Latest / Craft Brewery Financial Training Podcast / Inside The State Of Beer With NBWA Economist Lester Jones

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Inside The State Of Beer With NBWA Economist Lester Jones · Craft Brewery Financial Training Podcast

0:00
SPEAKER_01: Today on the podcast, we welcome back everyone's favorite economist.
0:03
SPEAKER_01: It's Lester Jones from the National Beer Wholesalers Association.
0:06
SPEAKER_01: Lester gives us his top-level overview, the state of the beer industry, what exactly is going on out there in the beverage alcohol space.
0:14
SPEAKER_01: We'll talk data and trends.
0:16
SPEAKER_01: We'll get into the beer purchasers index, the signals that Lester is seeing, and how wholesalers can respond.
0:23
SPEAKER_01: We'll talk about pricing and price elasticity, on and off premise trends, demographics, and so much more.
0:30
SPEAKER_01: And of course, we'll talk about tariffs and taxation and regulatory changes.
0:36
SPEAKER_01: And Lester will leave us with his action playbook.
0:40
SPEAKER_01: Given today's trends, what can beer wholesalers do to move the needle and drive volume?
0:46
SPEAKER_01: So for now, please enjoy this conversation with Lester Jones, the chief economist from the National Beer Wholesalers Association.
0:53
SPEAKER_01: Welcome to the Craft Brewery Financial Training Podcast, where we combine beer and numbers to provide you with tips, tactics, and strategies so that you can improve financial results in your brewery.
1:04
SPEAKER_01: I'm your host, Carrie Shemoy, a CPA, CFO for a brewery, and a former CFO for a beer distributor.
1:10
SPEAKER_01: I've spent the last 20 years using finance to improve financial results in our beer business.
1:16
SPEAKER_01: Now I'm helping other craft breweries to do the same.
1:19
SPEAKER_01: Are you ready to take your brewery financial results to the next level?
1:23
SPEAKER_01: Okay, let's get started.
1:29
SPEAKER_01: Just a quick note, we'll be right back to the podcast.
1:31
SPEAKER_01: I want to let you know about a new network for beer industry professionals.
1:36
SPEAKER_01: It's called the Beer Business Finance Association.
1:39
SPEAKER_01: It's an organization of financial pros, just like you, looking to improve financial results, increase profitability, connect with your peers, and share best practices.
1:50
SPEAKER_01: So I'd love to tell you a little bit more about this.
1:52
SPEAKER_01: If you are interested in learning more, please email me, Carrie at Beer Business Finance.com.
1:58
SPEAKER_01: That's K-A-R-Y at BeerBusinessfinance.com, or you can visit BBFassociation.org.
2:06
SPEAKER_01: That's BBFassociation.org to learn more.
2:10
SPEAKER_01: All right, Lester Jones, welcome back to the podcast.
2:13
SPEAKER_01: How are you doing today?
2:14
SPEAKER_01: I'm doing well.
2:15
SPEAKER_01: How are you?
2:16
SPEAKER_01: I'm doing fantastic.
2:17
SPEAKER_01: And I'm excited to talk about beer and numbers with my favorite economist.
2:22
SPEAKER_00: That's you.
2:23
SPEAKER_00: Thank you very much.
2:24
SPEAKER_00: I'm glad that I'm your favorite economist.
2:27
SPEAKER_00: That's that makes me feel good.
2:29
SPEAKER_01: I won't tell you that you're the only economist I know.
2:33
SPEAKER_00: Well, I mean, you know, you could be a fan of Paul Volker.
2:36
SPEAKER_00: Uh Paul Volker, was he even an economist or is he just a central banker?
2:39
SPEAKER_00: I don't know.
2:40
SPEAKER_00: But anyway, very good.
2:42
SPEAKER_00: Let's uh yeah, this is the ball rolling.
2:45
SPEAKER_01: I'm sure everybody who's listening knows who you are in your background.
2:48
SPEAKER_01: But if there's that rare, that rare individual out there who does not know, why don't you give a little bit of background on who you are and what you do?
2:56
SPEAKER_00: Okay, I'm Lester Jones, chief economist at the National Beer Wholesale Association.
3:02
SPEAKER_00: Uh, my job is to keep track of the beer market, the alcohol beverage market.
3:06
SPEAKER_00: And like what I like to say is the economics and the demographic and the industry trends that drive all those things uh in in the marketplace.
3:16
SPEAKER_00: So that's what I do.
3:18
SPEAKER_01: That's a nice summation and a good job to have.
3:22
SPEAKER_01: Yeah, things are crazy out there right now.
3:23
SPEAKER_01: Why don't you?
3:24
SPEAKER_01: I always love kind of letting you just sort of freeform it.
3:26
SPEAKER_01: I I want to hear kind of your state of the industry.
3:30
SPEAKER_01: This is your your sort of state of the union as it relates to beer.
3:33
SPEAKER_01: What's going on out there?
3:34
SPEAKER_01: Wow.
3:35
SPEAKER_00: So yeah, it volumes are not well.
3:38
SPEAKER_00: Uh, we know the the the the aggregate volumes that are reported by the beer institute or the summation of all the individual states, probably running it down five percent this year.
3:49
SPEAKER_00: Uh probab it may actually be one of the worst volume uh uh uh uh on record.
3:58
SPEAKER_00: I mean, I don't think since Prohibition we have seen a market volumetrically that is down this bad.
4:06
SPEAKER_00: Uh and uh that uh has a lot of people really upset and nervous and not quite sure what's going on.
4:14
SPEAKER_00: Now, I take a certain, you know, we'll dive into it, but I have I have some insights that uh that are contradictory to many in the marketplace of why I think we are where we are.
4:25
SPEAKER_00: So, but for the most part, the state of the industry is not is not so good right now.
4:29
SPEAKER_00: Like I said, we're down probably around four, five percent uh with one percent on price because we haven't been taking a lot of price.
4:37
SPEAKER_00: Maybe we're down minus three on dollars.
4:40
SPEAKER_00: My model right now puts me at pretty much a solid minus three on dollars.
4:45
SPEAKER_00: I look at the marketplace from a perspective of retailers buying from wholesalers, and what was roughly a$70 billion market uh last year is going to be down around, you know, maybe$2 billion,$3 billion by the time we get to the end.
5:04
SPEAKER_00: It really depends on how this last part of this year plays out, the last our last quarter, OMD, right?
5:10
SPEAKER_00: How does OND play out?
5:12
SPEAKER_00: Uh for now I'm on track to be down around minus 3% from retailer spending.
5:18
SPEAKER_00: But retailers buying beer from uh from distributors, there's some surprises in there that we'll talk about as we go through our conversation.
5:28
SPEAKER_00: So that's where kind of things stand right now.
5:31
SPEAKER_00: Well, yeah.
5:33
SPEAKER_01: That's kind of an unfortunate starting point, but I guess we have to deal with reality as it exists, right?
5:38
SPEAKER_01: And it's things are not looking too good right now.
5:40
SPEAKER_00: Absolutely.
5:41
SPEAKER_00: And I talked a little about this at convention.
5:43
SPEAKER_00: I said there's structural things going on and there's cyclical things going on.
5:47
SPEAKER_00: Everyone's like, is it structural?
5:48
SPEAKER_00: Is it cyclical?
5:49
SPEAKER_00: I'm like, it's both.
5:51
SPEAKER_00: It's both structural and cyclical in its nature.
5:54
SPEAKER_00: We have demographics that are structural in nature.
5:58
SPEAKER_00: We can't fight the demographics uh uh as an industry.
6:02
SPEAKER_00: We just have to go with them.
6:04
SPEAKER_00: And that's structural change and what people drink, why they drink, where they drink, when they drink, with whom they drink, and all those what, where, when, whys, and hows that you have to get your head around uh in the first place.
