Dear Client: 

After he shared the details of their just-announced program for 50/50 splits on returned kegs [see BBD 04-15-2020], A-B sales chief Brendan Whitworth answered BBD’s burning questions on current challenges for their business. 

First, he emphasized many times how they’re putting their people and partners first in the age of pandemic displacements. For example, they’ve  committed more than $2 million toward restaurant employee relief. Their brands have various donations programs as well.

You may recall from late March that A-B also redirected more than $5 million from their sports and entertainment investments (largely on hold for now) to American Red Cross COVID relief efforts, which included space for blood drives. Blood drives have already been completed at the A-B STL Tour Center, Rocket Mortgage FieldHouse (home of the Cleveland Cavaliers), State Farm Stadium (home of the Arizona Cardinals) and Xcel Energy Center (home of the Minnesota Wild).

Of course, we were also curious about some pressing COVID-time operations and other issues. Brendan obliged us with timely answers. 

You, friends, are a Fly on the Wall. 

ON SEEING RECENT GROWTH FOR MICH ULTRA AND EVEN BUD LIGHT. For most of the recent weeks of the COVID era since mid-March, with people wanting to shop brands they know, “We have led the absolute dollar growth for the industry,” Brendan says. As we reported in BBD last week, recent weeks have seen Bud Light up mid-single digits in the off premise [see BBD 04-08-2020]. 

“We’ve seen people move to their trusted, reliable brands. Obviously, we’ve been the beneficiaries of that all across the portfolio. Consumers have definitely at least started to go to larger packages. We’ve seen that.”

And “we’ve continued to see the week-over-week ‘health,’ if you will, of the off-premise, which we’re happy [about], as we continue to deliver our brands to provide the joy, comfort, and normalcy that people seek in a little bit of an abnormal time. Our system has been absolutely critical in providing the service levels to make sure that we have that business continuing to ‘go.'” 

ON RELEASING NEW INNOVATIONS LIKE BUD ZERO IN COVID-DISRUPTED TIMES. It’s hard to launch innovations right now, with retailers suspending sets and consumers reverting to known brands. But A-B is doing it with brands like Bud Zero, which hit market at the beginning of April (though marketing has been pushed back). 

Of that, Brendan says: 

“We actually put in some pretty meaningful adjustments to what we would otherwise normally be doing in terms of what we kind of collectively plan with our system. We simplified a lot of our programs and things that we had, understanding that. And we are working with our wholesalers on service level issues and things along those lines, knowing that we are, across the board, streamlining our execution.

“We have made incremental products available … innovation, like Bud Nitro. They were kind of already in the cycle of execution as this thing was happening. We’re not intentionally putting the brakes on it, but we’re also not really pushing our system to go even harder. We’re being understanding that we need to be simple, and we need to be streamlined, and we need to be focused on our overall execution. That’s where we’re centered, and that’s how we have collectively worked with our system ever since the start of this thing.”

ON ESTRELLA JALISCO INVENTORY AND THE MEXICO SITUATION. Pressed on the latest with the situation in Mexico, where officials seem to be guiding back and forth as to whether beer is an “essential” activity that can endure during mandated COVID shutterings: 

“I think it adjusts every day. I think, from everything that I know, it’s open; then it’s closed.” Regardless, “we’re in an adequate inventory position with Estrella Jalisco right now. We saw it coming.”

ALSO PREPARED FOR ANY GLOBAL DISRUPTION. In fact, “We’ve been working on this as a potential threat to the business based on our global reach and our business in China since way earlier in the year. From a planning standpoint, from a mobilization standpoint, from a leadership standpoint, we’ve been mobilized since January, February, and then prepping all aspects of our business to see if something were to happen cross-border: This is ingredients; this is malts that we get from Europe; this is all sorts of things. We had all this planned well ahead. We feel that, in the near term, we’re pretty well positioned across all facets of our business to manage if anything like that happens. So we’re in adequate shape.”

QUANTIFYING DISRUPTION TO SPORTS AND OTHER VENUES. As for other major disruptions, we wondered about the state of the union of sporting and other major entertainment venues, where A-B is among the biggest sponsorship partners. 

“We’re obviously in close contact with our sports partners to understand when they would come back up, and when they come back up, how they would come back. As time progresses, as events change their timelines, as [venues] choose to cancel an event for the year, we’re kind of working with them. So we’re just staying nimble as it goes, and being in regular contact with the partners that are inside of the events, and the sports [arenas].”

ON THEIR CRAFT BREWING PARTNERS CREATIVE SOLUTIONS. Finally, asked how their craft partners (especially those with robust brewpub operations) are faring in a time that is decimating that part of the business, Brendan said they’re doing better than expected.

“They’re obviously not doing the exact same amount of business that they would have otherwise been doing, but they’ve been doing a pretty impressive percentage of that business with takeout, with delivery, with other sort of creative things that they’re doing.”

They’re helping other businesses, too. 

