Dear Client:
Beer imports were down by 0.6% in May, to 3,520,391 barrels. That puts the YTD trend at up 6.1%, per Beer Institute’s Danelle Kosmal.
Interesting dynamics influenced that number. For one, Mexican imports slowed sequentially, to just 5.5% growth (notably, +4.2% vs. May ’19), down from +15.7% YTD and +10.6% in April.
But fear not, this is likely just about the flow, and fullness, of inventory (recall, Constellation Beer shipped a lot of beer in its recent quarter ended May 31, with shipments up 17%).
Danelle shared some crucial STR trends with BBD. Overall, “sales to retailer volume for imports for April 2022 was essentially flat (+0.4%),” said Danelle. The slow movement of inventory in April led to the slowdown in growth for shipments in May. But thankfully, the glut should dissipate, as STRs for imports picked back up in May (+9.5%), “so we most likely will see Mexican import shipments pick back up again in the June data.”
And last but not least, Mexican imports faced a very tough comp — up 94% last May.
Mexican beers were still May imports’ strongest driver, comprising 69% of total import growth.
Dutch imports were the second biggest growth contributor, up 9.4% for the month. And Italian imports were up 33.7%.
Meanwhile, “imported beer from Belgium, Poland, and Canada were the largest contributors to declines in volume for May,” said Danelle, as those countries experienced high double-digit dips for the month.
But the Belgian numbers — down roughly 85% — are “due to the shift in production of Stella to the U.S. by Anheuser-Busch.”
BEHIND THE STRATEGIES THAT INFLATION-LAIN CONSUMERS ARE USING AT THE PUMP AND THE BEER SHOP
In part two of our chat with IRI pricing specialist Lance Goodridge, he shares some strategies that the average household is utilizing at the gas pump — and the beer aisle.
We asked Lance if he’s seeing consumers turn more to large beer packs to save money — or more single-serve type packaging?
It’s a bit of a bifurcation, he says.
SINGLE SERVE AND LARGE PACKS ARE SOLUTIONS FOR LOWER AND HIGHER INCOME SHOPPERS, RESPECTIVELY. “It really depends on income segment. We’ve seen folks who are struggling on the lower income scale, they’re looking to manage overall baskets. So what happened is, with all the gas prices going crazy, folks are no longer filling their tank. They’re filling to a dollar amount. So they have the ability to manage a budget in a store.
So they’re very conscious of, ‘if I’ve got a hundred dollars to spend, I have to divide that up across the products I need to buy and provide for my family.’ So what we’re seeing in the low-income segments are, they’re looking for lower cost outlays, even at the expense of a per volume basis. So if I can get something for $2, two or three times a week, that’s still better for me than if I’m buying something for $10, which might last me a little bit longer, might be a better price, volume relationship.
“The higher-income folks are still looking for those deals. So their behavior is changing, too. They’re not premiumizing like they were before, but they are looking for bigger, better value deals and they’ve got more dollars to spend to afford those. So it’s kind of both; it’s, you know, the singles and the smaller purchase requirements are fitting the low-end and the larger, price-per-volume plays are fitting the more affluent consumers.”
Asked if it’s bad to be caught in the middle of those pack sizes, Lance says companies should assess just how important the low income segment is to their business.
But just how squeezed is the “average household” of roughly $60k a year?
“The inflation, as it stands today, is costing that average household more than $400 per month — just in price increase, no additional stuff; just in price increase,” he emphasized. “So that’s hard to afford. So it’s gonna hit that low-income segment harder than it is relatively on a relative basis than the other segments. So I’d wanna assess how important that segment is to my business and my growth and see if it’s a risk for me or not.”
BUT WHY NO RETURN TO ECONOMY BRANDS? Considering that extra $400 to the average household, why haven’t we seen a bigger return to economy brands?
“I think it’s coming,” says Lance. “I think people are eroding savings that they built up over the last 18 months. Savings were at an all-time high as we hit the end of 21 and credit card debt was at an all time low. Now those have flipped, we’ve eroded savings. Our credit card debt has gone up. The cost of money has gone up through the fed interest rates. So mortgages and car loans and all the things that we took out last year when we have that extra money, they’re costing us more now, defaults are way up. So I think you’re seeing an erosion of available disposable income, and you’re gonna see a much faster switch to that value segment.”
TEXAS DISTRIBUTORS COMBINE TO FORM THIRD-LARGEST OPERATION IN STATE
There’s still room for wine and spirits wholesalers to combine, apparently.
In late June, Dallas-based Green Light Distributing and Houston-based United Wine & Spirits merged to create the third-largest spirits distributor in Texas, sister publication Wine & Spirits Daily reported last week.
The combined company will operate under the Green Light name and primarily focuses on small and mid-sized wine and spirits brands, per announcement. (It currently carries brands like Deep Ellum Spirits, Greenbar Distillery [including the RTDs] and Adictivo Tequila, to name a few.)
Green Light has experienced “rapid growth” across Texas in the last 18 months and is set to expand into Florida by the end of 2022. Its portfolio includes more than 350 suppliers and currently operates out of five warehouses across Texas.
With the merger, United Wine & Spirits founder and CEO John Saladino transitioned into the role of partner at Green Light Distribution, where he oversees strategic operations and is involved in community outreach. Green Light’s executive team also includes Matt Nunley, chief revenue officer, managing the company’s financial goals and strategies. In addition, Joe Saladino is joining as director of marketing after leading marketing at United Wine & Spirits.
“This merger was a no-brainer,” said Green Light founder and CEO, Dusty Odell. “Not only does it give us more robust marketplace coverage, but our goals and values are perfectly aligned in terms of offering best-in-class service and wanting to change the status quo to help small and mid-size brands compete with more muscle.”
Until tomorrow,
Harry, Jenn, and Jordan
“It is better to know some of the questions than all of the answers.”
– James Thurber
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