Brewbound Podcast: Bump Williams Consulting on Q1 Beer Trends, What to Watch This Summer

[00:00:00] Justin Kendall: Heading to CBC? Kick things off the day before at Brewbound's meetup at Love City Brewing in Philly, Sunday, April 19th from 5 to 7 p.m. Connect with beer industry leaders, grab a drink, and catch up with the Brewbound team. It's free to attend and walking distance from the convention center. Head to Brewbound.com slash lovecity.rsvp. And don't forget to catch the Brewbound team at booth 956 during CBC. We're live from the Craft Brewers Conference, next on the Brewbound Podcast. Hello and welcome to the Brewbound Podcast. I'm Justin Kendall.

[00:00:47] Jessen Fante: I'm Jessen Fante. And I'm Zoe Licata.

[00:00:50] Justin Kendall: And as I said, we are live. You can hear the bustle on the floor at the Craft Brewers Conference. It's day one. How you feeling, Jess and Zoe?

[00:01:00] Jessen Fante: Well, I'm just psyched that we're all together in person. This only happens a few times a year.

[00:01:04] Benny Ashburn: Yeah. Happy to be here. We're like three booths down from Elvis. There's a nice little cutout down here that we can look at. Maybe we need to snag a photo later.

[00:01:15] Justin Kendall: We got a cozy corner booth here. I kind of like it here.

[00:01:19] Jessen Fante: I like it. Yeah. We are at booth 1989. Apt. It's a big Taylor Swift Newsweek. So yeah, we snuck in on some of that. Yeah. We are not going to talk about our ex-boyfriends.

[00:01:32] Benny Ashburn: We will not be playing all 30 plus songs of the new album.

[00:01:36] Jessen Fante: Homegirl needs an editor. Wow.

[00:01:40] Justin Kendall: come for the Craft Brewers news, stay for the Taylor Swift critique.

[00:01:44] Jessen Fante: Yeah. So yeah, we are fresh out of the first general session that included remarks from Brewer's Association President and CEO Bob Pease, Brewer's Association Board of Directors Chairwoman Leah Justin, also the co-owner of Right Proper in Washington, D.C., also a recent person who got around with us. So you can check that out at Brewbound.com if you're an insider. But the bulk of today's general session was a really interesting sit down conversation featuring Crowns and Hopps co-founder and CEO Benny Ashburn and Fawn Weaver, the founder, chief historian, CEO, many, many hats wearer of Uncle Nearest Whiskey. Where do you guys want to start?

[00:02:28] Justin Kendall: I think we rewind and talk a little bit about Benny and the deal that they struck real quick because that was on the tail end of last week. There was a big deal between Crowns and Hops and Full Circle Brewing in California where they formed a strategic alliance that makes them what? The biggest black-owned brewery conglomerate group?

[00:02:51] Jessen Fante: Alliance? Yeah, for sure. That feels like five years ago, and yet it was four days ago. So yeah, huge news that came out at the end of last week. Benny Ashburn and T.O. Hunter, the co-founders of Crowns and Hops, and Arthur Moyet, the owner-CEO of Full Circle Brewing. but also Speakeasy, Ales & Lagers, and also Sonoma Cider. So these guys have united as the Circle and Crowns beverage group. They're a strategic alliance and partnership that's going to allow them to share resources, share Salesforce, and really kind of find the strength in numbers that is certainly required in the marketplace right now. Justin, you and I chatted with the crew on Friday.

[00:03:34] Justin Kendall: No equity being exchanged in this, but it is sort of, it is this shared agreement that they have that will give them scale, give them resources that they didn't have, like you just said. And, you know, what's wild to me is they don't have the overlap in their distribution, but they don't see that as a challenge for them. They see it more as an opportunity to sell those individual products.

[00:03:59] Jessen Fante: Yeah, that was interesting because they asked you and I like to help them break the theory. And we both were like, well, you're not in the same wholesalers. And they all were like, yeah, but that's a good thing, which honestly, I could see. I think, you know, when you are trying to get your foot in the door at a wholesaler, sometimes it's nice to have just one brand to get all the shine, all the attention, all the love. When you walk in with a portfolio straight off the bat, and maybe you're not as known a quantity, it can be hard to get the attention that all those brands need.

[00:04:28] Justin Kendall: I see the benefits and I see the negatives in both. Instead of having one truck that's going to one distributor, you've got multiple trucks. But hey, they're going to figure it out on their own and that's a good thing. And that sort of rolls in to what Fawn Weaver was talking about in the keynote slash fireside chat was, I've got all these old heads that were telling me advice. and I did the exact opposite thing.

[00:05:00] Jessen Fante: Yeah, that was great. Fawn basically said anytime anyone that had been in the industry a long time told her what to do, she did not that.

[00:05:07] Benny Ashburn: Right. Because she's trying to do things that don't exist in the industry yet. And so you can't copy the same code or playbook if you're trying to do something that doesn't exist. Exactly.

[00:05:17] Jessen Fante: Yeah. What's interesting about Uncle Nearest is that Fawn launched it in 2017. And obviously there's there's big differences between beer and spirits in terms of how they get to market. But something that people had been telling her was do not go into open market or do not go into control markets. Focus on the opens. And that's not what she did. She went to control markets first. And they were in all 50 states in two years. You know, if she was told, start in your home state, you know, build small at home, maybe consider getting into your neighboring states, maybe think about going beyond that. And I think the thing that she said was that she imagines most people die waiting for the strategy to play out.