“Take Platform Brewery as an example in Ohio. They’re working, and doing some delivery, and then, what they’re actually doing is pulling in other local businesses,” like a local cookie dough company in Cleveland. “They’re  delivering for them as well. So these [other local businesses] that otherwise would’ve been out of business are able to partner with some of our craft breweries, get their products out there in conjunction with the beer, and they’re able to stay up and running as well.”

MOLSON COORS AND HEXO ANNOUNCE “TRUSS CBD USA” JV, IN COLORADO 

Molson Coors Beverage Co. and HEXO, already partners on the “Truss” cannabis beverage brand in Canada, yesterday announced the formation of a JV “to explore opportunities for non-alcohol hemp-derived CBD beverages in Colorado. “

Dubbed “Truss CBD USA,” the entity will actually be majority owned by Molson Coors and “operate as a standalone entity with its own board of directors, management team, resources and go-to-market strategy.”

Recall that the company announced a revitalization plan last fall, which put Pete Marino in charge of an “emerging brands” realm, to include CBD. The company this week reiterated that “exploring hemp-derived CBD beverages is part of Molson Coors’ strategy to grow beyond the beer aisle with wine and spirits and non-alcohol drinks,” with the Truss USA announcement. 

Of course, without explicit FDA approval for CBD consumption in America, Molson Coors is being careful about the new U.S. endeavor. 

“All production and distribution for Truss CBD USA will be kept within Colorado state lines since it is one of a few states that has an established regulatory framework for hemp-derived CBD in food and beverages,” per announcement. They added that “no hemp-derived CBD products will be produced at Molson Coors facilities.”

Even with the precautions, it’s a ballsy move. 

“CBD beverages are a growing segment within the non-alcohol beverage category and this JV provides us an opportunity to build capabilities in Colorado,” said Pete Marino, Molson Coors president of emerging growth. 

He said they chose the state “because of its established regulatory framework for CBD,” adding that they “plan to approach any opportunities in full alignment with our commitment to commercial responsibility, transparency and compliance.”

NIELSEN SHARES INSIGHTS ON RECENT HOUSEHOLD BUYING TRENDS

With all the aggregate scandata trends, it’s hard to pinpoint how consumers are buying. In recent COVID stock-up weeks, are more consumers out there buying, are the same amount of consumers (or less) buying more, or both? 

Nielsen’s Danelle Kosmal shared some consumer data to better answer those sorts of questions, and recent stock up trends. 

Here are some highlights from Danelle: 

• “The week of 3/21 was the peak not only for sales, but also the number of households buying, the amount they purchased per trip, and the total number of trips.”

• “For the week of 3/28 the number of households dropped back a bit vs 3/21; however, it was still 20% more households than the same week year ago.”

What drove spikes for the 4 weeks ending March 28th? It varies based on segment:

MORE BUYERS ACROSS ALL SEGMENTS. “Across the board in alcohol, there was an increase in buyers purchasing beer, wine, and spirits. This was the primary driver of growth, meaning more people bought beer, wine, and spirits in March 2020 compared to March 2019. There were 25% more households purchasing spirits and 12% more buying wine compared to last year.  Dollar spend of course was up as well, with spirit dollars per buyer up 18% and wine up 15%.” 

BEER SAW BOTH INCREASED HOUSEHOLD AND SPEND PURCHASES. “What was driving beer growth? An increase in the number of households buying beer, and an increase in their spend. For the month of March, there were 19% more households purchasing Beer/FMB/Cider compared to last year, and they increased their spend by 13%.” 

HARD SELTZER SEES MORE BUYERS VS YA. Meanwhile, “hard seltzer growth was driven by an increase in the number of buyers, up 400% compared to March 2019. This doesn’t mean that hard seltzers are picking up a lot of new buyers right now. It mostly likely represents the increase in buyers that hard seltzers picked up through the remaining months of 2019. In other words, they probably didn’t purchase hard seltzers in March 2019, but most likely started drinking seltzers in the summer or later months of 2019, and continue to be seltzer buyers now. And, they want to make sure their refrigerator is stocked with seltzers while they shelter-in-place.”  

ON PREMISE SHIFT DRIVES  HIGHER DOLLAR SPEND PER CRAFT BUYER. “For craft beer it was less about an increase in households purchasing, and more about a strong increase in dollar spend per buyer. This most likely is the loyal craft consumer wanting to make sure they are stocked up on their favorite craft beer, and also represents the shift in purchasing for on premise and breweries to the off premise channels.”

AND FINALLY, LARGE PACK GROWTH DRIVEN BY INCREASE IN BUYERS. “What about the growth in large pack sizes? That was driven primarily from an increase in buyers for the 24 and 30 packs compared to March 2019. The dollar spend per buyer was actually flat for these pack sizes. So, a lot more people were buying 24 and 30 packs than typically would purchase them in a month like March.” 

Until tomorrow,

Harry, Jenn and Jordan

“Laughter gives us distance. It allows us to step back from an event, deal with it and then move on.” – Bob Newhart

———- Sell Day Calendar ———-

Today’s Sell Day: 12

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