Three Key Players in the Third Space Talk Beer

Dear Client:

Last year, BBD decided it was time the industry get acquainted with this Third Space everyone keeps talking about, so we invited three of the biggest players in the space to speak at our summit this year.

The lineup included:

Cara Fischer, festival director at FBR Management, which acts as a full-service beverage concessionaire at festivals like Austin City Limits, Lollapalooza (both of which draw over 400,000 folks in attendance), and many more festivals.

John Gross, director of national beer promotions at Alamo Drafthouse Cinema, which (you guessed it) is a cinema chain that serves food and booze. They currently have 36 locations across the U.S., and are aiming to do seven or eight more this year.

Dan Timm national beverage manager at Topgolf Entertainment. Now at 53 locations, Topgolf is a massive driving range, party venue, sports bar & restaurant all in one.

HOW IMPORTANT IS BEER TO THESE COMPANIES? “Even though we do music festivals, we joke that we are in the beer business,” Cara said. “Beer is my life… Even if we have events with liquor, beer is always at least 40% of my revenue, which is huge, because that involves wines, spirits, non-alcoholics.”

For Topgolf, beer is “half of our mix in the beverage pool,” Dan said. They have lots of brands they sell, but to give you an idea of the volume that goes through Topgolf, get this: they have three separate brands that did a million units in package this past year. In fact, in most of Topgolf’s markets they’re the very top alcohol account. Usually, it’s got to take a professional football/basketball stadium for Topgolf to come in second place.

Then for a business whose middle name is “Drafthouse,” you have to figure that beer is vital to the business. It is, no doubt, but in addition to beer, they serve wine and spirits, hold a full cocktail program, and make boozy milkshakes as well. Still, with all that considered, “beer comes in like right at 50% of the mix of all alcoholic beverages at Drafthouse,” John said.

IS BEER GROWING FOR THESE COMPANIES? John said they are “seeing a little bit of a tiny dip in beer sales,” but noted that “so much” of their numbers and analytics are inherently tied to Hollywood releases. “So that’s something we kind of have to take with a grain of salt… but overall alcoholic sales are trending up for us.”

At Topgolf, beer has dipped just slightly as well, but Dan said that dip doesn’t really indicate a weakness in the category. He still considers beer to be the natural beverage for a Topgolf occasion.

As for festivals, “beer is ever-growing,” Cara said, “especially with all these spiked seltzers. I mean, they’re huge.” They’re seeing a lot of growth in seltzers, she said, and “they’ve kind of kicked it back up for our beer category.”

The draw to seltzers at festivals is natural too, according to Cara. “Obviously at a festival you’re talking about, you know, 12 hours of drinking, multiple days in a row. So our audience, no matter what generation or whatever gender, they’re looking for something they can drink for that long. So it is a lot, you know, calorie-based, which is why we’re seeing such a huge rise in the seltzers.”

SELTZERS BECOMING A FORCE AT TOPGOLF TOO. Because guests are out in the elements and moving around at Topgolf, a lot of their trends match more with off premise purchasing, Dan said. “Within our program, we run a national and local selection for each of the venues and we have multiple, multiple venues that have been selecting hard seltzers: White Claw, Truly have really done well…We’re selling a lot,” Dan said.

In fact, Topgolf has a new menu coming out in March that will feature a national hard seltzer placement for the first time, Dan said, adding that they’ll allow their venues to select “a second, or maybe a third, but at least a second, based on what their local demand is.

“So seltzers, they’re real,” he said.

Dan wouldn’t reveal which seltzer would receive the national placement at Topgolf, but did say they were represented at the conference (that narrows it down to Boston Beer’s Truly, Crook & Marker, MillerCoors’ Henry’s Hard Sparkling, and Mike’s White Claw).

