New York City over the weekend hosted the Beer Marketer's Insights (BMI) conference with multiple themes discussed and management teams offering presentations.
Bank of America analyst Bryan Spillane attended the event and offered multiple industry-wide and company specific takeaways.
Disruptive Trends In Beer, Hard Seltzer
Some of the presentations focused on transformative changes and disruptive challenges beer companies face, Spillane wrote in a note. The main takeaways include:
- Hard seltzers stealing market share away from beer and total hard seltzer volume could double in 2020.
- Beer companies are likely to increase marketing spend.
- Mexican imports and craft beers are growing amid the overall declining beer industry.
- Traditional beer volume could decline by nine to 10 million barrels in 2020.
Molson Coors Brewing Co (NYSE: TAP) CEO Gavin Hattersley expressed confidence in the company's decision to invest in its large brands, continue expanding in above premium and alternative beer beverages. He also emphasized the company will focus on higher value over volume to match its financial guidance.
Constellation Brands, Inc. (NYSE: STZ) Chief Marketing Officer Jim Sabia placed emphasis on the company's strategy to extend is Corona brand, including Coronto Seltzer. However, the Corona Extra beer could see a 10% to 15% cannibalization rate from Seltzer.
The executive also discussed how Modelo has room to grow through new distribution venues, additional package extensions, and innovation including Modelo Cheladas.
Anheuser Busch Inbev NV (NYSE: BUD) U.S. Chief Marketing Officer Marcel Marcondes said the company is focused on remaining relevant within the "noisy" market. The company is seeing a trend of consumers trading up and management is looking to emphasize a purpose with each part of the portfolio. For example, Super premium would compete for attention from wine and spirits drinkers and Michelob Ultra Gold would target consumers who enjoy Mexican imports.
The company is also looking to reduce production times for a new product from two years to just 100 days.
Boston Beer Company Inc (NYSE: SAM) co-founder and chairman Jim Koch said its acquisition of Dogfish Head is more akin to a partnership and the company will invest in expanding store reach and distribution.
The company sees hard seltzers as an opportunity given a broad reach across all demographics. For example, Truly was initially marketed towards women but is seeing broad success across all consumers. Sam Adams remains focused on expanding capacity but the variety packs, which account for 75% of all Truly volume remains a margin headwind.
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