Brewbound Podcast: Wrapping Up the 2024 NBWA Annual Convention

[00:00:00] Justin Kendall: Next on the Brewbound podcast, we wrap up the NBWA Annual Convention in San Diego. Hello and welcome to the Brewbound podcast. I'm Justin Kendall.

[00:00:21] Jessica Infante: I'm Jessica Infante. And I'm Zoe Licata.

[00:00:24] Justin Kendall: And we are all very tired. You're so tired.

[00:00:27] Jessica Infante: You can't start the podcast and say we're all really tired. No one's going to want to listen to us if we're being like, oh, we're miserable.

[00:00:35] Justin Kendall: And we're all very energetic. So let's get into it. We've got some plugs to hit here before we talk about the NBWA's 87th Annual Convention. Zoe and Justin are going to be at the Great American Beer Festival in what, two weeks?

[00:00:51] Jessica Infante: Less than that. I get on my flight a week from tomorrow, so we have less than a week home between these two trips.

[00:00:58] Justin Kendall: So we will see you in Denver for the Great American Beer Festival, at least Thursday, Friday, and then some of us are going home. And then we're going to be at Brewbound Live in Marina Del Rey, California. It's our end of year business conference, December 11th and 12th at the Marina Del Rey Marriott. So tickets are available now. Speaker roster is coming together very fast. Get your tickets while you can.

[00:01:24] Zoe Licata: Super strong speaker roster this year. I thought somebody should call out the fact that we are actually putting together an excellent program.

[00:01:31] Jessica Infante: Yeah. I got kind of some previews of some potential content here at this event. We had some on-premise conversations we listened to here that we're going to talk about on stage as well. We saw Rebecca Mizell had her first speech as chairman of the MBWA board today, and she's going to be on the Brewbound Live stage. So this was a nice little teaser for some more Brewbound Live content.

[00:01:52] Justin Kendall: lester jones and jennifer hawke talking about the on-premise channel and we're gonna talk a lot about the on-premise channel in this episode but first we got a sort of center thoughts out here to the folks in north carolina who've been affected by healing the images coming out of North Carolina are devastating to see. And we've received some reports from New Belgium. I think that there's a distributor letter going out there from Sierra Nevada. There are small breweries that have been completely wiped out. And it is, I think somebody described it yesterday as biblical and it definitely looks that way.

[00:02:28] Zoe Licata: Yeah, like just widespread devastation. It really, we had a blurb in today's newsletter from New Origin Brewing. And they said their brewery is effectively gone because of the place where they were. They're not going to be able to rebuild. And it's just really heartbreaking to see all of that, not to mention the fact that more than 100 people are dead and hundreds more are missing. It just sounds really, really, really atrocious. So I'm sure the beer industry, as it always does, will pull together in the coming days, and we'll certainly try to keep you updated on all of the relief efforts. There's, I'm sure, no fewer than five collaboration beers in the works, so we'll try to keep everybody posted on ways that they can help support everybody that's been affected.

[00:03:10] Justin Kendall: And the folks at New Belgium told us that all of their employees are accounted for, but the situation is really rough in that in some cases they're having to airdrop food in and supplies, and they really don't know the extent of what's happening with the brewery there. There are going to be supply disruptions, as you can imagine, and all things going on there. We'll be covering it at Brewbound.com, so if you're an insider or outsider, keep an eye out for that coverage. Let's get into the NBWA Annual Convention and talk some themes. And I think there were a couple of things, you know, there are a lot of discussion of the on-premise. There's a lot of discussion of intoxicating hemp. Those are the things that stood out to me. What's standing out to both of you?

[00:03:57] Zoe Licata: Those things. Those things. And then I would also add online gambling as called out by Heineken USA CEO Maggie Timony. Just another thing that's now competing for the spare dollars of consumers, particularly young legal drinking age male consumers. So just one more thing that's, you know, trying to take a piece of the pie.

[00:04:19] Justin Kendall: She did a great job of laying out challenges that you may not even think about. She discussed the Whoop app, which I guess tells you like a breakdown of all the health-related things that you are or aren't doing and what you're missing and how that psychologically has affected even her, I think, children is what she was saying.

[00:04:40] Zoe Licata: Yeah, she has at least one college-age son. And I don't know, man, Whoop sounds like a much more judgy Fitbit. I guess it'll tell you like, hey, your recovery today was affected by the fact that you drank last night, which is like, mind your business, whoop. Yeah.

[00:04:55] Jessica Infante: I didn't know. There is a building in Boston that has the big whoop sign and I had no idea who they were until now. Now that's a little bit more intimidating. They have this giant building now also judging you.

[00:05:07] Zoe Licata: That's why we work from home.

[00:05:09] Justin Kendall: Which is also a problem that we've learned from other people that, you know, we're not going out enough. We've got to get that on premise healthy again.

