Beer Purchasers’ Index drops (SAM)
The National Beer Wholesalers Association’s (NBWA) monthly Beer Purchasers’ Index was 64 in July, down seven points from June and 16 points from May. 80 in May was the highest level for the index in over five years. The BPI is a diffusion index; a reading greater than 50 indicates expansion while below 50 indicates contraction. The index is a forward-looking indicator for distributors to measure expected beer demand. Premium regulars dropped 18 points YOY to 40 in July. Below premiums declined 27 points YOY to 30 in July, down from 35 in June. Premium lights declined 15 points YOY to 56 in July, still indicating expansion. Craft beer’s reading was 50, its fourth consecutive month of expansion, but down from 53 in June. The only other category to improve compared to July 2020 was imports which increased 7 points to 66 in July 2021. Flavored malt beverages and hard seltzers fell 25 points YOY to 69 in July and were flat compared to June. The declining index relative to the prior year indicates that more distributors are reporting that they are ordering a similar amount of hard seltzer as the prior year. The inventory at risk of going out of code index was 35, which indicates continued supply constraints. Beer ordering trends have decelerated after the initial “fill in” demand from on-premise businesses reopening in May.
To Kalon trademark stands (STZ)
A California federal judge awarded Constellation Brands $2.3M in attorney’s fees over a trademark lawsuit. Vineyard House sued Constellation Brands’ owned Robert Mondavi brand in 2019 over its use of the “To Kalon” wine and to cancel its trademark. In Greek, it means “the place of highest beauty.” Some consider “To Kalon” the most famous vineyard in the U.S. Vineyard House and Robert Mondavi own land in Oakville, California that once belonged to H.W. Crabb, a winemaker famous for his “To Kalon” wine in the 1800s. Robert Mondavi has been using the “To Kalon” trademark for over 30 years, while The Vineyard House vineyard is not located on any land that H.W. Crabb used to grow grapes. The U.S. Patent and Trademark Office warned Vineyard House against using the mark. The lawsuit was seen as to whether a name is a place or a brand, whether you could trademark terror. A quick online search shows Robert Mondavi's “To Kalon” prices priced at $139.99 and above.
In February, the judge ruled that “To Kalon” was a trademark of Constellation Brands and not the name of a place other vineyards could use. Vineyard House declined an offer to drop the case in exchange for stopping using the “To Kalon” name even after Constellation Brands won an injunction against it. The U.S. District judge ruled that Vineyard House’s case lacked merit and should “never have been tried.” Constellation Brands asked for an attorney’s fee, and the judge agreed it was justified.
The larger case for investors is Anheuser Busch InBev’s lawsuit alleges Constellation Brands cannot sell hard seltzer with the Corona brand under the license agreement.
May we recommend oat milk (OTLY)
Blue Bottle Coffee made oat milk the default option in two of its stores as part of a trial. In the Los Angeles trial store, a sign says, “May we recommend oat milk?” The sign also states, “Plus, oat milk creates fewer greenhouse gas emissions than dairy.” Nestle owns Blue Bottle. The chain now has 100 stores locally. The company said in an article that many of its customers prefer oat milk over dairy milk. In addition, blue Bottle serves Oatly at no additional cost. Oatly entered the U.S. market through coffee shops.
Oat milk is often considered the best plant-based milk complement to coffee. Therefore, we do not expect many Blue Bottle customers to object to the default milk option change. However, coffee shops and restaurants looking to become more sustainable may push their customers to oat milk.
