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The Beer Purchasers’ Index (BPI) is a monthly survey conducted by the National Beer Wholesalers Association (NBWA) that measures distributor purchasing sentiment. A reading above 50 indicates expansion or growth in purchasing activity, while a reading below 50 signals contraction, meaning distributors are reducing their orders.

For September 2024, the BPI recorded a reading of 31, indicating a significant contraction in beer purchasing activity by distributors. This continued downshift suggests that the market conditions for beer sales are challenging, particularly for craft brewers.

According to Craft Brewing Business, after a summer of heightened ordering levels, the combination of index readings for at-risk inventory (47) and BPI (31) reflects a more cautious outlook among distributors as they head into the fall months. The brutal call of the craft index also continues. See below.

The NBWA’s BPI is the only forward-looking indicator for distributors to measure expected beer demand. The index surveys beer distributors’ purchases across different segments and compares them to previous years. A reading greater than 50 indicates the segment is expanding, while a reading below 50 indicates the segment is contracting.

All segments were down year-over-year except for FMB/Seltzer, which rose 10 points to 38. The only segment in expansion territory (>50) is Imports, which marked its 52nd straight month with a reading above 50.

Looking across segments for September

• The index for imports continues to point to expanding volumes with a September 2024 reading of 53, nine points lower than September 2023 reading of 62.
• The craft index at 21 for September 2024 continues to signal contraction in this segment and is six points lower than the September 2023 reading at 27.
• The premium lights index fell to 38 for September 2024, nine points lower than the September 2023 reading at 47.
• The premium regular index fell to 30 for September 2024, ten points lower than the September 2023 reading at 40.
• The below premium segment for September 2024 at 35 marks a seven point decrease from the September 2023 reading of 42.
• The FMB/seltzer reading for September 2024 at 38 is ten points higher than the September 2023 reading at 28.
• Finally, the cider segment posted a September 2024 reading at 27 compared to 35 for September 2023.

Key Takeaways and Insights

1. Overall Contraction: The BPI for September 2024 highlights a continued contraction in many key beer segments, with most categories seeing reduced demand from distributors. This is reflective of broader industry challenges, including changing consumer preferences, economic pressures, and increased competition from alternative alcoholic beverages like hard seltzers, RTDs, and non-alcoholic options.
2. Craft Beer Struggles: The craft beer segment, once a dominant force in the beer industry’s growth, continues to face significant headwinds, with a notable 21-point index reading. This suggests that smaller breweries may need to adapt by diversifying their product offerings, focusing on direct-to-consumer sales, or adjusting pricing strategies to remain competitive.
3. Hard Seltzer Growth: The strong growth in the FMB/seltzer category is a clear indication of where consumer interest is shifting. This segment’s resilience amidst broader beer industry struggles suggests that lighter, more health-conscious options will continue to gain market share.
4. Traditional Beer Brands Under Pressure: Both premium regular and premium light beer segments are seeing reduced demand, with double-digit declines compared to September 2023. These legacy brands may struggle to maintain their relevance as newer options dominate the market, particularly among younger consumers.
5. Impact on Distributors and Retailers: With distributors pulling back on beer orders, breweries may face additional challenges in terms of production planning and managing inventory. Retailers, too, will need to adapt by offering a broader range of alcoholic beverages, including non-beer options, to meet changing consumer preferences.

In summary, the September 2024 BPI contraction signals a challenging period for beer distribution, with economic factors, seasonal shifts, and changing consumer preferences contributing to the downtrend. For craft brewers, this calls for adaptive strategies to navigate the tough market, maintain strong relationships with distributors, and continue driving consumer engagement.

Attribution: Article Retrieved from Craft Brewing Business, written By Chris Crowell .

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