Beer Industry Update, 2008 - USA Hops

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Beer Industry Update, 2008 - USA Hops

Beer Institute MembershipBrewers, Importers and Suppliers‣ Senior Board‣ ABInBev‣ Miller Coors‣ Heineken USA‣ Crown Imports, LLC‣ Supplier Members‣ Hops‣ Barley and Malt‣ Rice/Corn‣ Packaging Suppliers‣ Brewing Equipment‣ Ex Officio Board - Brewers‣ Bell’s Brewing Co.‣ Boston Beer Co.‣ Boulevard Brewing Co.‣ Brooklyn Brewery Corp‣ Deschutes Brewery, Inc.‣ FEMSA‣ FX Matt Brewing Co.‣ Harpoon Brewery‣ New Belgium Brewing Co.‣ Sierra Nevada Brewing Co.


Beer Serves America‣ The Beer Serves America (BSA) study is the industry’sprimary communication platform describing the breadthand economic contributions of the beer industry to thepublic and government‣ Throughout the year, the Beer Institute, its members, andallied organizations use The Beer Serves America (BSA)message in communications to the media, government,special interest groups and the general public.


US Brewing Cost Index• The Brewing cost index measures a select few commodityinput costs used by the US brewing industry• Weighted average index accounts for agricultural, energyand packaging inputs based on data collected through theEconomic Census for the industryComponent Weight 07 vs. 08PPI - Producer Price Index for Commodities 9.9%Packaging (cans, bottles, boxes) 60% 3.6%Agricultural (barley, rice, corn, wheat) 30% 26.1%Energy (commercial electric and natural gas) 10% -3.0%Brewing Cost Index 11.2%Source: Beer Institute and BLS PPI (Note: Hops are not measured in the PPI commodity index)


US PPI & US Brewing Cost IndexThe commodity costs index measure only a select few inputs. The index doesnot include many other P&L items such as marketing, administration,transportation and labor/benefit costs . The components of the brewing indexdemonstrate the energy and agricultural intensity of the brewing processrelative to the general economy.Source: Beer Institute and BLS PPI (Note: Hops are not measured in the PPI commodity index)


US Commodity Costs vs. Brewing Costs2007 vs. 2008General commodityinflation measured inPPI is beginning tocatch up with brewingindexSource: Beer Institute, and B 2009 and BLS


Beer CPI –Away from Home vs. At HomeOn Premise vs. Off Premise, 2000 to 2008In last two years, trading up and premium pricing on premises has exceededoff premise (at home) pricing.Source: BLS and Beer Institute, 2009


Per Capita Consumption of Malt Beverages1980 to 2008 (gallons per person/total population)1. 21.8 in 2008 from a high of 24.6 in 19812. Changing Demographics3. Increased alcohol beverage competition4. Additional non-alcohol beverage choices5. Policy Changes (21 LDA and .08)Source: Beer Institute, 2009.


US Population 2007, Ages 21 to 75Beer demo (21-27)27) - about 29.4 millionpeople or 14.9% of LDA PopulationTail end of the baby boom generationborn between 1957 and 1964 -about 32 million people or16.2% of the LDA populationDifference of 2.5 millionconsumers at 20 gallons/yearper capita…equates to about1.6 million barrels lessdemand…beer has weatheredthe storm with 28-34 yr oldage cohort (13.9% of LDA).Source: United States Census Bureau, 2009


Index Per Capita Ethanol ConsumptionBeer Wine and Spirits 1970-2008Share of Ethanol volumeSegment 1970 1998 2008Beer 48% 57% 52%Wine 10% 15% 17%Spirits 42% 28% 31%Assume 4.5% for beer, 14% for wine and 40% for spiritsSource: Beer Institute and The Beverage Information Group 2009


Industry Supply andShipments of Malt BeveragesDomestic production and imports of malt beverages1 barrel = 31 gallons = 13.78 cases = 330/12 oz servings


World and US Brewing IndustryBased on 2007/2008 volumes estimates• Top 3 brewers nowproduce over 50%of world’s beer and81% of US market• The 70-80% share isthe norm in mostother developedcountries as well.BrewerWorldShareUSShareABI 26% 50%MILLER/COORS 17% 30%HEINEKEN 10% 4%Top 3 Share 51% 81%Total (barrels) 1.4 Billion 214 millionCrown Imports now has 5.4% share of USmarket and Pabst 2.6% share of US marketSource: Beer Institute, 2009.17


2008 US Market Shares for Brewers(Based on Shipments from brewers to Wholesalers,2008)


Total Malt Beverage Industry2007 vs. 2008 est. (millions of gallons)Segment2007Volume2008 est.Volume2008ShareVolumeChangePercentChangeDomestic 5,664 5,726 86% 62 1.1%Imports 921 895 14% -25 -2.7%Total Industry 6,584 6,621 100% 37 0.6%Total Industry added over 37 million gallons of beer in 2008. That’s over 16.5million cases of beer for a gain of over 400 million 12 ounce equivalent servings.Source: Beer Institute, 2009


