On-premise price increases (BUD, TAP)
According to CGA, the price of beer at on-premise establishments increased 6% YOY in the 12 weeks ended August 20. The average price of spirits increased 6% in the same period. Craft, super domestic premium, and below premium had price increases above 8% while imports increased less than 3%. FMBs were flat YOY. Within the mid-priced beer segment, imports had the largest increase in sales velocity (33%) and led food-led on-premise outlets. Within the drink-led on-premise outlets mid and low priced domestic premium beer had the highest sales velocity. Craft beer had the highest velocity in polished casual restaurants while domestic premiums led sports and neighborhood bars.
Higher wages (UTZ)
Chobani announced it has increased wages for its hourly employees at its South Edmenston, New York plant by 20-30%. The starting salary will now be $18.50 per hour. Manufacturing job openings fell 9.5% in the preliminary August JOLT report, weakening further from July’s 2.8% decrease. Food, beverage and tobacco products were one of only four manufacturing industries that reported moderate to strong growth in the September ISM report. Having the ingredients, packaging, and staffing for production has been an underappreciated aspect of the supply chain challenges. Chobani originally planned to go public in November 2021, but has delayed an IPO four times.
Distributor acquisition (STZ)
Reyes Beer Division, the largest beer wholesaler, announced another acquisition this week. Reyes Beer Division is acquiring Paradise Beverage in Hawaii, which would be the company’s 12th market. Paradise Beverage adds 8.9 million cases and 2,300 customers. Its key beer suppliers include Molson Coors, Constellation Brands, Boston Beer, Diageo, and Heineken. Reyes Beer Division has been an important partner in the growth of Constellation Brands as it recognized how to capitalize on Corona and Modelo’s higher sales velocity. Constellation Brands’ share has outperformed in Reyes Beer Division markets. The distributor appears to be taking advantage of beer distributors which are often family-run looking for an exit strategy.