[00:05:55] Benny Ashburn: Yeah, it was an interesting thing to hear because we've had so many conversations over the past couple of years where, at least in Craft Brewers, it's been pushing, hey, maybe don't go big, stay kind of small and local, focus on your home market. So it was kind of like different messaging than what we've been hearing a lot for Craft Brewers.

[00:06:16] Justin Kendall: I'll be honest, I had some cognitive dissonance there because we are at the Craft Brewers Conference. It is put on by the Brewers Association. They support small and independent breweries. And on stage, Fawn Weaver is talking about taking... This is one of the fun things about being on the floor is you never know, like, when somebody's going to drop a giant metal thing.

[00:06:38] Jessen Fante: I'm just glad we're not at JBF.

[00:06:40] SPEAKER_??: Yeah.

[00:06:41] Justin Kendall: So one of the things that Fawn was talking about was taking investment and not being afraid of basically selling, being acquired. And one of the things that I know you highlighted on social media, Jess, was her comments about, it was like, stay small and you die. Or, you know, you lose the equity or the value in your business when you sell.

[00:07:04] Jessen Fante: Right. Yeah. If you stay small, like you will die or you will need to be acquired and you'll be acquired at a loss because you didn't grow. It's interesting. I mean, I see all sides of this. That to me made a lot of sense. You know, Fawn talked about how some craft distillers have so much pride in being small and they do like eventually have a hard time grappling with, you know, what is needed to survive. And I'm going to paraphrase here. But something that gave me a little bit of a chuckle was when she said, like, at some point, there's there's no more pride left in doing your own accounting.

[00:07:34] Benny Ashburn: Yeah. Yeah. I don't necessarily think she was totally saying, make sure you get acquired or something. It almost felt a little bit like she emphasized I could be she's valued at a billion dollars. I could be two billion dollars, but I wanted to stay independent. So she was still pushing, hey, stay independent. But you need help. You need investors. You need to think bigger. And so she was. You know, saying, yes, be independent, show who you are as a person and as a brand, make sure your liquid is number one. She said that a lot. But yeah, you can't just stay tiny because it can't last forever.

[00:08:06] Justin Kendall: And the amount of investors she said that they have is somewhere in the neighborhood. I want to say it was like one hundred and sixty, one hundred and seventy. And she said those become your brand ambassadors. They're the ones that are doing the legwork for you and helping. So. totally see a lot of the directions that she's coming from. But yeah, like the investment piece, I thought was very interesting.

[00:08:27] Jessen Fante: She also said she has no private equity invested. That was interesting.

[00:08:31] Justin Kendall: That's wild.

[00:08:32] Jessen Fante: That is not the case in Craft Brewers right now. So that's really, really fascinating.

[00:08:38] Justin Kendall: And we've seen how that's played out for Craft Brewers, too, that have taken private equity because they're on their own schedule. You know, within five years, they're looking for an out usually. Right. If they can get one.

[00:08:48] Jessen Fante: Right. Usually that doesn't always go well.

[00:08:51] Justin Kendall: It was a fascinating day. And when you look at the voices that were represented on stage today, it's very different from Craft Brewers in the past. Of course, Bob Pease is going to be out there to do the welcome, but I think he was on stage for less than five minutes.

[00:09:06] Jessen Fante: Yeah. Yeah. I love how when Leah, you know, got up and took the mic, she was like, let's just call it out. Like, yeah, I'm a woman. So like, sometimes you got to do that. And sometimes I feel like there's more power not doing that. But I think for Leah, it was perfect. Yeah.

[00:09:20] Justin Kendall: And she did a great job of framing things where she was saying, you know, we can look at things in a negative way or we can look at things in a positive way. And I think that she had pointed out, and I cannot remember the last time that there was a chairwoman. 2007. It was 2007. OK. I was like 17 or 2007. Anyway, Kim Jordan, New Belgium Brewing. And she's like, Is that really the best we can do? Or I can look at it in a positive way of, you know, we are making change. This is a very different look for the Brewers Association than you've seen in the past.

[00:09:53] Jessen Fante: Yeah. She pointed out that we're doing a little bit better than the rest of the country.

[00:09:57] Benny Ashburn: Just overall positivity was a big theme through all three of the speeches and conversations. Bob really emphasized all the positive things that are happening in craft. Leah said that about looking at positives. And even Fawn started her conversation with Benny and was like, we're not here to talk about the negatives. We're going to talk about the good things and positive things you can do.

[00:10:17] Jessen Fante: Yeah.

[00:10:17] Justin Kendall: Honestly, like you can only talk so much doom and gloom. So maybe we'll get into some of that when we have the state of the industry speech tomorrow.

[00:10:26] Jessen Fante: Yeah, for sure. Yeah. The doom and the gloom are coming. Yeah.

[00:10:29] Justin Kendall: It's the yin and the yang. Yeah.

[00:10:32] Benny Ashburn: Yeah. Bart Watson will be speaking tomorrow, giving us all of those numbers. So we got a little teaser of it. Is that last week now? It feels like a million years ago. Was that just last week? That was just last week. Where we got the numbers from their production report and top 50 numbers. So not as happy.

[00:10:49] Justin Kendall: Well, I think that's a great segue because we didn't tee this up at the beginning of the show. But hey, surprise, we have an interview that we're going to share with you right now. And that's with Dave Williams and Brian BK Kruger from Bump Williams Consulting, basically running us through Q1 of 2024 and talking about the trends that they're seeing and a little bit of, you know, scan mixed with just market analysis.

