Brewbound Podcast: Modern Times’ New Partners, Boston’s ‘Messy’ Earnings & Beer Wins Halloween

[00:00:00] Justin Kendall: Heading to CBC? Kick things off the day before The 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 The Brewbound.com slash lovecity.rsvp. And don't forget to catch The Brewbound team at booth 956 during CBC. Next on The Brewbound Podcast, Maui finds new partners for Modern Times, Boston Beer reports messy earnings, and beer wins spooky season. Hello and welcome to The Brewbound Podcast. I'm Justin Kendall.

[00:00:53] Jessica Infante: I'm Jessica Infante. And I'm Zoe Licata.

[00:00:56] Justin Kendall: And this week we're bringing you a pair of interviews recorded during the NBWA's Annual Convention. First, we'll bring you a conversation with NBWA VP of State Affairs David Christman. He'll give us a state-level update on the trade group's efforts. And then we'll have a conversation with Sean Mossman from Behold Beverage Intelligence and Laura Melzow from Glazers Beer and Beverage to discuss artificial intelligence and how it's changing workflow in the middle tier. But first, we gotta plug Brewbound Live, that's coming up December 11th and 12th in Marina Del Rey, California. We're gonna bring you insights from NIQ, three-tier beverages, Foresight Factory, and Bump Williams Consulting. sessions with Allagash Brewing, New Belgium, Beatbox, Suntory, Holidayly, Dogfish Head, Full Circle Brewing, Climbing Kites, Indeed Brewing, and many more. Advice from distributors, Gulf Distributing, Dahl Distributing, Markstein Sales, Retailer and Wholesaler one-to-one meetings, our Pitch Slam competition, which is a lot like Shark Tank, and a whole lot of networking and parties. Tickets are available now. The full schedule is out there too. A few tweaks still need to be made, but it's come together.

[00:02:18] Jessica Infante: Yeah, strong lineup. A lot of discussions across everything you could possibly think of. We're talking about like from hemp beverages to craft beer to Behold Beverage, distributor talks, retailer talks. We try to cover everything that's going on. I think we did a pretty good job.

[00:02:36] Justin Kendall: I agree.

[00:02:37] Jessica Infante: I know we did a pretty good job.

[00:02:38] Justin Kendall: I'm excited. We'll have more information The Brewbound.com, but tickets available now. So let's get into the news of the last week. And one of the things that crept up on us and was kind of a surprise, I would say, was that Kraft Ohana is spinning off the Modern Times brand into a pair of new partnerships. One, which will be with Josh Landon, who runs the Ashland Hard Seltzer brand and founded St. Archer and later sold that to Molson Coors. He's going to lead the beer operations daily, but they're going to still contract brew with Alesmith. And then Duncan Ward, a San Diego businessman, is going to run the hospitality side of the business, so the tap rooms as well as the coffee business. And I guess the why this is happening is that Maui is experiencing so much growth with its beer and hard seltzer portfolio that it wants to focus its resources there and have somebody on The Brewbound in San Diego running both of those businesses. And they did retain what Garrett Marrero told me is a healthy interest in both businesses, but Sounds like they're going to be out of the daily operations of both of those and just kind of riding the wave.

[00:04:04] Jessica Infante: Yeah. I mean, it makes a lot of sense. I feel like we probably should have known something like this was coming back in September when they announced they were shifting production of Modern Times to Alesmith and winding down operations at their production facilities. But it's been interesting to watch like the whole trajectory of the Modern Times brand. from what it had been and from, you know, years ago when its founder was saying it was calling for like a several hundred million dollar valuation to being sold after a very contentious auction for $10 million to this.

[00:04:44] Justin Kendall: it's been one adjustment after another, right? Like you said, you've got what we saw at the start, which was a bunch of layoffs of the employees because they had to transition over to Kraft Ohana Maui employees. And then here we are, they're closing the Point Loma location. They're auctioning off that equipment next month, early next month. And they've moved that production business over to Alesmith. And then they've got these partnerships. And we have seen Josh Landon found several companies. He's been involved in partnerships before. Great Frontier Holdings with Ninkazi is one in Oregon. That's where they are producing a lot of, I would say, the lion's share, if not all of the Ashland hard seltzer production is at Ninkazi in Eugene, Oregon. And that's a partnership that we had a lot of questions about when this was announced. And Great Frontier is not involved in this. Josh is no longer the CEO of Great Frontier. He's going to be taking this on and running this on the day-to-day basis.

[00:05:59] Jessica Infante: Yeah, it sounds like he's all in on Modern Times. And I'm not at all saying that anybody at Kraft Ohana was not super psyched about it. I'm sure they were, but I think the brand really needs somebody there and like psyched to work on it. So from his quotes in the press release, sounds like Josh is that guy. It's almost like Modern Times just needed to be completely kind of like taken down to its like bare bones to really restart. So we, I remember we did a round with Scott Metzger, who's the president and COO of Kraft Ohana earlier this year, and he was saying it was just a inefficient operation set up there. And so the integration process for Modern Times with Kraft Ohana was super complicated and way more labor intensive than they thought. And this kind of shifting of production and now shifting of daily operations has allowed it to kind of have a full reset in how that brand can operate. I will never give up the chance to remind people that Modern Times had a taproom with a swimming pool. Yes, they did.

[00:07:04] Justin Kendall: One of the other pieces of this is Josh has tried to start several beer brands in San Diego. He started Harland. He's no longer a part of Harland Brewing. He started Wings and Arrow. I don't know very much about that brand. Obviously, he started St. Archer. That brand doesn't exist anymore. Molson Coors killed that off after the gold experiment where they made it into a Michelob Ultra Challenger, and then you know what happens to Michelob Ultra Challengers usually.

[00:07:40] Jessica Infante: Nothing good.

[00:07:41] Justin Kendall: Nothing good. So here we are, and he has another brand that he's taking on that has been a struggling brand. Obviously it wouldn't be in this position. Kraft Ohana purchased it out of an auction for what ended up being $10 million. That's what Garrett told us, I believe The Brewbound Live a couple of years ago after the deal was wrapped up but I wonder if this is something that is the future for craft brands where a lot of them exist sort of in this ghost capacity where their contract brewed and you know they just kind of float out there in the ether.

