Brewbound Podcast: Brewers Association CEO Bob Pease Previews the 2023 Craft Brewers Conference

[00:00:00] Jessica Infante: The Craft Brewers Conference is almost here. We catch up with the Brewers Association's Bob Pease next on the Brewbound Podcast. Hello and welcome to the Brewbound Podcast. My name is Justin Kendall. I'm the editor of Brewbound and I'm joined by Jessica Infante, the managing editor of Brewbound. What's up, Jess?

[00:00:29] Brewers Association: Nothing. I had a nice week off.

[00:00:31] Jessica Infante: How are you? It's been a year.

[00:00:35] Brewers Association: Yeah. So I actually broke my own personal rules about not looking at beer news and work email because there was just too much happening. You guys had a time.

[00:00:44] Jessica Infante: It was a good time to be away.

[00:00:47] Brewers Association: It was. It was nice. But yeah, I'm back. And we've already written two stories today.

[00:00:53] SPEAKER_??: So

[00:00:53] Jessica Infante: Just two. Collectively, we've done more than that. We're recording this on a Monday. A lot's going on. Zoe is, to her credit, on the road now. She's on her way to the National Beer Wholesaler Association's legislative meeting in Washington, D.C., so that's why she's not here with us on the podcast, but she'll be back in time for the featured interview, and that's with Brewers Association. CEO and President Bob Pease, so stay tuned for that.

[00:01:28] Brewers Association: Yeah, I covered legislative conference last year. And because it's in DC, I think the NBWA always makes sure to have like a presentation of the colors with all branches of the military. And it was at that moment that I remembered the Space Force existed. So I should text Zoe and tell her to look out for the Space Force in the flag brigade.

[00:01:49] Jessica Infante: In addition to what was it, ginger ale and cookies on the JetBlue flight?

[00:01:54] Brewers Association: Yes, so Zoe's Flying JetBlue, which is my preferred airline, and my favorite snack pairing combo aboard the friendly skies with JetBlue is ginger ale and their brown sugar cookies, which is delicious.

[00:02:05] Jessica Infante: Not to give away Zoe's coordinates. We'll keep that on the down low for the most part.

[00:02:11] Brewers Association: Yes.

[00:02:12] Jessica Infante: Also, speaking of Zoe's future coordinates, she'll be with me in Nashville at brew talks on May 7th. That's a Sunday afternoon, 2 to 5 p.m. Central time. We'll be talking about. the dichotomy between low and no alcohol products being one of the growth drivers in Kraft and higher ABV offerings being the other growth driver in Kraft. So we'll be talking about that with Dogfish Head Sam Calagione. Greater Good Imperial Brewery's Colleen Quinn and Athletic Brewing's Bill Shufelt, going to get a broad range of expertise on that panel. And then we're going to discuss opening up multi-state tap rooms. So going beyond your state's border to open out of state, reach a whole new community, We're going to get into that with Monday night's Jeff Heck, Highwire Brewing's Adam Charnek, and Weathered Souls Brewing's Marcus Baskerville. Couple of fun panels there. We'll be talking beer business and networking, and we'll also have a conversation with the National Black Brewers Association. We'll have Chris Harris from Black Frog Brewery and Celeste Betty from Harlem Brewing talking about that organization's goals and mission just starting up. So lots more to come there.

[00:03:39] Brewers Association: Yeah, and we'll also be talking to the Tennessee Craft Brewers Guild as well. It should be a good time. People can get tickets at Brewbound.com slash events. A portion of ticket sales goes to the local guild in every state whenever we host a brew talk. So it'd be great to, you know, buy a ticket and help them out. I am going to tune into all four of those chats. I will miss you guys. I guess it's kind of out there in the world since I finally posted it on my own social channels. But I am not going to CBC because I am too pregnant to fly.

[00:04:10] Jessica Infante: Yeah. Secret's out.

[00:04:13] Brewers Association: I know. I had somebody at my baby shower post pictures and I was first I was like, oh, what am I going to tell her? And then I said, you know what? Just let it happen. So we let it happen. And yeah, that's what's going on.

[00:04:26] Jessica Infante: Yep. You're almost to the finish line there.

[00:04:28] Brewers Association: Yeah, so I did not purposely plan to have a baby so that I could spend my maternity leave at the beach, but that's what happened. So I apologize in advance. However, I am learning you can't take a baby to the beach. Oh, yeah. But I will be taking the baby to the Notch Beer Garden.

[00:04:48] Jessica Infante: With a lot of sunscreen, I hope.

[00:04:50] Brewers Association: Yes, covered with all sorts of things. I don't think you can put sunscreen on the babies.

[00:04:55] Jessica Infante: Oh, well, I already screwed it up.

[00:04:58] Brewers Association: But you had a December baby, so it's like the first six months. There's so much to learn. So much to learn. So many non-alcoholic beers to drink. So many regular beers they haven't had in a very long time.

[00:05:10] Jessica Infante: Yeah. And make them pasteurized too.

[00:05:13] Brewers Association: Yes. Please pasteurize your non-alcoholic beers. For everybody, but for the Pregos in particular.

