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Mexican beer, craft beer, and the Trump effect
Industry bigwigs discuss beer's future at Beer Summit
The 2017 Beer Industry Summit took place at Hotel del Coronado at the end of January.
The 2017 Beer Industry Summit took place at the Hotel del Coronado January 29 and 30, bringing together brewing company executives, distributors, financiers, and media for a series of panel discussions and networking opportunities. Among the nearly 500 attendees were senior staff from the world's largest beer corporations, such as AB InBev, Molson Coors, and Constellation Brands.
To some extent, such heavyweights were in focus during the conference, particularly Constellation — best known locally as the company that bought Ballast Point in fall 2015. Since that time, the company's earnings have increased more than 10 percent each fiscal quarter, with 16 percent growth predicted in 2017.
However, whereas the growth of the craft beer segment has been the story in the past, this year the hot topic was the growth of Mexican imports. It turns out most of Constellation's growth may be attributed not to Ballast Point but to the Mexican brands in its beer portfolio, including Corona, Modelo, and Pacifico. During a presentation of consumer research, Nielsen consumer research company vice president Danelle Kosmal noted that, "Of the 25 fastest-growing [beer] brands, eight are Mexican imports."
Trade publication Beer Business Daily staged the beer summit, and during introductory statements on the industry's evolving landscape, editor and publisher Harry Schuhmacher said, "another big change from last year is the slowing growth of craft." Craft beer sales grew an estimated 6 to 8 percent in 2016, down from a peak 18 percent growth in 2014. "What hasn't changed," he continued, "is that Mexican imports continue to grow so fast that it masks the slowing down of craft."
Nielson researchers were quick to point out that the slowdown in craft's growth didn't indicate the market is oversaturated, merely that it may be nearing its peak. Elsewhere their research shows data that bodes well for craft, including that "premium priced beer" sales (which included most craft beer) are up 10 percent in the past year, while "standard" beer sales are down 5.6 percent.
Additionally, millennials surveyed showed a preference for premium beers because it offers more styles, goes better with food, and their friends are drinking it.
Despite this rosy outlook, Constellation stock has been in a steady decline of late, which several panelists attributed to uncertainty over the impact of a 20 percent import tax on Mexican goods proposed by Donald Trump's administration. "With a new Trump administration, we really don't know what he's going to do," added Schuhmacher, "He's floated the idea of a border tax, which would severely hurt the Mexican import market if they had to take a price increase."
Speaking in a one-on-one interview with Schuhmacher, Molson Coors CEO emeritus Pete Coors also invoked Trump. While answering an audience question concerning the potential for price wars in the beer industry, Coors said, "We'll see what happens. I mean, I don't know. It's like taxes… Trump said he was going to lower taxes. That sounds good, [but] the devil's in the details. We'd all like lower taxes, but you're going to have to give something to get something…."
Here's something you might be interested in.
Mexican beer, craft beer, and the Trump effect
Industry bigwigs discuss beer's future at Beer Summit
Mexican beer, craft beer, and the Trump effect
Industry bigwigs discuss beer's future at Beer Summit
The 2017 Beer Industry Summit took place at Hotel del Coronado at the end of January.
The 2017 Beer Industry Summit took place at the Hotel del Coronado January 29 and 30, bringing together brewing company executives, distributors, financiers, and media for a series of panel discussions and networking opportunities. Among the nearly 500 attendees were senior staff from the world's largest beer corporations, such as AB InBev, Molson Coors, and Constellation Brands.
To some extent, such heavyweights were in focus during the conference, particularly Constellation — best known locally as the company that bought Ballast Point in fall 2015. Since that time, the company's earnings have increased more than 10 percent each fiscal quarter, with 16 percent growth predicted in 2017.
However, whereas the growth of the craft beer segment has been the story in the past, this year the hot topic was the growth of Mexican imports. It turns out most of Constellation's growth may be attributed not to Ballast Point but to the Mexican brands in its beer portfolio, including Corona, Modelo, and Pacifico. During a presentation of consumer research, Nielsen consumer research company vice president Danelle Kosmal noted that, "Of the 25 fastest-growing [beer] brands, eight are Mexican imports."
Trade publication Beer Business Daily staged the beer summit, and during introductory statements on the industry's evolving landscape, editor and publisher Harry Schuhmacher said, "another big change from last year is the slowing growth of craft." Craft beer sales grew an estimated 6 to 8 percent in 2016, down from a peak 18 percent growth in 2014. "What hasn't changed," he continued, "is that Mexican imports continue to grow so fast that it masks the slowing down of craft."
Nielson researchers were quick to point out that the slowdown in craft's growth didn't indicate the market is oversaturated, merely that it may be nearing its peak. Elsewhere their research shows data that bodes well for craft, including that "premium priced beer" sales (which included most craft beer) are up 10 percent in the past year, while "standard" beer sales are down 5.6 percent.
Additionally, millennials surveyed showed a preference for premium beers because it offers more styles, goes better with food, and their friends are drinking it.
Despite this rosy outlook, Constellation stock has been in a steady decline of late, which several panelists attributed to uncertainty over the impact of a 20 percent import tax on Mexican goods proposed by Donald Trump's administration. "With a new Trump administration, we really don't know what he's going to do," added Schuhmacher, "He's floated the idea of a border tax, which would severely hurt the Mexican import market if they had to take a price increase."
Speaking in a one-on-one interview with Schuhmacher, Molson Coors CEO emeritus Pete Coors also invoked Trump. While answering an audience question concerning the potential for price wars in the beer industry, Coors said, "We'll see what happens. I mean, I don't know. It's like taxes… Trump said he was going to lower taxes. That sounds good, [but] the devil's in the details. We'd all like lower taxes, but you're going to have to give something to get something…."
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