It will be a couple of months before the final 2016 numbers on both shipments and depletions are announced, however, we do have the 11 months of import shipments to review. While the industry buzz is about the slow-down in the grow rate for crafts, the numbers indicate that imports are surging at an increasing rate.
No doubt, we all are aware of the remarkable growth of the Mexican beers. In fact, both Constellation Brands and the Heineken Mexican beers are accelerating in sales. The growth we are seeing in a number of European countries is quite interesting.
Thru November, German beers are up +30%, followed by the Irish up +20%. Several countries are still negative, including the Netherlands down -7%; Belgium down -8%; and at the bottom, the UK down -27%. Canada is also slow at -19%.
Part of this trend must be attributed to the growth of the high end, but, why all of sudden, is there a surge in imports? With the exception of Stella, imports from Europe have not had much success in decades. So why now?
Past posts have discussed decisions made by successful European brewers who, mostly due to the exchange rate, reduced or eliminated their U.S. business model during the early 2000s. Now with a change of administrations and a different U.S. monetary policy, the exchange rate with the Euro is almost one to one. The breweries that left, now want to come back.
The personification might be Bavaria. Bavaria, just over 10 years ago, was a very successful importer. They had their own importing agency and shipped over 100K HLs. per year. Their three largest states were New Jersey, Florida and Texas. Considering that Bavaria might have been the first popular priced import, with a pricing model $2.00 per six-pack under Heineken. Bavaria had set their standards to be placed in the well next to Heineken. It worked.
Because of this model, Bavaria’s sales skewed to 99% off-premise. They basically had almost no on- premise business. They shipped no kegs. As the Euro grew stronger, because of their pricing, Bavaria had to increase front-line pricing to offset the exchange rates. The consumer no longer saw any value in buying Bavaria as the beer’s price edged closer to that of Heineken.
With declining sales, Bavaria closed their U.S. importer and assigned rights to a California importer. For all practical purposes, Bavaria disappeared…until now.
The owner of Bavaria, Swinckel’s, has recently purchased the U.S. importer Latis Imports. Obviously this purchase is to reestablish Swinckel’s beer sales and grow them in the U.S. You can almost be assured that someday Bavaria will be part of Latis Imports, along with Swinckel’s and Holandia.
If the exchange rate drops lower than one to one in favor of the dollar, expect a return to the 1980s when European and Canadian imports invested heavily in the U.S. This time, however, with the high-end segment growing and expanding, the importers will not back out. This expansion could put a damper on the craft segment with the millennials. Only time will tell.
It makes one wonder where a brand like Bavaria would be today had the Swinkel’s not pulled out years ago? Experience is simple, it is the name we give our mistakes….
Leave a Reply