[00:00:00] Justin Kendall: Next on the Brewbound podcast, we dig into the earlier scans with Tier Beverages. Hello, and welcome to the Brewbound podcast. I'm Justin Kendall.
[00:00:20] Jessica Infante: I'm Jessica Infante. And I'm Zoe Licata.
[00:00:23] Justin Kendall: And this week we have two guests from Three Tier Beverages. We'll be joined by Mary Mills and Stephanie Roatis. Actually, Jess and Zoe will be joined by them. Are you doing the full three up, three down?
[00:00:36] Jessica Infante: Yeah. Yep. Go and do that. full report that went live for insiders a couple weeks ago. So insiders have had those numbers for a while now, but we go through all the details there as well as just some added commentary from Steph and Mary, both familiar faces and voices to Rebound subscribers. It's a good chat. It's fun. We talk about everything from cards tea and coffee to hard seltzers, craft beer, small players, big players. Private label. Yes. Private label in the hard seltzer space, which is a really interesting combo. So definitely stay tuned for that.
[00:01:18] Justin Kendall: And also stay tuned for Jess and I hitting the road. We're going to be in Sacramento for the California Craft Brewers Association's Summit. We'll be on the floor for our first official Brewbound podcast on location event. Swing over, say, hey, record with us. We'll see you there.
[00:01:38] Mary Mills: Yeah, I'm excited. It's going to be a good time. So if you want to get on the recording schedule, we've got a few slots open. So drop us a note at podcast at Brewbound.com.
[00:01:47] Justin Kendall: We will see you there. I will actually be on the road early next week. So it'll probably be a Jess and Zoe podcast as I'll be at the Constellation Brands Gold Network Summit in Las Vegas. So look for coverage next week from that. But let's get into this week's news and strike looms at Anheuser-Busch. Uh, deadline is later this week. So. I don't know if I'm going out on a limb saying that there's a high likelihood that this strike will happen. Everything seems to indicate that they are far apart from getting a deal done by the March 1st deadline.
[00:02:29] Jessica Infante: Yeah, any indications of how negotiations have been going seem like they're still, even though this has been going on for a while, it seems like they're still in early stages. Oddly, they're running up just a few days now. And at least the posts by Teamsters on social media seem to indicate we're counting down, we're ready for this to happen because things aren't looking like they're going to be going any differently.
[00:02:57] Mary Mills: Yeah, and they've had practice picket lines at breweries around the country. I know definitely they have one in Newark, New Jersey at the AB Factory Brewery there. So we'll see. I mean, strikes are hot right now.
[00:03:11] Justin Kendall: And there is one that's ongoing at Molson Coors is Fort Worth, Texas brewery. And we mentioned this on last week's podcast, but we didn't know the full details until what was it? The Cagney event in New York. I can't even remember what Cagney stands for, but it's like a consumer analysts group of New York. Yeah.
[00:03:33] Mary Mills: You got it. There we go.
[00:03:35] Justin Kendall: And Gavin Hattersley, the CEO of Molson Coors and Tracy Joubert, the CFO presented. It was their first time at Cagney. And they talked a little bit about the strike at the end when one of the analysts asked them, you know, how things were going. And they said that they were actually producing at Fort Worth and that they're using current employees. And that's not something that we knew at the time. And that was just days after the strike began that weekend. So that was news to us. And I think it was maybe news to a lot of people that they were using current employees at that facility to run processes. And that strike is still ongoing. So if there was any thought that the teamsters aren't ready to strike at Anheuser-Busch, think again.
[00:04:26] Mary Mills: Yeah, and Justin, you reached out to the union on that and they gave you some really interesting bits about like how much this is costing Molson Coors to bring in other employees. What did they tell you that the company's covering?
[00:04:37] Justin Kendall: Local 997 Secretary-Treasurer Rick, and I apologize if I get his last name wrong, Medema, said that the costs being incurred at the brewery are greater than what the company execs are letting on. He said in a statement, Molson Coors is using current management employees to attempt to run processes. They transported management from other breweries, paying to put them up in hotels and giving them mill allowances. All this, including the downtime, has cost the company more money than compared to the package we had on the table to close the contract deal.
[00:05:16] Mary Mills: What they've done here is they're basically getting employees from other breweries to come in and scab for their coworkers elsewhere. I think, I mean, I don't know if I'm using the word scab right, but
[00:05:27] Jessica Infante: No, I think that's accurate.
[00:05:28] Mary Mills: I've seen it used by others.
[00:05:31] Jessica Infante: Yeah.
[00:05:31] Mary Mills: Yeah. Which just puts these guys in a really uncomfortable situation because like, what are you going to do? Say no? Yeah.
