Brewers Association: Craft Brewers Achieve Double Digit Market Share For First Time
For the second straight year U.S. craft brewers increased production volumes at a double-digit clip, growing 18 percent in 2014 according to new data from the Brewers Association.
As part of its annual “Growth in the Beer Category” report — which highlights market share, production and brewery opening statistics, among others – the BA emphasized a key milestone for craft: for the first time ever, craft brewers achieved double-digit volume share of the marketplace.
BA-defined craft brewers now collectively own 11 percent, or 22.2 million barrels, of what the BA said is a 197-million barrel U.S. beer marketplace. That’s up from 7.8 percent in 2013 and represents a retail value of $19.6 billion.
It’s important to note, however, that 2014 market share statistics were bolstered by the inclusion of about 3.5 million “new” craft brewer barrels, added after the organization changed its definition to include some previously non-craft brands, like Yuengling.
Yuengling made 2.9 million barrels of beer in 2014, the company told Brewbound.
BA chief economist Bart Watson wouldn’t comment on specific breweries now being counted towards its 22.2 million barrel total, but confirmed that Yuengling was on the list.
The BA, which represents the interests of the country’s small and independent brewers, teased out flavored malt-beverages and ciders from its reporting to only reflect traditional “beer” offerings available in the marketplace. According to shipment figures prepared by the Beer Institute and obtained by Brewbound, the entire U.S. beer market actually totaled 206 million barrels in 2014, 9 million more than the BA’s data set.
But no matter how you slice it, craft and the entire “high-end” beer segment is still growing at a tremendous pace. Shipments of imported beer were also up 6.3 percent in 2014, to more than 29 million barrels, according to the Beer Institute.
“2014 was the year where the high-end really, fully asserted itself,” said Watson.
Changing consumer tastes and the continued high-end growth has plenty of entrepreneurs rushing into the craft segment, hoping to cash in on a shift towards more flavorful beers. The BA counted 615 new brewery openings in 2014, more than 200 more than the 413 it counted in 2013.
In total, there were 3,464 breweries in operation last year, an increase of 19 percent.
“The opening numbers suggest that people are still betting on the growth opportunities within craft,” said Watson.
And with new business openings, comes new jobs. According to the BA, the craft segment added more than 5,000 jobs in 2014, 4.3 percent more than 2013.
So where is the majority of this growth coming from?
“In absolute terms, the gains are coming from the top 50 and the top 100,” said Watson. “That said, you are seeing incredible growth from the smaller breweries and the long tail shows no signs of abating.”
It’s not yet known exactly how many of the 22 million barrels came from top 50 BA-defined brewers, but in 2013, that group produced about 10.4 million barrels of all craft beer sold.
“As the overall market grows, the regional craft brewers have continued to grow and I see no signs of that changing,” said Watson.”
Keurig Green Mountain’s soon-to-be-launched cold-beverage system spells “Cold” with a “K”.
It’s one of a few new details about the highly anticipated machine, which Keurig unveiled at the Consumer Analyst Group of New York conference. Amid a wide-ranging presentation about the company, including updates on brand positioning and sales growth strategies, Keurig offered a first glimpse at Keurig Kold, a counter-top machine that uses pod-based technology to create a variety of at-home prepared cold beverages, including carbonated drinks.
Keurig launched into news about Keurig Kold with a slide that asked, “How Can The Cold Beverage Category Be Revolutionized…” The company, of course, had its answer in Keurig Kold, and pointed to vast opportunity in expanding its platform to include preparation of cold beverages. Quoting data from IRI, a Chicago-based market research firm, Keurig noted that 2014 U.S. sales of cold drinks exceeded $50 billion in measured channels, five times that of hot beverages.
Despite a massive market for cold beverages, Keurig Kold is designed to address what the company termed as “cold problems hidden in plain sight.” Keurig described a range of potential issues with traditionally packaged and prepared cold drinks, including freshness, in-home storage and carbonation levels, and noted the efficiency, convenience and reliability of its pod-based system as offering significant advantages to consumers.