[00:05:19] Jessica Infante: So let's get into this week's news. And since you are the resident expert on all things, New Jersey, we'll kick it off with you because as soon as there's an acquisition in New Jersey, you're on it.

[00:05:31] Brewers Association: Yeah, what an honor. Yeah, so we had breaking news this morning. Again, we're recording this on Monday. Cape May, which is New Jersey's largest Craft Brewers, is acquiring one of its oldest, Flying Fish. So Flying Fish, founded in 1995 in South Jersey. They're both in South Jersey. It's another one of these craft on craft acquisitions. In the deal, Cape May will be getting all of Flying Fish's assets, which include its 25,000 barrel capacity brewery, In Summerdale, Flying Fish is distributed in New Jersey, Pennsylvania, Delaware, and Maryland. And they will be staying with their own distributor partners. And that was interesting to me because Cape May does their own distributing. Cape May operates Cape May Beverage Distributing. They sell Cape May products to all of New Jersey. They also carry a few other brands, mostly in the Beyond Beer space.

[00:06:28] Jessica Infante: That's interesting to me too, because you would think that they would maybe at some point in the future want those brands in-house through their distribution arm.

[00:06:38] Brewers Association: Yeah, yeah. I mean, we'll see what happens. But when you and I were talking about this earlier before we published was maybe, I mean, Flying Fish is pretty big in New Jersey, particularly where my family lives at the shore. So maybe they're just not up to, can't get up to scale with all of this yet, but we'll see. Flying Fish has three distributor partners in New Jersey and several more out of state, which is what their spokesperson told me. One of them is in the Molson Coors Network. So I would think that they're in other Molson Coors distributors, but you can't always assume things, especially in a state with such wonky laws as New Jersey. So we will take a peek into that, but congrats to everybody there. Just another one of these instances of people finding their otter friend to hold hands with as we go through the rough waters of the moment.

[00:07:29] Jessica Infante: Yeah, another one in Georgia, Nofo Brew is linking up with Tantrum Brewing. So very small brewery acquisition there. But yeah, as you mentioned, A number of these deals have gone down this year, Drake's and Bear Republic, Full Circle and Speakeasy, Doke Beer and Federation. And then you have, you know, an acquisition of IP with Carbon 4 picking up Ale Asylum's intellectual property and continuing that brand on. And even last year, you know, with the linkups of Roadhouse and Melvin, Kraft Ohana forming with Maui and Modern Times and Made by the Water making all those acquisitions.

[00:08:14] Brewers Association: Yeah, I mean, it's still early to say, but it'd be interesting to me to see if the next few years shake out the same way that like the 2014 to 2017 years shook out where the trend was, you know, large global breweries acquiring craft, like is the next few years just going to be, you know, Craft Brewers merging with each other? We'll find out.

[00:08:32] Jessica Infante: I think it is. I think that the needle is definitely pointing that way. And we'll talk about it in a little bit with Bob Pease. We will. Another story, and we'll skip to it because we have more scan data for Bud Light. We just posted our story on this on Monday after we sent the newsletter.

[00:08:55] Brewers Association: Bud Lights, sales declines according to Nielsen IQ, I'm sorry, NIQ data shared by our friends at Bump Williams Consulting. Declines in dollar sales, declines in volume sales, and share losses have all accelerated for the second week of July. this nationwide protest of the brand among conservative drinkers after Bud Light's relatively small activation with trans influencer Dylan Mulvaney. And I for sure thought that when I left you guys the Friday before last, I'd come back and we wouldn't still be talking about this, but that was wrong.

[00:09:35] Jessica Infante: Unfortunately, very wrong. And yes, still talking about this. A lot of folks are still talking about this. And one of the reasons why is late last week, Anheuser-Busch informed its internal teams and its wholesalers as of, I'm gonna say Friday is when this came out, late Friday. So another Friday news dump that Alyssa Heinerscheid, Bud Light's Vice President of Marketing, and Daniel Blake, Group VP of Marketing for Mainstream Brands at Anheuser-Busch InBev, were both placed on a leave of absence from the company. And that's something a spokesperson shared with us. The Wall Street Journal quoted an AB spokesperson who said that, Alyssa has decided to take a leave of absence, which we support, and Daniel has also decided to take a leave of absence. However, The journal, citing unnamed people familiar with the matter, reported that the decision to leave wasn't voluntary.

[00:10:40] Brewers Association: Yeah. And this has been going on for weeks now. And, you know, I said this to you earlier, I think the way the company has handled all of this could really be content in what not to do in like a college level public relations class. You know, it's been two Friday news dumps in a row. It was most recently these two leaves of absence. And the week before it was US CEO, Brendan Whitworth's statement, which really didn't say much as you and Zoe talked about on last week's pod. And to me, I have to wonder how, if there are, you know, employees at AB who belong to the LGBTQ plus community, which I assume there have to be because they have so many employees, how do they feel right now? And, you know, like our friend Kate Bernard at Good Beer Hunting in a piece she wrote last week, you know, quoted a few different people who pointed out like, where's Dylan in all of this? The company has left Dylan high and dry and hasn't said, no, we stand by our partnership. There hasn't really been much of that at all. So, you know, what does that do? Cause I mean, we know what kind of vitriol headed to Alyssa and another female AB employee on the internet. Like I can only imagine that Dylan's, getting it much worse and much angrier. So what have we done here? What has been accomplished?