[00:05:38] Justin Kendall: This feels like an unforced error for Molson Coors. Their trends had been fairly well after the Bud Light conservative-led boycott, however we want to put that. Things seemed to be going well for their core brands. They were up double digits. And they're talking about how sticky these trends are. But then you end up with one of these strikes and you potentially alienating your workforce as well as a greater public who seems to be more open to union activity now, or the climate around unions is, I think, as you said, hot right now, Jess.
[00:06:20] Mary Mills: Yeah, I mean, the thing here that I think makes it a little tricky for consumers is that it's just one brewery, whereas they have many others. You know, do you just avoid all their products altogether? Do you try to figure out what came from where? I don't know that anybody's looking that deep into it, but the AB situation is different in that it's all their breweries in the US.
[00:06:40] Justin Kendall: It's 5,000 union members too, yeah. So we're talking 420 in Texas for Molson Coors versus 5,000 across all the breweries. And this Molson Coors facility is significant in that It's their hub for supplying the West Coast with products such as like Simply Spiked and Topo Chico Hard Seltzer. It's their variety packing facility. And I think that's the only one. And they had just invested $65 million in that facility.
[00:07:11] Mary Mills: Yeah, that's big. Well, the Teamsters have really stepped up their social media game, particularly in regard to the AB situation, and they're using some of, you know, the Bud brand's various iconic commercial milieus to spread the word about the impending strike. So check that out if you are interested and have an Instagram account.
[00:07:35] Justin Kendall: And we will see, March 1st is the deadline and it's an earnings week too for Anheuser-Busch. So lots of interesting nuggets likely to come out of that.
[00:07:45] Mary Mills: Lots of earnings this week. So I'm sure we'll report all of this out and we'll talk about it next week, but we've got AB earnings. We've got Boston Beer earnings and Monster earnings too.
[00:07:54] Justin Kendall: All of this you can read if you're a Brewbound insider. You can also check out our latest edition of Around With, our Q&A session that we do with companies across the country. The latest is Chicago's Moore's Brewing. We have a profile up on Storm Along Cider. There are stories on the Flying Fish auction and the sale of Lansing Brewing Company. All that and much more. So become an insider today. Check that out. But before we get to our featured interview, let's do another round of tabbing out. And speaking of insider, we have a couple of stories up on some super premium brands that are attempting to be challenger brands to Michelob Ultra. So we have a whole crop of these super premium, low calorie, low carb offerings cropping up. Are you buying another round of the opportunity finally being there for these brands to chip away at Michelob Ultra? Or are you tabbing out on these sort of falling by the wayside along with St. Archer Gold and 26.2 Brew, and I'm sure there are a whole lot of others.
[00:09:01] Mary Mills: I mean, I'm always buying another round on increased competition. I think that's important. But, you know, we've seen many people try to come for McUltra and it's, you know, to paraphrase The Wire, if you come at the king, you best not miss. And a lot of people have missed, like you just mentioned, you know, St. Archer Gold, 26.2 brew. But I think there's something here to the current launches that we're seeing Hero 95, is based in Boston. It is a startup from two former Boston beer execs. I wrote the story last week that you can read if you're a subscriber and their product is really good. I think they're focusing locally and they're tied into this insight that a lot of people who are into having these healthy active lifestyles are usually fundraising for causes and as a result doing various races and and bike rides and whatever. So they're helping people who are running the Boston Marathon for charity to raise money. So that I think that's a compelling component to their story. Justin, you talked to the team at eight. They also have like a healthy, active lifestyle component there backed by Troy Aikman, which... I'm sure it's compelling to some people, but Della Oro is doing it and doing really well. So I think maybe this is the time. I know the Bud Light boycotts didn't really affect McUltra too much, but overall the company is... not coming from the traditional place of power that they used to have. So maybe now is the time, you know, Todd Simon at Hero 95, his point was, you know, go to Whole Foods and look at the protein bar selection. There's so many choices, but when you want to look for a beard that fits in with healthy, active lifestyles, you don't have nearly as many choices. Maybe there's something there.
[00:10:43] Jessica Infante: I'm getting another round as a consumer of these products. Like Michelob Ultra is what I go to if I am getting something like a domestic beer. And so having some more crafty options that fit that flavor profile and those characteristics of a beer, I'm all for. I have a hard time seeing some of the smaller brands beginning any significant chunk of the national market. We've seen 8 has struggled to grow as much as it initially planned to. They just got into their second market. They did say at first they were going to be kind of slow and focused on Texas at first. But we had heard from them at one point that they were planning to add three more markets. And it doesn't seem like that's happening anytime soon. And their growth hasn't been as big or as fast as they initially expected. And that's a brand that has a celebrity name behind it. They have some things behind it that have been working for Tier Beverages alcohol brands, not just in beer. So yeah, I think when you have something like the money behind a Modelo Oro to put it out there and market it more, then you have more potential. I don't know what it means for some of these other smaller brands. And it might be kind of focusing on that more craft approach of, hey, let's just be a more locally focused brand. How can we convert some of the consumers that are just here in our smaller markets?
