Going Mainstream?

Imports are a big part of the U.S. beer business -- and they’re going to get bigger.

As recently as 2004, full-calorie mainstream domestic beers commanded more share in supermarkets than imports.

That’s not the case now.

Imports in 2007 represented more than 14 percent of supermarket beer sales, according to beer sales statistics from Nielsen. Mainstream full-cal domestics, meanwhile, accounted for just over 11 percent.

That stat highlights how imports are an increasingly important part of the U.S. beer business. And that trend is only going to continue.

The latest issue of Brew took an in-depth look at how imports have transformed -- and will continue to transform -- the U.S. beer business.

From the issue:

How big is imported beer? Consider:

• Two of the country’s top five beer suppliers are importers.

• Corona Extra and Heineken – the two brands that have driven import growth – are among the country’s top 10 beers, according to figures from Beer Marketer’s Insights. Corona is No. 6 and Heineken is No. 9.

• Imported beer’s share of total beer volume more than doubled between 1996 and 2006 to 13.8 percent of industry shipments, according to figures from BMI.

• Imports command a leading part of the industry revenue pool – and their share is forecast to grow, according to Miller Brewing Company estimates.

In short, imported beer is a big business and it’s going to get bigger. Powerful consumer and cultural trends are driving it.

Importers are better positioned to push their brands than ever.

And while imports might experience hiccups – Corona Extra volume slipped modestly for the first time since 1991 amid transition issues – their current and future significance is undeniable. And imports’ success is likely to continue to come at the expense of mainstream domestics.

“Imports will continue to take share from domestics for a good period of time,” says Kaumil Gajrawala, an analyst who follows the beer industry for UBS.

Says Justin Hott, an analyst for Bear Stearns: “It’s going to be a long-term trend where imports are going to grow faster than the industry.”

The domestic brewers are trying to respond. They’re trying to tap into the growth of imports with their own entrants.

But at the same time they need to find a way to market their core brands in a new era or risk losing more share.

What might the future hold for the mainstream domestics? In an August 23 interview with Beer Business Daily, Boston Beer Company founder and Chairman Jim Koch said, “In 1992, I predicted that better beer [imports and crafts] would get to 15 percent of the market and people thought I was crazy. Now, I will confidently predict that it’s going to get to a third of the market.”

Is it realistic? The revenue picture already is moving in that direction.

According to Miller estimates, imports represented about 17 percent of the industry’s revenue pool in 2006; they are projected to claim nearly 22 percent in 2012.

Over the same period, craft share is expected to increase to more than 10 percent from the current 6.4 percent.

Meanwhile, premium light share is expected to be flattish. And full-calorie premium share is predicted to slide to less than 10 percent from about 15 percent.

Projections can always change. If Anheuser-Busch manages to turn around Budweiser, for instance, the full-calorie premium trend line would improve dramatically given the sheer size of that brand. (Interestingly, the new ad campaign that positions Bud as “The Great American Lager” takes a shot at imports.)

But imports clearly pose a challenge to domestic brewers.

Read the rest here.

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Comments

[COREY HARRMANN]

I agree with almost all of the articals that you put out, but at times I do feel like you are rather one sided. I know you are published by Miller but please explain to me how Budwieser is "taking shots at import beers" by saying they are the great American lager?

[Jim Arndorfer, Brew Blogger]

Corey:
Thanks for commenting.

The article was alluding not so much to the tagline as the fact one Budweiser ad describes imports as "heavy." Another Bud ad -- which has drawn criticism in craft beer circles -- makes the claim that cloudy beers can hide flaws.

Brew Blog has covered this topic here:

http://www.brewblog.com/brew/2008/01/bud-takes-shots.html

Thanks for reading.

Jim Arndorfer
Brew Blog

[Corey Harrmann]

I apologize but the artical said nothing about the other bud ad's. That being said I truly enjoy great micro brews and imports. I can't get enough of the different examples of wonderful brew's that are out there. After all of my research though I must admit that I do belive that it is harder to hide flaw's in an American lager such as Budweiser or MGD. They are brewed to be a very drinkable crisp and refreshing beverage with less flavor. They are brewed for the purpose of volume rather then being compelling to only a small increment of consumers such as many of the craft and or import brews which tend to focas more on extreme hop's or being a strong stout. Without all of the flavor is only makes sense that "hiding" imperfections would be easier because they would be drowned out by whichever "big flavor" that brew is all about

[Bud]

Cory you are on the right track. Imports and Micros have a very heavy taste, and because of the the time and quality controls can be much more relaxed than in a Budweiser or MGD. These beers show imperfections much more than darker beers. I do not think that Budweiser was trying to take away from what micros and imports do, but rather point out all the work that goes into creating Budweiser.

[Jim Arndorfer, Brew Blogger]

Bud:

Thanks for commenting. A couple points.

Saying “imports and micros have a very heavy taste” seems to be a pretty sweeping statement that conflates Heineken with an imperial IPA. The leading imports are lagers and their taste profile hews closer to Bud than to many of the leading crafts.

And you are correct in saying the brewing processes for Bud and MGD are demanding because even the slightest imperfection would be apparent. That said, the European and other international brewmasters -- as well as Jim Koch of Boston Beer and Ken Grossman of Sierra Nevada or any number of craft brewers – are just as diligent in making their beers.