From Blue Moon to Purple Haze, Keith Villa Makes the Jump to Weed Beer

FILED MARCH 29, 2018

Dear Client:

We've seen a smattering of brewers, big and small, roll out "weed-infused" beers that smell like weed, taste like weed, but don't get you stoned. Keith Villa, arguably the most successful craft brewer of all time as the inventor of Blue Moon, wants to give consumers the "real deal."

"If consumers want a cannabis beer, they don't want something that's hyped up and marketed as a cannabis beer, but in fine print says 'does not contain THC' or doesn't include the active things that people are looking for," he tells BBD. "Our beers will definitely have those psychoactive components, so when people have our beers they'll have a true alternative to alcohol based beers."

Wait, what does Keith mean by "our" beers? Keith retired from MillerCoors at the start of the year, and since he parted ways with the company, he and his wife, Jodi, have been working to launch CERIA Beverages, a Colorado-based company that will specialize in cannabis-infused non-alcoholic craft beverages containing THC. Keith will serve as co-founder and brewmaster of CERIA and Jodi will serve as CEO.

NEVER WOULD'VE THOUGHT… If you're scratching your head at the thought of Keith messing around with weed, it's ok. He didn't see this coming either up until a few years ago. "Before it became legal I was truly against it. I was like Jeff Sessions, I thought it was a gateway drug and I thought it was just bad," Keith says.

In fact, when the legalization of recreational marijuana went up for vote in Colorado back in 2012, Keith voted against it. Once it passed, however, Keith started doing research into it and discovered "that this plant that's been blamed for so many of society's problems… was really not as bad as I was led to believe," he says. From there, Keith started to experiment with it at home, and started to see that there really was something there with cannabis and extract. Once he reached "the Rule of 85" with MillerCoors he left and turned his attention to CERIA.

NOT A WEEDMASTER. For as talented as Keith is in a brewhouse, he's not able to concoct a THC infused beer by his lonesome. That's why they partnered with ebbu, a leading cannabis research company out of Colorado. As Keith explains it, ebbu is "able to isolate the different sensations of cannabis and allows us to dial those sensations into the different beers that we make."

A ROUGH SUM OF HOW THE PROCESS GOES: Keith crafts a beer giving it a flavor profile and aroma, then that beer is de-alcoholized, and finally Keith works with ebbu to infuse the type and amount of cannabis they want in there.

WHY BEER? There's tons of way to get high now, you can smoke, you can eat edibles, and there's weed-laced drinks and elixirs on the market. So we asked Keith why he thinks people will pick his product, set to roll out in Colorado dispensaries by year's end, over another?

"There isn't really anything that compares to beer in being a socially acceptable form of cannabis," Keith says. Think about it, he says, you can't sit down with your friends for a couple of hours just smoking; you don't want to sit down on a Friday night and socialize while gulping down gummies; and the drinkables that they have out right now are either flavorless or non-carbonated and can be very sickly sweet. "There's nothing out there now that makes cannabis into a socially acceptable way to ingest it," Keith says, so "that's where we come in."

DOESN'T GO THROUGH A THREE-TIER SYSTEM YET. Just like alcohol each state is a little different on how it regulates cannabis. "In Colorado, you can make it and then your partners in the dispensaries are the ones who can legally distribute it," Keith says. "Nevada is working on a way to make the beer distributors into the cannabis distributors."

KEITH HOPES IT WILL GET THERE. "From my perspective, the beer distributors have always been our friend in the beer business. I see no difference with my products. As we expand, I want to try and get beer distributors to get behind us so that they can get a piece of this pie, because I think it behooves all of us for the distributors to be in this.

"In the cannabis business, we need a third tier and it's not set up that way yet, but I hope to try to rally the distributors so that they can be a part of this business. I really hope they can get behind this rather than watch as it unfolds… Because it's going to come whether we like it or not. It's a tidal wave that's slowly coming and you got to react to it."

LIMITED TO DISPENSARIES FOR NOW…. Right now, the law states that cannabis-infused products can only be sold in dispensaries. But there are two states that are working to get legalization of on-premise consumption, Keith says, those being: Colorado and Nevada.

