Industry activity in the domestic malt beverage market for the first eight months of 1998 has improved markedly across all sectors compared with the year-ago level:
Beer Institute has estimated domestic shipment figures for all months in both 1997 and 1998, besides the last quarter of 1996. Due to the lack of official government data since September 1996, taxpaid removal trends by state and region have not been presented in this report. That information will be provided upon publication of the missing data noted above.
A small increase in taxpaid withdrawals, combined with continued double-digit import growth, propelled industry activity up 0.3 percent in 1997 to more than 201 million barrels. Last year marked the second straight year that industry activity exceeded 200 million barrels. Weather extremes affected consumption less in 1997 than in 1996.
Competition Between Malt Beverages and Other Alcoholic/Non-Alcoholic Beverages
U.S. consumption of beer increased 0.5 percent in 1997, while soft drink consumption increased about 3 percent, wine increased 2.1 percent and distilled spirits consumption was unchanged.
Thirty-two states had beer shipment increases in 1997, seven fewer than in 1996. Note, however, that for the first time since 1990 (before the federal excise tax increase), more of the top ten shipment states had increases in 1997 (6) than decreases (4). California's first rise in state shipments since 1990 helped that statistic enormously, and gave an unexpected boost to overall U.S. consumption. TX, FL, IL, GA and NC were the other five states posting gains. Shipment increases occurred across much of the country, especially in the southern tier of states. The Mid-Atlantic, New England, upper Midwest and Inter-mountain West each had several states with declining shipments.
Distilled spirits consumption increased in twenty-four states in 1997, after rising in thirty-five states in 1996. Nevertheless, overall consumption edged higher, aided by rising spirits shipments in Florida, Georgia and Wisconsin. Wine consumption also rose in fewer states in 1997 (32) than in 1996 (46). Impressive gains in New York and California pushed overall industry activity up more than 2 percent for the year.
Per capita consumption trends for the major alcoholic beverage categories during 1996-1997 were as follows:
|Per Capita Consumption (in gallons per person)|
Last year's per capita beer consumption marked the lowest level since 1977. The over-21 population consumed 2.49 gallons of pure alcohol in 1997, 24 percent below the most recent high point (3.29 gallons in 1980).
1998 Activity Through 8 Months
We estimate that taxpaid withdrawals by domestic brewers increased 0.4 percent for the first eight months of 1998 compared with the same period in 1997. We also believe imports are up 15 percent for the same period. Taxpaid withdrawals and imports together increased by 1.4 percent compared with the first eight months of 1997.
Competing beverages also posted increases during the first half of 1998, based upon industry estimates. Wine is up approximately 3 percent after rising 2 percent in 1997, distilled spirits are up 0.5 percent after being flat in 1997, and soft drinks are up 3 percent, the same as last year.
Package Mix Information
Very little change occurred in package mix between types in 1997. Nonreturnable bottles gained another share point in 1997, rising to 35 percent of the market. Unlike recent years, in 1997 draught beer, not canned beer, lost the share point to nonreturnable bottles. Draught beer declined to a 10 percent share of the package mix for the first time since Prohibition ended. Shares for cans and refillable bottles remained unchanged.
Draught beer business for domestic brewers declined 3.3 percent in 1997, while packaged beer sales gained 0.5 percent. Draught sales decreased another four-tenths of a percentage point to 10.1 percent of the total, compared with 89.9 percent for packaged beer. The draught beer share in 1997 reached an all-time low.
To analyze beer industry sales, let us examine the most recent quarterly trends. In 1997's second quarter, domestic output rose 0.7 percent, while imports increased 15.8 percent. Third quarter domestic sales gained 1.1 percent, while imports rose 13.8 percent. In the last quarter, domestic output increased 0.6 percent while imports continued to climb, rising 15.9 percent. For the first quarter of 1998, estimated domestic sales jumped by 2 percent, while imports spurted 16.8 percent. During the second quarter, estimated domestic output continued rising, up 0.8 percent, while imports rose 11.6 percent.
In fact, taxpaid withdrawal statistics has been positive for each of the last five quarters when compared with the same quarter in the previous year. The quarter ending in December 1990 (just before the federal excise tax increase) marked the last time the domestic malt beverage industry posted five consecutive quarterly increases. One has to go back to the first quarter of 1987 to find a similar run of five consecutive quarterly increases.
BLS Price Data for Beer and Competing Beverages
The consumer price index for all items increased 2.3 percent in 1997 compared with 1996, much faster than beer, the same as spirits, but half the rate of wine's increase. Beer increased by just 0.5 percent, distilled spirits increased 2.2 percent, while wine increased 4.5 percent (this after the CPI for wine jumped 4.3 percent in 1996). In contrast, soft drinks fell by 1.3 percent.
For the year ending July 1998, prices for beer off-premise have barely moved (up 0.3 percent), below the 1.7 percent growth rate for the all-items CPI. In contrast to this time last year, however, home consumption for spirits and wine have also increased less than the general inflation rate (each up 0.9 percent). The soft drinks industry has continued to experience deflation, with its price index declining 0.5 percent.
Full-Year Prospects for Malt Beverages in 1998
Domestic taxpaid withdrawals should increase in 1998. A gain of up to 0.7 percent is possible, barring unusual market conditions. Non-alcoholic brews and exports likely will slow their respective rates of decline. Imports should continue growing by double-digits in 1998, likely passing sixteen million barrels for the year. Total industry activity should rise about 1 percent in 1998 to about 203.2 million barrels.
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