The bw166 TBA Servings Index* stood at 131.95 as of June 30, 2022, up 2.3% versus June 2021 and up 1.9% versus December 2021. Historically there has been minimal volatility in overall trends in The Total Beverage Alcohol market year to year. In 2020 and 2021 the impacts of the Pandemic, shift of volume from On-Premise to Off-Premise and back again, and supply chain issues have created significant volatility in the trends. By comparing the first six months of 2022 versus the first six months of 2019 the market appears to have settled into a new normal.
Unfortunately, the year-on-year trends versus 2021 need significant analysis to understand the actual market direction. The bw166 data focuses on total tax-paid shipments into the US market as well as other government data to fully analyze the market.
Beer for the first six months of 2022 shows shipments up +1.9% (107.2 Million Barrels). The reality is that the total growth can be attributed to imports from Mexico while the cumulative mix of all other sources and types is flat. Looking at Mexican Beer, Constellation is the key driver of these trends. The Compound Annual Growth Rate (CAGR) for Mexican Beer from the first half of 2019 to the first half of 2022 is 6.0% which is a reasonable trend line adjusting for the disruptions noted above. Consumer spending for Beer Off-Premise in the first half was $38.9 Billion, a 4.4% CAGR from the first half of 2019. Consumer spending for Beer On-Premise in the first half was $30.1 Billion, a 4.5% CAGR from the first half of 2019.
Wine for the first six months of 2022 shows shipments down by -0.7% (226.6 Million 9L Cases). The key drivers of the decline are Flavored Wine Beverages and Vermouth. Excluding these types, wine shipments are up over 3.0% in the first six months. Consumer spending for Wine Off-Premise in the first half was $26.7 Billion, a 4.3% CAGR from the first half of 2019. Consumer spending for Wine On-Premise in the first half was $15.0 Billion, a 3.7% CAGR from the first half of 2019.
Spirits for the first six months of 2022 show shipments up +11.1% (143.2 Million 9L Cases). The largest drivers of this growth are Tequila and RTD Cocktails. Consumer spending for Spirits Off-Premise in the first half was $26.9 Billion, an 8.8% CAGR from the first half of 2019. Consumer spending for Spirits On-Premise in the first half was $24.0 Billion, an 8.4% CAGR from the first half of 2019.
Comparing the first six months of 2022 to the first six months 0f 2019 the CAGR for the TBA Servings Index is up +2.8% and the CAGR for consumer spending on Beverage Alcohol is up 5.6%. The 2.8% differential between servings is driven by trading up across all beverage types, some pricing being taken, primarily by Beer in the Off-Premise, and higher mark-ups in the On-Premise. This is partially offset by a faster growth in Spirits which has a lower cost per serving, especially compared to wine.
The trends noted above are higher than the trends recently reported by SipSource for the first five months of 2022. A portion of this is attributable to shipments likely outpacing depletions in the first half due to concerns with supply chains. This has resulted in higher inventories at the wholesale level which indicates that shipments will slow in the second half. Regarding wine, the market is much more fragmented than Beer or Spirits. SipSource is heavily reliant on major distributors such as Southern Glazers, RNDC, and Breakthru. These three distributors controlled 93% of the Spirits market in the State of Florida in 2021 but only 74% of the wine market. From a wine perspective these three control larger brands that are reliant on major chains. As channel shift has occurred back to the On-Premise the large brands have lost volume in the Off-Premise chains which are being made up by smaller brands in the On-Premise and Direct to Consumer.
With the release of the second quarter GDP**, the US is technically in a recession with two-quarters of negative growth. In the second quarter, actual consumer expenditures were up 8.4% versus 2021 but this has slowed from the first quarter rate of +11.1%. Total Consumer expenditures in the second quarter of 2022 were up +2.0% versus the first quarter of 2022. For Off-Premise Beverage Alcohol actual consumer expenditures were up 2.0% versus 2021 but this has slowed from the first quarter rate of +3.7%. Off-Premise expenditures for Beverage Alcohol in the second quarter of 2022 were down -0.4% versus the first quarter of 2022 indicating some slowing.
Having stated that trends will slow in the second half, our perspective for the full year of 2022 is that Beer volume shipments will be flat, Wine will be down 2%, but excluding Wine Flavored Beverages and Vermouth, Wine shipments will be up 1%, and Sprits shipments will be up 4%. We see consumer spending on beverage alcohol growing at 4.5%, slightly lower than the CAGR since 2019 due to the slowing economy.
*The index measures the total servings of Beverage Alcohol entering the US market over a 12-month period with 2003 being the base year with an index of 100.00. The index is calculated on 12 ounces of Beer, 5 ounces of Wine, or 1 ½ ounce of Spirits equaling 1 serving.
**GDP is measured as Real Gross Domestic Product, the inflation-adjusted Gross Domestic Product, versus the prior Quarter. Real GDP for Q2 was reported as -0.9%. Current Dollar GDP, not inflation adjusted, actually increased 7.8% at an annual rate in the second quarter. Real GDP is used to indicate the direction of the economy and does not necessarily reflect current growth in business revenues or consumer spending.