Scheduled for a fall 2015 launch, Keurig Kold will deliver beverages cold and, unlike Sodastream machines, the system will not require a CO2 canister for preparation of carbonated drinks. While the company did not offer details on how it will add fizz to beverages, it promoted a “vast brand selection” for Keurig Kold, which will include products from “beloved partner brands” The Coca-Cola Co. (which acquired 16 percent of Keurig last year) and Dr Pepper Snapple Group, such as sodas, sports drinks, sparkling juice, cocktail mixers, and iced teas.
Keurig also released details on new company-owned brands, which include Red Barn Craft Soda, Flynn’s Soda Shop, Waterful zero-calorie flavored water and Tierney’s Iced Tea Co.
Boylan’s, Core Go to Big Geyser
The folks over at Big Geyser believe craft soda is headed the way of craft beer, and they want in. Last month, the independent New York distributor announced it had entered into an exclusive agreement with Boylan Bottling Co. to service its Boylan and Mash products throughout Big Geyser’s New York metro territories. The agreement will see Boylan’s departure from its current partnership with Manhattan Beer company.
Big Geyser COO Jerry Reda informed suppliers via email, writing “Much like the craft beer industry, craft soda is set for significant growth in the near future and Big Geyser sees Boylan as the preeminent product and organization in the craft soda space.”
Reda says the addition of Boylan won’t come at the expense of GuS, its other craft soda offering, which it has distributed since 2003. While both brands come in glass packaging and eschew high fructose corn syrup for cane sugar, Boylan’s positioned itself as an old-time soda classic, whereas GuS offers a more modern, juice-based beverage.
GuS founder Steve Hersh says his brand already shares truck space with Boylan in several other distribution territories and, if anything, he expects it to boost the craft soda category on the whole.
“They’re very different brands,” said Hersh. “But we do see it as a validation of this craft soda boomlet that has been our mantra to retailers. We’re trying to grow the category and this puts muscle behind it.”
Boylan Bottling Co. dates back to 1891, when pharmacist William Boylan first developed a birch beer elixir in his New Jersey apothecary. Now, the brand boasts a portfolio of more than 20 flavors, including diet and seltzer varieties.
The addition of Boylan comes as the latest move in what has been a year of big happenings for Big Geyser. In January, the company requested a buyout of its contract with Glaceau. Then in February, Big Geyser added Core Natural alkaline water to its stable of brands, presumably to fill in for the recently-departed Smartwater.
Lots of Spring Leaps
Maverick Brands, which markets Coco Libre coconut water drinks, announced the appointment of Candace Crawford as CEO of the company. Crawford, a former executive with ZICO, Bossa Nova and POM Wonderful, takes over for Maverick founder Mark Shaw, who will transition to the title of Office of the Chairman, Chief of Marketing, Strategy and Innovation. Crawford was the CFO and COO of ZICO from February, 2010 until November, 2013, when the Coca-Cola Co. completed its acquisition of the coconut water company. Crawford managed operations and oversaw finances for the company, which she joined following CFO roles at Bossa Nova and POM Wonderful.
Arnold Ventura has joined Califia Farms as VP of Business Development. Ventura, the founder of now defunct aguas frescas brand Coba, had been an executive with PepsiCo’s Naked Emerged Brands, an incubation unit tasked with identifying disruptive beverage brands and supporting those within its portfolio.
William Thein joined the sparkling probiotic drinks company as Vice President of Marketing, replacing Bill Lange, who left KeVita in January and became VP of Sales and Marketing at Santa Monica-based cold-pressed juice chain Pressed Juicery. Previously, Thein spent eight years at Odwalla. Thein also spent four years as Chief Marketing Officer of Evolution Fresh before joining Kevita.
KeVita also added Bob Nakasone, a 17-year veteran of PepsiCo, as its Senior Vice President of Sales.Nakasone worked closely with KeVita in his position as Senior Director of Business Development at PepsiCo’s Naked Emerging Brands (NEB) division, which began a trial distribution partnership with the probiotic beverage company in early 2014. Nakasone will attempt to expand the brand’s growth outside of incubation channels, per a company statement.
