Bump Williams Consulting on the Importance of Defending Display Space, 1st Half 2025 Trends

[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. Next on The Brewbound Podcast, a halftime 2025 update with Bump Williams Consulting. Hello and welcome to The Brewbound Podcast. I'm Justin Kendall.

[00:00:48] Jessica Infante: I'm Jessica Infante. And I'm Zoe Licata.

[00:00:51] Justin Kendall: And we're back together.

[00:00:52] Jessica Infante: Wow. First time on time. Look at this.

[00:00:55] Justin Kendall: I don't remember the last time we recorded together. So this feels momentous.

[00:01:01] Jessica Infante: It's been a couple of weeks. Joey, I have to say you killed it last week. Like I would listen to you do that every week. Thank you.

[00:01:07] Zoe Licata: I don't want to do that every week. But I appreciate it. It was fun to like just kind of go with the flow and talk to myself a little bit.

[00:01:16] Jessica Infante: I used to do that in the summer of 2020 when we were using the audio from our old web series, Brewbound Frontlines. And sometimes I felt crazy, but sometimes it was like, all right, I can have a conversation with myself and foist it upon everybody that's listening.

[00:01:32] Zoe Licata: No, it wasn't bad, but I'm very happy that you both are back.

[00:01:35] Justin Kendall: Yeah, I'm happy to be back. It's good to be back from vacation and a COVID fever dream. Baby's first COVID. Finally happened. Undefeated for, what, five years?

[00:01:47] Jessica Infante: I think he was the last undefeated person I know.

[00:01:50] Justin Kendall: That I knew of. And I knew that I had it this time. Bummer. It was pretty obvious.

[00:01:56] Jessica Infante: Well, sorry to leave you guys high and dry, but I had a mostly good Jersey Shore vacation week.

[00:02:02] Zoe Licata: How was the plane banner scene?

[00:02:05] Jessica Infante: Uh, nothing crazy. Everybody with a hard T is really touting no carbonation. I guess if you want to talk about bubbles and their unfortunate side effects, the beach is the place to do that. But nothing new other than everything that I've already reported on. Frankly, I kind of stopped paying attention. Sorry.

[00:02:22] Zoe Licata: As you should, you're on vacation. I was on vacation.

[00:02:26] Justin Kendall: Well, we're going to be putting in a lot of work here very soon. We've got Brewbound Live coming up December 10th and 11th in Marina Del Rey, California. Tickets are available now. We've got a handful of speakers that we've put out there. You can check all of this out at Brewbound.com. So look it up and join us in California in December.

[00:02:48] Zoe Licata: Please. It's fun.

[00:02:50] Justin Kendall: Yeah, and a lot more details to come very soon, but we've got a big interview this week. And by big, I mean in length and also with our guests. And this is something that you did in my absence last week, Zoe, you talked to Bump Williams Consulting President, Dave Williams and VP of Business Development and Portfolio Strategy, Brian BK Krueger. And you're going to get into a lot of things at the halfway point of the year.

[00:03:15] Zoe Licata: Yeah, we tried to touch on as much as we could. They have a lot of great insights and try to pull some positive notes out of all the doom and gloom and a lot of the data right now, particularly for beer. We also touched on some of the trends happening in package size, what the heck is going on with F&Bs right now. There's a lot of really fun nuggets in there. So definitely stay tuned and listen to all of that because Dave and BK, they're always, always really great.

[00:03:40] Justin Kendall: And we're going to do an abbreviated version of the news this week. And we're going to talk about one big CEO change, which you could probably take your guess at which one it is at this point, because we've got multiple. There's the changes at Paps, but we're going to focus on The changes at Boston Beer Company, which is Jim Cook is taking over as CEO for the first time in what, 24 years? So back in the saddle again. And Michael Spillane is wrapping up. He's given his notice and he's leaving the company on August 15th. And yeah. I'm not even sure how to get into this because you covered the earnings call, Zoe. Yeah. And it was all normal. Michael was on the call. Jim's always on the call. But here we get this Friday news drop. And then Jim's telling the Wall Street Journal that there's no search. He's in the role. And to quote him, there are multiple people who are not yet ready. But in a couple of years, one or two of them will be which points to looking for an internal candidate. And of course he didn't name names. And the only other thing that we know is as of last Christmas or so, Jim's succession plan is to hand everything over to his wife, Cynthia Fisher.

[00:05:08] Zoe Licata: Yeah, the earnings call really didn't indicate anything. I'm sure you could go back and overanalyze it a little bit and be like, oh, well, Jim probably talked a little bit more than he sometimes usually does. But other than that, Michael is still on there. It's still talking about they're not great quarter, but positivity about Suncruiser and their future plans. Yeah, it was not expected at all, especially late on a Friday to scramble around to get that information out there. And it seems based on their plans, it wasn't really expected on their end either because they don't really have a plan.

[00:05:44] Jessica Infante: Yeah. I mean, we can look at what they've historically done for their past two CEO changes, which was go to their board of directors, which, you know, Dave Berwick had been on for like a long time, like 20 some odd years. I think Michael was a long time board member as well. And it sounds to me like Michael is going to retain his board seat. Is that right?

[00:06:03] Zoe Licata: Yeah. He's still going to be on past his, you know, his date that he leaves as CEO. He'll still be a part of the board there. And then he can still seek reelection too, if he'd like to. So we don't know yet if he's going to do that or not, but it is still a possibility. So he's going to be there at least through into next year.

[00:06:21] Jessica Infante: Interesting. Well, if you need some beach reading for our last couple of weekends of summer, Jim's book, which is called Quench Your Own Thirst, I believe. I go to Jim's book way more than I think is normal, but it's a great way to get color whenever there are new stories about Boston Beer. Because I enjoyed reading it. Obviously, I worked there at the time. He details their CEO process from 25 some odd years ago when Martin Roper was named CEO over Rhonda Coleman. And that was really interesting. So if you need something to read, hit up Jim's book. He writes it in snackable chapters that are like three, four pages, but that portion is kind of juicy. So maybe check that out to see if it gives you any insights into where his head's at. because we talked through this before we started recording and I'm not really sure who he could be referring to in terms of people who are ready in one or two years because they also have some people who I think would be ready to retire in leadership roles. I don't know. We'll see. I like the idea of retiring. I hope it happens for me one day.

