Dear Client:
For this quarter’s “Around the World” data dive with 3 Tier’s Mary Mills and Danelle Kosmal, we wanted to examine the trends and trajectories of imports and FMBs. Recently the growth drivers in “beer,” the two segments have seen some deceleration recently in certain areas. 3 Tier overlaid the segments’ regional trends with NIQ Omnishopper data (NIQ’s household panel measurement, which tracks online and off-premise sales) to help paint a clearer picture of opportunities and challenges.
We’ll start with the segments’ divergent consumer purchase trends.
In some ways, imports and FMB buying trends seem to be veering in opposite directions. The imports category is gaining buyers — but overall, its purchase frequency is going down. Meanwhile, FMBs are apparently losing some buyers, but their loyal base is making more frequent purchases on average.
Let’s dig in.
Imports have experienced a slight uptick in household penetration for the latest 13 weeks (in NIQ off-premise channels, ended 2/22), driven by the South and West (+0.7 points each).
However, the import segment’s overall buy rate, or volume per buyer, was down by 3% for the period. “This decline was driven by purchase frequency (-4.8%), meaning the number of trips consumers are taking to purchase imported beer. This potentially is due to new, lighter buyers, whereas spend overall remained positive (+2.1%),” per 3 Tier. (When asked, Mary agreed that this could possibly also have something to do with the effect of ICE raids we’ve been reporting on.)
Contrast that to FMB buyers, who are making more frequent purchases: “FMB growth in Total US is driven by an increase in consumer spend (+12.8%) in the latest 13 weeks as compared to prior year. Consumers are spending slightly less (-0.5%) per visit, yet making more frequent purchases (+13.3%).” Moreover, buyer penetration (the amount of consumers buying FMBs) is slightly down across Total U.S. ( -6.8%).
But while the segment has lost some buyers, 21% of U.S. beer consumers exclusively purchase FMBs. That’s the second highest “exclusivity” among beer subcategories, after domestic beer, which enjoys a 34% exclusivity rate among buyers.
FMB REGIONAL TRENDS (NEW ENGLAND THE CANARY IN THE COAL MINE?) Total FMB/seltzer is up only 1.1% for the latest 13 weeks. However, the segment is up 4% if you take out hard seltzer (though note, hard seltzer is seeing slight growth in c-store f0r the recent period).
In this segment, “Hard seltzers (-3.2%), hard coffee (-45.2%), kombucha (-15.2%), and hard lemonade (-8.5%) all declined, while hard tea, hard soda, and hard juice are all driving growth,” per 3 Tier.
FMBs are growing across 6 of the 9 U.S. divisions, “with slight declines in East North Central (-0.4%) and West North Central (-1.3%).” But the greatest declines “come from the New England Division (-6.6%),” which is of course Twisted Tea’s birthplace.
Indeed, “hard tea is driving some of the declines in New England (-2.6%), while it’s seeing growth in all other divisions (mostly double digits).”
Hard lemonade and hard kombucha are down across all divisions. And hard soda is growing in 5 divisions, but seeing “strong declines” in the remaining 4.
AS FOR IMPORTS… Imports deserve a bit more ink here, for the sheer size they’ve reached of beer.
10 SHARE IN 10 YEARS. As BBD readers know, Mexican imports comprise the majority of beer imports, and have long gained share in the U.S. market. In fact, imported beer overall has gained 10 share points of the U.S. beer industry in the last 10 years, now accounting for a bit over 22% of total beer shipments here (per US Dept of Commerce and Beer Institute numbers). Imports now account for 25% of total off-premise beer dollars, per 3 Tier, up nearly a full share point vs. last year; Mexican imports alone account for 20.3% of category dollars (up 0.7 share points from last year).
In the latest 13 weeks to 2/22, in NIQ off premise channels, total imports are up 3.7% vs. YA, with Mexican imports the primary growth driver in that segment, at up 4.2% in dollars.
Mexican imports represent 4 of the top 10 category growth brands for the 13 weeks. But some regions have more upside than others.
IMPORTS HAVE STRONG HOLD IN PACIFIC, WHERE PACIFICO IS TOP GROWTH BRAND. Imports have the largest share in the Pacific division, accounting for almost 30% of the category’s dollars in this region, up half a share point vs. last year. In California, imports are close to 40% of total category dollars, also up half a share point. Again, Mexican imports are the lion’s share of this.
