Hard Seltzer Black Book Invite (SAM)
We are hosting a Black Book presentation on hard seltzer and the Boston Beer Company tomorrow at 2 PM ET. Hard seltzer’s demand growth in 2020 exceeded supply for the third year in a row. The market does not appear to be attributing any of the demand growth to the pandemic, because for the most part, the market has not put a higher multiple on COVID-19 one-time gains. We will show why growth will decelerate and why it’s important to know the role the pandemic played in this year’s growth.
CLICK HERE to access the associated slides (they will become available shortly before the start of the presentation, refresh this link for access).
Aluminum tariffs to increase by 10% (TAP)
On Thursday, President Trump announced a 10% tariff on unalloyed, unwrought aluminum. The President said Canadian aluminum had flooded the US market. “Imports of non-alloyed unwrought aluminum from Canada during June 2019 through May 2020 increased 87% compared to the prior twelve-month period and exceeded the volume of any full calendar year in the previous decade.” Prices and supplies of aluminum cans were already tight and are expected to be impacted by the decision. According to Oskar Blues Brewery, the tariff translates to about a penny more per can. Canned beer accounted for 58% of the total volume of beer sold last year. With draft beer sales down due to on-premise restrictions, cans account for two-thirds of total volumes. Molson-Coors said a shortage of available cans was partly responsible for weaker sales results in Q2 and Q3. Global canmaker Ball said it would invest $900M in new beverage can plants and production lines this year, $100M more than it planned at the start of the year.
Wholesalers Index points to continued strength in hard seltzer, but deceleration for others (BUD)
The National Beer Wholesalers Association released the Beer Purchasers’ Index for July 2020, which dropped to 70.5 from June’s all-time high of 81. July was still well above last year’s July reading of 64.7. The NBWA Chief Economist said, “Beer distributors continue to take an aggressive stance in their ordering to minimize out-of-stocks in the marketplace.” The index is a forward-looking indicator for distributors to measure expected beer demand. A reading greater than 50 indicates expansion, while a reading below 50 indicates contracting. The FMB/seltzer segment continues to produce the highest reading of 94 compared to 94 in June and 81 in the prior year. The index for imports was at 59 in July, compared to 66 in June and lower than the prior-year of 65. The index for craft beer was at 41 down from 46 in June and lower than 59 in the prior year. Premium light beer was at 71 down from 75 in June, but much higher than 42 in the prior year. Premium regular was at 58 in July down from 62 in June and 37 in the prior year. Below premium, beer was at 57 in July down from 65 in June, but well above 34 in the prior year.
