Fact or Fiction Reality Checking the Beer Business

Speaker 1 [00:24] All right, back to the program. Context is important in moments like these. Our next presenters are three of the best people to provide the proper context and play fact checkers on the realities the beverage alcohol industry is facing. So here to reach here. To reality check everything is Danell Cosmuel, VP of research for the Beer Institute, John Berg, VP of alcohol Industry thought leadership for Nielsen IQ, and Danny Brager from Three Tier Beverages in partnership with Nielsen IQ. Welcome them to the stage.

Speaker 2 [01:11] Thanks, Justin. Um, thanks for the opportunity. I'm lucky to be sharing the stage with, uh, people that I've known for quite some time. We all have either current, um, work with Nielsen or our past history includes lots of Nielsen. Um, so it'll be fun to do this. Um, we're going to do some fact checking like Justin said, and for this part of the afternoon, we're going to engage with you to help you, uh, do some fact checking with us and see uh how we collectively do. We're going to touch on a lot of subjects. We're going to touch on kind of the big picture. We'll talk about inflation, we'll talk about channels on premise, in particular, beer performance, what are some of the standout brands segments, and what are we seeing? How does health and wellness interact with beverage alcohol? Um, we're going to talk about the holidays. We're going to talk about the holidays just past, and we're going to talk about the holidays coming up and to start off, I'm going to play a bit of a kind of moderator and and hopefully throw some, some things that these guys, not guys, people. So, um, I mentioned the holidays. Obviously, we just finished Thanksgiving. Uh, Danelle, can you take us through a couple of things about what, uh, what some of the Beer Institute data told us about what people said they were going to do at Thanksgiving, and then maybe tell us a little bit about how beer is doing right now.

Speaker 3 [02:33] Yeah, um, so first, how many of you typically go out and have a drink the night before Thanksgiving? Um, so we did some work in understanding for the most part how many regular drinkers typically do this, and the kind of, we wanted to kick things off with a fun fact, and the fun fact with this is that beer is the most popular alcohol drink and actually drink overall because we also asked about carbonated beverages, soft drinks, etc. Beer is the most popular drink for this night. It makes sense. This is really about a night to gather with friends that you haven't seen in a while, family that you haven't seen in a while, and beer is the perfect beverage for that. So wine might be the winner for that Thanksgiving dinner on Thursday, but beer is really the winner for that Wednesday night before. That said, we've started over the past couple of days within the industry press, we've started to see a little bit of the coverage and numbers of how we fared this year for that Thanksgiving Eve, and some of the research that we did a couple of weeks ago to understand and talking to drinkers kind of backs that up. So typically we asked in pre-pandemic time periods how many regular alcohol drinkers typically go out on that Wednesday night. And it's just over 40%. And then we also asked how many plan to go out this year in 2022, and it was only a quarter, about just over a quarter of regular alcohol drinkers, a little bit higher for those 21 to 44, which isn't a surprise, but you know I think these numbers sometimes we don't always see in what consumers and drinkers say and turn out in the actual sales. From what we've seen so far, that might be the case that this is a softer year, but we'll see. Who knows, maybe it'll be a little better, better than what we anticipated. Um, so before we jump into the quizzing and the fact and fiction, I just wanted to set the stage of beer performance and where we are so far this year. Earlier this morning, Bart talked about craft performance, and so this gives a bit of a broader picture of beer. And just to give some background, any time I say beer, I'm typically referring to beer along with flavored malt beverages and hard seltzer, so anything within that space, not cider. Though, so when we look at that beer FMB category and all of the shipments and the total barrels that are leaving breweries year to date, we're pretty close to where we were in that 2019 period. We're just under. This is, this is year to date through August this morning. I just checked the numbers through October and it's pretty much the same. We're essentially flat just below where we were in 2019. So all considering, not bad.

