Beer Marketer's Insights
Yet another instance of Coca-Cola dipping its toes further into alc bevs at a distance, this time overseas thru its Switzerland-based mega-bottling partner, Coca-Cola HBC. Indeed, Coca-Cola HBC (which Coke owns 21% stake in) will buy Finlandia Vodka from Brown-Forman for $220 mil, cos announced this morn. Deal still subject to standard closing procedures, expected to close in 2d half of 2023. Finlandia has been “a leading vodka brand” in Central and Eastern Europe with annual volume of 2.7 mil 9L cases globally, “of which more than 60% is being generated within Coca-Cola HBC’s geographic footprint.” It’s bottled by Anora Group plc in Finland “based on a long-term production services agreement” and Coca-Cola HBC has been distributing Finlandia for 17 yrs. Full acquisition is expected to “enhance” its capabilities in the spirits realm. In the US, Coca-Cola primarily has licensed core brands to different alc bev producers like Molson Coors, Constellation and Brown-Forman for Simply Spiked, Topo Chico Hard Seltzer, Fresca Mixed and Jack & Coke RTDs. Is this just another test of the alcoholic waters before makin’ a bigger splash?
In this new age of celeb advertisements across multiple brands at once, Snoop Dogg’s latest cameo for Jack in the Box’s “Snoop Munchie Meal” also references his Corona beer campaign. New 30-second spot starts out with Snoop standing on a familiar beach setting typical of his Corona ads before the Jack in the Box mascot walks up to inform him “hey Snoop, wrong commercial.” This brief reference to another campaign from another company seems to underscore how widespread Corona beer ads with Snoop have become, his unavoidable association with his other campaign, and perhaps Jack in the Box lookin’ to latch on to some of that notoriety. Snoop also helped promote Happy Dad hard seltzer thru Death Row Records, which he owns, per Ad Age, starred in Sketchers’ Super Bowl ad, and has launched his own cannabis brand and much more. Is this latest cross-reference of another ad campaign from the same celeb endorser more of a one-off or something more?
There’s a strange irony to ABI being the first back-to-back winner of the Cannes Lions Creative Marketer of the Year as co’s caught in an unprecedented marketing maelstrom. But “it’s an important wake-up call to all of us marketers first of all to be very humble,” ABI’s global cmo Marcel Marcondes said from the main stage at today’s festival, later adding that “Bud Light is coming back.” Co’s “going all around the country, reconnecting with consumers,” and “moving forward” in a non-divisive way, according to comments covered in AdAge. (Recall, ABI was named the award’s winner in Mar, just before the Bud Light controversy erupted.) Axios separately reported that AB ceo Brendan Whitworth “plans to go on the road around the US this summer to listen to consumers, in connection with Budweiser’s MLB sponsorship.”
“It’s tough to see the controversial and divisive debates that have been happening in the US in the last couple of weeks involving lots of brands and companies, including and especially Bud Light,” Marcel noted. And it’s especially tough “because what we do is all about bringing people together.” Yet ABI’s mktg team is “learning a lot” from the situation, reaching 2 main conclusions: companies and brands 1) “must be driven by their values”; and 2) should strive to understand/celebrate all their consumers in ways that bring them “together, not apart.” Being values-driven yet non-divisive is a somewhat conflicting goal, as AdAge points out. But Bud Light will aim to reconcile the two by simply standing for “easy to drink, easy to enjoy,” Marcel reiterated.
With total industry volume down 4.4% for 1 week thru Jun 10 in NielsenIQ data, Bud Light dropoff got even steeper in latest week. Down fully 30% for the week in NielsenIQ nationally (data from Bump Williams Consulting). That’s first week that natl decline hit 30% and suggests BL trends still getting (slightly) worse in tracked off-prem channels. Bud Light volume down 28.9% for 4 weeks and now down 15% yr-to-date thru Jun 10.
Meanwhile, Coors Light and Miller Lite up 13% and 18% respectively in latest week, with slightly faster gains for 4 weeks. Coors Light up 4.5% and Miller Lite up 7% YTD. More tuff numbers for AB: both Ultra and Busch Light down substantially for 4 weeks, -5% and -10% respectively. Ultra up 0.6% yr-to-date and Busch Light up 0.1%.
“Best Week of Share Performance” Since Apr, Sez AB Despite this ongoing softness, looking at separate Circana MULC data thru Jun 11, AB said this was “ABI’s best week of share performance since April.” Mich Ultra share “nearly flat” for one week, said AB, and Busch Light “improving week over week.” Pressure on other brands is easing in some mkts, INSIGHTS hears.
Modelo $$ Way Ahead of Bud Light in Scan for 4 Weeks, But “CAUTION,” Sez Bump For 4 weeks, Modelo Especial $$ sales up 9% and Bud Light $$ down 25%, so that Modelo Especial now at 8.4 share and Bud Light down to 7.2. But after the flood of articles which recently declared Modelo #1 (significant even in short-term), Bump sez “CAUTION” and points to several caveats.