[00:08:29] Jessica Infante: Yeah, I mean, this one will still have to possibly more tap rooms. So, like, it will still have a physical presence, but it's just not being brewed at either of those locations. I don't know. I mean. We'll see. I mean, you would think that I guess some things like Modern Times are, to borrow a phrase, too big to fail. But at some point, we're going to have to start seeing some of the larger craft brands that are unsustainable finally admit that they are unsustainable. I don't know who would fall under that bucket, and I don't really want to get into that prediction game, because that feels a little too spooky.

[00:09:08] Justin Kendall: It is Halloween week, but... And this is something that we've seen before, whether it's McKellar shutting down operations in San Diego and moving production to A.L. Smith, or Anheuser-Busch doing this with the platform Beer Brand, and it just exists as like three zombie IPA brands that are in distribution and produced at other facilities. I mean, we could even get into the imports. Look at a story that Zoe has coming up The Brewbound about imports being produced in the United States. And you're obviously not an import anymore if you're produced domestically. But does that even matter at this point? Does where the beer is made still resonate with the consumer?

[00:09:56] Jessica Infante: Yeah, there's definitely a crossover there between craft and imports, right? It seems like potentially consumers are caring less about the physical location of where a brand is made and more about things like quality and the brand itself, like what that image of the brand is. And so possibly it doesn't matter for these craft brands since it doesn't seem to matter for a lot of these import brands, but it's still pretty early to tell for sure.

[00:10:23] Justin Kendall: Well, I think we can leap to another story that has some similar facets to it, and that's Boston Beer's earnings. I believe this was Q3, right, Zoe? And you were on top of that.

[00:10:38] Jessica Infante: Yeah, normally we look for the most interesting tidbits from earnings and the calls with investors and things, but this one came in the actual financial results, which has been a trend for Boston Beer's Q3 results for the past few years. And that mainly is because they had another huge impairment charge, mainly related to Dogfish Head. It was a total of $42.6 million in a non-cash impairment charge for Q3, and $41.2 million of that was for Dogfish Head. Now the crab brand is around $14.4 million for its fair market value. A reminder that Boston Beer bought Dogfish Head for $300 million in 2019. So that's just, we're coming up on like the five-year anniversary mark. That's a significant markdown. So this is the biggest impairment rate for Dr. Shedd that we've seen in the past three years. They did 16.4 million in Q3 2023 and 27.1 million in Q3 2022. They just said they don't expect any more. They're gonna quote amortizing the remaining intangible assets over the next 10 years. But that's a huge difference from, yeah, I guess over five years now from 2019 to 2024. But you also have to look at what happened in those five years and especially what happened for Boston Beer. Like that was the start of the truly rocket ship ride. And you have to wonder like if they, you know, like they really put almost all their resources and efforts in that basket. And they've said that on earnings calls and stuff. But what if that hadn't happened? What if Dogfish had received like the support that it needed and the nurturing that it needed to grow? Like maybe the brand would be worth something else now? I don't know. I mean, I look, I'm not a financial expert. I'm probably, it astonishes me that I even cover earnings calls, but it's, you know, like look at the five years that we just lived through. When you factor in COVID and all of that, What a wild time. COVID-19 pandemic, hard seltzer boom, which took a lot of Boston Beer's attention. And now looking at how their other like beer, like Samuel Adams is barely mentioned anymore either. So at least in these earnings conversations. So Dodger's Head is brought up when they're talking about their canned cocktails now, like not about the craft beer. Exactly. I don't know. When's the last time 60 Minute ever got a shout out? Yeah. Maybe never.

[00:13:18] Justin Kendall: And you look at what happened with a lot of these craft acquisitions that were made by publicly traded companies. They've almost all taken impairment charges on these businesses, whether it was Ballast Point and Constellation Brands or Lagunitas and Heineken or whomever it is.

[00:13:39] Jessica Infante: Yeah. And I feel like the question really is, like, were these brands in the right hands? Like, did these companies prioritize them the way they should have been. I think we all know the answer there with Ballast Point is absolutely not and Constellation themselves knew it. They got out of the craft business entirely. So I don't know. This impairment was also impacting Coney Island and Angel City. So those are also two other brands that were in Boston Beer that are now valued at nothing. That's crazy to me. Yeah. I mean, those were existing brands before Boston Beer acquired them, but they were tiny and very different. And the ride that, ride, that's a good pun. The ride that Coney Island went on is crazy. Boston Beer acquired the brand and then used it as a vehicle for hard root beer in what, like 2015? I don't know. I guess it made sense. It was an existing brand. It lived out in the world. The idea of Coney Island as like a fun, nostalgic summertime destination, I guess, made sense to line up with hard root beer. And then that crashed and burned and they tried doing a few other hard sodas with it. And then they abandoned that and then went back to focusing on beer, but then they closed the brewery. And I think they were just keeping one or two SKUs in the New York market. Be interesting to see if those brands are still around, if the platform beers that AB said they were going to keep making, like, are those still around? BBC did the same thing with Concrete Beach a couple of years ago, where they closed the, they turned the taproom into a dogfish

[00:15:18] Justin Kendall: Dogfish Head Miami, right?

[00:15:20] Jessica Infante: Yeah, I was gonna say like, I don't know what I was gonna say. They turned it into Dogfish Head Miami and then they were gonna keep Havana Lager in the South Florida market. I don't know if they still did that. Sounds like I just gave myself some homework.

[00:15:32] Justin Kendall: Do you wanna go have these on Angel City or Coney Island or both?

[00:15:38] Jessica Infante: Neither.

[00:15:38] Justin Kendall: We could finally own craft brands. These are in my price range at this point.

[00:15:44] Jessica Infante: Zero dollars. Yeah, man, I'm good, but I'll support you in whatever you want to do.