Speaker 2 [05:19] OK, so here's what we're gonna do. Um, I'm gonna say a statement. So the statement is beer is growing faster than wine is in spirits. Then I'm gonna say how many people think that's a fact. I want you to raise your hand if you think it's a fact, if you think that's nonsense. That's fiction, and I only put up here that other slide there saying that 22% of people drink beer and only drink beer. The other, what's that 78% drink beer and other things, and that's similar for other categories. There's not that many exclusive drinkers, but so that's why we're looking at beer compared to other categories. So how many people think that's a fact? Jeez, not a hand. Aren't we at a beer conference here? OK, just to make sure that we're all together here, how many people think that's fiction? I hope I see a lot of hands. OK, so actually the answer is kind of it depends. Here's a So good, good for you to put their hands up a second, but in fiction, so these are 12 month depletion numbers, 12 months rolling, and then the latest 6 months for spirits on top. And then I also did that excluding spirit RTDs just underneath that, and then wine at the bottom. So we got this kind of like spirits was rolling around. Now we're coming into some really tough comps for spirits. So by the way, I don't expect a lot of growth for spirits for the next several months, up against 8% from last year. And wine's having a really tough time, especially kind of the middle and the lower end. Danelle, kind of, what do you think? Beer,

Speaker 3 [06:51] yeah, I like to show this slide because I like to see beer right in the middle there. I mean, there's not a fluctuation, a lot of fluctuation. It's a pretty steady category and it really illustrates a lot of stability, I think, in a category.

Speaker 2 [07:06] And then Bart talked a lot about price increases, so John, factoring in dollars, what See, yeah, yeah,

Speaker 4 [07:12] exactly, and Barb brought up a really good point. You can't look at just the dollars, but when we do look at the dollars, we see a bit of a different story. So for those of you that were raising your hands saying it was a fact, you, you might be or might have been thinking about this in terms of where dollars have been and what we see is in the shorter time frame. Like the 32 week time frame, we do see some pretty good growth going on, but from a from a pricing standpoint it's really important to understand that when we're looking at average price, it's more than just the price increase that would cause that frontline price to go up. We're also averaging in there whatever is happening in terms of promotion, so it's It's got a couple of moving pieces to it. One is that frontline price increase, and then the other aspect to this is how much are retailers promoting and are they promoting to the same levels. So speaking of price, Danny, I think that's where we're going next.

Speaker 2 [08:12] Question number 2 beer price increases are in line with overall food CPI. Is that a fact? No hands. OK. What do we think? I guess a lot of fiction, John. Take us through, take us through kind of the overall numbers and then maybe Danelle can comment on the alcohol numbers. Yeah,

Speaker 4 [08:31] all three of us look at the inflation and recessionary indicators on a regular basis. We're kind of, kind of geeky that way. We're always trying to try to figure out. What's going to happen going forward and it's no surprise to anybody that all of the consumers are impacted so much by energy and food prices, but it is worth noting that from an increased standpoint, beer and beverage alcohol in general is definitely lower than that. The problem is when you get to the, you know you're wheeling your shopping cart to the checkout lane, you look at what your total price is. You look at how much extra you're spending as a as a shopper, and that impact really can hit you. But again, a lot of this has Do with the fact that you know while beer has had those price increases, it's still, I'll go out on a limb and call it still that affordable luxury we talk about that all the time, and that is something that people still feel really good about buying despite the price increases that have taken place. Yeah,

Speaker 3 [09:40] I'll just add that um within the bar chart where you see beer, wine and spirits, that's at home price increase. Um, Bart spoke earlier this morning about how, especially, particularly for beer, we haven't seen as much of a price increase within on-premise and even, you know, recognizing that as an opportunity. One more thing that I wanted to add is when we differentiate and look at the differences in the price increases across beer, wine, and spirits, beer has Consistently been somewhat higher than wine and spirits. However, we say the talking points behind that are that the Beer Institute has done studies to understand that beer costs more to produce and to distribute than spirits in particular, and the perishability part of that. So wine and spirits can sit on a shelf for a really long time. Beer needs to stay cold and it needs to move on the shelf quickly.

Speaker 2 [10:29] So let's just take one step back in history and kind of because Justin actually asked us what happened during the pandemic. Did we see consumption increases? Do we see declines? Did it stay flat? So alcohol consumption, my statement is alcohol consumption stayed flat during the pandemic. Is that a fact? Couple, couple hands. How about fiction? I should have asked, did it go up or down, which I didn't even think of. But Danelle, why don't you take us through what, what, what did happen?