[00:07:31] Justin Kendall: The other bombastic quote was, I don't plan to be doing this in five years, which from your 76-year-old founder, who would be 81 at that point, I would hope that he's not in that role and I would hope that he's doing other things at this point. But it's definitely a strange one to me that he would just come back into power at this late stage.

[00:07:55] Jessica Infante: Yeah. When Martin said that he was retiring and I was still there at the time, so it was a while ago, that search went on a long time, like a long time.

[00:08:04] Justin Kendall: It did.

[00:08:04] Jessica Infante: A year, maybe? I feel like we were talking about the CEO search forever. And then when Dave announced that he would be retiring, they immediately announced Michael right away. So you've got like a tale of two CEO recruitment phases.

[00:08:19] Justin Kendall: Not only that, the period that Martin was in the job was 17 years. And then Dave gets about five or six in the role and then retires and ends up at Spindrift. And then Michael gets 16 months on the job and we don't know the circumstances behind him leaving.

[00:08:40] Jessica Infante: No, he said personal reasons.

[00:08:42] Justin Kendall: Yeah.

[00:08:43] Jessica Infante: Yeah. I hope everything is okay.

[00:08:45] Justin Kendall: for him personally. Down quarters, you know, shipments down, Suncruiser a lone bright spot, Twisted Tea running into some issues. I'm looking at a Bernstein Beer Marketers Insight chart right now, and Twisted Tea makes up 46% of the company's portfolio at this point, which it is an amazing chart to see 2001 where it's 100% beer, 2024 it's 17% beer. 46 twee, 7% angry orchard and 24% hard seltzer.

[00:09:23] Jessica Infante: Those changes were gobsmacking. And the fact that tea has been down, I almost feel like they probably never thought could happen, but then it happened.

[00:09:33] Zoe Licata: Yeah. Jim mentioned on the last call, he think he said 85% of their business is in some sort of beyond beer space now.

[00:09:40] Jessica Infante: Which is up 5% from where it was like last year. Yeah. I mean, I know they think they have something with Suncruiser and the branding all over the Jersey Shore was impressive. Like Suncruiser is so visible as I learned from my new friend at Shorepoint, as we talked about a couple of weeks ago, but it's still so tiny, tiny, tiny, tiny. Like you can't put all your hopes and dreams on a tiny thing that does not have nearly the market access that all of your other brands have.

[00:10:09] Zoe Licata: Right. You can't sell it everywhere. I think they said it's like 4% of the spirits based RTD market. So it's a small percentage of a small segment that of course both are growing, but it's not something that it can support them like the growth they're getting from Twisted Tea was able to. Whoever comes in next is going to have a lot of responsibilities. Whoever Jim hands the reins over to is kind of going to be in charge of how they define what Boston Beer is now in its new era of being a not really beer focused place. Even though they love to say beer is the second word in our name, that's what we're about. But we all know that's not necessarily the case anymore. Sorry, Jim.

[00:10:52] Justin Kendall: Yeah. Throw a beyond in front of that.

[00:10:56] Jessica Infante: Well, I mean, it's just about Oktoberfest season, so hopefully that brings some cheer over there, but who knows?

[00:11:02] Justin Kendall: Yeah. Well, we'll also be figuring out what's next from them because we're getting into that season of business planning and distributor meetings. And I'm sure they'll be announcing some new news sooner or later. So we'll be paying attention to that. We'll be tracking what's happening next with their C-suite and we'll see where it all goes. But we should get to our featured interview with Dave Williams and Krueger Krueger.

[00:11:33] Zoe Licata: Our featured interview this week features two folks that everyone should be pretty aware of. We are overdue for a chat about what's going on with them and what is happening in the beer world in general. We have two of our favorite folks over from Bump Williams Consulting. We first have Dave Williams, who is president of Bump Williams. Welcome, Dave.

[00:11:54] Bump Williams: Thanks, Zoe. Always happy to be here.

[00:11:56] Zoe Licata: Thanks for being here. And then we also have Brian BK Krueger, who is VP of Business Development and Portfolio Strategy. Welcome, BK.

[00:12:03] Dave Williams: Yeah, thanks, Zoe. It's always a pleasure and happy to be here.

[00:12:08] Zoe Licata: We're going to be diving into a lot of numbers, but I think the best place for us to start is just how are you guys feeling about what's going on? What is kind of the current status of beer right now?

[00:12:19] Bump Williams: I guess I can kick things off and I try not to be a gloom and doom storm cloud rolling everywhere because I think the running list we have of challenges or obstacles when it comes to growth is nearing 30. Some of them might be duplicates, but there's about 25, 30 challenges in there. So what that ultimately results in is a less than stellar picture, at least from a comprehensive perspective, specifically for beer, specifically for wine, maybe to a slightly lesser degree, but still some concerns around spirits. So when you look at the collective beverage alcohol picture, it's not, you know, the rosiest of pictures, you know, on the surface. So I think a lot of what we've been doing lately is not dwelling on what's going wrong or what the problem is. It's more about, okay, acknowledge that. And what do we do to fix it or address it where we can shine the spotlight on obviously growing brands or companies, try to peel the layers back and highlight strong attributes that tie to behaviors that there might be some threads to pull on for the future. It's not the rosiest picture in general. I still think there's a lot of individual areas that are going to be, quote unquote, fun to talk about at this well past the midpoint of 2025.

[00:13:39] Zoe Licata: BK, how are you feeling at this midway point?

