Beer Marketer's Insights

Beer Marketer's Insights

Breakthru Beverage announced closing of its deal to buy 6-mil-case JJ Taylor in Minneapolis today. Not part of announcement, but at least 1 significant brand, Summit, moved. AB Distrib Capitol Beverage Sales got Summit in most of metro area. Summit was 2d-biggest brand in house, bigger than Heineken and around a half million cases. But Summit also took oppy to "redefine our territory," Summit founder Mark Stutrud told INSIGHTS, giving some territory that JJ Taylor previously held to 2 of the brewer's existing suburban distribs, Dahlheimer and College City.

Coca-Cola keeps makin' moves in alc bevs thru partnerships, this time teaming up with Brown-Forman to create Jack & Coke RTDs, cos announced. Feels like a no-brainer combo in retrospect, tho cos takin' it one step at time, starting with launch in Mexico late 2022 followed by other "markets around the world." US ain't part of initial batch, even as cos tout "bring[ing] together two classic American icons…in a way that is consistent, convenient, and portable." But expect brand in US next yr, INSIGHTS hears, with Brown-Forman making distribution choices. Yet US 3-tier system makes launch here more complex than in other countries.

DISCUS conference in New Orleans this week celebrated the "wonderful, wonderful time" for spirits biz in US, ceo/prexy Chris Swonger said during kick-off remarks. Key aim for the org and the meeting is to "keep that momentum going," he said. Spirits enjoyed a 20-yr growth run in US, from $12.2 bil in supplier revs in 2001 to $35.8 bil last yr, org reported in Jan (see Feb 3 issue), gaining over 10 share of absolute alcohol consumption, we estimate. Chris revealed just one, basic concern during opening session of a broadly positive, high-energy meeting: "what I worry about is what goes up must come down at some point." But DISCUS working hard to keep that from happening, he said.

Heineken USA is following in bigger brewers' footsteps, implementing a "temporary" $0.10/case freight surcharge from July 1 thru Dec 31 to help offset rising supply chain costs, and planning to take a general price increase "on or about" Oct 1, cso Jim Sloan informed distribs yesterday. Recall, HUSA sold 6.95 mil bbls (~95.76 mil cases) in 2021, INSIGHTS estimates. With volume declining so far this yr, suggests HUSA will receive just over $4.5 mil from distribs over 6 mos from surcharge in total. Jim Sloan and co cite "ongoing supply chain crisis, in particular with respect to ocean freight" as key reason for surcharge, with continued "port delays" and "shortage of space on container ships." That's "led to unprecedented and volatile increases in ocean freight costs," Jim noted.

As more filters out about AB's upcoming fall price increases, persistent distrib reports peg the amount as significantly higher than AB previously announced. More like 7-8% this fall than 4+%. WOW! That 2d price increase would put AB prices up double digits in 2022 in many parts of the country (like soft drinks). Uncharted territory.

Consumer price index for beer shot up 4.5% in May vs yr ago, easing just slightly from +5% surge in Apr, per data published this morn by Bureau of Labor Statistics. But CPI for all items hit highest level all yr, +8.6% for month of May, topping economist forecasts and once again marking new 40-yr record. Despite stubbornly high inflation, CPI for spirits (+1.4%) and wine (+1.8%) still well below beer. Spirits' 1.4% uptick marks its lowest reading all yr. Yr-to-date thru May, beer CPI +3.8% and all items jumped 8.1%. Spirits pricing up just 1.8% YTD, while wine even lower at +1.6%. Avg US gas prices also hovering right around $5 per gallon, several outlets noted, with higher gas prices reportedly yet to come as drivers gear up for summer travel season.

Particularly with supply chain strains these days and valuations that have been tumbling down, is there strength in numbers? Tho it's not a strategy that's demonstrated many conspicuous successes in the past, we're lately seeing a wave of rollup plays in which entrepreneurs are aiming to accumulate early-stage brands in multiple bev categories. This week brought a couple more: SYSTM Brands, deemed a "premium, impact-focused food & beverage brand platform," and New Berlin Beverage Co, which this week disclosed that it had picked up Minna Sparkling Tea brand back in Apr. They join ranks of cos like Splash Beverage Group, Sway Beverage and Golden Grail that are currently accumulating range of bev brands, and New Age Beverage, which tried unsuccessfully to do so before pivoting to different strategy that itself has resulted in co saying this week that it will consider sale, breakup or other strategic options (BBI, Jun 9).

This has been a month for strategic bevcos suffering some degree of buyer's remorse, with Coca-Cola saying it will sunset Honest Tea this year and Starbucks selling off its acquired Evolution Fresh juice brand. Now it's looking like Nestle has had second thoughts about the strategic fit of one of its acquired brands, Chameleon Cold-Brew, and a lot earlier in its ownership history, just 4 and a half years after picking it up. The buyer, we hear: PowerPlant Ventures, the private-equity shop launched by Zico Coconut Water founder Mark Rampolla and Dan Gluck. PowerPlant, of course, boasts portfolio of many brands that will be familiar to BBI readers including Liquid Death, Vive Organic, Your Super, OWYN, Rebbl, Flying Embers and Partake Brewing, but it doesn't seem to have had much of a presence in RTD coffee, tho it was investor in Jot ultra-concentrated coffee brand launched 2 years ago by Palo Hawkins (BBI, Apr 24 2020). So Austin-birthed Chameleon will give it potent play with early cold-brew player in US that under Nestle has largely held onto original premise that refrigerated entries best capture the vibrant flavor of cold-steeping process. For PowerPlant it offers entry into fast-growing RTD coffee biz, albeit one that remains fragmented at premium end, with even such coffee powers as JAB/KDP having negligible presence and some of fastest-growing entries moving thru the beer systems: Super Coffee thru Anheuser-Busch, La Colombe thru Molson Coors. And it represents another brand PowerPlant has recovered from strategic's about-face, after picking up Zico brand that Coke had killed a year ago. Deal hasn't been publicly announced yet but Nestle's natural foods sales team has been internally notified that move is coming. We can't say for sure that deal is final yet.

For story about Brooklyn Bottling's multifaceted expansion plans we spoke to our longtime contact there, company director Steve Parano - and then promptly quoted him as Rick Parano, his esteemed brother who's also been in bev biz. But, still. Apologies to both.

Hella Cocktail has drawn another investment from venture fund of Uncle Nearest whiskey distillery, adding $5 mil to advance buildout of decade-old brand that told Forbes it's on track to sell 200-250K cases by year-end. Uncle Nearest is Tennessee whiskey named for Black man, Nathan "Nearest" Green, who taught youthful Jack Daniels how to distill a coupla centuries ago (he seemed to get the hang of it), and Uncle Nearest Ventures was created by founder/ceo Fawn Weaver to invest in minority, particularly BIPOC- and female-operated brands. As Forbes recalled, fund has previously invested in Sorel Liqueur, artisanal Caribbean-inspired liqueur, tho Hella Cocktail is by far its largest investment, Hella cofounder Jomaree Pinkard told mag. "Our team members were already pairing their Bitters & Soda with Uncle Nearest, so I knew their products were made with excellence," per statement from Fawn. "What I didn't know is the brand was founded by three men of African American, Mexican and Jewish descent. Once I learned that, I reached into Jomaree and said, 'What do you need? It's yours.'" Pinkard's cofounders are Tobin Ludwig and Eddie Simeon. They haven't specified total investment by Nearest fund to date.