Brewbound Podcast: The Latest Spirits News, Plus Colorado Craft-on-Craft Brewery Deals

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

[00:00:49] Zoe Licata: And I'm Zoe Licata.

[00:00:51] Justin Kendall: And Jessen Ponte is not here this week. She is at the NBWA Legislative Conference in Washington, D.C. But we're joined by a special guest, Net Spirits Editor Ferron Salniker. Thanks for being here, Farron.

[00:01:05] Net Spirits: Thanks for having me.

[00:01:07] Justin Kendall: So you got big shoes to fill here.

[00:01:09] Zoe Licata: Seriously, you're going to have to make at least three New Jersey references to make up for just not be here.

[00:01:15] Net Spirits: It's so hard. I don't know if I've actually ever been to New Jersey, so we will struggle through.

[00:01:23] Justin Kendall: Sorry, New Jersey. Well, you were just at the Distilled Spirits Council of the U.S.'s conference, and we wanted to get you on here to discuss that. And we're going to get into that momentarily, but first we've got to do a couple of plugs. At the end of this month, Zoe, myself, and Jess, we will be at the Crappers Conference in Indianapolis. We'll be at booth 512 recording episodes of this podcast. So you can come over, check that out, say hi, get a free t-shirt.

[00:01:54] Zoe Licata: Yeah, we're going to be there. Someone will be there basically at all times. So anytime you're free, you're exploring the floor, come say hello. You don't have to be on the podcast. You can just watch us talk to other people. It's just, it's a very free environment.

[00:02:10] Justin Kendall: Who wouldn't want to watch us talk to other people?

[00:02:13] Zoe Licata: Exactly.

[00:02:14] Justin Kendall: Yeah. That's why they don't do job shadows with us. The other thing we've got going on is Brewbound Live. That's December 10th and 11th in Marina Del Rey. We will have speakers and conversations and networking and all kinds of things there. So stay tuned for announcements coming in the next few weeks or so. We'll have some things pinned down by then. Let's get into it with you, Farron. What was the vibe like at Disqus?

[00:02:41] Net Spirits: Well, Discus was in Washington, D.C. this year. It moves around. And so it was very fitting that it was in D.C. during this time of tariffs back and forth. And so I think that added a little bit to the anxiety. I would say the overall vibe was anxious, but determined. It was the end of March, so the week before last. And so we're looking at two-ish months of back and forth over tariffs. And so I think that was really wearing on people. And then there was a lot riding on April 2nd, which was either Liberation Day or Doomsday, depending on where you fall. And so, yeah, there was just a lot of anxiety around tariffs. It was really, I would say dominated most of the conference.

[00:03:35] Justin Kendall: And that's clearly went down. There's no anxiousness now.

[00:03:39] Net Spirits: Yeah. Oh, yeah. Everyone's just chilling now. It's very chill.

[00:03:43] Justin Kendall: I joke because my phone just blew up with a CNN alert that said tariffs on China set to rise to at least one hundred and four percent on Wednesday. So it is a fever pitch that we're running at at this point.

[00:03:57] Zoe Licata: For anyone who's unfamiliar that might be listening, what exactly about Net Spirits industry, can you explain what's happening there when it comes to imports and things, like why are they so concerned? We know for us it's like a lot of Mexican beer imports and that kind of stuff, but what is happening Net Spirits where they're concerned about tariffs?

[00:04:16] Net Spirits: Right, well, there's a lot there to unpack. Spirits are just so international if we look at the U.S. makeup of spirits. And so also still so connected to wine and to beer. And so I think there's this feeling of being attacked from all sides, imports, risk being tariffed. At some point, Trump had said something about 200 percent tariffs Net Spirits and wine coming from the EU. So that is terrifying to a lot of folks. And then there are retaliatory tariffs that we're waiting on from the EU. based on the steel and aluminum tariffs that the Trump administration enacted. And so those retaliatory tariffs have hurt the industry before, like during Trump's first term, and could be anything from tariffs on, you know, peanut butter, but bourbon was the main concern. And then, of course, there were the tariffs that were put in and then taken out with Canada and Mexico. And so essentially they're just tariffs all around us. So there was a representative there from Mexico who was talking about the impact of tariffs, potential tariffs on tequila, which it seems like we've avoided this month. There was a congressman from Kentucky who talked about the impact of potential tariffs on bourbon and the EU. And overall, the key word that was used a lot, like I heard it so many times, was untangle. Like, they're just trying to untangle spirits from all of the trade wars. And the message was really they want zero for zero tariffs. because everything, as I said, is so interconnected. Even if, say, imports from Europe are now pricier because of tariffs, that's not necessarily a win for domestic producers because importers might raise their prices on all products. And so there was this overall kind of, I think Disqus did a good job of galvanizing everyone to turn their anxiety into advocacy. and really explaining that these potential tariffs on products coming from elsewhere would overall hurt importers, distributors, and particularly restaurants and bars across the board. So that's the best summary I can do. Yeah, a lot going on. Yeah, a lot going on basically.