[00:13:42] Dave Williams: Yeah, I'm feeling just like everybody else, where we feel like it's kind of uncertain times. But I think what we have seen throughout 2025 is more certainty. Like, this is the reality of the changing environment. This is what we're dealing with. And instead of being surprised by it, I think it's like, OK, consistently, we're seeing these same things happen. I think that prepares people a little bit better on how to react and makes you a little bit more confident. It's like, OK. I know at least if I adjust my plans or if I evolve to this, then the environment is going to be stable, even if it's in a slight decline right now. That's how I'm feeling. Like Dave, there's nothing that we can do about the reality of the numbers, but we can't control our own situation. That's what we've been having the most success with, with our partners, is preparing them for the end of 2025 and 2026. what should you be paying attention to, what the nonsense, what the clutter is, and what can you actually impact moving forward on your own basis?

[00:14:43] Zoe Licata: So what is that reality, especially, you know, we're getting towards the end of the summer season, what should we be tampering our expectations for for beer this summer?

[00:14:53] Bump Williams: I mean, I think it's it's pretty clear. And I know there are some weekly updates lately that showed maybe hasn't gotten notably worse. but it hasn't also gotten markedly better. So I think that the, you have to accept to be case point, just the reality that Beer and Michael in particular based products and that consumer is not coming back around in large droves, right? So now it's, it's that battle of a one-to-one. So I, I don't expect volume to come back in any meaningful way. I think there are certainly still some individual winners that are maybe sourcing some of that, but I think a lot of behaviors from consumers right now, are drawing people outside of the beer malt world. They're slowing down their frequency of consumption or volume that they're consuming when they do go out or make a purchase at the package store. That's the New England in me shining through the package store. That's where I think of the purchases. And then it's just what they're choosing, moderation. A lot of the work we've done when it talks about what are you drinking less of, what are you drinking more of, it's going in the wrong direction when it comes to beverage alcohol. We're seeing a lot of noted decreasing of consumption in the beverage alcohol world, but increasing in other areas of beverage. So whether that's energy, hydration, some functional products, yes, the Delta 9 to some extent, I think there's just other areas where consumers are filling their beverage occasions that now beer is getting sort of boxed out, and I think that's just case with the reality that everyone has to navigate and figure out, all right, where can I be tactical? What am I missing? And what can I still address? Because there's still plenty out there from an opportunity standpoint.

[00:16:34] Dave Williams: Yeah, and I think one of the biggest competitive realizations of this year is before we used to look at, say it was the craft beer world and say, wow, it's so competitive. There's 9500 craft breweries out there. The reality is the last two or three years it's been much more competitive than that, where you're not just looking at brands within a certain category. All of a sudden everything started to connect and then as Dave mentioned, as far as upstating completely from beer or non alcoholic, you bring that into the mix and then you add flavor and then we usually talk flavor in our industry is okay it's wine and spirits it's RTDs but if you start to look at the whole broader world and you're looking at soft drinks and energy as that flavor as well that 9500 number doesn't look that bad. As far as the competitive set, the reality is you're competing against a lot broader category and a consumer that's drawn in a hundred different directions towards every category and not frequenting the beer category as much as they were in the past. And for me, that's one of the biggest realities that's coming more and more to light to more and more people as we move forward.

[00:17:41] Bump Williams: Yeah, it's it's you see growth in so many facets of beverage. Yeah. Beer, wine or spirits collectively right now. And so there's there's drinkers out there. It's just not drinkers in the way that we used to think of drinkers.

[00:17:54] Zoe Licata: Right. Dave, you mentioned civically malt beverages. And one of the things we saw recently, it was just talked about on Boston Beer's earnings call. F&B's not doing great right now, and it seemed to catch some people by surprise. What is happening there?

[00:18:10] Bump Williams: It's an interesting one because that was, at least for the last handful of years, a really reliable growth engine for incrementality. Now, a lot of that was innovation flowing in. It sort of tends to prop things up a little bit. A lot of that were those crossover brand licenses that were coming in and finding a familiar consumer, but not familiar with the beverage that was being propositioned to them. So it was a a category or segment of a lot of activity. And amidst that was expansion of other brands, companies investing more resources and focus to expanding visibility, expanding awareness, a little bit of evolution in the portfolio as well. So there was just a lot of activity taking place in F&Bs. And I think concurrent with that was this rise of the ready-to-drink world that now that a lot of brands are now known to consumers. They feature a lot of the same types of styles and products. I think it's a little bit of a bleed from the malt side into the mostly spirits, but also the wine-based side as well. It's just not as many players in that as yet from those familiar styles. So I think there's been a little bit of category switching taking place. The other thing I will add though, and I've, I've been looking, BK's been looking, our company's been looking at a lot of this flavored alcohol landscape. When you look within the F&B world, though, a lot of the collective declines or the dip in trends is really being fueled only by a handful of legacy brands that are maybe taking the brunt of this consumer exodus into other areas because there's still a lot of brands in the F&B, the malt-based world that are either finding success you know, via being a novelty or via expansion, or seeing a bit of a renaissance that is, I think, a benefit, a byproduct, a halo effect of this RTD behavior. Think of the margarita-style products. Rita's is having a renaissance time period. You know, you've got brands like Seagrams and Jack Daniels and, you know, a lot of other products that are skewing into the high ABV world because that's what consumers are indicating they want. So I think there's still a little bit of, of volatility in FMVs. There's a lot of growth I'd like to point to, but collectively, yes, I think the malt world continues to feel the squeeze and the encroachment of ready-to-drink spirits or wine-based products, whether it's in the same accounts or whether it's in a separate account where they have to go to get them. Consumers want those products, and I think a lot of these malt-based beverages are losing occasions, not consumers completely, but occasions to that rise.

[00:20:46] Dave Williams: Yeah, and I think F&Bs have been successful. They've been a shining spot in our industry for a number of years. And when you are successful and you're gaining share, and last year I believe they gained just over a half point of share, other people are going to take notice, especially as things start to downturn. And to Dave's point also, they have introduced other consumers from other categories into flavor. So now they're not only seeing the success, they're like, wow, that consumer is there. I have things that match that as far as flavor, ABV, and price point. So all of a sudden, that part of the cooler door gets a lot more competitive in there as well. And people all of a sudden forget about that half point of share that was gained just a year ago, and they're so focused on what's going now. But the environment has changed, and it's a product of that success that F&B's brought into the overall alcoholic beverage category.