[00:11:56] Jessica Infante: You've said this before, this is gonna end up being some test case in a marketing class of how not to handle a situation. Because on one hand, you have AV trying to appease a lot of angry consumers who are mad that the brand that they keep in their refrigerator gave a gift to a trans person. And on the other end, you have a community that AB seemed like it was trying to port in a way, you know, as a future consumer base to expand its reach on a brand that has declined in volume for double digit years. And then you have a CEO who has released a statement that just tries to play the middle ground. And as Zoe has more eloquently said, you know, you can't play middle ground these days.

[00:12:52] Brewers Association: Well, I mean, the other thing is in a highly regulated industry like beer, you're, at least in my experience in the marketing department of another beer company, like there's a lot of layers of approvals and discussions and it can sometimes feel almost impossible to get anything done because so many people have to sign off on it. So for them to act like this was like a throwaway decision made by people who weren't informing people at the top, I don't know if I believe that based on my own lived experience of having to ask 18 different people if it's okay to, you know, use this hashtag for something. So I think a lot of people had eyes on us and to get custom cans made like they did for Dylan, like there's a lot of work that goes into that.

[00:13:39] Jessica Infante: Yeah. I don't know what AB's trying to accomplish now, you know, other than some form of damage control. There's just too much damage on all sides. Everybody's angry at this point. You've got two employees who are left out to dry. You've got angry wholesalers. You know, you've got angry consumers. You've got an LGBTQ plus community that what more can you say other than they have to feel like they've been pandered to?

[00:14:12] Brewers Association: Pandered to and absolutely abandoned. Right. Yeah, it'll be interesting to see what happens this coming pride season. I mean, on the business end of things, because that, you know, is primarily our purview here. Off-premise dollar sales of Bud Light declined 17% for the week that ended April 15th. That is quite an increase from the prior week. you know, the week ending April 8th, the week before that Bud Light's dollar sales declined 6.9%. So that's a pretty big jump as this boycott or whatever you want to call it gained steam. We can also get into dollar share too, but the other thing that is really interesting to me here is that Bud Light declined 17%. Both Coors Light and Miller Light, their dollar sales increased 17.6%. So they even gained a little more than Bud Light lost in dollar sales. But where this really shakes out is share. So Bud Light in that week lost 6.7% in its share of the premium beer segment. It is still far and away the largest brand in that segment.

[00:15:19] Jessica Infante: And the top-selling beer overall.

[00:15:21] Brewers Association: Overall, yeah, exactly. It's not some tiny thing we're talking about here. Coors Light's dollar share increased 3.5%, Miller Lite's increased 3.1%. So Bud Light is still 32.7% of the whole premium segment, definitely a plurality, followed by Coors Light is 23%, Miller Light is 20.5%. We've been getting an influx of pictures of shelf sets and cooler doors where there's almost no Miller Light or Coors Light. We've had text conversations where we ask each other, is this really because people have bought all these products or is there something else here? But yeah, when you look at the scan data, people are buying those products. In the below premium segment, and this is all like NIQ data from our homies at Bub Williams, but Molson Corp has two brands in that segment below premium. Keystone Light was up 10.6%, Miller High Life was up 7.8%. But nothing in the bud family really had any kind of, other than bud light from what we've seen, nothing else had any kind of large decline. You know, Michelob Ultra was up 0.4% in dollar sales, up 2.2% in share of domestic super premiums. Bush Light up 3.6% in dollar sales, up a teeny tiny 0.1% in below premium dollar share. And Natural Light was down about a percent in both dollar sales and share.

[00:16:49] Jessica Infante: I think the thing that I would stress is this is a brand that has been in the red for a very long time. The exception might be during the pandemic when sales increased, but it has been volume declining for several years. So it's, it's still hard to sort of parse what's real and what's not here, but it is notable that the declines have accelerated at least in a two week period.

[00:17:19] Brewers Association: Yeah, and both Coors Light and Miller Light have been growing in the past couple of years, ever since Molson Coors' October 2019 revitalization plan in which they said that they really wanted to redouble their efforts and focus on growing those brands. So those brands have been growing too, even before all of this.

[00:17:40] Jessica Infante: Well, let's get into some other news this week and Schillinghard Cider. Schillinghard Cider, they are investing in a fully electric powered fleet. Zoe wrote this story. Schillinghard Cider is based in Seattle. They're one of the fastest growing cider makers out there. And they're trying to reduce the carbon footprint by investing in eight new electric powered vehicles. Those will go to their Pacific Northwest sales team. So that's what they'll be hitting the street in. They're all sort of customized with shilling logos and graphics. So very cool to see.

[00:18:18] Brewers Association: Yeah, it looks like they were part of like Pimp My Ride.

[00:18:23] Jessica Infante: It really does.

[00:18:24] Brewers Association: Very fun.

[00:18:25] Jessica Infante: And that investment amounts to more, I think around $250,000. So they'll get some of it back in federal EV credits and incentives and such.

