Members Conference S A N TA D IRE GO O, S A, ADECEMBER P R I L 8-1 0, The BWC Company

Transcription

1 Welcome to to CCBA s CCBA s Spring Fall Members Conference S A N TA D IRE GO O, S A, ADECEMBER P R I L 8-1 0,

2 The Changing Landscape of Craft Beer: Retail Opportunities & Pitfalls

3 AGENDA State of the Union Misalignment of Growth Strategies Beer s Slippery Slope of Decline WHERE is the Growth? Next Steps

4 BWC Data Sources

5 State of the Union Beer Continues its Volume Decline for Another Decade Old, Tired, Mature Brands Can t Stop Bleeding Farm Team of Consumers Think Alcohol is Evil NO Brand Loyalty...Seek Memories, Adventures and Socializing Tank Banks Are NOT Going Away Direct Threat to 3-Tier Brewery Landscape Continues to Grow as Does Consumer Choice POT is NOT Good for Beer and it Will Expand its Presence Misalignment of Growth Strategies Erodes Unity and FOCUS Branded Stories Build Trial, Repeat and Loyal Consumer Base Retailers and Consumers Seek Flavors, LOCAL Craft, Imports and INNOVATION.. What s New Today?

6 History of Innovation DG Yuengling.America s Oldest Brewery (1829) Budweiser..Iconic Advertising & Beechwood Aging Corona Extra Find/Make Your Own Beach Coors Light.1st Brand to Promote Use of Rocky Mountain Water Mike s Hard Lemonade 1st FMB Samuel Adams Lager 1st National Craft Beer Stella Artois.1st Brand to Use Packaging/Glassware to Build Brand Dos Equis..Most Interesting Man Alive Campaign Miller LITE 1st Low Calorie Premium Beer Smirnoff Ice..1st Spirits-Branded PAB Michelob Ultra 1st Health & Wellness Aspirational Brand Sam s Mix-6..1st Craft Variety Pack Rodenbach..1st US Belgian Sour Beer Fat Tire 1st Sustainable Brewery and Brand Dale s Pale Ale 1st Craft in a Can Founder s All Day IPA.1st Sessionable Craft in a 15pk Woodchuck Cider..1st National Gluten-Free Cider in America Treehouse Brewery..1st 60k bbl Brewery Tank Bank

7 Lack of Leadership? Wine & Spirits Consolidation SKU-mageddon Shelf Space Shrinking Demographics Health & Wellness Eroding/Changing Consumer Base Why is Beer in Decline? Mixed Drink Romance Poor Advertising Innovation? Beer is BAD Premium Light Beer Commodities Tank Banks Growth No Category Loyalty CANNABIS Legislative Changes Misaligned Growth Goals Service Levels Deteriorate Franchise Laws DUI Industry Divisiveness OOS s On Fast-Movers BIG is BAD Too Many Choices Higher ABV Beer PTC vs Bev-Alc Poor Quality Per Capita Consumption Declines Mature Brand Declines Loss of FOCUS

8 Tier Growth Strategies

9 Tier Growth Strategies BREWER SPLIT HOUSE DISTRIBUTOR CUTTING COSTS & FOCUS RETAILER PROFITS & MARGIN 1. Direct to Consumers 2. Line Extensions 3. Contraction/Expansion 4. Packaging 5. Distributor FOCUS 6. Acquisitions/JV s 7. Price Discounting 8. Brand Incubation 9. Retail Presence 10. Add/Cut People 1. FOCUS on $-Makers 2. NA Additions 3. Reduce OOC Beer 4. Shelf Space = Sales 5. Reduce Brewers/SKU s 6. Improve Efficiencies 7. Territory Expansion 8. Logistics & Technology 9. Wine & Spirits 10. Retail Execution 1. INNOVATION 2. High-End Focus 3. Price 4. Promotions 5. Shopper Loyalty 6. Reduce OOS s 7. 1 st to Market 8. Local Spotlights 9. Cut SKU s 10. Merchandising