[00:12:11] Justin Kendall: It's a challenge for sure. At this point, this might be where the window is open more than it has been just because of those boycotts against Anheuser-Busch and whatever contagion that Michelob Ultra has or has not suffered. I mean, it still has 67% of the super premium market. I think that's what we reported. It's a little more than that, 67.2, but who cares about 0.2? But still, like, Heideggen Silver is out there. It's got a $100 million marketing budget. You've got the backing of Constellation Brands behind Oro and Premier. You've got Molson Coors reframing MGD64 as Miller Genuine Draft Light 64, sort of highlighting that 64 calorie proposition and you've got these smaller brands like eight and hero that are at least at the moment, regionally focused. And I think there is something to being able to chip away regionally. Although Boston beer tried to do that with 26.2 brew and it went in the gutter.
[00:13:24] Mary Mills: Yeah. Yeah. I mean, they actually launched 26 to nationally to start.
[00:13:29] Jessica Infante: Yeah. Well, even think about like Michelob Ultra, even their Super Bowl ad they recently had, we were kind of impressed by it, but it turned out to be like one of the most impressionable Super Bowl ads this year by a lot of analysts of like what actually had returns in sales. So Michelob Ultra is still as old as it is, still gaining consumers in that space. Their sales, I think, are technically down, but not anywhere near down where all the other AB brands have had. So you're going up against a very heavy hitter, even with this potentially slightly cracked open door, that is still finding ways and has a giant budget to speak to consumers. It's incredibly challenging.
[00:14:12] Mary Mills: Plus, the other thing is people who do strive to live a healthy, active lifestyle, Oftentimes that's maybe not always compatible with beer consumption.
[00:14:21] Justin Kendall: Yeah, I think that's one of the key points, too, is the reason athletic is doing so well.
[00:14:27] Jessica Infante: Yeah, right. Think about it. One of the first things you cut out if you're trying to be healthier is your alcohol consumption. It's hard to be marketing yourself as a quote unquote healthier product when you are also marketing a not good for your health product at the same time, like a baseline not healthy for you. look out potentially in a few months for the next issue of BevNET Magazine. We should have a story that's looking more into this, not just in the Michelob Ultra challengers, but also kind of the Bud Light challengers within the more craft and independent space. I'm working on a story for that now, but there are so many brands that have launched in the past year. And so why are people launching and why do they think they can grasp onto some of this will all be explored.
[00:15:21] Justin Kendall: Can't wait. The year of the lager. It's finally happening.
[00:15:26] Jessica Infante: Not the lager that we hoped for, but the lager we deserve.
[00:15:31] Justin Kendall: Yeah. From hard kombucha companies and hard seltzer companies and everyone in between.
[00:15:38] Jessica Infante: Social media influencers.
[00:15:41] Justin Kendall: Well, with that, let's get to our featured interview with Mary Mills and Stephanie Roatis from Three Tier Beverages.
[00:15:51] Mary Mills: Welcome back to Three Up, Three Down with Three Tier Beverages, our quarterly data dive with our friends at Three Tier Beverages. Of course, who else would that be with? Joining us today to discuss this quarter's findings are three-tier consultant Stephanie Roatis. Hey, Steph, how are you? Good. How are you guys? Oh, good. Thanks. Thanks for being here. And Mary Mills. Mary, how are you? It's been a while. Hi, guys. Good. It's good to be on with you. It's been a while. I know. Well, I'm so glad we're doing this. And, you know, as always, you put together an awesome report. You know, every quarter we do this, it's a look at three segments or products or aspects of the bevac industry that are on the up in the quarter and then three that are on the down. So. Steph, I think the thing to do here is just give you the keys and let you drive, so take it away.
[00:16:41] Stephanie Roatis: Yeah, we'll just talk to, you know, what was in the article, and we write these on a quarterly basis, the latest 13 weeks trailing, but you know, there's always larger trends to be spoken to across the entire 52 weeks of the latest year, so Stay tuned for when we launch one of those. But the first one was Cider's convenience growth. We've talked a lot in the previous installments about how Cider has been on the ups. There's a lot of Imperials growing with some of those regional players, and as well as how convenience is helping to grow the craft and the RTD segment. And so merging those two ideas together, or those two growth segments, Cider is growing in convenience in addition to craft and RTDs. So you know one quarter of cider sales happen in the convenience channel which in the latest quarter was actually the only channel that saw positive volume growth. If we look at food is down slightly drug is down slightly mass. but convenience is up 1.6% in dollars and 5.1% in volume. And then total points of distribution grew 4.3%. When we remove national and import cider brands, so I'm talking like Angry Orchard, Magners, some of those import brands, when we remove that and just look at regional players, volume growth and convenience actually grew 16.5% in the latest quarter. you know, a lot of the cider is made in the Pacific Division. So that's California, Oregon and Washington. Cider is the fastest growing segment across those three states after FMBs. So, you know, when we talk about full flavored segments, your hard teas, your imperial ciders, your hazy double, triple IPAs, cider is a really big hotspot for those segments, those flavors, particularly in the 19.2s and the 24 ounce cans. And then, lastly, on cider, outside of the Pacific Division, the East-South-Central Division, so that includes Alabama, Tennessee, Kentucky, and Missouri, cider also grew 6.5% in volume. Nine of their top 10 brands grew. So, you know, we're seeing potential bubbling of cider outside of just the traditional Pacific sales.
