• ⬆️⬇️ 3 Up 3 Down with 3 Tier Beverages
• 🍻 A Round With Breakside Brewery
• 🪧 Molson Coors Fort Worth Workers Strike
• 🥃 The Neo-Prohibition Movement
• 📈 Heineken Grows Rev. in FY 2023 Earnings
• 🏛️ Dovetail Expands into Virginia and D.C.
• 🔮 On Tap: Brewbound Pod w/ Firestone Walker
• ⏮️ ICYMI: BA Revenue Dips -2%
• ✈️ Save the Date: The Brewbound Pod Hits the Road

In the first 2024 installment of 3 Up, 3 Down with 3 Tier Beverages, product team consultant Stephanie Roatis analyzes data through the first month of 2024. Roatis commends the growth of hard cider, non-alcoholic (NA) beer and smaller craft brands, and dives into negative trends for hard seltzer, certain flavored malt beverage (FMB) subsegments and table wine. 

Below is a snippet of Roatis’ analysis, using NIQ data through January 27.

⬆️ Up: Cider’s Convenience Growth Shows No Signs of Cooling Down

Roughly one quarter of cider is sold in the convenience channel, which happens to be the only off-premise channel growing volume for the segment in NIQ’s latest 13 weeks. Cider volume is up +1.6% and dollars are up +5.1% in total U.S. convenience, while total points of distribution grew +4.3%. 

When we remove national and import cider brands and just look at regional players, volume growth in convenience jumps to +16.7% in the latest 13 weeks. 

Within the Pacific division, hard cider is the second fastest-growing segment in c-stores after FMBs, and saw overall volume grow +17%. Seven of the top 10 cider brands grew their volume with double- to triple-digit percentage growth in the latest year, including Schilling, Square Mile and Portland Cider. 

While over one-third of off-premise cider sales occur in the Pacific division alone, one other division experienced noteworthy cider growth in c-stores: the East South Central division grew cider volume +6.6% in the latest quarter, with nine of the top 10 brands growing volume. The next three growth brands are new to the market. 

⬇️ Down: Hard Kombucha, Hard Coffee, and Hard Still Water are Losing Consumers to Big Tea

There was plenty of innovation in the FMB space during 2020-2022, when we saw sustained periods of heightened off-premise consumption. However, in recent months, hard tea and hard lemonade have exploded due to the resurgence of several big brands bringing attention back in, while smaller segments within FMB have seen many brands exit. 

Within FMBs, the bottom three varieties dropped a collective -43,000 in cases YoY. Hard kombucha, hard coffee, and hard still water now own less than 1% of volume share as other FMB segments (traditional FMBs and hard tea) continue to grow share of their own segments and chip away at shelf space with new entrants. 

Across all three declining subsegments, there remain just 24 brands scanning above $10,000 in dollar sales quarterly, primarily hard kombucha brands. Only six brands in the segment are growing in volume, of which four are hard kombucha, one is hard coffee, and one is still water. Additionally, 15 of the top 20 brands in this aggregate lost distribution. 

If existing brands want to survive this consumer shift, they will have to find a way to innovate and/or diversify into other segments, such as hard tea (+30.6%) or hard soda (+20%). 

Insiders can dive into the other positive and negative trends of the quarter here.

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In the latest installment of Brewbound's A Round With Q&A series, we chat with Ben Edmunds, brewmaster at Breakside Brewery. 

Edmunds shares his thoughts on innovation and inspiration in the pursuit of deliciousness, as well as the Portland, Oregon-based craft brewery’s latest wins and biggest challenges. 

What is the biggest challenge your business is facing right now?

Ben: Uncertainty. From a sales and revenue side, we’ve faced more curveballs in the last four years than we did in the first 10+ that the company existed. We’ve seen wild fluctuations in off-prem sales, consumer preference, and brand loyalty. 

Plus, there are severe weather events that halt sales for weeks on end, inchoate cultural trends – like Dry January, longer-term fallout from the pandemic, political turmoil, and seemingly intractable blight issues in Portland. 

These have left us handicapped in forecasting how we are going to perform as a brewery and business. I don’t know what numbers I should be referencing. Give us a little more predictability, and I know that we can deliver high quality and value for our customers and our team. Without it, we are brewing under duress. 

During your 2023 speech at CBC accepting the Russell Schehrer Award for Innovation in Brewing, you encouraged brewers to pursue deliciousness and disavowed the notion that anyone has a lock on creativity. What are the best ideas you’ve had in that pursuit lately?

