Chief Economist Lester Jones was on hand at the 2016 Beer Bloggers & Writers Conference in Tampa, Florida, to attendees a crash course in beer economics. Drawing from more than 20 years of experience in applied economics, Jones presented beer writers with a better understanding of the demographics, marketplace trends and economic forces at work in today’s beer industry.

1. Lester Jones
Chief Economist
National Beer WholesalersAssociation
@joneslester

2. Eating cheese in bed can kill!

3. Save a life - Stop Nicholas Cage from appearing
in movies!

4. 0
5
10
15
20
25
1900
1903
1906
1909
1912
1915
1918
1921
1924
1927
1930
1933
1936
1939
1942
1945
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
GallonsPerPerson

5. Source: http://brookstonbeerbulletin.com/

6. 25
26
27
28
29
30
31
32 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
GallonsperLDAPerson
Source: Brewers Almanac.

7. 1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
-4%
-3%
-2%
-1%
0%
1%
2%
3%
Dec-06
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
#notworking
ShipmentTrends
Still over 3.3 million young males (25-34) not working!
Combined impact of unemployed and not participating in labor force
Source: Beer Institute STW, BLS and NBWA 2016.

8. -20%
-10%
0%
10%
20%
30%
40%
50%
1/1/1979
1/1/1980
1/1/1981
1/1/1982
1/1/1983
1/1/1984
1/1/1985
1/1/1986
1/1/1987
1/1/1988
1/1/1989
1/1/1990
1/1/1991
1/1/1992
1/1/1993
1/1/1994
1/1/1995
1/1/1996
1/1/1997
1/1/1998
1/1/1999
1/1/2000
1/1/2001
1/1/2002
1/1/2003
1/1/2004
1/1/2005
1/1/2006
1/1/2007
1/1/2008
1/1/2009
1/1/2010
1/1/2011
1/1/2012
1/1/2013
Very high wage Middle wage Low wage
Low wage is 10th percentile, middle wage is 50th percentile,
very high wage is 95th percentile.
Source: EPI analysis of Current Population Survey Outgoing Rotation Group microdata

9. $36.58 $29.21 $27.86 $22.47 $20.39 $15.67
18.8%
7.6%
4.3%
2.1%
-1.6%
-5.3%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Craft Imports Domestic
Super
Premium
Total Beer Domestic
Premium
Domestic Sub
Premium
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
SegmentGrowth
PricePerCase
Price Per Case Segment Growth Rate
Source: IRI All Outlets YTD 12/27/2015

10. 0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
0 2 4 6 8 1012141618202224262830323436384042444648505254565860626466687072747678808284
U.S. Hispanic U.S. Non-Hispanic
Source: U.S. Census and NBWA 2015.

11. 68%
69%
69%
70%
70%
71%
71%
72%
72%
73%
73%
74%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
LDA Share
34.0
34.5
35.0
35.5
36.0
36.5
37.0
37.5
38.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Median Age
Source: U.S. Census Bureau

12. 40
50
60
70
80
90
100
110
120
130
Gen Y (21-29) Gen X (30-49) Boomers (50-69) Silent (70+)
IndexBase=100
Liquor Past 7 Days Beer in Past 7 Days Wine Past 7 Days
Source: Scarborough Research, 2015

13. 0
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
1,750,000
2,000,000
2,250,000
2,500,000
1/1/2012
2/1/2012
3/1/2012
4/1/2012
5/1/2012
6/1/2012
7/1/2012
8/1/2012
9/1/2012
10/1/2012
11/1/2012
12/1/2012
1/1/2013
2/1/2013
3/1/2013
4/1/2013
5/1/2013
6/1/2013
7/1/2013
8/1/2013
9/1/2013
10/1/2013
11/1/2013
12/1/2013
1/1/2014
2/1/2014
3/1/2014
4/1/2014
5/1/2014
6/1/2014
7/1/2014
8/1/2014
9/1/2014
10/1/2014
11/1/2014
12/1/2014
1/1/2015
2/1/2015
3/1/2015
4/1/2015
5/1/2015
6/1/2015
7/1/2015
8/1/2015
9/1/2015
10/1/2015
11/1/2015
12/1/2015
TotalGallons
Source: NBWA, TTB and U.S. Commerce Dept. 2016.

14. 45%
34%
23%
53%
34%
25%
0
0.1
0.2
0.3
0.4
0.5
0.6
Beer Wine Liquor
PercentWhoSaid“VeryorSomewhat
Important”
How important is being locally made to your purchase decision
for…
Total Persons 21+ 21 to 34
Source: Nielsen Quick Query Omnibus Survey, February 12-17, 2015 National. (Base: LDA consumers who drink at least several times per year)

15. 0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: TTB and NBWA.

16. State Count State Count State Count
Alabama 30 Kentucky 48 North Dakota 11
Alaska 35 Louisiana 25 Ohio 187
Arizona 91 Maine 84 Oklahoma 21
Arkansas 29 Maryland 73 Oregon 281
California 788 Massachusetts 124 Pennsylvania 278
Colorado 352 Michigan 316 Rhode Island 15
Connecticut 59 Minnesota 142 South Carolina 51
Delaware 21 Mississippi 14 South Dakota 19
DC 13 Missouri 90 Tennessee 88
Florida 205 Montana 74 Texas 220
Georgia 54 Nebraska 39 Utah 29
Hawaii 26 Nevada 39 Vermont 66
Idaho 57 New Hampshire 63 Virginia 155
Illinois 210 New Jersey 71 Washington 383
Indiana 151 New Mexico 71 West Virginia 17
Iowa 71 New York 329 Wisconsin 189
Kansas 37 North Carolina 207 Wyoming 32
Source: NBWA and TTB, 2016.

