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Rounding out extensive airtime dedicated to hot-hot hemp bev topic at Wine & Spirits Wholesalers Assn's Access LIVE convention in Las Vegas last wk, a trio of retailer execs detailed fast growth and huge expectations they see for emerging category. All 3 expect it to rival beer sales in their spirits & wine-focused outlets in short order. And they all prefer a system where existing alc bev distribs deliver the products for ease and efficiency as well as regulatory and compliance reasons. In short, the discussion closed the loop on exactly why wine & spirits distribs are devoting so much energy to the issue: their customers want the products from them. From 0 to Mid-Single Digit % of Sales, Higher Profits "I did not like the idea" of bringing in hemp-derived THC, confessed David Larue, evp of Fla-based ABC Fine Wine & Spirits (which recently acquired Applejack chain in Colo). "If you told me 3 years ago that we'd be essentially selling weed out of the store," he would've said "you are effing crazy." But here we are. His outlets started with a "little 4-foot section" in mid-2024. It's already closing in on 3-4% of sales and more like 6-7% of profits. He's "never seen anything like it." For major Texas liquor store chain Spec's, chief sales and operating officer Steve Jabour projects the category to hit 5% of gross sales and thinks "it's just the beginning."Bigger Than Beer with Reverse of Sales-to-Profit Picture At this rate, in 5 yrs or so "it'll rival beer for us," added Adam Sinks, prexy of a pair of sizable Nashville-metro liquor stores. His biz was 65% spirits, around 25% wine and about 10% beer. But hemp is already hitting "right about 5%" and growing. Similarly, "it'll be larger than our beer category for sure," Spec's Jabour expects, maybe even "edging up" against wine as the #2 or #3 category at chain. ABC's Larue was more wary of projecting out 5 yrs, but "in one year, it will be just as big" and "probably bigger" than beer in terms of profits. Retailers "just don't make as much on beer." So he foresees a near-term future where hemp hits 8-9% of profits, even if it's half that in sales. And "beer is the opposite."Dozens of Feet of Floor Space, Taking from Craft & Wine Hemp is already getting dozens of feet of floor space for both ABC and Spec's stores, David and Steve shared. Depending on the store, there could be anywhere from 1-8 coolers of it for Spec's, with "thousand-case displays" on the floor. David carries about 190 SKUs and Steve had "only 88 THC brands," compared to almost 1,700 alcohol RTDs, at end of last yr. But "for every dollar spent" on both categories, RTDs got 64 cents and THC got 36 cents.So Steve's "trying to give as much space as we possibly can to THC, currently," expecting it to get to around 60 ft of shelf space on avg. But that means "a ton of things have to be discontinued. So we're doing a lot of SKU-rats [rationalizations] right now." It's mostly coming out of "wine and craft beer." David concurred. "Craft beer we've cut back so much," he said, stocking "virtually nothing warm any more." And "a lot of it's coming from wine," too, especially larger bottles/jugs. In his view, "even if the sales were flat [for wine], we could cut back on that." Declines make that rationalization even easier: "Fish where the fish are," he said.After a period when Tenn forced hemp products to be behind barriers, it's back out on the floor at Adam's stores and getting "roughly about 150-ish, maybe 200 linear feet of shelf space," with "5 cooler doors." It "probably bit into our beer layout," he acknowledged, tho co "tried to take it from some of the other low-hanging fruit" like the snacks and bar accessories that move more slowly. And he still thinks hemp space will expand more.Consumers Coming from Wine, but 40-50% Only Buy THC Hemp sales are cutting into beer at Spec's, Steve offered, but it's hitting a bunch of chilled wine varietals: "Chard&hellip;Sanc&egrave;re&hellip;Ros&eacute;," he added. David's been surprised at "how much it affected the wine business," because he "didn't think that was the consumer." But it is. Hemp bev buyers "just want to relax," so it's meeting that "wind-down-at-night" occasion for which folks historically turned to wine.Women are over half of THC bev buyers at Spec's, Steve