[00:15:51] Justin Kendall: I respect anybody that wants to get in this business and I have zero desire to do it myself.

[00:15:58] Jessica Infante: Do you remember in my job interview five years ago, we were talking about the state of craft and about how basically if you were opening a craft brand these days, the way to go would be to open a taproom and then you're basically running a bar. And I was like, if you were to open a brewery, which way would you go? And you were like, I would not open a brewery. And I was like, all right.

[00:16:18] Justin Kendall: I'm glad that my position has held strong in the years since. So it's the Twisted Tea Show, right, Zoe?

[00:16:26] Jessica Infante: Oh, yeah, it is still very much the Twisted Tea Show. I mean, that is like the bulk of Boston Beer's volume at this point. I think it was like 65% the last time they put a number on it. They didn't put one on this time. But there was a little bit of concern, at least from analysts after the call and everything, because Twisted Tea27;s growth slowed pretty significantly in Q3. It's been pretty consistent in having double-digit growth, and Q3 was around 8%. the reason why Boston Beer has still been able to get out some growth on full company scale is mainly because of Twisted Tea. It's combating and outweighing the significant declines from things like Truly. If that significant growth goes down, even if it's still positive, it's not going to be able to outweigh those losses anymore. There was a little bit of concern and hesitation from analysts of what how long is it sustainable to just basically have all your eggs in and twist it. Boston Beer seems confident in it, they think it's okay, they think this is just a bit of a blip and it's kind of a natural occurrence with how the quarters move and some of the new competition, but they They said there's no significant take in their sales from any new entrants. They see that Twisted Still is a very dominant brand within the hard tea market, and hard tea's growth in general as a segment isn't slowing down, so they didn't seem to have any qualms about it.

[00:17:59] Justin Kendall: They keep saying that they're going to claw back whatever they may have lost too. They're fairly confident in that. And yet we've seen numerous hard tea challengers. They've even created their own premium hard tea brand in Suncruiser. I'll try and get it right because they don't get it right sometimes.

[00:18:21] Jessica Infante: Yeah, and they don't see there being any cannibalization of Twisted Tea with Suncruiser either. They see that as an entirely different consumer. It's competing with other vodka-based beverages, and they didn't name anything specifically, but High Noon or Surfside, those are the ones that are really dominating right now. So yeah, they see no crossover there that they should be concerned about promoting this new hard tea product. They also have been saying for several years now that they're going to call back with Truly, and that has not happened. One of the analyst quotes that stood out was Kumil from Jeffries said, quote, We thought Truly was finding its floor. We were wrong, unquote. Ouch. Truly, these declines have been pretty significant, and they thought they couldn't get worse, and apparently they have. And while Boston Beer has been saying, hey, we totally see green shoots, and we have this new strategy, and we see we can claim back share, and they've credited a lot of the declines to just the hard seltzer segment having issues. But this quarter was pretty heavy for them because White Claw gained a whole bunch of share and volume and everything in Q3 while Truly continued to record even accelerated declines. White Claw is more dominant now than it ever has been. Yeah. So it's not just, you can't say it's just a hard seltzer problem anymore. This is a Truly problem. Truly a Truly problem. Yeah.

[00:19:55] Justin Kendall: This was a knives out quarter too for the analysts, because when I said messy results at the top, that messy came from Nadine Sarawat from Bernstein, friend of the podcast. And they didn't hold back on sort of letting the company have it this quarter.

[00:20:13] Jessica Infante: No, they did not. Nadine also said, you know, the future of Boston Beer is pretty uncertain, is her word, because it seems like there, I think she said there's a lot of noise going on at Boston Beer, and so they don't, they can't really gauge what is going to happen with it, because there seems to be a disconnect between trends and what leadership is saying.

[00:20:36] Justin Kendall: And this is on the heels of you and I having spent time with Boston Beer at their media brunch. And what were they pitching there?

[00:20:45] Jessica Infante: They were pitching American Light, Samuel Adams American Light, which is their lager, which did get a brief mention on the earnings call. Samuel Adams doesn't typically get too much except for a short shout out for the seasonals. And then a new beer from Dogfish Head.

[00:21:05] Justin Kendall: Covered in nugs, IPA.

[00:21:06] Jessica Infante: Yes, covered in nugs, IPA.

[00:21:09] Justin Kendall: I think of Wendy's now when I hear it because of the saucy nugs or whatever.

[00:21:14] Jessica Infante: Yeah, I mean, the beginning of that brunch, they did acknowledge it was a lot of conversation about beyond beer. It's similar to this earnings call of like, that is a space for craft beer. Jim Cook said that in both that media brunch and in the call with investors that like craft is poised where that should be a big opportunity for the segment because it fits in with a lot of craft strengths around creativity and quality. So that was mentioned in both conversations. But yeah, then The majority of the earnings call was about their Beyond Beer offerings. The majority of that media brunch was about these two kind of more traditional craft brands. I don't know if you call American Light traditional. I guess not. But they're going at it from a craft viewpoint. And price point. And price point. Yeah, that was one of the things that stood out. Jim is trying to make a beer for light beer drinkers that want the quality of craft. And so he thinks they'll pay a little bit more for it. But that's expanding next year. That's just in a few markets right now. A lot of people have that idea right now. Yes, a lot. So yeah, we'll see how it stacks up when it expands on a more National Beer next year versus some of the others.

[00:22:27] Justin Kendall: Well, let's wrap up the news section with a positive note, and that is Halloween is here, and apparently, bevel buyers are choosing beer. People want to drink beer.