[00:11:15] Benny Ashburn: Yeah, we covered a lot in that conversation from just what is happening with resets, how Kraft is facing that. We talked about Dry January. We talked about Art Cider. We try to hit as many things as possible because they have so many insights there just in data and the conversations they're having with both suppliers and retailers. So it was a really good conversation.

[00:11:37] Justin Kendall: Well, let's get to that conversation. We're a quarter of the way into 2024, and now feels like a good time to catch up with the team at Bump Williams Consulting on what's happening in Bev Alk. So joining us now are Dave Williams, the president of Bump Williams Consulting. What's up, Dave?

[00:11:58] Fawn Weaver: Hey, Justin, how's it going, man? Good to see you. It's going well. Is that a new title? It is. As of Jan 1, Bump bestowed the president title on me. It was a nice way to start the year for sure.

[00:12:09] Justin Kendall: Well, that's awesome. Congratulations. Thank you. Thank you. Also joining us is Brian BK Kruger, VP of Business Development and Portfolio Strategy. Welcome, BK. Thanks, Justin. Good to see you both. So let's dive in because we got a lot of ground to cover. All eyes are on spring resets and how the momentum shifts we saw created by the Bud Light fiasco last year are either sticking or not. So Zoe covered some of this in a wholesaler survey put out by Goldman Sachs that pointed out that Molson Coors and Constellation brands are are the big winners here, while Kraft and Hard Seltzer are kind of taking a hit on the shelf. How are you seeing Kraft fair so far on shelf space losses?

[00:12:58] Fawn Weaver: So I think those quick highlights that you just laid out are pretty spot on. I mean, there's not really a ton of surprises in the big winners, and there's probably not a ton of surprises in the fact that Kraft continues to get squeezed, which we are seeing play out in the data, whether it's TDPs, whether it's points of distribution, whether it's just the general word of mouth you hear. The retailers in general, and I think a lot of it is proactive from the supplier side too, not actively trying to lose space, It's all right now for craft in the name of refinement and getting a little bit more efficient in the assortment. And with that inevitably comes a reduction in products and brands that just aren't making the cut. And I think it's a little bit more of strategy play too. Let's double down our efforts on the ones that are moving, get a little bit tighter on the brands that we can and want to control. And while space might be down, I think efficiency for craft overall is actually flat to up, depending on the timeframe that you're looking at it. So these steps, while it might hurt on the surface and it might hurt some individual brands, I think is a good thing and could be a good thing for craft momentum as a whole moving forward.

[00:14:08] Uncle Nearest: I think overall what we're seeing is right in line with how the trends ended last year when everybody was presenting. Those that had good stories to tell are those that are benefiting. And like Dave was saying, as far as craft, it's all about getting a little bit more efficient and a little bit more productive and focus more towards those core SKUs back on the shelf. And I know we talk about this quite a bit as far as shelf placements. The real scorekeeper is going to be as we see what the features and the displays and the floor space for those starts to turn around coming to next year. And we're seeing those trends as far as the shelf space be reflected and already in the commitments that are coming up as far as who's going to be getting more floor space and more features for key holiday periods coming up as far as their planners.

[00:14:52] Benny Ashburn: That efficiency aspect was a big focus in the last report that Bump sent over to us. And he also pointed out that part of that efficiency is just less innovation. There are fewer innovation items at retail. Can you dive into that a little bit? And where are we in that process of efficiency and slimming down? Is this still kind of the beginning or are we going to kind of level out soon?

[00:15:16] Fawn Weaver: No, I think I think you're 100% right with that. It's not just core brands or maybe brands that aren't as relevant getting pushed off to the side. It's just the absolute kind of hard stop on the number of new brands that are even finding their way to the shelf. And I think that's definitely applicable for craft because that's been the biggest pool of innovation and just sheer products on the shelf. But it's something that we're seeing across a lot of other segments as well. So craft isn't the only segment that's getting a little bit of the Heisman when it comes to innovation. It's something we're seeing for beer across the board. We're also seeing news slow down a bit for the RTD side. I think it's just we're at that point where space is fixed. You can allocate things accordingly and When you start to realize how many brands you actually need to account for 85, 90% of your business, and then the impact to the bottom line that new brands are bringing from an incremental dollar perspective, everyone's looking at that matrix and trying to find what the good fit is. Because sometimes new, especially with how short life cycles have been, It just hasn't been worth the effort, the time, the space allocation. When you've got proven winners that you might not even be looking at to the left and right, that maybe even just an additional facing will be more worthwhile down the road than allocating that to something unproven, brand new, that requires a lot of work to push and sell and connect with consumers.

[00:16:44] Justin Kendall: As far as what you're hearing from wholesalers and the retail buyers, what are they telling you at this point as far as what they're willing to take in? Because we know that innovation has been an important piece of the business, but like you said, there's this efficiency that's going on and this rationalization. It's gotta be a difficult balance to strike.

