Beer Marketer's Insights

Beer Marketer's Insights

No longer just beer that has a category growth problem and some negative notes sounded by financial analysts. "The latest US spirits data makes for disheartening reading," began Bernstein's Trevor Stirling in research note today. "March was weak in NABCA" data, rolling 3-mos now down and Diageo volume "underperformed the market," he added, with Smirnoff -5%, Captain Morgan -13% and even Casamigos -6%, with "very weak price-mix trends." Tho Don Julio remains "remarkably robust" (+42%), Trevor noted. Pernod also "continues to underperform the market," down 7% for 3 mos. Nielsen data shows somewhat better trends than NABCA, but "we think NABCA … is closer to the truth than Nielsen… when it comes to shipments."

Top suppliers are placing less emphasis on innovation, and it shows. Largest new brands so far this yr are 8% ABV hard seltzers, i.e. a niche within a declining niche. Truly Unruly variety pack at $6.1 mil and White Claw Surge variety pack #2 at $3.9 mil in Circana multi-outlet + convenience data yr-to-date thru May 5. They are less than half the size of last yr's top new brands at this point in yr, Modelo Oro and Beast Unleashed. In fact, Oro and the Beast are still gaining more than any top new brand. Oro up $11.3 mil to $24.6 mil and Beast Unleashed up $8.8 mil, 77%, with much of their sales still incremental.

Nation's largest retailer is offering low prices of Modelo Especial, at $24 per case for both bottles and cans, reportedly in over 40 states. Program started in a handful of states in Mar, expanded in Apr and as of mid-May, it's in most of US. Walmart is selling Modelo Especial below cost in many areas and that's creating lots of ripple effects. Modelo Especial averages $36/case across all packages in natl Circana multioutlet + convenience data.

(This article continues on from our issue earlier this week, which outlined the two separate panels of scientists generating work for the 2025 edition of the US Dietary Guidelines.) 

The research plan for a small panel of scientists looking into the health impacts of alcohol ahead of the 2025 edition of the Dietary Guidelines for Americans (DGA) is still in draft form and has yet to be submitted for public comment. But the authors already seem to know the outcome. The next DGA will “represent an opportunity to provide the public with updated information on how alcohol use impacts health,” the panel wrote in their draft protocol paper (our emphasis). They also seem to know which direction they want that update to go, while hinting at the desire for new resources. “Additional tools may be needed to actively promote changes in alcohol use, and to maintain such reductions,” they wrote (again, our emphasis).

That’s all from the draft protocol set by a 6-person panel appointed by the Interagency Coordinating Committee on the Prevention of Underage Drinking (ICCPUD), including those with close ties to the anti-alcohol advocate community. The paper has not yet been peer-reviewed, as we noted last issue. Indeed, the self-publishing site currently hosting the paper warns that such “pre-prints” should not be “referenced by the media as validated information.” Recall, prior to the paper’s publication, the panel’s makeup and mandate was virtually unknown. So we cite this draft paper purely to better understand what these scientists plan (or at least planned) to do and how they expect(ed) to go about doing it.

New Overview Aligns with DGA Processes The panel’s draft plans may already be shifting, perhaps suggesting some internal pushback. An official DGA website recently added basic overviews of the work taking place by both the ICCPUD panel and the separate panel formed by the National Academies (NASEM). “Both projects will include opportunities for public participation and will include external scientific peer review,” the brief description confirms. They’re also both “slated to be completed by the end of December 2024.” That aligns with the timing of larger DGA efforts, but differs from ICCPUD’s own suggestion that the work will be “ongoing,” with a final report not published until the end of 2025. 

Further, each project “will result in a report with findings, not recommendations on alcohol consumption. These findings will be considered by HHS and USDA as the Departments develop the next edition of the Dietary Guidelines” (our emphasis). It was already clear that the NASEM panel would not develop recommendations for drinking guidelines. But that won’t be expected of the ICCPUD panel either, apparently. And that’s the norm: panels of scientists typically report on the science, but leave precise guidance up to DGA authors. 

Links to WHO, Controversial Canadian Recommendations The ICCPUD panel aims “to generate evidence on weekly alcohol consumption thresholds to minimize health risks,” according to the bare bones overview on the DGA website. It will also develop models that “estimate the lifetime risk of death and disability for different levels of average alcohol consumption” and use a “cause-specific” approach for building “absolute risk curves.” That method is preferred, the panel wrote in its draft protocol, pointing to the WHO, the widely-respected Global Burden of Disease (GBD) studies and guidance in other countries.  

For instance, it was the method used for research that led to the controversial recommendations that adults consume no more than 2 drinks per week, released by the Canadian Centre for Substance Use and Addiction (CCSA) last year. But that research was led by Dr Kevin Shield, also the first listed member of the ICCPUD panel and its proposed protocol paper. Given his links to the WHO, it’s also unsurprising that the paper does not cite the most recent GBD study on alcohol, published in 2022, which acknowledged some health benefits for older adults. Instead, it cites only the older 2018 study that kicked “no safe level” rhetoric into high gear.

Opportunities to Exclude Research Showing Benefits Ahead of the public comment period and its finalization, it remains unclear which aspects of the protocol will eventually happen. But the draft lays out a much more extensive process with many more sub-projects not referenced in the brief DGA website overview. Planned research into the “daily thresholds to minimize the short-term risk of injury or acute illness” references studies of behavioral outcomes that would not traditionally contribute to the development of dietary guidelines, like emergency room cases and roadside surveys, for instance. But that’s just one of the ways it diverges from those norms, INSIGHTS understands.

