The Internal Revenue Service (IRS) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) descended on the Union City offices of Southern Glazer’s Wine & Spirits last week according to an article in the San Francisco Chronicle. Union City is located just across the Bay Bridge from San Francisco.
Distribution & Retail
News pertaining to the distribution and retail tiers
Britain’s hospitality sector saw 2,200 venue closures in the last three months, equivalent to one per hour. The sharp increase in closures is thought to be primarily due to the rise costs of energy, food and labor.
The closures cover the full range of on-premise hospitality including the number of nightclubs which has fallen by 5.6% in the last three months alone.
More details here.
Kroger, which operates 2,721 supermarkets across the country announced today the acquisition of Albertsons. The marriage of the two largest grocery store chains in the country will have a combined total of almost 5,000 stores nationwide.
The acquisition comes when both Walmart and Amazon are growing their grocery offerings and squeezing competition in the industry. It will likely come under close scrutiny from regulators who will evaluate the possible effect on pricing for consumers already hit hard by inflation.
It is hard to predict the impact on alcohol suppliers, but it could make it more difficult for smaller suppliers to gain and maintain placement in shelf schematics as buying decisions will likely be consolidated.
Reyes Beer Division (RBD) has agreed to acquire Paradise Beverages, Inc. in the state of Hawaii. The transaction is scheduled to close in early December, according to Shanken News Daily. The acquisition adds about 8.9 million cases to RBD’s overall operations, and includes brands from Molson Coors, Constellation, Boston Beer, Diageo, Heineken USA, Maui Brewing and others. RBD will operate the business as Hawaii Beverage, LLC and will maintain all five existing distribution facilities across the state.
Also this month, Reyes announced that it will purchase Capitol Wright Distributing in Austin, Texas. The deal will add about 16 million cases. The two deals come less than a month after Reyes announced the acquisition of DET Distributing in Tennessee.
The Paradise acquisition makes Hawaii the 12th state that Reyes will now sell beer in.
Reyes Beer Division has acquired the assets of DET Distributing in Nashville. It was reported that Reyes will keep both the Nashville and Jackson warehouses in operation.
DET Distributing is a family-owned business founded in 1951 and covers more than 4,000 retailers in 24 counties across Middle and West Tennessee with more than 200 brands. They are a MillerCoors and Constellation house with a wide selection of imports and craft including Sam Adams, New Holland, Sweetwater and others.
Reyes has operations across 8 states and Washington D.C.
In what could be a pivotal and landmark court case, three brewers in Washington state have filed a lawsuit against the state of Oregon seeking to ship beer directly to consumers (DTC) and self-distribute to retailers in Oregon.
The three breweries filing the suit are Mirage in Seattle, Vancouver-based Fortside Brewing Co. and Garden Path Fermentation in Burlington.
The well-known “Granholm decision” (Granholm v. Heald, 544 U.S. 460), in 2005, was a court case decided by the US Supreme Court which ruled that laws in New York and Michigan that permitted in-state wineries to ship wine directly to consumers but prohibited out-of-state wineries from doing the same were unconstitutional.
Anheuser Busch is selling its company-owned beer distribution operations in Oakland, California to two independently owned wholesalers in the region.
Markstein Sales Co. and Matagrano Inc., both AB distributors in surrounding Bay Area communities, will take over the sales and distribution of AB products that have been serviced by AB. Markstein Sales will absorb the Oakland territory and Matagrano will fold the AB brands into its San Jose and northern Santa Clara County regions.
The AB-owned warehouse in Oakland will be shutdown and Marstein and Matagrano will consolidate operations into their existing warehouses. Approximately 140 jobs will be lost.
Popularity in low and non-alcohol beer, wine and spirits have prompted a new bottle shop to open soon near Richmond, Virginia that will only sell non-alcoholic beverages.
The store will be named Point 5 in a reference to the maximum ABV level a non-alcoholic drink is allowed to have.
The 1,000 square foot store will specialize in non-alcoholic beer, wine and spirits.
The National Beer Wholesalers Association (NBWA) released the Beer Purchasers’ Index (BPI) for May 2022.
The index is an attempt to generate a forward-looking indicator to measure expected beer demand. The index surveys beer distributors’ purchases across different segments and compares them to previous years. A reading greater than 50 indicates the segment is expanding, while a reading below 50 indicates the segment is contracting.
The craft index is at 37, which is well below the May 2021 reading of 65. Imports remained strong with a reading of 71, slightly higher than the May 2021 reading of 68. Not surprisingly, The FMB/seltzer index took another big hit, falling to 37 from a reading of 82 in May of 2021.
After years of failed attempts to modernize some of the state’s restrictive alcohol laws, Minnesota Governor Tim Walz signed into law yesterday the ‘Free the Growler’ bill that will allow breweries up to 150,000 barrels in annual production to offer growler sales, up from the current 20,000-barrel cap.
The state’s six largest craft breweries which include Castle Danger, Fulton, Indeed, Lift Bridge, Schell’s and Surly will still not be able to sell growlers under the new cap.
The new law will also allow smaller and medium-sized breweries to sell four and six-packs from their taprooms. And it would allow micro-distilleries to increase the number of off-sale products they can offer. Other allowances were included in the bill such as allowing resorts to sell beer with an alcohol content higher than 3.2%. But 3.2% will remain the standard for grocery stores and convenience stores.
