RBC’s Nik Modi lowered his estimate of Constellation’s depletion growth in its fiscal first qtr (March to May) to 6% from 8%, following survey of distribs.  “The company is not immune to the poor weather that plagued much of the quarter,” wrote Nik.  “Weather was pretty poor throughout the quarter, particularly in May,” he added. Distribs surveyed expected 6% growth for qtr, 7% for fiscal yr.  Over last 10 qtrs, on avg, STZ depletion growth “lagged” distrib survey by 50 basis points.  Also, Constellation depletions average about 300 basis points less than IRI data, which would imply depletions “closer to 5%” in qtr.  Recall, Constellation guided to mid-single digit growth in 1^st fiscal qtr. 

Interesting question buried deep in RBC deck. “Do you think the Corona brand could play in the spiked seltzer space?” 57% of respondents said yes.  Indeed, there are reports floating out there that Corona Seltzer could be coming next year.  Nik also cites Numerator data (formerly Infoscout) that show Corona far down a list of brand interactions with White Claw.  Numerator tracks receipts for hundreds of thousands of customers.  Data shows that 24% of White Claw purchasers bought Bud Light in last 6 mos, 18% bought Coors Light.  Each of the 4 top light brands had the most interaction.  Then comes Truly (14%) and then Corona at 12%.   

What six months ago seemed an inevitability now very much uncertain, as effort to establish a legal adult-use cannabis market in New York comes down to final 3 days of state legislative session. New bill and new energy emerged over weekend. Legislators will determine by end of session on Wednesday whether or not NY will become 11th state to do just that and 2nd big state to legalize via legislature this month. Recall, Illinois lawmakers cleared cannabis sales a couple wks back. Last-ditch effort may hinge on two key issues: opt-out provisions and dealing with past convictions. Latest bill changes tack on the latter, would expunge minor marijuana convictions from public records, following pleas voiced by leaders of black communities, including state AG Letitia James, as NY Daily News reports. Not addressing that issue contributed to faltering of bill earlier in session. And Democrats may still not have enough votes in the Senate, according to Rochester Democrat & Chronicle. Republicans remain firmly opposed despite recent backing by state’s Farm Bureau. Tho an insider/proponent sees 60-40 odds of passage, according to NY Post.

Contributing to last-minute debate, a pair of physicians penned op-ed for NY Times advocating for a minimum purchase age of 25, not 21 as every other state to legalize chose, mirroring alc bev laws. “While society may consider a 21-year-old to be an adult, the brain is still developing at that age. States that legalize marijuana should set a minimum age of no younger than 25,” the doctors wrote, also urging for “stricter limits on THC levels” and “educational campaigns.” Notably, the pair of medical leaders also specifically tie the issue to alcohol and cigarettes, which, while “both legal, have caused great harm in society as well as to people’s health, and have ruined many lives.”

RBC’s Nik Modi lowered his estimate of Constellation’s depletion growth in its fiscal first qtr (March to May) to 6% from 8%, following survey of distribs.  “The company is not immune to the poor weather that plagued much of the quarter,” wrote Nik.  “Weather was pretty poor throughout the quarter, particularly in May,” he added. Distribs surveyed expected 6% growth for qtr, 7% for fiscal yr.  Over last 10 qtrs, on avg, STZ depletion growth “lagged” distrib survey by 50 basis points.  Also, Constellation depletions average about 300 basis points less than IRI data, which would imply depletions “closer to 5%” in qtr.  Recall, Constellation guided to mid-single digit growth in 1^st fiscal qtr. 

Interesting question buried deep in RBC deck. “Do you think the Corona brand could play in the spiked seltzer space?” 57% of respondents said yes.  Indeed, there are reports floating out there that Corona Seltzer could be coming next year.  Nik also cites Numerator data (formerly Infoscout) that show Corona far down a list of brand interactions with White Claw.  Numerator tracks receipts for hundreds of thousands of customers.  Data shows that 24% of White Claw purchasers bought Bud Light in last 6 mos, 18% bought Coors Light.  Each of the 4 top light brands had the most interaction.  Then comes Truly (14%) and then Corona at 12%.

