Brewbound Podcast: Early 2023 Beer Trends with Bump Williams Consulting

[00:00:00] Justin Kendall: Next on the Brewbound podcast, an early look at this year's numbers. Hello and welcome to the Rebound podcast. I'm Justin Kendall, the editor of Rebound, and I'm joined by Jessica Infante, the managing editor of Rebound. What's up, Jess?

[00:00:24] Jessica Infante: Hey, nothing.

[00:00:24] Justin Kendall: How are you? I'm doing well. And Zoe Licata, Rebound reporter extraordinaire is also here. What's up, Zoe? Hello, hello. This is going to be a not a fast episode, but a fast intro, because we are actually recording this in advance due to some technical issues. Our guests this week will be Brian BK Kruger and Dave Williams from Bump Williams Consulting. We will break down all the news from early in the year from Dry January to the Super Bowl to early year surprises to advice to craft brands looking to expand and much more. So stay tuned for that. A quick plug, we will be hitting the road. We will be at the California Crafters Association Summit, March 20th through the 22nd. So if you're in Sacramento for that event, check us out at the Brewbound Studio. We'll be recording podcasts there. Also, we will be at the Craft Brewers Conference in Nashville. Tickets should be on sale by now. We will be doing a BrewTalks event May 7th from 2 to 6 p.m. So check out all the info on that on Brewbound.com. We'll have guest announcements and panel announcements, more to come there. But let's bring in our featured guest from Bump Williams Consulting, Dave Williams and Brian BK Kruger. Thanks for being here, guys.

[00:01:44] Dave Williams: Absolutely. Thanks for having us.

[00:01:46] Justin Kendall: Yeah, thanks always. I want to jump into some early year data. It's only been a couple of months, as we all know, and it's early, but is there anything in these numbers so far that are jumping out at you that as a surprise, whether that's a brand, a style, a packaging format?

[00:02:05] Dave Williams: Yeah, actually, I think we have six or seven weeks of official data coming out of the Nielsen database. What has been very interesting, at least in the way that we've looked at it recently, is just what continues to top the charts in terms of growth, incremental volume and or dollar gains year over year. We saw a trickling of those domestic liners back into play across 2022, really amped up in Q4 of 2022. But through the start of this year, it's I don't want to quite say the domestic lot or renaissance, but there are so many premium plus or minus brands topping the charts and continuing to see not just dollar, but what's most important to me is volume growth on top of it. So that's been something new, almost a throwback that's nice to see when you see the leaders of the category. topping the charts and growth. So that's been kind of cool. And if it continues, you know, we'll see about that as we get into spring and summer and all that. But out of the gate, that's been something that's jumped off the page for me.

[00:03:13] Jessica Infante: David, how much of that is driven by Super Bowl and promotional activity? Is that part of this?

[00:03:21] Dave Williams: So I think a little bit Super Bowl was Those types of segments do get a little bit more play on the floor or on the shelf or a price promotion during Super Bowl. I think it kind of kicked off toward the end of last year when pricing jumped to a whole nother level and people altered their behavior a little bit, maybe a bit more than normal. So I think it got a kickstart even before Super Bowl, but we're definitely seeing increased activity on the floor and in the flyers for those types of segments. But I also think it's just, some consumers shifting their behavior a bit. So a little bit of A, a little bit of B in that sense.

[00:04:00] Brian Krueger: I think one of the themes that we're seeing is the case equivalents are about flat. The dollars are still there. So I know Dave and I talk pretty frequently about this. So that's a little bit concerning for when you're not picking up more occasions within beer, the dollars are there. So it means that the consumers are still purchasing about that same amount. They're paying a little bit more for it just like they are with anybody else. And then you're seeing some categories and some segments take a little bit of a rise, some segments taking a little bit of a fall. It's kind of all all over across the board, but overall people are drinking about the same amount as far as case equivalents that we've seen through the first seven or eight weeks of the year, even with the Super Bowl being included in there.