Speaker 3 [11:02] Yeah, I mean the answer to that might be it depends, but really when you look at this is, um, I, I'll call out Lester Jones. So Lester Jones has been using this slide for years and years and years. It's a look over the past couple of decades of per capita consumption of ethanol across beer. Wine and spirits and so when you look at that year over year, it's pretty consistent. You don't see a lot of fluctuation in per capita consumption. However, you do start to see a little bit of an increase in the past couple of years, and that is due almost entirely to an increase in consumption of spirits. So spirits really, there was a slight increase in per capita consumption, and that was driven by spirits.

Speaker 2 [11:41] OK, so thinking back about the pandemic, everyone knows the on-premise was devastated, and it's come back a long way. It's come back a long way. The question is, is it back to where it was pre-COVID for beer? Fact Few hands, couple, couple fiction, I guess. So, more hands. Danell, why you, uh, maybe you take us through beer and I'll maybe I'll throw a comment in, but why don't you, why don't you take this?

Speaker 3 [12:08] OK, um, so the way Danny and I have been looking at this in the past probably year is looking at on-premise share, um, that each of the categories had for pre-COVID time periods versus now. Um, and then creating an index to that pre-COVID time period. So a 100 index would get us back to at that on-premise share in pre-COVID time in 2019. And we see that pretty much all categories are almost there, so beer is about 1.5 share points below where we were in 2019, but again, we're almost there. I mean we could have a whole conversation about what to do, the importance of on-premise for all of these categories, especially beer, but I've continued to say that as if we're going to get back, first we need to answer the question of are we going to get back or do we just structure the industry in a different way if we do get. Back, how do we get back by understanding new consumer habits that have started since the pandemic? Thursday happy hours, engagement at breweries and taprooms in ways that we haven't seen before. So a lot of conversations about that. And then Danny, if you want to talk about wine and spirits because they bounce back a little faster than beer,

Speaker 2 [13:18] spirits, obviously it's moved back faster. It's almost back to where it was. Wine is struggling, but I would also add to both what Danelle said that maybe thinking about it differently. Um, there are $20,000 to 25,000 less accounts open now versus, and, and these are alcohol-selling accounts versus, versus pre-COVID, 25,000 less, that's about 5% less physical locations. Number one, people are used to doing more things at home now. Um, uh, there's meals to go, there's, in some states, alcohol to go. Uh, the average restaurant now, I saw some data saying it's open 6.5 hours less per week. There's business travel, it's not back to where it was pre-COVID. So there's a lot of things that accompanying it aren't back to where it was. And I think the question is, you know, will it get back? And I kind of have my doubts that it may get back exactly to where we were, which means think about the things that Danell said. So we're talking about going out, so we've got another kind of fun fact or fiction when visiting a bar, restaurant, or similar outlet, more people say they typically now order a hard seltzer or RTD cocktail than a beer. Is that a fact? Jeez, nobody really, not too many, not too many. Jon, educate us.

Speaker 4 [14:41] part of Nielsen IQ is our CGA group, and that's where we source a lot of the on-premise data, but Over the last 20 years that I've been in the beverage alcohol industry, I've been lucky enough to have done a lot of on-premise research both with bartenders, wait staff, and consumers, and one of the things that we always see is how beer is such a go to for the on-premise, and sure enough, that still remains the same, and a lot goes into that and you know. as consumers when we go into the on-premise, especially if we're going into a location we're unfamiliar with, and we're going to end up relying on either a bartender or a waitstaff suggestion, maybe we're going to try something new because we're in a venue that we haven't been before and that seems to be one of their specialties. All of that plays into how important beer really is and On premise and how it is that go to will RTD get there? Will RTD become more of an important part of the repertoire? Time will tell on that, but distribution has a lot to do with where RTDs are right now, and I think from a, from a sampling perspective, I think consumers are still trying to find, find where the loyalty curve is going to be for them and their brands.