[00:18:55] Jessica Infante: Mary, you talked a lot about cider recently at CiderCon too, and you dove into, you know, cider like outpaced beer growth too, like overall in 2023. It's a hot segment. Yeah. And it's impressive when you find out both of that presentation stuff just now, you know, taking out some of those national brands, those regional brands are really driving a lot of that growth. And they're about 55% of the segment now. That's right. Yeah. Yeah.
[00:19:21] Zoe Licata: No, I think it's a great point, Zoe. And I think oftentimes with convenience, especially for a segment like cider, that's still growing, you see more of those national brands that are driving convenience growth. So I think it's really cool that When you strip those out, you're actually seeing the same thing that we're seeing on a more national level, that it's really those regional players that are driving the growth, which is great.
[00:19:43] Mary Mills: Has Cedar had a moment like this before, or are we seeing something for the first time?
[00:19:49] Zoe Licata: This is dating how long I've been in this industry, but I remember back in gosh, what was that 2011 or 12 probably was kind of when cider was first making its big wave and people were really excited about it. A lot of people were looking at trends in the UK, like this could be huge. And then I think it just kind of leveled out a little bit and people almost like forgot about it. And so it's really cool to see it having this kind of resurgence and, you know, people looking at it as, you know, really authentic space. I think it has a cool story. Mary Givers talked a lot about this. and why Whole Foods has been so supportive of it, because it's a really natural product when you think about it.
[00:20:34] Mary Mills: For sure. Well, let's move on to the next point. What's your second pick for three up this quarter?
[00:20:40] Zoe Licata: Yeah, I'll jump in on this one. So not surprisingly that, you know, when you look at the time period that this includes, which is, as Steph mentioned, the 13 weeks that go through January 27th, you know, so inclusive of that dry January time period. So non-alcohol beer in that time period was up 29%. versus a year ago. So still comparing to that dry January and time period leading up to it, the previous years is still growing significantly. What's interesting to notice is that craft, while still the leading segment within non-alcohol beer, pulling in a million cases a quarter, which is incredible, imports are a close second and actually out of the top 10 brands, two are craft, two are domestic, but the rest are actually imports. So I thought that was interesting to see. We're also seeing non-alc wine seeing growth of 17% in the last quarter, as well as non-alc spirits up 95%. The non-alc spirit growth, kind of similar to alc spirits, a lot of that is coming from cocktails. So on an NA cocktails make up 73% of that NA spirits volume. which is interesting to see too. I remember when those first came out thinking like, is this gonna work? Like, do people see the, you know, but I think, you know, it's kind of that mocktail that you see in the on-premise brought to the off-premise and obviously it's doing really well. But while spirits and wine both are, you know, gaining a lot of popularity, it's still very small in comparison to beer, which still makes up, I think it's like over 80% of the dollars in the NA space. So yeah, non-alcohol is still on fire.
[00:22:19] Mary Mills: So that makes sense, like for dry January, but I know people also like occasionally to observe something called sober October. Do we see a boost like this in the fall or is this non-ALK spike, you know, particular to January?
[00:22:34] Zoe Licata: I think we've really been seeing this non-outgrowth pretty consistently. So to your point, I think we do see a little bit of elevations in those kind of themed months, if you will, but it's really been on a strong trajectory for the last couple of years and growing beyond, I think, what people originally expected. But to your point, I think even more so than the participation in dry January or sober October is, I think, just new occasions for people on a regular basis. So I know for myself, I'll oftentimes have an NA offering at the end of a night or, you know, something like that, where it's not really even a substitution necessarily, but it's just a different occasion or, you know, maybe it's a lunchtime offering or, you know, something like that. So I think it's really found a way people are starting to discover more occasions and times to incorporate it into their choices. So.