[00:21:41] Zoe Licata: Totally. I would not expect a Rita's resurgence. That is funny.

[00:21:47] Bump Williams: It always warms my heart when I see longstanding brands have a bit of this this back in black type moment because the consumers are still out there. It's maybe you just got to reinvent. Maybe you just have to bide your time and play defense till the consumer comes back around or cycles. There's a number of different levers that could be pulled. But I like seeing stories like that. I mean Smirnoff again is another one of those that playing in the high ABV side, shifting with packaging a little bit, and getting back more in that relevance. And now they align with what consumers might be looking for in other categories. They're just drawing them back into the malt world. So I think there's a lot of jockeying taking place on the flavor side of things, momentum clearly in favor of the wine and spirits products right now, at least collectively. But I do think that world of flavored alcohol still has such a strong pull for consumers, both established, and maybe those new LDA ones coming in that get a first look.

[00:22:44] Dave Williams: I think on the positive side of F&Bs, especially on the malt side, you see that they are able to maintain the number of brands and the number of SKUs on shelf so far this year versus what they had last year. So that's still showing retailer confidence in the category, unlike some other ones that I'm sure we'll talk about later, where they're definitely scaling back. they're still building out the entire shelf, and Malt still has a place in that. It's not selling as much as it was in the past because of the competitive set, but there is still retailer confidence in that category, in that segment.

[00:23:17] Bump Williams: Now it's just those hot opportunities on the floor, on the end cap, are not going in Malt's favor, and they're going in this wine or spirits favor. But yeah, it's still a big draw for consumers, and retailers do see that, to BK's point, which is a good call out to make when there's uncertainty on collective trends. there's still a consumer draw there, which we know retailers love foot traffic.

[00:23:39] Zoe Licata: For sure. You guys have done several reports diving into this whole like flavored trend and what's happening with flavored alcohol. What else is adding some growth or doing well within that space beyond just F&Bs? What else can we include within that flavor forward segment?

[00:23:56] Bump Williams: So I think the way that we define the flavored alcohol universe, and this has been a lot of the custom work from Dan Wandel, you know, behind the scenes here at BWC, it is on the malt side, the FMBs, the hard seltzers, and even we're including ciders in that because they're playing a bit of a different ballgame lately too when it comes to their look and feel and approach to consumers. So that's that beer malt piece, which is still, 60, 70% of the flavored alcohol universe, by the way, it's still massive. It's got the reach, it's got the accessibility, it does have a lot of advantages, and it's got the price advantage, too, in a lot of side-by-side consideration sense. But on the other side of that, it's a lot of the ready-to-drink wine and spirits products, as well as the ready-to-serve products. So, in a larger bottle, or designed to be poured over ice, things like that. Now, that's a smaller piece of that you know, that wine and spirits world, but certainly a growing one, particularly on the spirit side. So that's sort of our flavored alcohol bubble that we're looking at. I think it's about, of the sales we can track, about 13, 14% of BevAlp dollars. Higher in beer, 17, 18, lower in spirits, nine, 10, lower in wine, six, seven, something like that. So that's sort of our world and that momentum though, if you had to point your finger, point the compass, it is on that ready to drink, spirits and wine based side where a lot of the not just fast movers, but big movers in terms of incrementality are coming from.

[00:25:27] Zoe Licata: Have you seen any examples of how breweries and beer folks are responding to that and products that can maybe relate to those consumers that are looking for those products, but they're giving them something more on like a typical beer side?

[00:25:42] Dave Williams: Yeah, I think you are. I think you're seeing traditional brewers get into more flavor forward and true flavor forward at higher ABV levels to meet that consumer where they are. I mean, it's across the industry from craft to the national players to those that have been around forever. When you start to look at the brand extensions that are out there, If it was three to four years ago, you're like, Oh, I can't believe they're doing a strawberry flavored this when they were just known for domestic premium or top end craft. And now all of a sudden you see craft breweries with a cocktail section that are malt based coming in at eight and a half, 9% ABV. that look nothing like the rest of their portfolio. So yeah, you are seeing people make that jump, but it's based off of where the consumer is and where the retailer is saying. And I think on the more local and regional level, they're still filling that void that the consumer is looking for somebody local that they can relate to that isn't in that space yet. And you're seeing success there.

[00:26:47] Bump Williams: Brewers, particularly craft brewers have always been That's like their greatest feature is how flexible and nimble they were. They could try something, if it doesn't work, pivot to something else. So I do think, though, that the rise and the fact that these are not only just, they're not a flash in the pan, they're a legitimate carved out piece of the beverage alcohol landscape now. And if you're trying to draw a broader consumer base who are shifting how and what they consume, it's worth taking a look at. where you can explore distilling, where you can explore a cider addition, or to be case point, even a malt-based cocktail style variant. You see it a lot with the non-alk side too. It's not saying get all this in your wheelhouse and rush it to retail because that's just not there anymore. That space is not there. But it's appealing to the diverse behaviors of consumers and what they consume. And we have seen an adoption of RTDs, of non-alk, and of a lot of these emerging categories to keep that foot traffic and to keep their consumer base happy and consistent. Like I said, we don't see the space for it at retail as much. It's already getting really tight on how much more is being added. But there's always that local spirit, whether it's beer, whether it's even on the RTD side. It hasn't gone away. It hasn't died. It's still there. It's just more selective. New or local isn't an automatic trial anymore.

[00:28:10] Zoe Licata: Right. Well, let's talk about that shelf space. What is getting the priority right now and what seems to be the ones that are getting their space taken away at the moment?

