Brewbound Podcast: A July 4 Darty Report, Plus TikTok Adds Bev-Alc Ads

[00:00:00] Justin Kendall: Next on The Brewbound Podcast, a 4th of July Darty Report. Welcome to The Brewbound Podcast. I'm Justin Kendall.

[00:00:18] Jessica Infante: I'm Jessica Infante. And I'm Zoe Licata.

[00:00:21] Justin Kendall: And this week, we're going to talk a lot about the 4th of July. We're going to talk about investments. We're going to talk about TikTok and a few other things. But first I got to know Zoe and Jess, how did your 4th of July's go? And Zoe, I know you did a lot of research, so we're going to dig all into that, but how did it go everyone?

[00:00:42] Zoe Licata: Lovely. It was a good time. It was very convenient to have Fourth of July on Happy Thursday and no brew pound Thursday, Friday to just kind of actually chill out for a little bit. That two day holiday is pretty clutch. Yeah.

[00:01:00] Justin Kendall: Which turns into a four day weekend, which is very nice. I approve of all Thursday holidays that lead to a Friday day off.

[00:01:10] Jessica Infante: Yeah. I mean, I think we could petition to keep this going.

[00:01:13] Justin Kendall: I think we should, although I, I absolutely hated the 4th of July. So that's just a me problem because I have a two and a half year old who every boom was like running around. Like we are under attack. Last year was way worse because it was nine days of fireworks and they've shortened it to three days because I don't think we live in a backwater. We sort of live in a backwater, but we don't live in a backwater, you know, anyway.

[00:01:42] Jessica Infante: So I have a question. Do you have baby noise canceling headphones?

[00:01:46] Justin Kendall: We don't. And she would never wear them. Well, actually, we do have headphones for her, but she would not wear them. Hmm. Yeah.

[00:01:54] Zoe Licata: I'm also not a big fan of firework booms. I was the kid that would like go like hang out in their grandparents room while everyone was doing fireworks in the backyard. I think you're either a fireworks person or you're not a fireworks person.

[00:02:11] Justin Kendall: It was mostly the like, it's not even dark. Yeah. And people are off big booms. And that's what's confusing. And then when she got to see the fireworks at night, it was a different story. That was cool. She's running around excited. But Now when it's happening during the daytime and it's just like loud booms, loud booms, she's not a fan of like weird noises anyway. So it becomes a challenge of calming her down on on those sort of things. And then even after the fourth, you think it's over because You have new rules in place, but everybody's lighting off their extra fireworks. And I swear somebody set off like a giant explosion on I think it was the fifth or sixth that just like rocked everybody in the neighborhood and left a mushroom cloud above us. So terrifying. It was not great for everybody.

[00:03:12] Jessica Infante: I think I'm with Sophie on this. Daytime still light out booms. No need. What's the point? Why are you wasting money? But I am a big fan of nighttime fireworks within reason, you know, like I think we keep it to two days and that's it. Yeah.

[00:03:27] Zoe Licata: You know, have some limits. I still heard some. I don't know if it was last night or Sunday night, like they keep going for so long. And so you never know when it's going to happen.

[00:03:39] Justin Kendall: Yeah.

[00:03:40] Zoe Licata: Especially living in a city. I'm like, was it a firework? I think it was, but I'm not positive.

[00:03:45] Justin Kendall: Fair. Yeah. It's just pure terror for small children anyway. Yeah. Let's talk a little bit about the shore. How are things going there? I know that they have enough surfside, or at least they thought they did at one time.

