Dear Client:

We’d been hearing rumors that Heineken USA was making a round of cuts around their regional sales division, linked to organizational changes at the national sales team.

We reached out to new chief sales officer, Jim Sloan, who came to HUSA earlier this year from Phusion Projects (where he’d been president).

Jim explained:

“With the departure of Bridget Lasda, our prior VP national sales, I had the opportunity to look at the leadership structure. We decided to split the National Sales role into two, recognizing the distinct difference in selling strategies that is required for the Off and On Premise, with both requiring specialized time, attention and prioritization.

“We have made the following two appointments: Effective June 1,

·       Alex Boerger will become the Vice President of National Accounts – Off-Premise.

·       Mike Miskiewicz has been appointed the Senior Director of National Accounts – On-Premise, also effective June 1.

“In addition we have moved some call points down to the regions and this will result in a shift in reporting lines and customers coverage impacting a handful of employees.”

Recall, Bridget was a big hire for HUSA back in 2015; before Heineken snagged her, she’d spent more than a decade at the Coca-Cola Company, where she had been most recently the VP of sales leading the Target business.

THE COMING RECKONING FOR CERTAIN CRAFT BREWERS

Regarding the Dogfish Head merger with Boston Beer, one of the best responses I received on Twitter from former distributor turned consultant Kimberly Clements of PINTS, LLC, who wrote:  “It’s just paperwork.”

Indeed, it is just paperwork.  [Ed. Note: Incidentally, while we referred to the Boston Beer – Dogfish Head deal as an “acquisition”, it actually truly is a merger, as Mariah Calagione swapped stock with Boston, making her the second largest individual shareholder behind Jim Koch,  and Sam Calagione holds a seat on their board. So glad to clear that up].

Like Kimberly said, it’s just paperwork, but there’s some paperwork out there that is going to soon come to a similar reckoning as DFH’s or worse, but they don’t have the opportunity for such an elegant landing as DFH had.

I remember Jim Koch telling me in San Diego recently that the tanks and fermenters are permanent, it’s just the capital structures that are changing. The beer industry, as Jim put it to me, “has low barriers of entry but high barriers to exit.” Enter private equity. Money and brand equity are easier to move around than physical breweries, apparently.

One of the issues many craft breweries can’t get around is that while demand has flattened, some took on private equity at the peak of their valuations three to six years ago. Now several are facing a “liquidity event” that is a “ticking time bomb,” as one veteran beer banker put it to me.

Why? Because these PE firms almost always  invests its money as a preferred stock, so they get paid before all other owners.  That preferred stock has either a guaranteed annual interest rate, or a multiple liquidation at say 2X investment on a sale, or both. These PE firms usually cover themselves on both the upside and the downside.  As my banker friend put it, “For the PE firm to convert and for the founders remaining stock to be worth something, the craft brewery needs to hit its business plan.” Sadly, many are not, and so the founders’ ownership equity is getting crushed.

Many craft breweries — some of them very large and that you’ve heard of — are in this boat. And if they’re already distributed widely across the country, it’s hard to pay for it by just expanding territories. Both those that aren’t, beware, they may be expanding too quickly just to pay the piper.

I suspect we’ll see more deals come down the pike. And if we don’t, I predict we’ll see a lot of old beer in the market and late payrolls.

IMPORTS UP DOUBLE DIGITS IN MARCH, MEXICAN IMPORTS UP NEARLY 12%

(Ed. note:  Keep in mind that import shipments can swing wildly from month to month based on many factors that have nothing to do with consumer demand at retail.  So read on with a grain of salt).

After five straight months of declines, imports finally made their way into the black, in a BIG way. Imported beer shipments were up 10.7% in March, according to Beer Institute estimates.

MEXICAN IMPORTS BACK TO DOUBLE DIGITS TOO. Much of that double-digit gain is owed to a double-digit performance in the largest source country for the U.S., Mexico. Mexican imports were up nearly 12% during the month – by far the best month of the year so far for Mexican imports, which fell 12% in January, and up only 2% in February.  

That said, first quarter tallies for import volume from our neighbor down south, now stands at up 0.4%.

Only one of the top five source countries saw a decline in imports during the month of March – the second largest, as a matter of fact, the Netherlands, which saw imports slip 2.7% in the month.

Meanwhile, the top source country grew, of course (again, Mexico); Belgium, the third largest, grew volume by 26%; Ireland increased volume by a whopping 42.4% (thanks St. Paddy’s Day); and Canada saw imported volume up 6%.

Despite the solid showing in March, it wasn’t enough to offset the declines seen in January (-11.9%) and February (-2.1%) seen, and total import volume finished the first quarter of 2019 down 0.8%.

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SAVE THE DATE:   BEER SUMMIT COMING UP IN JANUARY

It’s never too early to save the date for our annual Beer Industry Summit, next year on January 12-13, 2020 as we return to Palm Beach, FL at The Breakers, my favorite hotel on earth. Don’t get confused with other copycat “Summits”.  Ours is the one and only Beer Industry Summit and is not until January 2020. We only host one beer conference a year — this is it, folks.

Get out of the snow, and into the know (<- I made that up and I’m perhaps overly proud of it).  Make a weekend out of it. Bring your significant others, children, in-laws, whatever….  to our three receptions for free.  We always have great food, entertainment, and the best beer at our receptions — and sometimes I’ll make a speech.  Mark your calendar, book your tickets and hotel, and check out registration here: https://beernet.com/beer-summit/

I look forward to seeing you there.  –Harry

Until tomorrow,

Harry, Jenn, and Jordan

“I remixed a remix, it was back to normal.” – Mitch Hedberg

———- Sell Day Calendar ———-

Today’s Sell Day: 9

Sell days this month: 23

Sell days this month last year: 23

This month ends on a: Fri.

This month last year ended on a: Thurs.

YTD sell days Over/Under:  0