Beer production drops (BUD)
Total domestic beer production decreased 6.6% in August, decelerating from -6.1% in July, according to the Alcohol & Tobacco Tax and Trade Bureau (TTB). Compared to August 2019, production was 11.6% higher. Shipments of bottles and cans were down 9.2% compared to August 2020 and down 18.5% compared to August 2019. Keg production was up 93.2% compared to August 2020 but down 18.5% compared to August 2019. Inventory was up 10.8% YOY but down 3.7% sequentially, as seen in the chart below. Brewery on-premise use increased 10.3% YOY.
Can price increases (SAM)
Ball Corporation, the largest manufacturer of aluminum beverage cans, is raising the price of a 12 ounce can by nearly 28% to $119.11 per 1,000 cans. The price of 16-ounce cans will increase 19.5% to $161.15 per 1,000 cans. Ball also informed customers without contracts that minimum quantities for printed cans are increasing from one to five truckloads per SKU (1M cans). That represents more than most craft brewers produce in a year. In addition, Ball will no longer provide warehouse services. The changes will push small orders to third-party brokers. On its Q3 call, Ball said it is oversold by 10 billion units in its three central regions, with the majority in North America. The demand for cans continues to grow. Coca-Cola’s recent decision to shift the packaging of Dasani water from plastic to cans will use 1 billion cans annually. That represents the same number of cans that 1,000 average craft brewers combined use annually.
Chobani seeing growth in oat milk (CHO)
In 2016 Hamdi Ulukaya, the founder of Chobani, said he would give full-time employees shares worth nearly 10% of the value of the company’s growth between then and when the company was either sold or taken public. At the time, the company was valued between $3 to $5B. A $10B IPO would potentially represent a $500 million distribution to employees. The Class B shares are to be held on behalf of its 2,000+ employees. In total, the Class B shares represent a 12.5% stake but include the founder’s shares. The IPO proceeds will reduce the company’s debt load, which stands at 7.3x net debt to adj. EBITDA.
Chobani has a 20% share of the U.S. yogurt market and a 44% share of the Greek yogurt market. Its share has grown with new product launches, as seen in the following chart. 39% of sales in the first three quarters of 2021 were from new product innovations in North America.
Sales in the quarter ended September 25 grew 15% in North America and 12% in International markets. Chobani has reached third in market share in the U.S. oat milk category six months after launching. Chobani believes oat milk will continue to gain share from traditional dairy milk and other plant-based milks like almond milk. Gross margins contracted 300bps due to inflationary pressures in logistics, milk, and packaging costs partially offset by sales leverage and lower ingredient costs. SG&A costs were flat as a percentage of sales.
