Small-batch, craft beers may be challenging big beer companies, but there's an even greater and more uncontrollable factor that could hurt big breweries: the weather.
Outdoor activities tend to drive beer sales, and after a longer-than-normal winter, the colder-than-average spring has likely deterred the barbecues and other gatherings that tend to drive sales of brands like Budweiser (BUD) and Coors (TAP), according to Paul Walsh, vice president of weather analytics at The Weather Channel.
"If it's nice and warm out, there's more people that are outside mowing the lawn, having picnics, at ballparks, and what do they do? They drink beer," Walsh told “Big Data Download.” He said big brewers already saw lower beer sales in the first quarter of the year.
The problem’s not just domestic: Sales have taken a hit in Germany for the same reason. Fewer beer steins went bottom up last year compared with the year before, and German beer sales reached their lowest level in more than 20 years, according to German government statistics. German brewers blame the weather.
But the worst impact on beer sales this year is likely over, Walsh says.
"In the spring, about 40 percent of the variation in beer sales is related to temperatures that are drastically different from the norm, according to The Weather Channel's research. As you move into summer, the impact is less," Walsh said. "In fact, they'll probably get some of this business back as the weather's nice enough to be outside and doing those sort of activities."
This summer, cooler-than-average temperatures are expected in the Northeast and Midwest, Walsh said.
In the Southwest, the story’s expected to be the exact opposite: Scorching heat could drive people indoors and hurt beer sales there.
The Southwest region of the United States already reaches temperatures beyond 100 degrees on average in June, July and August, and weather in that region is expected to be hotter than normal this summer, Walsh said.
Craft beers (BREW) are less susceptible to weather-related volatility because enjoying them is less of an outdoor activity, Walsh added.
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- Consumer Discretionary
- Natural Phenomena
- Paul Walsh
- The Weather Channel