[00:04:41] Dave Williams: Yeah, actually, BK, that's a good point. I forgot to mention it, but, you know, we often look back to 2019 as that pre-pandemic benchmark that everyone's been clawing back to or doing above and beyond. But for beer overall, if you look at dollar sales versus 2019, it's up 14, 15 percent, which looks great on paper. But to BK's point, volume is flat for beer. So the incrementality, true incrementality, not just squeezing that sponge of the consumer more for more dollars, but the volume is not really changing. So it's just shifting around or remaining stagnant. And that is a concern. It's nice to see some big brands maybe restarting the engines a bit in that volume game world. But net net now versus 2019, we just have not seen it.

[00:05:31] Justin Kendall: So when you see that, what's sort of in your mind the answer to that volume question? What needs to be done? Because as so many people have pointed out, it does look good when you look at the dollar number, but it's masking that volume trend.

[00:05:47] Dave Williams: You can't force people to drink more. All you can do to really win is steal back some lost occasions. I know there's been a bunch of talk about lost beer occasions over to spirits, maybe a little bit to wine. You look at some to RTDs, whether that's seltzer, spirit-based, et cetera. It's just kind of a big beverage-alcohol circle. And I think the The way to win is to start stealing back. And you've seen ad activity, commercials behind big beer brands, again, maybe a bit more than usual. So just trying to resource some of those occasions. Try it again for the first time. Come back to the family, however you want to phrase it. And I think Lester talks about this too. We're not drinking more as a country to any grand degree, plus or minus. So it's just about taking back what was once yours, sadly.

[00:06:38] Brian Krueger: I think a good portion of it is being visible and telling your story and giving that retailer a reason to have you on the floor, whether it's a style that's jiving with the beer consumer right now, or it's a brand that still has some successes and some wins from the last couple of years. that is reliable and can be a part of that regular rotation of the beer consumer so they have a reason to stay instead of one of the recent surveys we've done or studies that we've done shows that the beer consumer is more likely than a hard spirits consumer or a wine consumer or even an RTD consumer to stray. So have brands in your portfolio, tell that story to the retailer, give them a reason to say, Hey, these are the brands that people are staying in beer for that you need to have on your shelf and not just on your shelf, but on the floor and be promoting and featuring.

[00:07:31] Bump Williams: So one of the ways that people have been attempting to make up for some of that has been innovation. And you guys have kind of a specific definition of innovation. It's product that adds incremental value. So what out there is actually doing that right now?

[00:07:47] Dave Williams: I think non-alcohol is doing a good job of finding those incremental occasions, right? Being where beer maybe wasn't before, that's an incremental occasion, picking that up or buying more every trip you go to the store, buying more frequently. Anything that can do that, add maybe a trip to the store here and there. And non-ALC I think has done a good job of that. A lot of times with innovation you see 12 month or less life cycle. Once that year two hits, it's immediately into the red. That's a win in the short term, but that's not how you build the category up over the long term. So it's kind of bleak out there when you look at life cycles for a lot of innovation. I do wonder about some of these familiar brand names that are outside beverage alcohol coming into beverage alcohol. Is that just going to be, I know it, I'll try it. but I'm not gonna add that on top of what I'm already buying at least multiple times. So jury's still out on all of these even familiar brands coming in on what their life cycles are gonna look like. But if I had to pick one, I would have to say not Alex done a good job, but that's still a drop in the bucket when you're trying to move the big beer needle back into the black and the trends.

[00:08:59] Brian Krueger: I think there's another good example out there as well in cider. If you look at what regional cider is doing, overall cider may be flat for the year, but then you dig down and you start to look at regional ciders where they're actually posting some positive growth. And then you get into the brands and the SKUs that they're doing, and they're being successful in bringing in non-traditional cider flavors, as far as a cocktail. or a fruit or some other flavors to get that consumer to stay within cider and then thus staying within beer. So I think there's a couple of good stories both in non-alcohol and cider that people can look to.

[00:09:34] Bump Williams: When you're looking at some of those other brands coming in, is there a time period for when we can kind of determine whether it is having that value or not? Like when can we finally say, okay, this worked or it didn't work?