6:15
SPEAKER_00: But cyclical, we have the economy, of course, and what we know is the economy has been slowing in 2025.
6:21
SPEAKER_00: You can see that in the employment gains, you can see that in the average hours worked.
6:26
SPEAKER_00: Uh, those things are all dynamics that are cyclical in nature, and those have direct impacts and linkages to what consumers are thinking and what they're spending their money on.
6:36
SPEAKER_00: Inflation is still real, so inflation is very uh uh uh it it upsets the market, it upsets consumers because they don't really know what's happening when inflation is so unpredictable.
6:50
SPEAKER_00: You know, despite what you know, the the administration is saying inflation is still running at 2.9%.
6:57
SPEAKER_00: It hasn't come back down to the long-run Fed target of 2%.
7:01
SPEAKER_00: So it is still expensive.
7:04
SPEAKER_00: Food prices, beverage prices still seem to be uh, you know, relatively expensive, even though the beer industry is not taking a lot of price this year.
7:13
SPEAKER_00: So that has that that mixes up the equilibrium of how consumers look at the marketplace.
7:19
SPEAKER_00: And we continue to see real wages increase.
7:23
SPEAKER_00: You know, real wages are up 3% year over year, 3.4%, I think, year over year.
7:29
SPEAKER_00: That's faster than regular inflation.
7:31
SPEAKER_00: So if you have a job and you're good at your job and you're being compensated fairly at your job, you're winning in this environment.
7:40
SPEAKER_00: You have real more disposable income than let's say people that don't have a job or not in a good paying job or in a slowing industry.
7:48
SPEAKER_00: But at the same time, average hours work seems to be coming down.
7:51
SPEAKER_00: So things are slowing down.
7:53
SPEAKER_00: So when you look at the consumer sentiment numbers, for example, there's a lot of negativity out there from consumers when you ask them about how they feel about things.
8:02
SPEAKER_00: Well, yeah, your wages are up, but your hours are down.
8:04
SPEAKER_00: You're not quite sure where you stand.
8:07
SPEAKER_00: And that is really disturbing for consumers when they go out and they go to spend the money that they have in the marketplace.
8:15
SPEAKER_00: So all these things are very discombobulating and they're very unsettling for consumers.
8:20
SPEAKER_00: We haven't yet found a solid kind of good equilibrium and a point where people can feel comfortable about what's coming down the pike.
8:28
SPEAKER_00: So, yeah, these are all big macroeconomic concerns that, in a sense, to me are cyclical, right?
8:34
SPEAKER_00: These can change, but the structural things aren't.
8:38
SPEAKER_00: And we can talk more about that as we go down the path here.
8:42
SPEAKER_01: I wonder if there's ever been a time where things are good, you know, it f it it always seems like there's some sort of uncertainty, right?
8:49
SPEAKER_01: And it can be, you know, pick pick your your time period.
8:52
SPEAKER_01: So I think it's important to maybe kind of say, all right, there's almost always some sort of uncertainty.
8:59
SPEAKER_01: There's some sort of disruption or unrest.
9:02
SPEAKER_01: And we just have to deal with it, right?
9:04
SPEAKER_01: So maybe we can kind of, as we go through our conversation, kind of talk about like little things that we can draw from this that people can take some action on, or or not necessarily some optimism.
9:14
SPEAKER_01: I mean, it is what it is, but how do you kind of interpret what's going on and do something like, you know, put it into into practice, something you can do about it?
9:23
SPEAKER_01: Absolutely.
9:24
SPEAKER_01: Let's let's talk about uh the beer purchasers index.
9:29
SPEAKER_01: Um, what do you see in there?
9:30
SPEAKER_01: Like what are the what are the signals you're laughing that should be good?
9:34
SPEAKER_01: What are you seeing in there?
9:35
SPEAKER_01: And maybe how how can wholesalers sort of what should they do to act on this, uh, if if at all?
9:41
SPEAKER_00: Well, so the beer purchasers index, once again, thumbs up, thumbs down, thumbs in the middle, right?
9:45
SPEAKER_00: I'm looking for three states of their sentiment or how they feel about what's being ordered to meet the demands of retailers and consumers.
9:56
SPEAKER_00: It hasn't been good this year.
9:58
SPEAKER_00: I mean, it's and and we see that in, you know, the shipment numbers and the STR numbers and the IRI and the Nielsen numbers.
10:04
SPEAKER_00: They're all reflected in that.
10:05
SPEAKER_00: You can't sell something you don't have.
10:07
SPEAKER_00: And for me, beer purchasers index is that leading, that leading indicator.
10:12
SPEAKER_00: You know, I'm looking for people, I'm asking for thumbs up, you know, and I'm getting thumbs down.
10:17
SPEAKER_00: So I haven't had a lot of thumbs up in 2025.
10:20
SPEAKER_00: And so that means we're just not ordering more beer because the marketplace is obviously slowing down.
10:27
SPEAKER_00: Um, and uh it just hasn't changed.
10:30
SPEAKER_00: I mean, it what's actually improved are things like cider and FMBs and seltzers, which were spent 23 and 24 in the tank, you know, and marginally they're looking a little bit better.
10:41
SPEAKER_00: Uh imports, you know, where imports and crafts, those higher-end things seem to have slowed way down in terms of how many people are giving me a thumbs up indicator.
10:51
SPEAKER_00: Uh, I got October out in the field right now, uh, you know, and I haven't even, I haven't had the gumption or to open it up and look at it.
11:01
SPEAKER_00: Like I'm just like, because, you know, eventually you would think, you know, inventories would start to kind of deplete.
11:09
SPEAKER_00: People would have to order a little bit more to to, but they're not ordering because they're waiting and seeing, right?
11:15
SPEAKER_00: And that's a problem with an inflationary and uncertain environment, is where beer distributors at their core are not ready to commit to the marketplace for the for beer like they were in prior years with this survey.
11:28
SPEAKER_00: So yeah, I'm uh it hasn't been good.
11:31
SPEAKER_00: Uh and uh, you know, here we are.
11:34
SPEAKER_00: I'm looking for the October orders to see if there's any sign of life.
11:37
SPEAKER_00: Just give me a couple more thumbs up and I'll feel better.
11:41
SPEAKER_00: But right now, the number of thumbs up versus thumbs down I'm getting hasn't in 2025 been too encouraging for the prospects of future sales, that's for sure.
11:52
SPEAKER_00: Gotcha.
11:53
SPEAKER_01: So if we if we look at that demand mix mix a little bit in a little bit more detail, what are we sort of seeing with those different categories?
12:01
SPEAKER_01: Premium light imports.
12:02
SPEAKER_01: You mentioned a little bit of some thumbs up for cider FMBs and seltzer.
12:06
SPEAKER_00: Yeah, some some of my categories have some have are sustaining their long-run trends, you know, and I feel good about that.
12:14
SPEAKER_00: It's just that craft, that premium light that's in very cyclical in nature that it hasn't.
12:19
SPEAKER_00: But watching the FMB seltzers that were just in the tanks uh a a year ago, they kind of have a little bit of lift to them.
12:26
SPEAKER_00: A little couple more people give me thumbs up.
12:28
SPEAKER_00: Cider.
12:29
SPEAKER_00: Below premium seems very seems pretty darn steady.
12:32
SPEAKER_00: I mean, it runs in that in a pretty narrow band.
12:35
SPEAKER_00: So I'm okay with premium lights.
12:37
SPEAKER_00: I below premiums.
12:38
SPEAKER_00: I think there's some uh I think there's some law, there's there, there's some there's some there's some predictability to it in what I see.
12:46
SPEAKER_00: So I'm I'm okay with it.