[00:17:08] Fawn Weaver: It absolutely is. And I think that's why you're seeing new New is still relevant to beer, right? I mean, new is always going to be a source of incrementality for the category. I think what we're seeing new mean this day and age is an extension of a familiar brand name. So consumers have a built-in trust or history with that product. It might not be that exact one, but it's the anchor brand that's been kind of spun off of. I think packaging, and now it's really occasion-driven. We see it with the 19.2s. We saw it last year. We continue to see it now. That's where innovation is for a lot of suppliers and wholesalers now. It's just give me this package or give me this extension that I can that can plug in without worrying too much about building it up to begin with. And I think the other bad news for beer and for a lot of suppliers is that what wholesalers and retailers are looking at to add, it's outside of beverage alcohol. It's still beverages, but it's outside of beverage alcohol. Energy, health and wellness, value-added ingredients, water, sparkling or still, all those types of products even outside of beverage, too, right? You know, they're kind of looking at other emerging categories that they can get on the trucks, get on the shelf and drop off at the same store while they're already there. So some of it, there's still a path for beer to find an opportunity to get on there. But there's got to be a purpose behind that innovation. And some of it is bad news for beer when it relates to what other tiers of the business are prioritizing and looking at.

[00:18:43] Uncle Nearest: Yeah, that's just the reality of this business is it is more global, both as far as kind of the map, but also within that store, as far as the different categories that are impacting beverage alcohol decisions that are being made. And it's tough to ignore that beer has been flat to slightly down as far as share of overall dollars going through those stores. And you look at where the excitement is, and like we see it in beer with flavors, You're seeing even more excitement in that with the sodas and the energy drinks and the health and wellness and everything that Dave mentioned before. So you're starting to see, not necessarily shelf space gets squeezed a little bit more, but it is more at a premium. And then that translates into that kind of in the aisle display space, which is getting cutting down, not just for beer, but overall, as far as Bev Alk. They're being much more strategic. Buyers are much more savvy as far as what's going on with the other categories outside of the ones that they specialize in.

[00:19:38] Benny Ashburn: Do we know about Kraft's shelf performance right now of just like how much is out there and its efficiency? What about just the overall like what we're looking at right now to start the year? How is Kraft performing? I know it's kind of a slow time of year, but what are those early scans look like?

[00:19:55] Fawn Weaver: It is, but I have good news on this front. I like good news. I like talking about positive things and trends for craft in channels like grocery and even in convenience to some extent. They've come out of the year not blowing the doors off, but flat to upper slightly below. It's a good start to the year. It's a stable foundation that you can at least look to build off of as you get into the summer and fall, which is a good stretch for craft as well. So I think when you look at overall trends, all outlets, liquor tends to be pulling things down quite a bit for craft, but that's true for beer almost in general. That's been a really tough channel for beer. But in grocery, And even in C-Stores, where a lot of other segments haven't been able to cycle that great 23 we saw last year, Kraft is doing all right on that front. So there is some positivity under the surface. And again, the story though, wildly different under the hood when you look supplier to supplier, brand to brand. But Kraft, I see a lot of signs, whether it's total trends, whether it's on specific attributes, that shopper base is still out there. They're still looking for Kraft. They're still looking for the brands they like. They might not have as wide a scope in terms of what they're willing to pay for and pull off the shelf. but there's still a very loyal craft consumer base out there. And I think back to that refocusing element, looking at your own portfolio, being a little proactive, getting more structured in terms of strategy and identifying opportunities. I think the companies that are doing those things are starting to see the benefits pay off of all that hard work they've been laying and all this weathering on the storm that we've seen over the last few years for Craft Brewers.

[00:21:43] Uncle Nearest: Let's face it, craft and beer styles are a personal decision. It's a personal extension. It's one of the more visible ones in this industry. With brand affiliation fading, you still see more brand loyalty and some Craft Brewers are able to extend that to the shelf and maintain their shelf presence on there. But again, it's a personal choice as far as the t-shirt that you wear, the Craft Brewers that's your favorite if it's in your hometown or on the shelf in a more regional basis, the type of style of beers that you drink. So I think those are the benefits that craft has going for it and some of its strengths that they should leverage moving forward.

[00:22:20] Fawn Weaver: Yeah, I actually want to add on that too. It's not just paying attention and looking at what's going on, it's being willing to adapt to what's going on too. You have to have a little flexibility and we've seen it with these Occasions being shifted toward craft lotters or pilsners or blonde or golden ales, right? It's the companies that were able to identify that movement and that opportunity and have been able to get a product out there that, A, aligns with who they are. To BK's point, it's still got to be authentic to that connection with consumers. but now it fits an occasion that you were able to grab that baton and run with it that might not have been there two, three years ago. Now there's an opening. You gotta be able to adapt and willing to adapt and quick to adapt right now to survive.

[00:23:06] Justin Kendall: So one of the things that obviously has happened over the last few years is price increases. And price of craft keeps creeping up along with every other segment. But how much of craft status as an affordable luxury is being challenged at this point?

[00:23:24] Fawn Weaver: I think that Kraft has always been on the high end of beer, right? That's not a new tier that they're playing in. And I think if you start to dig into some of these price tiers within Kraft, where it used to be really skewed toward the high end, like the apex tiers when it came to incrementality and growth, not necessarily size, but there was a lot of momentum on the higher end. You don't quite see it skew as high now. That being said, if you look within that 40 to 49, 99 window of Craft Brewers where a lot of brands sit currently. there's still some growth on that higher end of that spectrum, creeping toward $50 a case or above. Now, it's more brand specific. This day and age, you have to justify your price point a little bit more in terms of either just pure connection or quality or image or relevance or awareness. You know, checking all those boxes that you always had to check, you just might have to work a little bit harder to justify it now. But I think fewer people are willing to extend on unknown quantities. So you do see some softness for various brands on the higher end. But at the same time, value driven brands aren't exactly the fix either. I think that's when Craft Brewers have been able to adapt with these lager or pilsner offerings that are at a lower price tier, different style, different occasion, perhaps a different shopper, casting a wider net to get maybe the more price conscious while also meeting their you know, their core craft consumers that aren't as sensitive are still willing to extend with that other part of their portfolio. So not quite top heavy, like it once was in terms of high end growth or apex growth, but there's still some activity there. And like, like it goes back to what I said, there's still those shoppers out there. It's just fewer and farther between with the brands that can connect and justify those points.