[00:28:21] Bump Williams: It's probably going to be a boring answer because it might align with a lot of expectations. And, you know, the one thing that, at least from our desks, that's difficult for us to see is linear feet or multiple facings. I mean, that's something that has to be done on a more store audit market to market basis. But if we look at total distribution points or average items, I mean, there's a clear upswing in those things like not out beer, like the ready to drink wine and spirits. To be case point, FMBs have actually held pretty steady, maybe a slight uptick in their number of average items. And where's that going? That's all flavor skewed for the most part. You know, that tends to be what's swelling up the shelves. You know, Ultra continues to see a slight uptick. The super premium world in general, where I think garage beer is also housed. If you look in a database, syndicated database. So that's an area, the higher-end loggers that continue to find a little bit of room. And on the flip side of that, hard seltzer, craft beer just remain the biggest donors when it comes to at least average items when it comes to distribution points. That's high-level view, certainly varies market to market, retailer to retailer, but you think about it, retailers are paying attention just as much as we are. to their own numbers, they know them inside and out, and they pay attention to that momentum and what the industry says is going on, what consumers are showing they want with their wallets. Retailers are going to bend that way within reason.

[00:29:51] Dave Williams: Yeah, and I know I talk about this all the time, and people are going to say, okay, here he goes again. But the shelf space is great. That's one way that's where everybody keeps score. But what really matters is the floor space, and the display space, and the feature space, and the promotional space, and looking at where that has gone, because that's what really multiplies anything that you have on the shelf as far as velocity. And everything that Dave mentioned as far as those that are losing on the shelf are also those that are losing the most as far as velocity. So all of a sudden, they're not able to comp what they had as far as summer features and displays last year. And it's gone to not only a competitor within Malt, but into a different category depending on which state you are and the legalities that you are. And the other thing that we mentioned earlier, but didn't come up in this sense, Shelf space, not as much, but display space, if you look at what's on the floor and display, it's less alcohol now. Across the board, you're seeing more of the sodas, more of the flavor, more lollipops, more of the poppies that are getting that space that used to be 50, 60K stacks of beer or seltzer or craft or domestic or import. now it's gone, it's out of the mix, and the frequency has also eroded away as well. So when we're talking with our partners about shell space, it's like, okay, that's great. You need to fight even harder to maintain your display space and your feature space, because that's what really is going to turn the numbers even more against you. And we have seen some successful local and regional and national campaigns to maintain that space, to bring that profitability back to the retailer where it was in the past.

[00:31:36] Zoe Licata: It's a little daunting. You're not just competing for that space with other beverage alcohol brands. It's really any type of beverage you can imagine could take that space. How do brewers combat that? How do you really stick out in that space?

[00:31:52] Bump Williams: It is, it is daunting when you think about the snowballing number of competitors, you know, not just for occasion, but yeah, for space that you used to have locked up as a, as a beer brand. A lot of that maintenance or that defense comes through brands working with their wholesalers to develop these monthly initiatives, develop these plans, identify the targets where those displays still make sense or where they, where they were the most effective to really justify your placement there. And it really is about that alignment. I know we preach alignment across all three of those tiers, right? Brand, wholesaler, retailer. And it's easier said than done, but if your team isn't out in the market and aren't aware of what you're missing out on or where you're getting peeled back on or where priorities are shifting, then you can't even have that first conversation about how to formulate a strategy to combat it, right? So it is about being present in the market being paying close attention to what's going on in your core market, your most influential retailers, the volume movers, the needle movers, those things. But it's a daunting task and it's all about justification. Do you justify it or not? And show me why.

[00:33:09] Zoe Licata: Another aspect here when it comes to consumers is everyone's been saying these macro economic trends, the macro environment, everything that's going on with inflation or with tariffs or with there's the whole other section of just the impact on Hispanic consumers. When it comes down to things like pricing, are consumers, are they starting to make some decisions when it comes to their wallet now? And how are brands responding? Are we still seeing normal levels of price increases or are you starting to see some higher levels?

[00:33:45] Bump Williams: Again, just from a general standpoint, I think we're seeing a lot of, to BK's point, acceptance of reality and realization that maybe some consumers have been pushed too far on that value that beer used to bring, whether it's in a suitcase or whether it's in a pint glass, might not be there anymore. So, hence, consumers might be making some different decisions. I think if you're tracking the general inflation rate, you look at the numbers for beer at home, it's flattened out, right? It's not quite what it looked like the last few years. So that's, I think, a sign that everybody along the chain has realized that maybe it's time to just pump the brakes and reassess. There's not a lot of aggressive pricing being taken. at least from what we've seen or what we can track in the data. On premise, beer away from home is a bit of a different story. I think there's a different, still a value challenge there for beer that everyone's sort of still figuring out. So I do think there's been a lot of concern over it's no longer a sure thing, taking my X percent this year, like clockwork. I think now it's a bit more tactical. But I'm talking out of both sides of my mouth here because you look at all these growth areas and beverage alcohol or beer and they skew high end. They still skew high end. It's the ready to drink, ready to serve. It's the import brands. It's high end loggers. It's not elk. Things that you're paying a premium price for. So clearly it's not everybody that's feeling the squeeze and they're just feeling it in different ways. But, you know, on the flip side of that, again, flip-flopping on price because it's so hard to put consumers in a general box when it comes to price sensitivities. We are seeing interesting trends from a unique package configuration perspective. We've talked about single serve being on the rise to fit a need. Are single serves replacing the everyday six-pack now through these two-for deals, you know, or these three-pack assemblies? Maybe, because it's less out of pocket in that moment than they would have paid for even a six-pack. at the time. We're seeing unique configurations, eight packs, nine packs, depending on the category and the style. And I think that's brands trying to make a pricing sweet spot more available to consumers just to try to keep them in the family. I don't know if it's a complete abandoned ship, everyone trade down because outside of Bush Light, there hasn't been a lot of growth on the value side. So it's a weird It's a weird tightrope that we're walking here in terms of what's too high, what's, you know, what's a sweet spot lever. And I think it's different for everybody. But I do think there are signs of certain consumers feeling the pressures, whereas other consumers are willing to trade up, just maybe stretching that frequency a bit where they're buying smaller formats of it. So it is sort of that balance. But I do think the pricing landscape feels a bit different this year than perhaps years past, at least for beer.

