Craft beer outpacing the category (SAM)
Year to date, through February 21, sales of craft beer have increased 17.2% compared to the same period last year. According to IRI, craft beer sales have been outpacing the overall beer category, which has increased by 13.5%. Sales of Boston Beer have grown 65.2% to $287.1M. Truly’s 137.9% growth to $147.5M and Twisted Tea’s 51.9% growth to $79.1M drove its sales. Other highlights include Samuel Adam's seasonal, which has increased 21.7%, and the variety pack has increased 39.2%. For Molson Coors, Blue Moon Light Sky Citrus Wheat grew 881% to $7.4M off a small base last year. Leinenkugel Seasonal Shandy has grown 70.9% to $4.1M. Yuengling has grown 5.5% for the YTD period. Only four of the top 30 craft brands had YOY declines. Aphria’s SweetWater 420 Extra Pale Ale declined 0.9% to $2.7M. AB InBev’s Shock Top Belgian White Ale decreased 16.9% to $5.8M.
Hydroponic can be organic (APPH)
The U.S. District Court in San Francisco affirmed the legality of the USDA certification of organic hydroponic operations. There had been an ongoing debate about whether hydroponic crops could be certified organic. The Center for Food Safety had asked the USDA to prohibit the organic certification of hydroponic production systems in 2019. The USDA just declined the request. Since hydroponic produce is not grown with soil, they do not have soil samples to measure testing compliance with the Organic Foods Production Act. Canada, Mexico, and the European Parliament prohibit hydroponics from attaining organic certification.
AppHarvest’s tomatoes are hydroponic and not certified as organic currently. There is confusion among consumers about the difference between organic and hydroponic. Being able to label hydroponic crops as organic will be simpler for consumers to compare. Some organic certifiers already consider hydroponics as being certifiable if they use natural pest control and microbial activity to produce plant nutrients. The supply of organic produce will grow with the addition of more hydroponics.
California’s looming bacon shortage (TSN)
California’s Proposition 12 is scheduled to take effect on January 1, 2022, for pigs. Earlier components required floor space for egg-laying hens and veal calves. Proposition 12 imposes space requirements for breeding pigs within California and banning the sale of pork and vel imported into the state of farmers in other states and countries that do not comply.
Only 4% of the U.S. sow herd is currently raised in accordance with the new regulations requiring 24 square feet of floor space. The industry estimates 15% of hog producers would need to convert production methods to comply. Proposition 12 continues to be challenged in court, but it has been upheld to date. To meet the January deadline requirement, producers need to adjust their production methods in the coming months by expanding barn space by 20-25% or reducing stocking density. California’s pork supply could be short by half to start 2022 until prices increase to compensate hog farmers.
