Last year was a big one for the beer industry. The Brewers Association reported that for the first time in decades, production for independent brewers was down versus the prior year, with almost as many breweries closing down as opening up. Brewbound showed that volume was down nearly 2% across all beer, though total sales were still up 2.6% in dollars. And of course, the nation’s number one beer style is for the first time an import – Modelo Especial.
Most of these insights come from the gold standard for data in the beer industry, syndicated data providers like Circana and NielsenIQ. These companies work with retailers to get purchase data directly from the cash register, giving a real-time look to sales across the country.
But this dataset has a couple of problems. First of all, it’s expensive as hell – often far out of budget for most independent beer companies. And It does have some blind spots – independent liquor stores and all on-premise accounts in particular. But more importantly, it’s inherently looking back at what has sold, and not necessarily what will sell. It’s a lagging indicator that leads breweries to look at what is succeeding and try to copy it. See: hard seltzer, non-alcoholic beer, and coming soon to a craft brewery near you – hard tea.
Which is why in the last couple of years, I’ve become fascinated with California’s data on price posting. For the uninitiated, in the state of California every brewery and wholesaler must publicly post with the ABC the price of their beers in every county in which they operate. The process is meant to make price discovery more fair for retailers – if you’re buying a pallet of Coors Light 12-packs in LA County, you can be sure that you’re getting it for the same price that everyone else is.
But it also means that we have a complete data set for every beer sold in the state going back to February of 2021, when the online tool was created. Over 4 million entries that give you a forward-looking indicator of what new beers suppliers are making bets on. Now it won’t tell you anything about volume – 1 Modelo Especial carries only as much weight as the limited-release 4-pack from the brewery down the street. Nonetheless, we can still learn interesting insights on what trends might start to pop up in the months to come.
Which is why I downloaded it all. And here’s what we’re seeing.
Style Gainers and Losers
The beer styles that gained the most last year versus 2022 were mostly approachable craft classics. West Coast IPA – already by far the biggest category, representing 13.6% of all beer postings in 2022 – gained the most, increasing in share by nearly 0.7%. Other flavor-forward craft classics like Saisons and Hefeweizens also showed up in the win column, as well as easy-drinking styles like Helles, Mexican Lager, and nearly every substyle of Pilsner.
On the other end of the spectrum, the biggest losers were largely intense, high gravity, and/or ultra-contemporary. Four of the top ten styles include “Imperial” in their name, while flavor punches like fruited sours and flavored malt beverages also make a showing. We’re also seeing the cultural shift that was Hazy IPA start to boomerang, as it declined nearly a full share point. It’s clear that craft breweries are understanding that their presence in beer culture is shifting from one of flavor exploration and experimentation to one of drinkability and simplicity.
American Pale Ale was one outlier in this cohort, but I would wager that this style has suffered from being caught in between two more popular buckets. What might have been categorized as a Pale Ale 5 years ago is much more likely to get bumped up a couple of degrees and turned into an IPA, or reformulated and turned into a hoppy lager, both of which have much higher selling power.
Also included here are variety packs (remember, this dataset is about packages, not individual beer styles). This might be the most concerning element for independent breweries, as it could be reflective of more limited access to distribution in grocery stores. These buyers have spent the last decade expanding their craft set because they’ve started to understand that access to craft beer is important for their shoppers. But that trend has started to reverse, and as they start to rationalize their selection, variety packs are often one of the first products to go.
IPA Substyles
Let’s dive in a little more on beer’s biggest style, at least by population. In 2022, IPA represented 37.1% of all price postings in the dataset. But last year, that went down over 3 share points down to 34.1%.
Breaking these beers into their substyles shows similar trends to what we’re seeing across the board. The share that West Coast IPA is winning is largely being stolen from imperial IPA, hazy IPA, and imperial hazy IPA. In fact, the only other styles that were gaining (aside from the catch-all “Other”) were Session IPA (up nearly 0.2% to 0.76%) and cold IPA (up just a hair to 0.85%).
Hop Styles
But you can’t talk about IPAs without talking about hops, so let’s explore what hops are going into the beers. I included the breweries’ marketing descriptions for their beers in the dataset, which opens up much more insight into how these products are being described, as well as what they’re composed of.
Using those descriptions, I ran a search for the most popular hop varieties in use today, as well as some common hopping techniques. While this data doesn’t show us overall hop usage, it does show which hops are prominent and popular enough for breweries to be bragging about them to their customers. And what they show is a story of branding and supply chains.
On the growing side, we see several New Zealand hop varieties – Motueka, Enigma, Riwaka, and Waimea, which may have become easier to get as supply disruptions have diminished. Also present is a near-doubling in mentions of wet-hopping, which is always a logistical challenge that brewers may start to be getting more of a handle on come harvest time.
But we’re also seeing how much of an impact hop callouts have on beer, and the answer seems to be – not much. Overall, mentions of hops are down, and former craft darlings like Simcoe, Mosaic, and Galaxy are some of the biggest losers. Recently buzzy hops like Idaho 7 and Vic Secret, which were talked about amongst brewers but never really became known outside of the inner circle, are down big as well.
The brand names that are doing well are ones that convey flavor. It isn’t hard to figure out what Nectaron tastes like, and it is fourth fastest growing variety. And while Citra is down slightly in mentions this year, it still is a behemoth – in fact, it’s the fourth most popular word in descriptions, behind “brewed,” “notes,” and “malt.”
Flavor Descriptors
So what other flavors are getting the same love in the descriptions? Again, the watchcry here is drinkable. Moderate descriptors like “light,” “dark,” “floral,” and “mild” all are making bigger appearances. The more intense flavors of “sour,” “tropical,” “vanilla,” “pineapple,” and “candy” are all starting to fall. One outlier here is “smoked,” never a super popular descriptor but nearly tripling its presence to a 0.65% share of new beers. And as a rauchbier fan, I approve.
Package Trends
Finally, let’s talk about the packages these beers are being put into. Postings for draft, typically the first package that ends up getting distributed for a beer, were down from a share of 52% to 50% of all postings. This aligns with a larger trend of decreasing draft sales overall, which may indicate that breweries are doing fewer draft-only releases in favor of putting support behind their flagships.
On the off-premise side of things, we see inflation having an impact on both small packs and large. 4-packs earned a nearly 7% increase in share, taken largely from 6-packs, as producers continue to realize that shrinking their packages are more swallowable to consumers than raising their prices. 24-packs are also increasing slightly, as more space becomes available in club stores where these stores are sold more frequently. Shoppers have increasingly moved their purchases from traditional supermarkets to stores like Walmart and Costco as their grocery budget has faced strain, which is why we may be seeing an increased focus here.
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As you can see, there is a lot of insights that can be mined from this data, despite being just one state. If you would like to explore any of this data further, please don’t hesitate to reach out and I’d be happy to discuss with you or your team.