Brewscape: The Latest Craft Beer Brand News

Firestone Walker Strikes Deal for Cali-Squeeze Brand

Firestone Walker has reached a deal to acquire the Cali-Squeeze brand from SLO Brewing Co.

Financial terms of the transaction were not disclosed. The deal is expected to close by July 1, pending customary closing conditions.

“We have been close friends with Hamish [Marshall] and Rod [Cegelski] for 20-plus years, and we’ve remained impressed with their commitment to innovation and the way they bring their brands to life,” Firestone Walker co-founder David Walker said in a release. “Cali-Squeeze presents a unique beer style for us to explore through what we like to call ‘Fruits with Benefits.’ As a traditional hop-forward craft brewer, we have watched these styles evolve and we see Cali-Squeeze as the beer to help with that discovery.”

In an FAQ about the transaction, Firestone Walker explained that the Cali-Squeeze brand “aligns with our vision as a California beer company” and “from a branding standpoint it’s a natural fit.”

Firestone Walker added that it has been “historically reluctant to develop beers outside the traditional footprint.” Nevertheless, the company has toyed with fruited beers but ultimately “recognized that Cali-Squeeze already had everything we were looking for.”

And there is opportunity as consumers seek out fruited beers. Dollar sales of fruited craft beers have increased 8.2%, to $171.5 million at multi-outlet grocery, mass retail and convenience stores for the 52-week period ending March 21, according to market research firm IRI.

San Luis Obispo-based SLO Brewing launched the Cali-Squeeze brand in 2017 as a line of fruited hefeweizens, with flavors such as Blood Orange, Mango, and Tropical P.O.G.

Last year, SLO Brewing produced 8,000 barrels of Cali-Squeeze products. Until the deal closes, SLO Brewing will continue to produce Cali-Squeeze offerings to maintain supply in the western U.S., the companies said in a joint statement.

Firestone Walker plans to transfer production of the Cali-Squeeze portfolio to its Paso Robles brewery once complete. Cali-Squeeze will retain its own identity. The company’s initial plans are to focus only on Cali-Squeeze’s core beer offerings, rather than its hard seltzer, which “is under evaluation,” according to the FAQ. Firestone Walker has been reluctant to enter the $4.1 billion hard seltzer segment.

“We’re focusing on the Cali-Squeeze beers for now, and we’ll go from there,” the company wrote.

Firestone Walker added that it makes sense to align the Cali-Squeeze brand within its wholesaler network. The company believes the combination of its distribution power and brewing operations can propel the brand “to the next level.”

Firestone Walker’s acquisition of Cali-Squeeze represents the second craft-on-craft deal by top 10 Brewers Association-defined beer companies in 2021. Earlier this year, Deschutes Brewery acquired fellow Bend, Oregon-based craft brewery Boneyard Beer.

Molson Coors Makes Equity Investment in TRU Colors Brewery

Molson Coors Beverage Company has made an equity investment in TRU Colors Brewery, a Wilmington, North Carolina-based craft brewery with a mission to end street violence.

The deal is a unique one on several levels. TRU Colors (TRU stands for truth, responsibility and unity) was founded by tech entrepreneur and former Untappd chairman George Taylor, who is white, and leaders of the Bloods, Crips, and GD (Gangster Disciples) gangs.

TRU Colors hires active gang members with a goal of leveraging their connections to end gang violence while also snuffing out economic inequality, generational poverty, and racial divisiveness.

“At TRU Colors, we believe most street violence is driven by a lack of economic opportunity and societal exclusion, and therefore an inclusive economic solution is needed to stop it,” Taylor said in a press release. “Brewed by once-bitter rivals, our beer will be a symbol of the understanding and unity that’s possible when people are open to change. Through our partnership with Molson Coors, and the incredible talent of our team, the opportunities for our business and social impact are endless.”

“This partnership represents an opportunity to not only invest in what we believe will be a successful business, but also in a brand with a strong social justice presence that will have an immeasurable positive impact on hundreds of lives,” Molson Coors CEO Gavin Hattersley added.

Molson Coors will act as a strategic partner to TRU Colors and assist the company with distribution of its first beer release, TRU Light, a 95-calorie premium light lager that is expected to hit retailers in North Carolina and Virginia this summer. The company plans to expand distribution to the rest of the country within its first two years of operation, leveraging the Molson Coors distribution network.

Molson Coors will also advise TRU Colors on brand positioning, building supplier relationships, marketing and advertising, and product formulation.

TRU Colors is in the process of completing construction of a 56,000 sq. ft. production facility in Wilmington. The facility will be capable of producing more than 1 million cases of product annually. The facility will include corporate offices, as well as a wellness center, gym, recording studio, classrooms and a space dedicated for a “street intervention team.”

