BEER SALES SLUMP BUT PROFITS RISE
IT’S AN INTERESTING PARADOX: overall beer sales continue to decline in the US but . . . more revenue is coming in. The latest beer-consumption data demonstrate that drinkers will pay more for a product they deem superior, whether it’s locally brewed craft beer or an upscale mass-market beer like Budweiser Black Crown. On the craft side, the industry has continued to shine this year. The Brewers Association (BA) reports that after a very successful 2O12, in which American craft brew sales by volume rose 15% and sales by dollars increased 17%, sales are up again 13% and 15%, respectively, through the first six months of 2O13. What’s especially noteworthy is that the recent rise in craft beer comes at a time when overall beer sales are down 2% during the first half of the year. Such figures would lead one to assume that sales for the world’s biggest beer makers, including Anheuser-Busch InBev, are suffering. And they are. In the first quarter of 2O13, AB-InBev sales by volume in the US were down 5%, and, for one four-week period in the spring, sales of brands like Bud Light, Budweiser, and Miller Lite decreased by 6% to 9% compared to the same period a year prior. The beer companies blamed unseasonably cold weather, among other reasons, for the poor sales spell.
What’s more, AB-InBev recently issued its second quarter results, and overall sales have continued to dip, down another 1.2% by volume. But despite selling less beer, the company’s revenues are up 3.9% for the quarter. In order to accomplish this feat, the brewer squeezed more revenue from each bottle as beer drinkers traded up to pricier brands, such as Bud Light Platinum, Budweiser Black Crown and Bud Light Lime-a-Rita. Brands like Black Crown, which was introduced as a tastier, more sophisticated version of Bud earlier this year, are not only pricier, they’re far more profitable. The new AB-InBev report stated plainly, “Innovations [new beers] are being pricedata premium, while bringing new drinkers into the category.” The brewer is also focusing on craft-style brews as well, such as its Witbier Shock Top. All the trends seem to point out that consumers are willing to pay a little extra when the beer is better than the brands that have been around forever. This simple equation has certainly been boosting craft brew sales and the formula appears to be working for Big Beer as well: AB-InBev is expected to raise prices by 2% to 3% in the US this fall, just as it did last autumn.
