Beer Marketer's Insights
Like another PepsiCo partner, Celsius, before it, Guru Organic Energy got whacked financially in Q2 by inventory adjustment at PEP's Canada operation but was able to eke out some growth by riding Costco road shows in 2 US regions. Net revenue rose 4% to $8 mil, with 143% growth in smaller US biz to $2.7 mil offsetting 21% decline to $6.6 mil in Canada due to inventory adjustment by its exclusive national distribution partner, whose name apparently shall never be uttered except accidentally on Guru call (psst! It's PepsiCo Canada). Asked about hit by analyst yesterday, CEO Carl Goyette said it accounted for about 80% of decline in Canada, core market of Montreal-based co. Recall that PEP inventory adjustments recently whipsawed results of its US energy partner, Celsius, too, sending shares crashing. Guru's US gains were driven by rotational programs at Costco in LA and Midwest as well as Amazon, where it ranks as #1 organic energy drink. Gross margin widened 55.8% from 53.1% a year earlier thanks to higher prices and lower input costs. Adjusted EBITDA loss widened a bit to $2.7 mil from $2.5 mil as Guru anted up on innovation.
Monster Beverage has recruited longtime exec at one of its preferred Coca-Cola bottling partners, Swire, to serve as its chief growth officer. Rob Gehring brings experience as COO and then CEO at Swire bottling operation in Southwest, after experiences at Hershey and at Coke itself, where he ran Walmart biz and ran sales for western region at KO's distribution arm Coca-Cola Enterprises. At annual meeting yesterday, MNST brass also confirmed that it would be taking about 5% in pricing on core lines in Nov.
The brewing footprint of the largest dedicated non-alc brewer is about to get a whole lot larger with move that will more than double capacity to nearly 1.4 mil bbls. Athletic Brewing purchased its second San Diego production facility - and its second former Ballast Point brewery at that - for an undisclosed sum from Kings & Convicts, co announced today. The 107K sq-ft facility is expected to begin brewing Athletic products by late 2025 after 18 mos of extensive renovations. It's located next to co's existing San Diego facility in city's Miramar nabe, which was Ballast Point's old sour/barrel-aging brewery. So leading unaligned NA beer player continues its buy-&-build production strategy that includes big new Conn brewery. (A version of this article appeared in sibling publication Craft Brew News earlier today.)
Kirin Keeps Expanding Outside Beer, Set to Buy Rest of Skincare/Cosmetics Retailer for $1.4 Bil
Taking next big step in its long-term plan to diversify its biz outside beer, especially by building out its health science division, Kirin announced offer to acquire the remaining 2/3 of Japanese skincare and cosmetics retailer FANCL yesterday. Valued at about 220 bil yen, or just under $1.4 bil, picking up the remaining stake will make FANCL a wholly-owned subsidiary, building on a partnership first struck with Kirin's acquisition of its initial stake in the co in 2019. It follows Kirin's acquisition last yr of Blackmores, an Australia-based health food co operating across the Asia-Pacific region, another step in the co's stated plan to build a broader base of brands across food, beverage, pharmaceuticals and more.
Monster Beverage hosted its annual shareholder meeting yesterday against a backdrop of slowdown in energy drink sales and "management was a bit less sanguine than the normal bullish tone," wrote JP Morgan's Andrea Teixeira. Earlier this week, another Andrea report headlined a big question: "Energy Fatigue?" It began: "While energy drinks have been one of the most attractive categories within the broader Staples universe over the past 20+ years, more recently the category appears to have hit a soft patch…. The slowdown in energy drinks appears to be broad based and cuts across channels, with middle income consumers driving the recent softness," she added citing Numerator data at some length.
"Bud Light Boycott Still Hammers Local Distributors 1 Year Later," Wrote ABC in Follow-Up
During last year's Bud Light crisis, ABC News talked to a number of distribs who opened up about what happened, so this yr it followed up in story that also pointed to better sales trends and even some optimism in its network. Yet last year's losses are still deeply felt for lotsa reasons.
Athletic Doubling Capacity with Purchase of Another Former Ballast Point Brewery in San Diego
The brewing footprint of the largest dedicated non-alc brewer is about to get a whole lot larger with move that will more than double capacity to nearly 1.4 mil bbls. Athletic Brewing purchased its second San Diego production facility - and its second former Ballast Point brewery at that - for an undisclosed sum from Kings & Convicts, co announced today. The 107K sq-ft facility is expected to begin brewing Athletic products by late 2025 after 18 mos of extensive renovations. And it's located next to co's existing San Diego facility in city's Miramar neighborhood, which was Ballast Point's old sour/barrel-aging brewery. (This article first appeared in sibling pub Craft Brew News.)