[00:22:41] Jessica Infante: Numerator, which is a market research firm that does a lot of work with consumers and asking them, you know, their plans for various holidays, surveyed a bunch of people. I believe I called them souls in my story about this. He's had a lot of great puns in that story. Well, I mean, I live, I live in Halloween land and it is, it's been quite a Halloween season, let me tell you. So of the 23% of people who say they're going to buy alcohol for their Halloween celebrations, More than 60% of them said their Bev Alk buy of choice was going to be beer. So that should be a little heartening. For this story, I also did a little digging into popular fall seasonals and credit where credit's due, Sam Adams seasonal was showing up in some NIQ scans for like the last four weeks ending October 5th as like the third best-selling craft beer. So good on them. I feel like their year over year trends were still down, but I don't know that we've, really seen Oktoberfest have that big of a jump in craft lately. So, I mean, these obviously don't include on-premise data, so it's not the full picture. Yeah, they're popping a lot in the most recent Sakai report we had too, of making it within the top 30. I think both of Sam Adams' most recent seasonals made it recently. Good on them. Yeah, MBWA Chief Economist and VP of Analytics Lester Jones sent us a quick note, calling out that fall beers peaked earlier and higher and then fell off faster in 2024 compared to 2023. So basically it kind of, like the chart he sent made it really seem like as soon as fall beers hit the market back over the summer, everybody like rushed to buy them. And then we had like a big drop off. It's interesting, people always complain that they see pumpkin beer too early, but clearly it's not that early because they buy it. Yeah. I feel like we talk about it every year. It's like they come out earlier and earlier, but people are still totally willing to buy it. So we haven't quite reached the mark yet where it's too early for consumers. Yeah. I just, I read a great story in the AP this morning about how like Halloween culture is now like mainstream culture and they credited a lot of this to the Home Depot 12 foot skeletons. I'll send y'all a link. It was a good read.

[00:25:05] Justin Kendall: There are at least three of those in my neighborhood.

[00:25:08] Jessica Infante: Cora and I went for a walk yesterday afternoon and I counted 63 pumpkins between our house and the park. I was only counting real pumpkins though, not, you know, other ones. But yeah, it's been like, I live in Salem, Mass. We have become like the Halloween destination. It's only gotten crazier since COVID.

[00:25:28] Justin Kendall: I was going to ask you about this because I was listening to Make Me Smart, and they did a show in Boston. And they do this thing called half full, half empty, which is basically a round with or tabbing out. That's where I sort of got the idea for that from. And they asked the question of Salem. Are you half full or half empty on doing Halloween in Salem? And the crowd was just audibly like not into it. Like they know how bad it is.

[00:26:02] Jessica Infante: Yeah, it's fun, but like it just makes doing anything so much harder. Like you can't really like get in your car, like streets closed down. Like the city sends out notifications for when the parking garages are full and when they're closing streets. And that just happens early and earlier, both in the season and in the day. So like basically like we came back up from New Jersey after Labor Day and it's been like straight out the gate full on Halloween since then. It's nuts. I took Corey for a walk on Sunday and we stopped by a new-ish donut shop that opened. The owner of the donut shop used to do pop-ups at breweries. Like I had interacted with her to get her to do a pop-up at the brewery that I worked at. So, but like I obviously haven't spoken to her in a million years and I didn't say anything, but she was behind the counter and she seemed utterly, like, exhausted to her bones. I almost wanted to be like, hey, I live here too, and we're almost done. Like, you got this. Three more days. Like, people would come in and ask for her Hocus Pocus Sanderson Sisters donuts, which were sold out because it was like four o'clock on a weekend on Sunday. And then people would get snippy with her. And it was just like, because if the tourists that come, I don't know, man, this is, we don't need to go down this rabbit hole, but basically it's impossible to drive anywhere. It's becoming impossible to walk anywhere. And all I see is just people standing in lines. I left yoga at 9.30 on Saturday morning, lines out the door of every coffee shop, every breakfast place. This doesn't even look fun. So if you want to come to Salem, I say do it in early September or in early November. Anything in between is just standing in lines. Yeah. There's a reason we're not going this year. Yeah.

[00:27:47] Justin Kendall: Thank you. It's always the happiest time of the season when I see Spirit Halloween pop up, and it is the saddest time of the season when it goes away. And even in my target, the holiday creep is on because the Christmas decorations are starting to take over the Halloween one. I mean, it's a full on encroachment where I'm seeing trees and everything else. And it's like, I just want to buy some candy. I don't want to see this stuff yet. You know, just give me till, you know, October 31st. Can we just wait? But I know we can't. We cannot.

[00:28:24] Jessica Infante: If you needed Halloween decorations, you needed to have bought them already.

[00:28:28] Justin Kendall: Yeah, I mean, this is just candy fulfillment because I can't stop eating the Twizzlers.

[00:28:34] Jessica Infante: An interesting choice.

[00:28:37] Justin Kendall: Well, we should wrap this up and get to our featured interviews with David Christman and then Sean Mossman and Glazer Melzow.

[00:28:48] Jessica Infante: Welcome back to The Brewbound podcast on location. It The Brewbound managing editor, Jessica Infante. We are here at the National Beer Wholesalers Association 87th Annual Convention and product showcase. Look at that. I got it all out. And I am so excited. Our next guest is MBWA vice president of state affairs, David Christman, longtime friend of the pod. Dave, how are you?

[00:29:11] The Brewbound: I'm good. Great. Thank you guys for doing this. It's like Radio Row at our show. It's like, you know, just makes it feel like a political event or something, but I love it.

[00:29:18] Jessica Infante: We are, you know, we're trying to be a little fancy here. And I love doing these on location interviews because I feel like the excitement and the energy in the room really comes through in the audio. And this is a really nerdy thing to say, I think, and I'm sorry, but I like doing this. I think it's fun.

[00:29:34] The Brewbound: I appreciate being invited. This is awesome.

[00:29:36] Jessica Infante: No, so glad you're here. So Dave, this is like a massively busy couple of days for you. So first of all, how are you?

[00:29:42] The Brewbound: You know, you got me on day four. We start here Friday with our board of directors. And by the time you all get here Sunday, we've already kind of been through the gauntlet. But it's kind of downhill at this point. Like, it's always kind of energizes you to see all your members come into town. And so, yeah, we're great. We're happy to have everyone here. And San Diego certainly helps. I mean, 75 and sunny every day isn't so bad.