[00:23:29] Stephanie Roatis: Yeah, I like that. The folks are rent Nielsen, Kaylee and John from thought leadership. They call it the fourth quarter beer. So, you know, that's like the most frequent occasion we can think of is just maybe you've had your one or two beers, but there's one quarter left in the game. 20 minutes left to go. You want a beverage. You feel like spending the extra couple bucks instead of getting a diet Coke. you go for the non-alcohol option. I think the occasions for that have increased. Anecdotally though, non-alcohol wine and then non-alcohol spirits outside of cocktail RTDs, I'm still only seeing those at your elevated, your bodegas, your Foxtrots of the world, some of the independent liquor stores. I'm interested to see how those take on in the on-premise space because we see non-alcoholic cocktails in the on-premise space still being made with liqueurs and sodas. I haven't seen as much of the non-alcoholic spirits or non-alcoholic wine actually be used as a base for those on-premise NA options. I'm interested to see if I'm going to see more recess or hella bitters mixers at bars in the next year.
[00:24:39] Mary Mills: Yeah, that's a great point. I mean, I, having just been with child and unable to imbibe, I was looking at menus for mocktails wherever I could. And, and yeah, most of them are, they're made like a cocktail, but with no alcohol at all. So there's not even, you know, like the NA spirits in play. So yeah, really interesting to see if that happens. All right, well, let's move on to the third thing that was up in this quarter.
[00:25:06] Stephanie Roatis: Yes, I just labeled it. Don't forget the little guys. I have been hearing so much about how a lot of craft is being driven by the big players. Your Sierra Nevadas and your new Belgians of the world and volume wise. Yes, those breweries and those brand extensions. Your juice force Voodoo Rangers are still driving a lot of that absolute volume, but there is a lot of growth and there is something to be said about like recognition to that style. They're keeping those styles top of minds for a lot of local breweries. people are picking up hazy IPAs and hazy Imperials, hazy triples, whatever it is, maybe just because they tried. Voodoo Ranger for the first time. So the top four fastest growing craft styles by absolute volume were hazy IPAs up 76%, Imperial IPAs up 5%, hop water was up 61%, and then light lagers were up 45%. So really opposite ends of the spectrum, like your heaviest of beers, and then hop water is non-alcoholic, and light lager is obviously a light lager. And so all four of those styles are dominated by one or two large craft brands driving anywhere from 50% to 80% of the volume for that style. But when we cancel out the noise of some of those large brands, there's still a lot of great regional growth. So for example, in hazy imperial IPAs, New Belgium makes up 85% of the volume, but seven of the next 10 brands grew anywhere between 6% and 100% versus a year ago. So we're really seeing that entire segment, that entire style be elevated. And then next, you know, 20 new brands entered this style in the last year and helped grow overall volume. And even when we remove New Belgium from the equation, Hey, the Imperials grew 18%. So similar to what we talk about when we talk about cider. Within Imperial IPAs, 14 of the top 20 brands grew volume and 30 new brands entered the category. And that's taking out the really small players I filtered to, you know, brands bringing in at least 10k per quarter. For non-alcoholic hop water style, just three brands in the top 20 declined in volume. Hop water is a pretty small style. It's just bringing in about 5.9 mil quarterly, but 16 new brands did enter the category. And six of the 10 Hop Water breweries exclusively produced non-alcohol beer. So Hop Water, for example, Hop WTR, they're a brewery that just makes the Hop Water style, like that is their bread and butter. And then the remaining brands were existing breweries that launched non-alcoholine extensions. Lastly, the top light lager brewery saw its style grow 148%, but two new brands broke the top 10 in their launch year. So this is very much a developing category, but it's still the fifth fastest growing style by absolute volume. So just to speak to like your hazy imperial IPAs of the world are driving a ton of volume, but then there's still new styles bringing in a ton of new brands and volume.
[00:28:15] Jessica Infante: Yeah, that's huge. Because I feel like we get warned a lot in the data that, hey, you know, don't just read at first these big growth numbers and, you know, realize that there are just a couple of players driving a lot of that growth. But to see that there's still small players that are able to find space and carve out space is big. I know, particularly with light loggers and hop waters. We've seen so many new brands just pop up in the past year, like light logger brands just being like, yeah, we're going to make this one craft light logger or with the hop waters to just this is what we're going to focus on. So it's going to be really interesting to see how those continue and if they can keep that growth going as this kind of sole focused brand style. Yeah, definitely.
[00:28:59] Zoe Licata: it's so interesting to see the dichotomy. And I feel like it's been kind of like this for a little while now, but of like the double, triple IPA and then the other end of the spectrum of light loggers and hot water. And it makes sense when you think about like, again, it's like occasion based, right? So it's, I'm either like want the full flavor, full effect, or I'm, you know, at the end of the evening or just wanting something lighter. But yeah, I love the light space, you know, whether it's, low ABV, the lower calorie, but it's just nice to have options outside of kind of the traditional domestic light. Garage beer is one that's here in Ohio that's great and it's just doing so well. You see it everywhere because we just haven't had that many light options in the craft space before, so it's great to see.
