[00:00:00] Justin Kendall: The AB consent decree has expired. What's next? Find out on the Brewbound podcast. 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 this week we're bringing you an interview with Chris Jones, Managing Director of Central Market Strategies. He's going to discuss the expiration of AB's consent decree, what it means for competition. Jess, you spoke with Chris. Fill us in on what's to come.
[00:00:43] Jessica Infante: Yeah, Chris and I had a great chat. Really, really interesting stuff. Obviously he works with central market strategies, but his organization supports Main Street Competition Coalition, which is a nonpartisan group of independent businesses and agricultural producers who focus a lot on fair markets for small and independent businesses in the U.S. So the translation here is kind of that Chris works a lot to make sure that independent retailers, particularly grocery stores, are allowed to thrive. So we had a really great chat about the AB consent decree, which I mean, you'll hear all of it later, but came about in the wake of AB's global merger with SAB Miller and put all sorts of guardrails in place for 10 years, which are now over. So we talked a lot about what happened during that time and what happened in the 10 years of that consent decree was that Basically, Chris and his team's argument is that innovation was allowed to thrive in the face of healthy competition in the industry. So you'll hear it all. I really enjoyed our chat. It was a great time. And it was a lot of fun.
[00:01:45] Justin Kendall: Chris also wrote the white paper that we ran on Brewbound under the Voices banner. So you can check that out too at Brewbound.com. We also have Brewdown Live coming up December 9th and 10th. And one of our guests is going to go through the economics of running multiple tap rooms. We've got Tara Hankinson, the co-founder and co-CEO of Talaya Beer Company joining us. Talaya runs, is it five now or are they up to six tap rooms in New York City?
[00:02:15] Zoe Licata: They might be up to six at this point.
[00:02:17] Justin Kendall: Her bio says five. We may have to update that, but. Tara and Leanne Darling have done such a great job building the Talaya brand in New York City with multiple venues. Tara is an NYU Stern MBA. She has a corporate marketing background, and she's really going to dig into the economics of making your taproom more profitable. And we couldn't be more excited to welcome her to Brewbound Live.
[00:02:43] Jessica Infante: Yeah, she gave a similar talk in Albany at the New York State Brewers Guild Conference, and I was like, this is really good stuff. So, Tara, just come to LA and do it again.
[00:02:52] Justin Kendall: Yep. Very excited to have her join us. Also, The Brewbound Job Board is where you can find your next star employee, or you can find your next job. And one of the most popular job listings of the last week was the Lucky Luke Head Brewer job in Santa Clarita. I only want to mention that because the Santa Clarita Diet is still waiting for that ending, as we all know.
[00:03:17] Jessica Infante: You are that show's number one fan.
[00:03:20] Justin Kendall: I just don't like the lack of ending. I need some finality here.
[00:03:25] Jessica Infante: Call Drew. See what she had in mind.
[00:03:27] Justin Kendall: Yeah. So check out the head brewer job at Lucky Luke. We also have job listings for New Trail. They're looking for a sales rep, our friends over there. One of the fastest rising craft breweries out there. I believe they were our craft brewer of the year last year.
[00:03:44] Jessica Infante: They were indeed.
[00:03:45] Justin Kendall: You could work for them. Check out the Brewbound job board. for all your job needs. Anyway, let's get into the news of the week. And Zoe, we broke the story that Lawsons is getting into the non-alcoholic beer game, and they are launching Sippin, an IPA, of course.
[00:04:05] Zoe Licata: Of course, would you expect anything different from Lawson's? They knew they wanted to come out with a non-alcoholic IPA, but they wanted to make sure it fit the standards that they hold all their offerings to. And so this has been quite a process of them, you know, coming out with this beer. They started ruminating on something five years ago, kind of went on pause, and then the last year have really invested in making sure they can create the best non-alcoholic IPA that they can. So I had a great conversation with Adeline, who's the CEO over there, just talking about that whole process and what was important to them in creating this. And she really emphasized that this is not supposed to be a non-alcoholic version of Sip of Sunshine. This is something that is now going to live within the Sunshine brand family. But don't get it expecting it to be that. This is supposed to be its own product that still, you know, is made with citra hops, that is still hop forward for those folks that love that sunshine family. But it's an entirely new product.
[00:05:09] Justin Kendall: I like that she was very clear that they're not looking to be a non-alcoholic beer company. This is not some type of transition, but they... see a lot of their drinkers saying, you know, I wish I could drink sunshine. I wish I could drink these beers. They're old like me now and they can't hang like they used to.