GABF Competition to Go Forward in 2021 Despite Postponement of In-Person Event

The consumer-facing, in-person Great American Beer Festival tasting event will not take place for a second consecutive year due to the COVID-19 pandemic, according to the Brewers Association (BA).

However, the competition that accompanies the festival will go on as planned this yc ear, while the in-person event is slated to return in 2022 for GABF’s 40th anniversary.

“Despite vaccination efforts and the gradual reopening of the country, the health and safety concerns for large indoor gatherings, like GABF’s 60,000-attendee event, remain,” the not-for-profit trade group said. “While we are disappointed to cancel the festival portion of GABF for the second year in a row, and we will miss celebrating with beer lovers and our craft brewing community, we are excited to continue with the GABF competition and national passport program this year.”

The winners of the 2021 GABF competition will be announced on September 10, 2021, during the BA’s annual Craft Brewers Conference & BrewExpo America (CBC) event at the Colorado Convention Center in Denver. The awards ceremony will be live-streamed from the Bellco Theatre on The Brewing Network.

Registration for the 2021 GABF competition runs from June 8-22. Judging will take place August 16 through September 4, 2021.

The in-person festival is now scheduled to take October 6-8, 2022, at the Colorado Convention Center in Denver.

In place of the in-person GABF in 2021, the BA is bringing back its national passport program from September 17 through October 17, 2021. Last year, more than 1,100 breweries from across the country participated in the program’s first year. Passports cost $20 and will go on sale in July. Brewery registration for the event begins June 29.

“We are disappointed to cancel the festival portion of GABF for the second year in a row,” Bob Pease, president and CEO for the Brewers Association, said in a press release. “While we will miss celebrating with beer lovers and our craft brewing community, we are excited to continue with the GABF competition and national passport program this year. We look forward to convening in person for the festival’s 40th anniversary in 2022.”

CBC in Denver from September 9-12, 2021, will mark the first major BA event since the start of the pandemic. Registration opens May 4. The BA expects between 6,000 and 7,000 attendees, pending state guidelines, about half of the event’s historical attendance, a spokesperson told Brewbound.

Jim Koch Urges Beer Trade Groups to Fight Spirits’ Equalization Efforts

Boston Beer Company founder Jim Koch is urging the leaders of the beer industry’s three major trade groups — the Brewers Association, the Beer Institute (BI) and the National Beer Wholesalers Association (NBWA) — to work together to beat back efforts by spirits groups to bring taxes on spirits-based, lower-alcohol, ready-to-drink offerings in line with beer, hard seltzers and FMBs.

Koch — in the message addressed to BA president and CEO Bob Pease, BI president and CEO Jim McGreevy, and NBWA president and CEO Craig Purser — called for a “unified and effective response” to efforts by the Distilled Spirits Council of America (DISCUS) and its members “to change the fundamental tax and regulatory structures of alcoholic beverages to tilt the current playing field in their favor.”

Efforts are already underway in several states with more to follow, Koch warned.

“We need you to unite us with one message and one mission,” he urged the three trade group leaders, suggesting the industry form a task force to respond at both the state and federal levels. “Together, we are heavy.”

Koch cautioned that the growth the beer industry has enjoyed from the second half of 2019 through 2021 will be threatened if spirits groups are successful in their equalization efforts.

“They have publicly stated that they can reduce beer volume by 45 million barrels if they succeed,” he wrote. “If they succeed in changing state regulations, instead of a future of growth, the beer industry, brewers and wholesalers alike, would face virtually permanent declines in volume, revenue, and profits while liquor volume and profits would soar.”

Koch pointed to DISCUS’s success two decades ago “to increase hard liquor’s share through expanded retail availability, access to TV advertising, marketing to millennials, et cetera.”

“For twenty years, spirits companies have eaten our lunch,” he wrote. “We now have the innovation, the efficiencies and the superior retailer service to win this fourth category, unless DISCUS and its allies can change the rules. Let’s not let them eat our dinner.”

Each of the trade groups has since responded.

BI president and CEO Jim McGreevy told Brewbound that equalization of the tax rates between beer and spirits is “an existential threat to the beer business.”

“Equalization is always the biggest issue facing beer,” he said. “That’s why we should take Jim’s letter seriously.”

McGreevy explained that there are fundamental differences between beer and spirits products, chief among them that beer is typically lower in ABV than spirits products, with beer averaging 4.62%, while spirits average 40%.

Nevertheless, McGreevy said the trade groups, as well as state associations and guilds, have been already working together to prevent legislation from passing that would change the tax structure and regulatory environment for spirits. He added that there are efforts underway in Arizona, Hawaii, Missouri, Nebraska, New Jersey, Utah, Virginia, Vermont and Washington.

