With all the hype surrounding craft, you could underestimate the appeal of light beer. Despite the category slipping 2.6% in U.S. sales in 2016, light again dominated with 44.5% of the American beer market share. Compare that with craft’s 10.4% market share and you can see why light remains king of beers.
The category sold 1.262 billion 2.25-gallon cases in 2016, compared with 1.295 billion cases (and a 45.6% market share) in 2015, according to the forthcoming 2017 Beer Handbook from the Beverage Information Group.
Should that decline cause concern? On one hand: yes. That’s 33 million fewer cases sold in just one year. Nobody would call that a success.
On the other hand, craft beer has also seen a slowdown. What had been a category on the fast track has recently hit speed bumps. Growth dropped from over 10% in 2015 to just 6% in 2016.
In other words, craft could be approaching a saturation point. How much more market share craft can grab from light remains to be seen, but the answer may not be as much as we had imagined just a few years back.
Still, all top light brands remained in decline last year.
Category leader Bud Light lost 3.4% in sales in 2016, slipping back to 483.151 million cases. Coors Light, -1.5%, finished with 229.958 million cases. Miller Lite with 173.945 million cases was down 3.1%. Natural Lite lost 2.9% in sales, finishing with 89.343 million cases. Busch Lite rounded out the top 5 with a -1.2% performance and 82.148 million cases.
Among the top 23 light brands, only one registered positive sales in 2016. That would be Michelob Ultra, which finished in 6th place with 70.773 million cases, good for an uptick of 18.4% over 2015. That’s also enough to vault the beer into the top 10 selling beer brands in 2016 — a first for the brand.
Why did this of all light brews achieve rare growth year? The marketers behind Michelob Ultra have perfectly positioned the brand for modern times.
Michelob isn’t a “lite” beer — it’s “ultra.” The beer is advertised towards consumers with an active/social lifestyle. Marketing depicts people working out together: running, hiking, bicycling, etc. This beer is ideal for such people, the ads argue, because it’s a “premium lager” with “low carbohydrates.” In other words, this is the low-carb beer for anyone who enjoys active social activities.
Savvy understanding of the modern nutritional lifestyle has allowed Michelob Ultra to succeed where every other light beer brand has slipped. That’s how you can get the all-important Millennial consumers purchasing light beer instead of their beloved craft alternatives.
The corporations behind major light beers have devised another plan for those pesky craft producers: buy them up.
In 2016 alone, AB InBev purchased the popular microbreweries Devil’s Backbone, Karbach, Breckenridge and Four Peaks, while MillerCoors bought up with Terrapin, Revolver and Hop Valley. A litany of other purchases occurred in the years before and after 2016.
These acquisitions show that producers of macro light brands are hedging their bets about beer’s future. However the craft category turns out, they’ll be just fine.
Which is wise, considering the light category’s downward trend. Light beer has lost 190.675 million cases sine 2011, a 15.10% decline between then and 2016. Craft beer over the same time period has gained 116.753 million cases for 39.48% in growth. Consumers are turning towards craft while also experimenting more outside of their usual categories. Fewer people are now beer-only drinkers (which holds true for all categories).
It’s not a rosy picture, but it’s also not utter ruin.
Between the category’s sheer size, and the prudent purchase of craft breweries by corporations, light beer does have advantages. And among drinkers of the category, 22.9% are between the ages of 25 and 34 (compared with 26.4% for craft drinkers), meaning that light beer has not completely lost Millennials.
So look for light beer to continue to inhabit a weird spot in the overall category: total dominance in sales, built upon a shaky support and unclear future. Light beer had six of the top 10 selling beer brands in 2016 (Bud Light, Coors Light, Miller Lite, Natural Lite, Busch Lite and Michelob Ultra) while only Mexican imports also had multiple brands in the top ten. The top craft beer brand was Samuel Adams Boston Lager at #32, a brand that is in decline.
Yes, sales are slowing for light beer. But not at a rate that the category won’t pay the bills for years to come.