Former Coca-Cola Co. executive Mary-Ann Somers has joined The Hershey Company as VP and General Manager of its U.S. Chocolate division. Somers leaves her post as SVP and General Manager of Coke’s water, tea, and coffee categories, where she led Dasani past PepsiCo-owned Aquafina to become the country’s’ top-selling bottled water brand. Somers also helped advance Coke’s stake in the tea category with its Gold Peak brand passing $1 billion in sales last year.
Cold-pressed juice company Red Jacket Orchards has hired Gary Prusher as Director of Corporate Sales and Distribution. Prusher brings 26 years of experience in the industry to the upstate New York Orchard, including a role as a Regional Sales Manager for New York distributor Big Geyser.
The Saint Louis Brewery, makers of the popular craft beer Schlafly, has brought on a new chief executive officer. James Pendegraft, a Saint Louis native and the former vice president of sales & marketing for North American Breweries, a subsidiary of Florida Ice & Farm Co., will take over as Saint Louis Brewery’s CEO. He replaces co-founder Dan Kopman.
NUTRITION & BOOZE
Diageo has announced plans to supply serving facts information on its alcohol beverage products and voluntarily provide consumers with additional caloric and nutritional information.
After years of asking the Alcohol and Tobacco Tax and Trade Bureau (TTB) for permission to label its beer, wine and spirits products with serving facts information, Diageo finally convinced the TTB to temporarily approve the request in 2013.
Diageo has now received final approval from the TTB to include a serving facts panel on its labels. Previously, alcohol manufacturers in the U.S. were not allowed to list serving facts on their packaging.
“The consumer is at the heart of everything we do, and making serving facts information available to people in an easy to understand format is what, according to our research and polling, today’s consumers want,” Peter McDonough, the company’s president of marketing innovation, said in a press statement. “As a company that prides itself in promoting responsible consumption, we believe this information will help consumers make informed and responsible decisions about drinking.”
Diageo said it has supplied serving facts information for its products via the DRINKiQ website since 2006. Now, however, the company plans to also update its packaging to reflect serving facts information labels.
“This is the culmination of years of hard work by Diageo, as well as the more than 70 consumer and public health groups that stood with us in support of labeling in 2003,” Guy Smith, Diageo’s North American vice president said in a statement.
“It is important to note that including this information is voluntary, so producers have the option to include this information, or not. We specifically commend the National Consumers League and the Center for Science in the Public Interest who supported this important initiative from the beginning. And we are grateful to the TTB who are now allowing the industry to give consumers the information they have been asking for.”
Serving facts information will begin appearing on Diego’s U.S. labels in the coming months, the company told Brewbound. The company also said it does not plan to create any new marketing campaigns focused on the new labels or serving facts information at this time.
The IPA continues to reign as the most popular style in American craft beer. According to Dan Wandel, principal of Beverage Alcohol Clients Insights for IRI, the IPA style alone grew to more than $342 million, according to Wandel, representing a 41 percent increase over 2013 figures. IRI tracked 117 new IPA brands last year, which accounted for more than 10 percent of category growth (at $35 million). In all, there were 1,165 craft IPA SKUs tracked in super markets in 2014, a 15.5 percent uptick over the year prior.
Broken down by sub-style under the IPA umbrella, American IPAs were the best selling, pulling in more than $217 million in the channel. Imperial IPAs, the second best selling, earned more than $85 million. Rounding out the top three, the low ABV session sub-style hit the market harder than any other, totaling sales of more than $11 million for growth of nearly 339 percent.
“It’s really interesting to see once we peel back the onion on IPA how even some of the sub-styles of IPA are becoming so prominent,” said Wandel.
But not all sub-styles enjoyed the same kind of growth. Sales of Belgian/White IPAs ($2.1 million) and “other” (red, rye, brown) IPAs ($1.7 million) declined 21.5 percent and 12.2 percent in the channel, respectively.
There wasn’t a new-to-market IPA brand that stormed the market with the same ferocity as Boston Beer’s Sam Adams Rebel IPA did in 2014, however — sales eclipsed $21 million in U.S. supermarkets. By comparison, the second strongest new entry was Deschutes’ Fresh Squeezed IPA, which totaled just over $3 million in sales in the channel.
That perspective came during an IRI Power Hour, in which the Chicago-based market research company partnered with the Brewers Association to put the blazing hot style under a microscope.