[00:04:00] Jessica Infante: Thank you for asking about my favorite topic. I am at the Jersey Shore for the next month or so. And we had voluminous, extensive, wildly unregulated fireworks on the 4th of July, which was fun to watch. But yeah, I kind of do like my like, lady on the street investigative work about the liquor store around the corner from our house, which I, you know, take morning walks pretty frequently. So I'm usually around when like Shorepoint is making their delivery. That's the local Molson Coors wholesaler. But they have a big sign out front that they put pretty funny kind of cheeky things on. And I noticed on me and Coors walk on Monday that they said, like, we think we have enough Surfside, which. Brewbound listeners know is the beachy RTD offering from Philly-based Stateside Vodka. They are a Brewbound rising star from last year, just absolutely crushing the game. So when I went by on Wednesday to actually purchase some things, they had changed the sign to say, confirmed, we have enough Surfside. And inside the store, I can tell you they definitely had enough Surfside. stacks and stacks and stacks of like at least like 10 layers high in some points of I think everything in the Surfside portfolio. So I picked up a variety pack, a green tea and a half and half and some Zero Gravity Little Wolf Pale Ale. I had to walk the bike home because I was trying to put too much heavy stuff in The Beast. And yeah, I don't even really know how many of those surf sides I personally got to drink because they were just consumed by all of our house guests, which is the point. I'm hospitable.

[00:05:43] Justin Kendall: First, you need a wagon to pull your bounty. And second, of the ones you got to try, what was your favorite?

[00:05:53] Jessica Infante: I gotta say, I'm a big fan of the peach tea. Peach tea and half and half. Did I tell you guys about me being a delicate flower? Yeah. So the green tea is new. It's good. It's really good. It tastes like green tea, but I am a little baby and, you know, tea on an empty tummy doesn't always agree with me. And I think I was halfway through my second of the green tea on the beach the other day. And I was like, oh, I don't feel good. And I just want to be clear that this is an excellent indication that they're using real green tea in the product. you know it's good when you should have a snack. But yeah, green tea, I mean, super popular with everybody. I didn't do any of the research that you did, Zoe, so tell us how that was going.

[00:06:46] Zoe Licata: Yeah, unlike the Jersey Shore, there were some mixed opinions on Surfside, which was one of many things that I brought to two events that I went to over the long weekend filled with mainly like mid-20 year olds. I did a comparison Sun Cruiser which are Boston Beer's vodka tea line with Surfside and then also had people try The Beast Unleashed flavors from Monster and then some of the Happy Thursday from Molson Coors. Bought some What are those things called? Nutcrackers, nectar, something as well, but those did not make it into people were already too far gone to get any good research out of those. So that will be our next gathering. We'll get some knowledge on what those Gatorade looking like beverages are like, but. Yeah, most people were really into the Suncruisers and I think it might be a little bit of like local bias almost because Sun Cruiser just like everywhere around here. Some people had already tried it before, they were familiar with it, but they also really liked that it was sweeter than the Surfside's were. Like they wanted that happy medium almost between a Twisted Tea, which is super sweet and Surfside, which is way more like this is a tea. It's not like a sugary sweetened tea. A lot of people were saying Surfside is like a Dunk's unsweetened iced tea was the like main comparison. I could see it. I could see it. They did say they could probably drink more Surfsides if they wanted to because they're less sweet, but they're reaching for Suncruisers. The Monsters were a big hit just in like, what is this beverage? They had no idea what this was. People kept asking me, when do these come out? And I'm like, they've been out. They are out there. Maybe Monster needs to do some more marketing, at least in Boston. People were big fans of either the original, the Mean Green flavor, or the white flavor. The other two, not so much. There's a peach and a berry. The white one has like a textured thing going on in the can. People are a big fan of that, like having some sort of like tactileness to a can, which was interesting. I don't know how much that costs to get a textured can. Another person called it DUI shit. Wow. So I don't think that bodes well for Monster. Also, a lot of people were really confused, like asked me several times, Is this a Four Loko? What's the caffeine content? I thought this was legit a, which makes sense, a boozy version of a Monster. And I'd be like, no, there's no caffeine, but it's based on the flavor. Only one of the people that I gave it to of the 15 plus said they would definitely buy it again, but they were all kind of glad to have tried it. So mixed feelings all around on everything. Happy Refreshers also makes reviews. I think it was more if you really like no bubbles, fruity taste. My friend Ally, who I've talked about on this a couple of times, is really anti-carbonation, and she really liked them, especially the strawberry flavor. Other people were like, what is this? I don't understand what a refresher is. What am I drinking? A fair question, which we've talked about, and I think we're still going to explore what the hell a refresher is. Yeah, that's what the youth are saying.

