Beer Marketer's Insights
Even with impact from COVID-19 loomin' large, small breweries continue to open at a fairly rapid clip, outpacing reported closings so far, latest round-up of local news clips suggests. Just in the last week, articles popped about breweries opening all over the map, including Boston, Hartford, CT, Charlotte, NC, northeast OH and Richmond, VA among others. In fact, Charlotte area had two breweries open in the last week and another two getting ready to open soon, reported Charlotte Observer. Edge City Brewing sold somewhere between 600-800 growlers to-go last Thursday on its opening day, paper noted in separate article.
It held on for about a month and a half, paying retail workers since Mich taprooms forced to close mid-March, but Founders will now join many other breweries in furloughing staff. Effective May 3, 163 workers at co's 3 retail operations in Grand Rapids and Detroit will be furloughed for indefinite period, Detroit Free Press reported. Tuff choice will last "until we have better clarity on where we [are] as a business, and society, go from here," said CEO/co-founder Mike Stevens. "We did not take this decision lightly and hope to bring back our furloughed staff as soon as possible."
Lagunitas had its tuffest qtr yet in US since acquired by Heineken. Volume slipped "high-single digit," parent co Heineken noted in its Q1 release. That follows low-single digit declines in US each of the last 2 yrs tho co continued to grow overall thanks to big increases internationally. But in Q1, Lagunitas US sales were softer than separately run Heineken USA unit (down mid-singles) for first time. So total Heineken sales in US took another tuff hit altogether, even as Heineken brand family grew low-singles driven by Heineken 0.0.
Boston +36% in Q1 w/ 6-Pt Dogfish Lift; Sam Adams Still "Expected to Decline"; $6 Mil on Keg Returns
Boston Beer continues pick up steam despite its struggling craft beer (and cider) biz. Depletions were up 36% in Q1, including 6-pt boost from all incremental Dogfish Head. Shipments were up 347K bbls, 32% to 1.423 mil bbls (27.5% without Dogfish Head) and its net revs up $79 mil, 31% to $330.6 mil. Like other cos, Boston "is withdrawing its full year fiscal guidance," as it's "not in a position to accurately forecast the future impacts of the pandemic." But strong results thru start of the pandemic is "validation" of its biz model, chairman Jim Koch stated on Q1 conference call while reflecting on impact of COVID-19. Especially in relation to other craft brewers, Boston "developed a portfolio and business model that's able to prosper even in this new normal," he said.
It looked like the pantry loading ride was on its way back to reality. But craft beer sales kept up ~20% growth pace in off-premise scans for 2d straight week; $$ up 19.5% thru Apr 12 in natl IRI multi-outlet + convenience data, according to latest Bump Williams Consulting COVID-19 update. Overall craft segment continues to improve in tracked off-premise channels following COVID-19 outbreak even with cutbacks on SKUs at retail (see below). But it’s still consistently losing share, off 0.25 share to 11.5 of beer $$ in IRI MULC since March 8. Largest craft cos and brands continue to benefit most: Sierra Nevada (+36%), New Belgium (+35%), Lagunitas (+22%), Bell’s (+45%), Firestone Walker (+43%) and Founders (+29%) each among top-15 growth suppliers in beer during latest week.
Missing this week's massive Brew Expo America trade show that's usually part of Craft Brewers Conference, one of leading small-scale American canning-line suppliers went ahead with big new product launch anyway. If only it could have come even sooner. Colo-based Wild Goose Filling debuted Gosling line this week, a small, simplified can-filler designed for very small breweries, filling just 12 cans per minute, Westword reported. It's a step-down in size from the kind of Wild Goose lines used by many mobile canning cos, so popular with small breweries canning limited runs of hazy IPAs and sour ales. But it's also more attainable and apparently easier to operate, let alone fit into a small, crowded brewery. It takes up about as much space as home oven. But that ain't all. Wild Goose put its floor model in nearby Odd13 Brewing, allowing other breweries to come by with kegs
At least some liquor laws still apply in midst of a pandemic, Maui County Liquor Control affirmed over the weekend. Agency launched investigation into lead local brewer and distiller Maui Brewing, among the alc bev producers that pivoted to sanitizer production early in coronavirus crisis. But seeing high prices for small quantities of sanitizer, Maui decided to offer it for free with any purchase (including beer or not), founder/CEO Garrett Marrero told the Star Advertiser. Problem is, that looks a whole lot like inducement to regulators. In Hawaii (and many other states), licensees can't offer "free goods" with purchase of alcohol, or offer alc bev bonus with purchase of other goods. Co's produced some 3,000 gals of sanitizer, donating at least a third of that to first responders, paper wrote. But Maui also offered 16oz bottles to anyone patronizing its brewpub with food, merch or beer sales, Garrett explained. He estimated in-kind donations totaled at least $25K, finding the Liquor Control investigation in "extremely poor taste." Maui shifted sanitizer donations to local charities rather than to the county or state.
Bleak signals that impacts of COVID-19 will stretch far longer than anybody wants appeared early this week. Some from abroad, as huge annual beer celebration Oktoberfest in Munich, Germany, cancelled today. Scheduled for 2nd half of Sept and into Oct, over 200-yr-old annual gathering that draws some 6 mil attendees to drink equivalent of over 60K bbls will hold off this yr due to threat of coronavirus. Event cancelled over threat of cholera twice in 2nd half of 19th century, Bloomberg noted. Just before that announcement, 400-yr old Bavarian Werneck Brewery said it will close due to virus, news that reached US via AP report citing grim prospect that "many breweries will not survive this crisis, that is already becoming clear." That's German Brewers Assn tho, echoing US sentiments to the letter.
After first appearing as part of package of alc bev producer "asks" in early correspondence to Congressional leaders a month ago, full-yr suspension of excise taxes now top of the list for coalition of trade orgs. "Suspend all federal excise tax obligations" for alc bevs for entirety of 2020, leaders from 8 manufacturer assns asked in letter to Congress this wk. It details assortment of measures deemed most helpful to members struggling under coronavirus-driven limitations. Chief among 'em: "suspending or deferring excise tax payments for the year will allow producers to dedicate scarce resources to payroll and other operating costs," letter from Beer Institute, Brewers Assn, Distilled Spirits Council, Wine Institute and others urged. Lawmakers should also permanently reduce excise tax rates by including CBMTRA legislation in next set of large-scale economic relief measures, orgs suggest. In separate letter to state-level policymakers, BI and BA seek similar year-long deferral of state excise taxes.
As distribs and retailers look to rationalize SKU counts, beer UPCs (SKUs) tracked in Nielsen are down considerably since COVID-19, with smaller craft brands taking disproportionate hit, latest Nielsen report shows. Total beer/FMB/cider items dropped 8%, 1900+ items for latest 6 wks ending Apr 11; down 11% in latest 1-wk, Nielsen shared. Top-20 craft cos (ranked by $$) sold just 28 fewer items in that time, but remaining craft cos collectively sold 1,621 fewer items, down 12%. That's ~85% of total beer SKU reduction. Indeed, this "places even more pressure on small to medium-sized brewers that are already facing enormous challenges" with on-premise shutdowns, wrote Nielsen. Notably, premium light and below premium items were still slightly up for 6-wks thru Apr 11, while cider and import items each dropped 8% for 6 wks. But in most recent 1-wk, premium light SKUs began to dip (-2%) and declines steepened for all other segments. All while wine and spirits SKU counts "not much changed…compared to pre-COVID time periods." (A version of this article also appeared in sibling pub INSIGHTS Express.)