SELTZERS A LITTLE “OFF-BRAND” AT DRAFTHOUSE. But Drafthouse’s John said they don’t carry any seltzers right now, and actually haven’t had “a lot of guest demand for them yet,” given they can provide people with an actual vodka soda. But they’re “keeping their options open.” Still, seltzers “feel so off brand for us right now… I feel like that could change, but but right now I do feel it’s very… it’s not on brand for us right now.”

BUT IT’S A DIFFERENT EXPERIENCE AT DRAFTHOUSE. John noted that they recently reached a big enough size where they legally have to list all the nutritional facts for food and beverages they serve. He joked that they held off on this initiative for as long as they could, afraid to tell everyone how many calories are in ranch dressing.

But the anxiety around the office leading up to the launch was all for nothing, he said. “Once all was said and done, I don’t think there was any dip at all.” That goes for beer too: “We haven’t seen any dip as a result of someone seeing a pilsner versus a porter, and making their decision on that.”

“I think when people are going [to Drafthouse], they’re going on a date, they’re seeing a movie they’re excited about,” he said. “They’re there for what’s hopefully gonna be a great experience. They’re down to eat the fried appetizer and drink the big porter full of calories.”

So Drafthouse was unique, compared to the other two panelists, as its beer sales are not dominated by domestic premiums. But we wondered…

COULD MEXICAN IMPORTS TOP DOMESTICS AT A PLACE LIKE TOPGOLF? “There’s a lot that would have to happen for that, just because of pure volume, but you can never say never,” Dan said. “I think that with the demographic shift that’s happening within the country, it’s very possible and it’s being more normalized.”

WHAT ABOUT MICH ULTRA, could that become the top-seller? “I guess we’ll see,” Dan said. “I’ve seen people that are drinking Ultra and I’ve gone, ‘I never expected that.’

“It’s shocking to me when the [Mich Ultra] commercials are these very fit people that just had a Peloton session, but then you go into Oklahoma City and you see these guys with these big gray beards walking around with a 16-oz. bottle of Ultra.”

Cara shared a similar scenario. She says that if you think people attending country music festivals are still drinking nothing but whiskey and domestic premiums, “you’re wrong. … That is changing, one hundred percent.”

They just recently held a country fest sponsored by Bud and Bud Light, and “Michelob Ultra outsold everyone by twice,” she said. “We even had to get a hot shot and we’re like, ‘Hey man, we are running out of Michelob Ultra. Like we need twice what you brought us, and I’ll sell through it, I promise.’ Fortunately for A-B it was still one of their brands, so they weren’t upset, she said, “but I think it shocked everyone.”

SO WHAT TYPES OF FESTIVALS SELL THE MOST BEER? “It really depends on the genre,” Cara said. “We know that if it’s gonna be something like hip-hop or EDM, you’re really not gonna sell that much alcohol because those kids aren’t drinking,” (wink wink, they’re doing other things and drinking water). But at country music festivals, they’re drinking “no matter what.” In fact, the attendees at country music festivals are “drinking two and a half times the average of any other genre.” Still, that may not be all good news for beer. “It just depends on what you have on the menu because they are still a very whiskey-heavy crowd.”

SO WE KNOW WHAT THEY’RE PUTTING ON, BUT WHAT ARE THEY TAKING OFF? With the rise of seltzers, Cara said they’ve been taking less flavored beers, as there is really “no need” for those anymore. “You know, the grapefruits, and the pineapple drafts, we just don’t have space for anymore.”

For Topgolf, it’s a lot of the seasonals and the rotating lines that “change every hundred days,” Dan said. “It’s just become sensory overload for our guests,” who most of the time already know what they want by the time they sit down.

Then at Drafthouse, John didn’t call out any specifics to what they’re taking off, but did note that his job is all about “balance.” Yes, he wants to make sure they don’t have too many of one style, but for certain styles, like IPA, it’s tricky because it has splintered off in so many directions. “So now balance doesn’t just mean that we got all the classic styles, it’s within that IPA category how many different types you have represented for your guests.”