First, “there is NO ON-PREMISE data included in this report.” Second, Bump warned “BE CAUTIOUS with your conclusions” based on “SINGLE WEEK” data points as there “are too many variables,” including “YAGO ad programs, BOGO, new market launches, new brand intro’s” etc. Then too, as he pointed out, on a year-to-date basis, “Bud Light still has a significant $ advantage over Modelo Especial (several hundred MILLION $ advantage as a matter of fact).” He continued: “unless these growth trends for Modelo Especial continue and Bud Light declines continue, it is POSSIBLE but highly UNLIKELY that Modelo will be America’s #1 brand on a calendar (52 wk) timeframe” across total US.
Among industry members and the public health community, “there is absolutely a reluctance to partner,” Center for Alcohol Policy exec director Kelly Roberson commented, kicking off a rich program of panel discussions during the annual NCSLA meeting in Oklahoma City this wk. There’s a “historical” and even “natural distrust,” she explained. But “alcohol and the industry is not a monolith and neither is public health,” she pointed out. Most industry-members recognize that the caricature of profit-hungry Big Alcohol is often overdrawn. But you “don’t see the reincarnation of Carrie Nation in every public health stakeholder,” either, Kelly confirmed. And tho she sees “opportunities to find common ground,” you “can’t find that common ground if you’re not talking.”
“A lot of the mistrust” held by the public health community for “the [alcohol] industry with the big ‘I’...can be traced back to the tobacco industry,” in the view of Mary Segawa, the public health liaison for the Washington Liquor & Cannabis Bd. The “mistrust there,” in tobacco, “has had an effect on how public health works with other industries,” she observed. But can regulators work together with both industry and public health? “To be honest, yes,” Mary said; there are “many opportunities to do that,” especially “at the local level” and up to “the state level.” Unsaid, but national alignment may be tougher to find, especially given the stance that industry has no place in alcohol policy discussion, held by large national and international public health advocates.
How WA Embraced Public Health Questions After Privatization Mary holds a relatively unique position, for which she credits longtime WA LCB director Rick Garza (who retires July 1). He brought her on in an educational role just before privatization (passed in 2011), a year before the state legalized adult-use cannabis. Mary remembers “an increasing need for that public health perspective” in that time. As the agency started work in cannabis, she found it was “looking at the same things,” including outlet density and “packaging and labeling.” And “as time has gone on, it’s not just me asking those questions. It’s members from our licensing division, our enforcement division,” she shared: “what is the research? What [are] the best practices? Why did this make a difference?” As she tells it, “gradually it just becomes part of the conversation.”
“As a regulatory agency,” having asked those questions and sought answers, it’s “easier for us to defend those decisions,” Mary added. Tho not noted here, other panels during NCSLA reminded of the way the Supreme Court’s decision in Tennessee Wine raised the stakes for regulators to have these answers. Recall, the justices urged fact-finding around the public health & safety impacts of alcohol policies when weighing a dispute between the 21st Amendment and the dormant Commerce Clause.
Scales Not Always Balanced Panelists during this opening conversation at NCSLA urged state regulators to watch out when one side’s or one party’s voice gets louder than all the others. Moderator and Virginia ABC CEO Travis Hill explained how a “public health advocate” successfully convinced the governor to veto a bill to allow 150-proof Everclear in state stores even though the bill “got all the way through the legislature” and “barely had any opposition to it.” (Recall, as a control state, Virginia’s ABC is both regulator and retailer.) The state “put some brakes on it,” including limits on which stores sold it and carefully tracking those sales. “Now it’s been fully legalized,” Travis shared.
Open comment periods for proposed rules are designed to provide an open forum for debate from all sides. But sometimes it “doesn’t feel like a conversation,” offered Jay Lerdal of the Natl Restaurant Assn. He recalled an instance where a single set of comments ruled the day and advised regulators to “[make] sure that the industry is being heard.” But Kelly pointed to “the David and Goliath comparison of budgets,” commenting that public health organizations often have far fewer resources than industry advocates. In her experience, folks in public health are often thanked for participating, given a “pat on the head” and sent on their way without being taken seriously.
When asked what issues lawmakers should prioritize while crafting alcohol policies, a majority of the public ranks health & safety issues near the top, Kelly shared, presenting CAP’s annual survey results. That result doesn’t always manifest for regulators, New Mexico ABC’s Phillip Sanchez countered. “Public sentiment may be towards public safety,” he said, but “in action…we see the opposite.” He noted a law about spirits sales at convenience stores, when gas stations gave up selling gas to keep selling spirits. Also consider how commonly “convenience” plays into debate about alcohol availability (like wine in grocery stores) and the immediate popularity of cocktails-to-go allowances.
On the Same Page on Crossover Bevs Different voices have found a little more alignment around the regulation of crossover beverages. Many agree that hard takes on soft drinks need to be clearly distinguished on the label and placed in different parts of stores. Kelly’s seen “a lot of public health folks raising that and finding allies” in regulator agencies. And at least some industry members are on the same page, too. But questions around and discussion of these new alc bev entries reaches far further, of course. The issue of crossover bevs dominated discussion later in the NCSLA program, as we detailed extensively in our INSIGHTS Express publication earlier this wk. (
Cheers,
Tractor Beverage has recruited former Coke and Pepsi exec Gus Rios as svp marketing, reporting to chief brand officer Justin Herber. Dallas-based Rios had spent over a decade at PepsiCo over 2 stints and most recently ran marketing & customer engagement at MyCoke.com . . . Tyler Gage, who cofounded Runa guayusa brand not long out of Brown Univ, has been promoted from cfo/coo to prexy of alc player Flying Embers and its parent Fermentation Sciences, launched by KeVita founder Bill Moses. Runa now is part of Vita Coco portfolio tho its prospects seem uncertain.
