All Eyes on Anheuser-Busch

Dear Client:

On Monday we heard from a handful of wholesalers with a variety of thoughts around Molson Coors going 50-50 on expiring draft beer. One summed it up echoing Manhattan Beer exec (and former MC exec) Ed McBrien, “these guys could have told us to eat it. They are good partners and I’m glad they are sharing the burden no matter what it cost.” 

Remember, MC and Boston Beer both have announced they are meeting wholesalers halfway on expiring kegs. We’ve obviously heard from several A-B wholesalers who are wondering what their primary brewer’s plans are to share the load? 

Beer Business Daily understands A-B is conducting a Zoom call (who isn’t these days?) with their Wholesaler Panel today, considering what they will do to assist distributors who have a massive amount of inventory out there, particularly in kegs, that were positioned for canceled March events including St Patrick’s Day, pro sports and March Madness. 

Here’s the thing:  We estimate A-B has more than twice as many kegs out in the trade as Molson Coors — perhaps three times as  many — and at a higher average FOB. They have much more to lose. But with their scale, they also have less to lose per half barrel.  Stay tuned…. 


While we wait on a word from the above story… add Sierra Nevada to the list of brewers setting up a program to help distributors and retailers through these trying times.

The brewer wrote to distributors yesterday informing them that “effective immediately, they will be offering all distributors who are providing market-wide relief to on-premise retailers, 60% of the purchase cost of any untapped out of code keg” of Sierra Nevada products including their acquired brand Sufferfest, and new kombucha brand Strainge Beast — “whether they are in your distributor warehouse or at retail—from now through June 30.” 

Sierra Nevada also said they’ll “pay for, and arrange, all backhaul freight and product destruction.” Plus, “where state laws permit,” Sierra Nevada “will extend credit terms from 15 days to 21 from April 1-May 31, 2020” on all of its products.

HOW DOES IT WORK? Sierra said its “support will be directed to those distributors who demonstrate that they are committed to helping revitalize the on-premise in their marketplace,” as the sector is “vital to the health and future of our industry.”

The program “will be based on existing keg inventories in your warehouse reflected in VIP plus whatever you pick up and credit to on-premise retailers between now and June 30.” 

Sierra notes that its “keg codes are 150 days so, obviously, it is to everyone’s best interest to be able to sell your kegs if they are still in code when the on-premise market reopens.” 

They add that their “warehouse management system” informs them of any kegs in a distributor’s warehouse that are close to code, “so there is no need to contact us until that time to arrange product pick up.” 


A-B is temporarily raising the pay of its “front line” operations workers who must report in to work everyday instead of working remotely. BBD understands this includes the likes of on-site brewery workers, WOD employees, and even those taking care of A-B’s famed Clydesdales. 

These employees will get a temporary 10% pay increase, the brewer told them today. 

Recall, last week A-B announced a sweeping partnership with the Red Cross, which they’ll support by donating facility space for blood drives and redirecting some $5 million from their sports and entertainment partnerships, which have been thwarted by COVID-19 closures. 

A-B also said it’s offering full-time paid leave for any employees afflicted by the virus. 


As expected, beer continued to grow, a lot, in the off-premise snapshot to March 22.

After growing both volume (+18.6%) and dollars (+22%) by double digits for the week ending March 15, trends accelerated by more than 10 points in the following week with category volume and dollars up 32% and up 33.6%, respectively, per IRI’s all channel plus liquor universe (shout out to Bump Williams once again, for providing us with these IRI scanner updates).

ALL SEGMENTS UP DOUBLE DIGITS, SELTZER UP 400%. In the last update (for the latest week ending March 15) we saw, for the first time in a long time, every beer segment in the black. In the latest week to March 22, there isn’t a segment growing dollar sales less than 22%. Check it out:

  • Domestic premium, up 22.4%
  • Imports, up 26%
  • Domestic sub premiums, up 23.3%
  • FMBs, up 116.9% (if you break out hard seltzers, they were up 405.7%)
  • Craft, up 31.4%
  • Domestic super premium, up 36.1%
  • Cider, up 36%
  • Non-alc, up 48.2%

DOMESTIC PREMIUMS THE 3rd FASTEST GROWING SEGMENT IN FOOD. Of course, a hefty chunk of this growth in beer is going down in the food channel, where overall beer dollars are up 53%. Here, domestic premiums, up 49.5%, are the third-fastest-growing segment, trailing only FMBs (+172.4%) and domestic super premiums (+55%). Yep, that means domestic premiums grew faster in food than craft, up 40.2%, and imports, up 32.5% – actually, imports claimed the “slowest” growth rate in food for the week.

SPIRITS UP 70% IN LATEST SET. As beer continues to fly off the shelves in this crisis, so does wine and spirits, the latter in particular. Spirits were growing twice as fast as beer in the last set of data we received to March 15, and that hasn’t changed in this latest set, with spirit dollars up 70%. Wine, meanwhile, grew dollar sales nearly 50% in the latest set.  

We expected this particular week (March 15-March 22) to reveal the most eye-popping numbers in the off-premise thus far, as it captured not only the pantry loading, but also the fact that going out for a drink was no longer a reality for most, as 30-plus states made the call to shut down the on-premise that week. 

Could this specific frame be the peak of pantry loading? Recall various distributors indicated to BBD last week (the week beginning the 23rd) that they were beginning to experience a slight slowdown in the off-premise. 