[00:18:37] Brewers Association: Yeah. EVs aren't cheap.

[00:18:38] Jessica Infante: And these are Chevy Bolts.

[00:18:40] Brewers Association: Cool. All right. Well, congrats on your new ride, Eric. Hope it's fun.

[00:18:44] Jessica Infante: Yeah, absolutely.

[00:18:46] Brewers Association: May the charging stations be ever where you need them.

[00:18:49] Jessica Infante: And I think that's one of the sticking points is there needs to be more charging stations.

[00:18:54] Brewers Association: Yeah. Another Zoe story, the Sousa Agave cartels, the malt-based F&B put out by Boston Beer and their Beam JV S. Nomas. The brand has been discontinued and I don't think this surprises anybody, especially after we saw how quick Boston Beer was to Disco Bevy last summer. Now they've got two other cocktail-inspired malt-based drinks that I think they're betting a little bit harder on. Jim Beam Kentucky Coolers, which obviously have the Beam name on them, but they are malt-based. And there's clearly proof of concept for that in the form of the Jack Daniels Country Coolers, which Pabst produces using the Jack Daniels name license from Bram Foreman, and those do well. So, you know, there's a reason to believe here. And then Boston Beer is also launching I'm gonna screw up the name.

[00:19:52] Jessica Infante: Slinger's Signature Cocktails, 8% ABV, sold in single serve cans and available in three markets, Pittsburgh, Cleveland, and New Hampshire. So they're not going big with that one quite yet.

[00:20:07] Brewers Association: No. But I mean, that's what they told us they were gonna do after Bevy, was we're not doing any kind of national launch with new products. So not a surprise.

[00:20:17] Jessica Infante: Yeah. And one last news item. I talked to the Bevout team over at Aldi and they have their new summer lineup, which hits stores on Friday and they have a new hard tea brand that they're launching. It's a private label brand. It's called All Play. It's a variety pack and it's being produced by our friends at Octopi.

[00:20:42] Brewers Association: I was just going to ask you if they told you who was making it. That's cool.

[00:20:46] Jessica Infante: So I've tried the raspberry and the peach. Good. They're really good.

[00:20:52] Brewers Association: What's the ABV on that?

[00:20:54] Jessica Infante: About 5% I think.

[00:20:56] Brewers Association: Private label is so interesting to me because I feel like it's gotten really sophisticated in the past couple years. And at that point, you know, I know producers and retailers have a whole tier in between them, but that's one of those things where to me, it's like, if I'm selling my product to a retailer that has this elaborate, like really slickly, sophisticatedly branded private label, say Hard Seltzer, and I'm trying to sell them my Hard Seltzer, like, are we competing for the same shelf space? You know, like that's like, I've always wondered.

[00:21:30] Jessica Infante: You absolutely are an Aldi.

[00:21:32] Brewers Association: Yeah, like that, it's so interesting to me. I wonder like what that feels like to be on the supplier side of that equation.

[00:21:38] Jessica Infante: Yeah, I asked them about their fourth category strategy, basically, which was, is the strategy to build a private label brand to sort of play in that fourth category space? Or is it, you know, are you interested in whoever it may be, you know, on that's already producing these products? And it seems to be they're more interested in the private label. And they can't sell spirits at Aldi. I didn't realize that. So they sell beer or wine, but they play in that sort of cocktail space with either wine based or malt based or sugar based, I guess, products.

[00:22:16] Brewers Association: Yeah. Interesting. I wonder if that varies by state. And I'll do just open by me, but as you know, in mass, we can't sell spirits at grocery stores for the most part.

[00:22:27] Jessica Infante: Yeah. So that's kind of where they are with that. But I tried the hard tea and I will say it was really good. I was a fan. I was kind of a fan. Yeah.

[00:22:39] Brewers Association: Did they have calorie counts on it?

[00:22:41] Jessica Infante: Is it 130? 130 might be it or lower.

[00:22:44] Brewers Association: Oh, that's a bargain. I want to tell you what the calories are in the leading hard tea brand.

[00:22:50] Jessica Infante: It's more than that. I could have ventured a guess. Yeah.

[00:22:54] Brewers Association: Yeah.

[00:22:55] Jessica Infante: All right, let's play one round of another round or tabbing out and we'll only bring up one product. And I guess this has turned into a like, what is the wildest thing out there right now? Kind of in the fourth category. I guess that's all we ask about now on this because the one that came up on my beer buzz was a label for WarLoco Warheads Pregame Sour Cosmic Punch, which are 200 milliliter malt beverage-based shots that are 13.9% ABV. Are you getting another round of these or not?

[00:23:34] Brewers Association: I don't know. I had a phase with Sour Warheads as a youth. I don't know that I could do this again. Respectfully, as an old lady, I'm going to tab out.

[00:23:49] Jessica Infante: I'm surprised that 4Loko hasn't tabbed out on products like this because you've done this dance before, right? And then you partner with someone who makes a product that is primarily targeted at what? Young people?

[00:24:05] Brewers Association: Yes, like under 12.

[00:24:08] Jessica Infante: Under 12 consumers? I would say, I mean. Are warheads at a point that they are a nostalgic product for people of a legal drinking age?

