Brewbound Podcast: 3 Tier Beverages on Key Bev-Alc Trends for Summer 2025

[00:00:00] Justin Kendall: Next on the Brewbound Podcast, trends to watch as summer arrives with Tier Beverages. Hello and welcome to the Brewbound Podcast. I'm Justin Kendall.

[00:00:20] Zoe Licata: And I'm Zoe Licata.

[00:00:21] Justin Kendall: And it's good to see you again. It's been a couple weeks.

[00:00:24] Zoe Licata: Yeah, welcome back.

[00:00:25] Justin Kendall: Thanks. Now that I'm here, Jess is gone.

[00:00:28] Zoe Licata: Yeah, only for a moment. Just things like installing a fridge take time.

[00:00:34] Justin Kendall: We're getting surgery, which wasn't Jess, that was me.

[00:00:38] Zoe Licata: Yeah.

[00:00:39] Justin Kendall: But I'm back. I'm here and I'm doing okay. And how are you doing?

[00:00:44] Zoe Licata: I'm fine. No, no crazy things happening in my life yet.

[00:00:49] Justin Kendall: Nothing like Memorial Day weekend wise that you can report back on?

[00:00:53] Zoe Licata: It was a pretty quiet Memorial Day, honestly. I think a lot of, it seemed like a lot of people were like, oh yeah, it's Memorial Day, which was interesting. I mean, it was rainy. It wasn't too crazy. Monaco Grand Prix weekend, so which, you know, get to see a bunch of rich people on TV doing extravagant things, but.

[00:01:14] Justin Kendall: Living the high life.

[00:01:15] Zoe Licata: Yeah. It was very chill. Nothing too crazy.

[00:01:19] Justin Kendall: Yeah, I had a pretty chill weekend too, other than a screaming child who didn't want to wear any clothes. If you have any tips.

[00:01:26] Zoe Licata: It seems like a daily occurrence now.

[00:01:29] Justin Kendall: It is. Well, it's either wearing the same clothes or wearing just a diaper and screaming about it. And it's like, you can't leave the house just in a diaper. I don't want to leave the house. Well, now we've run into a problem.

[00:01:44] Zoe Licata: Maybe that's her strategy. She knows that. So she's like, if I don't have to put on clothes, if I'm not going to do it, then I don't have to leave the house.

[00:01:52] Justin Kendall: Exactly. She's pretty much figured this out.

[00:01:56] Zoe Licata: Yeah. Yeah. Smart.

[00:01:58] Justin Kendall: Well, we've got a few things coming up. We're going to get into the news of the week. We've got a featured interview with the team at three Tier Beverages. We're going to be joined by Donn Bichsel, Danelle Kosmal, and Matthew Crompton from CGA. They're going to break down what's going on in the Bev-Al category and what's hot heading into the summer. But we should plug our friends at BevNET. We're about two weeks away from BevNET Live in New York City. It's June 11th and 12th. And they put together a pretty stellar lineup. It includes the president of Olipop, Mel Landis, Anthony Kiedis from the Red Hot Chili Peppers, and he's apparently got a coffee.

[00:02:38] Zoe Licata: co-founder of Jolene coffee.

[00:02:40] Justin Kendall: Nice. You can check out the full lineup at bed net.com. Get your tickets. If you're in New York city, they've got leaders from liquid death, Chobani, the SWA, little saints, polar, so many more.

[00:02:54] Zoe Licata: Yeah, they're also doing those retail one-to-one meetings there as well. They just added HEB to that lineup and those are available only if you're registered for BevNetLab. So we know those can be great opportunities for beverage folks to connect with retailers. Whole Foods is also a part of it, Circle K, Casey's. So there's a nice good setup there for anybody wanting to connect one-on-one or as we like to call them, one-to-ones.

[00:03:22] Justin Kendall: Great pizza at Casey's, I can attest. So let's get into the news of the week, and it's really one of the best moments of the year for me as a nerd in this industry, because the Brewer'Brewers Association released its annual production data. We live for this issue of the new brewer. It's the May-June issue. It's available online now, but we've been breaking down the data that comes in that. And where do you want to start? Do we start with the top 10 craft brewers, or Big Brewer, or the rest of the regionals? Where do you want to go?

[00:03:58] Zoe Licata: Let's go big and get narrower, I think, if you want to start with what's going on in the big beer craft.

[00:04:06] Justin Kendall: Yeah, we just published this story on Tuesday. It's up for Brewbound Insiders to check out. And I think the one storyline that sort of stands out above any others in this is that New Belgium has overtaken Anheuser-Busch's craft portfolio for the number two spot. And we know that number one is held by Molson Coors. It has been for years. It's driven by Blue Moon, which is the top selling beer in craft in scans at off-premise retailers. Not necessarily huge. leaps for New Belgium this year. It was around 25,000 barrels, I believe. But they took out AB, which had sold off some of its craft breweries, but others have been in decline. So you've got that mix going on there. But New Belgium has really come on in, I want to say it's since around 2020, they've gained more than 400,000 barrels. And it's really been driven by the Voodoo Ranger family.

[00:05:09] Zoe Licata: Yeah, I think what was interesting that you noted in that coverage is it's not like New Belgium did this by like one big move that pushed them ahead. It's kind of been this consistent volume growth that they've been able to put out. They've had consistent double digit volume growth up until that streak broke in 2024, but they still remain positive. And that's primarily from Voodoo Ranger and all its various extensions that have come out from that. So we know we've seen new bell drums and specifically Voodoo Ranger's data has kind of been a mix of results, particularly in scans, but just the actual volume wise and what they're putting out there and what people are picking up from the overall brand is really helping consistently boost them up.