10 Beer Brands by Segment Total U.S. Multi Outlet + Conv Total Brands 7,734 Total Brands 9,180 6,903 Total Brands 10,643 8,178 Total Brands 11,421 Total Brands 11,490 8,942 9,077 5,667 1,099 1, , , YTD 2018 Premium Import Sub Premium Craft Super Premium FMB Cider Non Alcoholic Assorted Source: IRi Advantage YTD Ending Jul 15, 2018 *updated quarterly

11 Beer SKUs by Segment Total U.S. Multi Outlet + Conv Total SKUs 12,965 Total SKUs 14,835 9,725 Total SKUs ,334 Total SKUs 17,486 Total SKUs 17,364 12,245 12,259 8,130 2,096 2,131 2, ,998 1,002 1,012 1, YTD 2018 Premium Import Sub Premium Craft Super Premium FMB Cider Non Alcoholic Assorted Source: IRi Advantage YTD Ending Jul 15, 2018 *updated quarterly

12 Where is the Growth Today?

13 Beer Segment Dollar Share & Trends Total U.S. Multi Outlet + Conv Beer Category Dollar Sales % Chg YA = +1.7% Premium + Sub-Premium = 51.4% of Total Beer $ Dollar Share of Total Beer Category Dollar Share of Total Beer Category Chg YA SUPER PREMIUM 8.0% CRAFT 11.7% FMB 7.3% CIDER 1.2% NON ALCOHOLIC 0.3% ASSORTED 0.0% PREMIUM 36.3% PREMIUM IMPORT SUB PREMIUM CRAFT SUPER PREMIUM (1.9) (0.5) FMB 0.4 SUB PREMIUM 15.1% CIDER NON ALCOHOLIC (0.0) 0.1 IMPORT 20.0% ASSORTED (0.0) Source: IRi Advantage YTD Ending Aug 26, 2018

14 Beer Segments (Dollar Chg YA 000) Curr YTD Total U.S. Multi Outlet + Convenience Dollar Sales Dollar % Chg YA Case Sales Case Sales Chg YA Case % Chg YA BEER $403,105 $23,829,562, % 998,133,743-2,158, % IMPORT SUPER PREMIUM FMB CRAFT CIDER $344,723 $200,003 $132,352 $60,984 $28,952 $4,778,041, % 153,903,284 7,960, % $1,919,556, % 69,821,738 6,053, % $1,738,426, % 52,062,679 4,684, % $2,787,811, % 74,627, , % $290,865, % 7,496, , % NON ALCOHOLIC ASSORTED SUB PREMIUM PREMIUM -$323 -$10,926 -$59,170 -$293,487 $73,423, % 3,017,467-78, % $2,751, % 66, , % $3,588,606, % 227,384,766-2,878, % $8,650,078, % 409,753,442-18,987, % Source: IRi Advantage YTD Ending Sept 2, 2018