[00:05:30] Jessica Infante: Yeah. Yeah. I feel like most of their portfolio leans a little stronger on the ABV front, which I, I don't want to say found out the hard way because I knew that, but that party we went to of theirs during Craft Brewers Conference this year was a... A rager? Yeah. You could feel it. Yeah. I'm trying not to out myself here as having gotten a little too silly. But it was a good time. Yeah. But yeah, couple of these would have been nice back in April. Yeah. Is what I'm inelegantly trying to say.
[00:06:00] Zoe Licata: Yeah, so there's kind of two cool things going on here. One was, like you said, Justin, the Lawson's fan base, they found out kind of over indexes with people who are already drinking non-alcoholic beer as well. So about 30% of their consumer base drinks non-alc, which was really interesting and kind of what pushed them to finally come out with something because those folks, they're loyal to Lawson's. You don't have a non-alc, they're going to have to go to another brand. And then that kind of hole in the lower AVV space is what has also driven them to come out with this. So they kind of took about a year off from doing too many big launches of new products or new core offerings to assess their portfolio, to look at that core brand family and see what was missing. And they found they needed a kind of even higher ABV, single-serve, C-store offering, and they needed some stuff that was in the lower ABV space. So, you know, Sip of Sunshine is 8%. They had Little Sip, which was still 6%. And so they came out with Easy Sip, which was the 4.5%. And now they have Sip In, which is the non-alk. On that higher end, they came out with Epic Sip not too long ago. That's 9.5% Imperial IPA, and that's in those 19.2-ounce cans.
[00:07:20] Justin Kendall: I like that there's a consumer out there who's like 8% just too low.
[00:07:26] Zoe Licata: Not quite there, yeah. Not me. Not me. But yeah, so now they have this full portfolio where it's quite beautiful looking at the photo of all of them now lined up next to each other. Quite a rainbow of things going on, but the full, really the full spectrum of ABVs all in clear CitraHop IPAs.
[00:07:51] Justin Kendall: Where can you get sippin'?
[00:07:52] Zoe Licata: Sipin is coming out this week across Lawson's full portfolio. So they have kind of a 12 state portfolio that's mainly Northeast focused. So they can still achieve coal distribution, which is really important to them. But they're rolling it out the full footprint right away because they believe the demand is there already. So this isn't something where they've tested things before and just Vermont or something in the past. This is going everywhere immediately.
[00:08:18] Jessica Infante: What else is new with our friends in Vermont?
[00:08:20] Zoe Licata: They have a lot going on. They've made a good handful of distribution changes. So they've been kind of messing with that network. We know they had the big move not too long ago where they switched from self-distribution in their home state to being with Baker. And they said that's been going really well. And so they've made a couple other changes since then throughout this year to They said it was a mix of just aligning on what their priorities were and some of their previous partners were looking to expand to other products. And so it was kind of a mutual, mutual thing that worked out for everyone in those changes. They're also totally revamping their taproom space. Adeline said she was really inspired by the keynote speech at the Craft Brewers Conference this year, which was all about unreasonable hospitality and finding ways to give things to whoever is visiting your space other than just the product itself. And so they are expanding to have a private event space. They are expanding to add a bar to that section with offerings beyond just beer. They are just revamping the entire space to kind of create it as a destination for people visiting because you know they're in kind of a middle of nowhere Vermont. And so people who are traveling there are usually going either, you know, in the snowy season or for the summer traveling season. And so you really need to make that space a destination to be worth going to and then hanging out for quite a while.
[00:09:46] Jessica Infante: Did she ask you when we're coming up?
[00:09:48] Zoe Licata: Oh, yes. And as once again reiterated, we have an invitation to the Airbnbs whenever we would like. We gotta go. I know. Gotta take her up on it.
[00:09:58] Speaker 1: Hey, listeners! For the August 4th roundup, lots of new beer jobs hit cpgjobs.com, including from Solid Press and Lawson's Finest Liquids. Fort George Brewery, New Trail Brewing, and Stanford University keep the beer opportunities moving. Beer people, move now! Every listing runs on Brewbound, the beer industry's daily read. Got a roll to fill? Reach brewers, beer sales leaders, and distributor staff already tracking the category. Listings also run across BevNET and Nosh, putting beer rolls before the wider drinks industry. Post your job on cpgjobs.com today. Use code brewbound26 and save on a listing.
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[00:10:53] Justin Kendall: Well, let's shift gears and talk about the annual Tamron survey. And I don't want to get into the horse race of like who won this thing or whatever. Let's get into what distributors are saying.
