Multicultural Malts

Last year proved to be a good year for craft beer as craft brewers reached a double-digit volume share of the marketplace, according to data released by the Brewers Association.

Retail dollar value increased 22 percent and was estimated at $19.6 billion, representing 19.3 percent of market share, said the Boulder, Colo.-based trade association that represents small and independent American craft brewers.

The fact that craft beer is performing well is not news to the beer industry, but what is coming to light is the increasingly wide range of the consumer pool for craft beer.

“Craft beer appreciators are becoming as diverse as craft beer itself,” the Brewers Association noted. In addition to the growing number of households and women purchasing craft beer, Hispanic consumers “are demonstrating increased engagement as well.”

Market research firm Technomic Inc. has observed the same trend. Three in 10 Hispanic consumers (31 percent) drink craft beer at home and 43 percent order craft beer in restaurants and bars at least once a month, Technomic research has found.

“Hispanics are engaging with craft beer both as consumers and as producers, and they’re poised to influence the direction of the craft beer industry,” Donna Hood Crecca, senior director of Technomic, wrote in a blog posting this past summer.

Hispanic consumers certainly have the spending power to put behind their beverage pallet. The buying power of the U.S. Hispanic market tops $1.2 trillion annually, the latest Nielsen Share of Wallet Study showed. The survey, which was fielded between September and November, revealed this demographic spends $51 per shopping visit on adult beverages such as beer, wine and liquor compared to $39 per visit by the total market.

Drilling down even further, Hispanic millennials may represent the best opportunity for craft beer sales. According to New York-based Nielsen, the median age of Hispanics 21 or older in the United States is 28. Among non-Hispanics, the median age is 42.

“When you think about Hispanics, it’s almost synonymous with youth,” said Maria Monistere, senior manager with Nielsen’s Hispanic Center of Excellence.

Hispanic millennials are picking up some of the traits associated with the average craft beer drinker: they’re more likely to have a college education than the generations that preceded them, leading to a greater chance of landing white-collar employment. This, in turn, leads to higher income, and higher income is one of the more pronounced characteristics of the average craft beer drinker, according to Monistere.

Hispanics’ growing affinity for craft beer has not escaped the attention of some of the big-name brewers. Chicago’s Blue Moon Brewing Co. recently introduced Blue Moon Cinnamon Horchata Ale into select cities in Texas, California, New York and Colorado. The offering is inspired by the traditional and popular Latin American drink known as horchata.

Anheuser-Busch InBev, meanwhile, continues to expand upon its successful “Rita family” line of beverages, which began with the launch of Bud Light Lime-A-Rita in 2012. The St. Louis-based beer giant now offers Raz-Ber-Rita, Straw-Ber-Rita and Mang-O-Rita, to name a few. The entire line is on pace to be a $1-billion brand in year three, which is this year.

TRADING UP

“The Hispanic population is growing and is expected to exceed 100 million by 2050. The buyer power of this influential consumer base is now worth $1 trillion and is forecast to grow 50 percent in the next five years,” noted Gustavo Guerra, brand director of Tecate, citing Nielsen data. Tecate beer is part of White Plains, N.Y.-based Heineken USA’s brand portfolio.

“This phenomenal growth is having a profound effect on American culture from food and beverage to music, sports, film, fashion and much more,” Guerra continued.

As the economy stabilizes, consumers overall are trading up to premium beer offerings, specifically imports. And the imports segment, he explained, has a greater appeal among the multicultural/Hispanic consumer segment, which is forecast to account for nearly 70 percent of future beer category growth.

“[Imports] demonstrate higher loyalty and repeat purchase rates as compared to the regionality and trial-only nature of crafts,” Guerra said.

Heineken USA is seeing a growing movement among Hispanic consumers toward the more full-flavored imported light alternatives. Specifically, Guerra said, Tecate Light consumption “has exploded among bicultural, Mexican-American men in the Sunbelt region.” Heineken Light is also seeing double-digit growth among millennials and Hispanic consumers.

In regards to trading up to premium beer offerings, Mexican imports are driving a significant part of that growth the Heineken USA executive stated. The latest data showed absolute dollar growth of Mexican imports was 50 percent higher vs. the previous year’s gains.

“As the Hispanic segment grows in size their influence on the American culture is palpable” Guerra said. “Brands such as Dos Equis and Desperados are embraced by multicultural and mainstream Americans alike while Tecate appeals to the bicultural Mexican-American segment.”