What’s Eating Up that Lost On-Premise Volume?

Dear Client:

Lester Jones is hitting the virtual circuit. After presenting a deep dive on the coming economic crisis this past week [see BBD 04-23-2020], the NBWA chief economist was back on our computer screen yesterday highlighting the transformation taking place in the beer industry due to the pandemic.

To illustrate these changes, Lester teamed up with the good folks at Fintech, which as you may know covers sales to retailer data from about 150,000 retailers (both on and off premise)and thousands of distributors. So here’s what they’re seeing…

THE BIG SHIFT. Of course, all the shifts sort of stem from one big one: the virtual shutdown of the on-premise. The channel accounted for about 16% of beer volume at the start of the year, and shrunk down to less than 2% of volume in the last four weeks or so. 

WHERE THE VOLUME IS GOING IN THE OFF-PREMISE. That in turn sent more beer volume through the off-premise, as you know, but where in that channel specifically? Well, a lot of it fell into the grocery channel, which saw its share increase from 26% to 33% in the last month or so. 

Convenience saw a little bump in share as well, moving from 22% to 24%. And liquor stores saw a little more volume come their way too moving from about 4% to 5%. Beer volume in mass merch, meanwhile, held steady at around 26%.

CANS EAT UP DRAFT LOSSES IN PACKAGE MIX.  The closure of the on-premise did a number on package mix too, as draft’s share of package mix went from 9% in pre-COVID days to about 0.5% currently. Cans ate pretty much all of that up, as its share of package mix increase from 59.6% to 67.4% – 24pk cans and 30pk cans were the biggest beneficiaries there. 24pk cans saw its share of overall can packages increase from 24.8 in the pre-COVID era to 30.4% in recent weeks, while 30pks moved from 12.4% of overall cans to 13.9%.

WINNERS AND LOSERS IN SEGMENT SHARE. When it comes to segments, FMBs/seltzers, to no surprise, grabbed the most share in the “post pantry rush,” jumping from 8.3% to 10.3%. “Premium plus lights” also grabbed a bit of share, moving from 37% to 37.5% in the last month or so; as did “below premium lights” jumping from 9.1% to 9.7%. 

Imports, meanwhile, saw a slight drop, with its share falling from 15.7% to 15.3%. And craft experienced the biggest drop of any segment with its share falling from 10.8% to 8.4%.

When looking at the top ten brands, there isn’t a whole lot of difference from where their share stood at the beginning of the year (63%) to where it stands in the latest week of data (63.3%). But if you zoom in on that peak pantry loading week (week 12 or March 15-22) you’ll see that their share moved all the way up to 67.6% for that week, showing that consumers were indeed “locked in” on familiar brands during the shopping frenzy.

HOW BIG CAN SELTZER GET THIS YEAR? The remainder of the call took an in-depth look on the runaway train that is seltzer. 

While leaders in the segment – both Mike’s Hard chief Phil Rosse and Boston Beer founder Jim Koch – have recently told BBD that they believe the segment could hit a 10 share by year’s end, Lester isn’t so sure.

…”6-8″ SHARE, SAYS LESTER. Lester has total hard seltzer volume STRs at 5.5% for the first 15 weeks of the year (via Fintech data). What could it reach by year’s end? “I’m sure by the time we’re done with 2020 we’ll be well above 6 share, if not 7 or 8 share of [beer] market – [let’s] just see how this summer rolls out.” 


This will be music to beer industry players ears: In a Beer Institute webinar earlier this week on Congressional work to ease economic impacts of COVID, Senator Cory Gardner mulled: “Is there an expired beverage tax credit we can champion to help out with this?”

Sen. Gardner said they are indeed entertaining such ideas for the next round of legislation (“phase 4”), that could “create a tax credit for products that have expired  … [surpassed] their expiration date.” 

“We’re trying to see how that would work in phase 4… If you have a bunch of beer out there no longer usable, how do we address that … that’s why we’re looking into a tax credit to create that opportunity.

“We understand you can’t just turn around and take kegs, beer, and just dump it into the ground,” he said. “We’re dealing with a situation where you’re going to have some expirations you have to deal with.”

He also mentioned that he’s pushing to extend current excise tax rates, which sunset in December, as part of the next round of legislative relief. 

“Phase 4 and beyond, we have to look at ways to grow our economy,” he said.


BEER INSTITUTE CANCELS ANNUAL MEETING. “In an abundance of caution, we have decided to cancel the Annual Membership Meeting scheduled to take place June 8 – 9, 2020 in New York City,” chief Jim McGreevy wrote yesterday. “Although we are disappointed to have to take this step, we are working to continue providing you with speakers from a wide-array of sectors, including economic, political, and legal, who will provide you with their point of view of both how COVID-19 is impacting the beer industry, next steps once social distancing restrictions end and bars and restaurants reopen, and other topics relevant to our industry.”

Until tomorrow,

Harry, Jenn and Jordan

“Nothing ever goes away.”

– Barry Commoner

———- Sell Day Calendar ———-

Today’s Sell Day: 21

Sell days this month: 22

Sell days this month last year: 22

This month ends on a: Thurs.

This month last year ended on a: Tues.

YTD sell days Over/Under:  +1