Dear Client: 

After Molson Coors announced a 50/50 split with distributors last week for the cost of untapped Molson Coors kegs, eyes turned to the other major brewers: Anheuser-Busch and Constellation. It was their move. 

Well: Just seconds ago, Constellation sent a special COVID-19 edition of its Gold Network Newsletter to wholesaler partners, obtained by BBD. Among the headlines: a generous 70% keg credit of wholesalers’ delivered costs “for all full kegs of Constellation beer product that are returned to Constellation for decanting/destruction.”

They expressed solidarity with their partners, who have been impacted by COVID-19 measures, particularly via on-premise closures. “We are in this together …we are here to support you and your retail accounts,” they said. 

Constellation estimates peg draft inventory “spread out such that around 70% of full kegs are at distributor warehouses, while the remaining 30% are at retail,” they explained.

So to spell it out, in their words: “To ensure Constellation Brands bears the cost of our direct customers, we are implementing a Keg Credit Program to reimburse Gold Network Distributors 70% of their delivered cost for all full kegs of Constellation beer product that are returned to Constellation for decanting/destruction.” 

As with the Molson Coors announcement, some program details are still in the works. But basically the program:

Applies to all full kegs, both at retail and currently held at distributor warehouses;

Remains in place through May (with potential for revision);

Requires that “each full 1/2 barrel keg returned must have the original keg collar and / or keg cap that designates it as a Constellation keg,” (as Constellation uses MicroStar for cooperage); and

Notes that “all decanting and related transportation costs will be covered by Constellation.” 

“Logistics around the return procedure and process for credits will be sent to you shortly, as we continue to iron out details,” per newsletter. “We wanted to provide you with the overarching policy as soon as possible, as we know everyone is awaiting a solution.”

The company also provided updates on marketing (covering the COVID donations it’s making through flagship brands, which we reported last week), and operations — like the fact that Constellation Brands’ and distributor inventories “remain at targeted levels” throughout the network. 

In light of COVID’s daily influence on the market, the company told distributors to expect the Gold Network News updates to come weekly, rather than the usual monthly editions. 

Much more after Constellation’s earnings call tomorrow. 

PABST ALSO ISSUING REIMBURSEMENT PLAN FOR OUT-OF-CODE KEGS

Pabst Brewing Company notified distributor partners this morning of their plans to “implement a 50/50 split with distributors for the cost of untapped and out-of-code Molson Coors produced kegs from April 1,2020 – June 30,2020.”

Recall when Molson Coors announced plans to eat half the cost for untapped kegs last week [see BBD 03-26-2020], the company noted that the split would not include Pabst kegs and told wholesalers to contact Pabst for direction on what to do with those kegs. So, it would seem a program that at least matched that of Molson Coors’ was sort of inevitable for Pabst.

And like Molson Coors, Pabst said it would “provide a per-keg credit to distributors for decanting eligible kegs as all kegs must be empty before returning.”

Pabst stated that all claims to participate in the program “must be submitted no later than June 30, 2020,” any claims sent in after that date “will not be honored.” Note that the brewer also shared that this program will not apply to kegs belonging to their craft partner New Holland Brewing Company.

MICROSTAR PUTTING DISTRIBUTOR REFUNDS ON “A BRIEF HOLD”

Bad news for distribs looking to jettison their empty kegs for credits. Keg collection company, MicroStar, has said it’s hitting pause on distributor refunds until the on-premise market is back up-and-running. 

As we understand it, MicroStar expects it to be a madhouse once the on-premise is cleared for sales again with kegs coming back, and going into the marketplace, and believes it’s best to make the next steps on returns then.

Stay tuned.

Until tomorrow,

Harry, Jenn and Jordan

“The future ain’t what it used to be.”

– Yogi Berra

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