[00:30:04] Jessica Infante: No, nobody's mad about that. Well, we had a lot of great main stage conversation today and a lot of stuff. There's a lot on your plate, but when we look at like the 35,000 foot view statewide, what state level issues are rising to the top of your radar right now?

[00:30:22] The Brewbound: It is hard not to answer that by saying it's all hemp all the time right now. We meet with our state association execs while we're here in town as well. And we've had meetings with them throughout the summer. And it's new. It's something that a lot of our guys haven't dealt with in this space before. We do not have alignment across our membership on how these products should be treated, how they should be regulated, where they should be sold. go down the full list. So from our side, definitely we've gone to school a little bit to learn about these products. We've tried to figure out what the proper regulatory system might look like if a state wants to go down that road. But our message to our members is, you do have 90 years of experience in intoxicating beverage, at least be at the table if your state's looking at this. So that has definitely been the issue that's taken up the most oxygen in the room this year. Certainly not the only issue. Thankfully, I would say Team Beer has been working pretty well together. Five years ago, we probably would have been talking about craft brewer fights or some other issues like that. There's not as many of those at the forefront, but things like environmental legislation, bottle bills, and do you know what EPR stands for?

[00:31:36] Jessica Infante: No.

[00:31:37] The Brewbound: Extended Producer Responsibility.

[00:31:40] Jessica Infante: I would not have guessed that in a million years.

[00:31:43] The Brewbound: So this is sort of the idea is that whoever the supplier of the packaging of a product is that's introduced into a community, they are responsible for the cost to remove that packaging or that waste from the market as well. So that's something, again, that we've gone to school on. It's kind of a newer issue that we haven't dealt with in the past. I think you're going to see 0.05 DUI legislation.

[00:32:06] Jessica Infante: Really?

[00:32:07] The Brewbound: Coming back in a number of states. We've had a few states that have considered it the last few years.

[00:32:12] Jessica Infante: Has anyone enacted it? Utah. Utah, yeah.

[00:32:14] The Brewbound: Utah in 2017 enacted it. It went into effect in 18. And so there seems to be a pretty strong coalition that's going to make their way through the states. And I would not be surprised to see 10 or more states have proposed legislation next year.

[00:32:29] Jessica Infante: That's really interesting. Utah leading the way both in changing the BAC level and also like absolutely off the wall reality television.

[00:32:39] The Brewbound: One of the maybe less well-received advertisements against the .05 initiative in Utah was a billboard that said, you know, Utah, come for vacation, leave on probation. And I guess the legislature did not appreciate that effort.

[00:32:56] Jessica Infante: I mean, like, I'm old enough to remember when it was .1. Yep. That's when I was in driver's ed, and we I don't know, we would go to Vermont to ski a lot, and in Vermont it was .08, and that was just included in the packet of things to know about Vermont for the rental house we shared with a few different families. So it's been interesting to see this evolve.

[00:33:16] The Brewbound: And it's important to remember what happens when most states were at .1. What got them to .08 was not a federal mandate, but what they called an incentive grant, where if you wanted all of your state highway dollars, you had to pass legislation to go to .08. And so obviously strong incentive for states to get funding to go that direction. Your trivia, I believe Louisiana was the last state. They went a number of years not getting all of their transportation dollars, but eventually became the final state to go to .08.

[00:33:47] Jessica Infante: What a great trivia fact. Well, so one thing I know that's been on all of our radar for years now is the expansion of RTDs. And this is something that the NBWA has, you know, kind of gone to bat with in several states. How and where are those battles being waged right now? Because it's been a mixed bag, but usually lands in favor of Team Beer.

[00:34:05] The Brewbound: I was going to say, and I wouldn't even say MBWA, I would say Team Beer. You know, we've had great leadership from the Beer Institute, from the Brewers Association. You know, it's kind of been fun the last couple years to really work collectively, you know, as the beer community. And, you know, most of these have been tax-related RTD fights where they're trying to get lower tax rates on Spirits products. And, you know, thankfully they haven't been successful anywhere in the last three years on that. You know, maybe the most valuable tool we've used against their argument has been a report out of Maryland's. Their ATC did a study of what would it look like if we passed this legislation and essentially it was the consumer wouldn't benefit, you know, we wouldn't see a price decrease to the consumer, the state would be out money, and really the only ones that would benefit would be these distilling companies. So that's been a pretty valuable tool that I think the other side's had a hard time, you know, pushing back against.

[00:35:00] Jessica Infante: Got it. Well, something under your purview is the Beer Industry Electronic Commerce Coalition.

[00:35:06] The Brewbound: Talk about tough acronyms, right?

[00:35:08] Jessica Infante: Right? It's nowhere near as bad as ICPD. But give us the debrief on that, because you guys have done some really interesting work coming out of that group.

[00:35:17] The Brewbound: I love the BIECC. This group, I always start with, this group started in 1994. People didn't know e-commerce was a thing in 94, but. I was in fourth grade. Probably not doing e-commerce.

[00:35:28] Jessica Infante: No, and Joey was not born, so.

[00:35:31] The Brewbound: But this group's been around 30 years, really when electronic documents like EDI and the start of maybe some electronic payment was coming into the industry. the brewers and distributors got together and now we're at the point, I think I have a bigger membership than I've ever had. We have AB, Molson Coors, Constellation, Heineken, Diageo, Pabst, Bell's New Belgium, and then the Brewers Association, the Beer Institute are part of it. We have about 15 distributors from across the country, very purposely different geography, different brand portfolios, different size businesses, even different software solution providers. We kind of want, that representative sample. And then we're up to about 15 associate members. This is all the folks behind us on the showcase floor, the ones that are creating software, creating solutions. AI is certainly one of the hot topics in this industry right now. And so it's great that they support us as associate members, but we really lean on them for a lot of their expertise. When we're diving into projects, doing work, these guys are a huge asset. No, it's a great group. Like I said, we're doing two seminars on implementing artificial intelligence in your business here this week. We've done a lot of work on cybersecurity recently. And one thing we have that, again, I think is underutilized, but it's been a labor of love over the last few years, is what we call our master product catalog. We're working with a third-party company where we want anyone and everyone, so a retailer, a distributor, a vendor, brew-bound, to have access to up-to-date current images of every beer product out there, product attributes, ABV, style, all those things. And for brewers, we have two free ways for them to get their products into this catalog. So, you know, if you're getting into distribution, if you get a retail placement, this is a, you know, you can send all your product information, make sure it's accurate just by using this catalog. And so we've loved it. You know, we'd love to see it continue to grow, but we have a pretty robust set of retailers that are now utilizing it. So that's definitely one of our pet projects we've been working on as well.