This is 2d small MC distrib deal announced in less than 1 week and the 7^th MC deal we’ve reported in 1^st half 2019.  That’s already a slightly faster pace than 10-12 per year on average.  And  INSIGHTS knows of several other transactions in works.   Two IA distribs will merge their businesses in a new co and close a warehouse (but each also remains part of bigger cos elsewhere).  Premier Midwest Bev in Council Bluffs and Glazer’s in Sioux City will merge their IA bizzes into a 1.2-mil-case distrib, consolidated in Sioux City.  Name of new co will be Premier Glazer’s Beer and Bev and it will be jointly and equally owned.  Premier Midwest will continue to operate its separate biz in Omaha, NE. And Glazer’s is, of course, in many locations.  Employees notified on Friday and deal expected to close in late Sep. 

Pabst’s Lone Star brand is launching its “biggest push in 30 years,” for Texas-centric ad campaign, reported Ad Age.  Biggest mktg blitz in decades isn’t even for flagship but rather to tout new low alc (2.1% ABV), low calorie (just 68 per 12 oz) brand 24/7.  Lone Star’s “Keeps You Texan” campaign created by Austin-based Callen agency, small shop of “about a dozen” started by Wieden & Kennedy vet Craig Allen, noted mag.  No surprise, Ad Age added that, “with witty copy set against fairly still, spare tableaux, the ads feel a bit like the love child of the classic ‘Miller High Life Man’ campaign from Wieden & Kennedy” as well as “old spots for Corona Extra from Cramer-Krasselt.”  “These, however, are totally Texan in vibe.”  While Lone Star has “legendary status” in Tex, it has “done little to communicate it.” For 24/7 spots, “we wanted something that felt true to Texas and it’s weird, diverse culture without being cliché and playing into tired old Texas stereotypes,” explained Craig. 24/7 “is among slew” of new low-alc brands targeting “health-conscious millennials who are drinking less than their parents did,” per Ad Age.

Sobering article on changed landscape in craft’s most developed mkt begins: “they’re the brands this beer town was built on: Portland Brewing, Bridgeport and Widmer Brothers. For decades, they ruled craft beer, not only in Portland, but in Oregon and beyond.”  But that was then this is now. Number of US craft brewers took a “massive leap” from 1500 to 7500 in a decade, “habits shifted and a fickle younger generation of craft enthusiasts grew up with little brand loyalty.”  In new environment “increased competition is roiling a once steady landscape and claiming victims” wrote the Oregonian.  “Portland’s beloved Bridgeport Brewing, gone.  Portland Brewing’s and Widmer’s formerly packed restaurants, closed.  Alameda Brewhouse and Burnside Brewing, history.”

Oregon has 300 breweries, and there are 120 in Portland area alone. “There’s just too much beer out there,” sez Burnside Brewing’s former owner Jason McAdam. “With this many breweries, there’s not enough market, enough consumer purchase to sustain them all,” says Deschutes founder Gary Fish. “We’ve got 25 breweries in Bend,” he adds, noting (wistfully?) that “we used to kind of own the market” in Bend. But “that’s no longer true. We’re fighting alongside all these little tiny breweries.”  What’s more, there’s a distribution bottleneck, asserts Baerlic Brewing’s co-founder Ben Parsons. “You have an insane increase in the number of breweries having to rely on fewer, larger distributors,” he said, pointing to “antiquated franchise laws.” But OR brewers are free to self-distribute and can move for FMV, notes Danelle Romain, exec director of OR beer and wine distribs assn.  Perhaps “staying small” and self-distributing is best bet nowadays, sez Montavilla Brew Works founder Michael Kora. “Everyone’s looking around with eyes wide open because it’s kind of scary out there.  We don’t want to grow too fast.” Article closes on more optimistic note that there’s still room to grow, if you play your cards right.