[00:06:57] Justin Kendall: I think you had pointed out to us that some of the things that they had talked about, like champagne, are products that cannot even be produced in the United States.

[00:07:06] Net Spirits: Absolutely. Champagne, tequila, cognac, so many products have designation of origin status. And so there's a lot to say about whether or not, we don't know if a consumer would really then trade their tequila for something else. They might just pay a higher price for tequila or switch to a more value tequila. There are some MacGyver spirit products made in the U.S., but not many. And so really, it's just not likely that a consumer would then switch to vodka because they can't get the same price for their tequila, you know.

[00:07:48] Zoe Licata: It seems Net Spirits consumers are even more strict about sticking to what they like and know than maybe beer consumers sometimes. You know, a tequila person is a tequila person or a vodka person is a vodka person. You don't see much variation, I don't think.

[00:08:03] Net Spirits: Yeah, absolutely. And same with wine as well. I don't think people who normally go for champagne are then suddenly going to switch to like a natty, sparkling wine, maybe. Totally.

[00:08:20] Editor Farron: This episode is brought to you by the Craft Brewers Conference, where big ideas, bold beers, and brutally honest shop talk collide. Join thousands of industry pros leveling up their game. Don't miss it. Register now at craftbrewersconference.com.

[00:08:40] Justin Kendall: We're talking about hundreds of billions of dollars in trade here as far as these products go. Is that correct?

[00:08:48] Net Spirits: Absolutely. I mean, the U.S. imports much more than it exports in terms of spirits. But the European Union is a huge export market for bourbon. And tequila is obviously one of the fastest growing spirits in the U.S., as well as mezcal. So these are huge, huge categories. Tequila is a question mark right now, but even still, if we look at tariffs on, I think some of the larger tariffs that we're facing now are on Japan imports to the U.S. I think the EU across the board is 20 percent now. Japan is at 24 percent. And that is really going to hurt Centauri, which is one of the bigger spirits companies. and recently has made a big focus on its Japanese whiskeys. And so these are huge categories, billions of dollars, and we're still facing question marks in terms of how it's all gonna roll out.

[00:09:54] Justin Kendall: And I should fact check myself because that hundreds of billions is like the blanket imports from the EU, not Net Spirits. So yeah, just a quick correction there on myself.

[00:10:08] Net Spirits: Sorry, I don't have the exact figures in front of me, but I'm sure I've written about them and they have since floated out of my brain.

[00:10:16] Justin Kendall: Do you get a sense that Discus is getting any traction with the administration?

[00:10:21] Net Spirits: It was really hard to say, I mean. A lot of what we heard was that, you know, they're in meetings, they're having conversations. And really what we heard is that, you know, this administration is set on this, you know, reinventing trade policy. And so I really don't know if there was any traction. One thing I did hear was that there is seemingly a joint interest on bringing down tariffs in India. It seemed like Discus was confident that that was a conversation that was moving along. And India is obviously a very huge market for spirits. And so that was one more conversation that had some certainty around goals, I guess. But in terms of the rest, there was just a lot of advocacy. They blanketed the hill. So there was a lot of meetings between Spirit company representatives and congressional representatives. But I think people are confident that Discus is working on their behalf. How much progress they're making, I'm not sure.

[00:11:39] Zoe Licata: Discus has a designated task force for this stuff too, right? It's like a Toast Not Tariffs type of initiative, I think, right?

[00:11:47] Net Spirits: Yes, Toast Not Tariffs. I believe there was a mascot last year. This year I did not see the mascot. Yeah, but there is a whole initiative that, you know, is trying to get consumers on board and trying to get out the messaging Net Spirits companies need your advocacy in order to keep your drinks available and affordable.

