U.S. Beer Consumption Has Declined For Six-Consecutive Years
The Brewers Association defines a craft brewer as a small independent brewer. Small is defined as annual production of 6 million barrels of beer or less. Independent is defined as less than 25% of the brewery is owned or controlled by an alcohol industry member that isn't a craft brewer itself. Brewer is defined as an entity that has a TTB Brewer’s Notice and makes beer.
At the end of 2017, there were 6,372 breweries in the United States. 6,266, or more than 98% of them, are craft breweries. These 6,000-plus craft brewers provide more than 135,000 jobs across the U.S. The combined economic impact of all brewers, distributors, retailers and supply-chain partners totaled more than $328 billion last year.
According to research from Social Standards’ Craft Beer Market Insights Brief 2019, interest in beer appears to be waning. After analyzing 75 million posts on social media, Social Standards found conversations about craft beer have fallen 16% since 2017. Conversations about beer in general have fallen 9% over the same period.
Health trends are largely affecting consumers' drinking behaviors. Social Standards found that over the same period, conversations about health and wellness topics have increased by 63%. The drink category that is benefiting the most from this trend is hard seltzer.
Hard seltzer drinks are on pace for another year of triple-digit gains with sales expected to surpass $1 billion. While still a small segment in the overall alcohol market, the growth has been noticeable.
Hard seltzer drinks have seen their share of the overall U.S. alcoholic beverage market increase from 0.85% a year ago to 2.6% currently, according to IWSR. IWSR forecasts that hard seltzer consumption will more than triple from current levels by 2023.
"The rise of hard seltzers shows there was a segment of consumers underserved by the current beverage alcohol market who were looking for alternatives that were refreshing and flavorful, but also low-calorie and low-sugar," said Brandy Rand, COO of the Americas at IWSR Drinks Market Analysis.
Sales data appears to confirm the decline seen in consumers' discussions about beer on social media. According to Beverage Information Group’s 2019 Beer Handbook, U.S. total beer consumption declined by 1.3% last year, the sixth-consecutive year of declines. The craft beer segment saw its growth rate fall to 4% from 4.9% in 2017.
Besides hard seltzer, what are the trends in the alcoholic beverage industry heading into 2020? Not surprisingly, IWSR believes the top trend is "better-for-you" beverages such as those that are free from additives, organic, low- and no- sugar, low calorie and gluten-free. They also predict premium spirits such as agave-based spirits, gin and whiskey, as well as cannabis-based beverages will gain popularity.
While the beer industry is still an economic powerhouse, it is worth keeping an eye on the changing preferences of consumers and how both large brewers and craft brewers adapt. With the industry responsible for so many jobs, it will be imperative these breweries continue to meet the demands of consumers if they wish to remain in business.
That will change if the S&P 500 falls 5%. The Federal Open Market Committee maintained the federal funds rate in a target range of 1.5%-1.75%. The FOMC indicated it is unlikely to cut or increase rates in 2020. "The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective." Federal Reserve Chairman Jerome Powell said "In order to move rates up, I would want to see inflation that’s persistent and that’s significant." Of course, if the Fed measured things people actually spend their money on, they would see that the cost of living for most Americans is increasing at a rate well above their 2% goal.
That's an average of more than four per day. 1,480 CEOs have left their companies so far this year through November, according to Challenger, Gray & Christmas. November saw 148 CEO departures from companies such as Alphabet, United Airlines, Expedia and SoulCycle. Only five more CEOs have to leave this month for 2019 to break 2008's record 1,484 CEO departures. 284 of the CEO departures so far this year were from public companies, while 1,196 were from private companies or the government sector.
They won't fly until next decade. The U.S. Federal Aviation Administration chief Steve Dickson said the recertification process for Boeing's 737 Max airplane will stretch into 2020. The remarks from the FAA chief contradict what Boeing said last month. The company said "It is possible that the resumption of MAX deliveries to airline customers could begin in December," which sent Boeing shares 7% off their lows on November 11. "Like I said there are a number of processes, milestones, that have to be completed," said Dickson. "If you just do the math, it’s going to extend into 2020."
They're shutting the door on that idea. Facebook has responded to a request from officials in the U.S., U.K. and Australia to not encrypt its messaging services unless law enforcement has backdoor access. Facebook said in a letter "The 'backdoor' access you are demanding for law enforcement would be a gift to criminals, hackers and repressive regimes, creating a way for them to enter our systems and leaving every person on our platforms more vulnerable to real-life harm." Facebook, which already has end-to-end encryption on WhatsApp and Facebook Messenger, plans to extend the feature across all of its services.
Tesla has competition. Porsche has received 30,000 down payments its first electric car, the Taycan. More than 10,000 of them have completed orders for the car. "This number is well above our expectations," Porsche CEO Oliver Blume said. The Taycan will ship this month to U.S. dealers. Porsche, which expects to deliver 20,000 Taycans in 2020, announced it will increase production capacity at its Zuffenhausen factory in response to stronger-than-expected demand.