[00:37:36] Jessica Infante: That's huge. So let's say Zoe has Zoe's beer brand and I have Jess's beer and wine store with an e-commerce presence. In order for Zoe to make the most out of her placement on my marketplace, she should have half her products entered into the catalog and she can

[00:37:54] The Brewbound: put them in there, she can self-upload them with her own imagery, or she can mail a product sample and they will do all the professional photography, again, free of cost.

[00:38:04] Jessica Infante: Shut the front door.

[00:38:05] The Brewbound: They will do, you know, put all the item information in for you and then, you know, you have a link that you can send anyone where they can access your information. See, that's huge. It's a big deal and, like I said, we've had some fits and starts, you know, we launched it a few years ago and it maybe wasn't as functional as we wanted it to be, but it's definitely improved and we're pretty excited about it.

[00:38:24] Jessica Infante: How can people find out more about that?

[00:38:26] The Brewbound: BIECC.org. It's a site off MBWA's website, but if you just type in, again, great acronym, but BIECC.org, you can learn more information about it.

[00:38:36] Jessica Infante: Perfect. That's huge, because it's like the Wild West out there.

[00:38:41] The Brewbound: It's definitely a pain point that the industry has dealt with for years, and there's a lot of bad data out there and bad old images and graphics and things like that. So hopefully this helps to address that.

[00:38:52] Jessica Infante: So one thing that came up in the news last year while I was on maternity leave, so I kind of missed this story but my colleagues caught me up on it, was the fact that Walmart has implemented a new UPC mandate for seasonal and variety packs where now every seasonal thing needs its own UPC rather than cycling on the same one, which I believe Boston Beer Company pioneered.

[00:39:14] The Brewbound: Yes, and there are a lot of reasons to reuse that same UPC code throughout the year from keeping the same placement on a shelf in a retail account to data tracking to a number of other things. Walmart's logic behind this request was more customers are shopping online, there's omni-channel shopping, whatever. We don't want consumer confusion. We don't want them thinking they're getting the summer but it's already gone to the Oktoberfest or whatever season you're in. But there are solutions around that. Our guys in the route accounting companies, again, on the showcase floor here, they have solutions and ways to work around that that they've done for years. We tried to sort of share that with Walmart, and they said, we understand, we get it, but we're still going to do it, because they're Walmart, and they can. Thankfully, we haven't seen a lot of other traction from it. We've heard of one other retailer that wasn't mandating it, but sort of suggesting it. You know, I think for most craft brewers, it still probably makes more sense for them to keep that same UPC across their variety packs and their seasonal brands.

[00:40:15] Jessica Infante: Gotcha. I mean, that pain point, that happens, like, out at bars. You know, how many times do you see, you know, brewery seasonal on, and you think it's one, but it's the other. So, it's just part of life. So on the topic of beer, we've heard a lot today about how important it is for all three tiers to remind consumers how easy beer is to love, right? There's a lot of talk about romancing the beer. How often does this come up in your work? Are you talking about this with lawmakers?

[00:40:45] The Brewbound: Listen, I am extremely lucky to work for the people I work for because I travel way too many days of the year. I'm probably on the road 120 days a year at different legislative meetings and state meetings and things like that. People want to talk about beer. It's an easy conversation topic. If we're at a trade show and we're next to the insurance company and the bankers, they want to come by our booth and they want to get a koozie and they want to talk about who they know in the beer industry in their state. Yeah, we talk about this all the time, and I would say I'm probably very much the envy of lots of other government affairs friends out there.

[00:41:22] Jessica Infante: I bet. It's probably pretty easy to get me to.

[00:41:25] The Brewbound: Yeah, absolutely.

[00:41:27] Jessica Infante: Awesome. Well, I mean, what have we not talked about that you think our listeners need to know about?

[00:41:31] The Brewbound: Man, I don't, I can't think of a whole lot else. I mean, you know, this is, this is our, we always say we have sort of Christmas and Easter between our membership. You know, spring we do our legislative conference and that's Easter and, you know, this is kind of the signature event of the year. It's just great to see, you know, I said it in the beginning, but, you know, you do get reinvigorated in your job when you see your members, when you're kind of reminded of how good a people you work for and that these are, you know, real small businesses that, you know, put meals on people's tables and feed a lot of families. And so, yeah, if you didn't have a chance to make this one, make sure you make it to Vegas next year. And I guess I'd end where Jim Fabiano started this morning, and that's, you know, the other conversation of the day is just everybody talking about Asheville and all the places impacted by this hurricane. You know, it's, we really are a beer family when it comes to that sort of thing. And so, you know, lots of people, you know, seeing what they can do to help or, you know, if it's even possible at this point to understand the devastation that they're dealing with there.

[00:42:34] Jessica Infante: I'm glad you brought that up because it is something that Sean Belanger, the CEO of New Belgium brought up too, because they do have a brewery in Asheville. And he said that the outpouring they've felt from everybody across the industry just in the past few days has been huge. And I, not to make this about me, but, My family lost our home in Hurricane Sandy and that happened in the odd couple of months in the past decade and a half that I was not working in the beer industry. And I had made a bunch of trips back to New Jersey to help out on different like cleanup days because I was living in Boston. And my friends at Boston Beer had called me and they said, hey, like, are you going home soon? Like, please come by the brewery, take some cases, like bring them with you, share them with other volunteers, whatever you want to do with them. We know it's not the most helpful thing, but if it's something we can do for you, we'd be happy to do it. So yeah, Sean bringing that up made me think about that.

