Dear Client: 

Few things are a better leading indicator of imminent trends in our industry than our distributors. We caught up with a handful of all-sized wholesalers around the country to take the pulse.  

There’s a lot of variation by area, but a couple of themes emerge: 

MANY EXPECTING TO BE DOWN MID SINGLES OR MORE OVERALL FOR THE MONTH. Some have had a good start to April, still up double digits in the off premise. 

But when you take the on premise into consideration, and a continually battered economy, many are projecting to be down mid-singles or more this month. 

Said one Midwestern distrib whose on-premise business was shuttered in mid-March: “MTD through April 11 we are +11.5 off-premise, but combined with -99.7% on-premise it shakes out to total of -8.8%.  For us the lack of an on-premise for the entire month I believe will result in being off 10+% as a total house. I hope it’s not quite that bad, but that’s my guess at this time.”

A separate, multi-state distributor echoed some of those same predictions: Good sales now, but not expected to last the month, due to on premise drag.

“We are seeing sales in the off premise holding up nicely,” the distributor said, especially in club and grocery. They even had a positive week, given Easter’s early timing this year. 

And yet, “I expect the month for us will come in -6% to -10% overall as clearly we will not cycle this week,” they said.  “I get a sense that the novelty of ‘day drinking; while being at home ‘working’ is giving way to other concerns like job security and the reality and gravity of the whole situation.”

RETURNS STILL TO BE DEALT WITH. The same Midwestern distributor mentioned at the story’s outset said they’re not currently executing returns. 

“We are hoping and praying for a May 01 opening of on-premise, which if that happens, not nearly as much product as many predict will be a problem,” they said. 

A separate, large distributor further South also told BBD they’ve not yet dealt with returns: “There’s not a lot happening on returns yet but that will be an issue we will need to deal with in the coming weeks,” per distrib. “We have hardly had any inquiries from our accounts…” (Of course, in some cases, this could have to do with some suppliers — like A-B — staying mum on any buy back policies. Read below.)

CLOSED BEACHES COULD EXACERBATE MAY SALES DAY LOSSES. Beyond that, “business has been good and steady,” the same wholesaler said, noting that “last week was on par with the two previous weeks, however, it was down 5% compared to the same week last year and about 25% below Easter week 2019,” as beaches this year were closed. 

“Looking ahead, I see April down about 8% and May being a disaster if our beaches don’t reopen soon. We lose 2 selling days in May (our biggest month of the year) and, if we lose beach activity for the entire month, we could be looking at a 20% decline.”  

AB EXPECTING SALES AS USUAL; STILL MUM ON RETURNS. Amazingly, one other distributor pointed out that A-B is still biding its time on any sort of communication regarding keg reimbursements, saying they are still “deciding what their plan is” when pressed. As we understand, they’re leveraging “discounts and promos” to help distributors and retailers “sell through the beer.”  

Despite COVID-19 having completely upended the business, the distributor says A-B is nonetheless pushing them to “bring in new packages, launch new products, and increase forecasts.” 

OFF-PREMISE TRENDS ON THE RISE IN LATEST IRI DATA, BBD INVESTIGATES

It would appear that off-premise beer sales are picking up steam again – and we have questions. Is the uptick a sign of a less volatile “replenishment” shopping phase we reported on last week [see BBD 04-10-2020]? Or was this particular week a beneficiary of Easter timing? 

The answer is likely a little bit of both – let’s take a look at the data.

Total beer dollar sales grew 21.6% for the week ending April 5, according to IRI all channel plus liquor store data provided by Bump Williams Consulting. 

The 21.6% trend is a nice bump over the week prior, (the week ending March 29) which saw beer sales up 16.8%, but well short of the +33.7% trend seen in the week ending March 22, what we deem as the peak pantry loading week.

So, the good news is after a fairly dramatic deceleration from the peak pantry loading week (falling from +33.7% to +16.8%), the trends did not continue to throttle down, jumping back up to 21.6% in the latest week.

In fact, all beer segments are back to growing double digits in the latest week, and each segment bested the trend posted in the week prior.

The same goes for spirits too – each segment is growing over 30%, and all are outpacing the trends seen in the week prior. Wine as well – with still wine and sparkling both growing over 30% and each well ahead of the trends posted in the previous week.

