If you do not change direction, you may end up where you are heading.

Over the years, we have visited various beer industry shifts in consumer preferences. Many changes have been the result of the consumer altering the beer segments and brands. Such swings have included the rise in light beers and the growth of imports, led by the Mexican beers, primarily Corona. In the last 20 years, we have seen craft beers develop, create their own segment, rise rapidly in popularity, and in recent years, we have witnessed a slowing of growth in crafts.

Consumer shifts in beer products do not happen often, but it seems the industry is now experiencing one such move. Industry pundits have unloaded as to why the industry is contracting and why crafts have slowed. It is, however, becoming crystal clear to all that the Millennials are shifting their consumption from crafts to now preferring low ABV, low carbs, clear liquid, and gluten free FMBs and Seltzers.  This is not a shift characterized by moving into the “better” beer segment, as has been witnessed in the change from domestics to crafts; it is more along the lines of shifting to healthier made products… at least in the eyes of the Millennials.

A post from Labor Day last year highlighted the success that FMBs and Seltzers were having with product placement, usually being positioned in the high-priority end-caps in the liquor stores. In that article, we highlighted the early success of this segment but also questioned if these products were only seasonal or if they truly possessed what it would take to become long-term players. It is clear that FMBs and Seltzers are not the typical one-and-done creations.

It is also clear that the distributors are supporting FMBs and Seltzers. Distributors are chasing many new products in this segment as witnessed by the Mark Anthony group and the fact that White Claw went to distributors outside Mike’s current network. This is taking a page out of the old G. Heileman book which had distributors compete against each other by awarding Heileman products to different distributors.

The focus in which the distributors have been placed on this segment has negatively affected the sales of crafts.  The shift shows that the consumers of such products are coming from the craft segment as verified by the monthly shipment reports.

FMBs and Seltzers are packaged in cans, have great margins, and play in the premium price segment. What more could a distributor ask for?  The products are coming from large vendors, not the typical small, under-financed craft brewer; and the results are across-the-board-marketing, chain support, and field sales support. All the parts are there to make this segment work.

The craft segment, much like the domestic light beers, will not disappear; however, one can expect the craft segment to continue to struggle, even as many crafts shift from hop-bombs to lighter craft liquids.

Where this seltzer segment ends up and where the next new segment comes from will be interesting to see. The next generation will soon tell the beer industry what it needs to be.

If you do not change direction, you may end up where you are heading.