[00:43:24] The Brewbound: That's, what a great story. And yeah, just, you know, every week, you know, we kind of see the generosity of our members. And, you know, years ago when they started this independent beer distributors relief fund for, you know, efforts just like this, it's, you know, this wasn't our initiative. This was our members that started it that we kind of latched onto. So it's a good reminder of, again, the good people in the great industry we work for.

[00:43:48] Jessica Infante: Yeah. I mean, your members are, family-run, multi-generational businesses that are really active in their community. So who better to do something like that?

[00:43:56] The Brewbound: Absolutely.

[00:43:56] Jessica Infante: Cool. Well, Dave, I think we said it all.

[00:43:58] The Brewbound: All right, let's go drink a beer on the trade show floor.

[00:44:00] Jessica Infante: Let's go drink a beer. Okay, thanks for joining us.

[00:44:03] The Brewbound: You bet. Thank you.

[00:44:08] Justin Kendall: This is Justin Kendall The Brewbound, and we are at the NBWA's Annual Convention and product showcase in San Diego. And right now I'm joined by Sean Mossman, the founder of Behold Business Intelligence. Thanks for being here, Sean. Sure. I'm also joined by Laura Melzow, strategic tech manager at Glazers Beer and Beverage. Thanks for being here.

[00:44:30] Maui Brewing: My pleasure. Glad to be here.

[00:44:31] Justin Kendall: So I'm psyched to talk to you because I'll admit it, I do not know much about AI and its use case here with distribution. So I want to know a little more about what the old business intelligence does and how it works. So give me the spiel. Like, what's your elevator pitch, Sean? Sure.

[00:44:51] Modern Times: really long elevator, so we're going to do a Burj Khalifa elevator. That's fine. That's okay. So we really started as a consultancy. Me coming out of the industry, having been on the supplier side after the sale of Coupe Airworks, really thought that I would start as a consulting firm. that intended to essentially be the connective tissue between venture capital funded artificial intelligence tech and the beverage distribution industry. And we did start that way, but we instantly found a couple of really compelling use cases where we could create some native software utilizing AI that was really helpful to our distributor partners in the consulting side. And so we have kind of pivoted a little bit from the consulting to taking these tools that we've built as native tools for distributors and scaling them across multiple distributors. Because what we found is the pain point that existed in that first distributor when we built the first product exists across all the distributors, across the entire marketplace. And so we really moved towards more scalable tools rather than one-offs.

[00:45:54] Justin Kendall: And what is that big pain point?

[00:45:56] Modern Times: Yeah, the big pain point that we're solving is essentially the process of variable compensation. So sales reps at distributor warehouses get paid in a lot of different ways, base salary, maybe commission, maybe some business objectives and incentives. But The process of managing all the moving parts inside a distributorship around those objectives and incentives that sales reps are getting paid, essentially they're getting paid to execute for the suppliers in the marketplace. Let's say somebody gets $200 if they put five Modelo displays up in the market, right? That sounds pretty simple, but when you've got five of those different things for one sales rep, five more for another sales rep, it becomes really burdensome. And so essentially the amount of labor hours associated with that process was like 200 or so labor hours internally on building, communicating, tracking, validating at the end, and I know this is a little sort of boring block and tackle stuff, but what we did is we essentially utilized AI to automate that entire process for everybody inside a distributorship, so that now the sales rep has instant recognition and sees how they're doing against the goals that they're being paid for, and that we're getting now behavioral responses from the sales reps that they're executing at a really high level and the suppliers are super satisfied. So essentially it is, the shorter version is, It's automation of a really gnarly, dull process that exists inside every distributor.

[00:47:22] Justin Kendall: Is this what you found your big pain point there?

[00:47:25] Maui Brewing: It is definitely one of them. I've been in the industry over 15 years, and I don't think I've ever gone a year without having some conversation on how can we better this process around writing goals and incentives and PFPs. There's just such a matrix of levels of different activities going on that we're really excited on the distributor side to see these kinds of tools being developed.

[00:47:44] Justin Kendall: So how did you get involved with Behold?

[00:47:47] Maui Brewing: We are actually both on the BIECC committee. Oh, that. And so, it worked out well.

[00:47:51] Modern Times: Yeah, to be clear, Glaser Beer and Beverage is not a client of ours. Laura and I have just connected kind of as two, let's say, we have this commonality that we nerd out on AI possibilities, right? So most of the time it's just, and then this, and then this, right? That's like, that's how our conversations go. So that's really the extent of it. Right on.

[00:48:09] Justin Kendall: Well, tell us a little bit about how you see this sort of growing and where you see this going from here. Sure.

[00:48:15] Modern Times: I'll start. Like I said, well, like I'll say now, before we started, it's just early days, right? It's where a year and a half since OpenAI really sort of not, didn't start, but became part of everybody's consciousness and the other models that are being built. And so really what I say to everybody is, There's no AI dongle that you can plug into your distributorship to make it more efficient. What we're going to see here is a series of relatively boring improvements and automations of individual processes that don't replace human beings, but allow human beings to do more productive work and to do more value-add work than just running reports, blending reports, those are all important. And then I don't want to undersell those. But so now the answer to your real question is, we're going to see kind of some incrementality of Maui Brewing applied very directly to beverage distribution problems. And we're going to see kind of a mushrooming effect of that, I think, over the next three to five years. How are you seeing it unfold at Glazers?

[00:49:18] Maui Brewing: Um, so we took definitely a proactive approach. You know, I would say earlier this year, so we kicked off Microsoft Copilot pilot, so we've done a kind of a phased approach. Definitely followed a lot of the stuff that was talked about on the panel today on just kind of introducing AI into your business. We took a look at what are our pain points across the different parts of our organization. So we talked about PFPs, we talked about just really identifying any of the manual processes that we knew we could easily automate. And so that's what we've been doing, just chipping away at all that backlog of those mundane things that we're doing. and we are building a whole bunch of new automation processes, so we've recently increased our department. As far as we've added a director of enterprise solutions, we've got two developers, full-time developers, which is pretty exciting, focusing on a lot of growth.

