Beer Marketer's Insights
Put this in your pipe and smoke it. As summer of '13 winds down, US beer biz does not need new challenges. But there's a not-so-new but increasingly visible and viable "issue" on the horizon: marijuana. As Colo and Wash prepare for legalized pot (beyond medical use), many will watch for impacts on beer/alc bevs, via usage, regulation and/or policy concerns. Our sister pub, Alcohol Issues INISGHTS, has looked into this issue over last few mos, but it's more than an alcohol policy issue. And it's growing.
Pot vs Beer/Alc Bevs: Usage Rates; Attitudes There has always been a question whether pot is a complement or substitute for beer/alc bevs. Not much research exists. Anecdotally, seems to be a belief that alcohol and pot kinda go hand in hand. But one study of states with medical marijuana laws (MMLs) found that while pot smoking increased, drinking declined slightly and MMLs are "associated with a 5.3% reduction in beer sales." Alc bevs remain far more popular than pot. Almost 70% of young adults (age 19-28) say they drink at least once a month, according to fed surveys. That's still 4X pot's monthly usage rate of 17.7%. But alc bev rate hasn't changed over 20 yrs, while admitted pot use grew significantly, especially among young adults. The monthly pot use rate among 21-22 yr-olds, for example, rose from 14.7% in 1992 to 19.8% last yr, a near 35% increase. The drinking rate among the same age group declined slightly. Meanwhile, attitudes about pot's safety have softened remarkably. For example, only 16% of 27-30 yr olds now believe that smoking pot occasionally puts the smoker at "great risk," down from 27.5% in 1992. That's lower than the 17% of the same demo who think having 1-2 drinks "nearly every day" poses a "great risk." Also: while almost 70% of 27-30 yr olds thought "regular" pot smoking posed a great risk back in 1992, that fell to 43.4% last year.
Pot vs Beer: Which is Safer? The pot vs beer/alcohol safety issue is key to the advocacy around legalization. This summer, Marijuana Policy Project ran ads during some NASCAR events (that's right, a traditional beer stronghold). They ended up being pulled but had well over a 1 mil views on YouTube, insisting that pot was safer than beer and should be consumed in its place. The tag-line, "less harmful than alcohol and time to treat it that way," hints at MPP's focus. MPP's website details 7 ways in which alcohol "use" (note, not abuse) is more dangerous, including claims that "many people die from alcohol use" while "nobody dies from marijuana," that alcohol is linked to cancer while pot is not, and more. The Natl Inst of Drug Abuse challenged MPP's claim that pot is less toxic than alcohol, but in a modest internet flare-up, sources defended MPP, not NIDA or alc bevs. This attack on alc bev "safety" when simply "used" may be new from an advocacy standpoint, but it aligns perfectly with public health's constant attacks on alc bevs.
Pot vs Alc Bevs: Regulatory and Tax Issues Beer and other alc bev execs/assns have traditionally tried to separate alcohol and drugs from legal, regulatory and health perspectives. The industry has long supported separate enforcement (DEA and TTB), as well as the fed health institutes (NIDA and NIAAA). But the lines are already blurring in the states, where the real action is and will continue. NBWA's pro-state regulatory stance may be tested in new ways. Note too, part of pot legalization campaign in Colo was to regulate it like alc bevs. In Wash, state liquor control board was put in charge of regulating pot. So far, it appears that sales will be in different places, but those questions are popping. (In Wash, one-time beer distrib lobbyist now represents pot.) There's also the tax issue. Will pot be taxed by weight, strength, "standard serving"? Will tax decisions cause policymakers to (re)consider similar questions vis-à-vis alcohol? Clearly, states will grapple with many regulatory issues as more and more look at legalization. Indeed, 31 states will consider pot legalization bills next yr, said one speaker at recent Natl Conference of State Legislatures, BA's Paul Gatza told us. Last week's decision by the US Justice Dept to not challenge states that legalize pot removes another key obstacle.
Pot vs Beer: Craft Brewers vs Big Brewers Could pot issues further split big and small brewers? Big brewers have stood united to maintain separation of the substances and an anti-drug stance in general. But craft brewers much more ambivalent. Indeed, a number of craft brewers are unabashed pot supporters. Most notably, one of the fastest-growing and most visible: Lagunitas. The brewery was shut down briefly in 2006 when guests were found smoking pot there. Ceo Tony Magee is an unfiltered fan of pot who continues to sprinkle usage references into his tweets, not to mention his labels. SweetWater includes pot references across its branding and recently asked Lagunitas to stop using "420" in some label text after it received approval for a "420 Extra Pale Ale" trademark. That number has become a well-known and widely-used code for marijuana. SweetWater's 420 is 25th-largest craft brand by $$ in IRI, tho only available in 6 states. Redhook recently commemorated Wash's pot legalization with a state-only hemp ale. Growing popularity of these brands fuels the attitude changes towards pot noted above. None of which should surprise, given craft's roots in counter-culture. These craft brands suggest a complementary relationship, which could complicate industry response, at the very least. No one knows at this point how far pot legalization will spread, how it will affect beer/alc bev usage and/or key regulatory/policy concerns. But it's clearly on the radar of industry govt affairs execs and likely to be yet another challenge for alc bev biz going forward.