[00:05:55] Justin Kendall: And the Bell's acquisition didn't hurt that effort. Bell's declined slightly last year. New Belgium's volume gains more than made up for that. But there are 83,000 barrels behind Molson Coors, according to this data. And Blue Moon has been in decline, and Leinenkugel's has been in decline. And Molson Coors sold off their remaining craft breweries that it has in its portfolio to Tilray. If these trends hold, which is, there's a lot of ifs here, if New Belgium can keep up its positive momentum, which you mentioned that they had some issues in scans lately, so there may be some challenges there. But Molson Coors' negative trajectory has continued. It declined about 8%, I think, was the volume decline for its portfolio with Line and Kugels. Those two brands keep shedding some volume. there's a chance next year that New Belgium could overtake Molson Coors. A lot of ifs in there, but...

[00:07:02] Zoe Licata: Totally. And we have seen that Blue Moon is, it seems like it's rebounding a little bit, helped by some of the extensions that that brand has received. They have the non-alk Blue Moon, they have Blue Moon Extra, and then they did that rebrand a couple of years ago now, or at least a year ago now, of Blue Moon Light Sky to just Blue Moon Light. So it seems like there's some positive things happening for it. But it still has not quite had enough momentum to really reverse Molson Chorus crap trends. And yeah, it's just one of those things where it's eventually seems like they're going to balance each other out and eventually New Belgium might eke out above Molson Coors. Molson Coors also had that handful of craft brands that they sold to Tilray in 2024, so we don't know how that could impact their volume as well, but that's definitely a factor in Molson Coors' overall volume and what's the status of where their rank might be in the future compared to New Belgium.

[00:08:02] Justin Kendall: And these are craft breweries that are obviously outside of the Brewers Association's definition of small and independent. Collectively, these brands, which include like Goose Island Shauna Golden Road, Lagunitas, Founders, obviously New Belgium and Bells, who we just talked about, Blue Moon, Leinenkugel's, Kona on the mainland U.S. They collectively produced 6.752 million barrels in 2024. That marked a 4% decline on a comparable basis year over year. So that's kind of where things stand. That decline amounted to around 450,000 barrels. Lots going on there. So let's dive into some of the Brewers Association defined craft. And since we're starting top down, let's get into the top 10 craft brewers as defined by the BA. And four of the top 10 grew And that was really a lot of Athletic Brewing, some nice growth for Sierra Nevada after some years of declines and flat production, and then some nice growth for FXMAT Brewing and Brooklyn Brewery.

[00:09:16] Zoe Licata: It's no coincidence that Athletic and Brooklyn are on this, and Athletic is all non-alcoholic. Brooklyn has had a lot of non-alcoholic beer come out that they've been seeing create a lot of growth for them. So that's definitely something we've seen happening where NA beer is kind of the becoming almost the only driver of a lot of growth for beer. And so you're seeing that result in these volume changes for the top craft breweries. Sierra Nevada is also looking at non-alcohol. So there's definitely a bit of a through line there. And then you look at some of these other ones like Tilray I think was not super shocking to see some of those trends and they're one of the ones on decline. They have a lot going on and they've admitted they're kind of in this period of cutting down on the amount of brands that they have, introducing some new brands. There's a lot of changes happening there that's definitely going to have an impact on volume.

[00:10:18] Justin Kendall: I think the one that really made us gasp though was Boston Beer. That was the one that jumped out from the start at us as far as declines go. And they declined 23% to 1.104 million barrels. It amounted to a 320,580 barrel loss year over year, which was just, that's pretty stunning. And that does not include any of the Beyond Beer stuff. This is just beer that we're talking about.

[00:10:47] Zoe Licata: Yeah, all of these rankings, any of these data sets that we're talking about from the Brewers Association is exclusively just beer. So it doesn't include any of those products that are still counted in the beer category, like F&Bs and things. This is just beer, beer. That does not include Boston Beer like Twisted Tea or Suncruiser, which we know from The past year or more of earnings calls have been really the driver of any growth for that company. It's been their primary focus and their craft brands like Sam Adams and Dogfish Head have kind of been put to the wayside a little bit because they just aren't really contributing any sort of growth. And now we see they're really contributing a significant amount of volume decline.

[00:11:34] Justin Kendall: And then the other major brewer, number one on the BA's list that lost hundreds of thousands of barrels was Yingling. They declined 8% to 2.5 to 7 million barrels. It amounted to a 232,500 barrel loss. And what I think you're seeing there is some of those Bud Light trends that they benefited from, they are now not. keeping some of those gains that they got there.

[00:12:05] Zoe Licata: Yeah. And that was also mixed with some of those market expansions that they were doing. And I think I'm sure they saw some initial volume growth from that. And now that those are not as shiny and new anymore, that's going to have some sort of impact on production volume.

[00:12:20] Justin Kendall: Let's get into the rest of the top 50. And you really hammered through this. And I think you found out that 28 of the top 50 regional craft breweries grew last year.

