Brewbound Podcast: Five Beer Writers Enter a Zoom Meeting Pt. 2

[00:00:00] Brewbound Managing: 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. five more beer writers hop into a zoom. Find out what happens next on the brew down podcast. Hello and welcome to the Brewbound Podcast. My name is Justin Kendall and I am the editor of Brewbound and I am joined by Brewbound Managing Editor, Jessica Infante. How are you, Jess?

[00:00:57] Jessica Infante: Justin, I'm having a bones day.

[00:00:58] Brewbound Managing: A bones day.

[00:01:00] Jessica Infante: a bones day. It's been like really good, you know? So I know Zoe and I introduced you to the concept of Noodle, the 13 year old pug who determines what kind of day we're having on TikTok, but whether or not Noodle has bones, his owner will pick him up and if Noodle remains standing, it's a bones day and you got to like go out and get it and like tackle the world. If Noodle falls down, it's a no bones day and you just got to lay low and be kind to yourself. But today is a bones day.

[00:01:27] Brewbound Managing: And I'm also joined by Brewbound reporter Zoe Licata. Zoe, is it a Bones Day?

[00:01:34] Zoe Licata: It's definitely a Bones Day, I think. So yes, I would agree with Jess.

[00:01:38] Brewbound Managing: Just about every day with you two is a Bones Day, so. Well, that's definitely not true.

[00:01:43] Zoe Licata: Don't lie. We could be wonderful and it could still be a No Bones Day.

[00:01:47] Brewbound Managing: This is like a holiday episode anyway, so just take it.

[00:01:51] Jessica Infante: I had a hardcore No Bones weekend.

[00:01:53] Brewbound Managing: It was a No Bones weekend.

[00:01:56] Jessica Infante: I mean, I think we need to set the stage here for the listeners. We're recording this right now on Monday, December 6th. We have recently returned from Brewbound Live in Santa Monica, California. I think we're all still a teeny bit jet lagged. I got boosted over the weekend. It was rough, but I lived and that's the situation as it lays.

[00:02:17] Brewbound Managing: That is correct. And I may or may not be a father by the time that this is broadcast, airs, live streams, whatever. So we'll see how that goes. But yes, this is what we're considering a year in review episode. We actually recorded it a little bit earlier in the month of December with our friends from Beer Marketer Insights, Chris Shepard and David Steinman, the senior editors who, they're the guys behind Craft Brew News, and they were willing to hop into this podcast with us, hang out for a while, and chat about everything that happened over the last year, or at least, you know, a handful of topics.

[00:03:03] Zoe Licata: As much as you can talk about in an hour chunk of time.

[00:03:06] Brewbound Managing: Exactly.

[00:03:07] Jessica Infante: I don't know, guys. I think 2021 has been a wilder year for beer than even 2020 was.

[00:03:13] Brewbound Managing: It absolutely was a wilder year. A lot of upheaval, a lot of deals. No one could have really predicted what 2021 was going to be like.

[00:03:24] Jessica Infante: And COVID is still here.

[00:03:26] Brewbound Managing: Still very much here.

[00:03:28] Jessica Infante: Yeah, like all the things that didn't happen in 2020 because of COVID happened in 2021 with COVID.

[00:03:34] Brewbound Managing: little bit less of a threat of nuclear war happening because of a tweet. Well, that's true. That I will take as a positive. And on that note, should we get to the episode? I think we should do that. Yes. All right, let's bring on our featured guests, two guys that I have a ton of respect for, the senior editors for Beer Marketer's Insights, Craft Brew News, David Steinman. Welcome, David Steinman. Thank you. Yeah. Thanks for having us. And Chris Shepard, thanks for being here, Chris. Welcome to the Brewbound Podcast. I know this is a little bit like, and the wrestling nerd in me has it being like the NWO invading WCW in the 1990s. So a lot of people think that there may be tension between us, but I like you guys a lot. So. Feelings mutual. I like you guys a lot. So we brought you guys here today because we want to sort of do a year in review. And I guess for starters, I want to get started with one of the big deals of the year, which was Lions' acquisition of Bells. They've got this huge platform going on with New Belgium. So here we have another legacy crafter selling, in this case, Larry Bell. And my question to you guys is, do you believe the BA's definition of craft may be out of touch with the realities of how consumers view craft in this sort of new reality that we have?

[00:05:06] Beer Marketer: I'll start on that one just by sort of ripping off of comments that David Walker made at your show, which is it's kind of not relevant at this point because the whole point of the BA is to lobby for its you know, its members. And, you know, whatever the definition competitively of craft beers and Craft Brew, I think that's where you get into, you know, you're not necessarily looking at the real picture anymore if you're just looking at the BA definition. But, you know, the BA has got to do what it's got to do for its members. And it's got to draw the line somewhere. And it's a difficult line to draw, but they got to do it.

[00:05:54] Craft Brew: The way that I've started thinking about this or come to think about this is that, sales trends have shown that consumers are not super engaged on that level, that some subset of them are a relative, you know, a minority, perhaps a relatively small minority of consumers are engaged on the ownership, are sort of thinking about craft and Craft Brew in that way. But over the last few, you know, since the acquisition started, it's been clear that the vast majority of consumers are just not really engaging there yet. And I think that an association like the Brewers Association that depends on that sort of one of the tasks in front of them is sort of making that case to consumers that they should. I think, arguably, over the last year and a half, there have been more pressing issues, I think, for just about everybody. But I will be interested in watching to see if they figure that out, frankly.

