Dear Client:
It’s that time of the year again where we bust out our ancient pair of magic foggy binoculars to gaze upon the next twelve months, and relay what we see.
Recall our usual caveats with predictions: 1. We’re not always right, but never uncertain. 2. We don’t conjecture on specific people’s jobs, and 3. Mostly importantly, please don’t make material decisions based on what we predict. As a wise man once said, predicting the future is hard, mainly because it hasn’t happened yet.
With such a crazy reality, our predictions are a bit broader than usual. With that said, let’s see what we have in store for this year…
Seltzer will continue to grow in 2021— but it will be tough for lead brands to fully double. Why? Stiff competition from new entrants like Mich Ultra Organic Seltzer (Remember how Bud Light Seltzer grabbed about 20 seltzer share off the bat in January, due to the big Super Bowl push to market? That about cut in half by February, but it did siphon some share from the top dogs, at least in the beginning).
Further, liquor-based seltzer purveyors like High Noon and Cutwater will start gaining share among spirits, as well as from malt-based competitors, despite higher prices. Pair that competitive landscape with the fact that some of Truly and White Claw’s new offerings will cannibalize some of their flagship products, and it actually might be a tough year for the top two — though we don’t doubt their continued dominance. After all, they certainly have a lot of pent up demand from out-of-stocks to backfill. (But can they?)
More seltzer predictions…
At least three hard seltzer brands will be discontinued by major brewers in 2021.
There’s a lot of seltzer innovation in store for 2021, but I feel that, like last year, White Claw’s latest variety pack (number three set to hit in March) will end up being the top seltzer innovation of the year.
A-B distributors will get a taste of the “Hype Life” this year with the launch of A-B’s Cacti Seltzer aka the Travis Scott seltzer. The launch will go down as one of the most successful debuts for a beer brand ever (talking about first month timeframe here). That product will sell out faster than you can say cactuses in the initial stages… After that who knows.
Which brings us to our next prediction – more celebrity partnerships in beer. Generally, this has been a tactic reserved for spirits, but we’re starting to see it take shape in beer with Luke Bryan and Constellation’s Two Lane as well as the aforementioned Cacti Seltzer between Travis Scott and A-B. The success of these rollouts, particularly the Cacti launch, will attract more celebrities into the space and brewers will clamor to scoop one up.
Alright moving on from seltzer, we predict that…
Bev alc e-commerce will continue to grow, fueled by a homebody economy, regulatory developments, and supplier and retailer buy-in. Could it get to 20 share of off-premise bev alc transactions in the next handful of years, as Drizly has predicted? Maybe not quite, but we wouldn’t be surprised by 10-15. We’ll bet it gets to at least 4 share in 2021 (Drizly had pegged it at almost 10 share during parts of 2020).
Reyes will continue to buy distributors in new territories, even as regulatory scrutiny starts to heat up in the distributor consolidation space (recall, an industry watchdog group recently sent a letter to the California AG about A-B’s recent purchase of Ace Beverage, saying that deal gives A-B and Reyes 85% of Cali’s wholesale market). Where will Reyes strike next? Texas?
Driven by the same wellness trends that ignited seltzer, as well as flavor improvements, the non-alcoholic category will have a robust year in 2021, driven by market leaders like Heineken 0.0 and Athletic Brewing Co. There could even be a big deal for one of these brands — Athletic to A-B or Boston Beer? Or perhaps it could be Hoplark Hop Tea instead? (To wit, Hop Tea is not a beer — this trend isn’t just about NA neers.) Who knows, but we would not be surprised to see non-alc-beer-replacement-type beverages get to at least 1 share of beer in 2021 (from about 0.4, up ever so slightly from years prior), and gain a few more share points over the next few years.
Relatedly, energy/caffeine drinks will take on a more significant portion of beer distributors’ portfolios, as major suppliers from Molson Coors to A-B and beyond continue to strike deals to help make and/or distribute them, and wholesalers look for more high margin, non-beer products. Of course, NA contract dealings will continue to make our headlines, as energy purveyors are not used to beer franchise laws.