15 Import 4 Craft 6 FMB - 11 Top Emerging Beer Brands (Dollar % Chg YA 000) CORONA PREMIER BUD LIGHT LIME WATER MELON RITA SMIRNOFF SPIKED SPRKLNG SLTZR VPK WHITE CLAW HRD SLTZR VPK BLUE MOON WHITE IPA TRULY SPIKED & SPRKLNG VPK SOL SPIKED SLTZR ASSORTED WHITE CLAW HRD SLTZR BLACK CHERRY CORONA FAMILIAR BUD LIGHT ORANGE MICHELOB ULTRA PURE GOLD ANGRY ORCHRD ROSE HRD CIDER TRULY SPIKED & SPRKLNG BRY MXPK BUDWEISER AMBER LAGER SIERRA NEVADA HAZY LITTLE THING IPA SAMUEL ADAMS SAM 76 LAGER ALE ARNLD PLMR SPKD H&H ICD TEA LMNADE SMIRNOFF ICE RED WHITE AND BRY MODELO CHELADA TAMARINDO PICANTE ELYSIAN SPACE DUST IPA CIGAR CITY JAI ALAI IPA WHITE CLAW HRD SLTZR RUBY GRPFRT MICHELOB ULTRA LIME CACTUS NEW BELGIUM RAMPANT IMPERIAL IPA Total U.S. Multi Outlet + Convenience 3,202.7% 880.4% 568.5% 486.4% 304.6% 195.0% 194.6% 155.2% 144.6% 133.6% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 81.7% 81.2% 77.0% 67.5% 55.4% 46.1% 44.7% Dollar Sales Dollars Chg YA Case Sales Case % Chg YA Cat Wtd Dist Cat Wtd Dist Chg YA $97,110,341 $94,170,011 3,003, % 85.9% 82.5% $11,467,471 $10,297, , % 42.3% 35.7% $11,482,869 $9,765, , % 22.3% 13.6% $62,185,552 $51,581,485 2,042, % 46.0% 26.0% $11,561,088 $8,704, , % 36.5% 8.7% $37,377,011 $24,706,244 1,241, % 40.9% 16.7% $15,133,056 $9,996, , % 56.2% 38.3% $21,926,842 $13,334, , % 37.8% 19.6% $26,716,873 $15,794, , % 42.2% 11.6% $139,928,120 $80,036,215 4,106, % 56.9% 13.4% $49,861,425 $49,861,425 1,673, % 77.5% $33,443,011 $33,443, , % 63.5% $29,752,337 $29,752, , % 56.9% $20,349,744 $20,349, , % 25.0% $14,214,623 $14,214, , % 52.5% $13,949,597 $13,949, , % 33.6% $13,887,205 $13,887, , % 47.3% $13,167,543 $13,167, , % 52.7% $13,983,926 $6,287, , % 31.3% 5.7% $14,990,690 $6,717, , % 32.1% 8.6% $32,548,013 $14,162, , % 48.4% 12.6% $14,400,369 $5,804, , % 17.4% 8.3% $11,180,222 $3,983, , % 33.3% 5.3% $48,866,721 $15,412,071 1,625, % 46.3% 6.2% $19,212,484 $5,934, , % 25.3% 2.7% * Brands with over $1,000,000 sales ranked by Dollar % Chg YA Source: IRi Advantage YTD Ending Aug 26, 2018

16 Top Growth Beer Brands (Absolute $ Chg YA 000) YTD IMPORTS 5 FLAVORS 9 BFY 7 CRAFT - 3 MODELO ESPECIAL MICHELOB ULTRA LIGHT CORONA PREMIER CORONA FAMILIAR WHITE CLAW HARD SELTZER VPK BUD LIGHT ORANGE MICHELOB ULTRA PURE GOLD ANGRY ORCHARD ROSE HARD CIDER TRULY SPKD & SPARKLING VPK KEYSTONE LIGHT TRULY SPKD & SPARKLING BERRY MXPK TWISTED TEA ORIGINAL WHITE CLAW HARD SELTZER BLCK CHRY MICHELOB ULTRA LIME CACTUS BUDWEISER AMBER LAGER SIERRA NEVADA HAZY LITTLE THING IPA ELYSIAN SPACE DUST IPA SAMUEL ADAMS SAM 76 LAGER ALE CORONA EXTRA NATTY DADDY LAGER SPKD SELTZER ASSORTED ARNLD PLMR SPKD H&H ICD TEA LMNADE FOUNDERS ALL DAY IPA BUD LIGHT LIME WATER MELON RITA Total U.S. Multi Outlet + Convenience SOL $98,486 $82,800 $54,975 $52,088 $35,334 $30,962 $26,008 $22,584 $22,032 $19,707 $16,653 $16,024 $15,057 $14,606 $14,515 $14,412 $14,224 $14,123 $14,118 $13,868 $11,386 $10,775 $10,508 $186,044 $184,808 Dollar Sales Dollar % Chg YA Case Sales Case % Chg YA Cat Wtd Dist Cat Wtd Dist Chg YA $1,157,198, % 37,881, % 94.7% 1.2% $1,284,371, % 48,549, % 98.8% 0.6% $101,577, % 3,144, % 86.0% 82.5% $144,638, % 4,246, % 56.9% 13.4% $66,458, % 2,184, % 46.7% 25.9% $52,087,512 1,748, % 78.1% $35,333,752 1,019, % 63.9% $30,961, , % 57.2% $39,651, % 1,318, % 41.1% 16.5% $305,067, % 21,110, % 79.3% 1.4% $22,031, , % 25.7% $129,677, % 4,130, % 78.5% 5.6% $28,230, % 763, % 42.5% 11.5% $50,947, % 1,696, % 46.5% 6.2% $15,056, , % 53.4% $14,606, , % 33.8% $33,614, % 680, % 48.6% 12.4% $14,411, , % 47.5% $1,198,607, % 36,487, % 99.8% -0.0% $48,884, % 3,234, % 36.8% 5.9% $23,300, % 752, % 38.6% 20.2% $13,868, , % 53.0% $43,113, % 1,516, % 44.9% 10.5% $11,989, % 375, % 42.7% 36.0% $15,810, % 502, % 56.4% 38.5% Source: IRi Advantage YTD Ending Sept 2, 2018