[00:11:05] Jessica Infante: Well, that is also what I was most interested in in this report. And I got to say, it's not really the most heartening of news for craft brewers. Tamron obviously asks distributors to grade their supplier partners on a pretty rigorous rubric of all sorts of things. And that is what a lot of larger brewers look for in this report every year. But I think there's some really valuable information in this survey, a survey conducted of 170 wholesalers across the country. And the majority of them, when asked what they're going to de-emphasize or reduce their skew count on in the coming year, said regional and local craft. Numbers were well over 55% for both. So a lot of distributors surveyed are going to be paring down their selection for regional and local. That was not really the case for national craft. National craft seemed to have a lot more positive sentiment. And then the other thing I found really interesting in here was hemp drinks. They seem to be split, you know, with some distributors looking to expand and some distributors looking to cut back their hemp selection, which obviously makes sense when you look at the regulatory environment that we're in right now, where who the heck knows? Who the heck knows? They also shared some insights on e-commerce. Most distributors are looking for high quality digital assets. So if you want to make your distributor happy, make sure they have really nice high quality images of your products to put online.
[00:12:35] Justin Kendall: It feels like we've been saying that and interviewing people who have said that for the last five years. Easily. Easily. Just incredible that it's still an issue.
[00:12:46] Jessica Infante: Still an issue.
[00:12:48] Justin Kendall: Let's stay in the middle tier and talk a little bit about a trade that was made and it's a swap in New York and New Jersey.
[00:12:59] Jessica Infante: Yeah, so Serene Craft Beer and Remarkable Liquids, two super craft-centric distributors that operate out of the Northeast, have swapped. And we came to learn this news because Serene had posted on their Instagram account that they were preparing to leave the upstate New York market and they have a farewell party, I think, last weekend. So I just reached out and was like, hey guys, what's going on? And co-founder Matthew Schulman reached out to me and we had a really great chat. And I'm so glad we did because it's not just the, oh, these guys are leaving the market. Sad story. It's not that. They have decided to swap with Remarkable Liquids. So Remarkable Liquids is going to take Serene's territory in the counties north, like basically from like New York City to Albany and then a little bit west. And Serene is going to take Remarkable's full New Jersey footprint. So works out well for everybody. I think a lot of what this came down to was the placement of warehouses where Serene's got one just north of the Bronx, but Remarkable operates just outside Albany. And it's a lot easier to get to North Jersey from the Bronx than it is from Albany. So Everything is kind of underway right now. And, you know, Serene's going to be able to double their sales rep count in the Garden State. So expect better service for retailers there. And, you know, they kind of looked at everything and were like, why are we both doing this when you could take this and I could take this and we could both do a better job in the markets that we are ending up with? So I'd be interested to see if they do this again in another market, like they both serve Connecticut. So. We'll see.
[00:14:32] Justin Kendall: Matthew did a great job of laying out just the redundancy that both companies are experiencing and why this makes so much sense for them.
[00:14:42] Jessica Infante: Yeah, totally. And he was like, we're both sending trucks to Buffalo, to Cape May, to outside of Philly. Like, this is silly. So we should not both do this. And, you know, we got into talking about New Jersey a little bit because that is obviously where I grew up because I have made it like 80% of my personality. But he was like, it's a really dense state. So it's, it's not that hard to serve, you know, like you can just load up a truck and hit the parkway and the turnpike and be back at your warehouse. So I'm super oversimplifying that, but he pointed out that it is extremely dense in population. So. Yeah, it'll be interesting to see what happens.
[00:15:24] Justin Kendall: While we're staying on the interests of distributors, and I'm sure I know, actually, that there are some very happy distributors or at least trade groups that represent distributors on this one. There's a new bill, another one, that would regulate hemp and it would do so very much like the existing three-tier system for alcohol.
[00:15:51] Zoe Licata: Yeah, a similar distribution system would make it so you have to be 21 or older to purchase products. It's coming up with a lot of other kind of responsibility regulations as well. I mean, this is one of multiple different things that I've tried to move through, so who knows what happens with this. The latest official concrete thing that has happened is we at least have a delay until December of the ban, but Yeah. This is the ideal situation, I think, for most of the, at least like the beer wholesalers and folks that were starting to talk about this a couple of years ago of, all right, if this product is going to exist, just let it exist similar to our system.
[00:16:36] Justin Kendall: Like I said, the NBWA couldn't be happier about this, it seems like.
[00:16:41] Zoe Licata: Yeah. I mean, this has kind of consumed our worlds for a while now. I'm curious how much consumers actually are aware of what's going on, if they know that it's kind of in a scary balance right now. Because of course, like, news is going to talk about, hey, it's going to be banned by this time or not. But I don't really think it's as broadcasted out there of just how kind of all over the place this has been.
