Beer Marketer's Insights
Trio of topics received "increased focus" for "interagency cooperation" in Competition Report published early this yr, including "anticompetitive conduct," M&A and "greater transparency" (including in alc bev labeling), atty Alva Mather commented today during webinar hosted by her firm McDermott Will & Emery. And in 9 mos since publication, FTC has "started investigations in our space," she confirmed, "specifically on anticompetitive conduct." The "renewed investigations" in these areas that she and others have seen suggest the agency is "looking at particularly the distributor tier," she said. Recall, when competition concerns arise in alc bevs (for instance in review of proposed M&A), DOJ generally handles beer while FTC handles wine & spirits.
Beer $$ sales up a whopping 9.6% vs yr ago for 1 wk ended Nov 6, while volume flipped positive to +0.8% despite a near 9% price increase, per latest IRI multioutlet + convenience data. Just 1 wk earlier, dollar sales were +4%, volume -4%. Same goes for 4-wk period thru Oct 30. So both $$ and volume improved again amid price hikes, at least for 1 wk. Beer the "outperformer for the week," noted IRI exec veep Scott Scanlon, "partially the result of Halloween falling on Monday this year vs Sunday in 2021." Spirits $$ up 6.7% and volume +8.5% (boosted by RTDs). Even wine dollar sales grew for the wk, +1.4%, tho volume still off 3.2%. But beer continues to gain share of alc bev $$ in IRI tracked scan data, now marking 3d straight wk.
Harvest Hill Picks Up Poppilu, Augmenting Kids Portfolio of Sunny D, Juicy Juice, Little Hugs
Harvest Hill Beverage's American Beverage Corp unit has added to its array of kid-focused brands with acquisition of Poppilu lemonade brand, launched 5 years back by Melanie Kahn, Sara Lee and Fairlife vet turned entrepreneur. Brand had shifted toward pouched offering in recent years, garnering presence in retailers like Walmart, Target, HEB and Stop & Shop with message of being "bold on flavor, not on sugar." Kahn had launched brand as bottled lemonade targeting adults after feeling citrus cravings while pregnant with her daughter Poppy, who lent brand her name, but pivoted to kid-oriented pouches in 2020 after concluding that segment was underserved with lower-sugar entrants. It offers premium upgrade over current ABC mainstays Sunny D, Juice Juice and Little Hug. "We are especially excited that the product was crafted by a mom with kids in mind, which comes through in the bold taste and better-for-you benefits that will resonate with consumers," said Ilene Bergenfeld, cmo at Harvest Hill, which is controlled by PE house Brynwood Partners.
Despite revenue shortfall stemming mainly from production snafu, plantmilk demand shows no signs of slowing, Oatly execs argued today. In what served as a preview of Oatly report, SunOpta had offered similar message last week as reported strong Q3 sales gain keyed to its expanding plantmilk biz and raised its outlook for full-year sales. Revenues rose 15.7% to $229.7 mil. Gross margin edged up by 1.9 pts to still-slim 13.7%, despite 1.4-pt headwind due to margin dilution as pass-thru pricing took hold. Loss from continuing operations widened to $12.64 mil from $9.49 mil, mainly because of loss on sale as it spit out its sunflower biz, deemed no longer relevant to co's future.
Through all its road shows on long road to IPO, Oatly warned potential investors that all its discretionary income would go to constructing new plants, with profitability not a consideration in the short term. Investors enthusiastically bought into this vision, sending the company's valuation well beyond its $10 bil target when it listed in May 2021. But sentiment has abruptly shifted over the past year, hammering companies that don't have a clear path to profitability. And so today Oatly acceded to this new reality, telling shareholders on its Q3 call that it will move to an "asset-light model," seeking out partners for plants that are under construction in Fort Worth, Texas, and Peterborough, UK, retreating from its integrated production model to "hybrid" model in which outsiders deal with activities like filling while Oatly concentrates on making the proprietary oat base that underpins its oatmilk, frozen desserts and other items. On investor call this morning, ceo Toni Petersson sought to minimize tradeoffs of change, telling questioner that reliable copackers are more available than when vision was first set. (Indeed, SunOpta itself is producing massive plant in Texas that seems to count Oatly as a client - story below.) And co disclosed a shakeup of supply chain team, saying it had brought in new leaders for global and European operation who bring greater skill at rapidly scaling a company.
We never heard back from Rambler Sparkling Water on recent $11.6 mil raise but Ryan Williams to the rescue. The operator of recently launched Food & Beverage Investor Database (FABID) tells us that new round included Amar Lalvani, ceo of The Standard hotel group, ex-Pepsi exec Joe Cugine, Platform Ventures founder Chris Barkley, hedge funder Seth Cohen and former Coors ceo Leo Kiley. Leo was on founding team, recall. Joe Cugine will be familiar name to bev people who followed heyday of Argo Tea brand; he now operates restaurant franchise group and also has role at small, publicly traded Barfresh Group. (We profiled useful FABID offering recently - BBI, Sep 12.)
Beer distributor deals have been flyin' this fall, with our sibling newsletter Insights Express tracking 14 deals since Sep 1, including 2 recently announced to employees. Burkhardt Sales & Service will sell its 4.2-mil-case houses in St Augustine and Gainesville, Fla, to Mitchell Cos of Mississippi, which owns A-B distribs Mitchell Distributing in Miss and Chesapeake Bev in Maryland. Mitchell Cos will sell about 22 mil cases after this deal is done early next yr.
For Reed's Inc, which has struggled for years to get into groove of consistent but profitable growth, Q3 yielded another sales decline and net loss - 4 qtrs now, Zacks tallied, where co hasn't been able to surpass consensus EPS estimates. In period, net sales sagged 9% to $12.09 mil, missing consensus forecast by 30%, per Zacks. Despite significant cost-cutting efforts, gross margin declined to 20.1% from 28.9%, driven by lower revenue, higher promo spend and sales mix. But operating loss narrowed to $2.45 mil from $3.65 mil. Co didn't break out volume performance, that we could find.
Laird Superfood ceo Jason Vieth may have been last to realize it. But actions he's undertaken since coming aboard in Jan amount to full-fledged "turnaround," not just tweaks, as he informed investors on Q3 call yesterday, ruminating on actions that have remade top exec team, shuttered co's integrated mfg plant in Sisters, Ore, and tilted focus of ecomm biz from DTC more heavily to Amazon. "The company is going to look radically different, is the reality, we called it really what it is here for first time on this call: it's been a turnaround for the last few quarters," he told investors. "It started as more of a transformation, a little lighter, make a few tweaks - more than a few tweaks - but I really didn't see the depths we'd have to go through and how heavy the lift would be." (Some readers did, judging by inbound emails we got at time Jason hopped aboard.)
Stevia soda marketer Zevia PBC is in early stages of plotting selective move to DSD as it builds out a single-can business for the first time even while grappling with warehouse distribution model that left stocks severely drawn down at some retailers in Q3, causing co to fall short of topline target. DSD plan is "not minted entirely" so far and may be keyed to specific package formats, channels or regions, prexy/ceo Amy Taylor told investors yesterday. It will need to be coordinated with ZVIA's efforts to improve margins and a brand refresh pending in 2023.