Beer Marketer's Insights
Stone on a Roll This Summer, Off-Prem Volume +14.5% for 13 Wks, On-Prem Depletions +27% YTD
Growth isn't exactly easy to come by in craft these days, so folks at Stone naturally feel pretty good about rockin' a 14.5% volume gain in Nielsen all-outlet off-premise data for last 13 wks thru Oct 1. In fact, that's fastest volume gain among all top-50 craft brands in that cut of data, co reports. (Tho New Belgium remains top craft grower overall, much of its growth continues to show up in c-stores, not included in the Nielsen xAOC data cited by Stone. Either way, no need to quibble about rankings; double-digit growth is double-digit growth.) Stone's Chief Revenue Officer Tom McReavy gave us a good long look under the hood of that off-premise volume growth, even stronger on-premise gain and integration with Sapporo just 50 days into acquisition.
The 2022 Beer Insights Seminar is coming right up. Join us for this premier beer biz event, a little more than 3 weeks away. It starts with a reception on Sunday, November 13th and the program is all day Monday, November 14th. You'll benefit from presentations and discussions with top industry execs like Boston Beer's Jim Koch, Molson Coors' Brian Feiro, AB's Kyle Norrington, Constellation's Jim Sabia, BMI's Benj Steinman, plus in-depth panels on The Evolution & Future of Beer & Beverage Distribution and Reflections from Economists & Beer Industry Experts. Newly added: BMI's Christopher Shepard will present an informative summary of recent consumption trends & the legal landscape. Space is limited -
Trio of Washington state brewers and an Oregon consumer responded to OR's motion to dismiss their federal lawsuit with a new complaint early this mo. Proposed amended complaint adds 6 other commissioners of state liquor & cannabis commission (OLCC) as defendants, joining chair of commission, state atty genl and governor. Recall, in motion to dismiss filed last mo, state attys essentially argued that plaintiffs sued the wrong folks, that gov and AG were immune from suit and chair of commission can't act alone (see Sep 30 issue). Top state officials rightfully named, plaintiffs pushed back early this mo. And proposed amended complaint, if accepted, fixes the other problems, they say, arguing suit should continue. While advocates seek to expand the number of states allowing direct shipment by out-of-state brewers (and distillers), much of the action continues to be legislative. But this suit, if successful, raises potential for others, taking different route to similar outcome.
ABI On Track for Double-Digit Organic Sales Growth in 3Q, Despite Cont'd US Struggles, Sez Brett
As ABI gets ready to report 3Q earnings next wk, global demand environment is "better than we would have expected," even with US results likely to "mirror what we have seen recently with low to mid-single digit volume declines offset by positive price & mix," per Consumer Edge's Brett Cooper. Net-net, he predicts global ABI will deliver low-double-digit organic sales growth for the qtr, leading to EBITDA growth at the high-end of full-yr guidance. But US biz remains challenged, driven by share pressures in premium and mainstream beer as well as underperformance in broader RTD/beyond beer category.
Truly hard seltzer remains the main culprit for Boston Beer's declines and reformulation project became a bigger drag on Q3 than anticipated, Boston Beer execs detailed on earnings call. Excluding Truly, Boston Beer depletions grew 14% for qtr, and +12% for 9 mos vs total co down 6-7%. Boston's gross margin was "clearly below" co's expectations in Q3 primarily due to higher obsolescence charge amid Truly reformulation changeover, cfo Frank Smalla acknowledged. Co incurred $54 mil in cost of "inventory obsolescence, destruction costs and other inventory related costs" for the qtr. Reformulation is a "big project" with 6 different variety pks switching over, and co was "left with more stranded product than what we had expected originally." So Truly hit with an additional drag from the change-over as volume declined 26% in Q3 IRI tracked channels and steepened a bit in Sep as more reformulated products were swapped in. But "we're now pretty much fully transitioned to the new formulation," said Frank. Negative margin impact should be a one-off. Tho it's "going to take a while" to see tangible improvement from reformulation, ceo Dave Burwick added. It's "early still." But co "feel[s] very good" about product quality and new advertising. With Truly having "highest penetration" among 21-34 yr old beer drinkers, "we know they want to try our product" and "they'll get to it."
