Dear Client:

Sierra Nevada Chief Commercial Officer Joe Whitney told CBD that the third week of March was so blockbuster for them, Pale Ale — which hasn’t grown in years– was up 42% in the off premise.

That was of course driven by crisis-spurred behaviors, like pantry loading. That dynamic also drove spikes for Hazy Little Thing and Torpedo —  mostly in 12 packs, not surprisingly, as people stock up and seek more bang for the buck.

In one region, Pale Ale off-premise trends exceeded 100% growth in that third week. “So we’re seeing things we hadn’t seen since the 1980s,” said Joe.

He doesn’t expect that to last. In fact, it’s already started to fall. 

“Week four dropped significantly as we head toward the canyon we are expecting to experience mid-April through at least May,” he said. “Question is how long and how deep it will be?”

Indeed, that’s the question we’re all asking. Joe offered some interesting trends per region, with insights about those areas who have been hardest hit by the virus. 

HARD-HIT COVID AREAS TRAILING TRENDS BY 15% OR MORE. “We’ve been tracking key distributor trends in markets with the highest reported outbreaks of COVID-19 and those distributors are trailing total US trends by over 15%,” Joe said. “So while our March numbers are going to close in double digits (+15% as of [Friday] before we remove the keg sales we plan to take back from retail that are currently counted as depletions which should take that down near +10% of so), that group of distributors in the high outbreak markets has already moved into negative territory.  

“Off-premise did more than offset on-premise week of 3/15 and week of 3/22 and for the month as we finished +15.2 in March to put us up close to 7%  to close out Q1.” But the last week of March flipped the other way as on-premise losses outweighed off-premise gains “and we were down mid-single digits that week.” 

Joe said the orders for the first half of April are “strong.” Still, they expect “significant slowing” going forward.  

“Unfortunately, our expectation is that 2020 will not be a growth year for Sierra Nevada.  Easter is in April this year but it looks like we got most of our Easter candy in March creating an artificial sugar high that surely won’t last much longer as America’s pantries are now full.  Let’s hope June shows signs of recovery.”

HAZY WILL STILL GROW THIS YEAR. But while Sierra — like most craft brewers — likely won’t grow in 2020, Joe believes Hazy Little Thing still will.

“Most of the month [it] was up about 150%,” he said. “Which is about where it’s been,” though the back half of the month saw some slowing, as it had a big on-premise contingent. 

ON SHUTTERING THEIR RETAIL. Sierra had to shutter their retail locations last month, like practically every brewer by now. 

But Joe says they’ve made no furloughs to date.  

“We’ve offered to keep everybody,” he says. “We have a little over 300 people between both restaurants, the gift shop, and the Torpedo Tasting Room.” 

While “it won’t be 40 hours for everybody, we’re doing our best to find things for people to do. Most people have decided to stay; a couple have decided to leave because there are some pretty generous plans out there from the government.” 

WHY KEG CREDITS ARE SO IMPORTANT. But no area of the bev alc industry is being hit harder than the on-premise, and that’s a part of the reason that Sierra has offered some relief on kegs. 

Last week the company announced it would offer all distributors “who are providing market-wide relief to on-premise retailers, 60% of the purchase cost of any untapped out of code keg” of Sierra Nevada products. 

Many of their on-premise retailers bought lots of extra kegs before St. Patricks’ Day — right before they got shut down. 

“Those are the people that are suffering, I think, the most,” he said. So they wanted to put this program in place “as an incentive for wholesalers to help them out … ’cause we wanna help them, and see those people get back on their feet. They’re really important to the business.” And he believes most wholesalers are in fact “excited” to help retailers weather this storm. 

Tomorrow, check out more from our interview with Joe when we post the podcast. 

READERS WEIGH IN: CLOSURES WILL LIKELY EXTEND WAY BEYOND APRIL, AND 1.3 MILLION CRAFT BARRELS LOST 

Friday we highlighted one of the biggest shockers in Nielsen CGA’s Power Hour presentation: CGA Client Solutions reps Matthew Crompton and Matt Drummond crunched the numbers to share that “if all outlets across the U.S. on premise are closed for March and April 2020 … there would be approximately 17.8m 288oz EQ of BA Craft beer sales lost.” That converts to about 1.3 million barrels. 

Many wrote in saying we should be so lucky. 

Said one top craft brewer: 

“Jenn, I note the comment about craft losing 1.3m BBL’s IF on-premise remains shuttered through April.  I don’t think there is any question on-premise remains shuttered through April. The bigger question is how much further beyond that?  We’re definitely not going to go back to 100% business as usual on May 1st, if May 1st is even the date, which I have a hard time seeing.”

Reopening the economy will probably come in fits and spurts, and with new rules, source opined. It probably will not come with “unfettered access” to the on premise. 

“I think we have to assume that on-premise remains at zero probably through May, and then reopens at some much lower number- maybe 30-40%- and then slowly grows through the summer, but not back to 100%.  Come fall, who knows, but it’s likely we’ll be back to select lockdowns in response to outbreaks, and percentages will decline again. … Of course, I also really hope I’m wrong!”

Another Truth Squadder thinks we should at least double that 1.3-million-barrels-lost expectation: 

“I’d add that first, that prediction of 1.3 million barrels should be doubled for the slow return to normal HOPEFULLY starting in May; there’s no way we’ll return to 100% of normal until the fall at best. I’d also point out that it’s unlikely we’ll lose one big 1.3 million barrel brewer; we’re much more likely to lose 1300 brewers that average 1,000 barrels. Retailers and distributors are shutting down the long tail from what I’m seeing. Grim days ahead for the industry at large.”

WIDMER BROTHERS RELEASES “SUPERFOOD” BEER, SUPWERWEIZEN

Widmer Brothers of Portland, OR, just released a new brew called Süperweizen, a low-ABV (4.2%) and low-calorie (142 cal per 12 oz.) beer, infused with on-trend health foods like “blueberries, goji berries, golden berries, acai berries, black carrot, and ginseng,” the company announced today. The beer will be available year-round in the Pacific Northwest in 6 packs of 12-oz. cans.

To accompany the release of their new brew, Widmer Brothers is also holding a sweepstake for a Peloton bike to go along with its “superfood” messaging.

“We’re not making any health claims about Süperweizen, but if you are planning on drinking a post-workout beer, why not drink one that tastes great and is loaded with superfood ingredients?” Steven Hallstone, senior brand manager for the company, said.

FLYING DOG OFFERING KURBSIDE KEGS

Maryland-based Flying Dog Brewery announced today that they will be selling “Kurbside Kegs” to the public starting this Wednesday. They’re selling sixtel kegs, which contain about 41 16-oz. servings. 

Keg deposit and payment are required in advance. Limit one keg per person. 

The offer is valid only for this week and is limited to keg pickup, as the brewery aims “to keep their valued retailers fully stocked with inventory. . . of other cases, cans or bottles.” 

Consumers can also order the kegs “from other participating Frederick-area retailers,” the company said. 

And for those curious, yes: The ability to sell kegs directly to the public is the result of a special mandate during COVID shutdowns, Flying Dog told CBD. 

Until tomorrow,

Jenn, Jordan, and Harry 

“We cannot direct the wind, but we can adjust the sails.”

– Bertha Calloway

———- Sell Day Calendar ———-

Today’s Sell Day: 4

Sell days this month: 22

Sell days this month last year: 22

This month ends on a: Thurs.

This month last year ended on a: Tues.

YTD sell days Over/Under:  +1