Yesterday CBD reported that one Texas wholesaler group, the Beer Alliance of Texas, and the Texas Craft Brewers Guild have finally agreed on language to allow to-go sales from production breweries. It’s long been on the craft brewers’ agenda.

The Beer Alliance of Texas (BAT) is on board, having gained some key concessions in the deal. The Wholesaler Beer Distributors of Texas (WBDT), however, believe that brewpubs are allowed both types of sales under a 10,000 barrel cap, and that should be enough.

The current to go bill is being redrafted according to the compromise, which includes the following provisions:

New language will allow sales for off-premise consumption in amounts up to two cases per calendar day, per person.

Any product offered for sale in the taproom which does not have an approved label must post in plain view the alcohol content of that product.

The total amount of on and total amount of off-premise sales shall be reported (in barrels) to TABC on a monthly basis. The Commission shall hold the records for public review.

And both sides will refrain from lobbying to raise or lower allowable Texas malt beverage barrelage caps for a period of 12 years.

DISTRIBS ALSO GET CASH LAW SUPPORT. And there’s a sorta side deal, too, BAT chief Rick Donley told BBD: That craft brewers “will fully support retention of the cash law in the Sunset Bill, and they will support including ale and malt liquor, which aren’t covered in the cash law … moving it from the credit law over to the cash law.” (This law basically ensures that distributors are paid in cash or cash equivalent — mostly electronic transfer of funds. It’s more of a prompt payment deal, before or upon delivery.)

WBDT SPEAKS. While Texas Craft Brewers Guild and Beer Alliance of Texas seem happy with their compromises, the WBDT wrote to CBD after the story ran yesterday with an explication of their continued dissent against to-go sales for production breweries.
“We continue to oppose expansion of the current carve-out which allows manufacturers under a 10,000 barrel cap (137,778 cases) to sell beer to go, in line with numerous other states,” per EVP Tom Spilman.

“There are numerous stakeholders who have not agreed to the proposed legislation to expand the current carve out to larger breweries and create unfair competition for non-vertically integrated retailers. We will continue to defend the Texas system which emphasizes fair free market competition and has created the healthiest, most competitive beer market in the world.”


Has it not even been two weeks since Bud Light launched its ads disparaging Miller Lite and Coors Light’s use of corn syrup?

Since then, as you likely know, we’ve seen a spat of back-and-forth artillery fire, including a response from MillerCoors in the New York Times, a “scroll-written” response from Captain Barleycorn (or whatever the name of Bud Light’s King), and a bunch of craft brewers weighing in as well, many of whom dismissed the critique (it’s not HFCS, and it ferments out anyway) — although Boston founder Jim Koch blogged for more transparency and foreshadowed the exposure of Mexican imports in this ordeal.

Oy. Then earlier this week, in what we think is the latest development (who can keep track?), MillerCoors put out a video on social media channels.

“What about their brands that use corn syrup?” it says, posting pictures of A-B brands like Busch and Natural Light, but also upscale brands, like Bon & Viv (which also got a Super Bowl spot) and Stella Cidre.

…”Or their brands that use High Fructose Corn Syrup?” It said, naming Shock Top and Ritas. “So Much for Transparency!” (That’s an ingredient MillerCoors doesn’t use, the brewer contends.)

As for the accusation about Miller Lite and Coors Light’s use of hop extract (which apparently looks really nasty, and some believe is a big part of A-B’s phase 2 attack) , MillerCoors says A-B uses this ingredient in many of its U.S. brands, including Bud Light PLatinum and Mich Ultra Pure Gold, no less.

Will it matter? The counter on our video player said the video had been viewed about 600 times. This is likely but a small piece of shrapnel in an ongoing war.

Until Monday,

Harry, Jenn, and Jordan

“Make all you can, save all you can, give all you can.”
– John Wesley

———- Sell Day Calendar ———-
Today’s Sell Day: 11
Sell days this month: 20
Sell days this month last year: 20
This month ends on a: Thurs.
This month last year ended on a: Wed.
YTD sell days Over/Under: +1