Speaker 2 [16:05] So I know Bart mentioned this morning about trade down and he had his perspective and opinions on is there a trade down because of, you know, the inflation that we're seeing. So, um, below premium, uh, the Bush Miller highlifes of the world, uh, below premium growth rates have improved significantly, so says the statement during the last few months. Is that a fact? Yeah, that's

Speaker 4 [16:29] a little better response

Speaker 2 [16:30] than that getting there, OK, but a lot of people say no. I don't know. This 1 may be a depend too, but what, what is, what is Nielsen say? Yeah,

Speaker 4 [16:39] in the Nielsen retail data we are indeed seeing the below premium start to have a real moment and what you see here is we're taking a look at everywhere from the latest 52 weeks down to the latest 4 weeks, and you do see in that near term. People are definitely spending their dollars in terms of below premium now. It's we we say trade down and trade up all the time. I'm a little more comfortable with looking at the way people consume or shop from that perspective of a repertoire. So we all have a group of products that we're willing to move. In and out of depending on what our economic circumstances are or just maybe the usage occasion that we're going to have, but what we're seeing right now is a clear movement towards some of the sub-premium or below premium brands. I think we're going to see more of that, especially as we cruise into Q1 and Q2. We're also getting a lot of economic indicators that say that you know people have kind of spent themselves up to certain levels of debt and so I think there's going to be a reality check that's going to hit us in Q1 and Q2. But again, it doesn't mean that people walk away from craft or they walk away from imports. It's all part of the mix that they have. They're just moving in and out of those products all the time

Speaker 2 [18:07] and this is dollars,

Speaker 4 [18:09] yes, this is dollars and it's a really good point and we should think about volume.

Speaker 2 [18:14] Let's let's have Danelle think about volume.

Speaker 3 [18:17] So this is looking at sales to retailer, so actual volume that's being sold to sales to retailer. And in that case, this is kind of the answer to this is it depends or it's it's a little bit of fact, it's a little bit of fact, I guess we'll say so. When we look, it's expected right now. The economy segment over the past many years has been losing share. When we look at year to date through October, the economy was down almost 1 share point. However, just in the past couple of months, we see that economy share decline has slowed significantly. So I think it really goes back to What John said to you is that it's people are constantly shifting in and out of segments and kind of shifting up the repertoire a little bit and that said, economy will play a role over the next couple of months or you know 6 months to a year as consumers are trying to make those decisions on how they're going to be spending their dollars when they walk in the store.

Speaker 2 [19:19] So we're going to talk a little bit now about some segments and, and some brands within those segments. Um, so I want to start off just by showing this chart, um, and this is based on Nielsen's measured off-premise measured channels. Um, and these are dollar growth, dollar growth, absolute dollars this year versus last year. The amount of extra dollars these brands are generating this year compared to last year. These are the top 18 brands. Um, and if you go across them, There's 9 hard seltzers and flavored malt beverages. There's 4 imports. There's 2 sub-premiums. Michelob is there. There's 1 raft. There's Athletic Beer, obviously a non, non, non-alcohol brand. Um, so it's kind of spread out, um, and, you know, within that, if you look at them, there's kind of Modelo standing way out here on the left-hand side. Probably everybody in total after that may not even get to the height of the Modelo increase, so. They're not just a killer brand, they're a monster killer brand. Um, so let's go deeper into, uh, we'll talk about hard seltzers first. So my statement is, and we all know about hard seltzer declines, so my statement is some something's contributing to that. Over 2/3 of the top 20 hard seltzer brands are declining. Is that a fact? And we get a couple

Speaker 4 [20:37] of takers, few

Speaker 2 [20:38] takers who thinks that's nonsense. Should be more hands than those shoes. A lot of people aren't voting. OK, well that is not true. There are over 50% of the, I took a look at the top 20 hard seltzer brands, over 50% of them are actually growing. All of the ones on that list are growing. All of them are growing on dollars, and the ones in green are growing not just on dollars, they're also growing on volume. So these are big brands that are doing quite well. It's just that part of the problem is you don't see truly here in White Claw you don't see in green, so they're not contributing to. Any gains that are contributing to losses, but there's, you know, you go into, you go a little bit deeper and you see some decent growth. I think there's also some perception, and it could be true or maybe not true, that hard seltzers are losing largely to RTD spirits. Do you think that's true? Do you think that's a fact? OK, I expect a lot of hands then saying that they're not losing. So who says they're not losing to these spirits? Who are they losing to? FMBs, I don't know. What do you, this is for you, yeah,