Pacifico is actually the top growth brand in the entire beer category in both California and the broader Pacific Division, per 3 Tier. Meanwhile, as many readers know, Modelo is the largest brand in the category in California, accounting for 22.1% of total category dollars in the state.
Behind the Pacific region, The Mid Atlantic and West South Central divisions are the next two strongest divisions for imports share, accounting for 23.4% and 23.1% of category dollars respectively, per 3 Tier.
Note, Modelo was the top growth brand in the Mid-Atlantic and West South Central (including Texas) divisions (in the 13 week data).
LOW SHARE MARKETS. “On the other end of the spectrum is the West North Central division (midwestern states of Kansas, Nebraska, Iowa, etc.), where imports account for only 9.8% of category dollars, as well as New England, with 12.8% share,” per Mary and Danelle.
But import growth is beginning to reach a “saturation point” in some regions.
WHERE THEY’RE HITTING A WALL, AND WHERE THEY STAND TO GROW. “As expected, growth is slowing in divisions where imports have a strong presence and there is less room to grow,” per 3 Tier. “For example, imports experienced minimal growth in the Pacific (+2.5%) and Mid Atlantic (+2.4%) for the latest 13 weeks. However, strong growth continues in West South Central Division (+9.9%) and South Atlantic division (+6.2%), where share is also strong.
“From a consumer perspective, imports experienced a slight uptick in household penetration (+0.2pt ) in the latest 13 weeks compared to YA, driven by growth in the South (+0.7pt) and West (+0.7pt) US regions.”
7-ELEVEN INVOKES GROCERY MERGER DEBACLE IN “CAUTIOUS” APPROACH TO DEAL
As BBD suggested earlier this month, the parent company of 7-Eleven said this week it’s trying to avoid a repeat of the Kroger-Albertsons deal breakdown in the proposed acquisition of its company by Alimentation Couche-Tard Inc.
As such, it defended its “cautious” approach to the deal, raising concerns about it clearing U.S. regulators, per coverage from Law360.
Indeed, the 7-Eleven parent co., Seven & i Holdings, issued a statement Tuesday “to respond to ‘misinformation’ and to outline the efforts it has made to finalize a deal with Couche-Tard,” Law360 wrote. The statement came after Couche-Tard had criticized Seven & i “for its ‘limited’ engagement on the acquisition and its alternative plans for an initial public offering in the U.S.”
Earlier this month, Couche-Tard expressed frustration over Seven & i’s “focus on regulatory hurdles in the U.S. market,” noting it had attempted “constructive, friendly discussions” with the 7-Eleven parent for over six months.
But the 7-Eleven parent said it “has been working with Couche-Tard to identify stores that could be sold to increase the chance of the deal satisfying antitrust enforcers at the Federal Trade Commission,” per outlet.
“This is highly important, as U.S. antitrust hurdles are very real,” Seven & i said. “The FTC scrutinizes deals of this scale with significant consumer impact, resulting in a challenging and lengthy path to approval.”
Then too, Seven & i said in the statement that a deal with Couche-Tard must ensure a path to regulatory approval, as “a deal that doesn’t close is not a deal” and any regulatory obstacles could “leave the company in ‘a value destructive limbo’ for multiple years,” per outlet.
Of course, the Kroger-Albertsons merger debacle is a cautionary tale and front of mind for the 7-Eleven parent, who “said no shareholder should want to repeat that ‘disastrous story.’”
A viable deal would also require a divestiture package “unprecedented in size, complexity and scale,” Seven & i said. (Recall, sources recently suggested to the Financial Times that the two have figured they need to offload around 2,000 U.S. stores [see BBD 03-24-2025].)
Divesture talks have seemingly been moving forward, as Couche-Tard apparently ID’d stores and geographies that could be potentially divested last month.
“Now that ACT is finally taking our antitrust concerns seriously, we will be able to determine if there is a path to a viable divestiture process by identifying potential buyers and determining their ability to stand up a real, stand-alone business that will preserve competition,” the statement said.