[00:24:20] Brewers Association: Yeah, that's a great point. Now that I am facing my own impending parenthood, I don't think I would give my child a warhead. So maybe the kids aren't having them anymore. I mean, how many candy shops exist? Are kids still doing that, grabbing a fistful of the dollars and heading to the candy store? I don't know. I don't know either. I don't know. I know once we gave my grandma a sour warhead.

[00:24:47] Jessica Infante: How'd that go?

[00:24:48] Brewers Association: That was mean. She didn't like it. She didn't like it. But she was a rolling rock girl.

[00:24:53] Jessica Infante: Well, I did not know that your grandma was the mayor of Easttown.

[00:25:01] Brewers Association: Yes, totally. Yeah, I mean, like 200 milliliter shots in air quotes. That's big. That's four little pretend fireballs. That's not a shot. What is happening? 4Loko, call me. You need help.

[00:25:21] Jessica Infante: Well, with that, let's get to our featured interview with Bob Pease from the Brewer'Brewers Association. The biggest meeting of Craft Brewers in the U.S. is just two weeks away. The annual Craft Brewers conference will take place in Nashville from May 7th through the 10th. Here to give us a preview of what's to come is Bob Pease, the president and CEO of the Brewers Association. Thanks for being here, Bob. Welcome back. Thanks, Justin.

[00:25:46] Bob Pease: Always a pleasure to talk with you and your team. Zoe, Jess, great to see you guys.

[00:25:51] Brewers Association: Yeah. Hi, Bob. Good to see you, Bob.

[00:25:54] Jessica Infante: Yeah. So Bob, every CBC seems to have a theme, whether that's official or unofficial. As we head into this year's CBC, what's the theme?

[00:26:05] Bob Pease: Well, like you said, there's no official theme, but I think for me, the theme is the need for America's small and independent Craft Brewers now more than ever to double down on cooperation and collaboration. two of the hallmarks of craft brewing that really got us on the map and really redouble our efforts in those two areas. Because, you know, everybody knows it's a challenging environment right now for Craft Brewers, especially if you are a distributed Craft Brewers.

[00:26:39] Brewers Association: For sure. So all of that said, you know, what are the issues that are top of mind for Craft Brewers of various sizes heading into this year? But let's start with those distributed Craft Brewers because they have not been having an easy time.

[00:26:51] Bob Pease: Yeah, I mean, I'm sure you guys are all looking at the same data I'm looking at. And right now, it's really, really hard to find growth. If you're a distributed Craft Brewers. Bart did the, you know, his whole top 50 presentation last week, I think it was, you know, 9,552 breweries were operating in the United States last year. So it's kind of like good news and bad news, right? Two thirds of those more than two thirds of those 75% of those breweries focus their business on the on premise. So there are brewpubs and cap rooms. And it's certainly not easy, but there is some growth to be had in both of those segments. But if you're one of the just over 2000 microbreweries that are looking for distribution, it's tough. We got distributors consolidating, we got distributors not looking to add new breweries or brands, and in some cases, shedding breweries and brands. It's really challenging from the distribution aspect. And then, you know, the whole thing that's going on with how legal drinking age adults are coming of age and how they're entering beverage alcohol. And increasingly, it's not through beer. When I was growing up, and maybe I'm older than you guys, maybe when you guys are growing up, beer was the entry point for your experience with beverage alcohol. And now increasingly, that's becoming canned cocktails or hard seltzers or wine or spirits. And so, you know, Bart put forth a message a couple of weeks ago. It's, you know, one that I'll also incorporate is, you know, don't denigrate how folks come in to beverage alcohol. Because at some point, they're going to find their way over to the beer circle. And I think they'll have a positive experience. It just might not be first like it used to be. And that's okay. Things are cyclical, right? Who knows what the future of canned cocktails or hard sell will be. But beer's been around 9,000 years. I'm pretty sure it's going to be here today. Pretty sure it's going to be here tomorrow. And it's going to be here far into the future.

[00:28:59] Craft Brewers: Yeah, I really enjoyed when Bart first mentioned that comment when we were at the New England Craft Brewers Summit. I mean, my first entry was with a certain hard tea brand, but I made it into beer and I'm over here, so it's still possible to get into the category. With some of those numbers that Bart shared, you know, we have more breweries now than ever. openings are still outpacing closures, although that gap is getting smaller. Where do you see craft brewing and the whole craft brewing movement going now? What are we going to see next for craft?

[00:29:31] Bob Pease: I think we're entering into a maturing market. 13% of the American market by volume is nothing to sneeze at, and over 25% of the American beer market by dollars. So healthy, maturing, stable, and that's to be expected, right? I mean, Kraft is over 40 years old. So, you know, you don't ride the rocket ship forever. And like I said, I think beverage alcohol and all consumer CPG products have cycles. And I think our days of growth will return, but probably not in the foreseeable future.

[00:30:13] Jessica Infante: One of the things you talked about at the top of the show was brewers partnering up or working together more. And we're seeing that to sort of an nth degree in the number of small brewers who are consolidating themselves, their acquisitions, mergers going on. How do you see this benefiting and changing the overall industry?