Domestic Malt Beverage Industry2007 vs. 2008est (millions of gallons)Domestic Segment 2007 2008 est.2008ShareVolumeChangePercentChangePackaged 5,119 5,174 90.4% 55 1.1%Draught 531 538 9.4% 6 1.2%Tax Determined* 13.5 13.8 0.2% 0 2.4%Total Industry 5,664 5,726 100.00% 62 1.1%* Tax Paid on beer that is served directly from serving tanks in brewpubs and tavernsSmall relative to total market but almost 150 million 12 ounce servings ($750 million)Source: TTB and Beer Institute, 2009


Imports of Malt Beverages1984-2008 est. (1,000s 31 Gallon Barrels)Import volumes fell for first time since1991 to 28.8 million barrels in 2008Import share is holds at 14% ofmarket in 2008Source: US Dept of Commerce, Bureau of Census and Beer Institute, 2009


Import Package Mix2007 vs. 2008 est. (1,000s of gallons)Package 2007 2008 est.2008ShareVolumeChangePercentChangeBottles 710,299 677,701 76% -32,598 -4.6%Cans 134,298 137,139 15% 2,840 2.1%Draught 75,938 80,602 9% 4,664 6.1%Total 920,536 895,442 100% -25,094 -2.7%Import draft added 4.6 million gallons of high value on premise draftfor a 6.1% gain in 2008 (slow down from 11% growth in 2007).That’s over 37 million additional 16 ounce draft servings in 2008!Source: US Dept of Commerce, Bureau of Census and Beer Institute, 2009


Imports of Draught Beer into the US1999 to 2008 est. (31 gallon barrels)Draught imports have grown 4.5% CAGR since1999 to reach 2.6 million barrels in 2008.Source: US Dept of Commerce, Bureau of Census and Beer Institute, 2009


European Draught Beer Volumes1998-2008 est. (31 gallon barrels)70% of draught beer comes from Europe.Draught beer volumes now stand at over1.7 million barrels in 2008.Source: US Dept of Commerce, Bureau of Census and Beer Institute, 2009


Belgium Draught Beer Volumes1998-2008 est. (31 gallon barrels)Belgium draught beer volumes nowstand at over 400,000 barrels in 2008.Almost 100 million 16 ounce servings!Source: US Dept of Commerce, Bureau of Census and Beer Institute, 2009


Latin American Draught Beer Volumes1998-2008 est. (31 gallon barrels)Latin America draught beer volumes nowstand at over 200,000 barrels in 2008.Source: US Dept of Commerce, Bureau of Census and Beer Institute, 2009


Total US Industry Package Mix2007 vs. 2008 est. (millions of gallons)Package 2007 2008 est.2008SharePercentChangePackaged* 192.4 193.2 91.5% +0.4%Draught 620.9 632.1 9.5% +1.8%Total 920,536 895,442 100% +0.6%Based in preliminary estimates, 2008 was driven by growth in draughtand can packages from both domestic and import segments* bottles vs. can estimates not available at this timeSource: Beer Institute, 2009


Top 10 Draught Volume StatesTotal Year 2007 vs. 2008 est. (31 Gallon Barrels)Rank State 2008 2008VolumeChangePercentChange1 California 2,578,953 2,646,839 67,885 2.6%2 Texas 1,043,231 1,082,003 38,773 3.7%3 Florida 1,409,703 1,433,372 23,669 1.7%4 New York 1,000,179 1,067,880 67,701 6.7%5 Pennsylvania 1,492,866 1,551,636 58,770 3.9%6 Illinois 925,504 923,284 (2,220) -0.2%7 Ohio 715,489 705,609 (9,880) -1.4%8 Michigan 720,350 739,483 19,133 2.7%9 North Carolina 315,976 334,213 18,236 5.8%10 Georgia 350,419 350,885 466 0.1%US Total 19,947,842 20,299,054 351,212 1.8%Source: State Shipments from Beer Institute, 2009


Top 10 Draught Growth StatesTotal Year 2007 vs. 2008 est. (31 Gallon Barrels)Rank State 2007 2008VolumeChangePercentChange1 Arkansas 77,452 84,526 7,075 9.1%2 Alaska 39,634 43,156 3,521 8.9%3 Virginia 454,209 492,288 38,079 8.4%4 Rhode Island 77,541 84,007 6,465 8.3%5 Vermont 42,078 45,396 3,319 7.9%6 Maryland 318,432 343,142 24,711 7.8%7 New York 1,000,179 1,067,880 67,701 6.8%8 Colorado 637,678 680,356 42,678 6.7%9 North Carolina 315,976 334,213 18,236 5.8%10 Oklahoma 135,179 141,807 6,628 4.9%US Total 19,947,842 20,299,054 351,212 1.8%Source: State Shipments from Beer Institute, 2009


2008 est. Draught Share by State11% < share9% < share < 11%1% < share < 9%Source: TTB and Beer Institute, 2009


Draught Beer Share – On Premise MeasureDraught Share of Market 1946 to 2008 est.1. Draught share of market has fallen consistently from over a thirdof the market to less than 10% in 2008.2. But still significant, over 600 million gallons (domestic + imports)in 2008 and over 5 billion 16 ounce servings.3. There are over 29,000 miles of draught lines in the USSource: TTB and Beer Institute, 2009


Thank YouLester JonesBeer InstituteWashington, DCljones@beerinstitute.org

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