[00:17:07] Justin Kendall: I'm with you. I don't think it's broken containment.
[00:17:10] Zoe Licata: Yeah.
[00:17:11] Justin Kendall: Plus, how could you keep up with the number of bills?
[00:17:14] Jessica Infante: The number of bills has been bonkers. I would love to know what consumers even really know about the difference between hemp-derived stuff versus just full-fledged legal cannabis. Like, what do they even really think is happening?
[00:17:27] Justin Kendall: They probably know as much about it as they know the difference between a malt-based product and a spirits-based product.
[00:17:33] Jessica Infante: That's what I was just gonna say. This, to me, smacks of the fourth category. The mind meld, always. you know, which I feel like we all kind of thought, like, nobody really knows and nobody really cares. But here we are in 2026 and people do seem to know and kind of care.
[00:17:51] Zoe Licata: Yeah. I mean, what really kind of tuned me into, oh, maybe we're way just in our bubble is I was just at like a normal doctor's checkup and they go through like what you're consuming. And I was like, well, I have some like, THC beverages sometimes and I had to explain to my maybe like 35 year old doctor what these things were. She had no idea that these even existed. So the fact that that is the case in a major city I think is a pretty good indication that there's a lot of still unknowns out there.
[00:18:29] Jessica Infante: How close were you to having the cops called on you?
[00:18:31] Zoe Licata: Not close at all. No. It's a great doctor's office. I think even if I said I did something illegally, they would still protect me. That's nice. Yeah.
[00:18:40] Jessica Infante: Yeah. Yeah. I feel like nobody has any idea. Especially where we live, Zoe and Matt, we're a legal cannabis market. So a lot of the loophole stuff doesn't really happen here.
[00:18:53] Justin Kendall: All right, before we get to our featured interview, let's hit a couple of warm beer takes for this week, because the NFL season is about to kick off. It's preseason still this week. As of today, Thursday, we've got our first games. We're not going to count the Hall of Fame game last week. And we've got ads beginning to hit. AB has a couple of new Bud Light ads. One of them features Peyton Manning and Shane Gillis at a bar and they're jockeying for a position to buy a beer and it's wacky. But my warm beer take on this is I think Molson Coors does a better job of recreating what it's like to be in an actual bar versus Anheuser-Busch. There's just something plastic, generic feeling about the Bud Light ad that doesn't have that real sort of gritty feel to me. That's my warm beer take.
[00:19:49] Jessica Infante: It looks like it was shot in a studio, not in a bar.
[00:19:52] Justin Kendall: Absolutely. It's like on lot 30 or whatever.
[00:19:55] Zoe Licata: I think it doesn't help that it has like the same kind of stereotypical bar setup that all these ads have had for decades of just some neon signs and the dark wood bar with bottles behind it. Most bars don't really look like that.
[00:20:10] Jessica Infante: And the neons all belong to the brand in the ad. Yeah. Yeah. It's effectively in a tide house.
[00:20:19] Justin Kendall: Exactly. And also, you've got a Philadelphia Eagles fan next to a Patriots fan next to a Buccaneers fan.
[00:20:29] Zoe Licata: Yeah, they have to represent every single team out there.
[00:20:33] Justin Kendall: Exactly. It's like we got to fit in all 27 of our partners, not the five that we don't have partners with.
[00:20:40] Jessica Infante: Oh, my God. It's like when there's games in London and everybody just shows up in whatever jersey they have.
[00:20:44] Zoe Licata: Yeah, exactly. Now I'm going to pay more attention to who has the better bar. I feel like Heineken does a solid job. They've had a good couple in the ads where they're like encouraging you to get off your phone and socialize at the bar. Those have been very large bar spaces, which I feel like are pretty accurate.
[00:21:06] Jessica Infante: There better be. If you want me to put my phone down, you better be showing me a really good option as the alternative.
[00:21:12] Justin Kendall: Well, and that's the Miller Lite ad, too, is the ghost of Christopher Walken or whatever showing up next to the guy on his phone who's, you know, scrolling and swiping right or whatever. And he's got a girl that's trying to pay some attention to him and he's encouraging him. But it's not an overtly crowded bar. There's a lot of empty seats for ghost Christopher Walken to sit in. It just has a more organic feel to it, at least to me. I don't know that it's the best representation, but I also have been watching some old Miller Lite ads too that may have swayed me.
[00:21:49] Zoe Licata: It's just what you do in your spare time is watch old Miller Lite ads.