While Seven & i indicated it has not rejected Couche-Tard’s acquisition proposal, it didn’t rule out other alternatives, either, defending “its alternative multiyear plan that includes a potential U.S. IPO as a ‘parallel path’ to maximizing value for shareholders,” per outlet.
NABCA SYMPOSIUM TAKES ON HOT TOPICS
Though your editors were unable to attend the National Alcohol Beverage Control Association’s annual symposium this year, NABCA briefly recapped its first day of the show, which delved into key issues affecting the industry, including hemp beverages, celebrity endorsements, evolving cross-over product compliance, updates from major trade associations and more.
TRADE HEADS ON HEADWINDS. Chiefs of trade associations like NBWA (Craig Purser), DISCUS (Chris Swonger), WSWA (Francis Creighton), and ABL (John Bodnovich) also took the stage speaking on the litany of challenges facing the industry, such as the impact of demographic shifts, health trends, the rise of THC-infused products, development of dietary guidelines and tariff uncertainty. Of course, the forces coming after bev alc and the shaping of dietary guidelines was key among them, with the heads emphasizing the need for a unified response to these threats and calling for collective action to ensure that regulations remain science-based. Despite these challenges, the resilience of the beverage alcohol industry was stressed, with a call for continued dialogue among trade associations to tackle common concerns like inflation, staffing shortages, and evolving market dynamics.
HOW TO REGULATE HEMP? A significant topic at the symposium appeared to be the burgeoning hemp beverage industry, and the regulatory confusion that persists around it. Players in the space voiced their gripe with the patchwork of regulations from state to state and said they seek uniformity for the federally legal product. While we’ve seen little to no movement on that front at the federal level, the good actors in the space long for “sensible regulation” in the meantime, but not all are sold on taking a three-tier route. However, if a three-tier system is implemented, what should hemp beverages be modeled after: beer, wine, spirits, canned cocktails? With a fair amount of beer distributors taking them on, but many of the outlets selling them being liquor stores, not to mention its sizable DTC component, “there is no easy one-size-fits-all answer,” NABCA’s recap concludes.
MORE STATES RESPONDING TO CROSSOVER PRODUCTS. Then there are the crossover products (i.e. boozy versions of non-alc brands), and the public safety concerns that can come along with them. Bob Budoff, SVP of Legal and Regulatory Affairs at DISCUS, explained that five states have laws that regulate crossover products: ID, IL, NE, PA, VA, and notes that Colorado has legislation that is under development as well. These laws pertain primarily to the off-premise, although the law in PA pertains to all outlets. As you’ll recall, these regulations, by and large, mandate that non-alcohol and alcohol versions cannot be located adjacent to each other and require separate displays, with some also stipulating signage that consumers need to be 21+ and that the product contains alcohol.
WHAT TO MAKE OF NIL? Another session touched on the rapid rise of Name, Image, Likeness (NIL) deals, which allow NCAA athletes to monetize their fame by endorsing products. And while many states have restrictions that prohibit bev alc brands from partnering with athletes, there is an avenue for brands to partner with NIL collectives for schools. Co-commercial venture laws need to be considered on this front, but with collectives evolving so quickly, it’s unclear what other laws may be triggered because of these activities. And while it’s tricky for bev alc to enter into NIL, non-alc brands are increasingly engaging in NIL deals, with Athletic Brewing signing a number of high profile deals over the last few years. As are regulating authorities with the North Carolina ABC recently winning “a StateWays Magazine Best Practices Award for their partnership with multiple popular NC college athletes to help spread the message about stopping underage drinking,” per recap.
BEER BRIEF:
ANDREWS TAKES ON BERO. Actor Tom Holland’s BERO premium non-alcoholic beer is gaining significant distribution in Texas, with giant Molson Coors/Constellation wholesaler Andrews Distributing announcing this week it has started distributing the brand’s three core offerings – Noon Wheat, Kingston Golden Pils and Edge Hill Hazy IPA – in 12 oz. 6-pack cans and a 12-pack VP across North and South Texas.
Until tomorrow,
Harry, Jenn, Jordan and Bianca
“Disconnecting from change does not recapture the past. It loses the future.” – Kathleen Norris
———- Sell Day Calendar ———-
Today’s Sell Day: 19
Sell days this month: 21
Sell days this month last year: 21
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under: -1
