U.S. Domestic Beer Shipments Were Down 2.2% In 2017

On the heels of the market research firm IRI Worldwide report, which claimed U.S. domestic beer sales were flat in the first half of 2017, the beer brewing trade group, Beer Institute (BI), recently reported that U.S. brewers lost ground to the tune of 3.8 million fewer barrels shipped in 2017 : 170 million barrels as opposed to almost 174 million barrels in 2016.

Gleaned from the Alcohol and Tobacco Tax and Trade Bureau’s (TTB) tax-paid estimates for 2017, which are based on a monthly tally of gallons sold for excise tax purposes, beer shipment losses were accrued in 7 out of 12 months, and there’s a chart to prove it. 

data-param-cid="62cec241-7d09-4462-afc2-f72f8d8ef40a"
data-player-id="44f947fb-a5ce-41f1-a4fc-78dcf31c262a"
data-playlist-id=4ed6c4ff-975c-4cd3-bd91-c35d2ff54d17
data-elements-player="true"
layout="responsive"
width="16"
height="9"
>

February was the worst month of 2017, off by 1.2 million barrels when compared to February 2016. Disturbingly, the holiday period of December was second, down 1 million barrels—an 8 percent drop from December 2016 shipments. 

According to BI, the 2.2 percent drop in beer shipments in 2017 represents the largest annual domestic beer volume decrease in 63 years . It’s believed some of the losses can be attributed to consumers switching to imported beers, but evidence for that has to wait for beer import reports to come later.

Representing small domestic brewers, the Brewer’s Association (BA) suggests one remedy is for the industry to focus on upper-end beer, which, like upper-end wine, is a growing category. In fact, some blame the growth in wine and spirits for the slowdown in beer sales.

Declining shipments notwithstanding, IRI reported off-premise beer sales were more than $34 billion in 2017. That is big money, and when you couple it with relaxed TTB rules, as well as reduced excise taxes, the industry still attracts new brewers. BA reported 1,100 brewing permits were issued in 2017.

There may be other remedies for brewers.

Writing for Beverage Daily, Mary Ellen Shoup reported that while double-digit growth is over for craft brewers, the category still grows from 5 to 6 percent annually. At the same time, a frenzy of large corporate acquisitions appears to have slowed.

Rabobank‘s senior beverage analyst, Jim Watson, believes to survive the market craft brewers need partners. These partnerships can be in the form of craft brewers joining with other craft brewers to offset the disadvantages one or more brewers face with the advantages offered by one or more brewer partners. 

Another trend is a growing interest in craft brewing from the private equity industry. Watson points out that most consumers that respond negatively to the news of a conglomerate takeover of a craft brewer don’t often hear about the money going into craft brewers from capital investment funds.

The outlook for brewers is mixed but on the whole doesn’t appear too bad. Results in 2018 should provide a better fix on the direction of the industry.

Meanwhile, the ebb and flow of beer sales and acquisitions may seem like a new thing but beer itself certainly isn’t, and in surprising locations. LiveScience recently reported that archaeologists may have found evidence of Bronze Age beer brewing in northern Greece: about 2100 to 2000 BC.