[00:25:21] Uncle Nearest: I think it'll be interesting as we conclude our first quarter wrap-up on Kraft and start to publish some of those results, you'll see exactly what Dave's talking about as far as the different tiers within Kraft and exactly where those thresholds are now and what impact it's having as far as the overall velocity within a certain pack type or a price point that's going out to the market right now.

[00:25:44] Benny Ashburn: In terms of the trends within package formats, we saw last year now 70% of craft is cans and the number two package is 12 packs. And we also have continued to talk about 19 twos, possibly some 18 packs coming in there. I don't know if there's going to be some more larger sizes now that brands are getting into the light lager game a bit more, but what are you seeing happening in terms of package?

[00:26:12] Fawn Weaver: I don't have a complete shift in narrative versus what you laid out, Zoe, right there. A lot of what we saw toward the end of last year has carried through to this year. 12-pack's still connecting. Single's still connecting. You get the core 6- and 4-pack cans, depending on the pockets of the country, kind of treading water. It's a bit of a churn going on there. There's some up, some down. So it's just kind of holding steady. It hasn't pivoted or veered off course from what we've seen start to develop. I do think that some brewers are getting creative on those package formats with their lower priced alternatives based on a style. And that's to meet that magic price point of number of cans or number of bottles or ounces that you want to consume per occasion, but at a more affordable spot. So you're seeing package deals for the singles, right? You're seeing some three packs that pop up out there. That's more of a domestic play or an import play coming into the craft world. So it's a similar blueprint that a lot of beer was already doing. We're seeing be adopted by craft now that they're into this you know, maturity phase, you have to get a little bit more creative or tactical to find those, those wins. So nothing that's flipped the narrative on its head. It's more of the same. And it's, it's at the same time too. It's, it's finding a point where you can get consumers a price that they're comfortable with without putting yourself in jeopardy along the way, because playing a pure volume game has never been, never been a great strategy for, for Craft Brewers. I think sticking with, what works for you without putting yourself, you know, way past the ledge is still the right play.

[00:27:53] Uncle Nearest: Getting competitive with a craft light lager is a tricky proposition in this market. I mean, especially for these Craft Brewers because then you are looking at consumers who are very price sensitive and they're getting the same style of beer. They're looking for a larger pack size at that same price point. It's also oftentimes less efficient On the Craft Brewers side, as far as the tag time and taking things away from other higher priced items that they know that their consumers will pay for. We love the trend as far as light loggers and pilsners and blondes going out there. It's a tough proposition because you do start to go into some different competitive sets and that consumer's not just choosing it because it's craft, they're choosing it because of the value that's out there on the shelf.

[00:28:36] Fawn Weaver: Yeah, that's a great point.

[00:28:37] Benny Ashburn: The value piece comes into play a lot with the single serves as well. And we've seen that mainly kind of dominated by one key craft player. Has there been any way for other, like are we seeing any change in that other craft players getting to participate in or is it really still top heavy?

[00:28:56] Fawn Weaver: It's still pretty top heavy, especially on certain styles. You might see carved out of the data. If you're looking for a hazy Imperial IPA in the 19 two space, I can probably guess where 90% of those sales are coming from. Right? So that, that hasn't completely flipped, but we are seeing other brands able to crack. It's just on a much lower scale, but the momentum is still there behind it too. And on that topic, I think the Voodoo family has done a great job expanding its presence on the shelf. We are seeing some cannibalistic impacts take place within the family, but largely still net positive. So whatever game they continue to play and connect with these extensions, it's still a net positive win for the trends of that family. And as long as that's taking place, I don't think wholesalers or retailers are going to try to change things too much. They're going to continue. If it ain't broke, don't fix it. But it has opened the eyes of those same people to consider other brands to find success in it. Local options, high ABV options, Not so much on the lighter, longer side just yet, although those are also out there. It tends to be the IPAs, the higher ABV choices, the bang for your buck options coming off the shelf. That's still all pretty much structurally similar today as it was coming into this year.

[00:30:20] Uncle Nearest: Yeah, Dave's spot on with that as far as the impact that VUDU's had on this industry and it has opened up some shelf space, but you're not seeing 19-2 hold doors of double IPAs. You're seeing usually one dominant player and then possibility of a couple of local opportunities. Some of the things that we don't have as much visibility on though is that local affinity for those brands in the concerts and the venues and sporting arenas and those that translate in from there. So it's definitely been an industry changer and it's opened up some opportunities, but it's not going to be a game changer for that whole door of 19.2s that's going to be out there. There's only so many of those beers that people are willing to buy and it's a part of their life.

[00:31:06] Justin Kendall: One of the things that stood out to me at the end of last year was the two ABVs that were growing. One was non-ALK basically, 0%, and the other was 9%, being sort of the sweet spot, and obviously we've talked a lot about 19-2s and the growth there, and I mean, that's exactly where a lot of those double IPAs are playing. Have we seen anything this year to show there's another ABV area that might be showing some growth?

