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 0 1 8
The Changing Landscape of Craft Beer: Retail Opportunities & Pitfalls
AGENDA State of the Union Misalignment of Growth Strategies Beer s Slippery Slope of Decline WHERE is the Growth? Next Steps
BWC Data Sources
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?
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
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
2018 3-Tier Growth Strategies
2018 3-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
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 1,118 532 1,114 664 755 773 376 1,045 940 308 368 372 63 148 268 411 87 25 1 66 143 83 26 1 71 148 76 23 1 68 150 63 25 1 65 146 54 23 1 2014 2015 2016 2017 YTD 2018 Premium Import Sub Premium Craft Super Premium FMB Cider Non Alcoholic Assorted Source: IRi Advantage YTD Ending Jul 15, 2018 *updated quarterly
Beer SKUs by Segment Total U.S. Multi Outlet + Conv Total SKUs 12,965 Total SKUs 14,835 9,725 Total SKUs 16.599 11,334 Total SKUs 17,486 Total SKUs 17,364 12,245 12,259 8,130 2,096 2,131 2,083 900 1,998 1,002 1,012 1,843 566 664 755 753 799 546 713 548 688 538 665 529 658 522 641 304 543 726 285 262 236 229 66 1 67 1 62 2 61 2 58 1 2014 2015 2016 2017 YTD 2018 Premium Import Sub Premium Craft Super Premium FMB Cider Non Alcoholic Assorted Source: IRi Advantage YTD Ending Jul 15, 2018 *updated quarterly
Where is the Growth Today?
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) 0.1 0.7 1.1 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
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 $23,829,562,245 1.7% 998,133,743-2,158,746-0.2% IMPORT SUPER PREMIUM FMB CRAFT CIDER $344,723 $200,003 $132,352 $60,984 $28,952 $4,778,041,577 7.8% 153,903,284 7,960,028 5.5% $1,919,556,574 11.6% 69,821,738 6,053,605 9.5% $1,738,426,960 8.2% 52,062,679 4,684,209 9.9% $2,787,811,580 2.2% 74,627,785 766,303 1.0% $290,865,516 11.1% 7,496,494 595,366 8.6% NON ALCOHOLIC ASSORTED SUB PREMIUM PREMIUM -$323 -$10,926 -$59,170 -$293,487 $73,423,282-0.4% 3,017,467-78,811-2.5% $2,751,682-79.9% 66,087-273,122-80.5% $3,588,606,584-1.6% 227,384,766-2,878,433-1.3% $8,650,078,489-3.3% 409,753,442-18,987,891-4.4% Source: IRi Advantage YTD Ending Sept 2, 2018
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 3,003,386 3231.5% 85.9% 82.5% $11,467,471 $10,297,813 358,669 817.6% 42.3% 35.7% $11,482,869 $9,765,190 378,830 563.1% 22.3% 13.6% $62,185,552 $51,581,485 2,042,528 479.7% 46.0% 26.0% $11,561,088 $8,704,024 316,452 293.3% 36.5% 8.7% $37,377,011 $24,706,244 1,241,340 206.9% 40.9% 16.7% $15,133,056 $9,996,228 480,989 155.6% 56.2% 38.3% $21,926,842 $13,334,529 707,142 162.6% 37.8% 19.6% $26,716,873 $15,794,875 722,290 140.8% 42.2% 11.6% $139,928,120 $80,036,215 4,106,087 139.6% 56.9% 13.4% $49,861,425 $49,861,425 1,673,275 77.5% 77.5% $33,443,011 $33,443,011 965,041 63.5% 63.5% $29,752,337 $29,752,337 797,261 56.9% 56.9% $20,349,744 $20,349,744 674,735 25.0% 25.0% $14,214,623 $14,214,623 467,872 52.5% 52.5% $13,949,597 $13,949,597 364,148 33.6% 33.6% $13,887,205 $13,887,205 405,623 47.3% 47.3% $13,167,543 $13,167,543 393,581 52.7% 52.7% $13,983,926 $6,287,030 405,882 83.0% 31.3% 5.7% $14,990,690 $6,717,332 411,984 80.9% 32.1% 8.6% $32,548,013 $14,162,348 658,747 82.3% 48.4% 12.6% $14,400,369 $5,804,504 333,096 68.6% 17.4% 8.3% $11,180,222 $3,983,873 301,228 51.1% 33.3% 5.3% $48,866,721 $15,412,071 1,625,814 44.1% 46.3% 6.2% $19,212,484 $5,934,518 496,150 36.3% 25.3% 2.7% * Brands with over $1,000,000 sales ranked by Dollar % Chg YA Source: IRi Advantage YTD Ending Aug 26, 2018
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 $1,157,198,735 19.2% 37,881,379 16.0% 94.7% 1.2% $1,284,371,656 16.8% 48,549,417 14.6% 98.8% 0.6% $101,577,369 3185.8% 3,144,457 3216.6% 86.0% 82.5% $144,638,838 133.9% 4,246,055 140.0% 56.9% 13.4% $66,458,059 478.8% 2,184,018 474.2% 46.7% 25.9% $52,087,512 1,748,923 78.1% 78.1% $35,333,752 1,019,905 63.9% 63.9% $30,961,985 830,037 57.2% 57.2% $39,651,787 190.6% 1,318,244 202.6% 41.1% 16.5% $305,067,936 8.0% 21,110,920 9.3% 79.3% 1.4% $22,031,788 730,744 25.7% 25.7% $129,677,552 17.9% 4,130,554 16.2% 78.5% 5.6% $28,230,451 143.8% 763,967 140.4% 42.5% 11.5% $50,947,243 45.9% 1,696,689 43.7% 46.5% 6.2% $15,056,996 496,022 53.4% 53.4% $14,606,010 381,111 33.8% 33.8% $33,614,968 76.0% 680,683 81.2% 48.6% 12.4% $14,411,910 421,408 47.5% 47.5% $1,198,607,081 1.2% 36,487,714-0.9% 99.8% -0.0% $48,884,262 40.6% 3,234,346 48.4% 36.8% 5.9% $23,300,790 153.7% 752,342 161.4% 38.6% 20.2% $13,868,202 414,735 53.0% 53.0% $43,113,607 35.9% 1,516,496 37.0% 44.9% 10.5% $11,989,153 887.4% 375,311 822.3% 42.7% 36.0% $15,810,324 198.2% 502,129 158.6% 56.4% 38.5% Source: IRi Advantage YTD Ending Sept 2, 2018
Game Plan Going Forward?
Craft Brewer Strengths & Opportunities Craft is CLEARLY NOT healthy in non-reported IRi / Nielsen trade channels! 1. 2. 3. 4. 5. 6. 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 7. 8. 9. 10. 11. 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) 12. 13. 14. 15. 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
Recipe for Success 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 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
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) 200,000 180,000 TOTAL CRAFT % Vol. Chg vs. CY 2016: +14.4% +29.6% Compound Annual Growth Rate: +2.7% +2.6% 160,000 140,000 127,519.7 144,360.8 120,000 100,000 111,420.9 CY 2016 +5 Years +10 Years TOTAL CRAFT Source: IRi Advantage Pro 52 w/e Jan 22, 2017 Total US All Outlets Combined
jeff@bumpwilliamsconsulting.com 210-859-0145
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 0 1 8
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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 0 1 8