[00:21:53] Justin Kendall: Yeah, I got to see John Madden do all the tastes great, less filling debates. But while we're on the subject of football season. I also think it's interesting that Cutwater is the first A.B. brand that they've announced will receive a national ad during the Super Bowl this year. Well, next year.
[00:22:16] Zoe Licata: I can't believe we're already talking about Super Bowl stuff, but they are so jazzed they decided to announce it so soon. I think it makes a lot of sense in that Cutwater has become kind of like their big, other than Michelob Ultra, which already has, I mean, you could argue that's almost like oversaturated marketing. Cutwater is their biggest growth thing next, I think. And so being able to put that in a greater spotlight distracts
[00:22:45] Jessica Infante: Yeah, I mean, we know there will be a McUltra ad and a Budweiser ad and probably a Bud Light ad.
[00:22:52] Justin Kendall: Somebody's going to be on the chopping block, right?
[00:22:54] Jessica Infante: Yeah. Yeah, I mean, what do they usually do for?
[00:22:57] Justin Kendall: It's usually McUltra, Bud, Bud Light.
[00:23:00] Jessica Infante: Sometimes they do like McUltra organic gold, whatever that is. Yeah.
[00:23:05] Justin Kendall: Zero.
[00:23:07] Jessica Infante: Yeah.
[00:23:08] Zoe Licata: Well, sometimes there's Stella.
[00:23:10] Justin Kendall: That's true.
[00:23:10] Zoe Licata: We talked about this not recording, but I would pitch to them that their Cutwater ad should be dispelling the myth that Cutwaters need to be cut with water. It is plaguing social media. It's on like a three, four month cycle of someone citing the CEO of Cutwater said that you have to cut them with water. That's why they're so strong. So many things wrong with that sentence. Yeah, but I mean, maybe you should cut it with water.
[00:23:40] Jessica Infante: Some of them are really strong.
[00:23:42] Zoe Licata: Honestly, maybe you should at least put some ice in there and it can melt a little bit. But for cut water sales, you don't want people cutting with water. Fair enough.
[00:23:54] Jessica Infante: I don't know that I've ever had one.
[00:23:56] Zoe Licata: I really don't think I have. Had a cup water? Yeah. None? I can't think of any. I discovered recently that my parents are big fans of their Bloody Marys that they have. The regular and a spicy. Interesting. They are big fans.
[00:24:15] Justin Kendall: Who was the celebrity that they just partnered with? 1980s celebrity.
[00:24:21] Zoe Licata: Parker Posey?
[00:24:22] Justin Kendall: Parker Posey.
[00:24:23] Zoe Licata: The Longest Island, yes. They recently partnered with Parker Posey to promote their Long Island iced tea flavor.
[00:24:32] Justin Kendall: Do you think Parker Posey played a role in your parents switching over to cup water?
[00:24:38] Zoe Licata: No, because my parents are also very anti-commercials in the house. They exclusively only watch things that they don't have to watch a commercial or an ad. I don't think they even saw it.
[00:24:50] Justin Kendall: Have you noticed how very careful the wording of some of these partnerships are that are being announced for NFL teams. Athletic just announced the deal with MetLife Stadium and the New York Jets and Giants, and they are a proud partner. And then you've got Rheingeist, who is an official hometown beer partner of the Cincinnati Bengals.
[00:25:19] Zoe Licata: Yeah. It's like they're making sure they board it properly so they can still get as many brands as sponsors. And that's how you're seeing these stadiums that have like every bar is a different alcohol brand name or something. It's wild.
[00:25:36] Jessica Infante: Yeah. And I assume everybody's trying to not run afoul of the largest brand in their set.
[00:25:41] Zoe Licata: Yeah.
[00:25:42] Justin Kendall: Who we may have just talked about. I just thought that was notable because it's like no one's saying the official or, you know, the proud partner.
[00:25:55] Zoe Licata: Yeah. And that's very much a recent thing. We were getting press releases just a couple of years ago. People are still saying the official. They're also just seeming to get longer and longer in title. Yeah. It's becoming word salads a bit.
[00:26:09] Justin Kendall: Well, you can catch up on all the news at Brewbound.com. Become an insider today, but let's get to our featured interview with Chris Jones.
[00:26:19] Jessica Infante: Our guest today is Chris Jones, Managing Principal at Center Market Strategies, which supports the Main Street Competition Coalition. This is a nonpartisan group of independent businesses and agricultural producers who focus on fair markets for small and independent businesses in the U.S. His name will be familiar to Brewbound Insiders as the author of a column we published a few weeks ago about the end of the consent decree issued after the Anheuser-Busch InBev-SAB-Miller merger in 2016. Chris, thanks so much for joining us. How are you?
