Through September, U.S. brewers have shipped 3.5 million fewer barrels compared to last year, leading beer executives who gathered in Las Vegas last month for the National Beer Wholesalers Association convention to express a variety of concerns about current category health and the future of the beer industry.
The biggest takeaways came from Heineken USA CEO Ronald den Elzen and Anheuser-Busch CEO João Castro Neves, who both made the case for an industry-wide offensive aimed at reclaiming market share that has been lost to wine and spirits brands — companies they believe have done a better job of branding, marketing and pricing their products for an evolving consumer demographic.
According to den Elzen, who shared some sobering statistics about category health, the beer industry has lost 35 million barrels — or 11 billion servings of beer — to wine and spirits over the last 20 years. He added that beer’s so-called “share of throat,” compared to wine and spirits, had dropped from 62 percent to “a mere 50 percent” during that same period.
“If this is not a wakeup call that we need to do something, I don’t know what is,” he told attendees.
For his part, Castro Neves traced share losses back to the mid-1990s while citing three reasons for the decline:
• Demographic and societal changes as younger consumers are exposed to wine and spirits when they turn legal drinking age
• Innovation by wine and spirits into flavors, experiences and better packaging
• The loss of traditional beer occasions, such as sporting events.
“If this trend continues on the pace that it is today, by 2030 beer will no longer have the largest share in the alcohol category,” Castro Neves warned.
The thrust of den Elzen’s and Castro Neves’ argument was that brewers and wholesalers need to work together to regain share, and Castro Neves challenged leaders from all three tiers to find solutions for growing beer’s slice of the alcoholic beverage pie, even if that meant compromising “for the greater good.”
He argued that all brewers and wholesalers needed to band together to elevate consumer experiences with beer, while competing for more occasions and capitalizing on emerging trends.
“I stand here confident that we have the opportunity to turn it around,” he said, noting that industry thought leaders and influencers needed to continually reinforce the quality and consistency of beer.
Den Elzen echoed Castro Neves’ comments, while simultaneously calling for increased investment into the category.
“We need to do that with the small brewers, the big brewers, the wholesalers, the retailers because we’re not going to crack this if we don’t do it together,” he said.
Market share declines were also addressed in a presentation by CM Profit Group partner Tom Fox and NBWA chief economist Lester Jones, who both noted that beer volumes failed to increase despite a growing economy. Jones argued that millennial consumers have yet to become brand loyal due to the number of product choices available.
“They’ve just arrived,” he said. “We need to find these guys and convince them that beer is the better beverage.”
Winning back share was also a theme of incoming NBWA chairman Jim Matesich’s speech, who addressed attendees on Tuesday and allowed that the industry needs a “recharge.”
“All beer needs a jolt to convince the consumer that it should be their beverage of choice,” he said. “We need to focus more of our competitive energy on rival products, including wine and liquor. Instead of working against each other, we should work with trading partners to improve the beer category.”