And while we’re on the subject, Monster will continue to flirt with bev alc, but ultimately decide not to dip its toe into the space this year.
The “reopening” of the on-premise will be a tale of two cities: Some areas, where restrictions are lifted and certain demographics of consumers seem comfortable congregating (as we’ve seen in some areas of Texas and Florida, for example – especially the beach/country club set), could see a tidal wave return to the on-premise. But some pockets and parts of the country will continue to see a majorly afflicted on-premise business, even beyond 2021. Continued sanctions, along with consumer proclivities (from homebody trends to increased awareness of illness) will continue to deter traffic and profitability.
Brands with favorable image and intrinsics will continue to grow. Especially in light of Constellation’s blockbuster results, we’ve got a simple rubric with which to view bull/bear brands: Intrinsic and image. The more “favorable” the intrinsics (involving calorie count, and maybe even intensity of flavor) and the image (badge, or relevance) of a beer segment, the more likely it is to maintain growth. Lowish-cal, still-relevant Mexican imports fall in this bucket (some clearly growing faster than others), obviously, as does seltzer
(AKA “not your father’s light beer”). IPA, which is gaining share of beer while total craft hasn’t, checks the boxes, but the larger segment doesn’t. And clearly this lens doesn’t bode well for economy brands.
We kept waiting for the budget boom last year, and it never happened. Shouldn’t expect it to happen this year either. Space for all this new innovation has to come from somewhere, and we predict that budget/economy will be the largest donor, as it was the weakest segment in beer last year.
Cannabis will continue to be a snoozer, at least as it relates to bev alc. There’s been a ton of investment in the space from bev alc, and hardly anyone has begun to rake in the dough. That doesn’t change this year. Brewers will shoot their shot with CBD beverages, but will realize they’re too expensive, and carry little velocity.
Illegal speakeasies and taprooms will continue to pop up until we achieve some semblance of herd immunity due to the vaccines, but it will be sporadic.
SEAGRAM’S HARD SELTZER SHIPPING LATER THIS MONTH
Can FIFCO USA replicate the success seen with its smashing Seagram’s Escapes line? We’re about to find out with, what else? Seagram’s Hard Seltzer.
The newest innovation from Seagram’s is shipping to wholesalers later this month, in a 12-count 12oz. slim can variety pack, per FIFCO USA newsletter. Flavors include Tropical Pineapple, Mango Peach, Mixed Berry and Watermelon Lime. This is one to keep an eye on…
MOLSON COORS EXTENDS VIZZY’S SHELF LIFE
Molson Coors informed its distributors late last week that it’s extended the shelf life on all Vizzy SKUs (yes, even the coming Vizzy SKUs) from 26 weeks to 40 weeks.
The extension comes after determining that it can “deliver the great taste of Vizzy… for a longer period of time,” said the brewer. Plus, they’ve “ensured” that Vizzy’s key differentiation (the antioxidant Vitamin C) “will deliver benefits throughout the extended shelf life.”
Molson Coors said a “soft transition” is set to get underway with “production later this month,” explaining that “40-week dated packages can be flowed into inventory” as distribs “deplete packages with the 26-week date.” All Vizzy SKUs will stay the same.
BEER SUMMIT STARTS TODAY AT 10AM, CENTRAL
If you’ve signed up, you should’ve received an email from Jessica Lopez regarding the login.
-Here is the Beer Summit speaker schedule
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All Central Standard Time.
Still a few minutes to sign up (online only).
Register for both here>>
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Until tomorrow,
Harry, Jenn, and Jordan
“I don’t deserve this award, but I have arthritis and I don’t deserve that either.” – Jack Benny
———- Sell Day Calendar ———-
Today’s Sell Day: 12
Sell days this month: 21
Sell days this month last year: 23
This month ends on a: Fri.
This month last year ended on a: Fri.
YTD sell days Over/Under: -2
