Beer Marketer's Insights
Lower Costs to Free Up Beer Cash Amid Spirits "Hangover," Morgan Stanley Sez: Buy ABI, Sell Diageo
Conclusion that investors should "overweight" (or buy) ABI stock and "underweight" (sell) Diageo as Bud Light continues to get clobbered in mkt and media and after spirits' long run of share gains seems counterintuitive. But the logic is fairly straightforward and positions on ABI at least, taken by Morgan Stanley's European Beverages team led by Sarah Simon last wk, is not that controversial. ABI now enjoys a buy rating from 61% of Wall St analysts, report cites.
Slight improvement in Bud Light trend for 1 week thru July 8 short-lived and apparently related to holiday timing. It's down 30% again in latest week thru 7/15 in NielsenIQ data from Bump Williams Consulting. And remains down 30% for 4 weeks. 30%! Such a precipitous dropoff rate for beer's largest brand (yr-to-date in $$ and volume) remains an unprecedented development as does its persistence.
Bottling giant Arca Continental, which has Coca-Cola rights for large part of SW quadrant of US, suffered 2.3% volume decline to 115.5 mil centiliters in its US territory in Q2 but still scored 11.3% sales increase in local currency, per earnings release issued on Fri. On sparkling side at Coca-Cola Southwest Bottling, colas were off 3.7% in volume to 51.7 mil cL and flavored entries off 2.3% to 29.8 mil cL. Noncarbs excluding water were off 3.5% to 18.6 mil cL but water grew 4.2% to 15.4 mil cL driven by 9.4% gain in Smartwater and 83.5% gain in Topo Chico.
JDE Peet's has just added to its coffee empire with pickup of Brazil's JAV Group, which markets the venerable coffee and tea brands Café Maratá and Chá Maratá, primarily in northern part of country where JDE Peet's hasn't established big presence. Terms were undisclosed but deal includes 2 plants at co that employs 1,200. Maratá has been in market for over 50 years. Like other JAB-aligned cos, JDE Peet's has been under some investor scrutiny for balancing expansion with debt reduction, issue ceo Fabien Simon alluded to in assuring, "over the last 3 years we have been focused on transforming JDE Peet's in a correctly invested, more productive and more sustainable company. We are now ready to take the next step and continue our disciplined path of geographical expansion and diversification."
Coca-Cola has decided to exercise its right of first refusal on Monster-acquired Bang Energy, which now is almost certain to move thru Coke bottling system rather than network of beer houses that built brand and to which Bang returned after dissolution of its distribution alliance with PepsiCo. The alternative, had KO decided its energy portfolio is robust enough, would have been for MNST to take acquired brand to alternative system of beer houses thru which it's moving its Beast Unleashed and other non-energy brands. "Yes, we have consented to Bang coming through our system in the US and around the world," KO rep told us this morning in response to query we made late last week, tho brand still needs to forge deals and marketing plans with individual bottlers. So Bang will join array of brands that includes Monster, Reign, NOS, Full Throttle, Burn and others. MNST exec confirmed to us Coke's intention, saying it would shortly notify beer houses of outcome. This will be disappointing news to beer houses that were hoping to get a shot to rebuild Bang, many of whom had previously lost Celsius and C4 and have big void to fill in growing, lucrative segment.
A particularly high number of Portland closings popped in the past month. Shutdowns or impending closures spread across Brewery 26, Unicorn Brewing, Ambacht Brewing, Pono Brewing, Sessionable beer bar, Conspirator Beverage and Grains of Wrath PDX, New School Beer reported. Many are nanobreweries for sale in some shape or form. And CBN already chronicled Grains of Wrath closing its Portland outpost to focus on expansion in WA. But closure of Conspirator Beverage is notable since that 20-bbl facility contract produced for Rosenstadt Brewery and new brands such as Kings & Daughters, Via Beer, and Oak Union. Conspirator's "surprise closure" left staff "out of work and breweries struggling to find stable ground," article notes.
Loveland, Colorado's oldest brewery is now under new ownership. Grimm Brothers sold to owners of fellow Loveland craft co Berthoud Brewing for an undisclosed price, local paper reported. In mix along with Berthoud's Jesse Sommers and Lynx Hawthorne is investor group Yellow Duck LLC. Berthoud previously distributed some of Grimm's products and will look to expand the brand's reach. They may move Grimm's taphouse but plan to keep the brewhouse where it is, article notes. Otherwise new ownership doesn't foresee significant changes to the product line and all 5 of Grimm's employees were retained, Sommers added.
Stone Starts Serving Sapporo Test Batch at Pubs as Wrangling Over Anchor's Future Intensifies
An "experimental lager" showed up on tap at Stone's San Diego bistros recently, the city's Union-Tribune wrote. And tho it's not identified as such, it's Sapporo Premium brewed in Escondido, an early glimpse at the "fresher" and therefore "better" Sapporo scheduled for full production in early 2024, Stone COO Sean Monahan told the paper. Co emphasized the staff expansion (40-50 jobs) and investment in Stone facilities in CA and VA (around $60 mil) to bring the Sapporo production stateside.
Athletic Brewing's remarkable growth with NA beer continues to stand out in tracked off-prem channels thru first half of 2023. Its sales jumped 89% to $36.5 mil as volume grew 84% to 831K cases YTD thru Jul 1, according to NielsenIQ off-prem data shared by Bump Williams Consulting. It's now #2 non-alc brand family by $$, behind only Heineken 0.0 and gaining ground toward #1. It's 13th largest craft beer supplier in Nielsen channels and #2 craft growth co overall. And chain retailers continue to make more space for Athletic as its category weighted distribution (CWD) rose 10 pts to 25%. That's the biggest CWD gain by far among top craft brand fams, even as it's still well below top craft families like New Belgium (71%), Blue Moon (75%), Sierra (57%), Sam Adams (46%) and Lagunitas (47%), among others.
With cans now 70 share of craft segment and continuing to grow (see Jul 7 issue), bottles remain the main drag on craft segment sales. Craft bottle $$ slipped 12% YTD thru Jul 1 in Nielsen data shared by BWC. Bottled 6pks (-10%) and bottled 12pks (-14%) are still #2 and #4 largest package formats within craft at 18 share and 9 share of craft $$, respectively. That's 90% of all craft bottle sales. Bottled 4pks (-16%) and bottled 12oz singles (-17%) down at steeper rates and under 2 share of craft collectively. Interestingly, bottled 16.9oz singles are the only bottle format size growing and gaining share in scans YTD, up 8% to $18 mil at a whopping $132/case. Seemingly fueled by Maine Beer and roping in Russian River's 510ml bottles. But they're less than 1 share of segment. Net-net, in order for craft segment to grow at retail, 6pk and 12pk bottle sales gotta stabilize and/or dwindle to a size that can no longer impact the segment so much.