Dear Client:

We’ve talked to a ton of distributors over the past week to get a feel for how they’re adapting in the wake of current turmoil. One common theme, no matter the person’s time in the beer industry, “I’ve never seen anything like this.”  

One distributor described it to me as, “It’s like flying a 747 right above the treeline. You’ll probably be okay, but you can’t make any mistakes.”

We are truly in uncharted waters. So with essentially every wholesaler learning on the fly right now, we figured it would be of use to share some of the best practices wholesalers have sent in to BBD.  

SOME PRECAUTIONARY MEASURES TO TAKE. One Midwest wholesaler tells BBD that they have “suspended all meetings that are not virtual, and keeping folks six feet apart.” Their “drivers report directly to trucks,” and their “reps report directly to their first account” without coming to the plant first.  All are equipped with hand sanitizer and disinfectant wipes. Additionally, they’ve secured “‘no touch’ thermometers to ensure we have no ‘fevers’ running around and of course, we have told employees that are sick to stay at home.” They have “several folks working from home” and have put in “‘contingency plans’ for selling and deliveries should we get a significant amount of people quarantined.”

Several distributors are limiting driver check-in to one or two in the check-in room at a time.  The check-in person is usually behind glass anyway, but she or he is now using disposable latex gloves to handle checks and cash (where applicable). Several distribs also providing merchandisers and presalesmen with hand sanitizer and encouraging washing hands after each stop.  

ASSEMBLING A “WORKING GROUP.” Another wholesaler doing business in the Northeast says they’ve “taken significant precautionary steps to mitigate health risk to our team members, customers, and supplier partners.” In fact, they recently “assembled a ‘Working Group’ comprised of leaders from across the company, we talk daily by conference call and make the necessary decisions for our business and of course communicate across all team members throughout the company.” Still, “the big concern beyond safety and good health is sustaining beer quality and freshness, this is fluid and an area we are heavily focused,” this distrib said.

OUT-OF-DATE ISSUES REARING THEIR HEAD. Indeed, another Midwest wholesaler told us that out of date beer was already a problem and it’s only set to get worse with the current situation. He called out one brand, in particular:

 “We’ve seen Budweiser become our state’s most problematic out of date brand due to A-B refusing to go to 180 days, refusing to decrease SKUs, and all while the brand loses significant share and volume every quarter,” said this distributor. “AB is going to have a serious problem if they don’t help with this out-of-date beer coming.” This distributor’s solution? “Allow wholesalers to use these losses as a credit against our CPC spends, or determine a dollar co-op ceiling based on how many cases a distributor sells.”

SOME ARE CANCELING ALL FUTURE KEG ORDERS. In line with precautions against out-of-date beer, another large, multi-state distributor told BBD they’ve “proactively canceled all future keg orders from all suppliers.”

Partial or total on-premise shutdowns in the distribs’ footprint has “killed” on premise volume, going from almost a quarter of total business in their two markets to “less than 5%, and declining quickly.”

“We are very concerned about the quantity of kegs we have that will go out of date due to the on-premise shut down.  Not to mention all venues and events cancelled,” distributor said.

“I feel that the long-term effect of this on the on-premise could be losing 50% of the accounts that we currently service.”

THAT SAID, AN EASY WAY TO HELP OUT YOUR ON-PREMISE PARTNERS. “I emailed our full membership last night and reminded them this is a great time to remind our supplier, retailer partners, and local communities of the value we provide as wholesalers,” a wholesaler told BBD. “I also directed our teams to begin ordering lunch every other day for all our employees, starting with our best on-premise account partners as a way to support them through this time.”

NBWA OFFERS SOME BEST PRACTICE RECOMMENDATIONS, TOO 

The NBWA also highlighted some best practices to help wholesalers “navigate these unprecedented events.”

ON DELIVERING BEER. The NBWA recommends that distributors “develop policies that reflect an exhaustive effort to prevent exposure and risk in the workplace and the retail trade.” They add that these policies should “be memorialized in writing and signed to confirm that employees understand the risk and agree to continue working in these circumstances.” Indeed, according to the NBWA, “retailers are starting to ask to see assurances of distributor policies as part of their due diligence in letting vendors into their stores.”

Additionally, it would behoove distributors to work with retailers and “identify off-hour delivery times,” the NBWA said, as “distributor employees reduce risks when making deliveries to the retailer when it is closed.” If you’re wondering ‘well, who will sign off on that?’ The NBWA notes that “several states that have lifted signature requirements when deliveries are made to reduce the need for human interaction.”