[00:12:33] Zoe Licata: Yep. So 28 of the total top 50. And then if you exclude that top 10 that we just talked about, there were 24, I believe, breweries. So it's just over half of that top 50 were able to find growth. And so it was a really kind of mix it, but like two opposites of what was happening within that top 50 list. The ones that were recording growth were pretty substantial growth. There was nine of them that had double digits. Some of the top volume percentage growers in there, we have Fiddlehead, which was ranked number 24, BrewDog, which was number 23, Freem Family Brewers, which was number 41. That one was really interesting because that was highlighted in one of the features in the new Brewer Magazine as That's a brewery that is finding that growth now at almost 50,000 barrels, but it's doing it with a focus on pretty traditional beer. They're doing mainly lagers. They are doing things that are super focused on their core markets. They're not looking to expand to a lot of places. So that seemed to be a bit of a through line through a good handful of these breweries that were finding growth last year. A lot of them are regional breweries that are are really focused on a certain few markets dominating those markets. And that's something that happened throughout the other regional breweries that we'll talk about in a second too. But also a trend through that top 50 list was there a good handful of portfolio brands or craft collections that were finding some growth. So like Hendler Family Brewing was on there. They eked out a little bit. And that's Jack's Abbey, Wormtown Night Shift. It was kind of positive. It was kind of surprisingly cheerful for a good handful of the top 50 list to see, all right, the majority of that group is finding some sort of growth there. As you get further down past the top 50, not so much. and that seems to drag the total regional production volume down. I think for overall, all regional breweries, and so that's defined by the BA as producing over 15,000 barrels of beer and selling majority in distribution. Of those total regional craft, volume was down 3.1%, which is better than the overall craft segment, which was down 3.9%, better than top rooms, better than microbrewery. So down, but not as bad as some of the other folks. I think it comes back to a lot of things we talk about of the regional breweries that are finding success are the ones that have kind of really focused in on their portfolio, on their distribution, on where they are and what they're doing. And so that's definitely a common theme throughout that top 50 list for sure.

[00:15:19] Justin Kendall: There are a lot of different stories going on in here. You know, you've got Boston Beer and Yingling combined losing more than half a million barrels, basically. It is what they lost together. And then you've got some nice growth stories in sort of the middle regionals that you pointed out. But then you see some names on here like Abita growing 13 percent or Deschutes, which is transformed its portfolio, growing 9%. Nuclar is getting 2% growth, which off that base is pretty nice. Georgetown, which has been like a draft-focused brand that has sort of forced into distribution during the pandemic, getting nice growth there. And then, Rheingeist, growing 7% last year. like Nargansett still growing, Troggs, like there's so many nice stories. Russian River up 9%. Yeah, Russian River.

[00:16:15] Zoe Licata: Like, yeah.

[00:16:16] Justin Kendall: Pizza Port.

[00:16:17] Zoe Licata: Yeah. It's still some of those kind of, I don't know if you, like classic or like, I don't know what the other characteristic for that would be, but I don't want to call them old school. It's like some of that just really kind of traditional craft brands are some of those ones on that list where they're finding growth, which is, I think. should be encouraging to some folks.

[00:16:40] Justin Kendall: Well, all of those stories are up at Brewbound.com. If you're a Brewbound Insider, you get access to those. But by the time everybody's listening to this, there'll be another story up that you'll have on regional breweries. Anything in there that's jumped out so far that you want to hit on real quick as sort of a preview?

[00:16:59] Zoe Licata: Yeah. So that's diving into all those regional breweries past the top 50. So that's another 121 craft breweries. Of that 121, 69 were in decline. So that was a little over 50% or almost 60% of that list, which was a pretty significant bump versus the past couple of years, which it was less than 50%. So that's where I was saying before, it's not necessarily the case once you get past the top 50 where it's as bright and sunny, there were more declines in those smaller regional craft breweries. So you could dive into all that and the breweries that did find growth, there was like 36% found volume increase and about 7% were flat. Some of the big names in there for growth percentage wise, the shop beer had some pretty nice growth. They were also highlighted in that regional story as being someone who's really only focused on a few core markets. That story said they were 90% of the New England IPA market in Arizona, which is a crazy figure. And I would love to dive deeper into where that's coming from. And they're also really focused on draft beer. 70% of their business is draft. and they're finding ways that record pretty significant growth. Also highlighted that grocery was really important for that brand. Distil is in there, Figaro Mountain, Manhattan Project, all names that are recording pretty significant percentage growth for their production volume last year. On the other end of the spectrum, some of the largest declines were coming from Ballast Point, Calicraft, Full Sail, Minhawes, a good handful of folks. So all the details on everyone else on that list and all of their numbers are going to be in that report.

[00:18:45] Justin Kendall: Yep, and we'll have that. We'll have future reports on brewpubs, microbreweries, and taprooms. So check out the site for those. Become an insider today. But I guess with that, we should get to our featured interview with Tier Beverages. Each quarter, Brewbound and Three Tier Beverages team up for Three Up and Three Down, a look at what is and isn't working in the Bev-Alk industry. It's an exclusive available to Brewbound insiders. So as we head into this summer selling season, we thought that we'd do a more expansive catch up on the podcast while in Chicago for the Beer Marketers Insights Spring Meeting. So today I'm joined by Donn Bichsel Jr., founder of Three Tier Beverages. Thanks for being here, Don.

[00:19:37] Donn Bichsel: I just love that you always throw in the junior. It's perfect. You know, it's great. I appreciate it. Good to see you.

[00:19:44] Justin Kendall: Always good to see you. Also joining us is Danelle Kosmal from Three Tier Beverages, a consultant and thought leader. Thanks for being here, Danell, as always.

[00:19:53] Danelle Kosmal: Hi, I'm really excited to see you and do this and have this little chat with all of you.

[00:19:59] Justin Kendall: In person, not on Zoom, not in Japan.

[00:20:02] Danelle Kosmal: Yay! Yeah.

