The cider market in the U.S. is set to end the year well below 2014 and 2015 record-setting volumes, but it still will be much higher than any volumes recorded prior to 2013. Based on data from the U.S. TTB and U.S. Commerce Department for domestic and import reported data, total case volume for the industry should end the year around 23 million cases. There are still a few months of outstanding data points to collect from 2016 and revisions to 2015 that may change this estimate.
Many analyses have focused on the introduction of hard sodas as the significant factor leading to the drop in cider in 2016; however, it appears that the real culprit for the decline was too much cider, too fast. In other words, the cider market simply overshot itself.
To see a market overshoot itself is always fascinating to economists. The textbook explanation in economics is the Cobweb model, where basic decisions between supply and demand have a significant time lag between each other. Think farming, where a lot of time will pass between buying the seed and bringing the harvested crop to market. A lot can change in the marketplace in that span of time. So it goes with cider, with so much excitement from new suppliers, brands, flavors and extensions, it is no surprise that the category went too far, too fast. A market adjustment back to a level between 2013 and 2014 seems likely at this time.
One positive sign is the Beer Purchasers' Index for cider. The index for cider bottomed out (BPI=20) in May 2016 and has since slowly regained a bit of momentum during the summer and then again in the fall. However, the index value is still below 50, indicating a further contraction in cider orders from beer distributors.
The coming year will be an important year for cider. The first couple of months of data will indicate if the current 2016 levels of 23 million cases is a natural level of demand for the U.S. market. Or, is a lower level of demand closer to long-run trends more realistic for U.S. consumers? Regardless of where cider volumes end up in 2017, it will remain a significant part of the alcohol beverage category.