[00:05:19] Zoe Licata: Yes, for sure. I just I have many conflicting thoughts about that. I really like working from home. I wish to not do anything else ever again.

[00:05:28] Justin Kendall: I don't have another option if I'm going to be doing this.

[00:05:35] Zoe Licata: Yeah, a lot of talk about the on-premise. You know, the on-premise made its way into two different of the panels that were featured on day one. The first was craft industry leaders, including Sean Belongi, the CEO of New Belgium, Paul Tribe, the CEO of Pabst, and Bill Shufelt, co-founder and CEO of Athletic. And they talked about a few different things, but they did talk about the on-premise quite a bit. Justin, you had the story. Paul really mentioned that You know, it is basically like, I don't know, written on a scroll somewhere in the origins of the beer industry that brands are born in the on-premise. And COVID really, I think, challenged that notion. But I think what we're seeing right now is a big push to get back to that. Because when the on-premise shut down in 2020, there was no way to go to your local bar and try a pint of something new. What you had to do was go to your local convenience store and get a 19.2 ounce can of something new and try it that way. I think there's definitely a big push to get back to the on-premise, even though, as everybody called out yesterday, it is much more expensive and much more time-consuming to service those accounts. I think they do end up paying dividends in the end.

[00:06:39] Justin Kendall: Yeah, the health of the off-premise is linked to the on-premise, is what Paul Chibe was saying. And he laid it out there. He said, the question is, what if we don't serve, basically? You know, what happens if we let this go? And it's a red flag warning that Bart Watson from the Brewers Association has brought up in the past, that you're not servicing these accounts and these accounts aren't seeing the value of draft. What is the future of draft? Is it no draft hours?

[00:07:09] Zoe Licata: Yeah. And the thing about drafts is that it is a lot of work to maintain. It has to be maintained. If you're not taking care of your draft lines, you're creating much bigger problems. But I mean, that's something that is unique and special to beer. And we've seen, you know, places adding wine on tap and, you know, mixed cocktails on tap. And there's all sorts of stuff that can be happening. But draft towers, by and large, they are still the beer industry's domain. And yeah, I mean, I can't imagine what would happen if we let that go, especially because I think all those other categories really do see draft hours and the cold box as their way in.

[00:07:43] Jessica Infante: Yeah. And the consumers, I think, are still in the on-premise. Like if you look, we get reports like almost every week from like CGA and things like what is happening in the on-premise. It's doing like generally those businesses are growing compared to the harder past couple of years. So consumers are starting to go to these places more. And so they're there for you to sell your product to. But I think we've just now switched the mindset of what you prioritize in your business and beer that it's not, you're not totally paying attention to it anymore. Those consumers are looking, they are spending their dollars there. They recognize it's more expensive, but they're willing to pay for that premium experience. And so if you put your product there, they're going to drink it.

[00:08:26] Justin Kendall: One of the things that Lester Jones pointed out on day one was a pie chart basically showing that in September of this year, it was the first time that draft was over 50% of the beer in the on-premise. So that's one positive sign, I think. And he said that he thinks it's going to hold. Hopefully it grows from there, but we will see.

[00:08:51] Zoe Licata: Yeah, I mean, just like anecdotally, you got to think about what consumers value. What we know about the younger legal drinking age consumers is that they value more experiences and they value like going out and doing things. And by going out, I don't mean necessarily going to bars and restaurants, but that certainly is part of it. And what is a more meaningful and memorable experience for them the night that they, you know, hung out at home and binge something on Netflix with a six pack of something or the night they went out with their friends? Obviously, this is all anecdotal and I have no data to really back up anything that's coming out of my mouth right now, other than the fact that I miss being young and fun and going out. But yeah, I think you want your brand to be a part of those moments.

[00:09:33] Jessica Infante: Yeah. And there are so many new types of those like places, those alternative spaces where people are looking for those activities, like in ping pong or pickleball, like courts. There are other places where you could possibly integrate your brand into being a part of their experience.

[00:09:51] Zoe Licata: So Boston, by and large, probably a lot less cool than many other cities. But Boston has a dedicated activity bar for basically everything you just said. So if that's what we have, I can only imagine what's going on in other cities that don't have terrible weather for nine months out of the year.

[00:10:09] Justin Kendall: Zoe, being our very small sample size of someone who is at the table that is more likely to go out anytime, how many nights a week do you think that you go out with friends?

[00:10:21] Jessica Infante: At least one, one to two on average. So yeah, it's like consistently a part of like our weekends, weekdays, not as much, but we're going out to places. I love this for you.

[00:10:33] Justin Kendall: Thank you. In the back of my head, when I'm hearing this from people on stage who are older than me, who are talking about young people not going out, I'm like, I feel like I know somebody who goes out like still, you know, and I'm on a podcast with them, you know, and I'm like, how legit is this? Or is it just become like this group thing that we all have that young people do not go out?