[00:26:48] Chris Jones: Good. Thanks for having me, Jess.
[00:26:49] Jessica Infante: Oh, yeah, of course. So let's set the stage for a second, because this consent decree expired in July. It's 10 years old. At least our listener base, I think, changes over a decent enough amount that we've got people who listen to this podcast that weren't even legal drinkers when this thing was put into effect. So for people who maybe haven't followed the story so much, what was the AB consent decree and why did it matter so much?
[00:27:16] Chris Jones: Yeah, sure. So back in 2016, the world's largest brewer, AB InBev, acquired the second largest brewer, SAB Miller, forming a megacorporation that controlled roughly 30% of all beer. So the Justice Department got involved with that transaction and allowed it to go forward, but under some strict conditions. The first big one that we still see today is SAB Miller had to sell its interest in Miller Coors to Molson, to keep Budweiser and Miller as separate U.S. competitors. But equally important, in my view, there was a distribution agreement that lasted for 10 years and just expiring earlier in July. It limited the ability of ABI to acquire distributors, punish distributors for carrying competing products, and demanding sensitive information on their competitors. And importantly, it provided a mechanism for monitoring and enforcing any violations of the consent decree at the Justice Department. So it matters because it prevented ABI from using its massive size as the world's largest brewer to disrupt the market and thus put consumers in the driver's seat in terms of what beer they wanted to drink. And that gave, in my view, smaller brewers and brands the ability to get beer to market without the interference of a dominant gatekeeper.
[00:28:43] Jessica Infante: You did a really nice job in the piece laying out how the consent decree placed limitations on the influence that A.B. could exert on distributors, which is something that I think has ebbed and flowed in the past. One will read reports of A.B. leadership speaking to distributors in the early days of the craft movement and really encouraging their distributors not to take any new craft brands, which was a pretty common practice back then. But one of the results of distributors having unfettered independence was an explosion in Bev-Alk innovation in the last decade. Why was that? And as a follow-up that I will probably remind you of when it's time, do you think that that innovation would have happened if it were not for this consent decree? Maybe that's too hard to say, but what impact did this all have on product innovation in beverage alcohol?
[00:29:31] Chris Jones: Yeah, well, it gave greater freedom for distributors to take a chance on products that lied outside their portfolio. So they were able to really respond to the incentives that came from the bars, restaurants, the grocery stores and consumers rather than the incentive that came from where the most volume came from in their distribution. So it caused them to pick up emerging products on the marketplace without having to worry about conditions on beer prices of its biggest products or contract terms on competing products. So the example is over the last 10 years, you had this kind of explosion in innovation on seltzers, for example, and ABI saw that happening. And bought a company that became Bonnevive. But then we saw White Claw, Truly, these other sorts of upstart brands come along and became category leaders. And there was no interference in that. So we think the conditions under this consent decree without. potential interference, help kind of create this environment for new products to respond to consumer demand. Same thing happened in innovations in non-alcoholic beer. So, Athletic is independent and it's the biggest non-alcoholic beer brand out there, and we think that's because of the successful enforcement of this decree.
[00:30:50] Jessica Infante: Yeah, I love that you lean on hard seltzers in this because Bud Light Seltzer is always the example I give when explaining the distribution system and its nuances to lay people. I'm like, well, look, in hard seltzer, there was White Claw and there was Truly, and they belong to the Molson Coors Network. AB distributors do not have those products and they want some answer to that to be able to sell. And the simplest way to get here is AB introduced Bud Light Seltzer, which No one really asked for it, no one really wanted it, and its sales didn't do that well, and you don't need to respond to that. But yeah, the only reason that that product existed was to give a hard seltzer alternative to the AB network, because who knows what had happened. The company was really quick to acquire Spike Seltzer, like the earliest mover in the space, and totally fumbled it. And Bon and Viv had really great flavors, but once you really look and think about it in the lens of this consent degree, it all makes sense. So some people might hear, oh, the consent decree expired and assume that the industry changes immediately. Is that realistic?
[00:31:48] Chris Jones: I think it's going to take some time because, you know, there are contractual arrangements. ABI is not exempt from the antitrust laws or state antitrust laws or franchise laws. So there are still kind of restrictions, but these specific rules being gone are concerning. So, you know, if there is any sort of interference or coercion, you don't have an independent monitor to work through or mediate any potential claims and verify compliance. It's much harder to use the traditional antitrust laws to address these sorts of behaviors that require investigative authorities. There are competing priorities among state and federal antitrust enforcers. We also don't know exactly what bad behavior was prevented. We just know that we've had a flourishing marketplace. I think we'll have to see. But the one thing I would caution is that there is a lot more risk in the system of this market power and abuses of market power that could result from the size and scale of the largest brewer.
