In the last few weeks, there have been several articles delving into what Beer Marketer’s Insights appropriately called the “wacky world” of scan trends. With the cycling of COVID-19’s onset, suddenly the comparable is no longer the old normal of 2019, but the unique experience of off-premise stock up and the extreme turbulence of 2020. In that context, using the same tools as you typically see in beer industry analysis, such as year-over-year (YoY) growth or loss, make a lot less sense. Is the beer or craft industry “down” in supermarkets right now? That completely depends on your frame of reference. Versus the second half of March 2020? Yes, we aren’t loading our shopping carts for Armageddon like last year. Versus a normal year? No. In fact, they’re still elevated versus 2019.
To that end, I think it makes a lot more sense to look at certain trends in share terms. Categories and styles are two great examples. In 2020, asking if something was up in scan was kind of meaningless, since everything was up. Unless you were balancing it with on-premise data, a better question was almost always “how has its share changed?” The graph below shows just that: how craft’s share has changed across 2019, 2020, and early 2021.
We could do some sophisticated analysis on the differences, but hopefully the basic trend is pretty obvious: each year, including 2021, looks pretty darn similar. Year to date craft has slightly higher share than 2020 and slightly lower than 2019, but we’re talking about tenths of a percentage in both cases (and 2018, if included, looks about the same too). [Reminder: the graph above is share, not sales levels. Craft actually increases sales in the summer, but still loses share relative to other categories, which see bigger increases in sales levels].
So what different conclusions can you draw when looking at the share picture above as opposed to YoY growth or absolute sales level numbers? I see two, both of which draw from the meta point that craft performance and demand for craft has been remarkably steady, even in the face of a global pandemic, a huge shift in shopping behavior, a 20% reduction in SKUs (Nielsen used that figure several times last year), and the explosion in seltzer.
The first is that recent calls to further cut craft SKUs miss this stability and the reasons for it. If we did a similar graph with other parts of beer, they wouldn’t be as steady. Many parts of the beer market are actively losing dollar share to seltzer, to wine and spirits, as well as to premiumization within beer. In addition, craft’s contribution to shopper traffic goes beyond its already strong dollar share. Craft beer is a differentiator. Your store’s seltzer selection is probably going to be the same as the one down the street. Your craft beer selection gives a store the opportunity to stand out and differentiate.
The second is the dark side of that coin: given how remarkably steady independent craft beer share growth has been in recent years, we shouldn’t expect that to change and return to growth after the pandemic without other changes. In fact, if share holds steady, as it has, when off-premise levels return to whatever level they are going to revert to in the next 6-12 months and beyond, the independent brewers captured above are all going to be holding a similar sized piece of a smaller pie.
For many brewers, increased draught and taproom or brewpub sales will make that equation a net positive, but the basic point remains: independent craft isn’t really growing share in scan anymore, and unless something big changes, you should probably think about your company’s response to that shift. Whether it’s different channels, different products, or different consumers, collective growth will have to come from new places.