Category: general

Consumers continued to increase spending in the beverage alcohol category with overall spending at $253.8 Billion – an increase of $12.4 Billion, +5.1%. In contrast, consumers moderated their consumption with the bw166 TBA serving index ending the year at 120.8, a change of only 0.2%.

The legal drinking age population in the US reached 240.7 million people, an increase of 2.4 million, +1.0%. The overall beverage alcohol serving index softened slightly to 101.4 versus 102.2 in 2017, indicating the average adult consumed six fewer drinks. One important note about the growth of LDA population is that 2 million (of the 2.4 million increase) were age sixty plus. This trend of an aging population will continue to impact beverage alcohol going forward.

The equivalent wholesale value of all beverage alcohol sold in the US in 2018 was $125.3 Billion +3.61% (note this includes actual wholesale transactions as well as equivalent values for direct to consumer purchases).

Beer volumes were 200.2 million barrels, -2.0%, but consumer spending on beer totaled $117.3 Billion, +5.0%. The average retail price for a case of beer increased to $31.29 (excluding on-premise markups).

Wine volumes were 431.8 million 9LE cases, +1.4% (which includes 23.7 million cases of Cider). Consumer spending on Wine totaled $72.2 Billion, +4.91%. The average retail price for a 750ml equivalent bottle increased to $10.84 (excluding on-premise markups).

Spirits volumes were 235.6 million 9LE cases, +2.9%. Consumer spending on Spirits totaled $64.3 Billion, +5.6%. The average retail price for a 750ml equivalent bottle increased to $15.92 (excluding on-premise markups).

bw166 reports a market that is more robust than others, such as those based on retail scan data. Food stores, the predominant share of scan data is losing share to retailers like Costco, Trader Joes, Aldi, and Lidl that do not report through the syndicated services. Secondly, many retailers that do report scan data do not include their private label business. Thirdly, direct to consumer sales, especially in wine and craft beer are a significant driver of growth. Lastly, in on-premise, consumers continue to move away from traditional chain accounts and spend more in local, independent accounts. These factors make it more difficult to accurately track the overall market with traditional scan-based methods or wholesaler/supplier surveys.

In response to these dynamics, bw166 utilizes total tax paid shipments into the market aligned with consumer spending as reported by government agencies to give a comprehensive view of the evolution of the total market. For 2019 the market will continue to evolve with increasing fragmentation across products and channels. The producers that focus on gaining share in the categories and segments in which they compete will continue to generate positive returns from their activities in the beverage alcohol market.

For more details regarding the total beverage alcohol market, subscribe to the bw166 Total Beverage Alcohol Overview report.

For twelve months ending December, the bw166 Total Beverage Alcohol Overview shows total consumer spending on beverage alcohol at $233.5 billion, an increase of 4.2% and a slight deceleration from the 4.7% growth in 2015. The bw166 Total Beverage Alcohol Index, the standard in measuring overall consumption, stands at 119.98, a 1.28% increase over the prior twelve months.

Beer volumes entering the market were 209.3 Million Barrels, up 1.31% over twelve months but are down -1.06% over three months.  The growth is primarily driven by imports from Mexico.

Spirits volumes entering the market were 221.3 Million 9L Cases, up 1.92% over twelve months and up 1.80% over three months. This compares to growth of only .57% in 2015. Tequila has shown very strong growth throughout the year, up 7.37%.

Wine volumes (including Cider) entering the market were 423.2 Million 9L Cases, up 1.92% over twelve months.   Cider for the year is off -14.48%.  Wine excluding Cider reached 399.6 Million 9L cases, up 3.1%.  Sparkling Wines have been the the segment with the fastest growth, up 13.55%

Overall consumer goods sales for the last twelve months through December in relevant channels are as follows:

• Supermarkets & Grocery Stores: +1.86%
• Beer, Wine and Liquor Stores: +3.24%
• Warehouse Clubs & Supercenters: +0.54%
• Full Service Restaurants and Drinking Places: +6.17%.

For the year the CPI increase for Beverage Alcohol off premise is +0.84%,  The CPI increase for Beverage Alcohol on premise is +2.15%

The bw166 Total Beverage Alcohol Overview Report tracks all tax paid shipments into the US market including domestic products, packaged imports and bulk imports.  The reports also track total consumer spending on beverage alcohol in both the on and off premise channels. Subscribe now to receive the most complete view of the total beverage alcohol market.

Please feel free to contact us at admin@bw166.com if you have any comments or questions.