[00:09:47] Dave Williams: I think sadly, I mean, I looked at some of the lost leaders through year to date 2023 and again granted six, seven weeks. But the leading growth brands of the same timeframe in 2022 are now the number one, two, three, four loss leaders in 2023. So give me 12 months and I can tell you if it's going to stick or not. And there's a lot of different levers you can play in that, right? Is the brand stagnant on where it's being sold? If it continues to expand, that can extend things a little bit and add in incrementality via new markets, reaching new consumers. you can tell pretty quickly if you look at year over year trends is the easy one but if you look at that you know, item dollars per item in the markets that they're in. How is that trending? How is that trending versus its premier comps in the market? Is it peaking and then plateauing and then slowly trickling down? You know, that's an early warning sign, too, is just not turning as fast as it used to. So if you're paying attention on even just a quarterly basis, every four week basis, you can start to see some red flags or warning signs for new launches. out of the gate and then the weeks that follow.

[00:10:59] Brian Krueger: Yeah. Paying attention to the retailers because we look at the data very frequently, but probably not as frequently as those that are controlling the shelves that are looking at it. When spring resets hit and that's their big push for innovation, take a look in the fall and see what's still around and see what's occupying the shelf space and take a look at the pricing of things that came in. Now, in the fall, if they've dropped or if they're over-indexed on some floor space at a lower price, They're making up for something like they're trying to make that shelf be profitable. So Dave does an awesome job on the data. I like looking at the retailer shelf and seeing what what's happening in the spring and then what's sticking in the fall because they are absolutely on top of their game and they have to be looking at it very, very frequently.

[00:11:45] Jessica Infante: So we brought up non-alc and it feels like every conversation that the three of us have had in the past two months has factored non-alc products and Dry January into it pretty heavily. But that's been framed as adding incremental value through new and extended occasions to the beer category. A non-alcoholic beer is something that you can have on a night when you maybe wouldn't have had a beer at all. It did really well in the off-premise, double-digit sales, volume growth in January. Having both of those things is a rarity right now. What were your takeaways from this Dry January? Dave, I know you mentioned that it's hard to move the big beer needle with a tiny segment, but what can we expect to see in years to come?

[00:12:23] Dave Williams: It is. It's hard to move the needle. But I think the other side of that coin too is you still have to point out success stories. Right. And not outspent one of the biggest ones in beer. Rarely do we see quarter after quarter of similar if not stronger double digit trends. Right. I mean that's a rarity. So, I think what we saw this past January is that double-digit growth continued. We do see a slight uptick in share for non-ALC in January, as you might expect, but it's not overwhelming. And I think, to me, that honestly tells more of a story about its strength. more so than it being a fed, right? You know, if I look at things like non-ALK share throughout the year or its seasonality or volatility through the different seasons, it's a lot more stable than the beer category in general. Doesn't spike as high in the summer, but it also doesn't dip as low in the spring, I'm sorry, the winter or going into spring. It's just one of those steady engines that could continuing to build and build. And we saw more of the same of that this year, you know, during that Dry January period. We also saw that not only did it continue double digit trends, but it had a little bit of an uptick or a more accelerated trend versus last year. So more brands coming into the space, I think certainly helped that. Now you have different segments that weren't there before. Guinness, non-ALK, was a more recent entry that I think a lot of people flock to and has been well-received out of the gate. You're still seeing innovation, which helps boost those trends as well on top of that. there haven't been besides the quote unquote old guard of non elk, there's still been a lot of shared success among all these brands that are coming in. So very much in that developmental phase, that growth phase and um, you know, not as volatile throughout the year. So a lot of positive attributes you could tie to what's going on with non elk right now.

[00:14:20] Justin Kendall: Curious to see how you both see this one shaking out too, because we have a craft brand essentially in Athletic that has cracked the top 20 vendors list in off-premise sales. Is this a segment where multiple producers and players can be players, I should say, or is this going to be the domain of like bigger brands such as Heineken 00, Bud 0, and maybe you get a breakthrough like Athletic, but beyond that it's a longer tail of small producers.