[00:36:35] Dave Williams: Yeah, I think we're at a good point as far as pricing where I think beer is settled into where it needs to be, but the competitive set has increased so much greater. And we say, okay, yeah, people are pinching pennies, they're no longer spending $12.99 on a six pack. But you know what? They're paying $18.99 or $20.99 on a 4-pack of 5mg or 10mg. So you can't say that both of those things are true. That's a swap out or maybe it's an additional occasion that has taken away from beer. But yeah, in addition to that, the bottom line is, yeah, things are more expensive out there and people are making decisions. And sometimes it's the decision not to partake in the beer category or even the wine or the spirits category and to go someplace else. Or it's a decision that, you know what? Beef's getting a little bit more expensive. I have less money for beer. but I'm still going to do some online gambling with my beer money too. So, I mean, it's a complicated world that we haven't seen before. And I think that's the reality of what we're settling into. It makes for difficult decision-making, but again, you kind of know where they're going or where they're not going as frequently as they were.

[00:37:50] Zoe Licata: It seems like you have to be even more specific with who your target consumer is and what they're willing to pay for specific things. Jim Cook was just talking about the other day how they kind of recognize Twisted Tea is priced too high because that consumer is a consumer that's usually buying domestic loggers or something. They're used to a lower priced item and if you're getting closer to like a Sam Adams price, they don't see the same value in it. So it's like being extra, extra aware of what your product is and what the consumer is willing to spend on it.

[00:38:24] Bump Williams: Absolutely. Doing a full-blown price elasticity study is not something that's feasible. For a big company, sure, it's something they probably are doing and are looking into. There's always thresholds of no looking back now. But it is something that's, I think, rising in importance. You think about the consumer decision tree. What matters most to them when they're making their selection? Is it the brand that they love? Is it the style for that moment? Or is it the price point? Because to be case point, they have to stretch that $20 bill or whatever it is and in any example further across a lot of things. So I think it's important that the companies continue to pay all categories, you know, CPG categories and paying attention to things like that. So it's, it's yeah, maybe now, maybe elevated importance than previous years, not that it was ever unimportant. But yeah, if you start to notice a market decline in your velocity or a drop off that you can't assign to a structural reason, then you have to start, you know, diagnosing what that is. and find that sweet spot again.

[00:39:28] Dave Williams: I think the other element is the frequency, where it may be a great price. It's like, I totally still see the value in this proposition at whatever pack size it is, but you know what? I'm not willing to go there as often as I did in the past. It's still a fair price, but instead of once a week, it's more like once every couple of weeks or once a month now.

[00:39:49] Bump Williams: That's why you see the rise in these, like I said, six packs are still big, but they're not coming back. 12-packs, consumers are finding value in certain segments, but now it's different. 24 down to 18. We're seeing slower declines at 18 than we are at 24. Singles are still on the rise. Those three-packs I told you about, that's bundled in imports and domestics and things like that. It's a way consumers are letting us know in the industry that pricing is on the mind when they're looking for those deals or those lower out-of-pocket in the moment, even though it might be more per ounce.

[00:40:23] Zoe Licata: Mm hmm. It's almost like a it's a weird contradictory thought. These ideas of these bigger, more value packages you think would make more sense in a financially constrained market because you're getting more bang for your buck. But it's really they want that initial purchase to be smaller.

[00:40:43] Bump Williams: It is. It's it's yeah, sometimes if you're if you're buying for the long term, you're doing that math. And I think there are a lot of people still doing that. But when you're coming home from work, Or are you just grabbing something for a party or a Sunday to wind down? You're looking low out of pocket at that moment. So I do think it's, again, there's these just subsets or buckets of consumers that make different decisions based on the different occasions. And that's why you see this broad array of configurations on the shelf, mostly from the larger brands, of course, because they've got the ability to, A, produce those, but develop a pricing structure around them. And I think that's why you're seeing a lot of tightening up from more independent, smaller suppliers on 12-pack single. You're hitting that longer-term occasion, you're hitting that immediate occasion. It's a lot of tough decision-making to prioritize your packages, prioritize your brands, and prioritize where you're putting those and in what order.

[00:41:42] Dave Williams: This is a good opportunity to talk about that decision-making as well, because a lot of people will hear a podcast like this and say, OK, this is the way it is. You say the 12-packs are doing this, or 24s, or 18s, or premium or sub-premium. The important thing to remember is in these, we often talk about total US. What's happening in your area is not what's going on in total U.S. It may be contributing some, it may be aligned in some areas, but the pockets of opportunity are drastically different. And we'll talk with four or five different partners and identify a different key opportunity that they should be chasing for their area or their pack size or the flavor or the F&B, whatever it happens to be that is most relevant to their area. So while a lot of these generalities that we talk about are good overall guidance, You really need to know what's going on in your backyard and pay attention to that data and those data points and the inputs from your distributors or your retailers or even the consumers to get a clear picture for what's going on to even make those decisions.

[00:42:44] Zoe Licata: And we've heard from a lot of folks recently in conversations of just like talk with your partners and people are working more together now than ever just figure out how this works best for all of us.

[00:42:55] Bump Williams: If it's forced alignment, at least it's alignment. Everyone working together to figure out how the hell to get back on track. That's a good thing, objectively.

[00:43:03] Dave Williams: That's one of the beautiful parts of this business is people do work together and there are true partnerships out there, especially in tougher times that you see more of the community come together and that's why we love it so much.

[00:43:18] Zoe Licata: One of the other stories we've been talking about this year of a segment that looks a lot different this year in terms of performance versus last year is that import segment and what's going on there. We know part of that is some of those pressures on Hispanic consumers because Mexican imports are such a huge chunk of that business. But what else are you guys seeing that's happening there with imports?