[00:06:49] Brewbound Managing: I think it's difficult too, because you see all of these people who have their legacy story, you know, that was wrapped up in this ideal. And I think that David Walker was right. And you guys make a great point that that sort of narrative has sort of faded to the background in recent years, at least, you know, as COVID sort of took over and the landscape has definitely shifted.

[00:07:15] Beer Marketer: I think it's still going to be a top of mind issue for the BA. They've got the label. A lot of brewers have the label on it. I don't know how many consumers fully understand on a regular basis what they're looking at when they see it, but it's not going to be an area that BA just sits idly by on for sure over the years. We're still relatively early days. in this era of consolidation. I think it remains to be seen, but right now, like Chris Shepard, you see it over and over again. There's not that much engagement, I guess, at the level of local independent, the consumer fully making that line. They're willing to go across wherever.

[00:08:08] Jessica Infante: Yeah, I mean the other thing about this is that there's, what, close to 9,000 Craft Brew. It is so hard for consumers to keep straight in their heads who's craft, who's not craft, who's foreign owned, who's P.E. backed. And I think, you know, consumers don't care. They have a million other things going on in their lives. They're wondering, you know, how they're going to pay their rent, how they're going to pay their student loans, what's going on in the world, what's going on with COVID? Are we in a backsliding democracy? There's a million other things that Craft Brew drinkers think about before they think about who owns the brewery that they're buying beer from.

[00:08:42] Brewbound Managing: You don't take your cheat sheet with you to the grocery store?

[00:08:46] Jessica Infante: Well, I know everything, but I'm not normal. You need a cheat sheet?

[00:08:50] Craft Brew: Get out of this room.

[00:08:52] Jessica Infante: So I, you know, spent the beginning part of my Beer Marketer at one of the largest Craft Brew in the country and arguably the one that the BA has changed the definition of craft most to continue to accommodate, to keep it in the fold. And you would hear a million times pouring at festivals, giving tours, working at the brewery, everybody wants to come up to you and be like, well, Sam Adams isn't really craft. And then I would have to like, actually, Sam Adams is craft. And here's why, here's what defines a Craft Brew. And then I think the person would fall asleep on their feet right in front of me. So It's a hard case to get consumers to care. When you explain to them, some of them truly do care. They really do. But there's fewer of those people than there are of the people who are like, just let me buy my beer and leave me alone. Like when the seal came out, It was my project to revamp all of the packaging and POS templates on the brand side. I don't know why, but somehow I had to do this. Sounds like fun. Right? No, it was not fun. And then that year we would go to Denver early for GABF and we would visit breweries and we're at Hogshead. And there were, you know, a bunch of people nearby talking about the ceiling because I had taken on this project I overheard. And it was due to like easily could have been my dad being like, if it doesn't have that bottle on it, I'm not going to buy it. It's like, cool. Well, they're clearly into it and they know about it and they care about it, but they're also approaching Medicare age.

[00:10:15] Chris Shepard: I don't think anyone I know would know anything about that at all.

[00:10:20] Zoe Licata: They're not looking for any sort of signifier of like, oh, this is a Kraft product. I need to get this over whatever other product that I prefer to drink or whatnot. It's a great idea. It works for the Travis breweries.

[00:10:33] Craft Brew: Well, I mean, that's an interesting point to me, Zoe, because I think one of the things that I think the Brewers Association would point to, but lots of other organizations and companies are pointing to, is the level of engagement of especially younger consumers, right? That folks that are turned 21, call it, in the last five years and that are about to are, you know, reportedly, according to surveys, much more likely to be interested in where things come from, what the ingredients are, so on and so forth. And that's driving much bigger change. I mean, you can open this up way broader than who is a Craft Brew, what is a Craft Brew. That's driving a lot of activity in consumer packaged goods these days and certainly in beer and alcohol. So I think it's important and your point is apt because it's sort of like what that thing is that is of interest is going to vary by person. And maybe what a Craft Brew is isn't the thing for everybody, but there is this movement towards, well, but what? The number of things that people are going to go down that sort of deep dive into is probably pretty limited from person to person to person, it seems to me.

[00:11:46] Brewbound Managing: And everything that we keep hearing about Gen Z is it's more, are you a purpose-driven company versus I'm local, you know, I'm right next door.

[00:11:56] Jessica Infante: Thank goodness your people think that way Zoe, because the local is always better was getting exhausting.

[00:12:03] Craft Brew: Well, that's driving a lot of, I'll use the terrible word that we hear all the time, excitement from a lot of larger companies that actually see the opportunity to sort of make their case to a new generation of folks by being sort of purpose driven first, right? By throwing out that messaging front and center and bringing a lot more attention to it.

[00:12:26] Jessica Infante: So with another major Craft Brew joining Lyon being, you know, first New Belgium in 19 and then Bells this year, and just about all of the big crafts partnered either with, you know, a foreign-owned platform or being publicly traded. What do you think this is setting up for the future? Like, where do you guys think we're going from here?

[00:12:45] Craft Brew: David, she wants us to predict.