On August 25th, 2016 the Governor of California signed a bill into law that eliminates Instant Rebate Coupons (IRC) funded by suppliers or wholesalers for the promotion of wine in California. This mirrors the regulations that currently apply to Malt Beverages, however Distilled Spirits can continue to use IRCs for the promotion of their products. The law takes effect as of January 1st, 2017 (click here for the full text of California Senate Bill 1032).

California accounts for 61 million of the 397 million 9LE cases of wine (excluding cider) sold in the US market for the 12 months ending August 2016.  Given the strength of multi-unit retailers in California it is reasonable to assume that at least one third of this volume may be sold with an IRC with a potential redemption value is excess of $200 million annually.

This law represents a significant change for how wine can be promoted in California going forward.  While it is impossible to predict the overall market impact, the following areas will need to be addressed:

• Retailers are unlikely to continue promoting wines at the same prices without these promotional funds. As such, suppliers and wholesalers will need to identify other discounting methods to fund promotions moving forward.
• Many retailers set their programming calendars six months in advance or more.  With the effective date of this bill, January 1st, 2017, less than three months away, retailers, suppliers, and wholesalers will need to revamp programs slated for early 2017.  
• Programs run in California are often mirrored in adjacent states (most specifically in Arizona and Nevada). Suppliers and wholesalers will need to decide if they wish to continue similar IRCs in these markets.
• The use of IRCs is inconsistent across channels with some channels more heavily utilizing them than others. Elimination of IRCs could shift wine volume between channels as retailers seek other means to be price competitive.
• Should suppliers and wholesalers transition to volume discounts, they will find increased volatility in their monthly volumes as retailers purchase less frequently and at greater quantity.
• Additional opportunities exist in spirits, which can still promote using IRCs. Spirits suppliers may increase investment in IRCs to shift consumers away from beer and wine.

While more issues will arise as this transition occurs, this listing highlights some key areas to consider in making business decisions going forward. Ultimately, this law represents a significant change to the promotional landscape in California.  There will be lasting effects across all three tiers wherein some industry members will find opportunity and others detriment.

At bw166, we provide multiple tools to enable you to understand the total beverage alcohol market. The bw166 Total Beverage Alcohol Overview Report tracks all tax paid shipments into the US market including domestic products, packaged imports, and bulk imports.  The report also tracks total consumer spending on beverage alcohol in both the on and off premise channels. Subscribe now to receive the most complete view of the total beverage alcohol market. Additionally, to be able to track Beverage Alcohol imports and exports on a monthly basis for volume, value in USD, and value in local currency for all major trading countries, please see the bw166 Import and Export reports for Beer, Spirits, and Wine.

The wine grape crush declined from 3.9 million tons to 3.7 million tons (excluding raisin and table grapes), a 5% decline from last year. Generally, there were declines in coastal areas while the central valley had another strong harvest. Despite the decline in coastal areas, with the three preceding strong harvests, current forecasts do not predict any shortfalls of supply. As such, this harvest has brought supply back into balance with demand.

In analyzing the report, bw166 has identified two key metrics of interest for this harvest. The first concerns the concentration of winery owned/operated vineyards relative to open market purchases. On a statewide basis wineries owned or controlled 15.1% of all wine grapes crushed in 2015, down from 17.0% in the preceding harvest. This decline is mirrored in individual districts but of interest is the larger concentration of winery owned/operated vineyards in the coastal areas. For example, District 3’s (Sonoma) concentration was 34.5% in 2015 and District 4’s (Napa) was 40.9%. This dichotomy in concentration of vineyard ownership by wineries demonstrates that as coastal fruit gets more expensive, wineries are finding it more acceptable to control their grape sourcing and costs through outright ownership.

The second concerns the value and average price per ton for this year’s harvest. The total market value of all wine grapes crushed dropped to $2.88 billion from $3.43 billion, a 16.0% drop in value. This drop was driven both by quantity (3.70 million tons in 2015 from 3.89 million, a 4.9% decline) and market value per ton ($777.96 in 2015 from from $881.24, a 11.7% decline). The higher decline in market value per ton versus tons was caused by lower overall yields in the higher priced coastal areas. In other words, higher priced coastal areas represented a smaller share of overall tons in 2015 versus 2014, bringing the total value per ton down. In fact, prices within the coastal areas saw pricing increases. District 3 (Sonoma) saw average market value per ton increase to $2,465 from $2,343. District 4’s (Napa) increased to $4,417 from $4,071. District 7 (includes Monterey) was stable moving at $1,239. Lastly, District 8 (includes San Luis Obispo and Santa Barbara) saw market value per ton increase to $1,609 from $1,533.

The complete detail of the 2015 and 2014 harvests by district and key varietals can be downloaded from here.