[00:10:58] Jessica Infante: Yeah, I think we probably just go out differently. Like, I mean, even look at like TikTok, which is a huge part of Gen Z culture and things right now. A huge part of TikTok is restaurant recommendations and like filming you going out for a day or something. And I know so many people who were going out at least once or twice a week. Cause you want to check out all these new places that you're seeing on social media. You want to try these experiences that you're seeing people record a day in their life of like they, people are going and trying these new things. It's just, they're just going about it a little bit differently than before.

[00:11:28] Justin Kendall: And one thing that Jim Cook pointed out during a separate discussion with Lester Jones and Robbie Miletus from Miletus Beverage in Oregon, right? Pacific Northwest. And then Alex Berkson from Manhattan Beer was that, I think he said for every one beer sold in the on-premise, it's like two bottles sold in the off.

[00:11:53] Zoe Licata: Yeah. And I, we talked about this with Lester Jones in another, you know, another conversation that you hear on this podcast eventually, but I think we all kind of agreed that that Jim's estimates a little bit on the low end. That's probably a little bit higher. And Jim himself even said, this was just a gut feeling that he has and it's how he thinks about it. I know we used to think in terms of like, if somebody, I mean, this is old data now, but like if somebody came on a brewery tour, they would eventually become like a $25 lifetime spend. And that's an average, you know, like I'm sure people come on the brewery tour, spend much, much more and some people spend less. But, but yeah, like creating those experiences for your consumers, although it's an investment in your time and money upfront, it will pay off down the road.

[00:12:38] Justin Kendall: So let's switch gears a little and talk about intoxicating hemp because They're not serving any here. They couldn't. We have seen it served at some places around here as part of the festivities, unofficially. And there's really a lot of talk about it here. There are a lot of folks from that industry here. And while the message from the NPWA isn't THC-infused beverages are bad or anything like that, which is a thought that you might think that they would have. It is not. It is, we want in on the action if you're going to be doing this. And if our members are doing this, here's your blueprint for doing it in a way that's not going to blow up your core business.

[00:13:28] Zoe Licata: Yeah. I mean, I think this segment is so volatile right now. You know, I think It basically changes every half hour. Every state, you know, as they do with alcohol, is doing something different. But, you know, the general theme, like you said, Justin, is if these beverages are being discussed in your home states, your home markets, make sure you have a seat at that table, because as beer distributors, there is nobody more qualified than you to participate in a conversation about the responsible and legal selling of another intoxicating beverage.

[00:14:01] Justin Kendall: I think you nailed it. Thank you.

[00:14:04] Jessica Infante: Yeah, it was a bit of a change from any other conversations we've heard around this because most previous conversations have been anything having to do with THC or any type of hemp product or cannabis products has been, oh, that's taking away sales from beer. Like you should be cautious of any of that. And this was kind of accepting the reality that these products exist. We don't know what the future is going to look like for them, but they are out there. So what do you do about it? You can't fight against that.

[00:14:34] Zoe Licata: Yeah, Heineken Maggie brought up something really interesting in her one-on-one with MEWA CEO Craig Purser was where she talked about how of things that really matter to the younger LDA drinkers, a lot of them are really into health and wellness, but a lot of them associate THC and gummies with that. They think they're making a healthier choice than having a drink. So I think that is probably something that will be super hard to overcome. And it sounds like I think the industry is finally wrapping its brain around the fact that this is going to happen whether we want it to happen or not. So let's figure out how to work with these changing notions rather than try to fight the tide.

[00:15:17] Justin Kendall: I had a conversation this week with Chris Herron, who is the founder of Creature Comforts. He's since stepped down as CEO from there. He still has a role, obviously, with the brewery, but he started a separate business called Bev Strategy with Seth Herman, who was the chief commercial officer at Creature Comforts, and this consulting firm is working with climbing kites in my neck of the woods of Iowa. We've talked about climbing kites before, and they're expanding this week to Georgia. Basically, there's legislation that has allowed them to come into the state effective October 1st. And they're going to run sales and marketing for them in the South in these expansion states. And it is really interesting to hear somebody like that who has been through building a craft beer brand and is now entering this new industry and helping it in the early stages and working with primarily Anheuser-Busch wholesalers, it sounds like.

[00:16:22] Zoe Licata: That's very interesting.

[00:16:23] Justin Kendall: Right?

[00:16:24] Zoe Licata: Yeah. I mean, I don't go out and shop. for intoxicating beverages much. I really should do a little more of that. But I know D9 drinks are showing up in liquor stores and other places. Zoe, do you see them in mass? Is this happening?