17. Contribution to Craft
Growth in 2014 by Volume
Rank
35%
20%
10%
36%
Top 10 Top 50 Top 100 Balance (25k OR LESS)
Contribution to Craft
Growth in 2015 by Volume
Rank
14%
22%
12%
52%
Top 10 Top 50 Top 100 Balance (25k OR LESS)
Source: New Brewer Magazine, BA 2015 and 2016.

18. • Reviewed 4,000+ brewer names
• Rivers (90), Creeks (63) and Mountains (53) are in
• Fields (1), Streams (2), Prairies (3) and Deserts (2) are out
• Dogs (30), Bears (29) and Horses (25) are in
• Spider (1), Snakes (2) and Lizards (2) are out
• Eagles/Hawks (9) vs. Doves/Pigeons (4)
• Bulls (11) vs. Cows (2)
• Size does matter ... Big (60) vs. Small (1)
• Direction important … North(40), South(35), East (10),
West(24)
• Numbers matter too … Prime (48) vs. Composite (19)
• Most likely to open in your neighborhood
• 3 Big River Dogs Taproom (Northwest)
• 5 Big Mountain Bears Brewpub (Northwest)
• Least likely to open in your neighborhood
• 4 Tiny Desert Spiders Taproom (Southeast)
• 6 Small Field Snakes Brewpub (Southeast)

19. SubPremium
28
Premium
62.3
Above Premium
9.5
1980
SubPremium
21.7
Premium
43.1
Above
Premium,
34.9
2014
Source: Beer Marketers Insights, “The Long View” 2015.

20. Imports
2.6
Super Prem
6.9
1980
1980 Above Premium 9.5%
Imports
14.1
Craft
9
SuperPrem
7
Cider
1
FMB
3.8
2014
2014 Above Premium 34.9%
Source: Beer Marketers Insights, “The Long View” 2015.
MEADE AND SPRKLING WATERS?

21. 2014, 1.8%
2014, 29.4%
2014, 32.0%
2014, 17.1%
2014, 19.8%
1979, 0.1%
1979, 12.9%
1979, 38.8%
1979, 23.9%
1979, 24.3%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Rich
Upper Middle
Middle
Lower Middle
Poor
Source: The Growing Size and Incomes of the Upper Middle Class, The Urban Institute. June 2016

22. 0
200
400
600
800
1,000
1,200
2006 2008 2010 2012 2014
Average Number of SKUs
Count of SKUs
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0
2006 2008 2010 2012 2014
Inventory Turn
# of Times
Source: NBWA, Distributor Productivity Report.

23. 9%
8%
13%
70%
Share of Jobs at a Distributor
Admin Marketing
Operations SalesOps
Source: NBWA, Comp and Benefits Study, 2015.

24. 1.00 ,
58%0.24 ,
14%
0.48 ,
28%
2000
Beer Wine Liquor
0.90 ,
49%
0.31 ,
17%
0.62 ,
34%
Beer Wine Liquor
2015
Source: NBWA 2016. (Ethanol = C2H6O)

25. 100
102
104
106
108
110
112
114
116
118
1/1/2008
4/1/2008
7/1/2008
10/1/2008
1/1/2009
4/1/2009
7/1/2009
10/1/2009
1/1/2010
4/1/2010
7/1/2010
10/1/2010
1/1/2011
4/1/2011
7/1/2011
10/1/2011
1/1/2012
4/1/2012
7/1/2012
10/1/2012
1/1/2013
4/1/2013
7/1/2013
10/1/2013
1/1/2014
4/1/2014
7/1/2014
10/1/2014
1/1/2015
4/1/2015
7/1/2015
10/1/2015
1/1/2016
Beer Liquor Wine
Source: U.S. Bureau of Labor Statistics, 2016.

26. 0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
2013 2014 2015
ReportedGallons
California
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2013 2014 2015
ReportedGallons
Florida
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
2013 2014 2015
ReportedGallons
Texas
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2013 2014 2015
ReportedGallons
Iowa

27. 40,000
41,000
42,000
43,000
44,000
45,000
46,000
47,000
2010 2011 2012 2013 2014 2015
Source: U.S. BLS, Quarterly Census of Employment and Wages, 2016.

28. 10.2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1946
1948
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Back in the days when we drank “away from home”
To today where we drank “at home”
Source: NBWA, TTB, U.S. Department of Commerce. 2016.
In 2015 the industry produced and sold the same volume of
draft beer in 2015 as it did in 1960s.

29. • Mega Brew – Local vs. Global. What does it mean for the industry?
• High End – Craft and import volumes continue to grow, but at a
slower pace for 2016 – still adding more cases as industry capacity
expands but on larger base.
• Innovation will drive growth – more SKUs and a more complicated
business.
• Domestic macro volumes will show a slight improvements but won’t
carry the industry – economics, employment and wages and
disposable income.
• Ciders vs. Hard Soda vs. Sparkling Water vs. Meade
• Cans vs. Bottles vs. Growlers
• Taprooms vs. Traditional On-Premise –Will draft ever grow?
• Waiting for industry to get back to basics…
• The data will tell the story of beer

30. Thank you!
Questions?
Lester Jones
ljones@nbwa.org