shared, mostly in 35-50 age range. Fast-growing prosecco brand La Marca is the #1 brand that hemp bev buyers also buy. Given that demo, he won't bring in any THC product "that looks 'weedy.'" His rule of thumb: "If a mom will not walk across a soccer field holding it in her hand," then "I will not carry it." In his experience, "anything that is a Tiffany blue color rips."That said, as of 3 mos ago, over half of THC buyers "were only buying THC products" at Spec's, Steve said. David concurred, finding the 41% of hemp bev buyers that only buy hemp bevs at ABC stores to be "remarkably high." They're "customers we couldn't drive into the stores," Steve commented.The category is "a little bit more male-driven for" ABC stores, David said, tho echoed that buyers tend to be in the 30-50 range. Buyers tend to be "very affluent" and "predominantly white." Detailed look he got showed that "80% of the people are Amazon Prime members" and lean toward Target over Walmart. "These are not people that are just grabbing this stuff to be obliterated," he said. Adam's twin stores operate in very different areas, one in downtown Nashville with a very diverse consumer-base and the other in the suburbs that lean more conservative. But co "saw the same thing, the same growth" in both stores.4 Pks of 12-Oz Cans at 10 MG Drive Biz; No Brand Loyalty Yet Hemp bevs at 10 mg THC became the clear leader for both Spec's and ABC. They're about 55% of hemp sales at Spec's and more like 81% at ABC. Neither sell anything stronger than that, nor do they sell single-serves, at least not any more. By contrast, Adam sells lots of singles, about 40% of his THC sku's, about 10 pts behind 4-pks. There's definitely a clear element of folks looking for "bang for buck," both Adam and David acknowledged, and high-potency products were some of Adam's top sellers until new Tenn law limited bevs to 15 mg per serving and 30 mg per container. Indeed, Steve's seen very few "duds," but low-dose bevs at 2 or 2.5 mg "don't sell," he said.The 4-pk leads the way, a departure from RTDs, which is driven by 8 or 12-ct multipacks, David observed. But that "might be a price-point thing, more than likely," he added. And there's "not a lot of brand loyalty" yet, Adam said, echoing David. There are a couple "clear market leaders," for David, but otherwise sales tend to be "price- and promotion-driven." Steve supposed that "eventually the flavor and the taste loyalty will come. I don't think it's this year, I think it's next year," though. More regulation and use of 3-tier system will help drive brand strength, he thinks.3-Tier Advantages: 'The Plumbing's There' & 'Added Layer of Legitimacy' After Tenn's recent law change, wholesalers there are selling hemp bevs to retailers, as moderator Ryan Moses, CEO of distrib Best Brands, and Adam discussed. But in Fla and Texas, that's not happening yet. And the "majority of our products, we're buying direct," Steve said. "We will switch overnight when that time comes" and hemp bevs move thru the 3-tier system, he added. "The plumbing's there. Why make it more difficult than it needs to be?" David agreed: "Just pump it into the system that works." That system "just works and it just makes way too much sense not to," to him.In Adam's view, it's an "added layer of legitimacy if it goes through the distributors' hands," adding extra "consumer protection in addition to the logistical plumbing." It also "helps with the taxation piece," Ryan added, and "prevents the kind of bad actors" or issues with "dosing." His distrib is "pretty active" in managing compliance of hemp bev quality, including 3d-party testing, he explained. That's another help for retailers. "Every product we carry has to follow our protocols," Steve said, and his team is now very familiar with the cos providing THC emulsions, so Spec's won't carry a product with a supply chain he doesn't know and trust. Getting products from wholesalers doing that work would be an added help, he and David agreed. No whining from the retail panelists about the sliver of margin that DSD exacts for its services. (This article appeared in our sibling letter Insights Express on Fri.)

WSWA CONFERENCE: Retailers Just as Bullish on Hemp: 3-5% of Revs, More of Profits, Set to Rival Beer; Seeking 3-Tier

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