[00:10:16] Justin Kendall: Did you ice the refreshers?

[00:10:18] Zoe Licata: I didn't like pour over ice. So they were all like all cold from being in the coolers. I feel like it would benefit from being in a glass. That's how I felt. They weren't bad flavors. It wasn't super sweet. But yeah, it does kind of feel like you're drinking a flat beverage. I almost and I'm kind of anti carbonation a lot of the time, but I kind of craved with those flavors a little bit of bubbles. I could see it. So that's what the youth are saying. the youth, the legal drinking age youth, to be clear. The legal drinking age youth, yeah. The getting closer and closer to 30 year old youth are saying about some of the kind of newer innovations. But yeah, Sun Cruiser really, it's like, I feel like I can't escape it. It's everywhere.

[00:11:02] Jessica Infante: It's everywhere down here too. Like Boston Beer is making a very obvious push in heavy surf side markets, which makes sense. But you know, like this liquor store that I creep on, What you didn't see in that picture I took of their sign is that they've got like a Sun Cruiser cling covering one of the entrance doors. I really should have looked at what the Sun Cruiser situation was inside. I was just so it was July 3rd and I was just trying to get in and get out and, you know, hobble my mom's poor bike back to the house.

[00:11:33] Zoe Licata: I should note that yes, I brought all of these things for people to try. Most people throughout the entire weekend were drinking high nudes. That was still the number one thing. I also talked to a friend who works as like a manager to the really popular downtown bars here and he said that's all people are drinking is high nudes as well. They have a bunch of beers on draft. These bars are frequented by a lot of the younger legal drinking age folks here, a lot of college students, and they almost exclusively are selling High Noon now.

[00:12:05] Jessica Infante: So at the Darties, the High Noon, were you seeing primarily like the original vodka seltzer or just tequila and tea get thrown in the mix too?

[00:12:15] Zoe Licata: I didn't see any tequilas, primarily the originals, and then a couple folks did bring The Beast. I like The Beast. I'm a fan of The Beast, but yeah, it's still mainly the originals. And there's all the different variety packs too. Like it was, everyone kind of has their go-to pack because it has one or two flavors that they're really into. So I think I saw almost every single one there.

[00:12:38] Justin Kendall: Wow. So good times were had then.

[00:12:42] Zoe Licata: Good times were had. There was no mishaps. A lot of bug bites. That was the main drawback of the weekend. I think that's unfortunate.

[00:12:52] Justin Kendall: Yeah, I'll be curious to see the sales data when we finally get that in to get a good read on what Sun Cruiser doing and I don't know if it's taken a chunk out of any of the Surfside, but I mean, Surfside's a totally different story at this point because it went from a Northeastern product to essentially national at this point, right?

[00:13:14] Zoe Licata: Yeah, they're just about there. That map you found Jess, that they posted.

[00:13:19] Jessica Infante: Yeah, that's on their Instagram account. They've got this fun giphy map that shows all their expansion markets and they're just about nationwide. Zoe, I know you mentioned that people felt some like hometown affinity Sun Cruiser. Did they know it was a Boston Beer product or did you have to tell them?

[00:13:35] Zoe Licata: No, I had to tell them. I did almost like a mini lesson with some folks about who owns what, because there's a lot of confusion about who makes what products. Even like, oh, Coors Light and Miller Light are the same company. What? They had no idea it was Boston Beer. Some also still don't really know that truly is Boston Beer. No one knew any of the ownership. They're just standalone brands to them.

[00:14:02] Jessica Infante: Yeah, that's my fun party trick too. And sometimes we get into the three tier system and that's when I think people wish I would leave.

[00:14:10] Justin Kendall: Well, it's because you bring a chalkboard with you and you start pointing to it. That's where things go off the rails.