Plans for a “systematic review of systematic reviews on alcohol’s impact on health” would exclude any research published before 2010, studies that don’t use lifetime abstainers as the baseline, research into specific types of alcohol beverages and anything that examined “patterns of alcohol use and not total alcohol use,” the draft protocol details. Any of those decisions could exclude studies that showed benefits of moderate consumption. The plan also promises to favor researchers who publish most frequently; work co-authored by the 3 Canadians on the panel, Rehm, Shield and Naimi, is cited 19 times in the short paper. Other details hint at ways the panelists could tip the scales toward their stated aim to “promote changes in alcohol use, and to maintain such reductions.” 

Lofty Goals & Great Expectations The panelists conclude their draft protocol by explaining just how important they believe their work is. “The success of the Dietary Guidelines for Americans, 2026-2030 will depend upon the conclusions of this review, the dissemination and clarity of the guidelines, and upon the American public’s knowledge of how much beer, wine, or spirits constitutes a standard drink,” the protocol concludes. (Note: throughout, the paper uses the incorrect years for the title of the next edition of the DGA.) And the paper opens with perhaps the loftiest goal of all: “this project will establish a scientific consensus concerning alcohol’s impact on health.” But such consensus seems unlikely, given the long history of ambivalence toward alcohol, which is perhaps reflected in the fact that a whole other government panel of scientists is also exploring the topic. 


Cheers,

Christopher Shepard

To the mother & daughter duo who run Louisiana coffee roaster Mountains & Mermaids, the Siren's Brew mark under which they do business serves as convenient signifier of their love of the ocean and bears no resemblance to icon at center of Starbucks' stylized logo. But Seattle gigaroaster is highly protective of its siren and, with US Patent & Trademark Office backing its view, has taken small roaster to court in NY seeking to have it drop use of that brand and image of red-headed mermaid who personifies it.

Craft players large and small are upping their participation in hop water segment that offers beyond-beer oppty to expand biz beyond oversaturated craft beer. We offer quick update here on coupla efforts at larger, more established brewers Founders and Sierra Nevada and deeper dive into wassup at more modest player, Drowned Lands, located in Hudson Valley upriver from NYC.

As Biden administration has been signaling since 2022, key fed gov't agencies (particularly holdout Drug Enforcement Administration) are ready to reschedule marijuana from a Schedule 1 substance to Schedule 3. AG Merrick Garland submitted rulemaking change proposal in Federal Register yesterday, which now triggers a 60-day comment period for public remarks before being finalized. "A move that could collectively save cannabis operators billions of dollars," noted MJ Biz, and open doors for research, investment and importantly, as Jeffries wrote investors, "could lead to much greater institutional ownership." Rescheduling "could prove to be a major catalyst for the US cannabis space, with big possible upside a potential route to uplistings," reiterated Jeffries. The news sent cannabiz shares broadly rising.

Infant formula maker ByHeart said it pulled in $95 mil in new financing as it builds integrated manufacturing chain and broadens array of offerings. With roster of investors that include D1 Capital Partners, Bellco Capital, Polaris Partners, Two River, OCV Partners, AF Ventures, Red Sea Ventures and Gaingels, ByHeart by now has raised $395 mil in total, per announcement this week. At time US has suffered from squeeze on infant formula production, ByHeart has devised patented protein blend of alpha-lac, lactoferrin and both whole and broken down proteins to come close to replicating breast milk, as backed by what it says was largest clinical trial by new infant formula brand in 25 years. It's also sought to eliminate reliance on external partners by forging end-to-end mfg chain that includes new plants just opened in Portland, Ore, and Allerton, Iowa, augmenting existing plant in Reading, Penn. "We are committed to doing better for babies and their parents, and that means continued investments into end-to-end manufacturing, scientific advancement and meaningful innovation in an industry that so desperately needed it," said CEO Ron Belldegrun, NY-based exec who cofounded ByHeart in 2016. Brand is sold in Target, among other retailers.

In the merging world of bev distribution, Columbia Dist CEO Chris Steffanci is right, Boston Beer founder/chmn Jim Koch said during Spring Conference hosted yesterday in Chicago by BBI parent Beer Marketer's Insights. Distribution is "migrating" toward total bevs, with beer and 4th category RTDs likely to be "all on the same truck with soft drinks," because "the efficiency is there," Jim agreed. Retailers like 7-Eleven "would love it if that was all on three trucks," not 8. And tho he's made comments like this in the past, Jim went "even further" than agreeing that there will be more consolidation to capture those synergies. "It's very possible that beer distributors win this whole thing," he said, repeating that "beer distributors can win this whole thing" and in fact, "the deck is stacked in their favor," in his view.

Back at helm of Voss Water, former CEO Jack Belsito is looking to rebuild indie DSD network after earlier alliance with PepsiCo didn't pan out while retaining multisource strategy that doesn't rely only on shipping water in from brand's country of origin, Norway. What's status of Dwyane "The Rock" Johnson, once a prominent frontman for the brand before turning more of his focus toward Zoa Energy along with his own Teremana tequila brand? He remains an investor and friend but isn't expected to play prominent role in rebuilding effort, Belsito indicated.