[00:14:55] Dave Williams: Craft has always been unique in that sense where it's just so deep, so broad, and for a while preceding these last year plus two years, there was a lot of shared success in craft. And I think we're seeing that on craft non out now. Non-ALC share within Kraft is half a point higher, maybe a full point higher than in total beer. I think consumers have just flocked, and Athletic has done a great job paving that path on the Kraft side. But a lot of the recent entries are still picking up space, picking up traction, and for the time being, seeing that shared success. So within Kraft, I think you'll continue to see that. I think in the big picture for non-ALC, it's going to shake out the way you kind of laid it out. There's going to be the big, big volume brands, and then there's going to be a handful of the craft or crafty type non-op spin-offs. But market to market within certain groups or where the brand resonates more, you will see the deep craft success in the home market, but maybe not as much on the grand scheme or the nationwide picture, just like you do with the full strength options out there. Speaking of athletic, they did introduce that athletic light recently too, which is kind of towing the line of both what you see in non-ALC craft, but also full strength craft now. So that's kind of one of those casting the net a little bit wider on the type of drinker too, I think. So brands like that will be interesting to see how they stack up against the non-ALC loggers that were out there before and maybe on the horizon.

[00:16:25] Brian Krueger: It is encouraging within Non-ALC to see that five of the top 25 brands are from athletic, and there's about another four or five that are from craft producers. So they are starting to change the face of what Non-ALC is and being successful in doing so. So it tells us that, sure, they're coming in with new products, but consumers are latching onto them, so much so that you see a new launch. I think three of them in the top 25 were new this year, and that's top 25 total US. So they are starting to build a more robust category within Non-ALC, which is great to see.

[00:16:59] Justin Kendall: How much added retailer support are you seeing or shelf space? Because when I go into a Walmart, it's not a lot, you know, or even a Target or wherever. It's still just a few facings.

[00:17:13] Dave Williams: I think retailers in general are trying to be a bit more cautious about over-indexing on space. And to BK's point he made before, they're eagle-eyed view on their shelves week to week, seeing what's moving. So you want to put the space behind not just the hottest mover, but the one that's doing the volume at the same time. So I think you're seeing it expand. It depends on how much real estate they have in those aisles. Some are still tucked way back in the corner in their own little section, but some are getting a little, you know, the end caps, the more space. So I think cautiously expanding room for non-ALC, but avoiding going overboard. But, you know, we'll see again, there's still some big names coming into non-ALC. So we'll see if that kind of tips the scales toward opening that shelf space for more.

[00:18:01] Bump Williams: So the other big topic that we've been talking about lately, other than Dry January has been Superbowl stuff. And we saw, uh, interesting, at least advertising wise, uh, lean towards more like traditional core beer brands this year. But what did you guys see as kind of those, how beer reacted to Super Bowl? How did sales go? What were kind of the trends that you saw there?

[00:18:29] Dave Williams: I think in terms of magnitude, trends for the week of and just after the Super Bowl didn't exactly kind of blow the doors off in terms of magnitude. Maybe, you know, dollars were still up a little bit, but volume was hovering around flat for the category. What did pop was super premium, which is mostly make ultra and then below premium, which obviously got a little bit more focused recently, which was interesting to see. And that's kind of a new look. So those were the areas where we saw promotional activity get increased behind trends, you know, grow on volume and dollars in those areas. So those are the interesting ones to me. You know, the domestic premium loggers, we all know that have led the charge during Super Bowl, kind of hovered around what they had been doing. No massive uptick, but, you know, it's pockets of growth. I look for brands in those spaces that saw volume gains, saw dollar gains, and it was a lot of the usual suspects, and some of the usual suspects didn't. I think Miller Lite and Coors Banquet stood out in terms of KPIs during that one week, and a lot of the below premium, the Bush, the Natural, the High Lifes too. I know we talk a lot about internally, externally, about domestic and this lager renaissance and trying to get more people drinking in, and the brands I see growing, might not be the expected ones or at least the ones that are growing the fastest, but maybe that's the way in to get consumers back into the fold too. So it's nice to see some familiar names pop during Super Bowl, but it wasn't a massive swing like bursting out of the gates like, hey, I'm here to just kick ass.