[00:30:36] Bob Pease: Well, I just saw one come across my email while I was on another call earlier this morning, where Kate May in Flying Fish in New Jersey. Two of my closest friends in the industry, Ryan Creel, Gene Mueller, two of the outstanding leaders of our craft brewing community. I think in the end, that's a positive, Justin. I think it gives the business entity more resources. And I think it's an opportunity also for breweries to really focus on quality. I mean, that still has to be top of mind for all of the 9,552 breweries that were operating in the United States is to really have that focus on producing world-class beer that delivers just fantastic experience to the beer drinker every time they venture into a tasting room, a tap room, or a brew pub. We know that when the beer drinker comes into those establishments, the sense of community, the sense of belonging, the interaction is top shelf. Got to make sure that the beer stays at that same level as all of those other intangibles.

[00:31:42] Brewers Association: So let's shift gears a little bit and get into CBC, which will be here before any of us know it. Bob, what are you personally most looking forward to about this year's conference?

[00:31:53] Bob Pease: You know, it's the best week of the year for the staff of the Brewers Association because it's our opportunity to interact in person with our members, which we don't get all the time. You know, we are really heartened by the fact that our membership rosters have stayed really, really strong through COVID, past COVID, and now into what I guess is what we call the new normal. And we're heartened by that because we know we're delivering tremendous value to the small and independent breweries that are part of the BA and our efforts to help them make better beer. So it's the opportunity to interact with the members, which is probably the thing I'm most excited about. Over 10,000 registrants right now and people are still registering. 600 exhibitors. I love walking the trade show floor and just picking up on the buzz that's in there and the excitement that you get on the trade show floor. So that is something I'm really looking forward to interacting with the members. Voting members meeting is always spicy. And that's also a great opportunity for me and my team because the members that attend that meeting are our most engaged. And we get good feedback. Sometimes the feedback is not everything you want to hear, but that's good. You need people to be honest with you and be straight with you. And the people that come to the voting members meeting are always that. So I look forward to that. Really looking forward to honoring this year's award winners. you know, the BA Recognition Award going to Jess and Richard Fierro, you know, really, really a story that gives you goosebumps, right? And, you know, I did not know or really interact with Jess and Richard before the tragedy that took place in Colorado Springs. But, you know, since then, we've had some interactions and it's really, you know, been inspiring for us, for them to let us know how much they're being part of the Brewers Association and being a member of the BA really means to them. So that's been great. Peter DeFazio winning the FXMAT Defense of the Industry Award. I've worked with Peter really closely since 2009. We first met in 2003. And for him to win that award, again, somebody who I've worked with for two decades, it's going to be great to be up on stage with him and shake his hand. So those are just a couple of things personally. A lot of really great seminars. I'm not involved in the seminar selection process. That's Paul Gatza and his team. Paul, Chuck do a great job in that area. But, you know, approaching the beyond beer category with Craft Brewers integrity with Garrett and Sam, certainly going to be one of the seminars I'm going to try to hit.

[00:34:40] Craft Brewers: Yeah, that one sounds awesome. As we mentioned earlier, more crapperies than ever, so there's going to be a handful of probably first-time attendees this year. Any advice for anybody who's going to be going to CBC for the first time?

[00:34:54] Bob Pease: Great question, and it reminds me I left something out. What am I excited about? I'm excited about the first-time attendees meetup. which we have the first night of the conference, we ask people to sign up for that. And I think we're over 600 people, I think, that have signed up for that already. So that's always really cool to go and talk to first time attendees and find out why they're here, why they're there. So that's the first thing. The second piece of advice I would give first time attendees is make a plan. Try to figure out in advance what seminars you're trying to attend. Third piece of advice would be it's a marathon, not a sprint. So, you know, don't make a rookie move and go out and have too much fun the first night in Nashville. Pace yourself so that you can enjoy all that Nashville has to offer and all the wonderful breweries in that community through the whole week. And then come to the World Beer Cup Awards at the end of the event, because that's always a lot of fun and energy and excitement in that room, for sure.

[00:35:55] Brewers Association: Bob, I wanna go back to something that you mentioned that to the credit of the voting members, we never hear about the spiciness. It does not leave the room of that meeting. And I know, I mean, I know you can't tell us, cause we're not invited to that session for a reason, but what have been some of the changes that have come out of those gatherings?

[00:36:18] Bob Pease: I've been going, you know, for two decades. One big change that I remember coming out of one of those meetings is a commitment from the BA leadership, our board and our management team to be more transparent with the members whenever we make a substantive change to the organization. So that was one change that came out of the voting members meetings. You know, last year, the, uh, the key topic revolved around accessibility of raw materials, specifically cans. So glad to see that that pressure has eased somewhat on our members. It's still, it's, you know, it's still a factor, but it's not, it's not quite as dire as it was last year. Another change that came out of the voting members just meeting was a commitment from the board of directors to review our foundational documents every two years. For us, those documents are our purpose, our mission, our strategic objectives, our bylaws, and the Craft Brewers definition. So the board has followed through on that commitment. And they take that really, really seriously. So those are the ones that pop into my head. You know, in some years, you get no questions at all. And then you're like, huh, wonder what that means. And so, you know, some people are like, well, that must mean we're doing a pretty good job.