Throwback Thursday
Leo Van Munching Jr, longtime prexy of what was then largest beer importer in US, the co that made Heineken and Amstel Light top import brands, announced he was leaving co this week in 1993. His father founded biz, which Leo Jr led since 1979 and "built biz thru much of the 80s," noted INSIGHTS. "When I sold the company to Heineken (in 1990), I agreed to stay for 3 years. Now I'm going to take at least 6 months and relax," Leo told INSIGHTS. His 2 sons remained with co as new prexy Michael Foley took over. Leo passed away at age 89 in 2016.
Many familiar bev names listed once again in Forbes 400 for 2022, including owners of mega MC and AB distribs. Atop billionaires with beer investments at #25, worth an estimated $28.1 bil, is Jim Simons, whose family office Meritage owns mega distrib Columbia as one of its investments. Next up are brothers Chris and Jude Reyes at #115 on list with estimated net worth of $7 bil each, which includes Reyes' food distribution biz, beer distribs and Coca-Cola bottlers. They are tied with AriZona Ice Tea's Don Vultaggio and family, also estimated to be worth $7 bil. At #184 are Stewart and Lynda Resnick worth an estimated $5.3 bil each. They hold Pom Wonderful, Fiji water and several wine cos among their holdings. Next up at #227 is Russ Weiner who sold Rockstar energy to PepsiCo and worth estimated $4.6 bil. Right behind him at #234 is National Beverage Corp's Nick Caporella (LaCroix sparkling water) at $4.5 bil. Another big distribs investor on list at #244 is Jim Davis, whose Redwood Capital investment arm is getting mighty big in AB system, worth estimated $4.3 bil. Forbes estimates net worth of Constellation's Richard and Robert Sands at $3.9 bil each, tied at #285. Also on list, Monster chmn/ceo Rodney Sacks at #332 with $3.3 bil estimated worth, tied with longtime Starbucks leader Howard Schultz. Yet another beer tie among top billionaires is former Pabst owner Dean Metropoulos, now operating Blue Triton, the bottled-water spinoff from Nestle, who's worth an estimated $2.7 bil, Forbes sez.
Pernod Ricard once again delivered double-digit sales growth, co reported in fiscal Q1 results. Sales totaled $3.3 bil on 11% organic growth, following +17% gain to $10.7 bil for fiscal full-yr 2022. Marks another qtr of double-digit gains for a leading spirits co. Pernod saw "+7% price effect" following FY22 increases plus new price hikes "implemented notably in USA," per release. But amid a "very strong quarter" (with +8% FX benefit), Pernod did show "signs of deceleration in the US," noted Bernstein's Trevor Stirling. "Net sales growth of only +2% in the US represents a slowdown," he wrote, adding that underlying depletions are growing mid-single digits, down from +8% last yr.
State Regulators Getting Feet Underneath Them, Arms Around Tuff Issues, Not All in Same Way
Over 2 yrs after pandemic caused some swift changes to alc bev laws, often framed as "lifelines" to ailing hospitality bizzes, some state ABCs and liquor boards are rebuilding staffs, helping to clean up complicated codes and digging deeper into difficult questions posed by increasingly digital mkts. But they don't always come to same conclusions and their plates remain full, panel of state regulators shared this wk at Wine, Beer & Spirits Law Conference put on by CLE Intl.
Pepsi Blue Cloud Responds to NBWA Criticisms, "Misrepresented Key Facts" & "False Assertions"
After multiple speakers sounded off on Pepsi's Blue Cloud Distribution arm (BCD) at NBWA and BI meetings, Blue Cloud reached out to INSIGHTS with comments, hoping to clear the air on "misrepresented key facts" and "false assertions."