[00:14:17] Jessica Infante: Yeah.

[00:14:18] Zoe Licata: This is the only reason that Bud Light Seltzer existed. Yeah. You bring a pop quiz for everyone at the end to make sure they were listening.

[00:14:26] Justin Kendall: Jess starts unfolding her low chart of ownership of different brands and it's just completely off the rails and the darty ends.

[00:14:36] Jessica Infante: Everybody falls asleep. So did you see any like traditional hard seltzer around?

[00:14:42] Zoe Licata: No. No.

[00:14:45] Justin Kendall: No claws?

[00:14:47] Zoe Licata: No claws. There was a, what was the brand? It was like Breezy or something. Selly, also a vodka-based seltzer. My friend's sister, who was hosting the Saturday party, she was like, yeah, I went to the store and there was a rep there and he had me sample it. I liked it, so they brought it home. But I guess it's a more locally-based vodka seltzer brand.

[00:15:12] Justin Kendall: Look at that.

[00:15:13] Zoe Licata: Well, there you go, people. Liquid to lips. Super important. It works. They made a sale.

[00:15:21] Justin Kendall: Well, let's get into some of the news, and I think that we have a topic that may play well into introducing some of these youth to brands, and that's a story you did, Jess, and that is the door is open for advertising from BevElk companies on TikTok.

[00:15:39] Jessica Infante: It sure is. And this is a recent development. It's a little bit complicated, so you might be scratching your head and thinking, I don't understand, and that's fair. But yeah, so TikTok is now accepting ads from beverage alcohol brands in the United States. This is new. This is because, you know, we've covered this extensively in The Beast, in order for alcohol brands to advertise, you know, use paid advertisements, not just have a profile on social media platforms. The users of those social media platforms and networks must be, at least right now, this number changes, but right now the number is 73.8% age 21 or older, and that mimics, that mirrors the population of the United States. So it's just to make sure that the people who could be seeing your ads are by and large overwhelmingly going to be legally able to buy them. And this is something that trade groups kind of police themselves. It's a really complicated situation, but basically TikTok has said, yes, our users, 73.8% of them are now over the age of 21. This was confirmed by DISCUS, the Dispilled Spirits Council of the United States. who has a really great resource on their website. If you are curious about how to advertise on social media, hit up their website. They've got each big platform and whether or not it is over 21. But TikTok, they're being really conservative and I'm sure there's a lot of reasons that go into that, but they are requiring booze brands in the US to set their target settings to only advertise to people over 25. So older than 21, but I think, you know, I think there's just a lot of safeguards and guardrails in place here to make sure that this isn't getting to anybody it shouldn't be seen by. You can check out more and more of this in our story at brewbond.com. But, you know, I chatted with friend of the pod, Nicole Shoestack, who is now a partner at Nutter, McLennan and Fish. She's heading up their alcohol practice there. And Nicole really kind of hammered home for me how there's two things here that you need to be aware of. The first is that the age of the general audience of the social media network and also like the age of your users. So one thing she brought up that's super complex is influencers. So let's say you're an RTD brand and you really are trying to get yourself out there and you know the way to do that is through influencers, which totally makes sense. You need to make sure that the influencers you're working with, that their audience is also 73.8%, 21 and up. So it's not just enough to make sure the platform is okay, you need to make sure the influencers you work with also meet the same metrics. And there's all sorts of stuff that goes into play here. You need to make sure that they're not doing anything dangerous while they're advertising your product. There's a whole, we could go on about this forever and we're not gonna do that because I know my reputation. But basically, big deal, TikTok is open for beverage alcohol sales. TikTok's the fifth most popular social network in the world in terms of monthly active users. It is behind a few others, but the thing about TikTok is that those users are highly, highly engaged, most engaged user base out there in the world, far and away more than the next highest, which is Instagram.