12:48
SPEAKER_00: Uh and I still at the same time I ask for a at-risk inventory.
12:52
SPEAKER_00: What is the at what is the the for your inventory?
12:56
SPEAKER_00: What is your expectations for your product going out of code in the next 30 days?
13:01
SPEAKER_00: That's kind of leveled off and it's pretty steady.
13:03
SPEAKER_00: So I don't see the that they're managing, wholesalers are managing this downturn.
13:08
SPEAKER_00: And uh and they're managing effectively because you don't want to throw out a whole bunch of beer.
13:13
SPEAKER_00: You don't want to be caught with stale beer.
13:15
SPEAKER_00: So I we're doing our best to kind of manage the downward trends in in the marketplace.
13:21
SPEAKER_00: And um we'll see how we play it out here in in October.
13:25
SPEAKER_00: I'd hopefully we see a little bit of resurgence in uh as we hit the uh the uh the the the last couple of months here of the year.
13:34
SPEAKER_00: The comps gotta be easier.
13:36
SPEAKER_00: I mean, you know, things the 2024 comps you know should be easy to meet this year.
14:12
SPEAKER_01: Particularly in the fourth quarter, you mean?
14:14
SPEAKER_01: Or in the got it.
14:16
SPEAKER_01: Okay.
14:17
SPEAKER_01: Um you mentioned price.
14:18
SPEAKER_01: Let's talk about that.
14:20
SPEAKER_01: This this fancy word price elasticity.
14:24
SPEAKER_01: What are we seeing with pricing and how sensitive are different segments to well there's the price is interesting.
14:31
SPEAKER_00: This is so I've always used the slide that showed this the consumer price index up against beer.
14:37
SPEAKER_00: And I have beer has always had pricing power with the general CPI, and that it's you know, it's it's it's it's it's it's tracked it pretty darn well.
14:49
SPEAKER_00: And I've always argued that, you know, keeping up with CPI is is is a plus.
14:54
SPEAKER_00: I mean, great if we could afford not to price with CPI and we could magically deliver beer without all the associated costs of doing it.
15:01
SPEAKER_00: But but at the same time, retailers have costs as well that are going up.
15:06
SPEAKER_00: Insurance, labor, you know, all the inputs that go into all the energy inputs that go into running a store.
15:12
SPEAKER_00: So for the ability of beer to keep priced with CPI has been a bonus for both distributors and retailers.
15:19
SPEAKER_00: Uh and as wages go up and CPI goes up, consumers can keep up with it.
15:25
SPEAKER_00: And of course, you know, there's downward sloping demand curve.
15:28
SPEAKER_00: We've taken price, and as price, we've always lost a little bit of quantity, but that's what you expect when you're on a demand curve.
15:36
SPEAKER_00: Demand for beer has been relatively inelastic over time, so that's been good because you know you gain more from price than you lose from volume.
15:45
SPEAKER_00: That's the nature of price elasticity uh calculations.
15:49
SPEAKER_00: What's happened in 2025 is we haven't had the price.
15:53
SPEAKER_00: So we may have broken the rubber band of elasticity.
15:58
SPEAKER_00: Uh, you know, it's inelastic, but you know, you know when things are inelastic and you pull them long enough, they eventually snap.
16:07
SPEAKER_00: And I am afraid that in 2025 we have broken, you know, the inelasticity of the beer market because we just haven't been able to take price.
16:17
SPEAKER_01: What do you see?
16:17
SPEAKER_01: What do you see happening?
16:18
SPEAKER_01: I mean, now is the uh you usually around the time of year that those decisions are starting to be made for next year or you know, sometime in the near future.
16:26
SPEAKER_01: What's your prognosis, if you will?
16:28
SPEAKER_01: Are we going to stand pat or we're gonna we're not gonna see any decline in pricing, I would imagine.
16:33
SPEAKER_01: But what what do you anticipate there?
16:35
SPEAKER_00: I could I could see some decline in pricing.
16:37
SPEAKER_00: I mean, if people eventually you get to this point where you need to move volume.
16:41
SPEAKER_00: And once again, the damn the command the demand curve slopes downward for a reason.
16:46
SPEAKER_00: It is a well-established economic principle.
16:51
SPEAKER_00: Price goes up, quantity goes down, price comes down, quantity goes up.
16:56
SPEAKER_00: So at some point, this industry, which has benefited greatly for since 2008, 2010, in kind of taking price and and moving things forward.
17:07
SPEAKER_00: Uh, in particular the craft industry, at some point, guys, you know, you you know, we can't, I've always argued, you know, one day we're gonna have one case of beer and it's gonna sell for$120 billion, and Jeff Bezos will buy that case of beer.
17:21
SPEAKER_00: That is that's the path we've always been on.
17:24
SPEAKER_00: We can always take more and more and more price, but we know that it's not a linear function, it's not a it's not linear, it's very much nonlinear in nature.
17:33
SPEAKER_00: So at some point, you know, someone, and we see this with outlaw beer, we see this with uh, you know, uh uh you know, garage beer.
17:41
SPEAKER_00: And a lot of these guys are coming out and saying, hey, we're coming out with an affordable beer.
17:46
SPEAKER_00: You know, it's a it's a it's a trick, it's a but you know, that's that that that's what those are the structural changes in the industry.
17:56
SPEAKER_00: The reason you have like outball beer coming in and saying we're gonna we're gonna sell affordable beer and garage beer and dad strength beer, all these new guys are entering the market, testing, you know, testing the grounds, forcing structural change on a market that quite frankly has been pretty comfortable in its in the path that it's been on for the last 20 years.
18:19
SPEAKER_00: It could be a black swan.
18:20
SPEAKER_00: I saw somewhere that Jim Cook called it a black 2025 is a black swan year.
18:25
SPEAKER_00: Maybe this is the year that forces that linearity out of the marketplace and puts us back on some kind of nonlinear path, which is a much more healthier place to be.
18:35
SPEAKER_00: Uh otherwise, like I said, we got one case of beer, it's worth$120 billion, and there's only three people in the world that can buy it.
18:43
SPEAKER_00: We don't want to be in that position.
18:45
SPEAKER_00: We want to be in a much more healthier place where supply and demand and the brewers and the distributors and the retailers are meeting the consumer where they can afford it and they want to be.
18:57
SPEAKER_00: Gotcha.
18:58
SPEAKER_00: We've broken the rubber band of price elasticity.
19:03
SPEAKER_00: That's what the data look like to me.
19:06
SPEAKER_01: A lot of firsts here in 2025.
19:08
SPEAKER_01: Well, it'll be interesting to see if it is a one-off.
19:10
SPEAKER_00: I think that's why Jim called it a black swan year, you know, because we have broken a lot of the traditional metrics and the the principles and practices that we've grown accustomed to uh over the over time.
19:22
SPEAKER_01: So let's talk a bit about on and off premise.
19:24
SPEAKER_01: Uh I know you had some strong feelings on that last time we talked.
19:28
SPEAKER_01: Very strong feelings.
19:29
SPEAKER_01: What's the data?
19:29
SPEAKER_01: And I imagine you still have strong, and I want to hear them.
19:32
SPEAKER_01: What's the data showing?
19:33
SPEAKER_01: What's going on there?
19:34
SPEAKER_00: Data continue to show that the American consumer is wants to spend money away from home.
19:42
SPEAKER_00: So this is what we knew was coming on the backlash from COVID and the lockdowns.
19:47
SPEAKER_00: Uh, we knew people were going to be aggressive and going out.
19:50
SPEAKER_00: And uh quite frankly, we spent a trillion dollars in food and beverage away from home in 2024.
19:57
SPEAKER_00: We will spend a trillion plus some in 2025 away from home.