[00:12:48] Beer Marketer: It's like she doesn't know. Well, yeah, well, you'll never get us to do that, but I mean, I think you can kind of just look at everything that's happening and that has happened and know that there are still plenty of breweries, obviously thousands and thousands of breweries, but more in like the regional and above that probably are in the position where they have to at least be thinking about those kinds of decisions. of what's next for my business and is there a partner that makes sense for me? And there are plenty of strategic breweries, whether it's international or in the US, that are kind of looking at all kinds of spaces constantly. There's private equity money we've seen come into the space regularly. And you just can kind of deduce that there are more deals that are set up to continue happening over some amount of time, but no one knows how far it goes. And when someone like, you know, AB Molson Coors is like, ah, that's it. I don't need it. Maybe I'm just going to innovate for the rest of all my new high-end stuff. Maybe I don't need to buy as much, but maybe they're going to go on another spree. Maybe ZX Ventures is investing still in all sorts of little stuff.

[00:14:24] Brewbound Managing: You never know what they're investing in at this point.

[00:14:27] Beer Marketer: Well, they got this Hooptie. That's the latest. It's literally the smallest company that I've seen them explicitly bring under the AB unit in my time, at least. in terms of M&A, they've done sort of little ZX investments. But this is just, you know, it's in the Beyond Beer unit. It's part of Sanzini's platform. And it's this little brand in a kind of unique pouch that's mostly sold in Maryland and don't know much else

[00:15:01] Brewbound Managing: Yeah. Every time I go to the ZX webpage, I feel like I learned something new about who they've either invested in or, you know, what they invested in before that I didn't realize they had investment in or who's out as far as that goes.

[00:15:17] Jessica Infante: Yeah. And Goop Tea is pretty old. I feel like I remember it launching as a Twisted Tea competitor like years ago.

[00:15:24] Beer Marketer: for sure, but it sort of, yeah, like repurposed itself as a subsidiary of itself in 2019. And then they did a fundraise and then something happened during COVID that seemed to be actually on the positive side, I would say. And partly because we've seen kind of the to-go packaging benefit and more outlets needing that kind of thing. So All things considered, they raised some money, they had the right package format, and they had an interesting enough proposition to catch AB's attention.

[00:15:58] Jessica Infante: Good for them, like an FNB phoenix rising from the ashes. Another enormous story this year, and I think all of us have talked about this a whole lot, was the outpouring from women in the industry who have shared their stories of harassment, abuse, misogyny, much worse, Started in May on Breanne Allen, formerly of Notch Brewing's Instagram account, Rat Magnet. Months later, where do you think we are? Better place? Worst place? Unchanged? I have many thoughts on this matter, but I'm going to defer to our guests on this.

[00:16:33] Craft Brew: I'm not going to choose worst place. Perfect. I'm glad. I'm not going to choose worst place, but not sure I can choose otherwise. it makes a lot of sense to me that at this point we're in a place where this is a quite a bit more under the surface than it was for a number of months earlier this year. But I think that David and I were talking about this a little bit before is it, it just sort of kickstarted so much internal work for a lot of industry members and any Craft Brew who had not spent any time thinking about some, frankly, pretty basic HR stuff, now finds himself in a position where they're getting that house in order. So to the extent that it sort of did that, that's important. There's this sort of professionalization of an industry on the crap side that is, frankly, largely pretty darn small companies. And so bringing any kind of just sort of improvement there good thing, but one of the striking things about the whole story that I frankly focused a fair amount of my time on was the way that a lot of the rest of the industry allowed this to be sort of a craft thing when it's not, right? Where anyone with a brain and a pair of eyes, one eye, don't even need eyes, could recognize that this is by no means just a craft thing and just limited to small companies. We didn't hear a lot of larger companies get implicated, mostly for reasons of the fact that there are all sorts of nondisclosure agreements and some sort of legal boundaries with them being mentioned in the kinds of mechanisms and social media that all of this came out. That doesn't mean that these problems and that women are treated perfectly all the time at those places of employment. And I think that I am interested in following as the story continues, because I would also argue that this ain't over yet, right? Like the sort of immediate impact happens, but there are going to be repercussions and ripples for a long time. A lot of the things that I am interested in is watching how this ripples through interactions between companies, and especially between suppliers and wholesalers and retailers. Because I think as we saw in some of the stories that came up, a lot of the instances of harm were coming up, not necessarily at the company that the individual worked at, but at other companies that they had to work with. And so how those tensions ease and how those harms are frankly righted and sort of the potential for harm is ideally eliminated or the ways the companies sort of figure out how to try to eliminate that harm is I think one of the more interesting things for me going forward.

[00:19:27] Beer Marketer: Unfortunately, the conversation, you can feel it fading from the center of discussion as the year has gone on, as we've moved further away from some of those initial just outpouring of posts and actions as well by companies that had to absolutely you know, answer for things that happened at their company. And so, yeah, I think we're still a long, long ways away, and I'm probably not the best person to even be commenting on all that.

[00:20:07] Jessica Infante: No, you both put it perfectly. I think you're absolutely right. The conversation's starting to fade, and I think that's because some of the loudest, strongest voices in it are starting to get a little fatigued. The one thing we haven't entirely seen unlocked yet is widespread consumer concern. There's concern among the most heavily engaged craft-centric consumers, particularly women and craft drinkers of color, but I don't think the issue is spilled out over into mainstream craft drinkers yet.

[00:20:39] Brewbound Managing: And there's a lot that goes unseen because as everyone here knows, there's implications at retail, at wholesale, like their placements lost, their, you know, shelves lost to the companies that were implicated in this.

