"Revenue and margin pressure keeps building" for ABI, said HSBC analyst Carlos Laboy yesterday. Given erosion of financials, "weak fundamentals," plummeting stock price and existing debt, he wondered "is a capital raise coming?" That's even tho there is no immediate cash crunch. Back in 2008, when InBev bought AB and after mkts had cratered, ABI got "infusion of new capital through a rights issue" and Carlos wondered if ABI would have to do "2008 like capital raise" again. Back then, ABI fell to 6x PE ratio, but ABI presently at 10x, Carlos figures, implying it could still fall further. Recall, ABI had $7 bil in cash/cash equivs at end of 2019, just raised $9 bil thru credit facility and will get $11 bil from Asahi if Australian govt ever approves deal. So under any normal circumstances, ABI would have plenty of cash, but ABI also seemingly preparing for potentially worse scenarios ahead with $9 bil credit facility. "People hoard when hard times are ahead," wrote Financial Times and ABI has "already dashed to claim a first-mover advantage." That's even tho its "need for cash" not as urgent as airlines and hospitality industries, Fin Times suggests. ABI "rushed to trigger revolving credit lines," even tho it won't get hit as hard as other bizzes. But "drawdowns increase banks exposure to troubled industries," FT warned. "Panic borrowing, like panic buying, makes shortages inevitable."

In this crazy time, the White Claw craze continues and it's still pickin' up steam. Not surprising and it's not even yet available throughout US, but White Claw's 2d variety pack already became the #1 new brand in IRI multi-outlet + convenience for 1 week thru Mar 8, said Mike's Hard Lemonade Co's sr director of category insights, Dan Wandel. "It did overtake Bud Light Seltzer in volume and $$" in latest week, Dan said. And tho INSIGHTS joked that White Claw's original variety pack "slowed" to 230% growth, if you put the 2 variety packs together they were up 342% for 1 week thru Mar 8. And 294% YTD.

While COVID-19 response has generally gutted the stock mkt in recent weeks, some analysts are still taking optimistic tack, finding the brighter side in pockets of our little world of beer and more broadly in big retail. Notably, Credit Suisse analyst Seth Sigman upgraded Walmart to "outperform" as "near-term shopper behavior will push Walmart's business evolution forward by as much as five years," thru more rapid adoption of Online biz, "stronger" execution at store, and ability to acquire new customers. "This is a fundamental change," sez partner analyst Kaumil Gajrawala. Indeed, this is "more than just a short-term pantry load," and "at home consumption may remain elevated for the next 12 months," in Seth's view. As shopper behavior shifts even faster to newer models like delivery, curbside pickup and online, "on the back of COVID-19," this "is driving significant growth in new customers for WMT." That "should" be "sticky" and "strengthens the case" for Walmart as an able competitor to Amazon Prime, sez Seth.

Shortly after news broke that an AB employee at the Cartersville, GA brewery tested positive for COVID-19 (see yesterday's issue), AB announced that it will keep the brewery open. "Our ability to serve our consumers, retailers, and communities has not been impacted, nor has the safety and quality of our products," AB spokesperson told local news channel WSB-TV Atlanta (among others). "We are monitoring the situation closely and will continue to support our employees during this challenging time." Cartersville facility brews 20+ AB products, including Pure Gold, and is the "only brewery" that makes Bud Reserve series products, WSB-TV notes.

In the spirit of "times have changed and demand flexibility," and working with regulators, TTB made a quick pivot last week regarding allowable returns of product and its consignment sale policy. Responding to NBWA request, TTB issued new guidance that will allow distribs to legally pick up product sold in to retailers anticipating subsequently cancelled big March events (St Patrick's Day, March Madness, etc). As NBWA ceo Craig Purser explained: "The guidance recognizes the COVID-19 event as a reason for return and will not classify a transaction impacted by this emergency as a violation of the consignment sale provisions of the Federal Alcohol Administration Act (FAAA)…. Given the unique shutdowns now facing the nation, NBWA…requested clarity on returns from suspended retailers as cities and states begin to order bars and restaurants to close."

While we know beer distributors are already engaged in local efforts to assist in battling coronavirus, veteran industry atty and lifelong community volunteer, Art DeCelle at Lehrman Bev Law in Oakton, VA, shared this thoughtful proposal with us and some industry leaders. Based on input from his local Arlington Fire and EMS and various public health and industry sources, Art notes: "Most people, including public officials, are anxiously and somewhat helplessly waiting to figure out whether we will see widespread infection and serious consequences for health care providers, supply chains, and other elements of our economy and society. In a worst-case scenario, many drivers and others involved in logistical functions could be ill for a period of time creating gaps in delivery of essential consumer goods at a time when unique needs will arise and spikes in demand will occur." At the same time, Art figures that the closing of so many on-premise outlets around the country "has resulted in lower demand for deliveries. As a result, distributors may have resources that could be deployed for deliveries of essential goods. Their drivers know local geography and tend to be in a younger and lower-risk age demographic. Personnel at distributor's offices are also familiar with geography and have the infrastructure to communicate with drivers."

Despite strong short-term beer sales, many expect severe downturn in broader US economy, at least in first half from COVID-19 pandemic. Markets experiencing extreme volatility (Dow down 1400 points today at presstime, following 1,000 point gain yesterday. Fear is gripping financial mkts. Some do even worry economy may head past a recession and straight into a depression. "'D' Word Rears Head," headlined Reuters yesterday. Coronavirus shockwaves "are forcing investors to contemplate outcome more dire than a recession… a credit crisis or even a depression," Reuters wrote. Yesterday, Treasury Secretary Steve Mnuchin reportedly warned senators "unemployment could rise to 20% without government intervention," according to Bloomberg. Urged lawmakers to approve an economic stimulus package of $1 trillion or more to avoid an economic fallout which he cautioned could be worse than the 2008 financial crisis, as reported by Bloomberg Economic and others.

At press-time, 29 states plus DC have mandated complete on-premise shutdowns for all restaurants, bars and other public accommodations, insisting on delivery and pick-up options only. Another half-dozen limited on-premise capacity, mandating or recommending that retailers reduce the number of patrons by 50%, down to less than 50 or less than 10 at a time. Another dozen states have not taken state-wide action, but large cities and counties within those states either limited capacity in on-premise accounts or closed them to dine-in business. Take-out only. In other locations, individual business owners have voluntarily chosen to close dining rooms, following federal CDC guidelines to limit public gatherings to groups of 10 people or less and practice social distancing. Whether mandated or by choice, the on-premise food and drink business has effectively halted for the vast majority of the US population.

Nielsen also showed big beer "bump" for 1 week thru Mar 7 (7%), tho trend less robust than IRI. "Consumers are thinking ahead about what their household will need over the next several weeks and perhaps even months," said veep of beverage alcohol Danelle Kosmal, "and stocking up on alcoholic purchases is part of the equation, as large pack sizes are experiencing some of the largest bumps in sales." Danelle continued: "In beer, growth rates for 30 packs and 36 packs jumped to 2.8% and 20% respectively, compared to several years of declines for both of those pack sizes. Nearly all segments of beer experienced a bump for the week ending March 7, 2020. Budget and mid-price tier mainstream brands performed much better than average trends from recent months." Danelle concluded: "We expect to see even bigger spikes in off-premise beer and broader alcohol sales in the weeks ahead."