[00:50:04] Justin Kendall: So you don't always see a lot of buy-in at distributorships on new tech like this. How hard was it to get the buy-in and how are you seeing that unfold sort of across the industry?

[00:50:17] Maui Brewing: Well, I would definitely say from just questions I've been asked at the conference, People are afraid or they have a little bit of a hesitation on the investment that you would be utilizing or that potentially leveraging and implementing an AI across your organization would be substantial. But you don't have to. So we didn't choose to go across the entire company. We chose selected users. We also played with the free version first. to slowly integrate and see what we could do as far as leveraging the free capabilities just across all of the users. So we've taken about 30, 40 users and just really let them just unleash, just go wild, do what you can do and we're seeing a lot of good things.

[00:50:55] Modern Times: Yeah, I think everybody recognizes that whether you're running a beverage distributorship or whatever business it can be, your employees are already using AI in some form or fashion, right? So to some degree, one of the challenges for the distributors that we work with is to sort of create a program around AI, even though it's not entirely fully fleshed out, that recognizes that people are already using it and allows them to use it in a way that's really safe for the individual business, protects trade secrets, protects data. There's a lot of things that exist out there that are open source AIs that aren't entirely the most secure tools to be using, right? So to some extent, like you also have to kind of corral that natural inclination of your employees to want to use these tools that they're hearing about that other people are having success with. And so that's why you're seeing, I think, leaders like Glaser Beer and Beverage. We see others like Breakthrough and Reyes, some of the bigger ones that you would imagine really starting to address this notion that, hey, we need structure around this, because if we don't build structure around this, it could be chaos because people are going to use AI.

[00:52:08] Justin Kendall: What's your conversations like with distributors who may be on the smaller end of that spectrum?

[00:52:13] Modern Times: That's what we exist for, to be honest with you. The ones that I named earlier, you know, you've got Laura here who maybe the first dedicated AI asset at a distributorship that's ever walked the floor of this show, I would say, right? So that's how far out on the press they are in regards to leading internally. And the others that I talked about, Danny Wertz is famous at Breakthrough in talking about how they're trying to invest in this. But those large companies have enough free capital relatively speaking, that they can make the capital expenditure and invest internally into building tools for themselves or identifying tools for themselves. The reason we exist in our business model is to take tools that we create for small to medium distributors and scale them across small to medium distributors across the country. The tools that we build have plug and play applicability to a glazer or any of the other big ones that we've mentioned before. But really, it's those really hungry middle of the food chain, so to speak, it's a terrible analogy, distributors that need companies like us innovating and scaling product inside the space.

[00:53:25] Maui Brewing: And I would just like to circle back and add, so when you asked about like how do we get leadership to buy in and whatnot, so one of the tools we have is that with the user base that we've got, we've got a ton of tracking mechanisms. It just comes with part of the package of turning on the Copilot Pro license. So you actually have an adoption and impact dashboard that gets created off of what your users are using to see where they're utilizing it, how it's being utilized, how frequently. again, not sharing any of the privacy around that data, just letting you know how effective and impactful is this tool being. So that helps a lot.

[00:53:56] Justin Kendall: What's the revenue generated or revenue saving opportunity here?

[00:54:01] Maui Brewing: I mean, I don't think we've even touched it yet.

[00:54:04] Modern Times: Probably not. There'll be another AI that's created that captures the financial impact of the AI that's being, you know, so, but you were asked the question, but from my perspective, we're really not focused on, I don't think the tools that we're seeing And the use cases that we're seeing are so much about generating more revenue. And we will get there for sure as an industry. I think right now the fruit that's on The Brewbound that's not even low hanging fruit is efficiency on the cost side. We can spend our entire lifetime doing nothing but creating cost effectiveness, cost efficiency out of these operations. We're going to see some crazy stuff coming in the future. I've made my bets. I'm a believer. There are some wet blankets, understandably so, out there. But I don't think you didn't ask this. This isn't a fad. This isn't crypto. This isn't NFTs. This is life-changing, business-changing, job-changing technology.

[00:55:01] Justin Kendall: Enough so that you wanted to sponsor the convention here.

[00:55:06] Modern Times: For me, yes. Enough so that I wanted to make sure that all of the distributors, as many as we could reach, understood that there was a business now dedicated to creating artificial intelligence tools very specifically for the unique needs of this vertical. That's really the future of applied AI, is applying AI technology to unique verticals, enterprise data within unique verticals. Lots of big, buzzy venture capital words in there, right? But the specialization of UI is what's gonna really be remarkable.

[00:55:42] Justin Kendall: Well, one last question before we get out of here. Behold is engaged in a lawsuit. You mentioned Trade Secrets. That was part of the lawsuit against I Sell Beer's parent company, CPG Data. Sure. Is there anything that you want to say on that matter that you can share with our listeners?

[00:56:02] Modern Times: I just think from our perspective, it's really important that when we enter into an agreement to develop a product with a distributor partner that The trade secrets that are shared on both sides are protected. It's critically important that they're protected. We take that very seriously. And in this particular case, we know that our distributor partners take it very seriously. But somehow, something leaked through. And as a company, we have to defend our intellectual property, our ability to earn for our employees moving forward. You know, intellectual property and patents aren't necessarily there to create monopolies, but you still have to compete fairly and you have to create product off of your own ideas and your own work. And we take that very seriously. And so that's my non-answer answer to that question.

[00:56:55] Justin Kendall: Well, if you want to learn more about the lawsuit, you can read it The Brewbound.com if you're The Brewbound insider. But Sean, Laura, thank you for doing this.

[00:57:05] Maui Brewing: My pleasure.

[00:57:06] Justin Kendall: Thanks a ton. Good to see you. Good to see you. Cheers. And that's our show for this week. Thanks to Jess and Zoe for all they do. Thanks to our one man audio team, Joe. And thanks to all of you for listening. We will be back next week.