[00:29:48] Jessica Infante: Yeah. Alright, let's transition to the three down of this installment. And the first one is, I feel like a familiar face to the three down section. But you could, Steph, you kind of spinned it positive in here too. So you guys take it away. What's our first three down of 2024.
[00:30:10] Stephanie Roatis: Yes. Continued seltzer, hard seltzer rationalization is happening. Like Zoe said, I tried to spin it in a positive way, but also keeping in mind like seltzer blew up so quickly, so fast, particularly during 2019, 2020. Some of these declines are still, volume is still up a ton, but seltzer quarterly is down 13% in convenience, 15% in food, 14% in liquor, and 24% in drug. If we exclude White Claw, which currently makes up about 60% of off-premise volume still, cases are down even further. So White Claw has maintained the trends a little bit better. If we take out White Claw, everyone else is declining with the exception of a couple brands. So, you know, when we look at those brands that are growing, so there's still roughly 100 brands that are scanning over $20,000 per quarter, meaning there's a lot of regional players that people are still picking up, still scanning, still has potential for growth. And then one third of top 100 seltzer brands actually did grow volume. The largest volume growing brands, and this was similar to the last installment, were Happy Dad, which was up 120-ish thousand cases. White Claw was actually up 24,000 cases. Spindrift was up about 7,000 cases. The fourth one was actually private label seltzer. So private label is now the 19th highest selling seltzer by volume. It's up 40,000 cases. So, you know, private label, meaning the retailer itself is launching hard alcohol using their existing seltzer brands. So I don't know, like I don't think Kroger has their own private label, but like imagine Kroger Cola selling seltzer, right? So I think consumers might be gravitating towards that and growing that brand offering for a couple of reasons. They're either trading down to curb spending or they still want to offer a seltzer option to friends, to family, to themselves, but they're trying to be mindful of spending. Second one is they no longer perceive hard seltzer brands as a premium. They don't want to pay the white claw prices, or they just buy and prefer retailers, non-alcoholic seltzer brands already. And so they've now picked up that alcoholic option. So when we talk about case price, private labels, average case price is $12 less than the next most economic offering. So, you know, people are picking that up because there's a huge price cut on it. And that's appealing or appetizing to the consumers who are still purchasing seltzer.
[00:32:50] Mary Mills: And you did notice this summer that Kirkland hard seltzer was very popular with my brother's friends.
[00:32:55] Stephanie Roatis: Yes. There was a huge surge this summer between, I guess, my friends, but also TikTok. It was a huge trend to throw like Costco themed parties, like birthday parties where you just buy everything from Costco. And I was just seeing Kirkland seltzer everywhere, like for every event.
[00:33:11] Mary Mills: That's so funny. I know Costco, we became members recently and I've never felt like more of an adult. Like I feel like this is when you reveal grown up.
[00:33:19] Zoe Licata: Graduated into a new level. Yeah.
[00:33:21] Mary Mills: Yeah. Like it's not when you buy a condo or like pay off your car. It's when you get the Costco membership card of your own. They were making like Costco branded sweatshirts.
[00:33:33] Jessica Infante: That like, oh yeah, the bananas for the like full like sweatsuit, Costco branded sweatsuit is very popular with. Yes. Yes.
[00:33:43] Stephanie Roatis: Peyton on our team actually owns a Kirkland signature sweatshirt and there you go. Yeah. She's got style. She's got drip. It's really cool.
[00:33:54] Jessica Infante: I'm going to root for Target's seltzer brand to come out with an alcoholic version. That isn't like the Good & Gather brand or something. That seltzer, the non-alcoholic seltzer is tasty. Yeah, so if they brought that in as an alcoholic version, I would definitely be into that.
[00:34:10] Mary Mills: Target launched a private label, Hard Seltzer, in like the heyday of Seltzer. Like I want to say it was like spring going into summer 2020. And it had like a real name and everything. It was not Good & Gather. It was like a brand name of Target's, which I find interesting because like, it's one thing to be like Kirkland brand or, you know, Target, Good & Gather brand. But when the store themselves is making like a brand name with like brand art, like, At what point do suppliers say like, you know, it's complicated because it's like, you're the retailer and you're selling my product, but now you're also selling your own product. And now I'm competing with you for space on your own shelves. Like those must be some really interesting conversations that have to happen.
[00:34:55] Zoe Licata: For sure.
[00:34:56] Mary Mills: Absolutely.
[00:34:57] Zoe Licata: And I would assume there's some sort of partnership with somebody, right? Like they probably are working with the supplier to make the product. So that supplier is happy about it, but the other one, probably not.
[00:35:08] Jessica Infante: Yeah. All right, the second down related to the F&B space, what do we got going on there?