DISTRIBUTION: Brooklyn Best Opens Its Self-Distribution Arm in NY to Outside Brands under Reset Name
Brooklyn Best, new marketer of canned teas and lemonades in NY, is opening its modest self-distribution arm to outside brands on Jul 1, starting with roster that includes Chlorophyll Water, United Sodas of America and Cann THC bevs. Encountered at BevNet Live event, cofounder Mac Petrycki said new unit will be operating under name Reset Distribution out of warehouse in Gowanus section of Brooklyn with two vehicles and two asst sales mgrs but will grow from there. It was born out of brand’s own struggles to find suitable DSD partner with reach both to off- and on-premise accts. It will offer data-focused approach down to store level, he said. Self-distribution arm is currently servicing about 450 active accts. We profiled Brooklyn Best last summer (BBI, Aug 30).
NY DSD power Big Geyser already boasts robust energy portfolio capped by Celsius and C4. But as prexy/coo Jerry Reda told us, newly launched Gorgie brand “is unlike any other energy drink.” He was referring to its non-GMO ingredients and adept female tilt thanks to crowd-influenced recipe that adds biotin and other beauty-enhancing ingredients to 150 mg caffeine payload. Early momentum at Whole Foods and Sprouts suggested it would be a good bet, Jerry indicated. As for Gorgie creator and bev newcomer Michelle Cordeiro Grant, who announced assignment from BevNet Live stage as she competed in brand Showdown, she said it was clear from Celsius performance that Big Geyser was right partner for daunting NY market. At BevNet event it was clear that Gorgie has constituency even within the DSD house: Reda’s daughter Stephanie Reda, who’s built Geyser-affiliated Hal’s seltzer and snacks brand into familiar presence in NY and beyond, pronounced herself an avid fan as she cradled a can.
Last week Liquid IV touted its biggest launch ever and laid out slate of clues – including Spotify playlist that included Maren Morris’ Sugar and Zac Brown Band’s Free – that some shrewd followers pegged as hinting at first no-sugar entries (BBI, Jun 8). That duly proved the case on Thurs during big reveal to social media followers, with sugar-free Hydration Multiplier debuting in White Peach, Green Grape and Lemon Lime. Sweetener is “proprietary Amino Acid Allulose Blend. No yucky, artificial sweeteners,” as co replied to inquiring fans on Instagram. It’s available immediately for members and to the hoi polloi starting Jun 21. Debut was greeted with jubilation by some followers tho a few questioned core premise. “Wasn't the sugar content necessary along with the sodium content?” asked one. “After all the complaints I saw of the sugar levels, I always saw the reply that both were needed to refuel and rehydrate. So why now is it ‘zero sugar’?” Of course, that’s question that’s been asked of other hydration brands as they’ve extended into zero-sugar versions that seem to war with hydration science.
Montreal-based Guru Organic Energy turned in tepid Q2 as growth in its core Canadian market was offset by tuff comp in US as Sam’s Club effort didn’t repeat. Sales edged up a mere 1.4% to $7.71 mil (Canadian) as brand responded to national campaign in Canada dubbed Punch Up Your Mind and strong takeup of newest entry, Theanine Fruit Punch, a smart-energy play that grabbed 3% of Quebec market in first month. It hopes to continue momentum with summer campaign dubbed Summer of Feel Good Energy. By geography, Canada sales rose 21% to $6.6 mil but US sales dropped by half to $1.1 mil given comparison vs one-time Sam’s Club program. Still, argued ceo Carl Goyette, brand’s fundamentals remain encouraging, with scanner sales in core natural channel up 18% over past 52-wks in US. (Remember, Guru moves thru Pepsi bottling system in Canada but has no DSD outside Calif south of border.) Gross margin narrowed to 53.1% from 54.3% a year earlier on higher costs and heavier promos. Adjusted EBITDA narrowed to $2.5 mil from $3.7 mil a year earlier, in part because co has learned to take more targeted approach to sales & marketing efforts.
Stifel’s Montreal-based analyst Martin Landry, who follows Guru closely, offered this perspective on results: “Since transitioning its Canadian distribution to PepsiCo in October 2021, Guru’s revenue growth has been lumpy, impacted by pricing differences and destocking/replenishments, blurring actual performance at retail.” And while it suffered from adverse comparison to Sam’s Club sales this period, that situation reverses this summer when Guru cycles a labor shortage at PepsiCo that translated into out-of-stocks at retail, Martin noted. With its valuation near a 52-week low, with shares trading at 1.4X Stifel’s fiscal-year 2024 sales estimates, he’s putting out a buy on the stock.