[00:19:06] Zoe Licata: TikTok's been integrating a lot more advertising too lately. Just like in The Beast few months, it's been doing a more like traditional like pop-up ads in like you're watching a video at the end of the video, it instantly starts playing an ad and you have to do the whole like skip ad thing. So it's been even more integrated into that platform recently.

[00:19:26] Jessica Infante: Wow. And there's a few other things to look out for when you're making content for TikTok. They will not accept anything referencing hangover relief products, homemade alcohol beverages. They do not take any ads for like retail or e-commerce. So basically anything that's pushing people off the platform to, you know, go to Instacart or what have you, but they also have like some behavioral rules. Like they do not want quote people acting drunk disorderly or irresponsibly or the display or endorsement of excessive or immoderate drinking, including binge drinking and bottomless drinking.

[00:20:02] Zoe Licata: Can't promote your bottomless brunch. Nope. No more bottomless molasses. Not on TikTok.

[00:20:08] Justin Kendall: Well, if you're a BevEl company looking at doing advertising on TikTok, you better be ready to do some math.

[00:20:14] Zoe Licata: Yeah, for real. I'm interested just to see what folks do, if like they'll find that it's, if it does provide any more benefit other than like the personal content that they're already creating. We've talked about some brands just doing, I don't know, funny or whatever videos. And like we said, like shorts does their stuff or revolution. Like what is going to be the more beneficial type of presence on social media?

[00:20:43] Jessica Infante: Yeah, that's a great question because they think people know how to ignore ads, but if your organic content is really good, but there's also, it's very hard to know. Yeah.

[00:20:54] Justin Kendall: Yeah, that's a lot of skit stuff at this point, right?

[00:20:57] Jessica Infante: Yeah, like a lot of like behind the scenes in our workplace stuff, which. I don't know, maybe people like it, maybe they don't.

[00:21:06] Justin Kendall: Well, you can check out the story at Brewbound.com. Also, we just released a story on Athletic Brewing. The non-alcoholic beer maker is receiving a $50 million equity financing round cash infusion from General Atlantic, which is a private equity firm. They are gonna use this money for the purchase and upgrades at the Dallas Point facility in San Diego that we reported on weeks ago, and also international expansion. So another $50 million coming to Athletic, and this follows a $50 million Series D round led by Keurig Dr. Pepper in November 2022. Athletic has raised around $225 million from various rounds and cash infusions and whatever. But the thing that sort of popped out to me today in the coverage of this by various outlets, the Wall Street Journal reported that Athletic is now valued at $800 million, and that's according to people familiar with the matter or something like that. Very vague, sorcery. And last year, athletic sales topped 90 million dollars.

[00:22:27] Jessica Infante: That's huge. I mean, you shot it with Bill. What was what's his general vibe these days other than probably very happy?

[00:22:35] Justin Kendall: Very happy and confident. I would say the vibe is confidence that they are going to get where they're going. And the category, the segment, whatever you want to call it, is going to hit those targets that they have. I think he said in the story it was I want to say 10 to 20% of the beer category share?

[00:23:01] Zoe Licata: Yeah.

[00:23:01] Justin Kendall: He believes? He's super confident in that.

[00:23:04] Zoe Licata: Yeah. He's been saying that for a while. He's like really into it. I mean, I've been going through some of the brand data for the most recent Circana report. So that stuff through 6-16 and Athletic Brewing The Beast four weeks up 76.6% and like year-to-date 77.7%. They just passed Kanarchy in year-to-date dollar sales. So they're now, what is that like 24th largest beer vendor? Yeah, they're 24th.

[00:23:32] Jessica Infante: And that doesn't even include their DTC business.

[00:23:35] Justin Kendall: Yeah. So last year, they were the 10th largest craft brewery as defined by the Brewers Association. And OK, you know, that doesn't include all Athletic Brewing companies. But in the U.S., they were overall the 20th overall brewery in the U.S. So, I mean, that's pretty powerful. They did more than 250,000 barrels last year. They're on pace to beat that this year, I would venture, given their rate of sale from what we've seen at retail. The other thing was they will have 1.35 million barrels of capacity once the third brewery in San Diego is completed, once those upgrades are done in late 2025. But he doesn't believe that that's going to be enough to fill their needs. He said that they are going to have to build in another region at some point, or at least that's his expectation.

