Good news for brews: the 2007 Beer Growth Brands reveal total beer sales finally turning upward, with craft and imported brews continuing to skyrocket

Cheers, Sept, 2007 by Donna Hood Crecca

Raise a glass and give a toast! After three years of flat sales, beer finally turned the corner and posted an increase in 2006. Total beer sales grew 1.7 percent to end the year at 2,892 million 2.25-gallon cases, according to the Adams Beer Handbook 2007.

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But what type of beer to put in that toasting glass? "Imports and craft beers drove the increases in 2006," asserts Eric Schmidt, manager of information services at Adams Beverage Group in Norwalk, Conn. "All segments of imports are up and all crafts--all flavors, styles and seasonals--that's the big headline."

Indeed, imported beer continued its upward trend in 2006, increasing 12 percent, a considerable jump coming on the heels of the 6.5 percent gain in 2005. Ending 2006 with 397 million cases, imports now comprise 13.7 percent of the total beer market. The combined super-premium and craft category rose 6.6 percent in 2006 to reach 152 million cases. On its own, craft increased 12 percent; the slowing of some large super-premium brands stymied that combined segment's growth.

All is certainly not lost on the domestic front, however. Domestic beer maintains its lion's share of the U.S. beer market, generating 86.3 percent of total sales. In 2006, domestic beer sales stopped the downward trend of 2005 to end the year at 2,495 million cases, a 0.2 percent gain. While premium domestics declined 5.9 percent and popular brands saw a 4.0 percent drop, domestic light beer enjoyed a 2.3 percent gain, dominating beer sales and accounting for 50.5 percent of the market. Malt liquors and ice beers inched up 0.9 percent and 1.0 percent, respectively.

Sparked by the higher cost of imports and craft beers, total beer dollar volume grew 6.7 percent last year to reach $92.5 billion.

The other headline in 2006 is the re-shuffling of brands through mergers and acquisitions. Although Crown Imports didn't officially begin importing and marketing the Grupo Modelo portfolio until January of this year, the news in mid-2006 that this single entity would be handling Corona Extra, Corona Light, Modelo Especial and the rest of the Mexican producer's brands caused many to sit up and take note. Anheuser-Busch's agreement to import a number of InBev's premium brands--including Stella Artois, the Beck's line, Bass Pale Ale, Hoegaarden and Leffe--as well as its deals with other foreign brewers to import the Grolsch, Czechvar, Tiger and Harbin brands also re-shaped the beer landscape considerably as the major brewer sought to tap the growth segments.

All these trends are evident in the 2007 Beer Growth Brands, which identifies the beer brands that are achieving notable growth and, as a result, are driving trends and profits in the larger beer market. Adams Beverage Group, using recent data, spotlights the brands experiencing growth in recent years, segmenting those brands into three categories. No matter how you slice it, however, the brands included in the Adams Beer Growth Brands report are the ones to watch.

CATCH THE RISING STARS

With the exception of Michelob Ultra Amber and Smirnoff Twisted V, each and every one of the Rising Stars is an imported or craft brew. The criterion for the Rising Star category is that the brand be less

than five full years on the market and exhibit notable growth during the past few years. Seven brands made the cut, up from five in the previous Growth Brands report.

The one brand to exceed 100 percent growth in 2006 was Michelob Ultra Amber, which is interesting in light of the current growth trends. In its second year on the market, the brand grew to six million cases.

Scottish & Newcastle Importers' Kronenbourg 1664 enjoyed a 23.9 percent increase to reach 140,000 cases, while Smithwick's ale, a Diageo-Guinness Irish import, grew 18.1 percent to approach 1.3 million cases. Also noteworthy is Brahma, the Labatt USA-InBev Brazilian import that hit the U.S. market in 2005. With marketing and advertising specifically targeting Hispanic consumers, the brand grew 11.4 percent to reach 215,000 cases in '06.

Newcomers to the Rising Stars list include Heineken Premium Light, the entry from Heineken USA that took the market somewhat by storm last year, creating a new dynamic in both the import and light beer categories. In its first year of distribution, Heineken Premium Light achieved sales of 7.5 million cases. Skinny Dip, the 110-calorie American blonde ale flavored with kaffir lime from New Belgium Brewing, made its debut in 2006 and created quite a buzz. It qualifies as a Rising Star on sales of 339,000 cases achieved in only 16 states.

Waving the only flavored malt beverage flag in the Rising Stars line-up, Smirnoff Twisted V held steady at 13.3 million cases, a 0.8 percent gain.

FAST TRACK CHAMPS

The slate of Fast Track brands for 2007 mirrors that of 2006: Modelo Especial, Stella Artois and Blue Moon. To qualify as a Fast Track Brand, domestic brews must have exceeded nine million cases for the year, while imports and microbrews/crafts must have exceeded 1.5 million cases, with double-digit growth during the past four years.