[00:31:39] Fawn Weaver: At the big picture level, it's tough for that to really trickle through because there's still a lot of that long tail being trimmed off, and that's adding up to pull down a bunch of trends. But if I look at some of the leading growth brands for craft, just on a pure individual brand level, They're in that 5% to 7% range for the majority. So there is still plenty of success. I mean, that's the bulk of Kraft ABV is in that 5% to 7% range. You just happen to be getting a lot of new and a lot of novelty around the zero and nine, whether it's format or whether it's emerging or re-emerging non-alk. landscape, right? But I still think it's very important to meet consumers or to fish where the fish are in that five to seven range. You look at the other brands that that top the charts of growth and I don't want the big picture to make people think that you can't succeed unless you've got the extremes. They're a nice bolt on to have maybe in your taproom or maybe in your local footprint, absolutely to capture those occasions. But I still think the volume still lies within that five to seven sweet spot, dipping down a bit more if you want to, you know, attack on a Pilsner or a blonde. But I think there's plenty of examples to point to that are growing in that, you know, mid range that are essential for craft to continue. Because it's not just a one or two per occasion play, you're hoping to get a couple more in that volume per occasion play to keep the lights on and keep your business just on a larger scale.

[00:33:13] Benny Ashburn: Moving away from craft and to a segment that I love to talk about, ciders. Lots of growth coming from those regional brands. They make up more than half of the segment now. They also are seeing a lot of growth in those higher ABV ranges. What other trends are you seeing from that cider segment? Are they going to be able to maintain this growth? It's still pretty small, so what significance does that growth really have in things?

[00:33:43] Fawn Weaver: I think on an individual supplier basis, that growth is extremely significant, right? And it's about communicating the message. And one of the greatest quotes that the BK and I had or heard, we didn't come up with it because it's a great quote. We heard it on a conversation. It was, you know, non-beer continues to win with these flavor offerings. And cider falls very much in that realm of non-beer, traditional beer in your mind. And then you look at the brands that are succeeding in that space. And it's mirroring like kind of like the craft blueprint, right? They're playing or emphasizing quality. They're playing with style in package and ABV. They're even introducing a little bit of these cocktail inspired offerings out there. So it's trying to meet these consumers who are looking for a lot of these attributes, but just delivering it, you know, with the cider foundation or through a cider vehicle. So it's a very similar approach to what Craft Brewers has done just on a smaller scale. And one of the other interesting things that was also brought to my attention, I got to start coming up with interesting things of my own and just stop talking about the ones that get brought to me. But you know, in certain markets across the US, the leading cider brands are just as big or bigger than some of the local craft leaders. So there are some very impactful products. in the cider segment that are helping, that are good for the beer category and trends as a whole, and that I think companies are looking to speak more loudly about, let more people know about things like that so that this momentum that cider has can continue to build and swell and expand and be brought to other markets that might not be as open or as front and center with it just yet.

[00:35:29] Uncle Nearest: Cider's an ideal delivery vehicle for a lot of those trends that you see that consumers care about. I mean, we didn't even mention health and wellness in there, but we definitely mentioned the flavor, cocktails, variety, ability to increase the ABV and check all of those boxes. It's fantastic. And then on top of that, you throw in the regional and the local affiliations that people have with cider. All of a sudden you're starting to cross into territory where they're not cider drinkers. They're just drinkers and they're drinking the same thing in other categories. Cider happens to have an ideal delivery vehicle for them to reach into that and kind of make that connection. So really exciting things going on with cider right now.

[00:36:08] Justin Kendall: Zoe and I have been tracking things like Stateside Vodka, Buzzballs, Beatbox is, you know, wine-based at times, and it's malt-based at other times. Like, we're getting way, you know, into the weeds on base, but what are some of those challenger brands beyond those maybe that you see coming up?

[00:36:28] Fawn Weaver: So I think one of the big ones is long drink. Long drink is still putting up some, some good stats and it's got a point of differentiation, right? Gin based. It's got a lane where it can kind of slide in among those other leaders as the go-to gin based offering. You can't take your eye off of what neutral has been doing either. I know that's not a small and upcoming brand, but that continues to show that it can challenge high noon. in a lot of single markets in terms of performance and size and velocity. So that's got some runway to grow there. And then yeah, Surfside is a shining star right now in that. I'm paying attention to Jack and Coke. It's one of those unique ones where that's one of the brands attached to an existing spirit brand, traditional spirit brand, that's continuing to find success and innovate around it. So those are the ones that are picking up share. And there's some other new ones coming into the space. I still look at, you know, some of the craft brands like the dogfish cocktails and seeing what they can do as still a top 25, you know, brand in the landscape. But those would be the ones that come to mind in terms of Who's picking up share? Who's got momentum? Who's got a runway for distribution? Because it's a long road and the market to market could change depending on how things flip from retail access. And right now, a lot of eyes are on the spirit based foundation of it. So, you know, that's kind of what I look at. But yeah, buzz balls, that's you talk about five tool athletes in baseball, that's a three tool athlete in our team, right, that can cross a lot of a lot of things. And, and I wonder brands that do have a spirit base now, if there's an opportunity that isn't going to open up with that. with a spirit base. Do they pivot to malts? I don't know if they will, but you got to start thinking about that once they get a taste for success and they're running into roadblocks. How do you pivot and adjust to that too? I don't know if that's a realistic priority right now, but down the road when you're searching for more incrementality and it's not as easy to pick up, strategic moves could be made.

