Beer Faces Competition From Other Segments

The beer industry declined 1.3%, partly as a result ofbeer heightened competition from other beverage alcohol segments, according to the Beverage Information Group.

Consumers are gravitating to the wine and spirits industries with their new product offerings such as flavored vodkas, category-crossing whiskey liqueurs, sweet reds and high-end blends. 

The beer industry lost 35.6 million 2.25 gallon cases, to end the year at 2.787 billion cases, according to the recently released Beverage Information Group's “2012 Beer Handbook.”

Other contributing factors to the loss include high unemployment rates among core consumers and a still struggling economy.

Domestic beer saw declines due to its lack of innovation and ability to connect with consumers, according to the Hartford, Conn.-based research company. 

With the largest segment, light beer, losing 39.2 million 2.25-gallon cases, the other beer segments could not make up for the loss. The craft and imported beer segments' continued success helped to offset some of the overall industries' declines, but could not fix the problem.

According to the “Beer Handbook,” imported beer also saw an increase of 1.3% in 2011, and is projected to climb. Consumers are increasingly drawn to imports because of the wide variety of high-end products available, as consumers are trading back up to more premium brands. 

The growth in the craft and imported beer categories seen over the years is expected to continue, with imports projected to grow at a slightly slower rate. It remains to be seen whether they can offset the declines in the domestic categories. 

"We are looking to the craft segment to continue to spur growth in the beer industry," says Adam Rogers, senior analyst for the Beverage Information Group. "Consumer interest is at its peak and there is unlimited potential for growth as more craft brewers enter the marketplace."

Unemployment rates, economic uncertainty, rising commodity and fuel costs all impact beer pricing structure, and therefore, volume.

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