Dear Client: 

Those waiting for Constellation to offer some sort of split with distributors on expiring kegs will have to keep on waiting. (But we hear they will probably come out with something very soon.) 

But the company did share with distributors some extended shelf life parameters for package and draft beer yesterday. 

Only the draft extension is temporary. 

Indeed, having conducted a 12-month study in various markets and conditions, Constellation is now moving its import package beer shelf life to 270 days, effective immediately. That goes for “all bottle and can packages, except for new product introductions. New product introductions, like Corona Hard Seltzer, will remain at 180 days until we can fully test their shelf life stability,” per sales chief Bill Renspie and president of Mexico operations, Daniel Baima. 

The company will send its beer to the Gold Network within the first 180 days, “and our distributors will continue to have 90 days to sell the products through retail,” it said.

That move seemed imminent, but was instituted now for obvious reasons. A more temporary measure to help allay expiring kegs: Moving draft to a “temporary shelf life extension of kegs to 180 days.” 

Constellation stressed that this is an “interim and short-term change and we will revert to 120 days shelf life for kegs once the current situation is resolved.” (Recall, last week A-B went from 50 days to 90 for draft temporarily [see BBD 03-24-2020].) 

“Our quality analysis determined that this temporary extension will not compromise keg freshness in the short-term but we do ask that Constellation Brands Draft Beer Dispense Standards

be closely followed, specifically cold storage requirements (33-45°F).” 

DIAGEO BEER COMPANY TO COVER 60% OF KEG LOSSES

This just in late last night.  Diageo Beer Co. sent a memo to distributors, obtained by BBD through dark and dirty ways you would rather not know, which states that while they would prefer for on-premise accounts, if reopened before code dates on kegs expire, to “sell through as much inventory as possible and bring consumers back to the on-premise”, they realize that will likely not happen.  

“Since this happened during St. Patrick’s Day season, we want to provide strong support,” writes sales chief Jack Edwards. “For all untapped keg inventory in your warehouse, including what you’ve legally been allowed to take back from the on premise, we are providing a 60/40 split with Diageo Beer Company covering 60% of the inventory.”  

(Not all of the inventory?  Just 60% of the inventory?  That was unclear at press time, so we’ll get back to you on that. But I suspect they meant they will cover 60% of the FOB of all the untapped keg inventory).  

DRIZLY DOESN’T THINK COVID-SPURRED GROWTH TRENDS WILL END ANYTIME SOON

In mid-March (March 17, to be exact), days after states started shuttering the on-premise, e-commerce bev alc platform Drizly shared that, in their prior four days or so, they were seeing roughly 3.5 times the growth rate from earlier in the year. Beer, wine and spirits were all up tremendously, but wine and spirits were growing twice as fast. 

The next week, the IRI data to March 15 bore out pretty much exactly that scenario.

By now, many distributors — who two weeks ago told us they were seeing record trends at retail — have said they are just starting to slow. Could we be turning a corner with off-premise growth? 

We wondered if Drizly could help answer. So we turned to their Head of Consumer Insights, Liz Paquette.  

We asked: What are you guys seeing, especially last week? Are we decelerating or are we continuing to grow?

Liz walked us through the recent trajectory. 

“When we first started to notice a discernible impact was around the week of March 9th,” she said. “When we look now at this past week, the week of 3/23, compared to that week of 3/16, we’re not seeing as big of a jump, however, we still are seeing growth.”

But it’s still significant growth compared to their “baseline” of earlier in the year. 

DRIZLY’S PHASES OF GROWTH: FROM OFF-PREMISE TO E-COMMERCE BUMP. In that first week, Liz says, the shift to off-premise juiced their numbers as the on-premise was starting to shut down (or at least become victim of a quarantining public).  

From that, there was a “greater shift to e-comm.” And now, “what we’re seeing is that that is not only just maintaining, but it is growing.”

STILL UP 500% LAST WEEK OVER BASELINE. So: “If we look at our numbers last week, specifically, on average, we were up about 500% year over year. Prior to that, on average it was about 400%,” she said. 

TRENDING UP 150% OVER SUPER BOWL SUNDAY. But she clarifies that they don’t really see year over year as their baseline. 

Their baseline is basically eight weeks prior to the date (that cuts out obvious recent noise). Right now, that still puts them on firm ground for growth.

