The import boom continues

Modern Brewery Age, July 19, 1999

Importers are making hay while the sun shines, as an economic boom and a flat craft category open the doors for growth.

Corona ascended into the pantheon of the top ten beer brands in the U.S. in 1998, edging out Milwaukee's Best for the number ten slot. "I find that interesting," says industry analyst Robert S. Weinberg of the Office of R.S. Weinberg, St. Louis, MO, who notes that one out of every 33.7 beers consumed in the United States is now a Mexican import.

As in the past, the growth in the import sector is driven by the top imported brands: "The top four or five are carrying the freight," as one executive notes. Americans are now quaffing these high-volume imported brands in record quantity, driving continued growth in the segment and sometimes blurring the line that has always existed between imported and domestic products.

Certainly, all concur that the prolonged economic boom is a big factor. "Consumer confidence is high, and people are deciding to trade up," says Dan Tearno, v.p. of communications for Heineken USA "This is not unique to beer, and it's happening in all consumer products. It's the L'Oreal syndrome - 'I'm worth it.' Microbrewers reintroduced people to the idea of high quality beer, and that has made us [importers] work harder."

"We're going through some of the best economic times in U.S. history," notes Paul Cooke, president of Labatt USA, "and people are spending more. This economic strength will support import development, and we've certainly seen an acceleration in the import segment. It was growing 9-10% in the early 1990s, now it's been 14-15% over the last couple of years. There is a general tendency to go upscale, are there are absolute parallels in other categories. Craft growth has now topped out, and ultimately the craft explosion served to direct drinkers toward more differentiated brands. We anticipate continued vitality as more volume shifts from craft."

The import boom has certainly taken the spotlight off the craft brewers, many of whom stumbled as they tried to grow undercapitalized businesses and expand little-known brands into new geographies. "Craft brewers share drinkers and consumption with many other beers," Jim Koch of the Boston Beer Company said recently. "The same drinker drinks many brands, micro or contract or import. We're all in the same pot. The consumer freely interchanges beers, and Sam Adams is competing for share of stomach with imports and somewhat with domestics. But I believe that they sort it into 'regular beer' and 'better beer.' Imports and micros compete, and if we think of the world that way: 'craft beer or an import' it's a source of concern. But it's a funny kind of competition. Both are trying to get people to drink better beer, and I think we will prosper or not together. The growth of Guinness and Heineken is helping more people drink better beer. If imports take a nosedive, that won't help us. We have to earn our share. [Unfortunately] doing that won't get easier given the clout of the imports."

Jeffrey House, president of Thames America of Sebastopol, CA, is small specialty importer with a business akin to micros in many ways. "There are now some very good American beers going against some very good imports," he says. "But the big guys have upped the ante, and the large companies, domestic and import, are trying to guarantee focus - adding salespeople, increasing promotional dollars to get wholesalers to concentrate on their brands. This could trigger the demise of quite a few small breweries, and won't make it easy for specialty importers."

Relative Consumption Frequency 1999 Total Consumption Per One Unit
of Specific Country Consumption

                                     Total Import     Total Malt
                                     Consumption       Beverage
                                         Base         Consumption

1. Mexico                                 2.8             33.7
2. Netherlands                            4.1             49.0
3. Canada                                 5.3             62.5
4. F.R. Germany                          14.8            175.3
5. United Kingdom                        18.2            216.5
6. Ireland                               20.4            242.2
7. Japan                                146.9           1745.4
8. Dominican Republic                   163.2           1939.4
9. Jamaica                              196.8           2339.2
10. Czech Republic                      238.3           2832.4

Source: The Office of R. S. Weinberg, St. Louis, MO.

Kevin Moodie of Scottish & Newcastle sees a market shift to more established products, micro and import alike. "The good micros are now a permanent feature of the market," Moodie says, "and I think that is great. At this point, however, they aren't out there in quite the same numbers as they were before. Consumers are no longer as confused, and they are going back to tried and tested brands - and the retailers are in this business to make money, so they are turning to the tried and tested as well. There will always be new brands coming in, and there are opportunities for entrepreneurs. Consumers will continue to demand better brands. At the moment, the sky appears to be the limit for imports, although of course there is a ceiling somewhere."