The once-popular domestic beer segment, still referred to in the industry as “popular” beer, has steadily been losing market share the last few years. In fact, “big beer’s lagging performance is hindered most by declining volume sales in the massive light beer segment (49% market share),” said Beth Bloom, food and beverage analyst for the Mintel International Group, a market research firm.
The decline in light beer sales is partially attributed to the growing sophistication of U.S. beer drinkers, who are increasingly opting for more flavorful craft-brewed offerings, imports and ciders. As a result, domestic light beer consumption fell 3.5% in 2013, and is expected to shed another 4.9 million barrels through 2015, according to Impact Databank.
“Today’s beer drinkers still consume traditional lager, of course, but they—especially Millennials—are increasingly attracted to premium and craft offerings, as well as hybrid FMB (flavored malt beverages) that more closely align with spirited cocktails than beer,” Bloom said.
What these trending adult beverage offerings have in common, Bloom said, is quite simply their “uncommonality.” By design, premium, craft and FMB innovations are meant to deliver unique and highly diversified flavors. The result is a highly-fragmented consumer base.
Richard Shortt, retail sales operation manager at Durham, N.C.-based Erwin Oil Co. Inc., knows about the consumers’ growing palate for craft beers.
Erwin operates nine c-store locations, including two Bull Markets, which reflect the company’s new store design. The new retail format is also conducive to the company’s growing commitment to craft beer.
Shortt said 2014 craft sales increased “double digits,” and he predicted at least a single-digit sales increase this year, indicative of customers’ taste for vast beer selection.
Conversely, craft beer sales at the Durham chain haven’t hindered domestic beer sales, but have helped craft brands bring more customers to the c-store, where they are choosing different brands for different occasions.
“As craft customers are trying these different brands they are also purchasing domestic beer,” Shortt said.
As domestic beer sales continue to decline, big U.S. companies are widening their reach with different product lines.
MillerCoors held on to most of its 24% of beer’s multi-channel market in the last year, driven by the success of its lesser-known “other” brands, Bloom said. Collectively, these brands accounted for nearly 8% of MillerCoors’ sales—thanks to 8% growth in 2013-14.