If not beer, then what? And why? How to respond to the sagging BPI

Just Tapped 

Once again, it’s rather dismal news coming from the National Beer Wholesalers Association. Once again, I offer some hope. Shoulders back, head held high! The Beer Purchasers Index (BPI) for craft beer hit a historic low in January, dipping below the historic low it hit in December. It's time to tighten the bootlaces and soldier on. 

If not beer, then what? And why?

Parse the data any which way, but that dismal number of 21 (see below) means wholesalers are ordering less craft beer because consumers are buying less craft beer. If not beer, what are alcohol consumers buying? Is there a silver lining?

Here’s something kind of happy before I dig into the rest. The BPI only deals with distributed craft beer and is swayed by what’s happening at the largest distributors. It doesn’t speak to sales at brewpubs and brewery taprooms, which reportedly is still pretty solid. And that dismal BPI number doesn’t seem to reflect what’s happening at smaller, craft-focused distributors, which relates directly to something we talked about recently on The Taster Tray--the emergence of a new kind of distributor. If you missed it, might be worth a read.

Back to the matter at hand. If alcohol consumers in the USA are drinking less beer, what are they drinking instead? Luckily, there’s a Gallup poll for that. I am not the first to report the trend, which over the past two decades (since 2001) is clear. While beer slipped from 46% to 35%, and wine held steady at around 32%, spirits grew from 18% to 30%. 

The graph above shows a slow, steady increase in spirits, with a drastic increase over the most recent years. What changed? Craft distilleries arrived. Last year alone, the number of craft distilleries increased in the U.S. at a rate of better than 1 per day (there are now over 2,700). According to reports, the global craft spirits market is expected to keep expanding at a compound annual growth rate (CAGR) of 28.3% from 2022 to 2030. That number is HUGE. Remarkable growth.

Why am I talking about craft spirits in a craft beer newsletter? There are other forces encroaching on craft beer's realm, but we need to learn something from the rise of craft distilling. Experts surmise that, ideologically, craft spirits are a great fit for many millennials. Craft distillers are small. A family-oriented or otherwise relatable story usually defines them. They’re recognized for quality and creativity. Consumers don’t just relate to the brand, they see themselves in it.

Hey, wait a minute! Isn't that our story, too? Over the past two decades, craft beer has become increasingly common. That’s great, but for consumers of a certain age that means craft beer has always existed and there’s nothing special about it. It's just a type of beer. They don't know our stories. They are not ideologically drawn to craft beer. Perhaps they don't see themselves in our brand.

We need to get back to basics. Craft beer needs to start telling our story again. Craft spirits will grow a lot over the coming years. That growth will be fueled by consumer interest in the exact same stuff that, once upon a time, fueled craft beer’s growth. It's the exact same stuff that makes craft beer a great ideological fit for some of today's most desirable consumers. 

I know it’s not all about spirits, and I know there are plenty of other forces driving the craft beer BPI down, like the rising popularity of RTD cocktails and other options. Still, we should look at this surging interest in craft spirits as a bright spot. If nothing else, it's a reminder that we need to tell consumers who we are. After all, we're pretty cool. 

As always, you can send us your thoughts and comments. We read them all. Email us or use the feedback poll below. 

How Will You Sample New Beers?

Last week we talked about how beer festivals are struggling these days. Festivals offer a great way to sample new, different beers. We ran a poll to ask a simple question: if not at festivals, how do you intend to sample new beers? The largest majority of you (56%) said that you will visit breweries to discover what's new. The smallest minority of you (4%) said we were crazy and that beer festivals were not going away. 

I find it comforting that you, like me, think visiting breweries was the best answer. I may dive deeper into what that means. It's got me thinking. 

Around the Web

• Last week, the world celebrated National Beer Can day. Here is an interesting, informative, and quick read about the history of beer cans. (Beer and Brewing.)

• Good news for Virginia’s craft breweries. Virginia lawmakers taking steps towards allowing self-distribution. (Richmond Biz Sense.)

Say What?

Feedback from last week, in their own words: “Fascinating facts on failing festivals. I know breweries are usually asked to donate beer, and it seemed like there were more and more festivals every year. I don't blame them for taking the Covid pause to reflect on what may not be best for their brewery.” - patrick@...

Thanks for the feedback, Patrick. You get an A+ for your use of alliteration in the first sentence. 👍🍻! Yep, I have heard more than one brewery owner/manager talk about the effects of festivalius overwhelminus. 

Feedback

This week's Taster Tray was composed by Kendall Jones.