[00:12:09] Justin Kendall: Let's switch gears a little bit and maybe get into some of the trends that you're seeing in the industry.

[00:12:17] Net Spirits: There's a number of things that came up at DISCUS. I mean, I think the biggest question was, is Gen Z drinking? There's a lot of conversations about Gen Z. And I would say there was a lot of debate about whether these changes, these generational changes are cyclical or structural. I don't think there was an outcome that was determined at the conference. I think the biggest takeaway that I got was that Gen Z is drinking and they're just approaching it in a different way. And so spirits companies are really trying to wrap their heads around how to innovate for Gen Z, how to embrace the cell phone generation and how to kind of stay authentic and really think about this generation as one that's just a bit delayed, like they turned 21 during the pandemic. Underage drinking is less common. And so, you know, I think there's just a lot of conversation about how to embrace that generation and how much non-ALC spirits and THC are cutting Net Spirits sales. And, you know, unlike other conferences like WSWA, which is the Wholesalers Conference, for wine Net Spirits, there's like a lot of THC representatives there for THC beverages, I mean, and some non-alcoholic spirits. And there really wasn't a lot of that at Discus. So those trends weren't really discussed at large. And then there were also conversations about M&A and investment, and they're just coming off of this slow, well, flat growth year for Spirits last year. There's a lot of conversation about what's gonna happen in terms of strategics and acquisitions. I think we're gonna probably see more companies working together, smaller companies working together, smaller companies making lateral moves, selling off parts of businesses, things like that. So I think those were some of the top conversations. There was also a lot of excitement around American Single Mall, which got designation as its Net Spirits category this year. So there was a lot of excitement about that, about the potential for export and having this new American product to export, about the potential for contract manufacturers who may have reduced orders for bourbon products right now, now having this Net Spirits to produce. So I think that was something that was exciting for a lot of folks.

[00:15:08] Zoe Licata: With those deals that folks were talking about, was it, are you seeing more folks wanting to make moves to bring potentially other new products on? Is it more just sharing? We've seen a lot of like craft deals with people wanting to share resources. Can you dive deeper into what those deals are looking like, what people are looking for the most?

[00:15:27] Net Spirits: Yeah, I don't think we've seen a ton of them yet. I think it's going to be an emerging thing. What we saw last year was definitely a lot of, say, we saw some wine companies go into more fast-moving categories Net Spirits, RTDs. We saw some kind of emerging acquirers, so medium-sized spirits companies now picking up smaller spirits companies or regional craft spirits buying, say, buying a another craft spirit in the region or distillery in the region. So I think we're probably going to see more of that. There's over 3,000 distilleries now, craft distilleries in the U.S., and I think we'll probably see some consolidation. We've seen some folks go from being craft distillers and suppliers to now moving into the import side or setting up boutique distribution. So those are some of the things I've seen. And we may see more of these smaller companies trying to make, I don't know, hopefully creative moves to figure things out. We just saw Distill Ventures close. There's a number of small companies that you know, I heard on a panel are now trying to figure out how to work together that they've lost this larger strategic that was supporting them. So it's kind of TBD.

[00:16:59] Justin Kendall: What's the scuttlebutt you're hearing? Maybe there was scuttlebutt at Discus about distribution moves, because in the last week, we saw Another Round of them with Gallo moving high noon to Reyes in California. That's been a trend that we've seen with Spirit suppliers exiting RNDC. We saw it with Sazerac, Tito's, Jack Daniels, and like I said, now high noon.

[00:17:28] Net Spirits: Yeah, DISCUS, I would say the organization is very political when it comes to distributors. There was a question asked at the kind of big breakfast start of the day panel about distributor consolidation. And the response was very political. You know, we support all of our distribution partners and we need them in our industry, something along those lines. And so officially there's no comment I think from the larger organization. And within Net Spirits industry, yeah, there's a lot of conversation about how hard it is for emerging, even midsize, especially craft distillers and brands trying to find distributors, that the consolidation has really created this bottleneck. And now I think, yeah, you're right. And that we're seeing these larger companies make big moves. And I think some of that is really just part of spirits having a down year and these companies looking for whatever better margins they can get, which they might be able to get from beer distributors. And RTDs are like really the growth category for spirits right now, if you look at the numbers. And so I think a lot of these larger spirit companies are just really trying to figure out how to move those products in the best way possible for them. Net Spirits distributors are notoriously a bit, I don't wanna say slow, cause they're moving a lot of product, but I think that beer distributors have been, obviously because of the type of product they move, better at taking advantage of that product. So yeah, I think there's a lot of frustration in the industry about distribution overall. And I think that it's particularly coming from some of the smaller size companies, which there are certainly at Discus, but not as many.

