Not long ago as the industry began to experience a slowdown in shipments and sales, the industry pundits focused on the lack of creativity and exciting new products. When beer was compared to spirits, one could argue that this might just be the case. The beer industry did not make an effort to bring any new products that really moved the beer needle until the craft renaissance, and then it all changed.
Beer has always seemed to overcome handicaps which slowed down the industries continued growth. Crafts and their creativity came to beers rescue at the right time. We have all seen the results which continue even today however two key models continue on regardless of all the issues.
One is ABIs continued and unrelenting model, which has resulted in ABI losing over 10 million bbls. Industry rags have written once again about this and now more pressure is on AB wholesalers for volume. ABs volume loss is being blamed on the wholesalers. If that was the case, maybe InBev should consider who, originally, built AB into the leader in our industry? My money is on the wholesalers.
Secondly, applications for new breweries seem to have slowed somewhat but label approval is increasing. This trend is not changing continuing the pressure on wholesalers and retailers. Chain real estate has been a premium for some time and continues to be so. Wholesalers are pushing back on venders as new products and packages present logistic and warehousing problems plus the issue of out of date product which is killing brands.
ABI is not going to change their business model any more than the craft industry will reduce the new number of new products and packages. So the question is what is next for the industry?
Local is the new model. Even the chains focus now on quality local products first if they have a flavor or brand that is popular. The on premise is even more local. This is a recent trend that also seems to have staying power and should continue to be that way.
Just when it looks like the industry has hit a wall, along comes something unusual and very unique. Walking into a Portland sports bar this past weekend, hanging on the wall was a sign, now serving Not Your Father’s Root beer. This new product is the talk of the industry and is on fire. The beer, at 5.9% ABV, tastes just like old fashioned root beer; in fact the bartender said some customers like this beer over ice cream for an adult root beer float. Now did anyone see this coming?
It will be interesting to watch how this brand and flavor does in the coming year. With a caloric count of 371 per 12 ounce bottle and 31 carbs, it is a sweet tasting product. Will it become a category on its own? Regardless, it is new, it is different, it is exciting and it is creating new customers. It is also a product with nice margins.
With products like NYFRB it makes business models like ABIs and the wave of new SKUs, manageable. Remember that the term status quo is Latin for “the mess we are in!”
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