[00:20:54] Jessica Infante: Yeah. And it's not, I mean, it's not just beer. It's like you said, it happens at the retail level at, you know, bars and restaurants. We've seen a lot of stories come out of the wine industry about some pretty atrocious treatment of women over there. So. It's not just a craft thing and it's not just a beer thing, but it is still a whole thing that is far from resolved.

[00:21:17] Craft Brew: It's interesting the way that this story shapes some of my year and also where we're headed. We had already started thinking about here in the office you know, going back to something I said before, the way that so many companies, especially larger companies, especially publicly traded companies and sort of global companies have really focused their attention on what they call ESG, right? Or environmental, social and governance concerns, right? And like a key part of that, and that comes from the investment world. And there are lots of investors, especially overseas that, you know, are using these metrics as ways to sort of rate whether they should invest in a company or not, you know, but social, That's all about how you're treating people, whether they're people you employ or people you or your consumers. And Kraft saw this really big moment that took sort of all of the attention, all of the focus. But you know what? Lots of bigger companies are thinking about this and thinking about this in more careful ways and also thinking about their specifically their risk. And that's a good thing, you know what I mean, I'm, I am encouraged is a word I like to use about all this because it's still sort of early days and who really knows where it goes, how much of that is going to be whitewashing how much of that is going to be sort of, you know, just sort of covering things over to make themselves look nicer we don't know yet. But I see up and down the industry, and bigger than just the alcohol and the beer industry, companies pay more attention here. We're devoting a whole publication to it starting next year. And so I, in particular, am going to be spending a whole bunch more time, hopefully, holding some companies accountable to sort of, what are your promises? What are your practices? And sort of getting that on the record in a more clear way, not just when it comes to how people are treating their employees, but also sustainability environment sustainability issues, and so on and so forth, it sort of goes on down the line, you say you want to be better Okay, how, how are we doing that? And how's that going? But it's still super early days, like that world is developing, the language is developing.

[00:23:24] Zoe Licata: it's going to be interesting to check in with some of these places that like had responses this year of like, oh yeah, we're, we're changing things. Things are going to be better and check in a year from now and see, okay, what has changed.

[00:23:36] Craft Brew: Precisely. And that's work that we're all that all five of us are sort of yet to do, you know, and I, but I think that there's going to be a fair amount of that in 2022.

[00:23:48] Beer Marketer: And I think it's also worth giving it the space to have time to develop. Absolutely. It's not something that you can expect immediate change from. And I think everyone sort of understands that to an extent. But then, you know, there are plenty of companies that are going to have to make responses on the fly and they're going to get lampooned for it regardless of kind of what they do or say initially. It's about what they do over time.

[00:24:21] Zoe Licata: All right, let's move on to another big topic of this year. I feel like I joke all the time that like, yes, we're beer reporters and beer writers, but a lot of what we talk about now is hard seltzers and all that fun stuff. And hard seltzers had an interesting year. I mean, there was a lot of issues with over predicting how much supply they would need and the return of bars and restaurants kind of taking some of those consumers and occasions. But overall, Seltzer's up around 12% in dollars over last year. It crossed $4.5 billion this year, accounts for 10% share of the category. That's the most it's ever had. So how do you guys see this segment going into 2022?

[00:25:04] Beer Marketer: I mean, it's a pretty dynamic segment already. And I mean, it's impressive when you zoom out the way that Danny Brager did at Rebound Live. When you look at the growth over a very short five-ish year period, it's real dollars that you can't ignore. That being said, I think it's hard to just kind of be like, oh, so it's big. So it's fine. It's a very real slowdown. A lot of the growth, whatever growth basically that you see right now is all new brands and packages. So that just means that next year we're cycling all of that plus the stuff that's declining this year and it's just set up for short-term challenges in the space. There are a lot of brand families that are smaller and that are larger that are declining and there again a lot of the growth is new growth. So it's just really hard to get a feel for how much it can grow short term. I think the consumer has moved to beyond beer in various ways. And I think of hard seltzer more as F&B light than I do as hard seltzer these days. I mean, I don't know how much, nobody knows how much more these things can grow, but it's just been, FMVs in general have been a volatile space since its existence, you know, a lot of up fast, down fast, up fast, down fast, but it's kind of been a step ladder up overall, and Seltzer obviously explained that.

[00:27:00] Craft Brew: Yeah, so the FMV light thing, and we obviously talk about this a bunch, David, but is what I think is the best explanation of what happened in Seltzer in 2021. The way that Dave Berwick at Boston Beer explained it at our conference is he sort of, he used the Venn diagram description of sort of the Venn diagram of like, there's beer, but then there's like the three circles of FMB, traditional FMB, hard seltzer, and canned cocktails. Sort of the opportunities are in the spaces between those little bubbles and those sort of bubbles are filling in. I think of it as bubbles and sort of three-dimensional. And those bubbles are sort of growing and then sort of like mashing up into each other. And if you think about the flavor innovation of seltzer in 21, it's this sort of fuller flavor, sort of bigger place with tea and punch and lemonade sort of ruling the day. Next year, it's all about margarita styles and agave. So I see less importance of sort of breaking out hard seltzer as its own thing. moving forward, it just f of this broader ecosystem

[00:28:13] Brewbound Managing: It feels like the consumer is almost a locust. They go from one thing to another. It's lemonade, then it's iced tea, then it's punch, and then it's, like you said, it's margarita, or it's agave, or it's ranch water. There's this constant flashing of new, new, new, move, move, move that you know, partly is on the companies for throwing out so much so soon, but then you can't really blame them because somebody else was going to do it anyway.