[00:19:42] Zoe Licata: I'm curious what the sentiment is on the supplier side around RTDs and kind of this big focus of Discus and Net Spirits industry on that segment. We've seen on the beer side when there's kind of a big potentially new trendy product that's not necessarily traditional beer, there's kind of mixed feelings or emotions around like how much you should put support behind that. Is it potentially taking something away from the core product? Is it worth it for having that incremental growth? What is the dynamic for that on the spirit side? Is everyone just totally full in RTDs or are there any naysayers there?

[00:20:21] Net Spirits: I think we've seen from the largest spirit companies that most of them have gotten on board. There's a few outliers, Campari, but I do believe they have some things in the works, but most of them have gotten on board. I think the smaller to midsize have you know, really looked for angles into that world. And a lot of the most successful RTDs, though, have come from outside of traditional spirit companies. And so I do think there's a little tension there. I think a lot of companies haven't made moves yet into that category because they're aware that it's not their specialty, and the numbers are showing that, at least right now, it's pretty complicated to jump in. I just was talking to actually a Limoncello producer who was at Discus, and he was saying that there's all this conversation about RTDs is this big thing and they've had RTDs in the market for like since maybe 2017, and they've kind of just been this consistent 40,000 cases per year or something like that for them every year. It's not this big booming thing, and it's just difficult to then get to that next level of growth if they wanted to do that. And so, yeah, I think it's all over the map, but I know for the smaller to midsize guys, it feels like a very hard game to get into without a huge marketing budget at this point.

[00:21:57] Zoe Licata: Do you have any predictions, Farron, of just what we might see next? Are there any anything swirling out there of any other moves coming in that distribution space?

[00:22:09] Net Spirits: There's always rumors in Net Spirits industry, but I have not heard a ton. There's been talk of merger for a while, and I think that kind of resurfaces in terms of some of the bigger distribution companies merging, to be clear. How serious that is, I don't know. And in terms of moves of other spirits companies to other distributors, haven't heard anything lately. These jumps from RNDC to Reyes were definitely rumored about for a while, and I haven't heard anything else, but I expect we might see more. I think a lot of it. will become clear when we see how well Reyes actually does with these new products. It's a lot at one time to onboard. And I think Tito's will be interesting. You don't really have to sell Tito's, you know, it sells itself. But it will be interesting to see how it goes.

[00:23:11] Justin Kendall: Yeah, those are all major products on the move. And I think, you know, for us, at least the one that we're sort of watching at this point is what happens with Anheuser-Busch's Cutwater in California, especially in that Los Angeles, San Diego area, because you've got Sunset Distributing coming in there with the acquisition in less than two months at this point of Stone Distributing and Classic Beverage. And they're with RNDC and it's a whole mess of, you know, AB's wholly owned distributors can't carry cut water in the state, but when you've got an independent AB distributor coming in, then that might sort of shore up that network.

[00:23:56] Zoe Licata: Yeah. Rey is taking on Sazerac alone, that is so many brands in itself. They have, what was it, like 500 just total in their portfolio of various offerings. So yeah, I am really curious to see how it all plays out over the next year or so, just with what has happened so far.

[00:24:16] Net Spirits: Absolutely. And also there's a lot of spirits brands that went straight to beer distributors when they launched and are having success. So it'll be interesting to keep watching those as well. Totally.

[00:24:31] Justin Kendall: Well, I think that's a lot of spirits for now. So we will release you back into the wilds of California.

[00:24:39] Net Spirits: Thanks you guys. This was great.

[00:24:41] Justin Kendall: Thanks for joining us Farron.

[00:24:42] Zoe Licata: Thanks Farron.

[00:24:45] Justin Kendall: Let's get into some news, but first maybe you and I should debrief on our trip to Michigan for Oberon Day.