As brewers and other alc bev industry members push to make fed excise tax breaks obtained in 2017 permanent, or at least extend ’em, different media spins popped today.  CNBC quoted several industry members about how cuts helped build small bizzes, aided wineries whacked by wildfires and pointed to bipartisan support.  Senate sponsor Ron Wyden said one brewer recently told him tax cut “allowed them to offer health insurance for the first time.  These small businesses need certainty to plan for the future, which is why it’s so important to make these reforms permanent.”  Meanwhile, Bloomberg’s headline/article took negative tack: “Congress May Kill Some Hated Special-Interest Tax Breaks for Good This Year.”  A number of both conservative and progressive groups seek to exterminate the extenders, it seems.  “Let what is dead remain dead,” coalition of those groups wrote to Senators Wyden and Grassley recently.  They just set up task forces “to study what to do about 42 expired or expiring tax breaks that Congress has repeatedly resurrected, often long after they were allowed to lapse,” per Bloomberg.  Brookings Inst pointed out that of $4.2 bil revs lost to fed govt over 2 yrs, savings went not just to small brewers, but to big companies, including “foreign and large domestic producers,” both articles noted.  Will that be a bigger obstacle to current efforts?  BA’s Bob Pease told CNBC: “For years we were advocating for this [2017] legislation for it to impact just small and independent breweries. For the bill to get passed, though, in Washington, compromise is often the order of the day.”

If hard seltzers more than double to 60-65 mil cases as Mike’s Hard Lemonade prexy Phil Rosse estimated, they will gain over 2.5 mil bbls this yr to 4.5 mil bbls.  Extraordinary growth.   Especially in an industry that’s not growing.  Seltzers up as much or more than FMBs in toto, even if only about ¼ of FMB $$ in scan data.  Similarly, IPAs growing much more than craft as a whole.  IPAs still up double-digits off premise even as craft segment has slowed. IPA $$ sales up $74 mil, 14% (volume also up 14%) while total craft up $45 mil, 3% yr-to-date thru May 19 in IRI multi-outlet + convenience.  Means all non-IPA craft $$ down about 3% YTD in IRI. 

IPAs now 40% of craft $$ in IRI.  And 37 share of boxes.  Since IPAs an even higher share of on-premise craft, suggests that IPAs between 9-10 mil bbls last yr.  Or 4.5-5 share of total biz.  Meanwhile, IPAs gained another 3.85 share of craft $$ to 39.5 so far this yr in IRI MULC.  Even if growth slower on-premise and in non-tracked channels, IPAs on track to grow at least around 1 mil bbls in 2019.  That means seltzers and IPAs likely to be somewhere near 15 mil bbls in 2019, up 3.5 mil bbls or more. Can seltzers double again and get to similar size as IPAs?  While one can’t predict the future, consider this: White Claw’s top 2 sellers alone (Variety Pack and Black Cherry) up $80 mil yr-to-date in IRI. That’s more than IPAs as a whole.

St Louis Blues won their first-ever NHL championship in game 7 last night.  Controlling owner is Tom Stillman, who also owns Summit Dist, local MC distrib.  Congrats, Tom.  And of course, AB wasn’t going to let oppy like this pass either, especially in its hometown.  So Bud Light created a 2019 championship bottle that showed up in players’ locker room and on the ice after game, with more “surprises” to come. 

Consumer price index for beer increased 1.9% in May vs May 2018, per latest Bureau of Labor Statistics data.  That was just ahead of 1.8% increase for All Items in May as beer price increases have been ahead of general inflation 3 of 5 mos so far this year.  CPI for wine matched beer with a 1.9% increase in May vs yr ago while spirits price gain decelerated to +1.5%.  CPI for beer was up 2% YTD thru May, ahead of 1.7% gain for All Items but just a tick behind spirits’ 2.1% increase. CPI for wine was up 1.1% YTD.

First On-Premise Beer Price Drop in over 20  yrs  BLS shared some good news for on-premise beer drinkers, noting that avg price for beer away from home was down 0.5% last 6 mos and down 0.7% in month of May, per Businessinsider.com. That’s first 6-mo decrease since 1997 and first decrease since BLS started tracking beer CPI!  Don’t get too excited tho, as “the drop doesn’t mean that beer prices are cheaper than they’ve ever been, just that the average price has returned roughly to October 2018 levels,” noted BI, which also categorized price drop as evidence of “beer giant’s struggles to win over millennials and Gen Z.”