Stealing market share from imports
The sales volume of imported beer brands, which are generally more expensive than domestic brands, is slowing as Americans cut discretionary spending. The beer industry’s overall sales in the U.S. were down about 4 percent in the first two months of this year compared with the same period in 2008.
Imports are facing increasing competition from similarly priced domestic “craft” beers, such as Sierra Nevada Pale Ale, but also appear to be losing sales to mass-marketed U.S. brands like MillerCoors’ Coors Light.
The recent decline is remarkable and continues a trend which started last year. According to Beer Marketers Insight, a market research outfit, traditionally strong brands such as Grupo Modelo’s Corona Extra and Heineken, which make up about 46 percent of import volume, have been hit hard: the top-selling import brand Corona went down 4.6 percent in 2008, the number two import brand Heineken fell 5.5 percent. The import category as a whole shrunk 3.4 percent in 2008.
Imports constitute roughly 12 percent of total beer consumption in the U.S. Between 1997 and 2008, the import category doubled in volume to 28.9 million barrels (33.8 million hl).
Last year, consumption of domestic beers remained flat year-on-year. While sales of Coors Light or Bud Light went up marginally, brands like Budweiser lost 5.7 percent in sales volume.
The domestic craft brewers seem to have benefitted from the decline in imported beers, although their market share, as of December 2008, is only 4 percent by volume. Nevertheless the 1,400 or so craft brewers grew their volume 5.8 percent in 2008.
Perhaps the romance of craft brewing has finally caught on with U.S. consumers. If they needed proof of the passion and dedication of craft brewers they only have to watch a video first shown at the annual Craft Brewers Conference in Boston (22 – 24 April 2009). If you would like to watch the video, here’s the link: I am a Craft Brewer.
Another more prosaic reason for craft beer’s attractiveness could be pricing. A glance at the price lists of various beer brands leads to an obvious conclusion: The imports have simply become too expensive. The weak economy is making consumers tighten their belts and is driving them to buy cheaper beers.
Most imports have revised their retail prices downwards to match those of craft beers. Far from matching the USD 3.99 you’d pay for a six-pack of Bud Light these days, several imported brands have drawn level with craft beer brands like Goose Island, Sam Adams and Trumer: USD 7.99 per six-pack. That is the price band that Corona Extra appears to have opted for in many places.