[00:24:54] Zoe Licata: Yeah, we're a couple weeks delayed now because we had to get those awesome main interviews out. So if you haven't listened to those from the last episode, make sure you do. But yeah, we went to Kalamazoo just for full transparency. Bells invited us and covered our transportation and housing costs and everything while we were out there. So thank you to them. But yeah, it was our first time at Oberon Day. It was also the last day for Cary Yonker at Bell. So it was quite a momentous occasion for everyone over there. Not necessarily sunny and warm in weather, but environment was pretty positive.

[00:25:32] Justin Kendall: Yeah, one of the things that I was most impressed with was it was cold, it was snowing, and there was a line of people down the block, and they were all ages, all demographics, and they were out in force to drink a seasonal beer on a cold, snowy day.

[00:25:53] Zoe Licata: And we're going well into the evening, like folks were coming after work if they didn't take the day off, though there were plenty of people who definitely did take that Monday off. People in special costumes and outfits, people have been going for years and years. It was kind of heartwarming and I posted some videos and people were DMing me that they were also so happy to see that something that is kind of seen as not as prominent in the craft beer scene anymore as this enthusiasm around a seasonal release still exists in some places. The event came just a few days maybe after this is here in Nevada announced that they were making some changes to their seasonal events and not doing as much. So it went from that news, which was, I think, more par for the course of what's happening for a lot of folks to seeing, okay, there are still ways to, to get people excited. There are still folks across the board that are in age and in gender who are, are still really excited about craft beer sometimes, which is cool.

[00:26:57] Justin Kendall: Yeah, there were a lot of cool things that I'd like to point out. One, there were so many different variants that they did that were special to the release. So that adds another factor to it. I can't even remember the strawberry one I had, but it was strawberries and cream. Yeah, that was it. And then you had a Michigan martini.

[00:27:18] Zoe Licata: Michigan Martini, which is inspired by, they mix like PBR and pickle juice, I think is what the thing is, but it was an Oberon with a pickleness to it. It was really good. They had a orange and vanilla one. They had elephant ear, which is based off that like cinnamony pastry that you had. Lots of areas. And you can only get those when you're there for Oberon Day when you're visiting. So it really is a, you have to go to try that type of event.

[00:27:49] Justin Kendall: There was a Tom Petty cover band playing in the middle of the morning. It was a great experience overall. And I think if you haven't experienced an Oberon Day, I would recommend it because we have said for years, like, Oh, you know, it'd be cool to check out Oberon Day, but we finally got to do it this year. We also saw new Belgium CEO, Sean Belanger. He was out there pouring beers.

[00:28:15] Zoe Licata: Taking a shift at the bar. Yeah. I think another really cool aspect of the event is the entire city kind of celebrates what's happening. So a lot of bars and restaurants that you go to around this time have special things going on for the event. Like they really have integrated it into not just what's going on. at the brewery or at its outpost or anything. So it's potentially something to look at for other breweries to look at it like, hey, how can we just connect with our communities that we're in more to drive some of this excitement? How can you collaborate with some of those on-premise partners to drive some excitement? There are some little nuggets into what they have figured out works that I think could be helpful to craft.

[00:28:58] Justin Kendall: One regret would be that I didn't get the chance to see some of those activations across the city. I would have liked to have seen that. Would have liked to hit the, what was it? The Kalamazoo Beer Exchange, which is like right by Bell's, which is like a stock market for beers. And sometimes there's market crashes, but maybe that's hitting a little too close to home at this point.

[00:29:21] Zoe Licata: Yeah, maybe not. Not in this current environment.

[00:29:26] SPEAKER_??: Yeah.

[00:29:26] Justin Kendall: Well, let's talk about a couple of craft on craft deals very quickly because the person who did the work on these is not here right now. She is on an airplane, but we had a couple of deals in Colorado and it was Left Hand-Dry merging with. Dry Dock and then Great Divide was acquired by Wilding Brands-Great, which was the platform of Stem Ciders and Denver Beer Company and about six or seven other brands within there that, you know, if you go down the flow chart, it's like Denver Beer Company's brands and Stem Ciders brands. But anyway, Those were a couple of legacy brands either on the move or merging, which I thought was very fascinating to see. And it's something that we've seen in New England of late with all the deal activity that's happened there.