[00:20:05] Justin Kendall: And the final piece of this podcast, Matthew Crompton from CGA by NIQ. Thanks for being here, Matthew. Yeah, thank you.

[00:20:13] Matthew Crompton: The company name's a bit of a mouthful now, CGA by NIQ, but delighted to be here with Don Donnell and yourself, Justin, for what hopefully is going to be a great chat. Yeah, and I think you've got a new title, right? Vice president now, but yeah, I mean, just lead me to it. Lead me to it largely, which is nice.

[00:20:29] Justin Kendall: That's awesome. So let's jump in. NIQ was nice enough to send the latest data today. The trends through May 3rd category is down 3.5% in volume year to date, minus 1.6% in dollars. everything but super premium is in the red in volume and four weeks cider actually joined super premium in the black in volume dollars import super premium fmb in the black four weeks cider and below premium are also up so as we're on the verge of summer here what's your early read on the trends

[00:21:09] Danelle Kosmal: It's been a tough start of the year, right? And most of what I've looked at was year-to-date through April 19th. The trends are still pretty similar, though. I think there are still bright spots, though. We have, I think when you think about some of the, especially, and we'll probably talk about innovation, right? But there are a couple launches from this year that are going to be fun to talk about. And NA, in my opinion, I think NA still has some momentum going into the summer. And F&Bs, I always talk about F&Bs in that it's this cyclical segment and the sub segments within F&Bs, they play an important role in flavors and engaging new consumers and engaging drinkers in different ways. And I think there are segments within F&Bs that where there's, you know, we'll continue to see a little momentum there too.

[00:22:03] Justin Kendall: You always do a great job of dropping the context on F&Bs.

[00:22:07] Danelle Kosmal: I love digging into F&Bs because I always say it has a special role. So F&Bs are always going to be around, right? And I think we all get really excited about Seltzer's had this massive, you know, boom and then the slow bust. Hard Soda years ago had the quicker massive boom and quicker bust. But at the same time, that's what we should expect and anticipate with FMBs, because there's always going to be something new. And right now, it's what I sent to BevNET last week and kind of digging into those subsegments within FMBs. hard juice and really it's the hard nectar that is the most recent driver of what's happening within F&Bs. And that's now, you know, the biggest growth segment within F&Bs and it surpassed hard tea and hard tea is still growing too. But I think it's what we should expect that there are going to be some segments that are going to bring in those new consumers and have the excitement and some segments where, you know, that excitement has now left and we just have to wait for the next innovation.

[00:23:12] Donn Bichsel: Can we just go back to calling it progressive adult beverages? No.

[00:23:17] Danelle Kosmal: Never.

[00:23:18] Donn Bichsel: That was the one that I had gotten used to. The all-encompassing catch-all for all of these. Never. Makes it easier than me trying to keep up with all these other acronyms if I only have one.

[00:23:28] Danelle Kosmal: I think my talent now is that when NIQ, you know, five years ago separated hard seltzers, and I still call it like when I say FMBs, I'm including hard seltzers, but half of the industry isn't.

[00:23:40] Matthew Crompton: It's a tricky one. We in the UK, five, ten years ago, we used to call them Alcopops.

[00:23:46] Danelle Kosmal: Oh, I remember that.

[00:23:47] Matthew Crompton: Yeah, I don't think that's an industry term anymore.

[00:23:53] Justin Kendall: Well let's talk about on premise and where the trends are right now.

[00:23:56] Matthew Crompton: Sure. So at the moment I think it's important like we do look at the numbers and sometimes the channel actually gets forgotten about in industry sort of noise. You know we saw a lot of things coming out from various industry bodies saying you need to look at the whole picture. I know Lester Jones did some bits on this earlier this year. Total beer is down. It's down 1.2% in terms of dollars in the on-premise. We've craft down 3.2. So, you know, we can't be naive and not think that there isn't challenges. Of course there is, but there's nice pockets of growth throughout there. I think for the on-premise, it's a little bit like the economy in terms of the polarization, which is at play out there at the minute. What I mean by that is we've got some people looking for those value led offerings. They're still going out, so perhaps their neighborhood bar, sports bar, etc. And we're actually seeing below premium do pretty well within the beer space within the on-premise. But then if you go right to the other end, we're seeing some of the more higher premium, particularly actually within Spirit. So premiumization still being there, which it may have slowed down a little bit in the off and not so much in the on. It's the same as it's always been. People want that experience. They want that experience. They want a reason to go out and they want to be able to do something that they can't do at home. We still firmly believe that the on-premise is the place to do that. I think what's interesting is we talk about building brands and obviously within FMBs, PABs, whatever you want to call them. These are one of the few categories which actually start in the off as opposed to start in the on. So it's a little bit of a slower adoption. So I've got in the minute RTDs are up 39% in the on-premise. That's great growth, right? Really good. It's not quite the triple digit growth we were seeing last year in the off-premise. Same with non-ALC. It's up about 27% in the on-premise at the moment. Now, if you think if retailers and suppliers can sort of get a game plan together, What could that growth be in bars and restaurants? I think it could be considerably higher if we keep pushing towards that and it's something that we're going to keep an eye on and keep tracking.

[00:25:54] Justin Kendall: And so we haven't seen that so far. You're not seeing that as much in the non-ALK space?

[00:25:58] Matthew Crompton: Well, we are. It's just still such a small base. It's still a small base. So 27% growth is good. Of course it is. But from a 1% base, which it is for total beer, it makes up 1% of all beer sales, U.S. on-premise. That's behind some other Western markets like the U.K. I just think there's lots of leg room there for the bars to go after.