20:02
SPEAKER_00: And when you're not when you're spending your money away from home on food and beverages, you're not spending your money on food and beverage at home.
20:12
SPEAKER_00: I mean, uh no, no way to get around that, right?
20:15
SPEAKER_00: Uh you can't have your cake and eat it too, right?
20:18
SPEAKER_00: You're either here or you're there.
20:19
SPEAKER_00: You can't be both places at once.
20:21
SPEAKER_00: So what that means is that you know, this this shit, the, you know, the this on-premise, the malaise of the on-premise is not necessarily we are incorrectly interpreting what is happening.
20:33
SPEAKER_00: We are interpreting this decline in volume as as consumers not being interested in in beer.
20:42
SPEAKER_00: When in fact they're interested in beer, but they're just going out for a beer.
20:47
SPEAKER_00: And when you go out for a beer, what do you start with?
20:50
SPEAKER_00: One beer.
20:51
SPEAKER_00: When you buy beer to take home, you start with maybe a six-pack, maybe a twelve pack, maybe a case.
20:58
SPEAKER_00: Volumetrically, these are huge disconnects in how the American consumers preach in the beer market.
21:05
SPEAKER_00: They're going out for a beer.
21:07
SPEAKER_00: And beer pricing on premise has been very aggressive and much more above inflation.
21:14
SPEAKER_00: So once again, demand curve is a moderating price, is a moderating variable in the equation for consumers.
21:22
SPEAKER_00: So if we're pricing beer and alcohol on premise faster than inflation, you're going to moderate quantity.
21:29
SPEAKER_00: And everyone's like, oh, people don't want to drink.
21:32
SPEAKER_00: Well, for the love of God, guys, it's the price equation.
21:37
SPEAKER_00: It's the endogenous price variable that is moderating their behavior.
21:43
SPEAKER_00: That's what it is.
21:44
SPEAKER_00: You know, that's the most, that's the Occam's razor.
21:47
SPEAKER_00: That's the most likely explanation.
21:49
SPEAKER_00: They all look to GLP1 or Gen Z doesn't like beer or Joe Rogan saying beer makes you fat and unhealthy, or all these other chuckleheads that are out there, you know, saying these negative things about it.
22:02
SPEAKER_00: But the most likely explanation for what's happening is that endogenous variable, which is price along the demand curve.
22:10
SPEAKER_00: Think about this, guys.
22:11
SPEAKER_00: Think about happy hours.
22:13
SPEAKER_00: Think about creating an environment where people want to socialize and have fun.
22:17
SPEAKER_00: They're all they want to be away from home.
22:20
SPEAKER_00: They want to socialize.
22:21
SPEAKER_00: It's our job as brewers, distributors, and even retailers to kind of encourage them to come in.
22:28
SPEAKER_00: So I that's where I think we've really missed the boat in the last two years is that we haven't captured that, we haven't captured that enthusiasm for socialization and the importance of beer in that equation to create a sociable atmosphere, to create sociability in a bottle, you know, to give people that liquid courage to interact, you know, where they need it.
22:52
SPEAKER_00: Uh instead, we listen to all the people that are promoting negative stories about alcohol and not the positive stories.
23:00
SPEAKER_00: And we can control those things.
23:01
SPEAKER_00: Those are things perfectly in our in our wheelhouse that we can control as brewers, as distributors, as retailers, but for some reason we're letting them control the sociability narrative and the the alcohol narrative without us really doubling down on it.
23:20
SPEAKER_00: And that's where I think we miss the boat as an industry, is just not capitalizing and recognizing that people's willingness to socialize is strong.
23:31
SPEAKER_00: And I that was my talk at that was one of one of my driving talks at convention was I got data here that show consistently different data set, not just one data set, but multiple data sets.
23:43
SPEAKER_00: And I'll give them to you.
23:45
SPEAKER_00: You can post them on your website, and your listeners can obviously go and look at them and call me batshit crazy if you want.
23:51
SPEAKER_00: But you know, these are the data, these is how I interpret them.
23:54
SPEAKER_00: Interpret them any way you like.
23:57
SPEAKER_00: You're free to interpret as you wish.
23:59
SPEAKER_00: Uh, but look at the data and think about them and say, yeah, you're right.
24:03
SPEAKER_00: Maybe Lester is right.
24:05
SPEAKER_00: Maybe people do want to be together, maybe they do want to socialize.
24:09
SPEAKER_00: Uh, and we need to figure out how to meet them where they want to be, not in a giant display in an HEB or in a Kroger or in a safe way where maybe they're not that interested in hanging out right now.
24:23
SPEAKER_01: What would you you said double down?
24:26
SPEAKER_01: What would that look like?
24:27
SPEAKER_01: I mean, do you have some specific thoughts?
24:28
SPEAKER_01: I mean, sure, if you you know if you're trying to like drive volume at a retail outlet off-premise displays and whatnot, but what what would you what are your thoughts on that for on-premise in terms of doubling down?
24:38
SPEAKER_00: Like what can people I for me, I just think that people need to be together.
24:45
SPEAKER_00: They want to be together.
24:46
SPEAKER_00: Socialization is important to our mental health, our physical health, and our just overall well-being.
24:53
SPEAKER_00: And the we just we just doubling down just means we just got to convince people that a low alcohol beer.
25:01
SPEAKER_00: Have a have a 3% beer.
25:03
SPEAKER_00: You don't need a 10% imperial IPA to have a good time.
25:07
SPEAKER_00: You can have a low alcohol beer, you can have an NA beer.
25:11
SPEAKER_00: Come together.
25:11
SPEAKER_00: I think our focus should not which needs to stop being on the product and start being on the occasion.
25:18
SPEAKER_00: And uh, we spend way too much time on the products and not on the actual physical occasions.
25:23
SPEAKER_00: You know, I have a slide.
25:25
SPEAKER_00: Once again, I always have a slide.
25:27
SPEAKER_00: Uh, but my slide is you know, there's more drinkers today who've had a beer in the past 30 days, absolutely just because of population increases, there's more people today that have had that had a beer in the past 30 days than 10 years ago.
25:41
SPEAKER_00: So the people are there and they they know what beer is, you know.
25:46
SPEAKER_00: Trying to convince them, you know, that beer exists is not the problem.
25:53
SPEAKER_00: Creating the occasion where beer is proper for the occasion and right for the equation, occasion is what we need to focus on.
25:59
SPEAKER_00: That's what I mean doubling down.
26:01
SPEAKER_00: Let's kind of take a little, you know, all through the craft beer revolution for 10 years we focused on, you know, the brands and the brewers and the personalities and and all that.
26:11
SPEAKER_00: And maybe that's gotten a little old.
26:13
SPEAKER_00: Let's let's let's refocus some of that energy uh towards the occasion and the benefits of the occasion, the importance of the occasion, and then let beer slide in there naturally.
26:28
SPEAKER_00: Because I do believe that even though people may be sober curious, even if people are in the mocktails and and NA beers, fine, let them do it.
26:39
SPEAKER_00: Because beer will find its way in there naturally, because it's just the right the it's the right product for the right occasion, especially if it's a a lower, a lower uh alk beer and it's refreshing and it's cold and it's got all those great qualities and attributes that all our products have.
26:59
SPEAKER_01: Yeah, that's interesting.
27:00
SPEAKER_01: Maybe you missed your calling.
27:01
SPEAKER_01: You're an economist, maybe should have been a marketing guy.
27:04
SPEAKER_01: Oh no, no, don't say that.
27:08
SPEAKER_01: It it's interesting you bring up like, because I know the non-alks uh obviously gaining in popularity.
27:14
SPEAKER_01: I don't know about market size if you have that data, but certainly it seems like that low alcohol space is really gaining traction.