[00:32:47] Jessica Infante: When should we expect to know whether the expiration meaningfully changes the competitive landscape? Is this like a month's out or a year's out kind of thing?
[00:32:55] Chris Jones: We have to kind of watch and see the pace of new product approvals, whether there's going to be slower placements, weaker geographic coverage. I think there's already been some movement, consolidation at the distribution tier happening. One of the things in my piece was there's 150 to 200 ABI distributors who were seen as out of compliance. So are there going to be pretextual reasons why ABI retailers get kicked out or go under scrutiny and that would kind of change behaviors? We also should look at market share. I mean, we are already under the kind of federal guidelines that were published in 2023. It's a highly consolidated market. The top three brewers constitute what's called an HHI. Don't look that up, but basically under the federal guidelines, it's a highly concentrated market. So that would mean that any additional acquisitions in this space would warrant a lot of scrutiny from the antitrust enforcers. So keep a look on national market share and keep your eyeballs on the consolidation at the distribution tier and how contractual arrangements might change over time.
[00:33:59] Jessica Infante: Great, now you're an expert in the grocery industry. How does beer distribution compare to the ways that other fast-moving consumer goods reach stores?
[00:34:07] Chris Jones: Yeah, I think really the good analog and kind of the warning signal to look at is what has happened in the non-alcoholic beverage aisle. I mean, we have an aisle that's dominated mostly by two players. They control the distribution networks almost entirely. And they don't respond so much to consumer choices as much as the values of the largest carbonated beverage companies. And we've seen as a culmination of that some of the most difficult behavior for the independent supermarkets out there. And my background is in grocery. I work for the National Grocers Association, independent supermarkets for almost 10 years. And the real challenge we faced in these categories that were highly consolidated is we became a lot less competitive because we didn't have too many alternatives. And so we saw a major difference in terms of our cost structures relative to the dominant retailers that we competed against. And the beauty of beer and alcohol is there's so many different brands, so many different local is it gives the grocer a chance to be a lot more competitive because you've got alternatives. If one product, you're getting a higher price in one market relative to your dominant competitor, you can focus on another product, but you don't have that same opportunity in the carbonated beverage. You kind of have to accept what you get. Consumers expect that when they go to a grocery store, they're gonna be able to buy Pepsi products and Coca-Cola products. So that puts the brands in the driver's seat. And what we want is consumers and retailers to be in the driver's seat. So that is the kind of juxtaposition I would point to as a warning as to where we don't have this much focus on competition enforcement, competition policy, and these constraints. And we can end up in a market like that that is not good for the little guy.
[00:35:59] Jessica Infante: Right. Our sister publication, BevNET, covers non-alcoholic beverages, not just beer, but everything you can think of, especially soft drinks. And whenever me and my coworkers are kind of chatting, if slotting fees come up, they will be shocked that alcohol brands cannot pay slotting fees. So it's one of those things that's so normal in that world, but it is foreboding in ours.
[00:36:20] Chris Jones: Right. I mean, that's small brands outside of alcohol have a hard time getting on shelves in the first place because you can't get the shelf space that you need to appeal to consumers. And the larger brands are able to kind of muscle out from that standpoint. So it's something to be thankful for, certainly in the beer and alcohol space.
[00:36:38] Jessica Infante: For sure. One thing that surprised me a lot when I, before coming here, I had worked at the Boston Beer Company on marketing for the Samuel Adams brand, specifically on helping develop campaigns to secure things like grocery displays. And now having grown up in New Jersey and Massachusetts, which are heavily independent markets where you can't buy beer at grocery stores, like the concept of buying beer in a grocery store was foreign to me to begin with. But then learning how concentrated a lot of the grocery chains are, like, You think there are so many different brands, but they're not. They're just different flag names that belong to like a handful of corporate companies.
[00:37:11] Chris Jones: That's right. Yeah, we have a very consolidated grocery industry, which is a problem for anyone who sells into that segment, because then you have the power of the largest retailers that become such an enormous customer for people that you kind of have to bend to their will in a lot of ways. We want a marketplace where suppliers or distributors can put their product where they feel they'll be most successful, not where most of their volume is. And so that kind of reinforces the importance of antitrust laws. And then, you know, you end up in a situation when you have consolidation in retail, you have less retailers to sell into, that prices end up going up for consumers and there's just less choice. We just see more and more of that, unfortunately. But that's why we have the antitrust laws and why they need to be enforced.