[00:28:44] Craft Brew: Beer was one thing for like 35 to 40 years. if not longer, right? Beer up until really 2010, for the vast majority of people, was lager. It was one thing. And like you had FMVs before that and sort of the 10 years before that, starting in around 2000, right? Craft existed for a while, but you still had like three quarters of the industry, if not more, was just beer the way that most people think about beer. And over the last 10 years, as the digital revolution has changed the way all of us think and all of our brains actually function, and as younger people came in and were not interested in that thing, of course, they're going to this, that, and the other thing. I mean, that was craft for the first part of the last decade. For six, seven years, a lot of the growth was driven by, oh, I want to try that, and I want to try that, and I want to try that. Tony McGee told us, Tony McGee of Lagunitas, how much did he estimate? It was like, five years ago, and he got really concerned about how much of craft's growth was trial, right? It was just people trying things. And, you know, we see how craft slowed down after people stopped trying so many things. And FNBs are in that space right now. And they're frankly, better suited to provide any of that little flavor of the night. But you were at our conference a couple years ago, Justin, in 2019, when I gave that whole speech on craft and, and memes like FNBs and seltzers are, it's all memes, right? It's all just people sort of one upping each other and sort of trying to do a better version of that thing and you know that's where our culture is like I can't blame the companies from being like we have we have to give the consumers what they want. The problem is on the supply you know that gets real tough and how do you keep up with that indefinitely.

[00:30:39] Brewbound Managing: I feel like you've got all these old beer guys too, who are like, you know, we're letting the consumers drive this, you know, versus we're telling the consumers what they should like, you know, there's all this like push pull, you know, that you're trying to figure out. And then I feel like I've listened to three years of Boston beer earnings calls in which Jim cook is like said, a shakeout is coming. And it's like, still waiting on that shakeout, you know,

[00:31:08] Beer Marketer: A little bit wishful thinking from all the larger companies, I would say. That's been a party line. Remember the Third World Bus?

[00:31:15] Craft Brew: no wait which one was i mean bloodbath was bloodbath was sam i want to say 2017 or was that more recent bloodbath might have been more recent but greg cook you know it's craft is looking like a third world bus and like one bump is gonna throw off a whole bunch of them like that was like 2016 like there were all these comments about a shakeout that are years old and at this point it's sort of like what's this year's model of that

[00:31:43] Brewbound Managing: Well, and then they, you know, folks like Berwick have pushed the idea that, you know, this is going to be like soda or this is like energy drinks or whatever. But those, I mean, energy drinks in particular, too, that's proven to be disruptible. There are new players and, you know, it's early.

[00:32:02] Beer Marketer: Yes, it's early and there are more players coming in. And so you're just going to get more examples of disruptors, there are going to be more companies that are going to try than in the beverage space that are already established to some extent. Then on top of that, you've got the non-alcohol companies and spirits companies that are trying to figure it out and wine companies. Everyone's trying to figure it out from both sides of the spectrum. There are going to be more. Not less. That's a little bit of a prediction. So I apologize.

[00:32:38] Brewbound Managing: That's as close as you'll get to a prediction.

[00:32:41] Beer Marketer: Yeah. Companies will make more of these kind of beyond beer products. Oh, my God. Look at that.

[00:32:47] Brewbound Managing: Beer Marketer's crystal ball.

[00:32:49] Craft Brew: Yeah. The only thing we know is that consumers are going to keep moving. Their tastes are going to keep changing and companies are going to try to figure out ways to address that. then the supply chain and the system and the industry is just going to have to figure out how to do it. Would I like a world in which consumers change their tastes towards things that were a little bit more beer-like? Like, sure, I would, but the world is not Chris Shepard. And thank goodness. I mean, my world is, but that's just me. Don't lie to my face, Jessica and Fante.

[00:33:23] Jessica Infante: I mean, I feel like people got real into, like in like the Steve Jobs worship, people got real into the idea of like, you have to tell the consumer what they want. But that's when you're inventing like a computer that's small enough to live in your pocket. It's not when you're peddling light lager.

[00:33:37] Brewbound Managing: I like flavor.

[00:33:39] Jessica Infante: Right. They're not asking for a whole lot. You just got to figure out how to make it for them and make it attractive.

[00:33:48] Craft Brew: Yes, I'm going to yes that for sure. The flip side of that is when we're talking about alcohol, and we're talking about alcohol beverage choice. It is generally speaking not convincing people. to drink, it is nudging them one direction or another. And especially among today's consumers, we're talking about nudging them among things that they're probably already drinking, right? Because so many people are drinking just about everything, depending on the moment, depending on the time of day, depending on the occasion, the word that we hear so often. And I think that you can push people to make those choices differently, depending on what they're confronting. And that becomes the game, right? It's sort of like, how do you help consumers make that decision towards you at that decision-making moment? I would love it if beer companies figured out a way to make that nudge towards beer rather than various and sundry other products.

[00:34:49] Jessica Infante: One thing that makes me feel hopeful on that front was that last week at Brewbound Live, Danelle Cosmo of the Beer Institute gave a great presentation on data and styles. And she had by region in the Pacific Northwest. And in my experience as a marketeer, we always look to the Pac Northwest as being where styles and trends start. And she had the Pac Northwest being big on pilsners. So, give it a year, they could start migrating.