[00:26:17] Justin Kendall: As far as U.S. on-premise retailers, though, how difficult is it to get them on board with a menu of non-ALK options when, you know, maybe they're going to say, well, I've got my non-ALK. I've got, you know, athletic, run wild or whatever. Why do I need?

[00:26:35] Matthew Crompton: I think it comes down to education. I think it comes down to education of the bartenders, education of the waitstaff and so on to be able to have the confidence to recommend these products and also get around that price issue that some people have. Often some consumers will go in and instantly they'll see that the price might be on a par with an alcoholic version and consumers just aren't educated enough to know that actually even without alcohol these products take a lot of skill and a lot of work to get out there and that's why they are priced appropriately.

[00:27:04] Donn Bichsel: Yeah, and I think the one thing that really needs to happen is the suppliers need to work with their distributors to get alignment on which one of their products and which one of their flavors they're going to be pushing out there consistently. Because that confusion gets even harder for the retailers when they've got a menu of different brands and different styles from either athletic or other. Which one are they supposed to bring in? We saw that happen with the Winking Lizard group when they were making the decisions to bring in some of these RTDs, PABs, et cetera, into their stores was picking which flavor. Were they going to go all in with cherry? Were they going to go all in with lime? Which was it? And I think the retailers need the suppliers to get behind one get behind something that they're going to push, make sure that their distributors know that, then they'll start getting more consistency on the menus out there.

[00:27:57] Justin Kendall: Communication. That's what it comes down to. So we know Kraft is struggling to start the year down almost 6% in volume and 0.3% in dollars. When you look at the craft segment at the moment, you know, how should craft brewers be looking at where they are heading into the summer and what they should be doing to sort of reverse these trends? And I know that these aren't monolithic trends, but for those who are struggling, what's your advice to them?

[00:28:29] Danelle Kosmal: I would say simplify, like simplify everything that is possible. So simplify in terms of portfolio and focusing on the core, whatever your core flagship brand is, or your core markets, because I think it really is about simplifying and having that ability to focus in really on the most important part of your business. And simplifying is a good way to do that. I think there are also, I mean, if we talk about things like ABV and non-ALK at the same time, we have, it's almost like the polarization that Matt, you were talking about in terms of, you know, how people are spending. We're also seeing that with ABV. So you have growth within the high ABV segments and craft, but then You know, both of those segments are actually not within craft, but the high ABV segments are declining at a much slower rate than the rest of craft. And that's kind of where we're at right now. But then you also have a consumer mindset that is open to higher ABV products, because we see so much of that happening within, again, the F&B space, within the total beer category. But back to your original question, I would say simplify as much as possible.

[00:29:40] Matthew Crompton: I think that's a really interesting point on the ABV point. We ran a consumer study, so 15,000 on-premise visitors ran over the last three months or so. We basically asked, what do you make decisions based on, on a menu? And funnily enough, 47% of beer drinkers said they are very likely or likely to choose based on ABV content. Now that can work both ways, either low or high. So I actually think when you think like that, that can be a good thing for beer because naturally ABV is called out a lot more for beer, whereas spirits you don't really know. If you're looking to be a bit more conscious with your sort of alcohol intake, you don't really know what the bartender, it's not consistent to pause. Wine, if you get in the glass, you don't know how much is in there. Beer will help guide the consumer maybe in a better way than some of those other categories.

[00:30:29] Justin Kendall: It certainly guides my purchase decisions because I am definitely on the lower end there or the no end. Depends if you're out with Donald or not, doesn't it? That's true. And if Mallord is involved. A lot of craft brewers have leaned into craft lager. What in that space do you see working at the moment?

[00:30:51] Danelle Kosmal: The conversation of lager is kind of, again, back to simplicity. It's a really approachable style. For the past couple of years, I've been saying that's one of the reasons why Mexican imports have done so well is the lager style, the Mexican lager style, but lagers in general, they're just an approachable style. And so I think we'll continue to see opportunities for craft brewers in particular with loggers. And in terms of like what you can do with that and additional brand extensions and flavor offerings, that again goes back to simplicity. So the flavored loggers that we're seeing do well within craft are the, you know, the lime loggers kind of Anything where you see something that's a lot more complicated, that takes a bit, somebody needs to Google what that means of like what kind of, you know, herb that is. Those are the flavor loggers right now that we're seeing in decline, at least in off-premise. Maybe on-premise is a bit more of like the experimentation.

[00:31:51] Matthew Crompton: Yeah no, when we were discussing this earlier, citrus flavoured beers are up 12% within the on-premise at the moment. So that fits in with the lime call and I think even if you look at some, I mean I'm sort of biased to Chicago, but you look at some of the local craft brewers around here, their seasonal offerings, it's almost been a bit more of a back to basics and like summer lager style drinks as opposed to some of the seasonals you may have got which might have been a bit more sort of out there. And we know that seasonals can be challenging because it's inconsistent. And especially when you're taking it away from your own tap room and your own brew pub to make sure that it's, you know, delivered the way that you want it. But I still think there is opportunity there to really bring to the fore, especially when consumers are looking for that point of difference and willing to try something new.

[00:32:38] Justin Kendall: If craft brewers are playing in this space in the off premise, do they need to be ready to play in those larger pack sizes?