[00:30:24] Zoe Licata: Yeah. And both of these were deals that involved, you know, what people are referring to as craft platforms, right? The idea that you're joining resources of these craft breweries to be able to have this, you know, greater power or say, or, you know, easier time going through things. So like specifically the Left Hand-Dry and Dry Dock deal, that was the first one to come out of what Left Hand-Dry teased last year of creating their own craft platform. So it's been, I want to say it's been at least like, what, three years now? Two or three years now where we've been seeing this craft platform thing be more widely adopted by a lot of folks. And it's not slowing down at all. And we're still seeing it happen with pretty well-known breweries.

[00:31:10] Justin Kendall: And this is one that was kind of connected in a way because Dry Dock had a deal where Great Divide was producing for them. And then because of this, I guess they ended up, you know, moving over to Left Hand-Dry and Left Hand-Dry had announced its plans for its own craft platform. This is something that we're going to be watching. It looks like Wilding Brands-Great is going to be very active in acquiring brands. It looks like Left Hand-Dry is also making some partnerships. And I think that this is something that we will see pop up across the country because it is tough out there.

[00:31:53] Zoe Licata: Yeah, it's definitely not stopping anytime soon. Both the hardship and the strategy to kind of join forces like this.

[00:32:03] Justin Kendall: Speaking of, this isn't even joining forces, but the craft acquirer out there that is Tilray Brands, you sat in on their earnings call today, and this comes as the NASDAQ has sent them a warning notice saying that they are on shaky ground as far as delisting because their stock is traded below a dollar for, I think it's 30 days.

[00:32:31] Zoe Licata: Yes, and Tilray leadership acknowledged this throughout the earnings call that happened today as we're recording this, and Erwin Simon, the CEO, mentioned, you know, we, our number one focus is, of course, to make sure that stock is okay, but they are not necessarily worried about just stock price right now. They're worried about or focused on debt consolidation, which they've done a lot of. They are focused on geographic and distributor consolidations, especially in their beverage division. And they are focused on SKU rationalization. So it's very much a transitionary period for the company right now. They have a lot going on. About 30% of their business is that Bev-Alc and a little bit other beverage divisions that also includes intoxicating hemp beverages. They have like a canned water and stuff. So that's about 30% of their business. Then they have their cannabis stuff going on in Canada, both of the health and wellness stuff and medicinal stuff and then also recreational cannabis. So just trying to balance all of that, all the brands they have going on, they're making sure they're making the investments in the right places. So yes, they want to have a positive trajectory for that stock, but they have to figure out a lot of stuff first in order to do that. Specifically on the beverage side, they did a lot of ski rationalization at the beginning of this year and now are starting to focus more on some of that distributor work. They shared various numbers throughout the call of how big their distribution network is, but the largest one they said was 700 distributors, which is an insane number, and even they would admit is an insane number. And a large reason for that is because they've done all of this building of this division through acquisitions. And so the companies that they have brought on, whether it's the four from Molson Coors, or they had eight beverage brands from Anheuser-Busch, or a handful of other independent acquisitions like Montauk, like Sweetwater. They all had their own existing networks to begin with, and they haven't really been able to make certain adjustments to that yet, especially with those eight Anheuser-Busch brands. They had a contract in place where they couldn't make any changes for at least two years. So now they've passed that. Now they can start to make those changes. But it's a lot to weed through. They said they're gonna bring on a third party to kind of help with that and figure out how they can do that in the most efficient way, because you can't have 700 distributors. That is not manageable.

[00:35:09] Justin Kendall: Let's put this in perspective. Boston Beer Company, which is much larger than them, has a network of around 400 distributors. So just for perspective, that's how big the Boston Beer network is. I don't know that this has anything to do with their ability to move distributors, but as I was shopping around my little town here in Iowa, a lot of Tilray brands are in the discontinued for that store or reduced price quick sale grocery carts that, you know, make their appearance around the spring reset time. And so I've seen some 10 barrel, I think, I know I've seen Breckenridge and some other Tilray brands make an appearance in those carts. So I wonder if, If that is at all related to this or if that's just normal store turnover.

[00:36:06] Zoe Licata: I think it's a mix of this. I think it's definitely a mix of some of that distributor stuff. It's a mix of they are still rationalizing SKUs. They had tons of SKUs that they're trying to cut back on. And it's also a part of what they're calling this geographical consolidation. So they are trying to have a more regional focus with some of the brands in their portfolio instead of being more spread out nationally because they found a lot of success with the brands that do have a more focused approach to where you can buy their beers. Things like Montauk is one of their strongest brands right now and that's super regionally focused at the moment with a lot of their strength coming from their home market of the, you know, greater New York area and the Northeast. Sweetwater has still been able to record growth in, you know, the Southeast and that's kind of its core area, its home area. So a lot of more kind of narrowing down where they can best find growth and success or these various brands is a key priority for them.