[00:43:42] Bump Williams: sometimes might get lost because Mexican imports very much dominate the import landscape is that we are still seeing a lot of good momentum and numbers on the Asian imports or select European imports. I know this might get put in the Hispanic consumer bucket, but the Central and South American and Caribbean import brands as well. We talked, I forget where this was, but previously about there's brands now from these countries that are now being serviced and made available to a previously probably underserved consumer base that was looking for something familiar, something authentic or something new in some cases. So I think there might be a, again, like a side door way to reintroduce beer beer to consumers again through addressing underserved populations across the country or just intrigued populations that aren't from those home countries. but still respect the quality product with a good history behind it. So I think there are on a smaller scale, you know, I think a Sapporo is a prime example of that, or Rotterburger, Pilsner are prime examples of these brands that once they get front and center, people realize the quality that's there, the consistency, just the look, feel. They bring an image with them that I think the brands that have persevered through all this bring an image with them that when it's in your hand, it's sort of attached to a moment. And I think a lot of these smaller brands, are now getting attention and focus because there's softness elsewhere. So everyone's sort of trying to ride the storm or momentum of these other import brands. I say all that. There's the other shoe that has to drop right on the Mexican import side. And I think it's it's a it was a bit of a slap in the face this year. And you Not that anyone took for granted how loyal or regular or consistent or powerful the Hispanic community was when it came to beer consumption, but you're seeing it play out to a pretty stark contrast from what was happening before to what's happening now in the trends. They haven't gone away, they haven't disappeared, but they've adjusted behaviors clearly. We did a survey earlier this year, back in March, I want to say, targeting Hispanic consumers because we heard rumblings from wholesalers. that their constellation numbers were looking a little softer, looking even down earlier this year, and half of the consumer base that we asked if they were concerned or have adjusted their behaviors, half of the consumer base said yes. It's a simple question, yes or no. 80% of that consumer base said if not them, they knew somebody that had. And I know that's a small sample size, but there were early signs of this apprehension or shifts in behavior, and it sure hasn't seemingly gotten any better. on the environment for them. And we did an anecdotal survey of retailers lately, and they see a lot of the same behaviors, mostly on Modelo. Corona's more or less persisted. Some of those central South American brands have been largely undeterred. A lot of that is a distribution push helping that, of course. But there's a lot of fear on if these behaviors now will maintain or revert back eventually to what they were before. It's a lot of unknown. There's no timeline on this, right? I think on one hand, the import world, that high-end world, we're still seeing momentum, but the big brands that move and shake that category as a collective remain challenged for some hopefully cyclical reasons.

[00:47:07] Zoe Licata: I had some Peruvian-inspired beer last week. Absolutely delicious.

[00:47:11] Bump Williams: Nice. Dare I ask, what prompted that? Was it just something new on the menu, something that was introduced to you, or just something that caught your eye?

[00:47:18] Zoe Licata: Introduced through a friend. There's a local craft brewery here. One of the founders is from Peru and their whole menu is like in Peruvian Independence Day on Monday. So it would fit the occasion, but it was absolutely delicious. And all of their beers are more along those lines of a lot of like German inspired stuff too, and more like really traditional beer. And their place was packed. I haven't seen a tap room that packed in a very long time.

[00:47:42] Dave Williams: That sounds awesome.

[00:47:43] Bump Williams: Yeah. I love hearing that, but you know, it's, It's again, all this, like Zoe, your story just then, the growth we see in other brands within the category that aren't flavored, there's still a massive interest in beer, a traditional beer. It might not look, walk and talk the same as what built the category to what it is today, but there's still a thirst among consumers for those types of products. And now it's figuring out to be case point, paying attention about, all right, how can I connect with this evolving and changing consumer base of today? maybe a little bit of the same, a little bit of old school, a little bit of new wave, whatever it might be. But if you're not paying attention to what's going on, or you're sticking your head in the sand and unwilling to accept the realities that are happening around you, there's a number of ways to connect with consumers. It doesn't just have to be flavors or non-alcohol. There can be a lot of other ways too, which is cool.

[00:48:37] Zoe Licata: I want to make sure that we also touch on what's happening with Kraft. We just got the B.A. 's report about their latest mid-year numbers. Not so great, but are there any any positive things you can pull out? Anything that is working within Kraft right now?

[00:48:53] Bump Williams: A lot of the brewing stories that we saw happening within Kraft over the last couple of years remain true to this day. There is that high ABV skew still seeing a lot of imperial momentum. We're seeing ongoing traction from the lighter fare. And again, I think it ties to that. They still want to drink beer, just maybe that more elevated beer product. So a lot of craft brewers are finding success in the Pilsners, in the blonde or golden ales of the world. Light lagers are in there. Some brewers are playing with that, but I think that Pilsner, we're seeing a lot more among the smaller scale, more in, I should say independent, they're still mostly independent. The smaller scale brewers, because you can still, get a premium-ish price point for something like a nice Kraft Pilsner than maybe trying to go full, compete head-to-head with the big boys on light lagers. But that lighter side of the spectrum is still seeing a lot of traction. You know, I think it's, again, it's adapting to, A, the constraint on space that's being afforded to these brewers at retail, B, the diversity in how families, how single consumers drink or consume these days. So I think there's a lot of a lot more focused outside the walls. Well still that same diverse spirit inside the walls. And that's you know it's still that war of attrition from a category or consumer perspective as as behaviors contract or go outside craft. There's just fewer opportunities. That's the harsh reality that these brands are trying to navigate. The picture hasn't changed. It hasn't gotten significantly worse, I'll say that much, but it also hasn't gotten exceptionally better to where there's a glaring bright light at the end of a tunnel that's short.

[00:50:41] Dave Williams: I think a lot of those smaller craft brewers are finding more success in catering towards that lighter palate, whether if it's a Mexican lager, a blonde, or even a heft that obviously has some flavor in it, that they seem to be a little bit more approachable. They're definitely more sessional. So when they do get the consumers in front of them, especially in the on-premise or their own premise, they're able to capture them for a little bit longer. And in addition, they're able to get more women into craft beer through those lighter styles. I know we've talked about this quite a bit in the past, but it does lead to longer stays at their establishments, a little bit more family friendly, a little bit more repetition, a little bit higher tabs while they're in there to take full advantage of the consumers that are going in. And overall, it probably also plays in a little bit more towards that health and wellness effect as well, where you do feel different if you're not consuming the big Imperial Double Triple or the Over Hazies or the Over Juicies. It's a different experience that's more in line with where the consumer is. and the hardcore craft guys and girls they haven't gone anywhere they're just doing it a little bit less and there's more opportunity and I will say coming from the craft beer world I think the brewers have gotten better at those lighter styles so now they are more true and they're approachable and they're crisp and they're clean where before In the past, they were known to have a few more flaws that can be hidden more with the hops and the heavier flavors. So I'm excited about where craft beer is from those aspects. And I like the evolution of bringing even a little bit more flavor subtly into craft beer that keeps people coming back. and it hasn't played out in the numbers other than some of those that Dave has mentioned as far as kind of the pills and the blondes and the loggers, but you can still see that undercurrent. That's been something consistently we've seen for the last year and a half that we've talked about before as well.