[00:32:46] Donn Bichsel: I think they need to be careful. I mean, the one thing that you get into trying to play in that space is the pricing game. And I think when you look at when most of your revenue is coming from four-backs, six-backs, you start playing into the 12-backs, 15s, 18s, 24s, I think you're chasing a losing proposition. I think you got to be very careful or be prepared to have a high price and just give up some of your turns.

[00:33:11] Justin Kendall: We did talk about high ABV and we've seen a lot of success with the double, triple IPAs, but is there any white space left in there? Any room to play in other styles that you see?

[00:33:26] Danelle Kosmal: I mean, Matt, it was interesting to hear you say that the consumer work that you did, that consumers were making decisions based off of ABV because I usually have a thought that it's the style for craft in particular, it's the style that's driving the decision and not necessarily the ABV. However, because ABV is so often posted on menus and consumers and drinkers are becoming so much more aware of ABV levels that are attached to each of those styles, then it's almost one in the same now and how drinkers are making that decision. I think we've, in a sense, tapped out to, I can't think of another way, a lot of the higher ABV styles, though, within craft. I mean, it's great that there's been momentum around double, triple, you know, imperial IPAs and the hazy IPAs. I don't know how much more room there is to grow there.

[00:34:21] Matthew Crompton: It's worth noting that there's a certain Irish stout brand, which is one of the fastest growing beers at the moment in the on-premise in the US, naturally by a sort of me too and just overall sort of intrigue into the category. Is there something more at play for stouts to become a category for some local craft players to start? Obviously many do already, but to sort of lean into a little bit more as well.

[00:34:45] Justin Kendall: You definitely were seeing some of that play out earlier this year on social media with the splitting the G phenomenon and helping drive that, I think, for a lot of consumers who thought this is a heavy beer when it's not. Absolutely. So we talk about non-ALK. Those trends, although dry January gets a lot of hype, they do follow seasonal beer trends. And so as we're in this, I don't know, we're about four or five years into this trend really taking off, I feel like. What's your expectations for non-ALK sales this summer?

[00:35:24] Danelle Kosmal: I'm optimistic. I mean, I'll first speak to the rest of the year. NA is close to, you know, by the end of the year, ready to reach a billion dollars. Leading into the summer though, I mean, NA for year to date is up over 19% still in off-premise channels, just in the latest 13 weeks. This is through the end of April. It's a little slower. So like it's just over 18%. So that growth is slowing and it has been slowing. That said, if you look at what's happening across total beverage alcohol being up 19% and 18% is really phenomenal. And so, you know, there's momentum. And even the recent launches, I mean, McUltra was the second fastest growing innovation brand for year to date, the McUltra Zero. So there's still an opportunity for some new brands. I think that it's already a crowded space though. So I think the biggest challenge is gonna be if anybody is still launching something, getting that space in the retailer. The biggest opportunity I think for this summer and within the next year is just engaging new consumers and creating new drinking occasions. And I think that's where there's a ton of opportunity for it.

[00:36:39] Donn Bichsel: Well, and this isn't just outside of athletic. I mean, I think that everybody thinks that this is an athletic only world. They are the number one growth driver in craft overall. But Best Day Brewing over the last 13 weeks is in at number three and Bureau is in at number seven. So any success is just not coming from one brand. And then I agree with you completely, Danelle. It's going to be interesting to see how they can power new distribution. I mean, the power of the AB and their network, they've got the ability to get it out there and get it out there fast. So, I think they're going to help everybody else by getting new consumers that are going to see these products out there in a wider swath of distribution.

[00:37:18] Danelle Kosmal: Yeah, yeah. I mean, other new craft, or not new, but NA craft brands that are growing, Sam Adams here in Nevada, Lagunitas, you said Bastet Deschutes, Hopwater, if we're considering Hopwater, Hopwater, there, I mean, bureaus on a handful of lists of growth drivers.

[00:37:34] Matthew Crompton: Absolutely. I think from an on-premise perspective when we're talking about what's next, you've always got the draft dilemma, haven't you, with non-ALK. Now obviously I know there's reasons why draft is not possible for non-ALK in terms of sort of like the just very nature of the product and how safe it is, but we are seeing that come about now. So in the UK and Europe, the draft offering of non-ALK is becoming a sort of staple. Really, we are seeing that. Could that be the next thing to get it into front of more Americans in the U.S. bars and restaurants if we can work out the science?

[00:38:06] Justin Kendall: You mentioned Michelob UltraZero as one of the top innovations so far this year. What else are you seeing as far as innovations, new-to-world products that are really taking hold this year so far?

[00:38:20] Danelle Kosmal: I mean, I would say it's probably like three pillars that's driving innovation growth. It's NA, which we just talked about. It's flavors, which flavors, in my opinion, always drive growth and innovation. And then specifically within craft, there's, you know, there are a couple brands that are in brand extensions that were launched this year that are doing well, and there isn't like a consistent theme. And I think that's interesting. But I mean, I'll go back to you and start with flavors across the total category. When you look at the top 20 new innovation brands that are like the biggest drivers of growth, 15 of those are some form of either flavored beer or flavored malt beverage. And so it's the even hard seltzers that are the high ABV seltzers, it's some hard teas, it's the hard juice. I mean, Kumex, are we saying Kumex or Jumex? I'll say Kumex, which is also an interesting, it isn't a new brand. It's a brand that many people drank for years and have known for a good part of their life. And now they've transitioned to the alcohol space. And they're actually the number one growth brand in terms of innovation brands. So back to that idea of like what's driving innovation overall and growth. flavors and a and then within craft, I mean, the standout brands are Sam Adams, American light, the high ABV Blue Moon that launched recently. And that's doing all yeah. And then a brand like dogfish, Grateful Dead, which I think is one that really I mean, it's an obvious fit, it aligns well with their brand, and it speaks well to that core consumer, right?