27:23
SPEAKER_01: I mean, maybe to your point, if you've got people that are going out, I mean, the limiting factor, of course, is you can drink more at home because you're likely not going out than you can if you're on premise.
27:32
SPEAKER_01: But if you're kind of, you know, using these other products out there, right?
27:37
SPEAKER_01: Low alcohol, no alcohol, things like that, you know, you can extend those occasions.
27:41
SPEAKER_00: Yeah.
27:42
SPEAKER_00: And and yeah, and that's quite frankly, I still believe in 2.5 gallons, even though there's a, I mean, part of, you know, I do believe in 2.5 gallons.
27:50
SPEAKER_00: I see at much more local levels that there's a lot more consistency and measurability uh in that total alcohol consumption uh patterns.
27:59
SPEAKER_00: In some markets, I see it changing, in other markets I see it very consistently.
28:03
SPEAKER_00: I think there's an there there's way too much supply of alcohol in the marketplace currently, and that supply is sending the signals that that excessive supply uh is is sending the wrong signals to the mark to the marketplace.
28:18
SPEAKER_00: It's not that people don't want to drink, there's just so much more to drink that they have to choose from, which is what's confounding people to come to these false narratives that people aren't drinking.
28:30
SPEAKER_00: It's just they're drinking so much more, right?
28:33
SPEAKER_00: Only so many drinking occasions in a day, right?
28:35
SPEAKER_00: I asked uh a buddy, uh a buddy of mine, Brian Sedano.
28:38
SPEAKER_00: I he's a big, he's a he's a beverage analyst.
28:41
SPEAKER_00: And uh I was like, how many drinking occasions do you think there are in a day?
28:44
SPEAKER_00: And he's like, Well, blah, blah, blah, blah, blah.
28:46
SPEAKER_00: There's 13, right?
28:47
SPEAKER_00: He came up with 13.
28:49
SPEAKER_00: You know, and you know, if there's 13 occasions to have a liquid refreshment from the time you wake up to the time you go to bed, and you think of the the just the the vast nature of all the alcohol, all the beverages that we have to choose from, uh, you know, beer fitting into it is where we really need to focus our our our our our efforts and making beer fit into those occasions because very few people get up and have a beer when they wake up in the morning.
29:17
SPEAKER_00: They tend to have coffee or tea or something else like that.
29:19
SPEAKER_00: And when they're driving to work, that beverage occasion certainly is not and should not be a beer occasion.
29:25
SPEAKER_00: But you know, once you get into that lunch day part, once you get into that afternoon, paper night evening day part, all of a sudden you have all these day parts where beer belongs, right?
29:34
SPEAKER_00: And you we need to figure out how to insert beer into those occasions uh more uh more aggressively and and and and more just more efficiently.
29:45
SPEAKER_00: That's what that's what I'm talking about when I say doubling down.
29:48
SPEAKER_01: Got it, got it.
29:49
SPEAKER_01: No, that's good.
29:50
SPEAKER_01: Um let's pivot a little.
29:52
SPEAKER_01: Let's talk like demographics, right?
29:53
SPEAKER_01: We've talked a little bit around you know, Gen Z millennials, and etc.
29:58
SPEAKER_01: Do you have any data around how these different generations are kind of shaping demand for beer differently than maybe older generations?
30:09
SPEAKER_00: Well, let me start by saying uh I'm done the Gen Z conversation, I'm not gonna have it anymore.
30:16
SPEAKER_00: I think we should we do you own cats?
30:19
SPEAKER_00: Do I personally I have a cat, yes.
30:21
SPEAKER_00: Do you have a cat?
30:22
SPEAKER_00: Do you call a cat or do you how do you attract a cat?
30:26
SPEAKER_00: Put the food out or you ignore the cat.
30:29
SPEAKER_00: You ignore the cat.
30:31
SPEAKER_00: If you want a cat to come to you, you ignore them.
30:34
SPEAKER_00: And I think that's the fatal flaw with Gen Z's.
30:37
SPEAKER_00: I think the beer industry needs to ignore Gen Z.
30:39
SPEAKER_00: I just pretend they're not there.
30:42
SPEAKER_00: Go off and have fun somewhere else.
30:44
SPEAKER_00: The cat will become interested in what you're doing, and the cat will come to you.
30:47
SPEAKER_00: We have we have so we have 125 million people over the age of 60 in the United States today.
30:56
SPEAKER_00: That is as many people that were on the that that populated the entire country 100 years ago.
31:03
SPEAKER_00: In other words, 100 years ago, there were 125 million people in the United States, right?
31:09
SPEAKER_00: From zero to however old you live, for 100, 125 million.
31:12
SPEAKER_00: Today we have 125 million people 60 years and older.
31:17
SPEAKER_00: And they are the most wealthy people to ever grace this country in its 200 plus years of history, right?
31:28
SPEAKER_00: You know, I mean, literally.
31:33
SPEAKER_00: It is the wealthiest group of people to ever probably live on the face of a planet.
31:38
SPEAKER_00: And go go back through time.
31:40
SPEAKER_00: Find me anywhere in the history of mankind, since we were living in caves where you had this many people with this much money.
31:47
SPEAKER_00: You won't find it.
31:48
SPEAKER_00: It just never existed before.
31:50
SPEAKER_00: So, you know, I demographically, I think we need to focus on where the money is and where the people are.
31:58
SPEAKER_00: And for me, that money and those people are in these older generations.
32:03
SPEAKER_00: If they're out having fun, if they're socializing, if they're engaging with the alcohol beverage market and they're doing all those things they do, I believe all those little millennials will become scurrying around like cats.
32:14
SPEAKER_00: Why are you guys having fun over here?
32:16
SPEAKER_00: Why?
32:16
SPEAKER_00: I'm over here, I'm sad, I'm lonely.
32:18
SPEAKER_00: Look at the data.
32:19
SPEAKER_00: This is probably the most unhappy uh group of people that we've ever seen, right?
32:25
SPEAKER_00: You look at the happiness index, you look at the you know, the loneliness index for these group of people.
32:30
SPEAKER_00: You know, we need to lead by example demographically, generationally.
32:34
SPEAKER_00: We can go out and lead by example.
32:36
SPEAKER_00: We can bring this generation into our markets, into our places, and make them happy and healthy and mentally sound again.
32:44
SPEAKER_00: I mean, that's ultimately our goal.
32:45
SPEAKER_00: Trying to tease them and trick them with fancy marketing, probably the biggest mistake you're gonna get.
32:52
SPEAKER_00: That's like trying to call a cat to you.
32:54
SPEAKER_00: They're just gonna turn around and you're gonna get a big old fat picture of their butt staring at you as they, you know, walk away.
33:00
SPEAKER_00: That's how cats are.
33:02
SPEAKER_00: You know, uh, you know, it's it's it's my thesis of you know, dog versus cat marketing here.
33:07
SPEAKER_00: You know, we're not we're not calling dogs, we're we're trying to attract cats, and I think we need to focus in on that.
33:13
SPEAKER_01: That's interesting.
33:14
SPEAKER_01: I really like that because it's sort of like an 80-20 thing, right?
33:16
SPEAKER_01: Like fish where the fish are type thing.
33:18
SPEAKER_01: Exactly.
33:19
SPEAKER_00: You know, everyone's gotta we're going after this group of people, they're not majority of them aren't even 21 yet, anyway.
33:25
SPEAKER_00: They haven't really found their way, they're still struggling around, feeling around, feeling around in the dark.
33:31
SPEAKER_00: Uh, so you know, why are we or why are we spending so much time talking about them and trying to attract them when we just have this massive population of people that just need to just need to be, they need to be our marketers.