[00:52:37] Bump Williams: Unlike that FMB conversation we had before where a lot of the category declines were really being fueled by a handful of leading performers, if you look within Kraft right now, There's more down than up, at least when you track retail sales among the leaders, among that long tail. So I think that goes to show that it's not just someone doing something right or someone doing something wrong. I think that speaks more to the broad behaviors of that. What was the Kraft consumer base, the Kraft consumer base that has now evolved their consumption and what, when and why. That may be choke point of a pipeline that's not coming in as strong as it was once before. I mean, you look at, 1 through 25, there's been so many different strategies that these leaders in craft have taken, focused on a singular style, two pillars of new school, old school, evolving on a packaging perspective and an image perspective. You name it, these brands have tried it. So I don't think there's a magic bullet for craft beer right now. I think it's just the harsh reality of how people consume in the new, the lost, and the retained consumers, how you're navigating that within. What I will say is it's even more about fine-tuning your approach to market, not overextending yourself, paying attention to where you're bleeding the most or where you've got the biggest untapped potential. You need a microscope with craft beer right now to defend your position, bolster your position where you're strong, and maybe reconsider or reassess what expansion means. Some brewers have had great success with that, and it's traveled down a coast or across the country. That can still happen. but it's relevance, it's image, it's awareness, it's visibility. If you're not checking all those boxes and you're extending or you're even in your home market, it's an uphill battle. So it's, I feel bad bringing this hammer down, but it really is. You look around and there's no blueprint for success because everyone's tried a lot of different things to mixed results. So it's about team, it's about planning, and it's about execution.

[00:54:43] Dave Williams: Yeah, I think these days it's even more important to be aware of the performance at the retailer level and what those hurdle rates are and have that innovation, not in the sense that we've had in the past where innovation meant I'm doing 28 different brands that are coming out this year. But realize and be realistic with the struggles, if it's a flagship or your number two or number three priority and where it stands in the eye of the retailer, and be prepared to do something with that space on your own before somebody else comes in and takes it. And then that also aligns more with the retailer who is looking for a little bit of innovation or a little bit of a spark and wants to carry over what you've built in that market, isn't willing to give up on you just yet. but can't ignore it for a whole lot longer. So paying attention to that and having that plan and aligning with the consumer and where they're going. You look at those craft brewers that are seeing success, those are the ones that have been successful with protecting that space on the shelf and evolving it towards that next stage.

[00:55:44] Zoe Licata: So final question for you both, now that we're in the back half of 2025, what are one or two areas that you guys are really paying attention to, to see what happens through the rest of this year?

[00:55:57] Bump Williams: The way that we look at this category, the category of the world of total beverage alcohol, we always kind of break it into where's the growth coming from, where are the biggest losses coming from? And all I'm looking for is just momentum. heading into the end of the year. I think heading into the end of 2024, beer was on a bit of a, I wouldn't say an upswing, but the magnitude of decline was decelerating. As I add more syllables, I sound smarter. It was declining less and less. So that gave me a bit of hope coming into 2025, only to get my legs swept as I looked at the numbers. So it was a rough start. But I do look at momentum. It doesn't have to be growth right away, but I do look at momentum because I am concerned about the short-term viability for volume growth. For beer and wine in particular, spirits is having its own bit of moment right now as it searches for for some clear and widespread growth. So I'm looking for some signs that momentum is stalling and we're approaching that floor because I don't think we found it yet. And I'm just curious about what that is. Beer, still the number one category of dollar sales attract retail, by the way. So still a very valuable category. Let's not forget that. But momentum not on the side. So I like to look for signs of stability in the trends. You know, Lester talks about the economic factors, which are objectively, it looks like we should be doing better than we are right now from a performance perspective. So I'm waiting for that behavior piece to catch up to the new reality of consumption, and then we'll start to see that in the trends. But I'm looking at space, I'm looking at momentum, and I'm keeping my fingers crossed that we can maintain before we give away too much more.

[00:57:47] Dave Williams: I think what excites me about the end of the year is looking for those success stories that are out there, making sure that we're shining more light on those, because it can be a beacon for other people to follow and say, hey, you know what? I'm able to do that within my situation, within my territory, within my portfolio, and being able to produce things that align, again, with that retailer, your distributor's needs, as well as the consumer. The other thing that looking at, and you're starting to see kind of the language change instead of talking as far as percentage growth, it's like, what are we doing with share? At an individual level, across the board, like as a company, because there are opportunities to gain share within whatever segment or category or territory or distributor that you're in right now. I think those that are approaching this business really look into the future are focused on gaining that share. It doesn't matter if the trends continue and we're down 10%, which we aren't right now, which would be a completely different conversation. Gaining share is going to help you position for the future and allow you to do more things that can get us out of this on an individual and a collective basis. So that's what I'm looking for at the end of this year is what we're able to do as far as protecting share and then aligning with those retailers and distributors.

[00:59:07] Bump Williams: Yeah, absolutely.

[00:59:09] Zoe Licata: Well, Dave, BK, thank you so much for joining. I know we could keep going for a really long time, so we'll just have you back on soon to chat about more things. But I really appreciate you guys joining me today.

[00:59:20] Dave Williams: Always a pleasure. Thanks for having us.

[00:59:23] Zoe Licata: And that's our show this week. Thanks to Jess and Justin for coming back. Thanks to Joe and our audio team for making us sound excellent as always. Thanks to Dave and BK for joining and sharing their excellent insights. If you like the podcast, make sure to like, rate, subscribe on all the podcast platforms. We appreciate it. And we will see you next week.