[00:40:06] Justin Kendall: As far as flavor goes, are there any unifying themes as far as particular flavors that are working right now?

[00:40:13] Danelle Kosmal: Yeah. I mean, I didn't look into specific flavors. I think in general, I mean, we went through a phase where it was like all the mixes of flavors that you could do that was just really interesting. And now I think it's back to basics in some way. I mean, I think there's like a, a white claw, like regular seltzer that's like grape flavor that's in with, within one of the top growth drivers too. So.

[00:40:38] Justin Kendall: What a world we've come full circle here. Driving that hard juice trend, is that Humex?

[00:40:46] Danelle Kosmal: Yeah.

[00:40:46] Justin Kendall: Is that really what's like powering it?

[00:40:49] Danelle Kosmal: Yeah, it is. It is.

[00:40:51] Justin Kendall: Wow.

[00:40:52] Danelle Kosmal: Across all NIQ brand extensions of innovation products, it was the one SKU or brand extension and it's their assorted pack. That's the number one growth driver.

[00:41:05] Justin Kendall: Don, you posted this on LinkedIn as sort of a statement. You mentioned that at some point craft beer stopped being essential to retailers. When did you see that happen?

[00:41:18] Donn Bichsel: I did preface this with Danelle beforehand that I was going to say, October 16th, 2019, that was my last day working in the craft beverage space. I don't know. I mean, I think that the essential comment was probably a little strong. But I think that it got confusing. I got it really confusing for the retailer. It got to the point, kind of what I went back to saying before, about suppliers picking their brand and standing behind it with their distributors and with the retailers. It's a lot easier for a retailer to make a bet on something that is known, on something that is not rotating in and out every two to three months. I think that the seasonal world has gotten much harder to pull off through the distribution channel and much harder to teach our retailers. So I think that the theme, and we've talked about it, and Danelle's mentioned it, and Matt has as well, you know, simplicity, the going back to basics. So it's been happening for a while. There wasn't particularly a date that craft stopped being essential. But I think that you need to be able to justify your space. You need to make sure that you're at the right price and that you're bringing in or maintaining a new or existing consumer to justify that space on the shelves.

[00:42:40] Matthew Crompton: It's just a much busier, more competitive environment as well, isn't it? You know, your competitors aren't just overcraft beer suppliers. It is the RTDs, the non-alcoholic, et cetera. It's just, there's just so much there. And there's only so much fridge space, same as on the bar. There's only so many tap handles. There's only so many space in the fridge. So it's tough.

[00:42:58] Justin Kendall: I think it hits home for me though, with the shelf space, because I'm just watching it play out in real time in my little town area in Iowa, where it's like, It's not like Target was a huge craft beer source, but that space has just been, it's like it's in a vice and it just keeps shrinking and shrinking and shrinking. And then my conservative grocery chain, Fairway, which isn't even open on Sundays, They have a whole section now that's devoted to THC infused beverages. I mean, it was two shelves, now it's four shelves, and you can see where this is probably going to snowball from there. And the craft disco carts, the discontinued or we're no longer selling that, just keep getting more full of craft options, whether it's Fairway, Hy-Vee, wherever I go. So I just kind of see that playing out. You know, I know that that space has been carved out of craft. I mean, I just know it, you know, I can see what's in the cart. So I guess when we talk about craft shelf space, can you quantify what we're seeing on a national basis as far as how much craft has lost?

[00:44:15] Donn Bichsel: Yeah, my partner Joe actually had sent over some numbers before this and was talking about craft total distribution points overall and talked about versus a year ago, it's down 3.6% compared to overall beer that's down 1.2%. So distribution is getting hit and continues to do so as you go through each one of these resets. You know, the other point I was going to bring up is, you know, before this, I had asked the team for some comments on the things they were seeing. And Danny Brager, who, you know, runs the wine division for us, he said something that completely resonated with me was that retailers were closely looking overall at their space allocations, you know, across the entire store, you know, what's growing, what's not, and always asking the question, And he used it in relation to wine. He said, how many Chardonnays do I need between $10 and $20 to satisfy their consumer demand? And that can really be asked across the Tier Beverages, alcohol category and segment. It's the same thing with IPAs or as some of these breweries get into craft lagers. Only a couple of them are going to win. I mean, you may win in your local zip code and your local town, you know, but are you going to be able to perform for that retailer's chain across their entire market area?

[00:45:37] Justin Kendall: These things go in cycles, though. So are we just an innovation or something, a way for being able to claw back some of that? Or what does it take to finally get that back with that buyer?

[00:45:52] Donn Bichsel: You know, everybody not moving in the same direction as once. I mean, I think that that's one thing that has taken over our industry. I mean, not only just in beer, but elsewhere. It's, you know, we all move at the same time and overwhelm some new innovation so quickly. And I think that has to stop. I think Matt brought up a good point of, and I didn't think about that, about the opportunity maybe for Stout to be an attractive offering for craft brewers. But we have to break out of that cycle of everybody doing a lager at the same time as we did with everybody doing a hazy and everybody doing a kettle sour.

[00:46:33] Justin Kendall: I mean, we see it with every sort of innovation too, whether it's hard seltzer, you know, a lot of people jumped into that and how many of those have survived.

[00:46:42] Danelle Kosmal: Right.