Pot vs Beer/Alc Bevs: Usage Rates; Attitudes There has always been a question whether pot is a complement or substitute for beer/alc bevs. Not much research exists. Anecdotally, seems to be a belief that alcohol and pot kinda go hand in hand. But one study of states with medical marijuana laws (MMLs) found that while pot smoking increased, drinking declined slightly and MMLs are "associated with a 5.3% reduction in beer sales." Alc bevs remain far more popular than pot. Almost 70% of young adults (age 19-28) say they drink at least once a month, according to fed surveys. That's still 4X pot's monthly usage rate of 17.7%. But alc bev rate hasn't changed over 20 yrs, while admitted pot use grew significantly, especially among young adults. The monthly pot use rate among 21-22 yr-olds, for example, rose from 14.7% in 1992 to 19.8% last yr, a near 35% increase. The drinking rate among the same age group declined slightly. Meanwhile, attitudes about pot's safety have softened remarkably. For example, only 16% of 27-30 yr olds now believe that smoking pot occasionally puts the smoker at "great risk," down from 27.5% in 1992. That's lower than the 17% of the same demo who think having 1-2 drinks "nearly every day" poses a "great risk." Also: while almost 70% of 27-30 yr olds thought "regular" pot smoking posed a great risk back in 1992, that fell to 43.4% last year.
Pot vs Beer: Which is Safer? The pot vs beer/alcohol safety issue is key to the advocacy around legalization. This summer, Marijuana Policy Project ran ads during some NASCAR events (that's right, a traditional beer stronghold). They ended up being pulled but had well over a 1 mil views on YouTube, insisting that pot was safer than beer and should be consumed in its place. The tag-line, "less harmful than alcohol and time to treat it that way," hints at MPP's focus. MPP's website details 7 ways in which alcohol "use" (note, not abuse) is more dangerous, including claims that "many people die from alcohol use" while "nobody dies from marijuana," that alcohol is linked to cancer while pot is not, and more. The Natl Inst of Drug Abuse challenged MPP's claim that pot is less toxic than alcohol, but in a modest internet flare-up, sources defended MPP, not NIDA or alc bevs. This attack on alc bev "safety" when simply "used" may be new from an advocacy standpoint, but it aligns perfectly with public health's constant attacks on alc bevs.
Pot vs Alc Bevs: Regulatory and Tax Issues Beer and other alc bev execs/assns have traditionally tried to separate alcohol and drugs from legal, regulatory and health perspectives. The industry has long supported separate enforcement (DEA and TTB), as well as the fed health institutes (NIDA and NIAAA). But the lines are already blurring in the states, where the real action is and will continue. NBWA's pro-state regulatory stance may be tested in new ways. Note too, part of pot legalization campaign in Colo was to regulate it like alc bevs. In Wash, state liquor control board was put in charge of regulating pot. So far, it appears that sales will be in different places, but those questions are popping. (In Wash, one-time beer distrib lobbyist now represents pot.) There's also the tax issue. Will pot be taxed by weight, strength, "standard serving"? Will tax decisions cause policymakers to (re)consider similar questions vis-à-vis alcohol? Clearly, states will grapple with many regulatory issues as more and more look at legalization. Indeed, 31 states will consider pot legalization bills next yr, said one speaker at recent Natl Conference of State Legislatures, BA's Paul Gatza told us. Last week's decision by the US Justice Dept to not challenge states that legalize pot removes another key obstacle.
Pot vs Beer: Craft Brewers vs Big Brewers Could pot issues further split big and small brewers? Big brewers have stood united to maintain separation of the substances and an anti-drug stance in general. But craft brewers much more ambivalent. Indeed, a number of craft brewers are unabashed pot supporters. Most notably, one of the fastest-growing and most visible: Lagunitas. The brewery was shut down briefly in 2006 when guests were found smoking pot there. Ceo Tony Magee is an unfiltered fan of pot who continues to sprinkle usage references into his tweets, not to mention his labels. SweetWater includes pot references across its branding and recently asked Lagunitas to stop using "420" in some label text after it received approval for a "420 Extra Pale Ale" trademark. That number has become a well-known and widely-used code for marijuana. SweetWater's 420 is 25th-largest craft brand by $$ in IRI, tho only available in 6 states. Redhook recently commemorated Wash's pot legalization with a state-only hemp ale. Growing popularity of these brands fuels the attitude changes towards pot noted above. None of which should surprise, given craft's roots in counter-culture. These craft brands suggest a complementary relationship, which could complicate industry response, at the very least. No one knows at this point how far pot legalization will spread, how it will affect beer/alc bev usage and/or key regulatory/policy concerns. But it's clearly on the radar of industry govt affairs execs and likely to be yet another challenge for alc bev biz going forward.