Speaker 4 [21:52] I think so. Actually, when people have gravitated away from seltzer products, we find, remember I was talking about repertoire before, that's exactly what they've relied on. They've relied on other products that were in there. Repertoire and over 50% of the losses for hard seltzer as a category has actually been moved over to domestic light beer. So what happens is you know as people trial on some of these products. maybe the product life cycle for them is a little bit shorter than it is for others, and so you're going to go elsewhere within the kind of your own selection set and when you do that, one of the first stops you'll probably make is something that you may have put on the shelf for a little bit or left in the refrigerator actually for for a little bit and then you might come back to it. And that's that's exactly what we're seeing so far with with the RTD switch. You know I've done a few interviews and it's so funny because some of the preconceived notions around this have been, oh, you know, all the hard seltzer losses are going somewhere else in RTD, and I've asked a couple of interviewers, where are you getting that idea? So it's kind of, kind of a preconceived notion that that would be something that would be naturally occurring, but you know the scope of what we drink as consumers is a little broader than that.

Speaker 2 [23:21] So RTD spirits, I mean, they're a factor. Bart talked about them. They're, they're growing, by the way, at 50, 60%. They haven't really slowed down. I looked at the last 13 weeks, 4 weeks, they're still up in that 60% range. Um, so they're getting big. They're getting big. How big? RTD spirits, they're almost equal to hard seltzers. Is that a fact? At least one brave soul. So here are the numbers off-premise measure channels, but there's not a ton of this in the on-premise. These are the annual dollar figures. So RTD spirits, these are things like largely in cans, the 4 packs, and so on, $1.1 billion. Hard seltzers, I mean, it was bigger than this, so it's, it's, it's shrunk a little bit, but 4.3 billion and flavor malt beverages 3.8 billion. So there's an enormous difference still between the size of these categories. It's a little bit easier to grow when you're smaller. It'll get tougher at some point, I guess it remains to be seen when is, when are we going to reach that point. Um, and then if I asked you to give me a definition for RTDs, my guess is I'll, if there's 200 people in the room, I'll probably get 100 different definitions, um. And I'm not sure. I mean, it could, I think some drinkers, they may know exactly what to call these, others may not. How many think that that that statement is a fact that they don't know what really to call these products? All right, I see a lot of hands, yeah, a lot of hands. Well, I know the Beer Institute has done some, I think, some cool stuff on this,

Speaker 3 [24:54] Dan. Yeah, yeah. Danny and I have talked about this for years of like the consumers even know like what do they call it? And so I finally was able to field that question and talk to drinkers and understand that. So we showed them this image and said it was an open-ended question and said, What do you call this? and some interesting and probably not surprising results.

Speaker 2 [25:17] That was my cue

Speaker 3 [25:18] that, um, it's a fact. Consumers don't know what to call it, right? So, um, a couple of things jumped out like flavors. People just call them alcoholic beverages. Um, sometimes people were calling out specific brands, so they saw twisted tea there, so they called it twisted tea. Some people were saying energy drinks, some people were saying girly. Some people were saying like, you know, it was all over and all over the board across the board and so I think it just comes back to us as an industry to help consumers to understand what it is they're drinking and so do we really want to differentiate this and help them understand what they're drinking and what the benefits are across each of these different types of RTDs?

Speaker 2 [26:01] Cool, I'm going to give you guys one break on this just to make sure we stay on time. But the question is, and so we're not going to do fact or fiction here, Jon, beer and RTDs are equally planned purchases. So first of all, I noticed that we put RTDs without even explaining what we mean, but maybe tell us what a consumer say. Yeah,