If these states make that happen they will eventually allow on-premise consumption, "but at the exclusion of alcohol," Keith says, meaning an establishment that allows for the consumption of marijuana will have to forbid alcohol. The other issue is consumers would have to bring their own weed to these establishments, because there won't be any weed for purchase at these types of places. "So it really doesn't make a lot of sense now," Keith says, "but I anticipate in the future that it will change to parallel the beer world and eventually it will interact with the beer world and alcohol world."

So there's a chance we could see Keith's newest brew on tap alongside his baby, Blue Moon? He sure hopes so. "In the future, I definitely want to have our products on tap so that people who are unable to consume alcohol or those who don't want to wake up with a hangover feeling the next day - have an alternative and that's our beer.

PACKAGING? Keith says the beverages will initially come in bottles, but they want to bring cans into the mix shortly after. Pack sizes will be single serves and four-packs for now. The goal Keith says is to create a user experience that's very similar to beer, so that when people see it there will be all of those visual cues that parallel with beer. [Ed. Note: Just like beer, the product is intended to be fully consumed in one sitting, there's no putting a seal on it and sticking it back in the fridge].

One other note on packaging: Keith says he wants to educate consumers on their labels by having a system. As of now, that system is set to resemble the different ski slopes, ya know your bunny slopes, your blues, blacks, etc. So light beers that contain small amounts of THC will have a small green marijuana leaf on them. If you're looking for something that matches your intermediate experience you'll reach for one with a blue marijuana leaf. Those that want a stronger experience will find a black marijuana leaf. And if you want to kick it up to 11, Keith says they'll have double blacks.

"We want to keep it really simple so current users who know about cannabis and people who just want to dabble, they'll both be able to jump right in and really substitute our beers for regular alcoholic beers," says Keith.

PRICING. Keith didn't offer an exact dollar amount for any of the forthcoming packages, but says they will "keep it as an affordable luxury along the lines of the very high-end craft beers." The taxes on the plant, which "are way higher than alcohol," and the federal ban on the drug, which prevents them from writing off equipment costs or processing costs, necessitates the higher price point, Keith explains.

Very interesting stuff. We'll be keeping in touch with Keith on his new venture.

MOLSON COORS AND HEINEKEN: TERRIBLE IDEA OR MATCH MADE IN HEAVEN?

Mark Howden from Jefferies International remarked on Molson Coors' stock spike this week amid speculation of a tie-up by writing:

"The only available buyer is surely Heineken and I repeat our OFT REPEATED view that there is no way Heineken want or need TAP. They have spent the last 5-10 years turning themselves into a global growthy emerging markets driven powerhouse. More developed markets beer, especially with the domestic segment in the US feeling so challenged, simply doesn't make any sense. Not happening. No way."

But I would submit what COULD happen is a joint-venture between Heineken USA and MillerCoors in the U.S. -- given that each needs what the other has.

In HUSA's case, it needs scale, distributor attention, and retail chain moxy. In MillerCoors' case, it needs a high end portfolio that includes Mexican imports (Dos Equis and Tecate) and a Stella fighter -- Heineken green. MillerCoors chief Gavin Hattersley, after all, is a former financial guy. Could it happen? Well, make it happen, cap'n.

Not now, apparently. There were zero signs of a MillerCoors - HUSA J-V at the first day of the MC distributor meeting in Austin. More on that later when I can talk about it …..

NAB UNVEILS NEW SALES STRUCTURE, BRINGING ON 35 NEW EMPLOYEES

North American Breweries is currently implementing a new sales structure that will "provide more frontline visibility for wholesalers and retailers, a deeper and more centralized national accounts team, and stronger resources and tools for its sales team," the company shared with BBD yesterday.

The new model seeks to "capitalize on key distribution and sales opportunities, create a national accounts structure, and strengthen teams in high potential markets with the addition of a net 35 incremental positions," per announcement.

Josh Halpern, Chief Sales Officer for NAB, said the new structure "will sharpen the focus and put more resources in place to drive business performance across the NAB portfolio. "We have great opportunities to sell more beer and FMBs by realigning our people and investments behind our biggest bets," said Josh.

NAB says they've already begun recruiting for the new structure and plans to hire over the next few months.


Until tomorrow,
Harry, Jenn, and Jordan


"Science is organized knowledge. Wisdom is organized life."
- Immanuel Kant


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