2007 Malt Beverage Industry Packaging Trends

Craft Brewers ConferenceSan Diego , CAApril, 19, 2008

Lester JonesBeer InstituteWashington, DC

2007 Changing Marketplace Import sector pulled back to its slowest growth in past 10

years, Slowing occurred in the mainstream import brands, but still have strong demand for specialty beer from smaller importing countries such as Belgium.

Top 3 Brewers had a very interesting year… AB first full year with Inbev, Grolsch, and Rolling Rock in

their distribution network MBCO has successful Miller Chill product launch and

McKenzie River/Steele Reserve continue to grow Molson-Coors had continued success with Blue Moon, Coors

Light Cold Campaign and Coors Original Banquet Boston Beer continues posting strong growth Yuengling continues to post a moderate growth and expands

into TN. Specialty/Craft segment continues double digit growth from

2006 into 2007 with 12% growth. BIG QUESTION: Will the economic slowdown, rising ingredient

costs and resource prices slow industry growth in 2008?

Per Capita Consumption of Malt Beverages1980 to 2007 (gallons per person/total population)

19.520.020.521.021.522.022.523.023.524.024.525.0

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Source: Beer Institute, 2007.

1. Second year of increase 22.2 in 2007 from a high of 24.6 in 1981

2. Changing Demographics, tastes and trading up

3. Increased alcohol beverage competition

4. Additional non-alcohol beverage choices

5. Policy Changes (21 LDA and .08)

Segment

2006 Volum

e

2007 Volum

e2007 Share

Volume

Change

Percent

Change

Domestic*180,40

1183,01

986% 2,618 1.5%

Imports 29,294 29,695 14% 401 1.4%

Total Industry209,69

5212,71

4100% 3,019 1.4%

Total Malt Beverage Industry2006 vs. 2007 (1,000’s of 31 gallon barrels)

Source: Beer Institute, 2007

Total Industry added over 3 million barrels or 42 million cases of beer for a gain of almost 1 billion 12 ounce

equivalent servings. In a dramatic reversal from 2006, over 90% of the net gain in volume came from domestic growth.

* 2007 Beer Institute Year End Reported Volume

Domestic Segment 2006 2007

2007Share

Volume

Change

Percent

Change

Packaged

163,371

165,85

9 90.4% 2,488 1.5%

Draught 16,993 17,287 9.4% 294 1.7%

Tax Determined *

414 419 0.2% 5 1.2%

Total Industry * *

180,778

183,565

100% 2,787 1.5%

Domestic Malt Beverage Industry2006 vs. 2007 (1,000’s of 31 gallon barrels)

Source: TTB and Beer Institute, 2008

* Tax Paid on beer that is served directly from serving tanks in brewpubs and tavern Small relative to total market but still 85 million 16 ounce servings. * * Industry totals may differ from year end published figures in previous slide as additional information on 2007 is collected in 2008

Import Package Mix2006 vs. 2007 (1,000’s of 31 gallon barrels)

Package

Type 2006 2007

2007Shar

eVolumeChange

Percent

Change

Bottles 23,130 22,913 77.2% -217 -0.9%

Cans 3,971 4,332 14.6% 361 +9.1%

Draft 2,194 2,450 8.3% 256 11.7%

Total 29,295 29,965 100% 401 1.4%

Cans and draught carried imported industry volumes for 2007. The bottle segment from Mexico and Netherlands

lost over 700,000 combined barrels.

Source: Us Dept of Commerce and Beer Institute, 2008

Imports of Draught Beer into the US1999 to 2007 (31 gallon barrels)

500

1,000

1,500

2,000

2,500

3,000

1999 2000 2001 2002 2003 2004 2005 2006 2007

Tho

usan

ds

Source: US Dept of Commerce, Bureau of Census and Beer Institute, 2007

Draught imports have grown 7% CAGR since 1999 to reach 2.4 million barrels in

2007. Measure of on premise consumption and best opportunity for

consumers to try new brands.

National Package Mix Trends, 2006 vs. 2007 (1,000’s of 31 gallon barrels)

Package 2006 2007

2007Share

Volume

Change

Percent

Change

Cans 100,656 103,618 48.7% 2,962 2.9%

Bottles 88,193 88,270 41.5% 77 0.1%

Draught 19,564 20,109 9.5% 545 2.8%

Refills 631 16 0.0% -615-97.5%

Plastic 702 722 0.3% 20 2.8%

Total209,74

6 212,735 100.0% 2,989 1.4%

Source: Beer Institute, 2008

Industry totals may differ from year end published figures in previous slide as additional information on 2007 is

collected in calendar year 2008.

0

20

40

60

80

100

120

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Millions of Barrels

Cans Bottles Refills Draught

US Package Mix Volumes, 1994-2007

Source: Beer Institute Package Mix and Shipment Reports, 2008

Shares Pack 1994

2007 Cans 55%

48% Bottles 30%41.5% Draught 11% 9.5% Refills

4% 0%

Draught Beer Share – On Premise MeasureDraught Share of Market 1946 to 2007

0%

5%

10%

15%

20%

25%

30%

35%

1946

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

1. Draught share of market has fallen consistently from over a third of the market to less than 10% in 2007.

2. But still significant, over 20 million barrels (domestic + imports) in 2007 for over 4.9 billion 16 ounce servings.

3. There are over 29,000 miles of draught lines in the US and over 10 million kegs in circulation.

Source: TTB and Beer Institute, 2007

Making a Dent in Keg Theft

Price Index for Scrap Metals, 2001 - 2007Four fold increase since 2001

0

50

100

150

200

250

300

350

400

450

Inde

x

2001 2002 2003 2004 2005 2006 2007

Source: BLS Producer Price Index and Beer Institute, 2008

Keg Loss Estimate2006 volumes and values

2006 Volume Estimates Total

Draught Volume Barrels 19,253,609

Total Kegs (mixed sizes) 45,120,744

Keg Turn (industry average) 4.2

Keg Float to handle volume 10,740,667

Percentage loss 3.6%

Kegs loss in 2006 386,053

Replacement Cost $136

Replacement Value $52,613,348

10.7 million kegs equals about $1.5 billion in

brewer assets on the street

386K kegs have the potential to be worth $15 million at current

scrap values

Source: Beer Institute, 2007

Keg Loss

•Surprise Issue of the Year

•300,000 Kegs Lost

•Costs Industry More than $50 million annually

•Expected to Get Worse

Fighting Back

● Partnering with ISRI, Others

● Education materials

● Ad campaign in Scrap Magazine

PR

February 8, 2008

TX

NMAZ

CA

OK

KS

NE

SD

NDMT

WY

COUT

NV

OR

WA

ID

MN

IA

MO

AR

LA

MS AL GA

FL

NC

VA

TN

KY

IL

WIMI

INOH

WV

NY

DCDE NJ

CTRI

MA

VTNH

AKHI

Legislation introduced that includes scrap metal/keg loss prevention

PA

MD

Legislation passed that covers scrap metal/keg loss prevention

SC

ME

Potential Keg loss target states for remainder of 2007 or 2008

Keg Loss/Scrap Metal Loss Prevention Efforts

Thank You

Lester JonesBeer InstituteWashington, DCljones@beerinstitute.org