Dear Client:

The VP of Budweiser USA wrote distributor partners yesterday to announce a delay for the full marketing launch of its big non-alcoholic brand, Budweiser Zero. 

Sales to retailers will still start next week, as planned, on March 30th, but the marketing around the new launch will be pushed back until May.

“As a result of the current climate, product delays and retailers postponing resets we have decided to move the launch of the Budweiser Zero marketing campaign to May 4,” said Bud VP Monica Rustgi in a memo to wholesalers. 

“The launch will be supported by a 360 marketing plan including national TV, social media and digital content, featuring key sports partners from the NBA, MLB, NFL and NWSL, including Dwyane Wade & Julie Ertz.”

The company believes that 50-calorie, 0-grams-sugar Budweiser Zero “has a huge opportunity in the non-alc beer space as the biggest brand name to enter the non-alc category in the US. Our objective for Zero is to drive overall awareness as Budweiser enters this new occasion.” She noted that non-alc is growing double digits in IRI.

The beer’s nutritional stats “are featured prominently on the pack with a white background that alludes to lighter refreshment, while still maintaining our iconic Budweiser look,” Monica said. 

They will focus execution on 12-pack 12 oz. cans in large format and 16 oz. single cans to drive trial in c-stores and venues. 12 oz bottles are slated for September.

A-B TEMPORARILY EXTENDING DATE CODES

We’ve heard a few distributors sound off on how date codes are beginning to rear their heads in these challenging times, and it appears some suppliers have listened. 

Anheuser-Busch has notified BBD of two temporary changes its making to its date codes, effective later today.

First, “All core & value package beer produced after March 24 at 1:00 PM EST with a current shelf life of less than 180 days will be extended to 180 days.”

And secondly, “All draught beer will be extended to 90 days effective immediately (includes all draught inventory currently in warehouse or retail as long as quality control standards are being followed).”

Again, the changes are temporary, and do not affect any craft brands.

A memo to distributors added to draft beer protocols, saying that “the requirements for cold storage have not changed. It is critical that we maintain cold storage during this period of time.”

“We will be monitoring Draught Quality closely and will revert back to our current 50-day shelf life if  we see any adverse effect on the Sensory of our beers,” memo added.

More as it rolls in.

MEXICALI REJECTS CONSTELLATION BREWERY IN REFERENDUM

Yesterday, news broke that Mexicali residents voted not to have a Constellation brewery in their backyard, with 76% of voters saying  “nay” to the $1 billion-plus plant already in construction and slated for completion by 2023.

We’ve long reported water rights concerns circulating around this plant. Farmers in the area have argued that a brewery’s water-intensive nature would further burden a region already strained from water shortages. But Constellation has said it has always complied with local law in building the facility, which would use only 0.3% of the Mexicali Valley’s water reserves. 

The vote means that “the government won’t grant a water-supply permit to Constellation Brands,” per the Wall Street Journal. The Mexican federal government “will soon begin talks with Constellation to look for compensation for incurred losses.” 

In any case, Constellation brass has downplayed such a potential result over the last couple of years, citing other capacity. In that context, as we wrote in January of last year, chief Bill Newlands shared that Nava capacity expansion efforts were nearly done, and that Obregon would be complete by the end of fiscal ’21, ahead of schedule. 

Further, Bill assured they could provide more than 400 million cases of beer from Obregon and Nava alone. 

But a Wall Street Journal article from Friday says the company already invested $900 million on the brewery, which was apparently on track for completion quite early — by next year. 

We hear a statement from the brewer is forthcoming. 

RECENT BORDER CLOSURES “DO NOT IMPACT COMMERCIAL TRAFFIC,” SAYS CONSTELLATION CHIEF

You likely heard over the weekend that the Trump administration made the call to close our borders to the North and South to prevent the spread of COVID-19. So how does that affect operations for a brewer like say Constellation?

BORDER CLOSURES DO NOT IMPACT COMMERCIAL TRAFFIC. Constellation chief Bill Newlands put out a note this morning to answer that very question. 

“Importantly,” Bill said, “recent decisions to close the northern and southern borders of the U.S. do not impact commercial traffic, which is essential to enabling supply chain operations and the building of critical inventories needed to meet the needs of our communities.” He added that keeping commercial traffic flowing “will prove helpful as we and other companies in the consumer product goods space work to provide a bit of comfort in this otherwise difficult time.”

CONSTELLATION BEER UP 30% IN LATEST SCAN DATA. Bill also took this time to comment on some of the market trends they’ve seen in the wake of COVID-19. To no surprise, Constellation says they’ve “taken steps to bolster support of local off-premise retailers and distributors to meet increased consumer demand.” Indeed, Bill said they’ve “seen IRI volume in off-premise accounts for our beer business increase more than 30 percent in the most recent 4-week period versus their 52-week trends.”