[00:37:46] Brewers Association: Yeah. Interesting. Do you sense any substantive changes on the horizon anytime soon? Anything that's been buzzed about lately?

[00:37:53] Bob Pease: nothing that's ready for prime time, you know, we recognize that the craft brewing community is evolving, maturing, changing, and certainly we're keeping our eyes on the future. We want to make sure that the Brewers Association is relevant to the craft brewing community three, five, 10, 15 years down the road. So this board is really taking a good hard look at themselves and also who it is that we want to represent into the future. You know, those conversations take place at our quarterly board of directors meetings and things move slow in the association world. So it's like no substantive change is on the horizon, but You know, it's always good to be having those existential conversations, and this board's doing a really, really good job of that.

[00:38:40] Jessica Infante: Are the review of those documents and those bylaws and the definition, are those on even or odd number of years?

[00:38:47] Bob Pease: Man, I got screwed up with COVID. So it seems like now we've actually been doing it every year. So this is 2023. So even, I'm going to go with even. We did a lot of work on our strategic objectives and the language and some minor bylaw tweaks in 2022.

[00:39:04] Jessica Infante: Okay. So you're also going to be on stage. You're going to be up there with the other trade association leaders, Brian Crawford from the Beer Institute and Craig Purser from the National Beer Wholesalers Association. So can you give us a preview of what the three of you will be talking about up there?

[00:39:22] Bob Pease: Sure. I think, you know, what we're going to be talking about is just the work that the beer trade associations have done to oppose work being done by our friends in the liquor industry, our colleagues at Discus. It's no secret that one of their major government affairs objectives is to work state by state to lower the excise tax rate on canned cocktails at the state level. And the Beer Institute, the Brewers Association, and the National Beer Wholesalers Association and our members have been working cooperatively to oppose those efforts. We don't think that the segment of beverage alcohol that is probably doing the best, you know, in terms of sales, revenue, growth, needs a handout from states that need all the revenue they can get. You know, and I would say that maybe inadvertently what has happened is by Discus's efforts in these areas, they have unified the beer industry to the likes which I have never seen. I mean, this is even, we're working more together now than we even were during the craft beverage modernization and tax reform efforts. So a shout out kind of probably has to go to Jim Cook, right, for kind of called out, I don't know how long ago that was, maybe two years ago, but he called out Jim McGeevy, Craig Purser and myself for not doing enough in this area. And, you know, we heard we heard the call and we've been working cooperatively together and we're putting some wins on the board for sure. So that would probably be the main theme of that Q&A.

[00:41:00] Craft Brewers: What has been the general reaction or response of members to that effort? Because it seems to be one of those weird things where some might be like, oh, we might make these products too.

[00:41:13] Bob Pease: Absolutely right, Zoe. That's a challenge that we face. We have to educate our members why, yes, maybe in the short term, we can understand why you see it in your self-interest to lower potentially the tax rates on those beverages, because you might make them someday. But if your core business is beer, you need to try to take the long view and understand that, you know, really what the objective here is by Discus and their member companies is to sell more of their full strength product. That's really what they want to sell at the end of the day. And then the other thing that we try to educate our folks on is canned cocktails are eating shelf space often from Craft Brewers. And you see that played out at retail in the off premise. And that's bad for beer. We're fighting to keep the shelf space that we have earned over the years. We don't want to see another cooler door go to canned cocktails. We want that to be a product from Craft Brewers that it can be. And if not Craft Brewers, then beer. All beer is good.

[00:42:26] Jessica Infante: What do you think about the growth trends and where they've been recently? Because on the one hand, you have non-alcoholic beer that's a growth driver. On the other end of the spectrum, you have higher ABV offerings that are oftentimes being sold in single serves. But, you know, still, there's the majority of the products that are sort of in that middle ground. But as the trade association leader, what do you think about where those trends are, where they're going? You know, this move on one side to, you know, no alcohol and on the other, higher strength offerings?

[00:43:02] Bob Pease: It's been interesting to watch what's going on in Europe over the years. you know, alcohol-free beer and low alcohol beer has been a trend that's, you know, been part of their world for quite some time. And it was interesting to see when that was finally going to get a foothold in the U.S. And, you know, you look at the success of athletic brewing, for example, and your guys' Neck of the Woods. I think it's great for that part of the beer industry to be growing so rapidly. It ties right into, you know, that younger legal drinking age adult who has shown interest in perhaps a healthier lifestyle, maybe consuming a little less alcohol. And I think that ties into their maybe not their first point of entry, not being through craft to beverage alcohol might not be through Craft Brewers, but it might be through a lower strength product. And then as for the rise of the 19-2s at C-Stores, it's been good to see some of our members crack that code and crack that market. The C-Store market has typically been the domain of the large brewers in this country. And to see more craft offerings at the C-Store outlet, been great.

[00:44:19] Jessica Infante: So those are two opportunities that exist out there for brewers right now. But what do you think are some others that maybe they could tap into that they're not into or that they should consider if they're not into yet?