[00:35:15] Zoe Licata: Yeah, so our second down, we're looking at some of those like sub segments within F&B. So, you know, we saw a lot of these hard segments emerging and really thriving during the pandemic. But we've lately just started to see some of them kind of leveling out a lot of them declining brands, just kind of leaving the space altogether. So these are categories like hard kombucha, hard coffee, hard still water. So there's really still a few strong brands that are performing well in these segments. But overall, you know, this space has really started to decline. We've really seen a lot of that volume kind of moving into, you know, you kind of have seen hard tea and hard lemonade emerge as kind of the dominant players in that space. A lot of that driven by national players that have been around for a long time. And it's kind of amazing when you think about like Twisted Tea as a brand, how they've sustained. I mean, in my memory, I don't ever recall them having a declining year. I mean, they've just continued to see growth year after year. So, you know, you do have some big national players driving that, but I think because of the success that those segments have seen, we're starting to see a lot of newer players moving in there as well. So you even have brands that are in, were kind of started in those other segments, moving over. Brands like Giant that started in kombucha have now kind of shifted their focus to hard tea. So I think that's where the good of this down really exists is, you know, the hard segments that have emerged as kind of the dominant players in the space.
[00:36:51] Jessica Infante: Yeah, F&Bs we have seen the past couple of years, they've been one of the few beer segments to really record growth. So it's been like looking at it super positive, but it's interesting to dive deeper into it and be like, well, it's not everyone in that space.
[00:37:06] Zoe Licata: Yeah, exactly. Yeah. The sort of traditional F&Bs and then the hard lemonades and teas, for whatever reason, those are the ones rising to the top now.
[00:37:16] Stephanie Roatis: Zoe and Jess, have you guys tried the Dunkin' Spiked yet?
[00:37:22] Jessica Infante: yes we have feelings i have feelings i just hasn't had it yet what are your feelings yeah i tried it it wasn't at all what i expected it to be as an avid duncan drinker they're just extremely sweet there's a market for that there's definitely a market i think they have a much better shot with the hard teas, but they just flavor-wise and that market as well, they could potentially get in there. And they have the 19.2s for those as well. I think that's great. But yeah, the hard coffees are tough for me. They were pretty tough. Yeah. Have you tried the hard tea? I had the slightly sweet tea. I liked that one. It had a very similar taste to Twisted, but less sweet, and it had more of the bitterness of black tea. So I kind of liked that one. I'm going to do the coffee.
[00:38:19] Mary Mills: Those are rough. To me, it makes sense. Espresso martinis, super popular. So I don't really get how no one has cracked this hard coffee thing yet.
[00:38:30] Zoe Licata: I know. I think it must be harder to make the right balance. It must be. I really liked the Pabst hard coffee. I liked that. Yeah. I honestly think they were almost before their time with it. Like when it came out, people weren't ready for hard coffee or what have you. Cause yeah, I thought it was good too. And it just, yeah. it kind of peaked too soon.
[00:38:53] Jessica Infante: Yeah, I have noticed a lot at our office, we've had a lot of canned espresso martinis coming in, all in the little tiny cans. And I feel like someone needs to be able to find out how to have like the quality, like those aren't bad, they're pretty tasty, to find like the quality of those, but in a malt based setting or in a, like the usual package that you're used to with these kinds of beverages. Someone has to figure it out.
[00:39:20] Stephanie Roatis: That'll be all about it. I feel like for how small of a segment it is, I've mentioned hard coffee across several of these three up, three down articles. I think it's just very punk rock and I'm rooting for it. I really want hard tea to work, or hard coffee, I'm sorry. Rooting for it. Every time a new brand launches, I'm like, sure, let's see if they pull it off. Why not?
[00:39:45] Mary Mills: I don't know that hard tea needs your well wishes. Yeah.
[00:39:50] Jessica Infante: Yeah. Maybe we need to see the way of like, you know, all of the non-ALC, CBG brands like Coke and Pepsi are getting into Bev-Alc. Maybe we need to see some of the, maybe more like craft coffee brands try to take their stab Tier Beverages alcohol. Yeah. See if they can do it.
[00:40:06] Stephanie Roatis: Yeah. All right. The final down, what do we got? Pretty straightforward. Table wine is down across the board, but there's a couple of bright spots in there. So table wine volume is down 4% in the latest quarter, 5% in the last year versus priors. And volume dropped across all of the major off-premise channels. So food, liquor, convenience, drug. 19 of the top 20 wine varieties lost volume down from 1.3 percent in Pinot Grigio to 12.5 percent or 13 percent for Shiraz. I think a lot of that is the decline in the off-premise and people consuming wine again, perhaps more frequently in the on-premise. But then across 750 milliliter bottles, those priced between 19 and $25 saw volume grow actually 4.5 percent. And that's primarily coming from Mayomi, Bonanza, Austin, Dow, and Three. Those are the big vineyards driving that growth. I see them in every store I go to. The price point is not a value price point, but it's not unobtainable. Versus value wines, wines below $19 dropped a collective 6.5%. So I think when we talk about moderation and better for you, consumers growing that 19 to $25 range, maybe they're consuming less frequently, but they're splurging on a semi nicer bottle than they were before. I think that is in line with what we're seeing across beer and FMB and cocktail RTDs as well.