REMEMBER TO COMMUNICATE, AND SHOW APPRECIATION. These are certainly trying times, and everyone has A LOT on their mind right now. Some of your employees may be “concerned about their own well-being and safety. They may be worried about the health of a child, a parent or loved one,” the NBWA notes. “The simple act of a letter, email or a voicemail expressing gratitude and letting them know you appreciate all they do can make a critical difference during this stressful time.”

AN EARLY SCAN DATA READ WITH SOME CONTEXT

I know everyone is anxious for a read in the off-premise, and we’ve got some scan data to share with you, but before we start rattling off numbers, it’s important to set a timeline with COVID-19, so we know where these numbers fall amid the outbreak.

The first confirmed cases of COVID-19 in the U.S. began to pop up in mid-January, but sadly I don’t think many people took it seriously till early March. 

MARCH 6. In fact, I don’t think many people considered COVID-19 to be a serious threat until March 6, the day Austin’s South By Southwest Festival was cancelled. Even then, some wondered whether cancelling that event was an overreaction, but it was top of people’s minds moving forward wondering what else it could possibly affect.

MARCH 11. The evening of March 11, was really the moment most Americans realized the gravity of the situation. President Trump issued a special report, stating plans to ban all travel from Europe. Moments after the President’s special report, news started to come in that national treasure Tom Hanks and his wife Rita Wilson had tested positive for COVID-19. Shortly after that, it was reported that NBA All-Star Rudy Gobert of the Utah Jazz had also tested positive for COVID-19. Then less than an hour later the NBA season was suspended. That was the night, in my belief, that everyone began to panic.

MARCH 15. This was the day that a lot of Americans realized that social distancing wasn’t really a choice and staying at home and self-quarantining would be the new norm moving forward. California, Illinois, Ohio, Massachusetts, New York and Washington all announced plans to shut down the on-premise that day, and many, many states began to follow suit.

So with all that said, the freshest set of off-premise scan data we can get our hands on is for the week ending March 8, which according to our above timeline would capture the moment people began to wonder how serious this threat could become, but still about a week away from the hysteria.

This IRI data to March 8 comes courtesy of Bump Williams Consulting, which has pledged to provide weekly data updates in these crazy times.

In this data we see early signs of the off-premise taking off, with total beer up 10.2% for the week in the multi-outlet and convenience channel. 

With double-digit category growth in the off-premise, you gotta figure that’s more than seltzer’s explosive growth – the majority of top brands’ dollar sales had to be in the black, and indeed they were. 

Here’s how the trends for the Top 10 shook out:

1. Bud Light, down 1.2%
2. Mich Ultra, up 15.7%
3. Modelo Especial, up 25.8%
4. Coors Light, up 2.9%
5. Miller Lite, up 3.7%
6. Budweiser, up 0.7%
7. Corona Extra, up 8.6%
8. Natural Light, up 3.7%
9. Busch Light, up 14.6%
10. Heineken, up 3.4%

As you can see, the only Top 10 brand to find itself in the red was Bud Light, which was only down 1.2%, a vast improvement over its trends as of late. 

But the rest of these brands all in the black? We haven’t seen that in a loooong time, what’s going on? 

Well, as Bump pointed out “consumers tend to be buying a lot more ‘trusted’ brands and have curtailed their spending on NEW brands and/or untested/untried brands just in case there is a shortage of high quality and highly trusted brands being available at retail.” We would note that seltzers, while still relatively new, are the exception, they’re still growing triple digits with ease in this one week set. 

Bump’s takeaway is one we’ve heard repeatedly in our recent conversations with distributors.

We told you yesterday how a Michigan wholesaler said their local “supercenters and warehouse clubs are ordering full pallets of large packs of seltzers and American Light Lagers.  Craft is not seeing the spike to the extent premium products are.”

And a large wholesaler based in the Southwest told us “I think you are going to see a narrowing of offerings in the large format with a focus on high velocity skus to help distributors be more responsive to keeping product on shelves.”

And those are conversations we’ve had this week, so expect those trends for the Top 10 Brands to accelerate in the next set of data. Would not be surprised if all top ten brands are in the black. 

YUENGLING SAYS BUSINESS “HANGING IN THERE,” DESPITE DRAFT IMPACT, AND THWARTED FLIGHT LAUNCH  

We pinged Yuengling sales chief Pat Pikunas about their state of the union, as Pennsylvania announced the closure of its state-run liquor stores earlier this week. 

Pat said they’re hanging tough, and that off premise business has been strong. 

Of course, there are a few hiccups. 