Newsletter
Beer Marketer's INSIGHTS
Tagged under
We know all about info overload, but growing staff here at beer marketer’s INSIGHTS has lots more to say than we can fit into our publications. So we’ve launched Beer INSIGHTS Extra, a blog for additional commentary, facts, observations and hopefully more insight too. Click here to join us.
Newsletter
INSIGHTS Express
Tagged under
Ongoing tussle between big aluminum users, including brewers and soft drink producers, and London Metal Exchange (LME) still unresolved. Recall that producers have major beef over how long it takes to get aluminum out of warehouses, which costs them many millions extra. General counsels for Beer Inst and American Bev Assn just sent letter to London Metal Exchange on behalf of Aluminum Users Group criticizing proposed fix that would still keep aluminum users waiting in 100-day lines. This fix, wrote the lawyers, doesn’t really fix current “dysfunctional” system that’s “prone to manipulation.” If system “left uncorrected,” could mean “long-term harm to the entire aluminum market.” Net-net: users seek “more transparent and efficient physical delivery settlement with an end to lengthy queues.” Detailed list of technical corrections from attys seeks to significantly shorten period between orders and delivery, a better process to resolve disputes and adoption of “more coordinated regulatory oversight” of LME’s practices, including warehouse rules, plus a “regulatory framework across countries and regions” to assure fair mkt for metal. Who sez big brewers want deregulation?
Newsletter
INSIGHTS Express
Tagged under
Lotsa buzz about new Guinness ad in recent days. Not since Dos Equis “Most Interesting Man” can we remember an ad getting this much press, interestingly enuf both imports. The ad revisits many traditional beer advertising themes, such as male camaraderie, sports, competiveness, strength, but with a contemporary twist. Also includes classic pour shot at end. When one discovers that the men in the ad used wheelchairs to play basketball to include one friend who has a physical disability, we see “what’s exceptional about the ad is how it presents the characters’ sensitivity hand in hand with their physical strength and love for contact sports,” wrote Business Insider. As the friends celebrate with a round of Guinness, the ad closes with the statement “the choices we make reveal the true nature of our character.” Ad proves there’s still plenty of life and creativity in traditional beer themes.
Newsletter
INSIGHTS Express
Tagged under
No surprise that AB will introduce more Ritas, since they’re hot and line extensions have been rumored for some time. Rita platform could clearly be extended, AB mktg veep Paul Chibe acknowledged to INSIGHTS last mo. Yesterday, AB sent notice to distribs that Cran-Brr-Rita “a new limited time only winter seasonal offering, launching on November 4, 2013, just in time for the holiday season” in 12-packs of 8 oz cans and 25 oz can. And 2 others are reportedly next up: Raz-Ber-Rita and Mango Rita, tho neither yet formally announced. This seasonal Cran-Brr-Rita is intended to “build on the momentum” of Straw-Ber-Rita, which is “leading the industry in share growth in 2013 and is now the leading brand in the FMB category, just ahead of Lime-A-Rita.”
Ritas Still Rock Yet Total AB Share Off AB has seized control of FMB segment in the last couple of yrs, just as Angry Orchard has taken commanding lead in cider. Both really came out-of-blue and suggest some of the volatility that suddenly fashionable segments sometimes face. Straw-Ber-Rita at 0.89 share of $$ yr-to-date in IRI multi-outlet + convenience thru Aug 11, while Lime-A-Rita at 0.77 share. While Straw-Ber-Rita all incremental, Lime-A-Rita up 0.41 share of $$. So the 2 combined for incremental 1.3 share and yet AB still down 0.5 share of $$ yr-to-date. And down 0.95 last 4 weeks. Actually, Lime-A-Rita now going up against big launch numbers and volume and $$ declined in most recent periods.
Newsletter
INSIGHTS Express
Tagged under
This is 1 of several mostly smaller MC deals in Illinois in recent yrs. Koerner will keep Orange & Blue name. Orange & Blue owner Alan Everette still owns MC distrib in Okla. Orange & Blue sold following death of another part-owner, Peer Pederson. This deal on the table for quite awhile, and went thru several twists and turns before finally closing. Interestingly, Orange & Blue competes against Gaudio in part of its territory. That’s the AB distrib that filed for Chapter XI this summer. Recall, bankruptcy court judge recently approved deal for Gaudio to sell to Skeff Dist closing in Sep. So within 1 mo, both AB and MC distribs in rural Illinois market will have changed hands.
