Beer Styles: How Preferences Vary By State

RealClear Staff

            

     India Pale Ales are the general consensus around the country in terms of mainstay mashes—at least for smaller and indie craft brewers—but are there variations in style preferences around the nation? Are IPAs truly king on the west coast? Do certain styles have a larger share in well-developed craft states?

In order to unravel these inquiries, the IRI Group availed some state-by-state style charts. But before delving into that data, absorb the knowledge from these notes:

- IRI’s newly restated craft definition availed vital alterations from the Brewers Association category—specifically the additions of Anheuser-Busch and MillerCoors brands in their category (don’t ask). The biggest effect is a bump up in “Belgian Wits” share (due to the inclusion of Shock Top and Blue Moon).

- This is based on scan data—i.e., it’s a quick snip of the off-site only (which accounts for only 60-65 percent of total, craft volume and won’t have any data from brewpubs/microbrewery tasting rooms). This may reduce the share of smaller styles served on-site but are less likely to be packaged.

- Not all suds slip easily in a style category. A White IPA (already obscure) that goes into a variety or seasonal pack will show up there rather than in Belgian Wit or IPA.

- Not all 50 states are included in the analysis. This information includes 42 states and 47 different retail-scan channels—some states have multiple channels shown.

Going into this, know the data depicts some decent style data state by state, but it isn’t necessarily a comprehensive carve out of the craft-beer industry.

Variations by State

In order to obtain a state-to-state variation, look at the two, largest styles for craft brewers—IPA and seasonal. Combined, both styles make up between 40 and 45 percent of craft volume (depending on the desired, viewing channel/how the data is cut). But their share varies vigorously state to state. In California (multi-outlet plus convenience; MULO+C), seasonals have 9.8 percent share of craft, whereas seasonals have more than 30 share in Massachusetts (30.5 percent in MULO+C and 35.3 percent in Liquor). Similarly, IPA ranges from 5.4 percent (Arkansas MULO+C) to multiple states with more than 30 percent share in various channels (Georgia-Liquor, Oklahoma MULO+C, and Utah MULO).

What exactly accounts for these variations? Obviously (to be correct), the answer is beer-lover preferences. However, in order to be informative and/or predictive, the depth of digging should increase. How do these shares shift as craft develops across a state? Is there a pontificated progression in share of certain styles and a corresponding loss in share of other styles as craft gains in share?

Within the craft universe, a loss of share isn’t necessarily synonymous with a loss of volume. In a growth industry, a rising tide lifts all styles (albeit at different rates). If a craft escalation from 10 percent share to 20 percent share of the overall beer market occurs, a style can still significantly grow its total volume even if it loses five or even 10 share points within craft. To put that in perspective: if craft holds 10 percent share of all beer, and within craft, Belgian Wits hold 30 percent share, that’s three-percent share of all beer. If craft grows to 20 percent share, and within craft, Belgian Wits drop to 20 percent share, that’s now four-percent share of all beer—a higher volume. Therefore, understand share gains and losses within the overall context of craft growth. It’s easy to get lost in share points while forgetting the pertinent information—increasing volume.

It’s important to analyze the relationship between industry development and style preferences via different states in comparison to each other in terms of development. When comparing states, how do styles shift in share as craft develops?

The following table illustrates a correlation coefficient (a measure of linear fit) between craft’s share of all beer across the states/channels in this data set and the top-ten craft styles in each of those states. These 10 styles reflect almost 90 percent of total, craft volume—national ranks may differ. A higher, positive number (closer to one) means as craft has a higher share in state, that style tends to also have higher share within craft. A negative number means as craft increases, that style tends to have a decreased share within craft.

[Source: BrewersAssociation]

Overall, the data depicts shares going from lighter and/or meltier, beer styles to hoppier/variety-based packages. (Only the bottom, three values are statistically significant (at a p<.1 level), and there are a few, other methodological issues with running a correlation like this.)

Without the ability to look at individual states chronologically, it’s difficult to assess how much of this relationship is:

Causal: where growing share for craft and development of the craft industry causes change beer-lover preferences.

VS

Different places are a different story: where most-developed states simply differ from places that haven’t—i.e., west coast beer lovers like different things than southeast beer lovers.

If the case is causal (probable but not proven), the data can be used to estimate what the craft-industry development would mean for various styles—e.g., IPA.

IPA Share Across the States

Get a gander at this graph showing state, craft share against IPA’s share within craft. Although there is a lot of variation, it generally conveys as craft share grows, so does IPA share. In fact, it predicts on average, as craft grows from five share to 25 share, IPA should rise more than 4.5 share points within craft. That may be too little to significantly shift business models—in a hypothetical million-barrel state, 4.5 share points for a craft industry at 25 share is only 11,250 additional bbls—but it certainly makes a difference at the margins.

[Source: BrewersAssociation]

Two, important points should be taken from all this:

1. State/local share of various styles matters a lot; and unless you’re a national brewer, national share shouldn’t drive the desired, local strategy.

2. There is some evidence of beer-lover preferences evolving over time as the craft industry develops in a state. While this point shouldn’t trump what’s stated above (get educated on local markets), it is worth considering when planning for the future.

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