[00:37:58] Jessica Infante: For sure. Can you think of any other categories that have gone through similar large-scale M&A that necessitated a consent decree like the ABI-SAB Miller one?
[00:38:08] Chris Jones: Nothing quite analogous. I mean, if you look across anywhere in the center of a store, these product categories have become increasingly consolidated, owned by kind of the same, you know, a lot of international companies becoming involved. And typically a regulator requires divestitures of factories, of brands, and other assets to be divested, but I think at the end of the day, you end up with a marketplace where there is less choice for grocery stores, which means that it makes it a lot harder for you to be competitive and go to source alternatives for consumers. So that, again, just to reinforce, that's kind of why alcohol is such a kind of a shining part of the store. You know, you go through the aisle, there are dozens, if not hundreds, in some cases, of different Suppliers versus, you know, other aisles where there's just a handful. So consolidation is kind of inherent throughout the grocery consumer supply chain and to the point where, as I mentioned, independent grocers can't really compete anymore on the center store. they compete on the perimeter. So the fresh foods, you know, the deli, the meat, the bakery, and alcohol. They have shorter supply chains, so it's easier for them to purchase local products and to be more flexible to what consumers demand. You know, in many cases, it's higher margin. So really important to the local independent grocery store to have a competitive alcohol market.
[00:39:33] Jessica Infante: So in BevAlc, the spring resets are kind of the be all end all of when you try to time your new product launches, like it is so important to get on that cycle. Does that happen for other categories in the grocery store? Is that a common thing?
[00:39:47] Chris Jones: A lot of categories gravitate around holidays. Christmas is obviously big. Thanksgiving. Fourth of July. And we have a lot of exclusive offerings kind of happen at some points. And that is another point of competitive tension. You know, there might be like Halloween Oreos that come to market, but the larger retailer will be like, oh, I want that exclusively. So, you know, no one else can get it.
[00:40:10] Jessica Infante: And is that allowed? Because that's not really allowed in beer.
[00:40:14] Chris Jones: These exclusive offering problems happen all the time. And there are antitrust laws that are supposed to kind of govern the way that the market works. But a lot of them have been long forgotten. And that's exactly why we started the Main Street Competition Coalition is to provide the voice of this problem so that enforcers can be more focused on using these antitrust laws. Our members individually are afraid to speak up about these problems because they're fearful of retaliation. So that's what we're here for, to kind of call out these issues so that we can have a more competitive marketplace.
[00:40:50] Jessica Infante: Can you tell me some more of the coalition's goals?
[00:40:53] Chris Jones: Generally, it is to work with the main street businesses and agriculture producers to reinvigorate antitrust enforcement, but also to propose stronger antitrust protections for those industries. And the idea is we're trying to work towards more competitive marketplaces. And sometimes that has to do with the enforcement of antitrust laws and competition laws. But also, you know, there are a bunch of folks within our membership that You know, you'll have governments and government policies on contracting or regulations that benefit the dominant incumbents. So we're trying to break those barriers down, you know, in the food space and pharmacy space, health care. We've got these problems across various markets, and we're working to address all of them. And I think at the end of the day, it just. comes down to smart policymaking and enforcement, and then actually pinpointing where there are problems in the supply chain. And that's what was so interesting about this consent decrees. Before it was ever issued, all of the players in the Bev alcohol market participated with the DOJ to provide their standpoint. And that is how we ended up with a consent decree that actually worked. So that's really kind of the key is having people step up and be able to tell these stories, the experiences in these markets so that we actually can craft thoughtful policies such as the consent decree and keep them going into the future.
[00:42:17] Jessica Infante: Well, Chris, thank you so much for being here. This was a really great chat.
[00:42:21] Chris Jones: Thank you for having me, Jess.
[00:42:23] Jessica Infante: And that's our show for this week. Thank you for listening. The Brewbound Podcast is a production of BevNET CPG. Our audio engineer for the Brewbound Podcast is Joe Cracci. Our technical director is Joshua Pratt and our video editor is Ryan Galang. Our social marketing manager is Amanda Smerlinski. Our designer is Amanda Huang. If you enjoyed this episode, please share it with your colleagues and friends and review us on your listening platform of choice. You can find our work at Brewbound.com. And we also welcome feedback and suggestions at podcast at Brewbound.com. On behalf of the entire Brewbound podcast team, thank you for listening. We'll be back next week.