[00:41:44] Jessica Infante: Is there anything that the consumer who was previously going for these table wines, is there a space that that decline leaves that other segments, potentially beer, could fill? What is that space?
[00:42:02] Stephanie Roatis: You know, I think if value wine is declining or continues to decline, I think wine RTDs may have their chance to shine. Some of the spritzers are just smaller pack sizes, your 375s or like four pack mini bottles. So I think within wine, you know, wine RTDs still have some room to grow. And then, you know, I think that there is some overlap between cider and wine. So for some of those lighter wines that may be seeing a decline, Maybe people are picking up cider in the convenience channel instead of a bottle of wine, like a dry cider. So I think there's a little bit of overlap there. But yeah, I definitely see like Miami, Bonanza, Austin and Dow continuing to grow and getting more shelf space.
[00:42:53] Zoe Licata: Yeah, I think wine, we've talked about this before. I think stuff, but wine has a generational issue as well that yes, you know, I know they're working very hard to address, but younger consumers just aren't drinking wine to the same extent that. Gen X and boomers are. So to your point, smaller pack sizes, the wine RTD is like there's, there's a lot that they'll probably pivot to, to, you know, try to bring in those younger consumers. But yeah, for now, I think beer is benefiting from that probably.
[00:43:29] Stephanie Roatis: Yeah. And also a lot of that coming from the steady shift and then the acceleration during COVID of it being easier to carry aluminum pack sizes and everything shifting towards aluminum. I think that just was the first thing that a lot of younger drinkers saw when they go into a grocery store or a convenience store rather than the wine aisle, and that's just where they've stayed based on trends.
[00:43:55] Mary Mills: because there is canned wine. It's interesting to me that wine has not been able to make the leap into cans that like say craft beer has. I mean, I know that takes time. So maybe we'll see that happen.
[00:44:08] Zoe Licata: Yeah. I think there's a perception of like quality with wine that they struggle with. And I don't know that it's, I think it's a perception. I don't think that there's actually any downside or quality impact of having it in aluminum, but I think, you know, wine for so long has had more of this elevated thing that, you know, doesn't really align with cans. So I think it's been, yeah, I agree. I think there's more opportunity there, but I think it's, you know, just a slower move than we saw for craft that pivoted pretty quickly.
[00:44:42] Mary Mills: Yeah, I know when I used to work at Sam Adams and we launched Beer and Cans for the first time in 2013, for years, comments on social posts about cans were like irate boomers, I assume. Being like, why is beer in a can? Your beer's too good. And it's like, I mean, you can't reason with people who are unreasonable. Those fears are very unfounded.
[00:45:08] Stephanie Roatis: I think canned wine needs it's like boxed wine is better tagline campaign and an educational moment for younger consumers. Cause like I still think like boxed wine is better. Okay. Like I know it's the same quality, but we don't have that exact translation for canned wine. That could be part of it.
[00:45:30] Mary Mills: Great. I mean, anything surprised you guys when you put together this quarter's report? Anything jump out as being particularly weird?
[00:45:40] Stephanie Roatis: I was really surprised to see Private Label is the second fastest growing seltzer brand, like faster than White Claw. It's Happy Dad and then it's Private Label. So, you know, we can't tease out Private Label by retailers. I assume most of it is Kirkland. But I am really interested to see like what other grocery stores launched their own private label seltzer. I will certainly try some.
[00:46:04] Zoe Licata: Yeah, that one was surprising for sure. I think for me, maybe even not a surprise, but just glad to see the craft call out you did stuff of the smaller brands, because I think we just focus so much on the growth coming from the bigger guys in craft. And we get questions often from clients, because there are some in the small to midsize space that have been struggling recently. And so I think their perception is like, is everybody feeling this? Like, you know, especially like the post COVID come down, it's been, you know, tougher trends for crafts, but there are some really good bright spots. So I'm glad we caught that.
[00:46:43] Mary Mills: Awesome. Well, this was a fantastic report. Can't thank you both enough for joining us and for all the hard work you do, wading through all the numbers. Couldn't be me, so thank goodness it's you two. And yeah, three up, three down is just one of the many perks you get for being a Brewbound Insider. And, you know, much more to check out there, but we will do this again in 13 weeks. Yes, we will. Sounds good. Thanks, guys. Oh, thank you. So thank you to Steph and Mary for joining us. Thank you, Zoe, for being an excellent co-host on this interview adventure. Thank you to our awesome audio visual team that makes all of this palatable. And if you enjoyed this episode of the Brewbound podcast, there will be another one next week. Look at that. Thanks, and we'll see you soon.