Atomic/Monaco Moving to Reyes and Mix of AB & MC Distribs in IL, IN; Down 5% in May Scans
Another sizable spirits RTD brand is moving to the beer distribution network in IL and IN. Atomic Brands, parent co of Monaco Cocktails, selected Reyes Bev Group in entire Chicago area, and several other AB and MC distribs to fill out both states, Reyes announced this morn. Besides Reyes' Chicago Bev Systems, Atomic selected MC houses Koerner and G&M, plus AB houses LaMonica and Rinella in rest of IL. An interesting mix of networks. In IN, Atomic stuck with MC network thruout including Reyes' Monarch plus Indiana Bev and Five Star Dist. Currently brands are with RNDC in IN and Breakthru in IL, and transition is expected to close by mid-July.
Athletic Doubling Capacity with Purchase of Another Former Ballast Point Brewery in San Diego
The footprint of the largest dedicated non-alc brewer is about to get a whole lot larger with move that will more than double capacity to nearly 1.4 mil bbls. Athletic Brewing purchased its second San Diego production facility – and its second former Ballast Point brewery at that – for an undisclosed sum from Kings & Convicts, co announced today. The 107K sq-ft facility is expected to begin brewing Athletic products by late 2025 after 18 mos of extensive renovations. And it’s located next to co’s existing San Diego facility in city’s Miramar neighborhood, which was Ballast Point’s old sour/barrel-aging brewery.
Transaction closed May 31 and was funded thru mix of debt, equity and cash flow from operations, sr comms manager Chris Furnari shared, just a couple yrs after Athletic built what it dubbed the largest dedicated NA brewery on the planet in Milford, CT. But Athletic’s new San Diego facility is now set to take that title. While Milford just completed an expansion in Mar enabling it to make ~450K bbls annually on its own, Athletic expects another ~900K bbls capacity between its 2 San Diego breweries, with the vast majority coming from co’s newly acquired spot.
Athletic’s existing San Diego space is equipped with roughly 150K bbls of annual capacity, implying the brewer could already crank out ~650K bbls between that and Milford. New facility should add close to 750K bbls of annual capacity once renovations are complete, tho it’s currently configured for about 400K bbls per yr with figures subject to change as buildout gets underway. (Co’s now entirely out of its original spot in Stratford, CT, but size of that space paled in comparison.)
Ability to Support 5x 2023 Production The brewer’s betting big on future growth, as roughly 1.35 mil-bbls of runway would be more than 5x the 258K bbls it produced in 2023. But if co’s category growth expectations for NA beer come to fruition, “we’re gonna need a lot more capacity,” Chris commented. Move should provide ample runway to support the Athletic’s growth while “further cementing it as the world’s largest brewery entirely devoted to producing non-alcoholic beer,” announcement notes.
Already the #1 NA beer brand in the US with over 19 share, Athletic $$ sales are up 62% in NIQ all outlet scans YTD thru May 18. If able to maintain 50%+ growth all channel, Athletic could finish 2024 in ballpark of 400K bbls. It ended last yr as the 10th largest craft brewer and 20th largest overall, according to the Brewers Assn (excluding beyond beer), with products available in over 50K retail doors and 25K on-premise venues nationwide.
No Plans to Contract Brew; Aim to Utilize Capacity “to its Fullest” The Kings & Convicts-operated Ballast Point taproom connected to the facility will remain open to the public during renovations. Yet Athletic doesn’t plan to contract brew for Ballast Point or anyone else, and transaction doesn’t include Ballast Point brands or personnel, CBN understands. Athletic plans to utilize the facility’s capacity “to its fullest,” co-founder & chief product officer John Walker said in release. “This expansion will allow us to efficiently and sustainably scale our capacity in anticipation of meeting increasing wholesaler, retailer, and consumer demand for years to come,” added co-founder & CEO Bill Shufelt.
Ballast Brewery Changes Hands for 3rd Time in About a Decade Athletic considered a variety of options in its quest to add another brewery. But perhaps it was able to buy the former Ballast facility for a comparatively low price as it switches hands for the 3rd time in about a decade. Recall, Kings & Convicts acquired the brewery and Ballast Point brand for $41 mil in 2019, just 4.5 yrs after Constellation bought the company for a billion dollars. By April of this yr, Kings & Convicts ceased production there with an (at the time) unnamed brewery set to take over.
Joining growing list of breweries tapped for unique, valuable oppy for mentorship and more from Boston Beer, Crowns & Hops Brewing won this yr's coveted Samuel Adams Brewing the American Dream Experienceship, cos announced this wk. The pioneering Inglewood-based beer and lifestyle brand founded and run by Beny Ashburn and Teo Hunter has long punched way above its volume-based weight class in terms of visibility and influence. So count this recognition as yet another feather in the pair's increasingly crowded caps, despite the delays and setbacks they've faced setting up permanent, bricks & mortar shop in their hometown. This is the 13th experienceship awarded by the co, part of its larger mini-grants program for startup food and drink cos.