Speaker 4 [26:18] yeah, in terms of RTD, I'm, I'm calling it for purposes of this quick part of the discussion, I'm calling it seltzers, FMBs, and spirits-based cocktails all merged together, and you're both so spot on. You know that's always a discussion that we have to go through constantly is how are we calling out our RTDs. This this slide that you're taking a look at comes from NielsenIQ Category Shopper Fundamentals, and I was on the supplier side for many years and just really love this tool. And what what we're talking about here is how much of the purchase is actually a planned purchase versus a reminded purchase, which would be You walk into the store and go, Oh yeah, this is on the list. I wasn't ready to buy it yet, but it's on deal, or a pure impulse, and it's always amazing to me that people have this preconceived notion that consumers are walking into the store as blank slates, you know, they're thinking that we robotically walk into the store, have no idea what we want, see the shiny object, and go ahead and purchase. And that couldn't be further from the truth. The planned purchase. It is really huge in the beverage alcohol business and it has been for quite a long time and for beer it's over 80%. So what that means is I go to the store, unlike the rest of this room where we like to spend some time in the store, go on a little bit of a safari, a little bit of a tour. No, no, no. Most shoppers, they have lives to lead. They've got to make their purchase and get out. So planned purchase is very much in the norm. For beer, less so for RTD, and you can see the numbers are about 20 points difference as far as being a planned purchase. So what this means is it's kind of a distribution tinge to it, but it also means that shoppers are still kind of finding favorites. They're finding some loyalty and they are definitely up for other considerations when they get to the shelf or make an e-commerce decision.

Speaker 2 [28:26] Thank you Jon. Bart told us a bit before, before the break about some of the struggles of craft, especially if we look at sort of the retail off-premise scanning channels that the NielsenIQs of the world would be, would be measuring. Um, so we looked at that and we said that half of the top 20 craft beer brand extensions, and I'll say an extension is like we went a level below just Sierra Nevada as a big brand family and went kind of one level deeper, we said that half of them grew during the last month, and this is in dollars. A lot of you are in the craft business. Is that a fact? Half of them grew. OK, how many things that's, that's given what Bart said and everything that's not happening. OK, some are not quite sure, Jon. I mean, you looked at the data. These are the top 20.

Speaker 4 [29:18] We took a look at the top 20 brand extensions, and one of the pieces of misinformation that gets out there is people look at the category and they'll say, oh, craft beer in decline, whether it's value or volume, and you really have to dig deeper, and I always encourage people to not stop at that particular level if you're going to try to define what's going on. And actually many of These brand extensions are either growing or in growth mode or even new, you know, and they're cracking the top 20 already. So yes, there are some brands that are in negative growth. They may be lapping bigger promotions that they've done in the past. There's all kinds of different stories out there, but yeah, there's a lot of room for encouragement as far as where growth is going to come and how positive it really is for craft.

Speaker 2 [30:09] Cool. Um, cider. A few of you are in the cider business, about 50% of the top 25 cider brands are growing. Expect almost like people in the cider business, I see your hands going way up there. Very good. So that is certainly actually not the case because it's way more than that. So you're kind of right, but it's actually 2/3 of the top 25 are growing. Trick question, trick question. There's actually 17 of the top 25 are growing, and 13 of them, these 13, are growing double digits, so not just a little bit of growth, but robust growth. So I mean I know several of you are in the room, um, great stuff, um, you know, for the cider category. A couple of people, we were at Juneshine last night. Thank you very much. So among the top 10 hard kombuchas, and I'm not going to ask you to raise your hand, but 4 grew over the last year, including the leading brand. That is true. Juneshine is the leading brand, and it grew, so did giant wild tonic unity vibrations. So there's 4 of the 10 that are growing and supporting that category expansion. Um, let's move over into kind of the health and wellness. We've got about 10 minutes, so I think we're pretty close to being on time. Here's a statement. Increasing number of drinkers are taking alcohol breaks. I want to see their hands up on this fact. Yeah,

Speaker 4 [31:36] yeah, it's overwhelming,

Speaker 2 [31:38] overwhelming, I think, uh, Danelle, you're going to,

Speaker 3 [31:40] yeah, you guys already know this, this we've also been talking to consumers and drinkers to understand that. In a survey that I did just a couple of weeks ago, 62% of drinkers aged 21 to 34 said they took an alcohol break in 2022. That's up from 50% last year. So not only is there an increase, but that's a pretty significant increase in just a year. Um, also, we're, you know, in general, we're hearing from drinkers that they're taking actions to cut back on alcohol consumption, and one of the things that is always most interesting to me is that when we ask how they're taking actions to cut back on alcohol consumption, we hear things like not drinking as often, only drinking on weekends, participating in Dry January, sober sober October, etc. and things like that. Um, what they're least likely to do is to say that they're drinking more non-alcoholic beverages. And non-alcoholic beer. And so I just see that as a huge opportunity for us because I mean there are so many innovative, cool, creative non-alcoholic beer products that are out there that have hit the shelves in the past couple of years, and I think it's again on all of us to make sure that drinkers are aware of that and that they're turning to those non-alcoholic products as one of their primary ways to cut back on alcohol consumption if that's one of their goals.

