Is it time for the King of Beers to hand over its crown?
Preliminary analysis of national 2017 beer sales indicates that, for the first time in decades, Budweiser is no longer one of the top three beer brands sold in the United States. Bud Light, which has been the best-selling beer in America since knocking Budweiser into second place in 2001, retains the top position. Coors Light, which passed Bud to become the country’s No. 2 beer in 2011, remains in second place.
Then comes the shock: Miller Lite has returned to the top three, narrowly edging out Budweiser.
Budweiser’s sales have been shrinking for decades, says Eric Shepard, the executive editor of Beer Marketer’s Insights, a trade publication focused on beer industry statistics and trends. Anheuser-Busch’s flagship beer now sells less than a third as much as it did in 1988, when the market was less crowded. “It was inevitable, looking at Budweiser’s trajectory, that Miller Lite was going to pass them.”
All four of America’s best-selling beers posted declining domestic sales in 2017, according to market research firm IRI, which tracks sales at “off-premise” locations like supermarkets and convenience stores. Budweiser’s revenue was up 4.4 percent outside the U.S. It’s just that Miller Lite’s 1.6 percent volume decline was “better” than Budweiser’s 5.9 percent drop in its home country.
How momentous is Budweiser’s slip? Sales data from Beer Marketer’s Insights goes back to 1977, and “you’d have to go back far earlier to a year when Bud was not in the top three,” Shepard says. But there’s another cultural marker at play: For the first time ever, the three best-selling beers in America are all light, reduced-calorie domestic lagers. Even for our diet/calorie/Crossfit-obsessed nation, that seems odd.
Craft beer fans, of course, have long mocked macrobrews as watery and flavorless, and that quest for beer with more intense flavors and aromas is what has propelled craft beer to a $23 billion industry. While IPAs still make up a disproportionate amount of craft sales, accounting for more than a quarter of all dollars in the category, one of the fastest-growing segments is decidedly less hoppy and in-your-face — two characteristics that describe why a majority of Americans prefer big corporate lagers to strong, bitter IPAs. Golden ales — also known as blonde ales — have been tipped to be “the next big thing” for years, thanks to astonishing year-on-year growth rates, including a 62 percent increase in 2015, and a 41 percent gain in 2017.
Some of craft’s biggest names have been jumping in: 2017 saw the releases of Green Flash’s GFB blonde, New Belgium’s Dayblazer golden ale, and Uinta’s eye-catching Park Series Golden Ale, which featured outdoorsy illustrations of National Parks on its cans. These are refreshing, easy-drinking ales, with alcohol-by-volume percentages hovering around 5 percent or less. While they have a similar ABV to Budweiser, the craft options have comparatively more hops and flavor than macrobrews — though noticeably less than other beers from the same brewery.
They’re also pricier than Big Beer: At stores around D.C., a six-pack of Michelob Ultra frequently runs $1.50-$2.50 less than GFB or Dayblazer. Is that worth the cred of drinking a local, independent beer? Bart Watson, the economist for the Brewers Association trade group, thinks it is. “I think we’ve reached the point where craft consumers are aging a bit, and so want more sessionable offerings, and where craft companies have enough brand equity to get people excited about lighter-style offerings that they can sell at a premium over the big light lager brands,” he says.
One of the biggest success stories in craft beer over the last few years has been Firestone Walker’s 805. This sweet, lightly hopped honey-colored ale began life as a taproom exclusive, named after the local area code. Initially distributed only within 100 miles of the Paso Robles, Calif., brewery, it became one of the fasting-growing craft beers in the whole country without leaving the Golden State. Now also sold in Texas, Arizona and Nevada, 805 accounts for “a majority of beer we make,” says Jamie Smith, Firestone Walker’s director of marketing. (Not bad for a brewery whose offerings include the nationally distributed Pivo Pils and Luponic Distortion IPA.)
Unlike other Firestone Walker beers, 805’s packaging — 12-ounce bottles to 24-ounce cans — doesn’t feature a style descriptor at all, just a mention of its Central Coast origins. “We’re talking to two different kinds of consumers,” Smith says. “For a lot of folks who are drinking it, they’re not craft beer fans looking for a specific style. The fact it’s a craft beer brand is less important than the fact it’s a cool brand.”
Those two different consumers want vastly different things: Firestone Walker has even given 805 its own website that tells stories about California musicians and surfers instead of waxing lyrical about the varieties of malts and hops used in brewing.
“I think it’s hard for people in the craft world,” Smith says. “They’ll say, ‘Oh, it’s a dumbed-down kind of beer.’ If a Firestone Walker consumer is drinking our barrel-aged beers, they’re probably not drinking an 805-type of beer. But we captured a new kind of consumer with it.”
Also selling a beach-life image — and selling well enough to see its sales leap by nearly 25 percent in 2017 — is Kona’s Big Wave Golden Ale, created by Hawaii’s Kona Brewery. “It’s our interpretation of a beach in Oahu” says Billy Smith, the director of operations for Kona. “Our approach was something lighter in body, not intimidating like an IPA,” with Galaxy and Citra hops for notes of pineapple and passion fruit, and an ABV of just 4.4. At the beach, Smith says, “you want something that will allow people to have more than one.”
But it’s the latest addition to Kona’s lineup that could make the biggest splash among the islands’ “green bottle drinkers” — a colloquial term for people who prefer big brands like Heineken — and mainland casual beer fans: Kanaha Blonde, brewed with Mosaic and Amarillo hops and fresh mango, clocks in at 99 calories per bottle. “We were looking at a lifestyle,” Smith says. “People are focused on their health and don’t want to feel guilty for having a beer … so we made it lower than 100 calories.”
This is perfectly on trend, even outside of places where bathing suits are the norm in January: Michelob Ultra — a 95-calorie, low-carb beer that’s marketed as a perfect post-workout drink — “grew volumes by double-digits” and increased its share of the market for the 10th consecutive quarter, according to the latest earnings report from Anheuser Busch’s parent company, AB InBev. (Shepard puts Michelob Ultra’s growth at “20-plus percent” and guesses that some of its success is down to “cannibalizing” Bud Light and similar beers.)
Whether it’s craft or the world’s largest brewing company, “a combination of light and sessionable is always going to be a large market,” says Beer Marketer’s Insights’ Shepard. “For a lot of people, that’s always going to be what beer is. The craft brewers, I think, see an opportunity to make beer more sessionable and lower ABV. I think they see a larger opportunity to take even more volume from these bigger brands.”
If they don’t, someone else will. Corona, which finished as the fifth-best-selling beer in America this year, continues to make inroads. The sales gap between Corona and Miller Lite and Budweiser is close to 4 million barrels a year, Shepard says, and “if you go back a decade, the gap was more like 10 million barrels. Corona is still growing. But sometimes things that seem obvious don’t happen.”