[00:46:43] Justin Kendall: I mean, I can't think of a craft brewer that's making a hard seltzer at the moment off the top of my head, other than Boston Beer that has sort of made it to the other side of, of this. And it's not like we've found the floor yet. Well, that was uplifting. We talk a little bit about price and it's always a hot topic. When you're looking at this pricing environment in this economic environment that we're in, how do you advise a craft brewer on how to price a product at this point?

[00:47:20] Danelle Kosmal: Yeah, I mean, we might all have different opinions on this, so I think it'll be interesting to have the conversation. But if you look at total price increase for the total beer malt based category, year to date, end of April, price is up 1.8% compared to last year. If you look at, you know, some of those segments like imports, there are a handful of segments and brands within imports that are still growing. Import price increases up 2%. Craft is up only 1.5% in price. And I think Craft has never taken price at the level that they could. I think there's more room for Craft to take price. I think that considering what's happening in terms of consumer sentiment right now, where we are with the economy, there's, of course, some hesitation. But I mean, Bart Watson has talked about this for the past couple of years, that the craft drinker really is more likely to have more disposable income. So, again, I think there's a little bit more room for that price increase with craft. When we think about price for the total category though, I also think this is a time when those smaller pack sizes will play an important role. Because it's so much easier for somebody to walk in the door and buy a single, buy the smaller pack size, not have that investment in a bigger pack size. And then hopefully that means that we'll be getting them in the door into the retailer more often too.

[00:48:42] Matthew Crompton: I do find that really interesting though that the Crafty State was up 1% price. 1.5%. 1.5%. Now, again, I don't have the data in front of me, but look at other FMCG goods in that time. You know, the whole joke around that price of eggs increasing and stuff like that. I feel like alcohol is nowhere near increased to the level of other categories.

[00:49:01] Danelle Kosmal: It hasn't.

[00:49:02] Matthew Crompton: It's been substantially lower. Yeah. So that's an interesting point. I think, again if I put my on-premise hat on, there's definite sort of more sophistication I feel sometimes needed in pricing in bars. You still get a lot of category pricing, so everything priced the same or maybe a dollar difference, whatever. I think if you've got this polarized consumer that we've spoken about before then you can start aiming certain products at certain people and actually have clear defined pricing ladders.

[00:49:31] Danelle Kosmal: Yeah.

[00:49:32] Matthew Crompton: Almost really distinguished pricing ladders which again helps guide the consumer helps educate the consumer on what a price should be. And then it's nice sort of knock on effects for off premise purchases off the back of that.

[00:49:45] Donn Bichsel: Yeah, I think it's so important to really understand who your competitive set is. Chasing price down just for the sake of chasing price never ends well. I mean, if you feel the need that you need to get a push on a brand, I always love the idea of doing some price pulsing. You know, it's some temporary price reductions, but I agree with Danelle, too. And, you know, what Matt was saying, there's definitely opportunities for Kraft to maintain, if not grow, price. I think for so many years, we were all afraid of the mystical $9.99 threshold and crossing over that with six-packs. And we've blown right past that. I think we're also scared of the mystical 1999 on a 12-pack, you know, and we've seen us blow past that as well. I don't think that we should be afraid of price. I think that we need to make sure that we're identifying exactly who our consumer is that we're going after and which products that they're moving into us for or replacing us with. But we should not be giving up price.

[00:50:44] Justin Kendall: You talked about some of the smaller packages working. How about the smallest size package? Are we seeing anything with the trends so far with like the New Belgium Voodoo Ranger mini rippers that kind of can point us to how that's performing so far?

[00:50:59] Danelle Kosmal: Yeah. Like the seven and a half ounces. I think it's probably too, because there isn't a comparison of how, so I'm sure they have their own internal KPIs and I would love to know, like, are they meeting that or meeting their goals or not? But, um. I think, and this is numbers aside and my personal opinion, I love the idea of smaller sizes. Like I always, when I'm on premise, even there was a place that we used to go to that was outside of DC when we lived in Alexandria, that they had the tasters that I absolutely loved. And it's the same. I would do that in off premise. I love the idea of having a smaller size. So I'm interested in seeing, you know, if this expands now.

[00:51:43] Justin Kendall: I am too, as far as innovation. You know, we talk about style or new products, but when you have a package format that Kraft hasn't really played in, I think that is a very interesting space to be.

[00:51:59] Donn Bichsel: No, I mean, it really is. You're looking for that point of differentiation to talk to your retailer about as you're trying to get new shelf placements. This is such a great way to do it. I mean, especially if you're looking at providing a pack size that can double how many buying occasions you have on a shelf. I think the people that are going to win here are the people that do the math and make sure that they understand how many of those packages can fit on the shelf. how much price that shelf position can drive. I mean, I think we just saw today, Justin, that Goose Island made a big announcement about their pack size and what they're doing with their Bourbon County stout, and I welcome it. I think it's exciting news, and it'll be interesting to see, as I was mentioning before, if the entire industry now follows.

[00:52:42] Justin Kendall: Well, I appreciate the time. Thanks for doing this, Danelle, Matt, Don. Thank you.

[00:52:48] Donn Bichsel: Thank you.

[00:52:48] Justin Kendall: Thanks a lot.

[00:52:49] Donn Bichsel: Thanks, Justin.

[00:52:50] Justin Kendall: And that's our show for this week. Thanks to the team at Three Tier Beverages and CGA for joining us on the podcast this week. Thanks to Jess and Zoe for all their hard work. Thanks to our audio team for putting this all together. And thanks to all of you for listening. We'll be back next week.