[00:44:32] Bob Pease: Well, you've got to know your customer. You've got to know the person that's frequent in your establishment if you're on-premise, and you need to know who's buying your beer if it's going off-premise. Certainly, we've seen some interest in beers being made with all local ingredients. I think that's an avenue that could be more tapped for Craft Brewers. I know personally, myself, I'm drinking a lot more lagers. So I think that's also an area of opportunity for growth. For me personally, I like the four and a half, five and a half percent blogger to kind of end my day. And that's a change where it used to be almost exclusively IPA. So I think the growth of bloggers, we're going to be putting out a book on bloggers next year from the previous publications written by the Hemler brothers. So that's a tease on that. And, you know, it's funny, that's an example of all things kind of being cyclical. The first book ever published by Brewer's Publications was called Brewing Lager Beer by Greg Noonan from the Vermont Pub and Brewery. Probably really dating myself, a few young people on this call, but, you know, when I got into the industry, Greg Noonan was, you know, he was a true giant and just such a, you know, wonderful man, you know, and he left us far too soon. So those are two of the areas that I think of, Justin, for opportunities for growth would be beers with local ingredients, and then maybe looking at some of the lighter styles.

[00:45:58] Brewers Association: You just made me think of something, Bob. Is New England the land of craft vloggers? I don't know.

[00:46:04] Bob Pease: It kind of feels that way. Certainly some of the breweries in Massachusetts are doing pretty well, as I understand it.

[00:46:10] Brewers Association: Yeah, I mean, that's exciting for me.

[00:46:14] Jessica Infante: Yeah, look at how Jack's Abbey jumped up on that list.

[00:46:17] Bob Pease: Yeah. Yeah. Savvy, Trillium. Yeah. It's, you know, again, another example of just things being cyclical, right? I mean, light lager was the beer style in this country, you know, since I was, you know, really post-World War II up until the 80s. Now, it's a period of 40 years or so. Now, craft is entering its fifth decade. And, you know, we're rediscovering ourselves as well. But you know what, what really separates craft though, is just that penetration we've made into the communities, you know, through the tap room, tasting room, the booth hub, and that sense of community that didn't exist in this country. You know, maybe it's your neighborhood bar, but you know, breweries are now the equivalent of, you know, what you see in the United Kingdom. Let's go to, let's go to our local, huh? You know, now you go to your local brewery. And that's really the point of differentiation for small and independent brewers are tied to the community. Contributions we make, you know, beyond the beers that our members produce, but in terms of philanthropy, sustainability, you know, just being a responsible business owner that brings brings people together.

[00:47:30] Craft Brewers: Changing a little bit, Bob, one of the topics that you guys covered quite a bit during the general sessions last year was the treasury report on competition and some of the things that were coming out of that. Do you have any gauge of where the feds are right now in their review or what we could be seeing next?

[00:47:49] Bob Pease: Well, we won't have Tim Wu on the stage with us this year, unfortunately. You know, he was great to work with. The wheels of justice turn slow. Work at the TTV certainly turns slow. You know, I would say though that we're not going to be talking about it as much, but it will be part of Mark Sweeney and Katie Marisik's government affairs presentation. It will be extensively covered there. I know they're going to point out that the treasury report has already had an impact. We know TTB has initiated a sweeping review of its trade practice regulations. So that's exclusive outlet, tied house, commercial bribery, consignment sales. They're moving forward with new rulemaking on mandatory allergen labeling, mandatory alcohol facts labeling, and possible ingredient labeling. We would certainly like to see them pay closer attention to trade practice issues that we think are best illustrated by what you see when you go to a major league stadium or large concert venue, which continues to be a really hard code for our members to crack in any meaningful way. And then this administration, you know, certainly with not just TTB, but at, you know, Treasury Department, but also the FTC, the Federal Trade Commission, there's been a little revival of a long dormant antitrust doctrine or piece of legislation called the Robinson-Patman Act. And they're using that right now to investigate Coke, Pepsi, and Southern Glazers. So there are things going on at TTB and the Department of Treasury that are certainly direct outcomes from the Treasury report that we had a great deal of influence on.

[00:49:42] Jessica Infante: So we'll wrap this up, Bob, and let you go here. After one last question, if you could deliver one message to Craft Brewers at this moment, what would it be? Do I get two?

[00:49:53] Brewers Association: Sure. We'll give you two. For you, yes.

[00:49:56] Bob Pease: Thank you. recommit to doing everything you can to make world class beer. Because it is so challenging out there right now for all of our members that your beer has got to be so good that people can't wait to come back the next time. And then at the same time, recommit to cooperation and collaboration. with your fellow Craft Brewers, because that really, really sets small and independent American Craft Brewers apart from pretty much any industry in the United States and most brewing cultures around the world.

[00:50:32] Jessica Infante: All right. That's where we'll leave it. Thanks for doing this, Bob.

[00:50:36] Bob Pease: Always a pleasure to talk to you guys and look forward to seeing everyone in Nashville. It's going to be great.

[00:50:42] Jessica Infante: Yeah. We'll see you at CBC. All right. That's our show for this week. Thanks to Bob Pease for joining us. Thanks to Jess and Zoe for all they do. And thanks to our one man audio team, Joe. And thanks to all of you for listening. We'll be back next week.