Speaker 2 [33:05] OK, that's great. And just to support what Danelle said, I mean, there's things that we're seeing in the data and by the way, Justin, we're gonna save a couple of minutes for questions, is that what you said, uh, so we're gonna, we're gonna try to move through this last few slides in, uh, with, with some pace here, but these are abstainer rates, um. It's gone from 24% of the population now up to 28% of the population. You can see how quickly that ramps up as people get older, but also in that younger age, that 25% is bigger than the next group, which is 30 to 39. And I know Jon, maybe you can quickly comment on this chart because this one blew my mind.

Speaker 4 [33:40] What Danny and Danelle were talking about is totally spot on, and we've got a Gen Z study that we're working on right now. And when we take a look at Gen Z that are LDA. What we saw was 45% of them in the never camp as far as beverage alcohol consumption is concerned didn't ask questions about cannabis use, didn't ask questions that would go in a different direction from this, just a really simple question about usage of alcohol, and I was kind of surprised at that number too, which is very high for not at all.

Speaker 2 [34:17] So I mean you all know that obviously non-alk beer, but also there's a non-alk movement in wine. There's a non-alk movement in spirits. There's an increasing number of brands and offerings. So I'm going to skip the statement and just ask Jon to take us through this slide. This is a share of the non-alk segment in total, shared beer, wine and spirits compared to that non-alk total.

Speaker 4 [34:38] Yeah, and to back up what Danelle was saying earlier about how important this is to how important non-alcohol really is to beer. The share is there. I mean, the size, the sheer size of non-alcohol choice is there, so it's something that can be built upon and it's something that will probably need to be defended because we're seeing a lot more. new products come to market in terms of both spirits and wine, mostly on the spirit side, but everybody's trying to jockey for some position with non-alcohol products.

Speaker 2 [35:13] And Jon, let me ask you a question that I'm not going to ask this group. I'm just going to ask you, do Non-alk drinkers, do they, are they primarily non-alk and to the exclusion of alcohol, or do they kind of drink both? No,

Speaker 4 [35:24] as a matter of fact, I think we'll see on that next slide. Yeah, 82% of non-alk buyers actually buy alcohol, so there's a kind of a being in control moment here that's really taking place for those that do consume alcohol, and it kind of makes sense if you think. About it because you know if you take a look at some of the verbatims that you get in survey work, what most people want is to be able to stay in control. Social media dominates a lot of this, you know. People don't want to be caught either on or be shown on video either doing something inappropriate, although some don't seem to care, but don't want to be doing something inappropriate that They didn't anticipate being captured. I'm not saying that's the only driver, but that was one of them that came to mind when I saw this number. But it's again, it's part of a repertoire where people say, you know what, I'm going to have a good experience. I'm going to either have a non-alcohol to start the night, maybe somewhere in the middle to pace myself, or maybe at the end.

Speaker 2 [36:30] We started off almost the 3rd slide looking back at a holiday. We looked at Thanksgiving. Um, the Beer Institute's done some pretty good research, I thought that Danelle wants to share about what people are saying with respect to the upcoming holidays, so. I'm gonna turn it over to you. Um, let's, yeah,

