Last Call: MillerCoors Says Trump Tariffs Will Cost $40 million; Magnolia Founder Departs

MillerCoors, NBWA Decries Trump Tariffs

MillerCoors is bracing for a $40 million hit to its bottom line due to the imposition of tariffs on foreign aluminum and steel, CEO Gavin Hattersley told Bloomberg earlier this week.

The tariffs — 10 percent aluminum and 25 percent steel — will likely force the company to scale back investments and hit the pause button on hiring new employees, Hattersley said. It could also lead to increased beer prices, he added, noting that the company’s shareholders won’t simply accept a $40 million hit to it profits.

“It doesn’t work that way,” he told the outlet.

Raising beer prices isn’t without consequences, though. Hattersley said even a $.50 increase in 12-pack prices would hurt the company’s market share.

Meanwhile, in an op-ed on the Morning Consult website, National Beer Wholesalers Association (NBWA) president and CEO Craig Purser agreed that wholesalers, retailers and consumers “will be forced to pay more for beer.”

“Instead of implementing risky trade gambles, we should embrace our international trading partners in a way that champions American business and further strengthens our economy,” Purser wrote.

The Trump administration doesn’t appear to be wavering. Earlier today, the U.S. announced it would impose 25 percent tariffs on $50 billion of Chinese goods starting July 6. China’s Commerce Ministry has accused the U.S. of starting a trade war and plans to respond with its own tariffs on U.S. goods. Earlier this month, the exemption on tariffs expired for Canada, the European Union and Mexico. All three nations have said they will retaliate.

Dave McLean Out at Magnolia

Less than a year after the brewery he founded was sold out of chapter 11 bankruptcy, Dave McLean has left Magnolia Brewing Company, according to Eater San Francisco.

McLean, who founded Magnolia in 1997 and recently launched Admiral Maltings, told Eater that the split with the new ownership group — which was led by New Belgium Brewing Company and includes Oud Beersel and Elysian Brewing co-founder Dick Cantwell — was “amicable.”

The group has appointed Brian Reccow, whose company, Specialistas, guided Magnolia through the bankruptcy and acquisition, as its new CEO. It will also temporarily close Magnolia’s Smokestack barbecue joint on June 18 for renovations. When the renamed Magnolia Dogpatch reopens in August, it will feature a new menu and beer garden.

Jester King Takes On Additional Owners

Austin, Texas-based Jester King announced Thursday that it had added four employees — Averie Swanson, tasting room manager Eric Kukla, artist Josh Cockrell and operations manager Matt Piper — to its ownership ranks.

“They were given equity in recognition of their years of hard work and great service,” co-founder Jeffrey Stuffings told Brewbound in an email. “They also were given the option to purchase equity as part of our recent land preservation efforts, which they did.”

Last month, Jester King purchased the remaining 107 acres of Ceres Park Ranch, where the brewery has been located since 2010.

Judge Tosses Lawsuit Against Goose Island

A federal judge has dismissed a lawsuit brought by two Massachusetts men who were unsatisfied with Anheuser-Busch-owned Goose Island’s refund process for infected bottles of its Bourbon County Stout, according to the Chicago Tribune.

The judge found that Goose Island’s offer of $8,000 to Jeff Roach and Scott Kaplan was sufficient, the outlet reported.

Goose Island recalled the 2015 edition of its popular Bourbon County beers due to off flavors and offered consumers refunds. Roach and Kaplan filed the lawsuit in February 2017, claiming they were unable to collect their refunds for more than 50 bottles of Bourbon County beers due to the process being “underpublicized and available for an unreasonably short period of time.”

Goose Island made its $8,000 offer to the men in April 2017, which the company’s attorneys said was “the maximum amount potentially available to them.” However, the men rejected the offer in pursuit of a class-action lawsuit.

Brewery Closures in Chicago, Washington and Virginia

After opening a 25,000 sq. ft. brewery three years ago, Chicago’s Baderbrau Brewing has ceased production and is now selling its operation, according to the Chicago Tribune.

According to data from the Brewers Association (BA), Baderbrau’s brewpub sold about 7,750 barrels of beer and contract brewed about 6,500 barrels for other beer companies in 2017.

In Spokane, Washington, Orlison Brewing has ceased production of its own beer and shuttered its taproom, according to the Spokesman-Review. However, Orlison will continue making beer on a contract basis for No-Li Brewhouse, according to the outlet.

Owner Orlin Reinbold told the Spokesman-Review that increased competition on- and off-premise as well as a lack of parking and food service at Orlison’s taproom hurt sales. Last year, the company sold 1,265 barrels of beer, according to the BA.

“The profit margin you’re making on canned beer is almost nothing,” Reinbold, whose primary business is in running grass seed companies, told the outlet. “You have to be doing such high volumes to make any money.”

And after just one year in business, Twisted Ales Craft Brewing in Manchester, Virginia, is closing, according to the Richmond Times-Dispatch. Owner Jason Price, who is moving to Raleigh, North Carolina, for an IT job, is attempting to sell the facility.

NBWA Beer Purchasers’ Index Expands Again

The NBWA’s Beer Purchasers’ Index — which helps explain U.S. beer distributors’ monthly purchasing behavior — expanded for the second consecutive month with a reading of 59 in May. However, the reading was two points below May 2017 levels.

According to the NBWA, “a reading greater than 50 indicates the segment is expanding,” while “a reading below 50 indicates the segment is contracting.”

Both the imports (index of 71) and craft (index of 55) expanded, but at slower rates than the previous year. Cider continued to show signs of recovery with a reading of 42, despite continued contraction. Meanwhile, the premium light segment contracted with a reading of 42.

Florida Beer Co. Parent Company Pays $40,000 to TTB

The Alcohol and Tobacco Tax and Trade Bureau (TTB) has accepted a $40,000 offer in compromise from Indian River Beverage Company, which operates as Florida Beer Co. in Cape Canaveral. The brewery was acquired in 2016 by ANSA McAL based in Trinidad and Tobago.

According to the TTB, Indian River Beverage Corporation failed to properly classify wine/cider for tax purposes, and the company also failed to pay or report its federal excise tax between August 16, 2011, and December 31, 2016.

A-B’s Budweiser Brand Salutes Vegas Golden Knights

Anheuser-Busch InBev’s Budweiser brand celebrated the Vegas Golden Knight’s rise from 500 to 1 underdog to the Stanley Cup finals. Although the NHL expansion team ultimately succumbed to the Washington Capitals, Budweiser highlighted the unexpected season with a video that features music from Las Vegas band The Killers.

The Budweiser brand has done similar tributes in the past, including celebrating the 2016 Chicago Cubs’ World Series Championship.

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