Beer Marketer's Insights
Oatly Group took key step toward abandoning its strategy of operating fully integrated plants with agreement to hive off its filling obligations to Ya Ya Foods, an established aseptic foods copacker based in Toronto. Under terms of deal anticipated to close later this qtr, Ya Ya is picking up property lease and equipment at Oatly's plant in Ogden, Utah, for $72 mil, while Oatly retains total control over production of proprietary oat base that it regards as key strategic responsibility. And Ya Ya will take over the finished-goods part of the plant that's going up in Fort Worth, Texas, while Oatly retains control of oat base output there. Crucially, deal marks Ya Ya's entry into US market, and associated 6-K filing with SEC indicates that Canadian co will be able to deploy surplus capacity to serving 3d-party customers, at time rival copacker SunOpta is claiming that plant under construction in area already has sold out half its capacity a year before going live (BBI, Nov 14).
On-Prem Beer Prices Up Far Less Than Off-Prem; Can Prices Flattish as Aluminum Costs Fell
Tho on-premise beer prices rose across top styles from Mar-Dec 2022 in the US, low-single-digit price hikes in restaurants, bars and taprooms still lagged well behind increases in the off-premise. Analyzing pricing from nearly 20K on-prem retailers, Untappd found that a 16oz draft American Light Lager had the highest percentage increase, up 3.3%, followed by Fruit Beer (+2.2%) and American IPA (+1.9%). But avg price of a pint ranked in reverse order: American IPA averaged $6.87 in Dec '22, Fruit Beer at $6.51 and American Light Lager at $4.94 across all on-prem venue types.
Global Beer/Bev Industry Revs Projected to Reach $402 Bil by 2027; Top-10 Rankings per Investopedia
The worldwide beverage industry remains resilient across both beer & NA bevs. Global bev revenues are collectively expected to reach $257.3 bil by 2023, projected to top $400 bil by 2027 growing at ~11.8% per year, per Investopedia (citing report from Statista). Growth of NA bevs "should outpace the more stable growth expected for alcoholic beverages," article notes. But at this point, "most of the top players in the beverage industry sell both alcoholic and non-alcoholic beverages."
Innovation remained a sizable portion of 2022 biz, according to Nielsen foodstore data highlighted by Bump Williams Consulting's latest monthly update. Top-29 new brands (including 4 brands with tiny bit of sales tracked in previous year) collectively surpassed $353 mil and 10 mil cases in Nielsen foodstores for 52 wks thru Dec 24. That's 2.5% of total beer $$ and 2% of volume in foodstores for period as beer/FMB/cider $$ just eked out a 0.7%, $95-mil gain and total volume declined by more than 18 mil cases. So outside of these top-29 new brands, all others collectively down $258 mil and 28.25 mil cases vs year ago in foodstores.
New Year didn't start off with a bang for big beer stocks. Wells Fargo's Chris Carey downgraded Molson Coors to an "underweight" rating this morn and its stock down 4% at press time. "We see too much risk" to its earnings and don't think consensus analyst estimates "properly" account for cost inflation in 2023, he said. Chris also does "not see sufficient offsets in volume (sluggish), price (little scope for additional actions given sluggish volume), nor MG&A [mktg, gen and admin] already running at multi-year lows in 2022 and we expect another low" in 2023.
Bombshell development that Sazerac would move from RNDC in over 20 states, and often to beer distribs (see Dec 30 issue), included other very significant offshoot news. Largest beer distrib, Reyes Beer Division, will now step into spirits in big way as it gets Sazerac portfolio in multiple mkts. Turns out there's another eye-opening aspect of RBD entry into spirits. It will get Sazerac not only in Austin mkt where it bought Capitol Wright last fall, but in 18 counties outside of Capitol Reyes territory, including San Antonio, Waco, College Station and Victoria, "staffing dedicated spirits sales team in those territories" and delivering from Manor, TX. That's notable because RBD is seemingly setting itself up for other potential acquisitions of brands and/or distribs.
After two years of dealing with Covid-related complications, in 2022, stockholders contended with soaring inflationary pressures. While Dow Jones Avg (-8.8%), S&P 500 (-19.4%) and Nasdaq (-33%) each lost value following double-digit gains in 2021, ABI and Molson Coors managed to gain while other brewer stock prices declined in 2022. ABI (BUD) stock price eked out a 0.1% gain last yr following drops of 13.4% and 14.8% over past two years. On Brussels exchange, ABI up 1.7% following decline of 6.7% in 2021. Molson Coors (TAP) stock price grew 14.4% in 2022, up from a 2.6% increase in 2021 and much improved over its 16% slide back in 2020. Heineken stock price was off 12% in 2022 following modest gains previous two years.
End of the Year "Earthquake": Sazerac Moving from RNDC in Lots More States; Many Beer Distribs
Very rarely happens that there's a big news development between Christmas and New Year's, but Sazerac's announcement today that it will move distribution from 2d largest spirits distrib RNDC in 20+ more states is a bombshell. Following up on Aug announcement of moves to beer distribs Eagle Rock in CO and Columbia in WA, this sweeping move, including to many beer distribs, is further validation that beer distribs can become sizable spirits distributors. Sazerac said transitions to new distribs will be complete by Feb 1. Sazerac expects "improved delivery frequency, customer service and overall improvements both in the on and off premise," it said in note to partners.
The assets of Indianapolis, IN's Fountain Square Brewing are listed for online auction with bidding slated to close Jan 17, including fermenters, a canning line and walk-in coolers. But owner Daryl Starr said a "conventional sale" could happen sooner, and head brewer/interim GM Beppe Cuello "wants to buy Fountain Square Brewing Co with his wife, Dama," writes Inside Indiana Business. Beppe said he's working on a proposal to keep the 11-yr old brewery operating and that "people have reached out to me, unsolicited, who want to help save the place," including 2 who "have the resources." Fountain Square opened in an 11K-sq-ft space in 2011, purchasing its production system from Alcatraz Brewing after that brewpub closed in same yr. It also acquired New Day Craft Mead & Cider in 2019, tho that co ceased operations in Aug and contributed to Fountain Square's financial struggles, article notes.
Just a few months after signing a 3-yr sponsorship of Indiana University athletics, Upland Brewing is expanding its presence via another Hoosier sports franchise. The Bloomington, IN-based brewer inked a "multi-year partnership" to sell its beer at the stadium of the NBA's Indiana Pacers, dubbed the Gainbridge Fieldhouse in downtown Indianapolis. Deal includes an Upland-branded bar on the balcony level that opened this Tues, while Upland's beers will also be sold thruout the stadium. Recall, Upland recently announced plans to open its 10th outpost (all in-state and its 4th in Indianapolis). "As we have been expanding across the state, we're thrilled to bring the Upland name to Gainbridge Fieldhouse," said Upland sales & mktg veep Patrick Roberts.