33:47
SPEAKER_00: They need to show, you know, sociability, you know, social fitness, uh, you know, all those attributes of what it means to be together in a community.
33:56
SPEAKER_00: And and and then those people will come to us.
33:59
SPEAKER_00: Um that's that's my thinking of the demographics.
34:03
SPEAKER_00: Uh, and you know, I have a slide for you.
34:06
SPEAKER_00: Don't get me wrong.
34:07
SPEAKER_00: I have a slide that I'll give you.
34:09
SPEAKER_00: Uh you post on your website.
34:11
SPEAKER_00: It shows the, you know, it shows away from home and at-home expenditures on alcohol.
34:16
SPEAKER_00: And young people are away.
34:18
SPEAKER_00: Those 25 to 34-year-old households are spending more aggressively away from home on alcohol beverages.
34:23
SPEAKER_00: So that's kind of the front end of Gen Z, the tail end of the millennials.
34:27
SPEAKER_00: But, you know, these are, you know, there's something there.
34:30
SPEAKER_00: But also what we fail to talk about is, you know, we look at the we look at the marketplace in terms of generations.
34:37
SPEAKER_00: I don't really do that.
34:38
SPEAKER_00: I look at the marketplace in terms of 10-year increments.
34:42
SPEAKER_00: 10 to 20, you're your first time in the workforce, you're kind of feeling your way around.
34:47
SPEAKER_00: 20 to 30, typically you change a job, you typically get a little bit more income, you become much more, you know, connected to the people you're going to be with over time.
34:56
SPEAKER_00: 30 to 40, boom.
34:58
SPEAKER_00: 40 to 50, 50 to 60.
35:00
SPEAKER_00: Our world is our world doesn't work in generations.
35:05
SPEAKER_00: It works in life events.
35:07
SPEAKER_00: Getting out of school, first job, moving on to your second, third job, establishing more connected relationships, you know, maturing in your career, maximizing your income, you know, and then winding down.
35:20
SPEAKER_00: That's how you move through the beer market, not Gen Z, millennial, baby boomer, silent.
35:27
SPEAKER_00: That's that's all just marketing gobbledygook.
35:30
SPEAKER_00: The reality is how do we move through our lives and where does beer fit into those segments and those life events that define our lives?
35:40
SPEAKER_00: Um, that's how I think the beer market, that's how I was a marketer, that's how I would approach it.
35:46
SPEAKER_00: I would not talk, I would I wouldn't even talk about these generations because you know, I got I got baby boomer friends that behave like millennials for crying out.
35:55
SPEAKER_00: They're running off seeing Taylor Swift concerts, they're dressing like they're 12 years old.
36:00
SPEAKER_00: They're they're they're not baby boomers.
36:02
SPEAKER_00: They're they're and I I I know millennials and Gen Z's that act like grandparents for the love of God.
36:08
SPEAKER_00: And they want to sit at home and knit and read books and drink tea.
36:12
SPEAKER_00: I mean, that's a grandparent behavior.
36:14
SPEAKER_00: Uh, so let's let's let's think more about the life sections that you know the important the important milestones in people's lives as they progress through the generations and create the create the occasions around that.
36:29
SPEAKER_01: Yeah, yeah, I think that makes sense.
36:30
SPEAKER_01: Well, you hear you heard it here first.
36:32
SPEAKER_01: If you're sixty-year older, it's time to start hurting some cats.
36:35
SPEAKER_01: You know, lead back.
36:36
SPEAKER_01: Let's go get out there, Trump.
36:39
SPEAKER_00: I didn't understand a word of that podcast.
36:41
SPEAKER_00: He was talking about cats and grandmas, and I don't know what he was talking about.
36:47
SPEAKER_01: Oh, people got it.
36:48
SPEAKER_01: We got it.
36:49
SPEAKER_01: We got to get out there and lead by example, and I'm gonna do that tonight.
36:52
SPEAKER_01: Yes, and I am too.
36:53
SPEAKER_01: What uh so let's let's talk a little bit about sort of this competitive set, right?
36:57
SPEAKER_01: You know, we've got all sorts of choices with beverages, we've got choices within beverage alcohol.
37:02
SPEAKER_01: You know, what are you seeing in terms of maybe substitution between and amongst spirits, RGDs, cannabis?
37:09
SPEAKER_01: Um where is is are there any places where beer is winning back?
37:13
SPEAKER_01: I know we're collectively down 5% in volume and three in price or in dollars, but what are you seeing there in terms of that data?
37:22
SPEAKER_01: What's that telling us?
37:23
SPEAKER_00: Okay, so this is how I see it.
37:25
SPEAKER_00: I mean, beer distributors sell beer to retailers.
37:29
SPEAKER_00: And retail accounts have been, you know, off-premise retail accounts have been flat to down.
37:34
SPEAKER_00: I mean, we've seen, you know, we've seen the Walgreens, the CVS, the right aid, that drug channel kind of vanish.
37:40
SPEAKER_00: But at the same time, we've seen the Dollar Generals and uh Dollar Trees kind of grow.
37:45
SPEAKER_00: Uh, we've seen, we've seen the account base.
37:50
SPEAKER_00: I don't see the account base having changed that much.
37:52
SPEAKER_00: The one place the account base has really grown is in the on-premise, where I, as far as I'm concerned, in 2025 and in 2024, the vast majority of new accounts have been on-premise accounts.
38:04
SPEAKER_00: Very little motion and and growth in the off-premise trades.
38:09
SPEAKER_00: The play, the places that would typically hold a lot of beer.
38:13
SPEAKER_00: So, so what we see is you know, the the growth in our industry and our ability to put product into the marketplace has really been in the on-premise.
38:21
SPEAKER_00: That's where things that's why draft is, I see draft sales doing very well in my data that I look at.
38:27
SPEAKER_00: Draft sales have been actually positive in 2025 over 2024 relative to many other uh trade accounts, which are still very much negative.
38:37
SPEAKER_00: Uh, I see some positive aspects to that.
38:40
SPEAKER_00: Uh, you know, within that, you know, there has been a rationalization.
38:46
SPEAKER_00: Retailers are tired of too much, right?
38:51
SPEAKER_00: They they can't handle all these SKUs.
38:53
SPEAKER_00: They're tired of figuring out what's slow, what's fast.
38:56
SPEAKER_00: That's why you see Mick Ultra, Modelo accelerating their shares in the marketplace, because there has been a return to safety.
39:04
SPEAKER_00: Remember when we were talking in COVID when things really locked down and all the major big brands really surged because people like retailers and consumers really just went to safety.
39:15
SPEAKER_00: You know, there was no more experimentation.
39:17
SPEAKER_00: Part of the things that cracked the craft, you know, trend was that return to safety.
39:23
SPEAKER_00: I see that happening in 2025.
39:25
SPEAKER_00: I see a lot of retailers, not on the consumer side, but on the retailer side, consumers like, I don't know what's happening.
39:31
SPEAKER_00: I need safety.
39:32
SPEAKER_00: I need predictability.
39:33
SPEAKER_00: I need something I can model.
39:35
SPEAKER_00: I need to know if I put that six bow on the shelf by the end of the week, it's gone, and I'm putting another one up there.
39:40
SPEAKER_00: Uh, that's why craft I think is hurting so badly because retailers, quite frankly, have a lot to choose from.
39:46
SPEAKER_00: The whole Delta 9 beverage world, the whole RTD beverage world, those have all given them, have given them uh some opportunity to bring new things in to test that velocity and that speed and that profitability of those packages.
40:00
SPEAKER_00: I think they're gonna, they're already becoming disenchanted with uh with RTDs.
40:06
SPEAKER_00: We've already seen a kind of a slowdown in that.