Speaker 3 [36:48] so I mean we start to see that drinkers are telling us that inflation is gonna impact the way that they're celebrating holidays. So 7 in 10 drinkers say that they're gonna make adjustments to how they're celebrating. We see that, um, that is a little bit higher among beer drinkers and beer and F&B drinkers in particular. It's even higher for Hispanic and black drinkers. So we are gonna start to see an impact overall of how people are just celebrating the holidays. Um, so ways that they're telling us they're cutting back is I thought this was kind of funny because the number one way that people plan on cutting back is cutting back on gifts, which is too bad for everyone else, but cutting back on other big ticket items like travel, cutting back on food, they're less likely to cut back on alcohol. About 25% of drinkers said that they would cut back. So of those that said that they are cutting back on alcohol, Um, Danny, the next slide, yeah. Um, ways that we see most of that is from spirits and it's not surprising. I mean, if you, if you're talking about something like a $40 or $50 bottle of, you know, a higher-end whiskey and tequila versus a craft. or six pack. I mean, that's, it's a bigger hit to have that, um, that higher end spirit. So we hear drinkers saying that they're, you know, they might scale back on and, and now purchase less expensive brands, but in particular spirits are just cut back on their purchase overall. Um, so we've talked a little bit about some exciting things. We've talked about growth opportunities. We've talked a little bit about doom and gloom, and we wanted to end with what we have going for us in three primary areas of what we see. One is around innovation, and I think all of you really represent that. Everything that we tasted and tried at lunch today really represents that. There's really interesting zero alcohol, hard teas, imperial IPAs, fruited IPA. I mean, the list is endless of the cool and creative innovations that we have in this in this industry. Experience is really important. On-premise experience is equally, you know, that's really what drives so much of it. And again, I think all of you represent that, especially with brew pubs and taprooms and local collaborations, and that's one of the best ways that we can engage drinkers and create those interesting experiences. The and then finally the affordability of beer. And so we know across beer, wine and spirits beer is much more affordable as we continue into some some more challenging economic times. We definitely see beer as that affordable treat and maybe people will just cut back on gifts. Maybe they can gift a nice craft beer six pack instead of their regular gifts.

Speaker 2 [39:25] Thank you very much. Appreciate your time.

Speaker 1 [39:32] Just want to get a couple of questions in. We've got one from the audience. Is there an easy way to look cross-category malt-based, wine-based, spirits-based, RTD, FMB, seltzer, and should suppliers be looking at it that way or separating?

Speaker 2 [39:47] I, I mean, I think, well, I, I know that you guys, um, have now, they have databases that cover all that gamut, because I think that is a better way to look at it. There's, like I said, exclusive drinkers to a category are few and far between, and the exclusive drinkers, they don't even contribute that much volume to that category. You get more volume from people that actually drink your category and others, so people are making occasion by occasion choices. In my opinion, the right product at the right time and you know you guys are doing some things to help bring all that together, I think

Speaker 4 [40:20] yeah yeah and it's you know you go from the consumer response kind of looking across all the channels that they interact with and Nielsen IQ's got an omnichannel approach now which I think is really good where we're going to Look at everything together in one continuum so you'll be able to see on and off trade together and you'll be able to see all the channels including e-commerce as it as it's impact. So instead of that fragmented view of having to look at all the little pieces and then try to weave the story together, we're working really hard to make sure that that's all done for us.

Speaker 2 [41:01] Justin, the only other thing I was going to say is you see it not just in That you should bring it all together, but beer companies are entering the spirit space and like everyone's looking for the right opportunity, right? And that crosses the total beverage alcohol spectrum.

Speaker 1 [41:14] All right, one last question, we're out of time anyway, but Boston beer founder Jim Cook, he's gotten a lot of headlines for saying he doesn't expect traditional beer to grow again in his, well, In our lifetimes, he said, I, I would argue that some of us have a little more life than this. I, I hope so

Speaker 2 [41:32] fact or fiction, now we're getting personal. Justin's. Yeah,

Speaker 3 [41:36] I, I will respectfully disagree with Mr. Jim Cook. I think, I mean, when John showed some of the brands that are the fastest growing brands. So you have the iconic brands that have been around for years. Of those top 5, it was Mic Ultra, um, Modelo, Corona. I mean, you have, you have iconic big brands that have, that are growing right now.

Speaker 2 [41:57] Let's just say it'll be tougher but not impossible.

Speaker 4 [42:02] And a lot of shopper and consumer preference comes handed down to them. You know, there's that word of mouth advertising that. brand that's inherited from, you know, my father or my mother, they drank that. I'm going to try to drink that. That's still prevalent. That's still out there. And when I started doing beer research a very long time ago, we saw how important that was and that's still got a really important place in most families. Well,

Speaker 1 [42:35] give it up for our friends up here. Thank you. Thank you.