Craft Brew News – 04/06/19

(courtesy of Brewbound.com)

Constellation Brands Sales Top $8.1 Billion in Fiscal Year 2019

Constellation Brands reported its fiscal year and second quarter 2019 earnings results today, which were highlighted by a 7 percent increase in net sales, to more than $8.1 billion.

During the 2019 fiscal year, Corona brand family shipments reached 150 million cases, while depletions increased 7 percent. Meanwhile, Modelo brand family shipments exceeded 125 million cases, as depletions rose 12 percent.

Newlands called Modelo Especial “the leading growth engine in entire U.S. beer market,” adding that it is the “fastest growing brand in the on-premise” and the No. 1 selling beer in 7-Eleven stores.

“It is the fastest growing major beer in the industry, accounting for almost 40 percent of total category growth,” he said, adding that the beer is now the top selling brand in California.
In 2020 fiscal year, Constellation Brands will make its “biggest marketing investment” behind Modelo, with television advertising during live sporting events as well as the roll out of 32 oz. single-serve bottles.

Heineken USA to Pay Record $2.5 Million Fine to Settle Trade Practice Violations

The Alcohol and Tobacco Tax and Trade Bureau (TTB) today announced the acceptance of a record $2.5 million offer in compromise from Heineken USA Incorporated for alleged trade practice violations outlined in the Federal Alcohol Administration (FAA) Act.

According to the TTB, HUSA supplied alcohol retailers with its proprietary “BrewLock” draft systems at no cost between August 1, 2015, and March 26, 2019.

In a press release, the TTB said the BrewLock systems were designed to only dispense products packaged in unique kegs used by HUSA, which subsequently induced retailers into purchasing offerings made by the global brewing entity.

Additionally, the TTB accused Heineken’s U.S. importing arm of making “slotting fee payments” to retailers, and disguising those transactions as “permissible activities” such as consumer sampling experiences that never actually occurred.

Brewers Association: Craft Growth Outpacing Overall Beer Market

The BA, which released its 2018 craft industry growth statistics today, reported that 7,346 craft breweries operated in the U.S. in 2018. That’s up from 6,490 in 2017.

Those 7,346 craft breweries produced a combined 25.9 million barrels of beer in 2018, up about 800,000 barrels from 2017, the BA said.

Brewers Association chief economist Bart Watson told members of the media during a teleconference. “We’re still seeing openings outpace closings by almost five-to-one,” Watson added that he expects both numbers to be revised upward next year as additional data is collected.

In 2018, craft’s share of total beer dollars grew to 24.1 percent — to an estimated $27.6 billion — which Watson attributed to price inflation and the so-called “long tail” of small brewers commanding higher retail margins. Craft’s volume share of the overall U.S. beer also increased, to 13.2 percent last year, up from 12.6 percent in 2017.

Watson also made a case for the smallest breweries finding the most success as they build their businesses through direct-to-consumer taproom sales. The BA estimates that the number of barrels sold directly to consumers via brewery taprooms grew by about 400,000 barrels, to 3.1 million barrels, in 2018 (up from 2.71 million barrels in 2017).

Ninkasi Brewing Sells Majority Stake, Establishes National Platform to Acquire Other Breweries

Oregon’s Ninkasi Brewing has sold a majority stake to Legacy Breweries Inc., an upstart venture led by former Yakima Chief CEO Don Bryant, that aims to acquire U.S. craft breweries.

Similar to Canarchy – which owns Oskar Blues, Cigar City Brewing, Deep Ellum, Utah Brewers Cooperative, Perrin Brewing and Three Weavers – or Artisanal Brewing Ventures – which owns Victory Brewing, Southern Tier and Sixpoint Brewery – Legacy Breweries Inc. hopes to establish “collaborative partnerships” with craft breweries, according Ninkasi co-founder Nikos Ridge.
Speaking to Brewbound, Ridge said he, along and co-founder Jamie Floyd and the company’s six investors, would “retain significant ownership” in the brewery.

“Ninkasi sold a majority stake to Legacy Breweries in order to create a new platform that can leverage our resources in conjunction with those of the Legacy team,” he said.

As those “brewing hubs” are established, the company would also look to acquire 10 to 15 smaller breweries in those geographies. Those companies would be able to access expanded production and packaging capabilities and have better access to raw materials such as hops, malt, and cans.

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