40:08
SPEAKER_00: There's a lot of RTDs that are out there that just aren't moving.
40:11
SPEAKER_00: Retailers gonna look at them on the shelf and like that shelf needs to create money for me.
40:16
SPEAKER_00: It needs velocity, it needs turn.
40:18
SPEAKER_00: What's gonna, what's gonna, what am I gonna put up there that I'm gonna get my marginal on every time a consumer takes it off the shelf?
40:24
SPEAKER_00: I need that, you know, and hemp beverages for God bless them for what they're doing, you know, they're trying.
40:29
SPEAKER_00: But, you know, for the most part, there's there's no clear brand leader in the hemp beverage space.
40:35
SPEAKER_00: Uh, I think there's it's too much.
40:37
SPEAKER_00: There's a lot of stuff that's just sitting out there not moving.
40:40
SPEAKER_00: At some point, there's got to be a shakeout.
40:43
SPEAKER_00: They're all just like like homogenous white milk in the grocery store.
40:47
SPEAKER_00: I don't care what it is, just give me something that's white and looks like milk and I'm okay with it.
40:51
SPEAKER_00: Uh so you know, there's there's no brand leader in the space yet uh uh for D9 beverages.
40:58
SPEAKER_00: But and at the same time, I do see a lot of green shoots in uh in craft.
41:03
SPEAKER_00: I see uh, you know, I love the Pilsner world.
41:06
SPEAKER_00: You know, it's funny.
41:07
SPEAKER_00: I uh look at we download data every week and we I'm seeing, you know, Japanese lager, uh Mexican lager, Czech lager.
41:15
SPEAKER_00: You know, I I see all of a sudden I see this kind of this import, this domestic import segment kind of growing out of the uh the uh the craft space, which you know, one you know, they all went Belgium, right?
41:28
SPEAKER_00: They all tried to steal the Belgian, you know, triples and the Belgian, you know, the Belgian-style ales and the sours.
41:34
SPEAKER_00: Those were all big uh in that domestic craft space.
41:38
SPEAKER_00: But now you're kind of seeing craft looking for other things to do with it.
41:42
SPEAKER_00: And that's why we see the Czech pilsners and the the German pilsners and just a lot of a lot of still innovation in there, and uh, but it's just not it's not the volume that we're used to.
41:55
SPEAKER_00: And uh that's that's certainly interesting.
41:57
SPEAKER_00: And at the same time, when you look at things like the art the the FMB market, you know, white claw is still relatively strong, still a leader in that space, uh, truly is kind of given up a given up a lot of share, but they gave it up to the RTD space.
42:13
SPEAKER_00: So there's a lot of overlap that still needs to be worked out on how the RTD space and the FMB space, how do we how do we account for it?
42:23
SPEAKER_00: How do we look at what do we do about beatbox?
42:26
SPEAKER_00: You know, beatbox is an RTD, it's a wine-based uh drink in a resealable tetra pack.
42:35
SPEAKER_00: You know, where does it fit in?
42:36
SPEAKER_00: Is it is is it stealing from truly?
42:38
SPEAKER_00: Is it stealing from White Claws?
42:39
SPEAKER_00: Is it stealing from High Noon?
42:40
SPEAKER_00: Uh, you know, but it's wine.
42:43
SPEAKER_00: And you know, where do we where do we put that in there?
42:46
SPEAKER_00: We're very used to being very discreet and and in in our analysis of the marketplace.
42:53
SPEAKER_00: We look at beer, we look at wine, we look at spirits, we look at premium bites, we look at blow papers.
42:58
SPEAKER_00: All these things are now in one big blob.
43:00
SPEAKER_00: And this blob that blob makes it very hard to segment and to do competitive analysis in terms of what's winning and what's losing.
43:09
SPEAKER_00: Who what what are the actual competitive products here and how do we how do we look at them so that we can can effectively compete against what's stealing our market share?
43:21
SPEAKER_00: Makes an economist's life a little tough, doesn't it?
43:23
SPEAKER_00: Yeah, it's so much fun.
43:24
SPEAKER_00: But this is the fun part, right?
43:26
SPEAKER_00: It's just not as simple as it used to be.
43:29
SPEAKER_00: Uh I, you know, I I do per capita numbers for all most all the states.
43:35
SPEAKER_00: And, you know, I see a lot of really steady per capita consumption markets where relative to the people, the volumes continue to make sense.
43:47
SPEAKER_00: And uh they are predictable and they are steady and they are reliable.
43:51
SPEAKER_00: So the narrative that people aren't drinking, for me, is a false narrative.
43:57
SPEAKER_00: It's the fact that, you know, you know, you know, the liquor industry is down.
44:01
SPEAKER_00: Well, the liquor industry went from a 750 milliliter bottle that has 17 servings in it, and they've doubled down on a single serve that has one serving in it.
44:12
SPEAKER_00: So any consumer that was a distilled spirit drinker, before they needed a drink, they had to buy 17 to get started.
44:20
SPEAKER_00: Today they buy one.
44:23
SPEAKER_00: Dude, this is a price.
44:25
SPEAKER_00: Do you not understand?
44:26
SPEAKER_00: Do they not understand what they've done to themselves?
44:29
SPEAKER_00: That they shot themselves in the foot and then they're like, oh, the consumers don't like drinking anymore.
44:34
SPEAKER_00: No, you gave the consumer the ability to substitute 17 servings with one serving.
44:40
SPEAKER_00: That is your fault.
44:41
SPEAKER_00: That is not the consumer fault.
44:43
SPEAKER_00: That is the suppliers' fault.
44:45
SPEAKER_00: It's not consumers that are to blame here, guys.
44:48
SPEAKER_00: It's a supply side problem.
44:50
SPEAKER_00: Wake up, smell the coffee, put the Bailey's in the coffee, wake up, whatever you want to call it.
44:56
SPEAKER_00: But you guys did this to yourselves.
44:58
SPEAKER_00: The consumers didn't do it to you.
45:01
SPEAKER_00: Craft, you've heard me rant about the craft industry.
45:04
SPEAKER_00: The craft industry was 40% draft.
45:07
SPEAKER_00: Well, you put a draft, you put a 15.5 keg in a bar, they spill half of it on the floor.
45:13
SPEAKER_00: The brewer gets the money, the retailer eats the waste.
45:16
SPEAKER_00: You turn around and go all in the cans.
45:19
SPEAKER_00: You're now eating the waste, and the retailer's not eating.
45:23
SPEAKER_00: This is a supply side problem, guys.
45:26
SPEAKER_00: Don't blame it on the consumer.
45:28
SPEAKER_00: Blame it on yourselves.
45:30
SPEAKER_00: You went to you went to the 24-12 ounce package because you wanted to be in cans.
45:35
SPEAKER_00: And now people are just drinking your product more efficiently.
45:39
SPEAKER_00: All that waste you capitalized on that helped you grow when you're 40% draft, you don't get that anymore.
45:47
SPEAKER_00: You know, in fact, you waste more beer filling cans than you do filling kegs.
45:52
SPEAKER_00: And every brewer, you know it.
45:54
SPEAKER_00: You waste more beer filling a 12-ounce can than you do filling a 15-5 keg.
46:00
SPEAKER_00: You don't want you want to make some money, start filling those kegs up, and you won't waste as much beer on your floor.
46:05
SPEAKER_00: Let the retailer waste it when they you see them do it.
46:10
SPEAKER_00: You know, they sit there with the tap flowing for five minutes trying to get a perfect pour.
46:15
SPEAKER_00: So, anyway, there's a lot of what's happening in 2025, which is supply-induced pain.
46:23
SPEAKER_00: We've induced this pain upon ourselves.
46:26
SPEAKER_00: Self-inflicted wounds.