17 Game Plan Going Forward?

18 Craft Brewer Strengths & Opportunities Craft is CLEARLY NOT healthy in non-reported IRi / Nielsen trade channels! Expanding tasting room presence (Bigger, Multiple Locations) IPAs Flavors, Packaging, New Style Variants (Brut), Mix-Packs Flavors Attracting NEW Shoppers to Beer Rotational & Special Releases Keep Brewery Top of Mind and In The News Variety Packs (Rotating, New / Exclusive Brands) Brewery-only Releases 4/16, 375mL, 500mL Sold ONLY at Tasting Room LOCAL is still a Critical Element for Building Loyalty Experience, Adventure, Social Gathering Points Flexibility & Nimbleness to React Quicker to Consumer Demands Diversification beyond Beer Spirits, Vineyards, Restaurants, Taprooms, Brewpubs Tank Banks (Margin, Profitability, Innovation & Incubation) Social Media Presence / Drives Brand Awareness BWC estimates ~4MM BBLs sold direct to consumer Inelastic pricing environment (Room to Grow) Craft (Ownership) Personalities are a Strong Marketing/Sales Advantage Craft Consolidation (ABV), Collaborations and Social Media (Sierra Nevada) Strengths Craft Being Primarily Privately Held does NOT Need to Report Quarterly Earnings and can Make Better Long-Term Business Decisions and Not Rely on Dropping Prices to Achieve a Wall St. Expected Volume Target

19 Recipe for Success Quality Beer, Package, Marketing, Message Math Skills ABP s that Make Sense Compass Have a Plan on Where you Want to Go and How you want to get there People Hard-Working, Ethical, Loyal, Points of Differentiation What Makes Your Brewery/Brands Unique Branded Story What is YOUR Message Zig-Zag Are your Growth Strategies/Plans Aligned with your Customers Look in the Mirror Who Does it Better and How Can you Adapt Portfolio Diversification Flagship + Flankers Crystal Ball Think Ahead, Zig when others Zag Homework WHY are People Drinking your Beer, How Often, Switching Don t Be a Quitter You are NOT Entitled to WIN Tape Measure Measure what Needs to be Done Thermometer Prioritize Your Work Bifocals FOCUS on what Needs to get DONE

20 Over the next 10 years, the Craft segment could see volume sales grow by roughly +30% if annual trends continue Volume (000) 4,000 Total Craft 10 Year Forecast 3,500 3,000 2,500 2,000 1,500 Volume (000) 200, ,000 TOTAL CRAFT % Vol. Chg vs. CY 2016: +14.4% +29.6% Compound Annual Growth Rate: +2.7% +2.6% 160, , , , , , ,420.9 CY Years +10 Years TOTAL CRAFT Source: IRi Advantage Pro 52 w/e Jan 22, 2017 Total US All Outlets Combined

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22 Welcome to to CCBA s CCBA s Spring Fall Members Conference S A N TA D IRE GO O, S A, ADECEMBER P R I L 8-1 0,

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25 Welcome to to CCBA s CCBA s Spring Fall Members Conference S A N TA D IRE GO O, S A, ADECEMBER P R I L 8-1 0,