[00:20:13] Brian Krueger: Yeah, I think it was interesting to take a look back at what the retailers were betting on, and they're betting by giving promotional support and that feature display support behind it. And there's always some big swings. Obviously, hard seltzer took a hit as far as promotional support as well as the display. But where are they staying stable? And they were staying stable on imports on that below premium and on that below super premium as well. They did increase more on flavored malt beverage. on the FNB side, pretty noticeable jumps in there. And then RTD spirits, they bet pretty big for the first time last year, and then they maintained or upped that a little bit in their support as well. And I think that showed through in the numbers. So when we talk about surprises, I don't know if we should be surprised that kind of the below premium and then the large import brands do well or maintain their space during Super Bowl. It's really who else is losing and where else are people gaining.

[00:21:08] Dave Williams: piggybacking on that. What was more on the underwhelming side during Super Bowl and just beer in general is during those weeks, the average lift you saw when beer was on promotion has been on a steady decline since I think domestic premium case lifts volume lifts when they're put on on any type of promotion price display feature are about half of what they were in 2019. That's a discouraging thing to see. So trends might be up down mixed across the board, but generally for beer, it's not seeing the same response when it's put on promotion during a week like Super Bowl that it did even three, four years ago. in the back of my mind, I'm looking at growth in some areas, but I'm also going, man, we're like scraping for it in some cases too. So it's, it's a mixed bag, I would say.

[00:21:58] Brian Krueger: Yeah. Dave and I were talking yesterday. I think you should definitely cover this Dave, as far as the pack size, what you were seeing on Super Bowl and some of the things I think that puts a good spin on what's really going on here.

[00:22:08] Dave Williams: Once you start pulling a thread, you just want to keep going and seeing what else is in there. I think the two notable changes in trends we saw on a pack size basis, were six packs and 24 packs. And I was joking with BK about it means I'm buying something to go to someone's home, or I'm buying a larger version to stay at home and host people. I mean, you could see the split if you're leaving your house versus staying into your house. And I'll bring a sixer to my friend's house, or I'll buy a case for them to come over and enjoy. Those two were the divergence in the trends, but everything else was kind of par for the course. So it's cool to see little quirks like that pop up.

[00:22:47] Jessica Infante: So grocery is obviously huge for beer. And this time of year in the run-up to the Super Bowl, you know, we're talking about lift and promo, but a lot of that is display, or at least it used to be pre-COVID. So has that changed at all? Are retailers still interested in getting these big floor displays? Are they easy for brewers to get and are they driving the traffic once they get there?

[00:23:09] Dave Williams: I think we definitely saw an uptick in display activity for certain segments. Again, it's going to be the broken record answer, but it really was the domestics that won. I think a lot of new FMB launches to BK's point, we're still seeing a lot of floor activity. And then RTDs, I mean, that thing was on a rocket ship. If you look at the average support, It tripled versus three years ago on, you know, the stores that account for X percent of the business, RTDs are on display in those stores. So it was a rocket ship up. So I do think it's still of interest. And I think they do still provide a lift. It was not negative. So that's that's a good thing, I suppose. So I think they're out there. But I think we also saw a lot of pricing promotion activity to take place. And that's always been part of the mix. But, you know, I don't know how many below premium brands are getting display, but those are the ones getting priced. And then it was the other maybe higher end segments in terms of price point or average case price that are getting the display activity.

[00:24:12] Brian Krueger: The biggest change we saw as far as the promo and display was definitely on the hard seltzer where you're looking at a 10 point difference for hard seltzer from last year's Super Bowl versus this year on promo and about 18 on the display. So it's a lot of floor display space that went to other people and they may have re-upped on kind of some below premium and super premium, but they also definitely had more floor display as far as that RTD spirits.

[00:24:40] Justin Kendall: In general, at this point in time with RTDs being such a focus, with super premium, domestics, those things getting focused, is it harder for Kraft to get those displays?