“Most of our off Premise ‘D’ Distributor retailers in PA are still open and business has been strong for them the last couple weeks,” he told BBD. “Grocery store business has been crazy in PA but because of the laws in PA consumers are limited in how much BEER they are allowed to purchase in the grocery stores. So the ‘D’ Distributors have a significant advantage when there are events like this Virus or snowstorms which prompts consumers to load up.” 

DRAFT IMPACT COULD LAST INTO MAY. “The challenge for DGY is we do nearly 30% of our business in the on premise and on top of all the mandated on-premise closures we’ve have had numerous events and sponsorships cancelled,” he continued. “The net result of all that is a very significant impact to our draft volume in the short term and likely into mid May at this point.” 

He said the COVID 19 crisis has also impacted the March 1 launch of their new upscale light beer, FLIGHT, “as many retailers have held off on adding new items or postponed cooler resets.  

“Overall however, our business is hanging in there through this crisis. All of us here at DGY are fortunate because our Company is built on a strong financial foundation and culture of discipline which has carried us through many tough times in the past 191 years.” 

A-B CANCELS WHOLESALER ASSESSMENTS AMID CORONAVIRUS CONCERNS

On Tuesday, Gil Morelle, VP, Route To Market, wrote A-B distributors that spring “WEA Assessments” would be postponed amid COVID 19 concerns.

These assessments, we’re told, typically involve evaluating a distributor across many fields: community involvement, sales structure, vehicle decals, comp systems and more.

“In the interest of the health and safety of our wholesaler partners and employees, we are rescheduling all WEA Assessments and we will evaluate reinstating the assessment process at the end of April,” Gil wrote. “Any assessments scheduled in March or April will be rescheduled for a later date.

“We will continue to monitor the situation on a national and local level and will evaluate and adjust future WEA Assessments as needed.”

A-B SAYS “ABILITY TO SERVICE OUR CONSUMERS HAS NOT BEEN INTERRUPTED” 

We asked A-B VP Communications Jennifer Morris if the company planned to continue running its breweries, and what other operational impacts COVID-19 has had on its infrastructure. As we wrote yesterday: 

“At Anheuser-Busch the health and safety of our employees, our partners, and our communities is always our top priority,” she said, noting that they are employing “social distancing” tactics. 

“While our ability to service our consumers has not been interrupted, we have proactively implemented a number of precautionary measures in accordance with guidance from government health authorities. That includes limiting employee travel and in-person meetings, screening external visitors, and implementing enhanced hygiene and sanitization protocols at all of our facilities. 

“As the situation evolves, we will not hesitate to implement additional precautionary measures in accordance with government health authority guidance to help keep our employees and our communities safe.” 

Other than that, we have heard precious little from the world’s largest brewer. 

AS MORE THAN 30 STATES SHUTTERED ON-PREMISE, MORE TO-GO BEV ALC ALLOWED 

Latest tally: more than 30 states have ordered bars and restaurants to shutter to help stop the spread of COVID-19. In several states that haven’t made that call yet, cities have given the order in TN, TX, MO, AK, AZ, ID, MT, OK, WY.

Amid those restrictions, more states are making allowances for to-go bev alc sales from restaurants. For example, in Oklahoma, where Oklahoma City, Tulsa and Norman have shuttered the on-premise (save pickup/delivery), restaurants “may sell closed original packages of beer and wine” when in conjunction with food sales, only when they are they are “completed in a curbside pick-up or drive through manner only,” good through April 17. 

In New Jersey, brewers have told BBD they’ve even been able to start home delivery, per New Jersey Division of Alcohol Beverage Control allowance as of Tuesday. As Cape May Brewing told BBD, “we got this up and running in a day and are currently filling orders today! The brewery is doing it.  We have a lot of infrastructure already in place that allows us to deliver, specifically many vehicles that are already permitted,” marketing director Alicia Grasso said. 

In New York, where we reported earlier this week a provision has allowed bev alc takeaway sales from restaurants, giant NYC sports bar Duke’s is pushing  takeaway sales pretty hard. Your editor saw a flyer: “The State Liquor Authority has made it legal for restaurants to deliver alcohol so we can bring the bar to you!” (with food delivery).

CLARIFICATION: Florida’s bars and nightclubs are shuttered for the time being, but restaurants in the state are still open and serving at 50% capacity. 

Until tomorrow,

Harry, Jenn and Jordan

“Sow good services; sweet remembrances will grow them.”

– Madame de Stael

———- Sell Day Calendar ———-

Today’s Sell Day: 14

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