So back to the question posed at the top… with virtually every bev alc segment back on an upward trend, does that mean it took about two weeks for everyone to drink through their booze and stock back up? Or is there something else at play in these trends, like Easter timing?

Spoiler alert: this latest week did benefit off of holiday timing. 

For starters, this latest week to April 5 was going against a relatively easy comp, as the first week of April in 2019 saw depressed trends due to Easter falling on April 1 in 2018. Secondly, this latest week likely benefited from Easter being just around the corner (April 12 this year) when it wasn’t until April 21 last year. So Easters of past and present helped boost these trends a little.

MEXICO’S CHIEF HEALTH MINISTER AFFIRMS PROHIBITION AGAINST BEER PRODUCTION

The last few weeks, there’s been a lot of conflicting information out of Mexico on whether or not beer is considered essential amid a national shutdown meant to stave off the spread of coronavirus. 

The latest? Mexico’s chief health official says the beer industry does not have the authorization to re-establish operations.

But who knows what could happen next. Recall: 

As we reported a couple of weeks ago, a federal decree suspended all non-essential business/activity in the country until at least April 30 [see BBD 04-02-2020]. Only non-alcoholic beverages were deemed essential under that order.

Initially, producers like ABI’s Grupo Modelo and Heineken signaled they would ramp production down in the area. Meanwhile, Constellation maintained their commitment to continuing operations per usual, then issued an updated statement last week saying they’d not completely stop, but would “reduce brewery production activities in Mexico to a level that safeguards the environment and avoids irreversible impact to its operations.”

The latest? There’s more back and forth, with some parts of the Mexican government seeming to exempt brewing as essential, with other parts immediately rescinding the directive. 

As Mexico News Daily reported last week, “after incidents of panic buying and a call from an industry group representing small businesses to declare the beverage an essential agro-industrial product, the government gave in and reversed its decision.” 

The Ministry of Agriculture reportedly “invited” producers “to continue with daily operations and production and distribution activities,” per a note from Sader official Santiago José Argüello Campos. 

Late last week, ABI’s Grupo Modelo issued a statement in receipt of the good news, that they would continue to brew in Mexico, albeit with a reduced crew:

“The beer industry is partially resuming its brewing and distribution activities in Mexico, once the federal government clarified that the barley and malt agro-industry is an essential activity. The Mexican beer industry is closely linked to this agro-industry as it is directly connected to nearly 5,000 barley farmers and their families. We (Grupo Modelo) continue to work with the Mexican authorities and to comply with all measures and guidelines to prevent the spread of COVID-19. As a preventive measure, for the time being we will operate with 25% of our personnel working on-site. The health and safety of our people and our communities remains our top priority.”

But shortly thereafter, Mexican health officials quickly noted that beer was not in fact exempted from the order, contradicting the agriculture official. 

“…All activities, except essential ones, are suspended. And that does not include the manufacturing or marketing of beer,” Hugo Lopez-Gatell Ramirez, chief of Mexico’s Undersecretary of Health Prevention and Promotion, said on Friday.  

As for the agricultural minister’s comments: “the Secretary of Agriculture has already taken action on the matter and it is going to be amended shortly. The beer industry does not have the authorization to re-establish operations,” per the health minister. 

Constellation told BBD its latest statement about reduced operations still stands. Global ABI has not responded to request for comment. Heineken appears to be towing the status quo. 

BEER BRIEFS:

HERE’S SOMETHING TO LIGHTEN YOUR DAY. With all the dire news surrounding COVID-19, we try to share some good news once in awhile. Apparently, this picture of 93-year-old Pennsylvanian Olive Veronesi pleading for more beer from inside her window (while sporting a Coors Light) has gotten tens of thousands of likes on social media. Beer is indeed essential in many ways. 

BREWPIC: More color from Molson Coors on helpin’ Olive out: “Even in the pre-COVID era, we would’ve been thrilled to fulfill Olive’s request. But in this moment, during these unusual times, bringing a little bit of joy to someone’s day is the least we can do. … We’re starting out with plenty of Coors Light, but we’ve also let Olive and her family know that they have a standing offer for more Coors Light whenever they’re ready for a restock.”

Cheers to Olive. 

Until tomorrow,

Harry, Jenn and Jordan

“Did you ever walk into a room and forget why you walked in? I think that’s how dogs spend their lives.” – Sue Murphy

———- Sell Day Calendar ———-

Today’s Sell Day: 10

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