[00:35:21] Beer Marketer: We've talked about it internally and at our own conference and everywhere you can talk about it. So far, nobody has figured out how to really, other than MicUltra, scale an above-premium light logger. I guess the caveat is unless you have these nutritional specs that are the core of your brand. So, Mic Ultra and Corona Premier is continuing to grow for Constellation. But then when you get to Heineken Light and Corona Light over time, they've just Those have never really gotten better in terms of brands. And when you get down to the craft level, you've had examples like Founders Solid Gold that tried to compete more on price and has seen sales kind of retract since. nobody's figured it out but everyone on a larger scale in the craft world but there are a whole lot of really good pilsners being made across the country too and some of them doing really well in their own little spaces so maybe that collectively just continues to grow over time who knows but i mean i'm here for more pilsners

[00:36:43] Brewbound Managing: Well, and look at the focus areas for both Stone and Firestone Walker and probably more that I can't even remember, you know, 805 Cerveza and Stone, Buena... Buena Veza. Buena Veza, yeah. So... They're trying to prove that they can play in that space. Can they do it? I don't know. And you brought up founders, you know, I, I remember what's probably four years ago, maybe, maybe not that far, but maybe it's even further back than that, that Mike Stevens was talking about going after the other 85% of the aisle.

[00:37:20] Craft Brew: Punch them through the ceiling. Exactly. A lot of Craft Brew have sort of recognized years ago, as the growth started to slow, that it was like, well, we better figure something out because, and it's the same problem, right? Speaking to the same set of people isn't going to get you to growth. So it was like, well, how do we speak to people who are buying beer, just not this beer? And style is a huge part of that. And to my mind, if craft writ large, if it grows, one of the ways that it grows is by figuring this out, right? By X number of players, figuring out how to, the way I see it, simplify craft down to, here is this thing. Yes, it's like that beer that you were familiar with, but it is plus for whatever reason, right? It is from a local company, it is from a small-ish company that treats its employees well and is employee owned, or X number of things, or it's made with better ingredients, it's organic, it is more flavorful, whatever that sort of craft version of the plus is. I think 805 is the best example of a Craft Brew sort of figuring out ways to do that. It's not a lager per se, but I think it absolutely sort of fits in that space. And the fact that they've had so much, Firestone's had so much early success with Cerveza, suggests that they're onto something there. They're figuring out ways to sort of sell that brand. But you know, this is something that has become clear too with what New Belgium's done with the Voodoo Ranger brand and what lots of other brewers are sort of coming around to is this sort of selling a brand that is not the brewery brand. And the way that I'm wrapping my brain around that at the moment is that it's something that's a little simpler. It's an idea that a consumer can grab onto and hold onto that isn't about the company. And honestly, like that doesn't say great things about the notion of the Craft Brew we were talking about at the top of this conversation, but it's obviously working. And I think arguably one of the reasons why craft slowed down to my mind is that it just got a little complicated for people to follow. It felt intimidating and complicated. And the way you cut through that is through simplification. And I think these brands are a version of that. I think 805 has been simple and straightforward the whole time. And I think other Craft Brew that figure out how to do that could find ways to emulate that. It's not going to be able to be the same, but there are lots of versions of that.

[00:39:58] Jessica Infante: Yeah, watching Firestone Walker's ABP annual business plan this year when they were going through 805 and they were showing all of the below the line communications for 805, like all the in-store displays, all the point of sale materials. And that's what I used to do in my old life. And it all looked the same. Black and white, 805, add an alternative sport and cool looking people, like rinse and repeat, plug and play, super easy. And I'm watching like, man, this is kind of boring. And then I was like, wait a minute. No, it's not. This is genius because you should be bored by your marketing because that means it's repetitive enough that it will finally break through in the consumer's mind. In my old life, we would have like orange in the fall and red and green in the winter and then like light blue in the spring and yellow in the summer and a million things. And it's like, how can a consumer remember in their head that these are the beers and brands from the same brewery that I like and want to buy from? You're like assaulting their eyeballs. I think you're right. Simplification.

[00:40:55] Craft Brew: And I wonder about, of course, the sort of pandemic influences there, right? We watched how folks We saw folks go back to brands that they trusted, right? That was sort of one of the big refrains of 2020 and into 2021. Bigger brands benefited by folks just sort of beelining it, grabbing the 12 pack and going, et cetera. Questions about how sticky that is and how long that lasts. But I think even more broadly speaking, we saw people try to simplify their lives, right? And sort of people just sort of cutting off a lot of slack, whether that was, hobbies or tangential friends or work, if it wasn't working out for them, sort of making choices about sort of, no, that doesn't work for me anymore. That, again, speaks to simplification for me.

[00:41:44] Brewbound Managing: Well, on the opposite end of simplification and into more complication and like getting blurry, This year, we've seen the acceleration of beverage companies looking at the alcohol space. We've got Boston in partnership with Beam and PepsiCo. That's led to Pepsi with its own Bev-Alf distro company, Blue Cloud. Then you've got Molson Coors and Coca-Cola with Topo Chico Hard Seltzer. Now rumors of Constellation and Monster doing a deal. That's a lot unto itself. And as we look ahead to next year, Do you foresee, and I'm maybe not asking for prediction as much as, you know, the way things have sort of set it up, do you see other beyond beverage companies, major CPG companies looking at possibly dipping their toe in here? Is that what we're all sort of being set up for here, do you think?