Ben: Part of my saying that is a reminder to myself that our success isn’t built on Breakside being the first to have every great new idea. And more, our novel ideas get better when we use our industry friends as soundboards. 

I find myself trying to be more open-minded than ever towards the innovations that I see others coming up with. Innovation exists in refining your own and others’ ideas in these incremental and interstitial ways. 

Brewbound Insiders can read more from the Q&A, including finding inspiration in unlikely spaces.

Workers at Molson Coors’ Fort Worth facility went on strike Saturday, shutting down production at the plant, which serves the Western U.S. with Coors Light, Miller Lite, Miller High Life, Topo Chico, Simply Spiked, Pabst, and Yuengling.

The 420 members of Teamsters Local 997 walked off the job after a new three-year deal wasn’t reached. They are seeking pay raises that account for inflation and the end of a tiered system for health care and retirement benefits. 

The Teamsters said the union has “filed numerous unfair labor practice charges with the National Labor Relations Board over the company’s bad faith bargaining.”

Teamsters general president Sean M. O’Brien said in a release: “Executives shamelessly brag to investors about the company’s incredible growth and historic earnings. Millions go to the CEO, billions go to Wall Street, and a middle finger goes to the workers. We’re not taking the disrespect, we’re not accepting the crumbs, and we’re not making concessions. The Teamsters are taking this fight to the streets, and we will hold the line until our members get what they have earned.”

For its part, Molson Coors said it has built up inventories in the event of a strike, and the company has contingency plans in place to serve its regions.

The Fort Worth plant, which opened in 1969, employs 520 workers with an hourly wage of $36, per the company’s website. The facility produces around 8.2 million barrels annually, amounting to 72 brands and 332 SKUs, according to a fact sheet on the website.

Is the U.S. government trying to limit your booze intake or access? The short answer is no. However, we keep hearing rumblings about something called the “neo-prohibition” movement.

Last summer, rumors that the Biden administration wanted to limit American’s drinking began making the rounds, particularly in conservative publications. At the root of the story were comments made by Dr. George Koob, the director of the National Institute on Alcohol Abuse and Alcoholism, to British tabloid The Daily Mail. Koob said that when the new Health and Human Services (HHS) and U.S. Department of Agriculture (USDA) dietary guidelines are announced in 2025, the U.S. could follow Canada’s lead if it wants to go in any new direction.

That statement refers to the recommendations made by the Canadian Centre on Substance Use and Addiction last January that adults cut their intake to two alcoholic drinks per week. The existing U.S. dietary guidelines, revised every five years, recommend the same amount or less per day for men and one drink or less for women (sidenote: will the USDA also update their gender spectrum?)

Those recommendations emerged around the same time that the World Health Organization issued a statement that when it comes to alcohol consumption, there is no safe amount that does not affect health. Not a great month for the bev-alc industry.

How much of a threat are these rumors, and what is actually driving the neo-prohibition movement?

BevNET spirits editor Ferron Salniker dives into the trend exclusively for Insiders.

Heineken N.V.’s full-year revenue for 2023 increased +4.9%, to €36.375 billion (around $39.2 billion USD), the company reported last week. Revenue per hectoliter increased +10.8%. 

Heineken generated €3.229 billion in operating profit (around $3.48 billion USD). 

Nevertheless, Heineken’s beer volume declined -4.7%, with more than 60% of the declines from Vietnam and Nigeria. 

Heineken brand volume increased +2.5%, and excluding the Russia business increased +3.4%. Heineken Silver is in 50 markets and posting volume growth in the “high thirties, led by China, Vietnam and the USA.”

Bernstein analysts noted that net revenue in the U.S. declined mid-single digit, as shipments declined due to an inventory buildup in the second half of the year. Depletions for the Heineken brand were stable, due to the launch of Silver and NA beer Heineken 0.0 growing in the “low-teens.”

For full-year 2024, Heineken is projecting low- to high-single digit cooperating profit.

Chicago-based Dovetail Brewery is expanding into Virginia and Washington, D.C.

The news was leaked on social media by Lost Dog Cafe in Alexandria, Virginia. The beer bar and pizzeria posted on its Instagram last week announcing it would be hosting a Virginia launch event for Dovetail on March 1. 

Dovetail confirmed the news on Twitter/X, writing: “Guess the word it out! More info to come on this tap takeover and other events in the D.C. area at the end of the month – see you soon!”

To celebrate, Dovetail, which focuses on European-style beers, has several parties planned, where it will serve its core four beers – Helles, Kölsch, Vienna and Hefeweizen – as well as some special offerings for National Rauchbier Month, including its Rauchbier, Grodziskie and Smoked Helles. 