[00:24:55] Dave Williams: I think it's harder for a lot of Kraft to get displays, but not all. You know, if I was looking at the swing, I think Kraft has been able to chip away and get some of those lost displays back. I mean, everybody plummeted during COVID on floor activity. But Kraft has some positive trends in terms of weeks, but they do lag behind other areas. And I do think that it's not as many Kraft brands getting that support. That scope has narrowed quite a bit. It's maybe a handful of brands or brewers that are getting the activity versus 10, 15 double, whatever it might be. So yes, they're still getting it much more difficult and not nearly as widespread. The love is a lot more focused on certain brands now.

[00:25:42] Bump Williams: Dave, you mentioned that beer is not getting as much of a boost from the Super Bowl as it was before. Is there a point in time where we're going to not care as much about the Super Bowl? Like, is that eventually going to fizzle out or is beer still going to have an opportunity to take it back as a major occasion?

[00:26:06] Dave Williams: I'll lead off by saying, man, I hope not. You know, it's fun to look forward to something, especially when it's tied to a social type event. You know, maybe that's just me personally speaking, but it's good for beer. It's a social category. I do think too you do see an uptick in the volume of sales. It's almost the calm before the spring reset storm and then the summer selling season really kicks off. So I do think it is kind of that starting line of the race toward the summer. And I don't think that will ever change. I think the focus might open up to RTDs a bit more, you know, as more of a bigger group that is now getting the love on Super Bowl or the week leading up to Super Bowl. But I don't think beer is ever going to willingly let go of that as this is our quote-unquote holiday, you know, much like Fourth of July or any of the other major milestones fall for craft beer. You know, those are windows of time that I hope they don't go down without a fight in terms of sharing the room on Super Bowl.

[00:27:08] Brian Krueger: Yeah, I'm right there with you, Dave. I mean, I think it's one of the ultimate in-hand occasions that beer has tremendous advantages on. And I continuously hope that they continue to leverage those advantages and put it in front of the consumer and make it about them and make it a beer holiday. in there. Sure, there's going to be some experimentation, but there's significant advantages as far as the distribution of beer, the availability, even pricing, the multi-packs, kind of the pack sizes that we've all covered, just lends itself to it being a fantastic beer occasion and that ultimate in-hand occasion to kick off, as Dave was saying, the spring and then the summer.

[00:27:49] Jessica Infante: So back to craft a little bit. It's been weird. It's been wonky. You know, there's this weird dichotomy that we've talked about both in this conversation and like in every conversation that, you know, what's doing well is load or no ALK stuff and then higher ABV stuff that's really driving growth. Where are you seeing the opportunities for craft brands right here? Is it basically you just head to the two poles and ignore the middle? Like what's the best way to really capture some of this action?

[00:28:17] Dave Williams: It looks that way on the extremes just because there's big brands that compete in both of those polls, as you said, that kind of mask or hide any success that might be trickled down underneath, I think. it was a weird year. And I know this, this, I'm going to get a lot of groans about this, but we saw a lot of growth within like craft Pilsners, the Goldens. But I think a lot of that was tied to a lot of those came in 12 packs and consumers were looking for maybe a bit more value per ounce, or I want to make one stop and get my 12 pack in. just, you know, spend an appropriate amount for this particular occasion. Not all craft shoppers, mind you, because we're still seeing a lot of local IPAs, not even Imperial, just local, hard to find, you know, classic priced IPAs still do well. So I think a lot of things get masked on the extremes. And I don't want to say that those aren't growing because they most certainly are. But I think the Pilsners, the Goldens, I think there's opportunity for there. But again, how many craft brewers have the capability to add a 12-pack in addition to a six or a four? That's not an easy hurdle to jump for everybody. So I do think, you know, revisiting your flagship, finding those areas where you do still resonate, you do have success. We do see Growth in those traditional IPAs, growth in the hazies, there are pockets in other styles too. So I don't want to, if I ever say that growth is coming from one area or two areas, there's wins everywhere. So I do think you just have to dig a little bit deeper and they're certainly not as widespread. They're much more one market, two market before it gets real difficult to start resonating because again, Kraft is the biggest donor to shelf space for the second, third year in a row in terms of items on shelf. I think a win is maintaining where you are and how prevalent you are on the shelf and then leaning into the wins and not getting too wide even within your own portfolio. It's tough because you're not getting the room, you're not getting the look, you're not getting the space.

