- Market research firm IRI reported sales of beer are up 3.5% since January at $19.5 billion, according to Brewbound.
- Flavored malt beverages, hard seltzers and domestic super-premium beers are driving the growth. Craft beer sales are also up 2.9%, but the top five brands are all reporting declining sales.
- Bud Light and Coors Light, the two top-selling beers in the U.S., continue to see declines in sales. Budweiser has also fallen off the Top 5 best-seller list.
Last year marked the fifth consecutive year that beer volumes dropped. Once the undisputed rulers of beer, AB InBev and MillerCoors' classic domestic lagers — the three top-selling beers in the U.S. — have fallen out of favor with consumers as they take to Mexican imports, craft beers and wine and spirits.
Out of these categories, malt beverages like hard seltzer and super-premium craft beers have seen significant growth. According to Nielsen data, hard seltzer saw a 193% increase in sales last year, with consumers reportedly interested in flavors like tropical and berry. A UBS analyst told MarketsInsider that the category could be worth $2.5 billion in 2021. This trend was echoed in IRI findings that White Claw hard seltzer increased sales by 267.5% for its variety packs. But the trend is fairly localized. White Claw Senior Vice President of Marketing Sanjiv Gajiwala told Esquire only 4% of households have bought their alcoholic seltzers.
This surge in popularity of hard seltzer is in line with bigger industry trends moving away from classic high-calorie beverages like beer and soda in favor of lighter versions. Sparkling water and low-alcohol beer have both seen significant growth in the last few years. Seltzer is a happy medium for consumers who are searching for sparkling beverages and alcohol, but also want better-for-you items. The numbers reflect this. According to Statista, sparkling water sales in the U.S. are projected to be worth $5.03 billion this year.
Super-premium craft beers also continue to see growth, according to IRI. Brands with smaller production brews like Anheuser-Busch’s Elysian Space Dust IPA — whose sales are up 25.8% so far this year — or Sierra Nevada Hazy Little Thing IPA — whose sales have grown 122.8% this year — are seeing consumer interest amid a continued rejection of “mainstream” flagship craft brews. As an example, Sierra Nevada Pale Ale is down 5.6% this year, IRI found.
Growth of super-premium craft beers may be slowing, but the segment is still healthy. It could get healthier still as Big Beer begins to experiment with cannabis-infused beverages. According to a study from A.T. Kearney, 30% of Americans would be willing to try a cannabis-infused nonalcoholic beverage, and 17% would be interested in an alcoholic drink containing the substance. Last October, Constellation Brands beat estimates for second-quarter earnings, reporting a $1.3B unrealized gain in its stake of Canopy Growth. The results showed that despite slumping sales, beer can still be hot.
Despite overall growth in the segment, it is important for companies to take note of the primary drivers of growth as the market moves away from a one-size-fits-all approach to beer. With consumers seeking better-for-you options, it's not likely the market will turn back to traditional lagers anytime soon.
AB InBev CEO Carlos Brito said in a March earnings call that no-alcohol and low-alcohol products now make up about 8% of the company's total portfolio. The beer giant plans to have about 20% of its sales come from that segment by 2025. And it's not the only one making a change. From dabbling in cannabis to flavored malt beverages, companies are searching for products that appeal to evolving consumer tastes as the alcohol market continues to splinter.