And we heard yesterday was completely dismal, not much beer moved at all. 


Just how hard has the on premise been hit by COVID-19 closures?

It’s essentially rolling to a halt. BBD caught up with BeerBoard founder Mark Young last week for a lay of the on-premise world. The company manages more than $1 billion in draft sales through its technology. 

By now, Mark says, his world of some 3,000 bars and restaurants, from independents to the largest national accounts, are down about 85%-90% on average. 

“I think we all know we got hit with this unprecedented situation, this Coronavirus hit the nation and I’m sure you can imagine … you don’t need BeerBoard to know our bars across the country have been hit hard.”

The first week of pain –around the weekend before St. Patrick’s Day – they saw a roughly 20% drop in overall volume at the bars. 

“And then it quickly went to different areas,” Mark said. “Some were hit harder, like New York, California… then we saw the Great Lakes, Chicago area get hit.” 

Then, the week of March 22, “this decrease swelled to about [down] 82% in aggregate (compared to same week in 2019) as bars chose to shut down or many states mandated them to close (at least no on premise dining/drinking).” 

But now, the carnage is everywhere. Mark says “over 95% of our locations are near zero volume and total volume down over 90% the last 7 days, from the same time frame in 2019.”

Which begs the question: Are we going to see a lot of folks go out of business? 

That’s “tough to say,” says Mark. “I think a lot of clients are going to come out stronger. This is a crisis for any business, yours or ours. We look at, how can we be more efficient? What are the things we need to push for …put more focus on.” (For example: Maybe not as many tap lines.) 

But “could there be a contraction? I think we can agree that’s probably going to happen” because closures could last for months. “This could be tough for some of these smaller operators, to sustain that length of closure.” 

What about takeaway sales, does that help?

“Overall I don’t think it’s making a dent,” he said. There may be some situations where tasting rooms or taprooms are “set up to do more of that.” 

But based on his conversations, “talking to bars, maybe they’re doing 10-15 a day, pouring [growlers]—it really doesn’t make a dent. … I don’t see that making a dent in recouping this lost volume. Bars are for experiences.”

As for how his clients may look different when they actually re-open, Mark agreed that there may not be as many tap handles for the long tail.

“I think that’s absolutely correct,” he said. “A crisis does give you an opportunity to relook at your business, and ways you could do things a little better.” 

Like: “How do we help these GMs spend [more time] on guest experiences… they’re focused on guests and we give them so much work.”

“They have to be beer buyers, receivers… there’s a lot.” He describes them as CEOs of each unit. But BeerBoard’s clients recognize the need to lighten their load, through data.

“We gotta help with more intelligence, technology, to make them more efficient; to focus on bigger items.” 

WHAT ABOUT THE STIMULUS BILL? While the recently passed stimulus bill has some in it for the industry, many in the restaurant world are disappointed that insurance carriers didn’t step up there. 

Asked about the bill, Mark said, “What’s interesting to me is the insurance — there’s no insurance kicking in, and this seems to me like a time when you should have insurance. I think that could be debated at length, and our insurance carriers wouldn’t agree. But could the federal government … and that’s what the Restaurant Association was pushing for, too – was to funnel some of that stimulus money through the insurance carriers to help with this interruption of business. If there was ever an interruption of business for bars, it’s right now.” 

Listen to the entire podcast with Mark on YouTube here>>.   


Investors may be more favorable towards liquor stocks than beer right now, but “a drawn-out recession might change [investor’s] tastes,” reports The Wall Street Journal.

Indeed, if you look at some of the top dogs in spirits — like Diageo, Pernod Ricard, Rémy Cointreau and Davide Campari-Milano – they have on average “lost 15% of their stock-market value this year,” per report. While big beer companies – like ABI, Heineken, Carlsberg and Constellation Brands – “are down 30% by comparison.”

WHY LIQUOR IS SAFER NOW. The report states that “liquor stocks look safer in the short term,” as brewers “are slightly more exposed to lockdowns that are closing bars and restaurants globally,” (Citi data from the report shows ABI and Heineken “make 34% and 38% of sales” through the on-premise respectively, while the channel accounts for 29% of Diageo and Campari’s sales). 

Plus, “brewers have a higher percentage of fixed costs than distillers,” because as you’ve heard me say once or twice – beer is heavy relative to its price, so “the drop in sales has an outsize impact on profit margins.”

BUT SPIRITS MAY RUN INTO TROUBLE LATER IN THE YEAR. “Liquor companies may face pain later in the year,” the report says, as liquor is more seasonal with sales picking up around year-end holidays, and “wholesalers must clear unsold stock before they can place new orders, which may delay brands’ recovery.”

Brewers on the other hand “should rebound more quickly, as beer’s shorter shelf life means bars carry less inventory.”

All in, “Liquor stocks tend to do well when economic growth is strong and consumers are trading up to premium brands. Beer consumption is usually more defensive during downturns.”

Until tomorrow,

Harry, Jenn and Jordan

“Do not be afraid of defeat. You are never so near victory as when defeated in a good cause.” – Henry Ward Beecher 

———- Sell Day Calendar ———-

Today’s Sell Day: 22

Sell days this month: 22

Sell days this month last year: 21

This month ends on a: Tues.

This month last year ended on a: Fri.

YTD sell days Over/Under:  +1