[00:38:29] Uncle Nearest: I think it's going to be interesting to watch because there's more than a handful of quote celebrity and digital social influencer brands that are coming to the market as well that are going to have that account base, not necessarily the account base, but the consumer base already built into other things that they're doing and other lifestyles. And so it's going to be tough to ignore those and the power that they're going to bring as far as an audience into the market. And it's a new wrinkle into especially kind of the beer and the spirits space. I mean Spirits has had some celebrity, but extending it into this RTD market is going to be interesting to watch this year. And those are decisions that distributors and retailers are making right now.

[00:39:11] Benny Ashburn: I know we're still early into a lot of the launches of these products, particularly the crossover products, but do you have any indication of what a typical life cycle or lifespan can look like for these? Because the innovation space, you know, it can be kind of short sometimes. So are they able to find a place to like stick out and stick in it?

[00:39:34] Fawn Weaver: I've been thinking about this a lot because These crossover brands have been impactful when they've hit the shelves, right? People are buying them, people are trying them, but none of them have yet to become quite a beer category titan, you know, in that space. I think it's turning more into a churn. You're seeing the different flavors come in and the OG flavor showing some decline, right? So I wonder about the longevity myself. We're seeing, two, three year life cycles of growth at most for a lot of these and maybe not even that long. And sometimes I'm waiting for this next one because I'm already starting to slow down and I need this next flavor to pump me up. So I don't think there's been quite a standout for a long life cycle yet. And I think that's why there's still a lot of activity around the innovation space, but all it takes is one to stick and make an impact and continue to climb that ladder. And, you know, you think about, I know this isn't a crossover brand, but a brand like Twisted Tea that continues to rise and is a top brand in the beer category and continues to grow. We haven't seen that from a lot of these crossovers yet, but the companies involved with making them, they're learning along the way what it takes to persist, what it takes to last, what it takes to execute. maybe those learnings will turn into one of those stickier brands long term. It's not like they've all gone away just yet either. I don't want to make it sound like I'm discounting them like there has been, but I do wonder about that life cycle and if there are any that can to make an impact like these beer brands that we know today.

[00:41:13] Benny Ashburn: Do you have any indication from the retailer, beer buyer side, are they giving potentially more grace or more time for these brands to figure out if they can work because they're coming from potentially existing brands they know of, like these giant spirit companies, or are they still kind of have the same, if you're not putting up numbers pretty quick, we're going to move on?

[00:41:37] Fawn Weaver: I think it's probably a lot of the latter. I mean, you still have to perform at the end of the day. Nobody's immune to performance. You look at some of the brands that are being cut this year. They're the biggest brands in the industry. So you still have to perform. Your SKUs have to perform. If you could continue to demonstrate that you're bringing incrementality through cross-promotion opportunities, or you're bringing a new shopper into your store by innovating or being on the shelf, I think that might give you a little bit of a longer leash, because you're doing something a little different what you might be replaced with can't quite replicate. So that might extend it a little bit, but at the end of the day, the numbers have to be there.

[00:42:15] Uncle Nearest: Yeah, retailers are keeping score day one and they're ready to make adjustments on a much quicker basis, even if it's with something giving more space to something else that's on the shelf that may need a little bit more holding power just to make that shelf a little bit more efficient. So yeah, you need to be ready to hit the streets running and put up numbers as soon as you get out of the gates.

[00:42:38] Benny Ashburn: On the other end of the spectrum here, just to touch on, we talked about non-alcohol a little bit, but could we get your read on just what Dry January looked like? I know a lot of people have been calling it Dry January, which I would like a different name for, please, but there's so many more options out there now. So what did that look like this year and what was that impact on beer?

[00:42:59] Fawn Weaver: So the non-alcohol segment as a whole has been one of the more consistent ones. I didn't see a massive spike in sales. for the first month, the second month, it's still in that 30 to 40 percent collective range as new brands come in and then the established players just continue to perform. So we're still seeing growth collectively. We're still seeing share get picked up. So, well, Dry January or any other alternative for how you want to phrase what happened this past one might not have it didn't fail. It just continued to keep consumers with that messaging in the space. And yeah, that's been one of those consistent growth engines, but you're right. There have been a lot of entries in there too. So once all of these start cycling, it's almost like every major segment in every category leader or every brand leader within that segment now has their non-alcohol alternative. So once you can check all those boxes, you know, Kraft has a longer list than imports and domestics and, you know, seltzers now have their, you know, non-alcohol alternative. So now that we've got this established mini beer category without alcohol, are things going to start to settle in slow and just get into more of that maturity phase? But right now we haven't seen it. We've still seen what seems like an influx and some organic growth coming.

[00:44:18] Uncle Nearest: Yeah, I don't think it's fair to measure the success of non-alc just in two months of the year as far as sober October and Dry January because it's very successful in establishing more occasions for non-alc beverages across different categories. And then that brings more variety and more availability from locals, regionals, imports, crafts, go on down the list, now all of a sudden you have a consumer that's like, hey, I don't have to drink all the time, and this is a non-ALC occasion, and I have choices, so I think that's for the good of the category. It's a good headline, and we talk about it twice a year for that, but the lasting effect happens throughout the other 10 months of the year with the consumer.

[00:45:00] Justin Kendall: It's really impressive to see, and not all data firms add non-alcohol craft into the craft number. So it's impressive to see what a brand adding in like the sales of an athletic would mean to the craft category.

