Beer Industry Update, 2008 Lester Jones, Beer Institute June, 2009

Beer Serves America  The Beer Serves America (BSA) study is the industry’s primary communication platform describing the breadth and economic contributions of the beer industry to the public and government.  Throughout the year, the Beer Institute, its members, and allied organizations use the Beer Serves America (BSA) message in communications to the media, government, special interest groups and the general public.

BSA Study Summary  The brewing industry is a dynamic part of the U.S. economy, accounting for $198.2 billion in economic output or 1.5% of US GDP.  Industry directly or indirectly employ almost 1.9 million Americans  Employees earn almost $62 billion in wages and benefits  The industry and their employees pay $30.1 billion in direct federal, state and local taxes  In addition, the consumption of beer generates $3.7 billion in federal excise taxes, 1.7 billion in state excise taxes and another $5.7 billion in sales and other related state taxes  The Hops Industry alone contributes over 2,500 jobs, $90 million in wages and almost $300 million in economic output to the US economy  Every state and virtually every community in the country contributes to the brewing industry in some way.

Beer’s Economic Contributions (2,083 Brewery, 2,869 Wholesalers and 521,725 Retailers) United States JobsContributions (billions $) Brewery 42,947 42,947$35.1 Wholesale 95,399 95,399$16.0 Retail 888, ,433$35.0 Supplier Impact 441, ,319$66.9 Induced Impact 417, ,077$45.2 Total Jobs/Contribution 1,885,175$198.2 Business and Personal Taxes $30.2 Consumption Taxes (excise, sales, others) $11.2 Source: Beer Serves America, 2009

5 Gallup Poll, 2009 Source: Gallup Poll, 2008: Do you most often drink beer, wine, or liquor? 40% Beer 34% Wine

Beer, still the largest segment 2008 US Market2008 US MarketBeerWineSpirits Total Sales (million)Total Sales (million)$99,345$27,215$61,120 Total Volume (million)Total Volume (million)6, Pop 2008 (million)21+ Pop 2008 (million) Per Capita SalesPer Capita Sales$456$125$280 Per Capita GallonsPer Capita Gallons Per Capita EthanolPer Capita Ethanol Source: Beer Institute and Adams Beverage Group, 2009

Total US 2007 Retail Sales Retail Sales Change Beer$97.9$ % Wine$27.9$ % Spirits$61.6$ % Total$187.3$ % Adams Beverage Books, 2009 US Beer, Spirits and Wine, 2007 vs Retail Sales Trends (Billions $)

Index Per Capita Ethanol Consumption Beer Wine and Spirits Assume 4.5% for beer, 14% for wine and 40% for spirits Segment Beer48%57% 52% Wine10%15%17% Spirits42%28%31% Source: Beer Institute and The Beverage Information Group 2009 Share of Ethanol volume

Per Capita Consumption of Malt Beverages 1980 to 2008 (gallons per person/total population) Source: Beer Institute, in 2008 from a high of 24.6 in Changing Demographics 3.Increased alcohol beverage competition 4.Additional non-alcohol beverage choices 5.Policy Changes (21 LDA and.08)

US Population 2008, Ages 21 to 75 Tail end of the baby boom generation born between 1957 and about 32 million people or 16.2% of the LDA population Beer demo (21-27) - about 29.4 million people or 14.9% of LDA Population Difference of 2.5 million consumers at 20 gallons/year per capita…equates to about 1.6 million barrels less demand…beer has weathered the storm with yr old age cohort (13.9% of LDA). Source: United States Census Bureau, 2009

40.0 > 30.0 ≤ 34.9 Source: Beer Institute, 2009 (2006 Beer Institute Population Estimates) ≤ ≤ est. Annual Per Cap Consumption Gallons per person 21+

US Brewing Cost Index The Brewing cost index measures a select few commodity input costs used by the US brewing industry Weighted average index accounts for agricultural, energy and packaging inputs based on data collected through the Economic Census for the industry ComponentWeight07 vs. 08 PPI - Producer Price Index for Commodities9.9% Packaging (cans, bottles, boxes)60%3.6% Agricultural (barley, rice, corn, wheat)30%26.1% Energy (commercial electric and natural gas)10%-3.0% Brewing Cost Index11.2% Source: Beer Institute and BLS PPI (Note: Hops are not measured in the PPI commodity index)

US PPI & US Brewing Cost Index The commodity costs index measure only a select few inputs. The index does not include many other P&L items such as marketing, administration, transportation and labor/benefit costs. The components of the brewing index demonstrate the energy and agricultural intensity of the brewing process relative to the general economy. Source: Beer Institute and BLS PPI (Note: Hops are not measured in the PPI commodity index)

Industry Supply and Shipments of Malt Beverages Two measures: Supply and State Shipments Supply = Domestic Tax Paid + Imports Shipments = Sum of all beer shipped from brewers and importers to distributors by state 1 barrel = 31 gallons = cases = 330/12 oz servings

World and US Brewing Industry Based on 2007/2008 volumes estimates Brewer World Share US Share ABI26%50% MILLER/COORS17%30% HEINEKEN10%4% Top 3 Share51%81% Total (barrels)1.4 Billion214 million Top 3 brewers now produce over 50% of world’s beer and 81% of US market The 70-80% share is the norm in most other developed countries as well. 18 Source: Beer Institute, Crown Imports now has 5.4% share of US market and Pabst 2.6% share of US market

2008 US Market Shares for Brewers (Based on shipments from brewers to wholesalers,2008) Source: Beer Institute, 2009.

Segment 2007 Volume 2008 Volume 2008 Share Volume Change Percent Change Domestic182,687184,65587%1,9681.1% Imports29,69528,70013% % Total Industry212,382213,355100%9730.5% Total Malt Beverage Industry Supply 2007 vs (millions of barrels) Source: Beer Institute, 2009 Total Industry added almost 1 million barrels of beer in That’s almost 13 million cases of additional beer passing from brewers to distributors to retailers to help satisfy over 90 million beer consumers.

US Package Mix (Bottles, Cans, Draft) 2007 vs (1,000s of barrels) Package 2007 Volume 2008 Volume 2008 Share Volume Change Percent Change Bottles88,48687, %-1, % Cans102,676105, %2,4822.4% Draught20,04020,2019.5%1610.8% Plastics %101.4% Total211,905213, % % Cans and draught beer lead industry growth in 2008 as bottles pulled the industry down by -1.6%. Draught continued to grow in 2008 reaching 9.5% share of market for over 5 billion 12 ounce servings. Source: US Dept of Commerce, Bureau of Census and Beer Institute, 2009

Thank You Lester Jones Beer Institute Washington, DC