MillerCoors Behind the Beer

The end of SKUmaggedon?

One of the defining aspects of the beer business in recent years has been the explosion of new brands, flavors and line extensions.

Driven by the craft explosion, this proliferation has given beer drinkers more choice.

It also has presented challenges for brewers, distributor and retailers. And, if you follow the premise of The Paradox of Choice, it can potentially confuse shoppers.

But is this so-called SKUmaggedon* coming to an end?

A May 31 report from Brett Cooper at Consumer Edge Research suggests it might.

The report notes that the beer industry had roughly 12,900 active SKUs at the end of 2016. That’s about double the number on store shelves at the beginning of 2011.

However, during the latest month period (ended May 7), there were approximately 12,300 SKUs. This follows a slowdown in the growth of SKUs that dates back to last April.

“Over the latest few months, the number of active SKUs actually decreased a little bit driven by reductions in the craft sector, which indicates that we may be a period of SKU rationalization in the craft segment,” the note said.

From the report:

The craft beer segment has been the primary catalyst for the increase in SKUs within the beer industry with the active SKU count going from ~3,411 back at the beginning of 2011 to about ~8,584 during the latest month. … In the latest month, the active SKU count was down roughly 2% YoY.

This reduction in SKUs comes as craft has been slowing down.

As the number of SKUs declines, the productivity of the ones that remain is increasing — including for craft SKUs.

“With the decline, we are seeing an increase in sales/SKU,” the note said. “Increased SKU productivity should be good for distributors, retailers and ultimately the industry.”

It’s too early to say whether this reduction will stick. But, as the craft slowdown continues, we may have passed peak SKUmaggedon.

(SKU=stock keeping unit, a distinct item for sale.)