He then closed out the note stating that their “teams remain committed to supporting the needs of local consumers, retailers, distributors, and the economies they help bolster in this critical time.” Adding, that they “will announce additional measures to further support our industry and communities in the coming days.”

TRULY HAS BEST WEEK EVER, A TOP 16 BEER BRAND; LEMONADE NOW SIXTH LARGEST HARD SPARKLING WATER SKU 

Grocery stock-ups in the COVID-19 era have helped pushed beer up double digits (see next story) overall in the off premise. But with so much of their sales in the off-premise, few brands are doing better than seltzer. 

Indeed, Boston Beer wrote BBD that Truly saw its biggest week of depletions ever in March, “with raw depletions up more than 270% from this time last year, with Truly now checking in at #16 of total beer,” Boston shared with BBD. (It’s normally no. 18.) This, via IRI Total US MULO + Conv thru 3/15/20.

TRULY LEMONADE NOW THE NO. 6 HARD SPARKLING WATER SKU. Truly Lemonade has been a key driver of the trend; it’s now the #6 hard sparkling water SKU and has 4.4 share of all hard seltzer, Boston said. “Lemonade has continued to increase in depletions and points of distribution on a weekly basis.”

The company says that Truly has gained 1.8 share points since the introduction of Bud Light Hard Seltzer in January. “Brands like White Claw, Natural Light and Bon & Viv have all lost share points – 12.7, 1.0 and 1.6, respectively – which further demonstrates Truly’s ability to capture a different drinker than our competitors,” per Boston.

TOTAL BEER VOLUME UP DOUBLE DIGITS IN LATEST SCAN DATA, BUT WINE AND SPIRITS GROWING TWICE AS FAST

We got a sneak peek at the latest IRI scan data available thanks to Bump Williams. And as suspected, the numbers are striking.

The data, which provides a look at the week ending March 15, shows total beer volume grew 17.7% over the frame. 

As Bump put it, in delivering this data to BBD, “looks like the panic shopping is showing up.” (Indeed, if you remember our timeline from last week, you’ll recall that March 11 was the day, in our opinion, that everything turned upside down and the American people started to panic). 

Yep, the 17.7% jump is a 10-plus point swing over the week prior (week ending March 8), which saw beer volume up 6.3%. 

BUT WINE AND SPIRITS VOLUME GROWING WAY FASTER. Of course, the American people aren’t just loading up on beer. The volume trends for wine (up 36.7%) and spirits (up 34.3%) are growing twice as fast for the week ending March 15. That’s particularly impressive for wine, which had seen its volume trends down low-single-digits for much of the year.

BUD LIGHT’S “DIVE BAR TOUR” GOES VIRTUAL 

Last Friday, Bud Light announced it is moving its Bud Light Dive Bar Tour online. 

The concert series, now dubbed the Bud Light Dive Bar Tour: Home Edition, will feature streamed shows from artists via social media channels as a way to provide “at-home entertainment” and promote social distancing practices, “bringing the dive bar straight to fans over the next few days.”

“In these uncertain times, we want to make sure we can still deliver a fun experience for music fans while keeping everyone safe,” said Shana Barry, Director of Experiential Marketing for Bud Light. “The Dive Bar Tour was created to bring people together over Bud Lights, and our new Home Edition will do that virtually while supporting causes that are so important to us and our talent partners.”

Friday’s show featured country music star Jake Owen. And Sunday’s show, the second so far, featured pop rock band OneRepublic. Both shows supported the American Red Cross, per release.

Updates for upcoming shows will be posted to Bud Light’s social media channels.

OHIO DIVISION OF LIQUOR CONTROL ISSUES MEMO ON RETURNS

A memo from Ohio’s Division of Liquor Control covered some FAQs from permit holders in the wake of Gov. Mike DeWine’s orders for bars and restaurants to stop on-premise consumption. It appears it was issued yesterday. 

As we noted in our own coverage yesterday, there is indeed a mechanism for returning high proof liquor in Ohio: The agency approved a return process and refunds for unopened bottles of liquor, including temporary permit-holders for events that were scheduled between March 12 and April 6. If events are still banned after April 6, returns will continue to be approved.

As for beer and wine returns to distributors: The Division followed the Wholesale Beer and Wine Association’s recommendation and “approved the pickup and future replacement of beer, wine and/or mixed beverages from a retailer, at the distributor’s discretion.” The product must be returned in the same quantity as ordered, “intact in its original packaging and purchased within the last 30 days for a major event” like St. Patrick’s Day or March Madness. 

As we understand it, however much a distributor buys back from a retailer, the retailer must repurchase the same amount upon returning to normal operations. They also note that these temporary policy changes will only apply to events cancelled due to the COVID-19 outbreak.

Until tomorrow,

Harry, Jenn and Jordan

“We play the hands of cards life gives us. And the worst hands can make us the best players.” – Doc Searls

———- Sell Day Calendar ———-

Today’s Sell Day: 17

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