Final numbers are trickling in for the 2014 calendar year, and the beer industry has some mixed results for us to review.
The data in the table below provide an expanded look at the industry for 2013 and 2014 calendar years. The beer category added almost 13 million cases and grew by 0.5 percent in 2014. The gains came mostly from imports and crafts. The total U.S. population grew by 0.9 percent by adding 2.7 million people in 2014. Per capita consumption measures show only a slight drop to 20.1 gallons per person. However, if we include the cider volumes in the industry figures, we pick up an extra 10.2 million cases and the industry grew 0.8 percent, almost on par with the population growth. Per capita consumption then takes a slightly higher level of 20.3 gallons per person.
It is worth noting that this is not your father’s business anymore. Ciders, shandies/radlers, flavored beers and flavored malt beverage innovations are all making the industry a bit harder to distinguish and define. Despite the fact that cider is federally taxed as wine, the overwhelming majority of it is produced, distributed and sold like beer. With that in mind, let’s take a look at the expanded industry accounting.
In hindsight, the combination of events that led to a positive year is pretty evident. Strong growth in Mexican imports and craft, falling unemployment and lower gas prices have all worked together to add significant “lift” to the industry volumes against the declines in mainstream beers. In fact, since the end of the recession, the “high-end” – loosely defined as craft plus imports – has grown significantly while the balance of the industry continues to decrease. This high-end segment has added 143.7 million cases since the recession and now accounts for a quarter of industry volumes. Meanwhile, the balance of the industry has lost 242.7 million cases over the same period. However, this is not the first time the industry has seen these trends. The 1990 to 1991 recession had a very similar pattern, where the high end recovered sooner than the balance of the industry. It took a while, but from 1996 to 2008 the balance of the industry managed a slight growth trend in volumes on a significantly larger volume base.
The high-end beer market has come a long way in just a few years. The past two years have seen estimated market shares exceed 20 percent in 2013 and now stand at 23 percent in 2014. As a comparison, the share for wine and liquor are estimated to be around 27 to 28 percent in 2013. That means that there is still plenty of upside for the category. Moreover, as we look forward to growth in 2015, the balance of beer consumers (non-high-end consumers) should begin to experience some of the economic recovery through wage and income gains. At that point, the balance of the industry should stabilize and maybe even add volume to the total industry, which will help redefine the high-end share of the market.
To receive additional information, please contact NBWA Chief Economist Lester Jones at email@example.com.