“Eight weeks prior to this past week was actually Super Bowl Sunday,” said Liz. “When we actually look at this past Sunday in particular, compared to eight weeks prior, we’re still about 150% over baseline. That’s 150% higher growth than we would have expected, even compared to Super Bowl Sunday, which is one of the biggest days of the year, always.

So while growth has leveled a bit from two weeks ago, “it’s still explosive growth compared to what we would have expected to see at this point in time.”

W&S SHARE HAD SWOLLEN, BUT IT’S GOING BACK TO NORMAL. When we last spoke with Drizly about trends, again, right around St. Patricks’ Day, they told us wine and spirits were seeing bigger gains than beer. 

Indeed, back then, “we were seeing a real acceleration in wine and spirits in particular. That has slowed a bit. What we’ve noticed is that the mix of share amongst those categories has kind of tempered back a little bit to what we’d expect normally.

“For example, wine typically makes up about 40% of sales on our platform. There were points where that had risen to about 44% and had taken share away from beer in particular. That has kind of evened out a little bit. We’re back at around 40 to 41%, and we’ve actually seen beer rise back up,” to about 19% share this past week.   

BUT, WHAT IS GROWING IN BEER? TRENDS AND TOP SELLERS. 

We pried more about what’s selling in beer, and suggested that tested brands — even legacy brands that maybe had been declining — are doing the best.

Liz agreed. “We’re not seeing a ton of experimentation right now,” she said. 

And hard seltzer “is definitely retaining share and sales on Drizly — White Claw continues to be one of the top sellers on the platform,” she said. Bud Light also continues to be a top seller. Beyond that, porters and “New England and Hazy IPAs” are seeing growth as well. (On the spirits side, no shocker, Tito’s is hot; Bulleit is too. And for wine, Kim Crawford is a hot grower. More in Wine & Spirits Daily.)

DOES IT SLOW FROM HERE? WHAT DOES THE FUTURE HOLD? But will growth start to taper off or go south over the next few weeks? 

Liz doesn’t think so.

“All signs for us are pointing currently still to continued growth even though there has been a little bit of that slowing,” which is “really just in relation to that first week, where everything really took off. 

“It’s not that I think we’re seeing kind of this lull starting to happen, we are still seeing continued growth, it’s just a little bit at a slower pace, just given kind of the nature of what’s going on now. I think everybody’s hunkered down and in” — still relying on booze, but slightly more adapted to their new norm. 

More tomorrow about regional blips and their changing consumer base. 

3% OF RESTAURANTS ALREADY PERMANENTLY CLOSED 

Bars and restaurants are among the hardest hit by COVID-19 containment measures. Restaurant sales were down 47% between March 1 and March 22, according to a survey of 4,000 restaurant operators conducted by the National Restaurant Association. 

More than half of respondents (54%) have switched to off-premise service only. 3% have already permanently closed, 44% have temporarily closed and 11% say they expect to permanently close within the next month, per survey. 

Seven in ten respondents said they’ve had to lay off employees and reduce the number of hours worked. Half of respondents expect more layoffs and hourly reductions over the next month. 

BEER BRIEFS:

DRIZLY AND BEVMO EXPAND PARTNERSHIP IN CA. Drizly has expanded its partnership with BevMo, adding 90 stores to the network (for a total of 145) in Bakersfield, Fresno, Stockton, Modesto, Napa Valley and Palm Springs as well as increasing the number of stores in Los Angeles, San Francisco and San Diego. “We are glad to be growing our partnership with Drizly at a time when online shopping and home delivery have become invaluable to our shoppers throughout California,” says BevMo ceo Matt Champion. “While we planned to expand our partnership with Drizly, recent developments accelerated the need for convenient home delivery options statewide.” Drizly said it’s serving about another three million people in that area of California with the recent expansion. 

Until tomorrow,

Harry, Jenn and Jordan

“I believe that every human has a finite number of heart-beats. I don’t intend to waste any of mine running around doing exercises.”

– Buzz Aldrin

———- Sell Day Calendar ———-

Today’s Sell Day: 1

Sell days this month: 22

Sell days this month last year: 22

This month ends on a: Thurs.

This month last year ended on a: Tues.

YTD sell days Over/Under:  +1