[00:37:06] Justin Kendall: So let's play Another Round or Tabbing Out before we wrap up this episode. And one of the things I wanted to bring up was Sierra Nevada is taking its Big Little thing, Imperial IPA, and they are transforming it into a Juicy Hazy IPA. So ABV is going up slightly. It was at nine, it's going up to nine and a half. They're leaning into juicier hop profile with Citra and Mosaic and Eldorado hops to really Tabbing Out those tropical flavors, or just those fruitier flavors, I should say. And they're redoing the packaging. It is very orange. I spoke with Ellie Pressler about the decision, and this is going on five years, this brand, I think, at this point. Looked at the data, you know, year one, boom, into the top 30 brands. Year two, you know, 30 plus percent growth, doing really well. And then year three, seeing some decline, year four, more decline. And here we are in year five, and it's still a top 30 craft brand. And they've made the decision to make these changes. And what Ellie told me is, if we don't do anything, you know, will we still have a strong productive SKU in five years? And I think that that is a fantastic point. On the other end of the spectrum, you can look at New Belgium and their decision to do this with Fat Tire. And it's not really an apples to orange, apples to apples comparison, I should say, because Fat Tire was a legacy brand and they completely revamped it. And whatever legacy drinker that it probably had at that point was probably turned off mightily by what they did there.

[00:39:00] Zoe Licata: It also felt like for consumers, it might've appeared more like a larger style change, I think, than this one does.

[00:39:08] Justin Kendall: Yeah, you're still in the IPA wheelhouse here.

[00:39:11] Zoe Licata: Right.

[00:39:12] Justin Kendall: I think it's a good move and I think it's one that I'm buying Another Round on. If you've got a brand that is still fairly young and you can make a change to something, you know, that you're missing in your portfolio,

[00:39:25] Zoe Licata: Yeah, I am buying around as well that at least, you know, they're trying something different and you know, oh, you're actually trying it. Hold on. Big moment. How is it?

[00:39:37] Justin Kendall: Definitely juicier. Yep. It's still not my thing. Nine and a half percent IPA is still not my thing, but yes, I am actually trying it.

[00:39:46] Zoe Licata: I think there is a very specific consumer base, and I think that consumer base is relatively large within Kraft, that is looking for this type of product all the time. And they are going to love seeing a package that says bigger, hazier, juicier. That's going to be like lights flashing on to them. They're going to be totally into it. If this was a different brand, potentially a smaller brand, I might be a little more hesitant because I'm nervous this is going to become like a thing now of like where everyone's going back to saying everything has to be this super juicy IPA. I mean we Just saw Boston Beer just did this for Sam Adams, right? They are no longer doing Wicked Hazy and they are now really focused on this Samuel Adams New England Juicy IPA. It's slightly higher ABV. It's all about being juicy. It feels vaguely familiar, this idea that, all right, everybody has to do this juicy, hazy IPA, right? I feel like we've been talking about that before. So, yeah, I'm tabbing in on Sierra Nevada doing this right now. I'm Tabbing Out on a lot of people making such changes or emphasis, because then nobody's going to pay attention to any of them.

[00:41:00] Justin Kendall: Yeah. And I should call out too, this is something that we have also seen from Dogfish Head recently with its 30 minute light IPA, which was... used to be slightly mighty.

[00:41:12] Zoe Licata: Rumor has it, yeah.

[00:41:13] Justin Kendall: Yeah, rumor and basically the text that was completely the same on the website.

[00:41:21] Zoe Licata: Yeah.

[00:41:21] Justin Kendall: So definitely something that we're seeing is if you've got a brand that you're invested in and you think can still be productive in your portfolio, There are different ways of taking care of it and nurturing it or, you know, reincarnating it to meet drinkers where they are.

[00:41:41] Ferron Salniker: Totally.

[00:41:41] Justin Kendall: Well, that's our show for this week. Thanks to Zoe for hanging out. Thanks Editor Ferron Salniker for jumping on here. And thanks to our audio team for making this happen. And thanks to all of you for listening. We'll be back next week.