Dovetail was founded in 2016, and started canning its beers in 2018. The brewery was the fifth largest Brewers Association-defined craft brewery in the North Central region in 2022, producing 5,680 barrels of beer, a +11% increase year-over-year (YoY), according to the BA in the May/June issue of New Brewer Magazine.

This week’s Brewbound Podcast features an interview with Firestone Walker CMO Dustin Hinz and brand director Hannah Barnett on the brewery’s marketing efforts, the effect of the Firestone Walker Invitational festival, and the diversification of its portfolio beyond the 805 beers. 

Also this week, Molson Coors will present at the Consumer Analyst Group of New York on Wednesday afternoon. If something notable comes out of the presentation, we’ll report back.

We took a page out of the Great British Bake Off’s playbook last week and called it BA Week. The Brewers Association (BA) – the trade group that represents the nations’ small and independent craft brewers – made a LOT of news last week. 

The BA’s revenue declined -2%, to $22,914,025, in 2023, according to its annual report, which was released last week. Nearly all revenue sources declined, including its largest driver, event revenue (-2%, to $13,886,191), followed by membership dues (-2%, to $4,268,747). Advertising and sponsorship, the BA’s third-largest source of revenue, was roughly flat at $3,413,383.

The BA’s publication of its annual report aligned with the first meeting of its 2024 board of directors, which elected Leah Cheston as its chairwoman. Leah is the co-owner of Washington, D.C.-based Right Proper Brewing and the first pub brewer representative to lead the board. She’s also only the second woman to hold the leadership position, after New Belgium co-founder Kim Jordan’s 2005-2007 tenure. 

Other board leaders elected include vice chair and treasurer Chris Herron (Creature Comforts in Athens, Georgia) and secretary Melissa Romano (Lake Anne Brewhouse in Reston, Virginia). The board also made changes to its own future makeup (details in the link).

AHA members’ 2024 plans will look a little different: Homebrew Con, the organization’s annual educational and social gathering, has been put on hiatus. Instead of existing as a standalone event in June, aspects of Homebrew Con have been woven into the Great American Beer Festival (GABF) in October. 

To round out BA Week, Brewbound reporter Zoe Licata spent a bit of time with BA chief economist Bart Watson’s recent analysis of craft price elasticity.

Bart wrote: “Overall price inflation and the proliferation of choices within craft, coupled with lots of new competition in beverage alcohol, has clearly made some consumers think about price more in their purchasing decisions. Including, price elasticity has gone up.”

To measure the impact of price elasticity in the on-premise, Watson looked at pint pricing, citing data from Arryved, a craft-centric point-of-sale (POS) provider. In 2023, the average price of a pint of craft beer increased +4.6% year-over-year (YoY), according to Watson. However, when looking at price increases by location, price increases vary significantly.

In other craft beer news, Saint Paul, Minnesota-based Fair State Brewing Cooperative filed for Chapter 11 bankruptcy. A court filing reveals the company owes about $5.16 million to as many as 199 creditors. 

Founder and CEO Evan Sallee wrote: “This does not mean we are shutting down – we are just restructuring our debt and will emerge on the other side stronger for it. The simple fact is that the pandemic put Fair State in a hole that we need help to dig out of, and we have a solid plan to get through this together so we can continue making the great beer you know and love.”

Boston Beer has dropped the lawsuit that it filed against former employee Brian Soudant. The company sued Soudant in the fall for allegedly violating his non-compete agreement and misappropriation of trade secrets when he took a job at Angry Orchard competitor Boston-based Downeast Cider. Boston Beer’s lawsuit against Downeast is still in progress.

Former Stone Brewing CEO Maria Stipp will take the reins at Suja Life this week, when she becomes the CEO of the cold-pressed juice and shot maker. Interim CEO Zach Keeling is leading Stone following her departure, which was announced last month.

More stories from last week can be found on Brewbound.com, including the latest Consumer Price Index report, craft Circana numbers for the start of 2024, Molson Coors Q4 earnings results, spirits-based innovation plans at Two Robbers and much more.

We’re taking this show on the road. The Brewbound Podcast On-Location is heading to industry gatherings across the country, starting March 12-14 with the California Craft Beer Summit in Sacramento, hosted by the California Craft Brewers Association. 

Look for Brewbound Podcast hosts Jess Infante and Justin Kendall conducting interviews with industry leaders on the show floor. 

Reach out to podcast@brewbound.com if you’d like to connect at the event. Also, look for more Brewbound Podcast On-Location announcements in the near future.