[00:42:46] Beer Marketer: It's clear that There are more companies now than ever from all sides of the aisle that are open to taking a look. And who knows where that goes? It still remains to be seen, even on just the nature of the partnership with Boston Beer and Hard Mountain Dew. We've seen iterations of these kinds of partnerships actually in the past. It's always amusing to me, think of the FNBs, like Sousa has already done a version of this partnership in the 90s. There are a couple of other examples that I'm not thinking of the time I had, but we've been here before to some extent, it's just that the market has now moved forward in a way that makes the proposition potentially more interesting if they can get it right. I think it's fair to think that that could set up more companies to want to try, but it's just too early to tell.

[00:43:51] Craft Brew: When it comes to broader CBG folks, companies that are not in beverages in a big way, going to beer, going to alcoholic beverages. That's why I said like my first reaction was like, it's got to be right for them. Because the way what I see in all the line blurring is, you know, companies just sort of looking out for themselves and saying, well, how, how can we cut a deal, you know, or find a partnership that helps us get where we want to go. And because so many category lines are blurring on the consumer end, that just becomes so much easier in terms of brand partnerships like the Hard Mountain Dew stuff. I think how Pepsi does on distribution and the Blue Cloud distribution on the Hard Mountain Dew is a big open question. How easily they'll be able to set those operations up, how easily they'll be able to sort of cross all the T's and dot all the I's on the regulatory front. is an open question, and how successful they are commercially is also an open question. And I think that how well or not well they do there will speak to, I think, the appetite of other large CPG companies looking at alcoholic beverages. Because outside the US is one thing, but alcohol in the US is a whole big can of worms. I mean, it's a can of worms everywhere, but particularly here in the way that we regulate it. Because you're not figuring out one thing, you're figuring out 51 plus things. That just makes it tough. But you got a lot of cash. They're pretty profitable a lot of the time, especially the suppliers. So you're looking for just picking up somebody who's already figured it out, I suppose. But I'm not sure what that looks like. Because then you start talking about monster, no pun intended, CBG, M&A. And I'm not sure where that is, frankly.

[00:45:46] Beer Marketer: One other thing I want to add to that too is that we've all seen already smaller non-alc companies, but not necessarily small, just Bang has a hard seltzer that's starting to gain some traction, you've got Spindrift. On the brewing side, we've never had more contract capacity set up for all different kinds of beverages and all different kinds of sizes than we do right now. And it's just set up to be one giant testing ground for whoever wants to try whatever, they're going to have an avenue to try it. And they're going to be interested parties that are going to at least test the waters. I don't know how far it goes. Maybe it doesn't gain enough traction.

[00:46:38] Brewbound Managing: So you're saying this is the early days of Bumble for the beer industry and the rest of CPG?

[00:46:44] Beer Marketer: It's possible. It's entirely possible.

[00:46:48] Craft Brew: Are you guys working on that app? Because if you're not, then you might need to. Speed dating. In all of our very technologically advanced practices here at Beer Marketer.

[00:46:59] Jessica Infante: I'll set up the Zoom for all five of us to discuss this tomorrow.

[00:47:04] Beer Marketer: I feel like they already have it set up.

[00:47:07] Brewbound Managing: Yeah, we're at the court in phase.

[00:47:11] Jessica Infante: I really want someone to make an app that has all of the content on various streaming networks loaded and you go through and swipe left or right or whatever and then it tells you what shows you've matched with with the person you live with.

[00:47:24] Craft Brew: Can y'all agree that like the current streaming universe is unsustainable like this is we're gonna get past this right? I hope so.

[00:47:34] Jessica Infante: Similar to the current endless flavor options in the Beyond Beer universe. It's just too much.

[00:47:40] Beer Marketer: Everyone always says that it's too much, and then there just keeps on coming more. That's where we're at.

[00:47:47] Brewbound Managing: Peacock, NBC Plus, or, well, Peacock, AMC Plus, I should say, Hulu, Netflix, Paramount Plus, everything with a plus.

[00:47:59] Jessica Infante: My nerd husband just got the Criterion Channel. Who needs that? Why?

[00:48:04] Beer Marketer: Why do you pay for it? All movies.

[00:48:06] Jessica Infante: I think he does. I think he does.

[00:48:08] Beer Marketer: Oh wow.

[00:48:09] Jessica Infante: He's seen every movie that ever. He's a great person to have on your bar trivia team. He's seen every movie that has ever been made and most of them at least three times.

[00:48:16] Brewbound Managing: I'll do it. So let's get to supply changes.

[00:48:20] Craft Brew: Oh no.

[00:48:22] Brewbound Managing: Yes, let's end on a high note.

[00:48:25] Craft Brew: Oh no.

[00:48:27] Jessica Infante: So, you know, for the companies that all of us cover, Ball's announcement of minimum order increases for printed cans was a jolt to their businesses. What are you two hearing from brewers and what the fallout will be for them?

[00:48:39] Beer Marketer: To be honest, at this point, not that much. But that's to say, you know, there are a lot of regional size brewers that are pretty well situated right now, for now, with their can situation. I don't think that any brewery wants to see this. I got a couple of comments, I would say, that were more along the lines of, yeah, that one hurt to see, but we're good for now kind of thing. And I feel like these things have a way of working themselves out over time and the initial Jolt, so to speak, sounds a Little World sharp than it necessarily ends up being. But that being said, there are plenty of thousands of companies that are like, what's going on here? What's my next order going to look like? How expensive is it going to be? Where am I going to have to go for it?