[00:24:34] Jessica Infante: Wow. And to put a little bit of context around that 1.35 million barrel capacity, If they were to make all of that in one year, that would make them the third largest craft brewer in the country according to The Beast's rankings. Because last year, Yingling was, call it 2.8 million barrels at number one, Boston Beer was number two with 1.4 million, and then Sierra Nevada was number three at right over a million barrels. That's so much non-alcoholic craft beer.

[00:25:07] Justin Kendall: And those are the only brewers association to find craft breweries that produce more than 1 million barrels, correct?

[00:25:15] Jessica Infante: Correct. Yeah. After those three, number four is the Gambrinus company, which is basically just Shiner plus also some Trumer, but they are under a half a million barrels, 483,000.

[00:25:29] Justin Kendall: And so for even more perspective on that, out of the non-craft set, so these are acquired brands, brands that fall outside of The Beast's definition of a craft brewer. You have New Belgium. that makes what, nearly 1.4 million barrels. You have Blue Moon that's owned by Molson Coors, 1.6 million barrels and declining, or at least that's been the history for that brand. Just two brands outside that even come close to that million barrel mark. Obviously, they have a long way to go, but they have come a long way from that first year when they made 800 barrels, more than 800 barrels, in I think it was 2017 or 2018. I can't remember which one it was, but really fast.

[00:26:24] Jessica Infante: Really, really, really fast.

[00:26:26] Justin Kendall: And one of the things that they asked me is, you know, do you see the product? And I do see the product. I see it on end caps at Target. I see it in the cooler at Hy-Vee. I see it everywhere I go. I mean, do you all see athletic pretty much everywhere at this point?

[00:26:44] Zoe Licata: Yeah, I see it. It's at the grocery store. It's it doesn't stand out as much, I think, in some of the like Total Wine or anything anymore, because there's so many brands there. Athletics kind of just blending in with the mix, but grocery, I feel like I see it all the time.

[00:27:02] Justin Kendall: Yeah. Well, one thing that pushed us into the July 4 holiday was a gift from Constellation Brands, and that was their Q1 earnings report. I mean, I'm sure the analysts and yourself, Zoe, and Jess, all of us loved that Constellation was dropping earnings right before the July 4 holiday. There's nothing I love more than an alcohol company taking away opportunities for drinking occasions by giving an acceptance report. But do you have one big takeaway out of that earnings call that you want to share with us?

[00:27:42] Zoe Licata: I would say, I mean, it kind of goes hand in hand with, we also got the latest economic reports from the BI that day. So thank you, BI, for some extra pre-holiday work. But Constellation's growth is not, like, it's continuing to stay while most accords, on the other hand, is not having as much of success in growing on top of its big comps from last year. So that's what stood out to me was that they increased net sales 6% and for their beer, it was plus 8%. Constellation is basically all, for their beer stuff, is all Mexican import brands. We just heard from the BI a couple hours after that, that May had more than 4 million barrels of imported beer come into the US, which is the first time that has happened in a single month. So imports just continue to do incredibly well. And of course, Mexico is the number one importer. So Mexico is making up a majority of that barrelage, that record-breaking barrelage. So it just points to how crazy imports continue to do. And it doesn't seem like it's going to go away anytime soon.

[00:29:03] Justin Kendall: Well, you can read all about that. You can read a lot of data stories. We've got Bump Williams on flavor driving growth in the beer category. Jeffrey's Analysts on the power of in-store displays compared to shelf space. We've got Cercana on improving beer trends this summer and that aforementioned BI report on imports and shipments and everything else. You can read all those if you're a Brewbound insider. Thanks to Justin Zoe for all they do. Thanks to all of you for listening. Please like, rate, review, and subscribe, and we'll be back next week.