BA president and CEO Bob Pease issued a statement praising Koch for “bringing this issue forward” and affirming that his organization does not support equalization.

“Successful alcohol policy has always recognized the fundamental differences between beer and distilled spirits,” he added. “We accordingly take the threat of tax equivalency very seriously. To that end, we are in communication with the other national trade associations that represent the beer family. Rest assured that we do not support legislation that would tax beer and distilled spirits equally.”

In a separate statement,NBWA president and CEO Craig Purser said the NBWA would also push back against equalization efforts. He pointed out that “beer, wine and spirits are each unique with regard to origin of production, level of alcohol concentration and manner of consumption.”

“Policies related to how these products are taxed and regulated vary from state to state,” he wrote. “Public health concerns related to higher concentrations of alcohol are well known. NBWA will continue to work with distributors, state associations and brewers to stand up for beer and oppose the pursuit of equalization.”

Goldman Sachs: Hard Seltzers Gaining Shelf Space in C-Stores

Hard seltzers will be receiving more shelf space in convenience stores, according to Goldman Sachs analyst Bonnie Herzog’s latest “Beverage Bytes” survey of convenience store beverage buyers (representing 30,000 retail locations, or about 20% of the c-store channel).

Of the c-store retailers surveyed, 90% said they plan to give hard seltzers incremental shelf space. A lot of that space will be allocated to the leaders within the $4.1 billion segment, Boston Beer Company’s Truly Hard Seltzer and Mark Anthony Brands’ White Claw. Other brands likely to gain space include Constellation Brands’ Corona Hard Seltzer; Anheuser-Busch’s Bud Light Seltzer, Michelob Ultra Organic Seltzer, and Cacti Agave Spiked Seltzer; Mark Anthony’s Mike’s Hard Lemonade Seltzer; and a potential entry from Monster.

Hard seltzers were a hot topic in the survey. Overall, c-store retailers say they are “increasingly positive” about the future, due to increased consumer mobility and the rollout of COVID-19 vaccines.

Nevertheless, the reopening of on-premise bars and restaurants has led to “a slowdown” in demand for alcoholic averages for at-home consumption. Still, some retailers reported “strong demand” continuing within their c-stores.

Overall beer category sales decelerated by nearly half in Q1 (+12%) in convenience stores, down from +23% in Q4. Still, Herzog said the beer category’s performance remains “impressive given comps are getting tougher and it coincides with the broader reopening of bars/restaurants.”

Out of stocks continue to be an issue and retailers surveyed reported a “slightly worse” situation in the first quarter compared to Q4, although they are “broadly less of a headwind to the category than they were throughout much of 2020.” Nearly 40% of retailers said out of stocks are bad today, up from less than 30% in Q4. Two-thirds of retailers surveyed said they expect out of stocks to persist through July and maybe beyond.

Retailers said they expect alcoholic beverage manufacturers to increase pricing this year, which most major producers have already done.

Back to hard seltzers, sales “remained strong,” increasing 95% year-over-year in Q1, and c-store retailers told Herzog that they are projecting +90% growth for the segment in 2021.

Retailers surveyed also expect the hard seltzer segment’s top two brands, Truly and White Claw, to maintain their dominance of the segment, “leaving the rest of the field to compete head-to-head with new entrants.” Which brand emerges as the clear No. 3 player in the space remains uncertain.

Even with an overwhelming tide of new products, c-store retailers said they are upbeat about the new products, especially from Truly and White Claw.

The Truly brand family increased c-store sales 120% year-over-year, and retailers surveyed said they expect the brand to continue gaining share within the channel. Respondents said they expect Truly’s momentum to continue, with Truly Iced Tea Hard Seltzer, which launched in January, and the launch of Truly Punch in May.

Although retailers said they’re excited for new Truly products, many said they won’t be allocating extra shelf space to Truly Punch, instead cutting into Truly’s existing space, Herzog found.

In fact, some retailers are questioning how much incremental growth is left in the hard seltzer segment. Other retailers said they were “maxed out” on space they can allocate to hard seltzers and they will run sales data to look for existing SKUs to replace before adding space.

Herzog also shared retailers’ thoughts on several new hard seltzers.

On Mike’s Hard Lemonade Seltzer, retailers shared positive views of the new offering, although some said it was too early to judge its success. Others said the brand is “off to a slightly slower-than-expected start,” and some said the brand hasn’t received much marketing support until recently.

Molson Coors’ Topo Chico Hard Seltzer also generated mixed reception from retailers, with some saying it’s too early to know how it will perform and others saying they don’t believe the brand will resonate with consumers outside of the southwestern U.S. Just a few retailers said they were delayed in receiving the product.

Emerging brands retailers said they were most enthusiastic about included Heineken USA and AriZona’s SunRise Hard Seltzer and Bang Mixx Hard Seltzer.