The infographics below are derived from data contained in
BMC's DrinkTell™ Database with Market Forecasts

WHISTLING PAST THE GRAVEYARD?

The annual National Beer Wholesalers Association meeting in Las Vegas last week certainly got the industry's juices flowing—but none of what was gushing came from a beer tap. "The … industry's wine and spirits anxiety has reached a fevered pitch" began a follow up piece in AdAge. Not that there's anything new about beer execs complaining about competition from spirits and wine but now "the urgency seemed particularly acute."

"As you know we're facing headwinds," a brewery sales exec told us a couple of days ago. The most telling quote to emerge from the NBWA gathering of 4,000 distributors and suppliers, however, came from Ronald den Elzen, president and ceo of Heineken USA. Commenting on declining per capita consumption of beer he said "… we have to do something, I don't know what it is."

Sounds sort of like the NFL, the NBA, and Major League Baseball trying to sort things out. Good luck. But like their sports counterparts, beer industry leaders are dedicated marketers and they did their best to put a smiley face on their well-documented challenges—proposing strategies such as linking beer to fashion and culture and positioning it to appeal to fitness enthusiasts and consumers seeking to embrace healthy lifestyles.

It's hard to think, though, that this isn't whistling past the graveyard. The numbers are what they are. With the exception of imports, our DrinkTell™ database numbers project inconsequential growth in U.S. beer consumption when viewed from that critical per capita perspective that shapes long-term prospects. In fact, for us, the most interesting thing about the hoopla in Vegas was that at approximately the same time, a more strategic, data-supported discussion was also going on about whether or not Boston Beer was for sale or would be soon and who might want to buy it. And, probably not co-incidentally, was Heineken looking to buy someone and who might that someone be.

The first speculative splash was a Credit Suisse report suggesting that Molson Coors might acquire Boston Beer. Stoutly denied for, among other reasons, the opinion that Boston Beer would rather sink than sell, a new rumor quickly blossomed—the "more plausible" possibility that Heineken, looking for a big spend, would look to acquire Molson Coors. Food for thought for a few days until the intriguing idea that Constellation would be the strategic acquirer of Boston Beer. Constellation, we know, wants to be part of everything. Somewhere, here among the reeds, perhaps there is truth.

While the analysts touted a number of metrics, financial and non-financial, that decision makers might be considering, we went to DrinkTell™ for a look at each company's U.S. volume, growth and share. Back to basics, you might say. Boston Beer is actually a dwarf in this company although a successful one until recently. Kingpin is Molson Coors' U.S. operations, Miller/Coors. One thing Boston Beer could do for an acquirer is add a couple of points of share. (Some speculation has pointed to high-end brands and profitability.)

None of the speculated-on acquirers would acquire significant growth in any of the scenarios mentioned. Constellation appears to own that metric. That in itself, of course, could be an incentive for Constellation to look around at opportunities.

Finally, share. Molson Coors has reason to crave it. But so does Heineken which despite its successes has never had the impact on the U.S. market that it would like to have had. Looked at longitudinally, Boston Beer has been a better performer. The Sam Adams/Angry Orchard marketer may have to rethink certain aspects of its business, as some people obviously think, but much of what it's been doing for the past five years has struck a responsive chord with consumers.

The upshot? ┬áNumbers of course are not substitutes for decisions which invariably seem to come with unforeseen consequences. But without getting into the arcane considerations of the investment banking community or the personal nature of decisions that some may have to make in the instances we've discussed, Boston Beer does look like a pretty tasty morsel. For questions about this column or to look at our DrinkTell™ database yourself give us a call. To order a BMC U.S. Wine, Beer, or Spirits Guide, 2017 edition, just click below.

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