[00:16:43] Jessica Infante: Do I live under a rock? I saw them. for a little bit, but then they kind of went away because we just had like a recent change in where they could be sold. So I have seen them less, but like last summer, I feel like I saw them a lot in just kind of random little like small stores and things. Like there's a wine store and market down the street that had a whole shelf with them.

[00:17:04] Zoe Licata: I mean, I assume they're at dispensaries.

[00:17:06] Jessica Infante: Yes. Oh, yeah. All right. Yeah, the dispensaries are filled with them and there's a lot of dispensaries in Boston Zoe and Justin Massachusetts now they're everywhere. So yeah, you can get any sort of beverage, edible, any other way you want to consume.

[00:17:22] Zoe Licata: It is so wild to me how fast this happened. I am old enough to remember when the third dispensary in Massachusetts opened in my town in 28. And we had to have like police out directing traffic because so many people came to go to this store.

[00:17:39] Justin Kendall: And for a while after, I think.

[00:17:41] Zoe Licata: Yeah, yeah.

[00:17:43] Justin Kendall: Yeah, it's something where when I talked to Chris about it, he kind of laid it out like he doesn't think that this is going to cannibalize beer occasions. He thinks it's something that's either creating a new occasion or if it is going to chip away at something, it's RTDs and seltzer likely because it's more of that type of a product where if you want a mango flavored drink or whatever it is, pineapple, black cherry,

[00:18:08] Zoe Licata: Yeah, I mean there's nothing like a beer flavored beer. There are many other things that are like a black cherry flavored intoxicating fizzy thing.

[00:18:18] Justin Kendall: Exactly. And that's probably where it lives on the shelf is somewhere between non-alcoholic and beer or those type of products. So there's obviously a lot more to come on this and we're going to be talking about it and we'll have coverage at Brewbound.com and available for insiders in the newsletter. We should probably wrap talking about one of our featured speakers, Rebecca Mizell. introduced as the new chair. Pretty lively speech. Zoe, you're covering that. What's sort of the big takeaway you got from here?

[00:18:54] Jessica Infante: Yeah, it was very much a rallying cry for wholesalers to kind of, she's almost kind of giving a bit of a kick in the ass, like, hey, we have this thing going for us and this is really good, but we need to continue to do more to kind of help the industry and help our own industry and doing that by both returning back to basics and paying attention to what's going on in your warehouses. Are you participating in that? Can you talk to your staff and your workers and see how they're doing? Do they need any help? How can you better support them and then better support your business? And also saying we also need to look at the newer voices in this, both on the executive level, like do you have people that, you know, this business is filled with families? Do you have some of their kids that are now in the business that could take on greater leadership roles? But looking in also in other departments, are there voices there that can be heard better or that could help your business? if you paid more attention to them. So it was very much a, all right, let's get going. I guess we have a lot of stuff going on in the industry and it can be a little depressing, but you guys have some control over what's happening here and you can control what's going to happen with your businesses moving forward. And there can be some exciting things that can come from that. So it seemed to get really, it was very well received by everybody in attendance. She got multiple standing ovations and a couple of hollers, I think. So she, I think she's being welcomed pretty well into her new position. People are excited for her to be chairman now.

[00:20:26] Zoe Licata: Yeah, and she's no stranger to NBWA leadership. She's been on the board. I assume she's been super active with their NextGen efforts. So yeah, I think everyone's very active in like the brew stuff as well. Super active with brew stuff. So I think people are just really excited to see her. rise to the occasion. I really enjoyed, this is a thing I never thought I would say, but I particularly enjoyed her quote from noted football coach Nick Saban, which I will paraphrase, but it was something about like, take the other team out of the game and control what you can control because you can't control what the other team is going to do. You can control what you do, which I think was a pretty pertinent message for this room today. You can't really control what else is going to happen out there. But if you focus in on the things that you do best and make sure that you are doing them the best you can, that will push you a little bit more over the line to success than if you just kind of coasted.

[00:21:21] Justin Kendall: I think that's a good bow on the convention that we can put it on it here. And we're going to have more conversations, including Lester Jones from the NBWA, Dave Crispin from the NBWA, Sean Mossman and Laura Melzo talking AI and probably more that I'm not even thinking about that we already did. So look for those in the coming weeks. But with that, we're getting out of here. We're going home eventually. Oh, and we'll have coverage of brew.

[00:21:50] Zoe Licata: Can we get a coffee?

[00:21:51] Justin Kendall: Yes.

[00:21:52] Zoe Licata: Let's get a coffee.

[00:21:53] Justin Kendall: Let's do that. So that's our show for this week. Thanks to our audio team for taking care of us on the ground here in San Diego, as well as Ryan and Jon Landis for doing what they do at the table. Thanks to Zoe and Jess. And thanks to all of you for listening. We'll be back next week.