The buying frenzy continues as Reyes Beer Division announced last week that it is buying the Sonoma and Marin County division of Columbia Distributing in Northern California.
Columbia, based out of Portland, Oregon, carries a wide range of craft brands in addition to the Reyes-sought-after Constellation portfolio. Columbia has made a number of acquisitions throughout the state of Constellation distributors, leading to speculation that its goal is to be the statewide wholesaler of the Constellation line.
More on the story here.
Consolidation in the middle tier continues with a major deal in Minnesota where Breakthru Beverage Group has announced the acquisition of J.J. Taylor Companies. The deal will consolidate Miller/Coors into one house statewide.
Breakthru will consolidates its beer portfolio into J.J. Taylor’s modern 600,000 square-foot warehouse and will have a portfolio of more than 65 domestic, imported and local and national craft beer brands. The company operates in 12 states, Washington D.C and Canada.
More details here.
Craft Collective, an independent craft beverage distributor serving Massachusetts, Rhode Island, and Maine, has announced the expansion of its service area to Vermont in conjunction with a new, local distribution partnership with Vermont Beer Makers.
The Springfield, VT-based brewery has worked with Craft Collective since 2020. Vermont Beer Makers is now poised for growth in their home market with the support of Craft Collective’s experienced team and distribution infrastructure.
Vermont Beer Makers, formerly known as Trout River Brewing Co., is one of 10 original Vermont craft breweries still in operation today.
British pubgoers have been put on notice that they face sharp increases in the price of a pint as mounting inflationary pressures in the brewing industry combine with rising staff and utility costs and the looming end of coronavirus tax relief.
According to an article in the Financial Times, beer industry executives and analysts have warned that drinkers have yet to feel the full impact of brewers’ rising costs.
Similar to the US, the situation reflects the unrelenting broader inflationary pressures in the UK where prices rose at an annual rate of 5.5 per cent in January, the fastest in 30 years. The article said that the British Office for National Statistics figures show that input prices for UK makers of alcoholic drinks rose at an annual rate of 7.9 per cent in January, the fastest pace in a decade.
Two competing bills have been introduced by the same Senator in the Nebraska Legislature, pitting the state’s beer wholesalers with craft brewers.
LB1235, supported by beer wholesalers would allow a small brewery to apply for a special wholesale liquor license to self-distribute up to 500 barrels of beer annually. Brewers could only sell their beer in markets where they do not have a distributor, and could only continue selling their beer through the end of the calendar year before they would be required to relinquish their wholesale license.
The second bill, LB1236 is being supported by brewers. This bill would allow breweries to self-distribute an undesignated amount of beer — brewers have indicated they were comfortable with the cap being set at 1,000 barrels — to retail locations across the state while also maintaining relationships with their existing distributors.
The landlord of Ye Olde Fighting Cocks in St Albans, which lays claim to being Britain’s oldest pub, has revealed the pub will be closing permanently after financial struggles due to the pandemic.
The pub is said to date all the back to 793.
See the full story here.
On-premise sales for the 12-week period ending January 29th, 2022 were up 17% over the same period two years ago, indicating that on-premise business is back to pre-pandemic times.
Not surprisingly, sales were much higher over one year ago in the middle of the pandemic with on-premise sales up 34% for the same 12-week period ending January 29th.
According to the CGA report, “Velocity and week-on-week performance continue to follow a very similar pattern to 2019 & 2020, further reinforcing that the on-premise has returned to normal seasonal trading patterns. Latest trends have been flat or slightly positive, with a +3% increase to January 22 followed by flat trends (0%) in the most recent week. This performance is comparable to pre-covid trends of 2019 and 2020, slightly outperforming those years by +7% and +2% respectively.”
Fortress Investment Group, which owns Majestic Wine, has agreed to buy Punch Pubs & Co for an estimated $1.3 billion.
Punch Pubs & Co is a pub and bar operator in the United Kingdom, with around 1,300 leased pubs. Most of Punch sites are run by self-employed tenants on either freehold or long leasehold agreements. The company was established by former PizzaExpress head Hugh Osmond and Café Rouge founder Roger Myers in 1997 when they bought the Bass Brewery portfolio of public houses.
Analysts believe that Fortress will seek to expand the Punch portfolio, which was highly impacted during the on-premise decline due to COVID-19.
The Louisiana Craft Brewers Guild has put up more than 30 billboards in Lake Charles to urge lawmakers to consider addressing craft-friendly reform in the state.
The billboards read, “Dear Santa, All we want for Christmas is craft beer reform! Sincerely, Louisiana Craft Brewers.”
Among several changes that brewers would like to see lawmakers consider is self-distribution to retailers. Currently, all beer sold to retailers in the state must pass through a beer wholesaler. Another request is to allow brewers to sell their beer at a satellite retail location. Under current state law, breweries can only serve and sell beer that is brewed on-site. If a second location is opened, beer must be brewed there before it can be sold, even if similar brands are brewed at the original location.
New data from IWSR has forecast an average annual growth of +20% in online alcohol beverage sales by 2025 in the U.S.
The meteoric growth will see the US shoot to the top of the leader board when it comes to online drinks sale, becoming the top global market for online beverage alcohol.
The study reveals that a quarter of alcohol drinkers across the globe report buying alcohol online. In most markets, wine is the biggest alcoholic drinks category in e-commerce (around 40% of total value). However, in the likes of China, Colombia, Mexico, and Nigeria, spirits rule supreme.