• 💰 Earnings: Brown-Forman Reports Sales Slump
• 🔍 IWSR: Challenges Ahead for Global Alcohol
• 🧜 Starbucks Joins Grubhub
• 🏛️ Kefir Feuds And Soda ‘Suits

Hemp beverages took another hit last Thursday, losing access to most mainstream retail outlets through a decision by state regulators.

The Massachusetts Department of Public Health (DPH) and Department of Agricultural Resources (MDAR) issued a joint statement through the state’s Alcoholic Beverages Control Commission (ABCC) declaring it “unlawful to manufacture and/or sell food or beverages” containing hemp-derived cannabinoids outside of the dispensary channel, applying to both alcoholic and non-alcoholic beverages.

What does this mean for the hemp industry, both in the Bay State and in the rest of the country? We made the rounds, spoke with various experts, stakeholders and brands and learned how this latest regulatory development for the hemp beverage industry is being interpreted. 

In Massachusetts: Which is the fifth largest state for THC beverage sales through dispensaries, (according to Brightfield Group) marijuana-derived THC drinks (not hemp-derived delta-8 or delta-9) tallied $20.3 million in sales during 2023.

Industry veteran Matt Melander, co-founder of Levia and recently launched Nantucket Longbird, said that closing the door on hemp beverages – which have been sold in grocery, convenience and bev-alc channels – would just push more brands to sell DTC, both from outside and into the state. While online sales of hemp-derived THC products continue to grow, that channel is usually less easily subjected to required lab testing.  

In the rest of the country: THC beverage trade groups like the Hemp Beverage Alliance and the newly-formed Adult Beverage Alliance (ABA) said the Massachusetts notice was a setback in continuing the conversation on how to properly regulate the industry, with ABA president and co-founder of Craft Collective Adam Olivieri calling it “selective enforcement.”

It doesn’t address how to properly regulate brands that are putting inferior or unsafe products on the market, and essentially takes a “prohibition route” to overseeing hemp drink sales, Olivieri said.

From an outlier: But at least one stakeholder in the Massachusetts dispensary channel disagrees, saying the directive is not necessarily trying to limit hemp brands from operating, but enforcing a law that was already in place.

As hemp beverages have proliferated in bev-alc channels throughout the country, licensed marijuana retailers in places like Massachusetts or Colorado have called those other routes to the consumer an unequal playing field for people looking to purchase intoxicating THC products.

“It shouldn’t be a situation where there are liquor stores selling products from out-of-state and local businesses can’t produce and sell into that market. That doesn’t really seem sensible,” said Brandon Pollock, CEO of Theory Wellness – which operates a THC beverage storefront in Medford.

BevNET Insiders can read the full story for more details on what this move signals for the broader hemp-derived drinks space.

Brown-Forman announced a sales slump yesterday in its earnings report, driven by lower volumes of tequila and whiskey, and the broader slowdown in the spirits industry. 

• The maker of Jack Daniel’s reported an 8% decline in reported net sales to $1.0 billion in Q4 FY 2024.
• Overall, reported net sales in the U.S. decreased 4%, with the decline partially offset by price increases.
• Bright spots include  recent acquisitions Diplomático Rum and Gin Mare (+61%), as well as RTD New Mix (+32%).

CEO Lawson Whiting was optimistic that trends would improve towards the end of the year, and said that the downward trajectory was primarily an “inventory correction” issue at the consumer level.

Check out the full rundown on BevNET.

For the first time in nearly 30 years, IWSR recorded a decline (-2% in 2023) in the volume of spirits sold in the U.S., according to a new report. Here are other highlights:

• Challenges are expected to continue until 2025, while total beverage alcohol volumes are expected to edge up by only 0.4% this year.
• Tequila is poised to add the most incremental value to the U.S. spirits market by 2028, driven by premium-and-above expressions. Agave spirits are expected to gain increasing traction outside of their North America base as well. 
• RTDs will also continue to be a bright spot, with volume and value forecast to grow at a CAGR of +3% between 2023 and 2028.

✨ We know the premiumization universe for spirits is narrowing: While agave was the key driver of premium-and-above growth across a broad range of geographies in 2023, the gin boom has ended even more quickly than was anticipated, with marked declines from pandemic highs in key markets.

😎 So what’s the segment with the best outlook? The latest consumer data indicates that no-alcohol is the only market segment with positive momentum, driven by year-on-year increases in the no-alcohol drinker population in several key markets, including India, China, the U.K., and the U.S.

Working from home helped to eliminate the shame of showing up late for a meeting with Starbucks. But now consumers can still have an iced coffee in hand for their next Zoom as the coffee chain announced a partnership today with Grubhub to offer home delivery in select markets.

☕ According to Reuters, Starbucks reported double-digit growth in its U.S. delivery business in Q1 2024, with food and coffee from its cafes already available on platforms like Doordash, Uber Eats and Postmates.

📱 Consumers in Pennsylvania, Colorado and Illinois will be the first to have the option to order Starbucks via Grubhub this summer, with plans to expand the partnership nationwide in August.

📉 Pull Back: Starbucks expansion of home delivery comes as it recently cut its sales projections as same-store sales declined for the first time in three years. Retail sales for its RTD coffees have also been in recent decline, per NielsenIQ.

The CPG Week team pulled out their legal pads and took seats in the gallery this week to discuss some of the courtroom drama brewing in the industry recently. 

⚔️ Senior reporter Brad Avery kicks off the case docket discussing developments in the long-fermenting family power struggle at Lifeway Foods.

🥤 Nosh managing editor Monica Watrous cracks open the can on Poppi’s class-action suit claiming its gut-friendly claims are unfounded.

❌ Finally, the team wade into a case out of the U.S. District Court of Northern Georgia claiming that General Mills allowed a racist and discriminatory workplace in one of its manufacturing facilities for over two decades.

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