[00:45:18] Fawn Weaver: Oh yeah, that definitely brings things up a notch. There's still a lot of incrementality coming there. And I think I just pulled this number. If non-alcohol beer is up 35%, let's just do somewhere in that range, not out craft, that collective universe is up plus 60 something percent. So there's still a lot of growth there from new, but athletic doing a lot of good work, continued good work along the way to propping up Craft Brewers and propping up non elk at the same time, not solely, I don't want to make it sound like they're doing all the work there as a leader in the space, they continue to deliver.

[00:45:54] Uncle Nearest: There's significant barriers of entry to get into the craft non-out game as far as if you're going to make the investment yourself. We're talking a lot of cash at a size that probably you're not going to be able to achieve to pay it off. And the other option is to go to co-packers who are capacity constrained right now as well. So while it might be a right move for your brand, It's really difficult to get into there. You've got to make a big commitment towards that. So I think that's a limiting factor as far as the craft non-out growth. But it's great to see that there are options available and other people are coming in to just enhance what's going on in the total non-out environment right now.

[00:46:33] Justin Kendall: Yeah, this will be a fascinating year to watch because some of those larger regionals such as Sierra Nevada and Deschutes are really just getting started in earnest in non-ALK.

[00:46:46] Uncle Nearest: Yep, and those are years of investments and product R&D just to get to this point.

[00:46:52] Justin Kendall: So one more thing I want to ask about before we get to our final, final question here is which new products, which new beer products you're sort of tracking through the early part of the year. You know, I've looked at some like top 30 lists and I think only one new craft brand really popped in there. and that was Voodoo Ranger Tropic Force, but beyond sort of like the Voodoo family sort of, or the Force family, I guess, poppin' numbers, is there anything that you're sort of watching?

[00:47:25] Fawn Weaver: So, there are some buckets that I am genuinely curious about, and this year is obviously a proving ground for a lot of hard tea brands coming for that twisted tea crown, so I am very curious to see how those all perform this year. Twisted Tea is still growing, still a massive share. There's a lot of big names though coming in, right? We saw Arizona last year, you got New Belgium, Monster, Lipton, Peace Tea, all those brands coming in with some crossover brands, some coming in from a different segment of beer, some just starting up. So that tea space is going to be a battleground and I'm curious to see how everyone fares against Twisted in that. I'm also paying a lot of attention to the imports is always jumping off the page lately about a growth area for beer. But a lot of that growth, at least the large scale is driven by Mexican imports or constellation more specifically. But I see a ton of growth under the surface for Asian imports, European imports, South American imports at the same time, as our country continues to change, as demographics evolve, brand preferences and styles evolve along with it. So there's a lot of open opportunity for imports from other countries beyond just the Mexican ones that have seen a lot of growth last year and continue to see growth coming out of the gate this year. So that's going to be another area for beer that I'm very curious about, because again, that's a higher end of the price spectrum. So you're targeting a higher end consumer, at least on a per case price basis. and you're targeting a little bit more market specific. So it's a little more tactical. So you might not see it pop on the top 30 or top 50 brand lists, but in certain markets, you're going to see some names on there that you just go, huh? All right. Well, that's something to keep an eye on. And then that's, that's the fun part for me too, is when you comb through certain areas of the country, you start to see developing trends in a product that, okay, where else could this go? Maybe it's just here, but maybe it's elsewhere.

[00:49:27] Uncle Nearest: Yeah, for me, I think it's going to be fascinating to watch what's happening in that premium and even sub-premium segment as far as where that consumer ends up because the world was shaken up quite a bit last year. And there were some brands that had kind of flat to slightly negative stories. They're all of a sudden in a position of growth and gaining more attention with retailers. And that's kind of both at the national level, as well as more we're seeing this come into play as far as some of those old school heritage brands. that have strong stories, strong affiliation, consumers that have come back to them from other places. I think they're poised to have a good year and I'm looking forward to see how all of that shakes out.

[00:50:05] Fawn Weaver: And if you want to tie it back to craft at the same time, I think my eyes always drift back to some of the legacy flagship brands that have been weathering the storm all this time and continue to stay on the list. Maybe not high in terms of growth or rate of growth, But are hanging on in terms of just sheer presence, like a Sierra Nevada pale ale that's been chugging along this entire time, or the same seasonal portfolio that still continues to churn out some wins every now and again at certain points of the year. So the craft flagships that we need to see healthy keep craft trends stable overall, because it can't all be done just by one rising star along the way. It's got to be more than just that for the segment when we talk segment health.

[00:50:55] Uncle Nearest: Yeah, those check the boxes that we've been talking about as far as kind of dependability, focus, efficiency, proven entities. I mean, that happens in the craft as well as kind of on the paps and the lone stars of the world. Like those have some of the best stories in the industry as far as flagships across craft and all. As far as saying, hey, consistently here for you. Consumers consistently come back to us. It's a part of their life. They may stray out, but they always come back to this space in both of those.

[00:51:26] Justin Kendall: Well, we were going to ask a final final, but I think you covered just about all of them.

[00:51:31] Fawn Weaver: We're trying to hit a wide spectrum there.

[00:51:34] Justin Kendall: Yeah. There's a lot going on. That was great. So thanks for doing this, Dave and BK. Anytime.

[00:51:40] Fawn Weaver: Of course. Thank you for having us as always. This is always a fun conversation.

[00:51:44] Justin Kendall: And that's our show for this week. Thanks to Jess and Zoe for all they do. Thanks to our guests this week, Dave and BK from Bump Williams Consulting. Thanks to our audio team for putting all of this together. And thanks to all of you for listening. We'll be back next week.