[00:30:21] Justin Kendall: I think you're onto something as far as, you know, looking for those wins. Obviously, you have to find those where you can. And as Jess pointed out, you have this dichotomy on style, but then there's also the package dichotomy where it's single serves and variety 12s. Speaking of groans, I'm sure there are going to be a lot of groans at this because it's like if I'm a small brewer and I don't have those capabilities, you know, and I'm seeing these trends on this side, these trends on this side, and then, you know, you're just stuck in the middle there and you can't play in any of those spaces. How do you even break out and be relevant?

[00:31:00] Dave Williams: I mean, it goes back to almost the roots of what got them to where they were in the first place, right? It's, all right, well, I tried the 10, 12 markets. Hell, I tried three, four markets, and now I'm starting to see a lot of softness or decline or slowdown. you know, retreat sounds like a dirty word, but you really got to maybe reassess where you are and where you can execute. And when I say execute, I mean, if you're at retail, making sure that you've got the right facings, the right brands, the right styles. If it's just taproom or direct to consumer, staying relevant through promotion or connecting with your local community. Honestly, it's not like it ever went away, but more so than ever for those brewers that don't have the packaging flexibility, the ability to go wide on styles, the ability to really hammer home why us at retail or chains, then there's only one path and that's connecting with the community and maximizing your relevance there and then taking it to the next level step-by-step.

[00:32:01] Brian Krueger: Yeah, you absolutely have to be focused in your portfolio offerings into the off premise right now. At any size of a craft brewer, you have to make sure that you're going to be having a success, which means that you have to build it off of a success story. I think the other part of the craft story that we don't really talk enough about is that on premise or their own premise. And are they up as far as their traffic? Are they having success in reaching deeper into their community? Are they more locally relevant? Are they doing more prowlers? Are people taking more at home occasions? from their own premise and putting that as a part of their variety and craft. That's something we can't get a good read on. I mean, obviously the BA has really good numbers on that, but that's something that we don't talk enough about. We talk about enough about the syndicated data, but how is the average craft brewery doing in their own premise as well as their focused efforts to get into retail?

[00:32:55] Justin Kendall: What about distribution expansion though? Because I see quite a few press releases, and I know Zoe and Jess do as well, of brands in that regional 15,000 to somewhere under 100,000, and they're expanding to multiple states at this point. And for someone who has watched this for, you know, half a decade at this point and has heard the words from like Rob Todd at Allagash about expansion and retrenching and how, you know, that strategy of just shotgunning beer out didn't work at that time, you know, does history repeat itself? What do you tell a brewer that's looking to expand to multiple states at this point?

[00:33:39] Dave Williams: I think it's two things. So if I look in the data, the breweries there are and there's a lot of examples out there of regional brewers that are expanding their footprint right and finding success through expansion. But on the flip side of that, if you look at the distribution and sales trends of the brewer who did that maybe five, six, seven years ago, they're the ones paying the price because they're getting pushed off the shelf to make room for the next one that's come in. So it's cut through. So if you can expand and you have the ability and the capabilities and the team to make sure that you're expanding, people know who you are, you can stay, you can be sticky on that shelf and that awareness and velocity can be maintained, expand. I mean, if you've got the capabilities and it continues to work for you, it's not a bad thing, but just know that for every one, two that are having success through that, there's four or five that are seeing massive distribution cuts because of this next brewer that's come in and is phasing them right off. complacency kills. If you to be out there hungry, selling, pushing, you los better be out there pick to say four or five year someone else following t now you're at risk. So i It's just the way that the world works within craft, within beer, within any business, right? So if you've got the capability and the drive and the hunger and the team that can execute, not to mention distributor relationships that can execute on your behalf as well, then it's not impossible, but it sure as hell is difficult.