[00:49:48] Craft Brew: Costs are up, costs are up, costs are up. That was like a particularly pertinent move because it's cans and like everything is cans now, that just sort of focused everybody there because there's already so much can tightness but there's also There's tightness for everything. And everything costs more, especially moving it, right? Like a big part of the supply chain issues are the fact that just getting things around is tougher. Freight is in a terrible place. The truck driver shortage is real and continues to be real. There was actually The New York Times did a really sort of smart thing in terms of visualizing the supply chain struggles today. And I see it on the app on my phone. And they basically created a flow chart that just sort of populated and you could just sort of swipe through and it would add an arrow and another sort of word that sort of summarized with like a quick paragraph on like, this is what happened and this is what makes that terrible. And it was just a really easy way of seeing this combination of pandemic pressures to facts about the supply chain and changes that were already happening that just made everything so much worse. But one of the biggest questions is, as David said, is how long does this last? And how long is there pressure? And what happens in the interim? I think when we talk about beer is something that we've talked a bunch about in the office recently is, you know, it's not just costs aren't going up just for the small guys. I mean, we're looking at all the largest players report huge increases in their costs on a quarter basis and setting the expectation that they're gonna raise prices much higher than they usually do in 2022. You know, so if we're looking at a world where the average price for beer is up four to 6% across the board next year, How consumers respond to that is a very big question, especially when we talk about the fact that wine and spirits have been less likely to raise prices over the last 10 to 20 years comparatively, but it varies across the spectrum too. Higher end segments like craft or F&Bs or imports even, maybe less impact on that price going up a bit. But when you're talking about mainstream beer, when you're talking about Bud Light, Bud Miller Light, Coors Light going up significantly in price, the reaction is less clear. And so I think there's smaller company issues with their costs going up even more than everybody else's. But then there's also a category issue of what's the response.

[00:52:23] Brewbound Managing: And look at Molson Coors earlier this year. They just chopped so much of their economy portfolio.

[00:52:31] Beer Marketer: Yeah. Probably it's like ripping the Band-Aid off a little bit, but it's a short-term loss for potentially a more healthy and slightly risen pricing portfolio. The other thing I wanted to add to what Chris was saying is that is one of the most interesting decisions in 2022 for craft suppliers and high-end suppliers, because they're feeling cost pressures more than large companies. But when you get larger domestic loggers raising prices, potentially closing that gap a little bit, that's competitively potentially attractive. And so you have to make a really tough call like how much of this cost am I going to eat initially while also keeping my brand competitive.

[00:53:26] Brewbound Managing: Well, this has been awesome, you guys. We've kept you way too long. We could keep going on distribution consolidation and the White House executive order and antitrust issues and just California in general, but we won't.

[00:53:41] Craft Brew: You mean we don't have another hour?

[00:53:43] Brewbound Managing: We do if you want, but maybe we should do a part two at some point. So we got a final final for you both. What are you most looking forward to covering in 2022? So this keeps you out of prediction, but keeps you into, you know, what you're looking forward to.

[00:54:01] Craft Brew: I sort of already answered that question earlier. My brain's been taken up by ESG, social issues, people issues, sustainability issues. I'm very, for the first time, really sort of digging my, really getting my fingers into some of the nitty gritty on some of the environmental stuff in particular, which I've avoided for a while. But I'm excited about going hard there and talking to these companies about what they're doing what they're up to what's working what's not working and sharing that with the industry getting a little bit more into the best practices world of like hey like these are some HR practices that y'all should get on board with or you know and and also covering some of the sort of industry-wide reactions to those things, right? Some of those coalitions of organizations like Pink Boots and Master Brewers with the BA and some of the others on the wholesaler side, the NBWA's efforts, you know, what are they doing? What are they finding? What are they coming up with? That's definitely the thing that I'm most excited about.

[00:55:01] Jessica Infante: That's going to be a whole new newsletter, right? Can you tell us about it?

[00:55:04] Craft Brew: Yeah, so it's actually it's an evolution of a newsletter we've done forever that my father edited for a long time called Alcohol Issues Insights that has been focused on alcohol policy and alcohol science, which strangely we haven't touched on at all. I don't understand. I could talk for another hour on pandemic drinking trends. Don't get me started. but we've covered the science and the policy side of alcohol for a long time and we're adding into that mix the social environmental and governance issues.

[00:55:34] Beer Marketer: My mind is still racing to come up with a good answer. Some of the thoughts are just kind of based on what we've already talked about and Admittedly, I am excited to cover and curious and scared a little bit all in one to just sort of cover what happens to just overall industry growth or not in 2022 and how hard seltzer plays into that, which direction that goes as a category. And craft, you know, craft has an up year right now. just based on comps from COVID alone, is that sustainable? All sorts of dynamics within domestic lager and imports are on fire, still mainly Constellation, just getting down to the whole nitty gritty and figuring out what is making the industry tick next year in a positive direction.

[00:56:36] Brewbound Managing: Nice. Well, we appreciate you both spending so much time with us. Thank you, David. Thank you, Christopher. Thank you, folks. Thanks for the invite.

[00:56:44] Beer Marketer: Really appreciate it. Always fun to talk shots.

[00:56:46] Jessica Infante: Thanks, guys. This was a lot of fun.

[00:56:48] Brewbound Managing: And thank you to our one-man audio team, Joe, for putting this all together. And thanks to all of you for listening. Please like, rate, and review. Subscribe. And we will return next week, probably. Who knows?