Newsletter
INSIGHTS Express
Tagged under
Beer volume up 1%, $$ up 3.3% for 4 weeks thru Aug 31 in Nielsen food/drug/mass/Walmart/$$, reported Goldman Sachs’ Judy Hong. “After five straight periods of volume declines earlier this yr, volumes moved into positive territory in July… and continued to grow this month.” All the growth is in high end, added Judy. MC volume down 2.4%, AB down 0.8%, while Crown and Boston Beer up double digits for mo. Boston Beer “slowed” to 12% growth in these channels for mo.
Newsletter
INSIGHTS Express
Tagged under
09/08/2013
Tampa’s Pepin Distributing’s $12 Mil Expansion Despite Declining Sales; Eyes Craft Growth
Pepin Distributing “has completed a $12 million warehouse expansion,” mainly to “make room for craft beer,” Tampa Bay Times reports. Craft only 5.5% of the local Tampa market, but Pepin sees continued growth in segment. A decade ago Pepin spent $20 mil to expand warehouse. This time, warehouse space increased 56%, cooler space for kegs increased 64%, up to 334,000 total square footage – this brings overall capacity up to 1.3 mil cases, a 44% increase from previous 900k capacity. Currently “Pepin distributes beer from 19 different breweries,” writes Tampa Times; Pepin sales down 2% in 2013, was down 2% in 2012. Total revs $154 mil last year. Gotta note AB down 9%, 740,000 bbls in Fla last 4 yrs.
Newsletter
INSIGHTS Express
Tagged under
09/08/2013
AB Investing in Ill; Grabs Exclusive At Wrigley, Replacing Old Style, Opens Bud Lab at U of I
AB may have to sell off its 30% stake in Chicagoland’s City Bev, but it’s investing serious $$ elsewhere in state. Chicago media hoppin’ with announcement that AB signed deal to be exclusive beer sponsor at Wrigley Field. Marketing agreement will give AB naming rights, exclusive use of Cubs logo in ads and lotsa stadium signage, including eventually a huge new scoreboard over right field. Pabst’s Old Style, closely affiliated with Cubs since 1950, ends its relationship. AB brands won’t be only brews available at stadium, but Cubs promising Old Style will be poured only thru end of this season. Brand decisions for next season still being made. Already speculation in Chi Trib that Goose Island will expand presence at Wrigley, possibly even with brand brewed solely for stadium. Also in Ill, AB will open a “state of the art data analytics center” at University of Illinois’ Research Park. Bud Lab will “focus on data analytics, developing data research and innovation to solve problems ranging from assortment optimization, social media and market trends to large scale data initiatives,” AB announced. Price tags for these projects not announced, but Wrigley deal’s gotta be big bucks and AB joins 15 other big companies (Dow, John Deere, etc) with projects at Research Park. Recall AB passed MillerCoors as #1 brewer in Ill in 2011. Last yr, AB had 38.5 share, about 1 share ahead of MC.
Newsletter
INSIGHTS Express
Tagged under
As Boston stock continues to climb, hitting new all-time high of $227 today and reaching a $2.9 bil mkt cap, Bloomberg did big feature welcoming Boston Beer founder Jim ceo to its Billionaires Index with a “net worth above $1 billion.” “Having watched my stock price go up and down, it seems almost whimsical,” Jim told Bloomberg. “I remind people getting rich is life’s great booby prize. Any normal person would much rather be happy than rich…. Because this was something started out of passion, I’ve been able to sustain 30 years of growing the business with all the ups and downs.”
Value of Boston stock has multiplied by more than 10x since 2009. Jim joins Dick Yuengling on Bloomberg’s list. Dick has a “fortune valued at more than $2.7 billion,” sez Bloomberg Index. That’s about 2x what Forbes listed Dick at. And recall that Dick balked at Forbes’ valuation, noting that no one would pay him $1 bil for his co and he wouldn’t take it even if it was offered as he’s “not for sale.” Jim too has often downplayed the wealth creation aspect of his biz, often noting that stock prices can fluctuate pretty markedly as indeed Boston’s has. But both of these American mavericks have built personal fortunes that few among their much larger brewing brethren have attained.
Value of Boston stock has multiplied by more than 10x since 2009. Jim joins Dick Yuengling on Bloomberg’s list. Dick has a “fortune valued at more than $2.7 billion,” sez Bloomberg Index. That’s about 2x what Forbes listed Dick at. And recall that Dick balked at Forbes’ valuation, noting that no one would pay him $1 bil for his co and he wouldn’t take it even if it was offered as he’s “not for sale.” Jim too has often downplayed the wealth creation aspect of his biz, often noting that stock prices can fluctuate pretty markedly as indeed Boston’s has. But both of these American mavericks have built personal fortunes that few among their much larger brewing brethren have attained.
Newsletter
INSIGHTS Express
Tagged under