[00:35:19] Brian Krueger: You have to be very relevant in your own backyard. I'm not saying you have to own everybody in your backyard, but you have to be very relevant and a part of that community. And then we also talk quite a bit with people about the alignment. It's not your decision on whether you should go into another state. It's, is there an opportunity? Are you aligned with that consumer and something that they're looking for that maybe they're not getting or an affinity that they have for your brands? already, and are you aligned with what that retailer is trying to do on their shelf as far as making that shelf turn, bring excitement back to the category? If you can't check those boxes and say, yes, I'm relevant, yes, I'm going to be aligned with the consumer, and I fill a niche in somebody else's market, we're very upfront saying you probably shouldn't be expanding. And to all of Dave's other point, if you can't handle it internally, if you're not adept or willing to get more adept at managing distributors and playing in a bigger field, then you should focus on where you are. And that's not saying everybody should focus. There's still great opportunities out there for some regional craft brewers to expand into other territories, but it's not a game that should be for everybody and everybody's saying, hey, I'm going to expand all of a sudden I'm going to be in three or five states.

[00:36:34] Bump Williams: So now that we're, you know, we're only a few months in, but as we're looking ahead, what are the things that you guys would be watching out for any particular trends or segments that you're looking at to kind of see how it plays out over the next few months?

[00:36:49] Dave Williams: I'm continuing to monitor this domestic lager renaissance, and maybe it's not the one people expected with, you know, the Bud Miller cores leading the charge. Maybe it's that next year, the Bush natural highlife Keystone leading the charge. I'm very curious to see. if they continue to lead the charge in incremental dollar sales for the category. It's a new slash old look. When you make charts like this, it's what it used to look like, and now it looks like it again. It's cool, but that'll be a big area of focus. I think the other thing that It kind of goes both ways with big name brands. One is going to be this familiar name. It's new innovation, but with an existing reputation. Brands people know coming into beverage alcohol, it'll get trial. But to what we talked about earlier, where's the repeat? What's that going to look like? Because big recognizable brands within beer have gone into new markets, caught fire, and just tapered off. So something completely brand new in terms of a product. I love monitoring life cycle trends. Might be the nerdiest thing I've said in 2023, but I stand by it because I mean it. It's interesting to see If there's anything that truly sticks with consumers of today, what are the attributes? What did that brand or company do different to hit the market? Maybe it's where they went. Maybe it's something in the product itself. So it's those new big names coming in with a familiar reputation. Those are kind of the two areas. And it has to do with big names we know and just how are they going to do.

[00:38:30] Brian Krueger: For me, I'm looking to see how people comp their last year, both on the negative and the positive side, because there were some great stories within craft and within beer on the positive side. And now those are the benchmarks for those companies going into this year. And they're also the benchmarks for the retailers. So I'm looking to see how that happens. especially throughout once we get into the resets and probably get that first 60 days of data there. The other thing that I'm really curious and we'll be keeping an eye on is 19.2s and how does that evolve? We know what it is right now, but I don't think that's necessarily where it's going to end up. I think there is some room for some other opportunities for people to come in. And I think that category is going to continue to evolve while still maybe providing kind of that bang for the buck and the value for the consumer as well as that convenience. So those are the two things I'm really curious about.

[00:39:17] Justin Kendall: Dave, there's no better time to be a lifecycle nerd than in this moment right now to steal a line from Sam Calagione with the, in this moment.

[00:39:28] Dave Williams: I'll plant my flag there. I stand by it.

[00:39:30] Justin Kendall: Yeah. Well, and the 19.2 trends are also definitely something that we'll have to talk more about, but Dave BK, thanks for joining us. Thanks for doing this and thanks for breaking it all down.

[00:39:41] Dave Williams: Always a pleasure, Justin. Thank you to Zoe and Jess, too. This is always a ton of fun.

[00:39:45] Justin Kendall: Yep. Thank you, guys. And that's our show for this week. Thanks to BK and Dave for being here. Thanks to Jess and Zoe for manning the ship or womaning the ship. And thanks to all of you for listening. We'll be back next week.