46:29
SPEAKER_00: Wine guys, no different.
46:30
SPEAKER_00: You guys, the wine guys love selling, sending boxes direct to people's homes.
46:36
SPEAKER_00: Send up a 12, 12, 12, send them their their nine-liter case.
46:41
SPEAKER_00: You know, I'm done.
46:43
SPEAKER_00: Hands off.
46:44
SPEAKER_00: Well, people want to be away from home.
46:45
SPEAKER_00: They're drinking one glass at a time.
46:48
SPEAKER_00: You know, do you want everyone to be locked down ordering wine at home?
46:51
SPEAKER_00: No, you want people out socializing, figure out how to adjust to this new structural change that we've created for ourselves and be successful in marketing.
47:01
SPEAKER_01: Well, there you go.
47:02
SPEAKER_01: I mean, you I know you don't want to be a marketing guy, but I think a couple times now our marketing people need to uh pay attention to what you're saying because it's a combination, right?
47:10
SPEAKER_01: You're seeing trends you're using data, and then you're reverse engineering and saying, look, we don't want to be repeating these mistakes.
47:15
SPEAKER_01: That's an interesting point on spirits in terms of sort of what they've effectively done is have everybody trade down.
47:21
SPEAKER_01: You know, don't give me, you know,$30, just give me$3, and then we'll figure it out later.
47:27
SPEAKER_00: Exactly.
47:28
SPEAKER_00: You know, you don't, you know, and and I still, it's funny, you know, I uh all of course, this is observational bias, and I observe it myself, but people still tell me they have liquor cabinets from COVID that they haven't touched, right?
47:41
SPEAKER_00: Because they're going out to have a drink.
47:43
SPEAKER_00: You go out and you have a drink, you have your one gin and tonic, you're you go to the you go to the baseball stadium, you have your surf side, you go here, you have your high noon, you don't come home and break out the bottle of vodka and the tonic or the gin and the tonic or the soda or whatever you do and start mixing, right?
47:59
SPEAKER_00: And and also remember when the spirits industry decided to put everything in measured 12-ounce servings, they lost the free pour.
48:07
SPEAKER_00: So when people went home with the 17 with a 750 milliliter bottle, they free poured, right?
48:14
SPEAKER_00: Now you've given it all measured servings.
48:16
SPEAKER_00: Same problem with craft brewers who took away who substituted kegs for package.
48:21
SPEAKER_00: You lost the free pour aspect of it, and you know, and that, you know, that that that un that that lack of measured servings, which packaged beer, packaged spirits, packaged wine delivers to the marketplace.
48:35
SPEAKER_01: So let's talk about a subject that everybody wants to hear about, and that's uh policy and taxation, taxes, tariffs, regulatory changes.
48:44
SPEAKER_01: What are you what are you seeing there?
48:46
SPEAKER_01: And like what what's like really important for folks in the beer industry to be aware of?
48:51
SPEAKER_00: It's just confusion and chaos.
48:53
SPEAKER_00: I mean, it's confusion and chaos.
48:55
SPEAKER_00: I think uh, I mean, we I think we I I looked at the data, you know, the there's Yale budget laboratory, and there's a bunch of other guys, and they're like the effective the effective tariff rate is 17% on imported goods, you know.
49:09
SPEAKER_00: But you know, we collected$200 billion year to date in tariffs off of$4 trillion.
49:14
SPEAKER_00: That's 5%.
49:16
SPEAKER_00: So, you know, who's collecting the money, who's paying the money, how's it being counted?
49:23
SPEAKER_00: I still don't think anyone knows.
49:26
SPEAKER_00: You know, uh I mean, if we only collected$200 billion off of$4 trillion of imports, we don't have a 17% tariff rate.
49:34
SPEAKER_00: Sorry.
49:35
SPEAKER_00: I mean, it's what you collected divided what you brought in.
49:38
SPEAKER_00: It's it's that it's math that simple.
49:40
SPEAKER_00: This is third grade math.
49:42
SPEAKER_00: You could present these these data to a third grader and well, maybe a fifth grader.
49:47
SPEAKER_00: I'm not sure.
49:47
SPEAKER_00: I'm pretty disconnected from elementary school math these days, regardless of who's calculating the number.
49:56
SPEAKER_00: $200 billion is what we've collected so far.
49:59
SPEAKER_00: That ain't 17% of$4 trillion.
50:02
SPEAKER_00: Now, these are the practical aspects of it.
50:07
SPEAKER_00: There's still so much commotion and so much chaos surrounding how it's being done, who's paying, and what's being paid for, is I I would only know how to advise people.
50:19
SPEAKER_00: I advise people call your congressman, your senator, and say you will not get a pack check or check from me until you put this house in order.
50:28
SPEAKER_00: I'm not supporting you as a candidate until you decide.
50:32
SPEAKER_00: I think if enough small businesses call their congressmen and senators and say, we are not supporting you until you put our our economic house in order, period, uh, I think then things will change.
50:43
SPEAKER_00: But that's up to American businesses collectively to just draw the line in the sand on.
50:49
SPEAKER_00: I don't know how I don't understand how businesses are doing it.
50:52
SPEAKER_00: I know I well, I do know how businesses do it because I talk to them all the time.
50:55
SPEAKER_00: They're moving the deck chairs around, they're constantly trying to, well, who am I going to source from?
50:58
SPEAKER_00: Where can I source from?
50:59
SPEAKER_00: This guy can source from this guy.
51:01
SPEAKER_00: What can I bring in-house?
51:02
SPEAKER_00: What can I what can I get done over there?
51:03
SPEAKER_00: So there's this frantic moving the chairs around on the on the you know, moving the deck chairs around, trying to get up come a combination where they can at least maintain their margin and be profitable now.
51:16
SPEAKER_00: This is kind of a good thing.
51:17
SPEAKER_00: And I said this on stage at convention.
51:19
SPEAKER_00: I was like, there's three Nobel, three economists got a Nobel Prize for, you know, innovation and technology.
51:26
SPEAKER_00: The recent Nobel Prize winners in economics, their whole thesis is well how innovation and technology disrupts things and makes things more efficient and actually leads to growth.
51:35
SPEAKER_00: Uh, you know, these all these businesses that are in the US economy today are frantically trying to readjust and reevaluate and come up with strategies and new business practices to maintain their margins in this face of chaos.
51:52
SPEAKER_00: You know, sometimes that's not a bad thing.
51:54
SPEAKER_00: It's kind of like, you know, kind of like we, you know, we took price for since 2008.
52:00
SPEAKER_00: We have 15, 20 years, we've been consistently taking price.
52:03
SPEAKER_00: We broke that, we broke that elastic inelasticity, we broke that rubber band, snap, you know, now we're can't take a price.
52:10
SPEAKER_00: We need to reevaluate the black swan event.
52:12
SPEAKER_00: It's things are different now.
52:14
SPEAKER_00: How are you as a business, as a brewer, as a distributor, as a retailer, gonna sit down and actually find workarounds and new things to to to to to make your business more successful and more profitable in the face of these chaotic events that are happening in our economy right now?
52:35
SPEAKER_00: I love that.
52:36
SPEAKER_00: Yeah.
52:36
SPEAKER_01: Well, I got a lot more questions, but I think we'll we're gonna wrap it.
52:40
SPEAKER_01: And that's a great, I think a great note to end on too.
52:42
SPEAKER_01: I really like that.
52:43
SPEAKER_01: But so we love the enthusiasm, we love the data, we love the insights.
52:47
SPEAKER_01: It's it's really helpful and really appreciate your time, you know, sharing this.
52:51
SPEAKER_01: So I guess with one final if there's an ask of the audience, um, people listening, is there anything you'd like them to do?
52:58
SPEAKER_01: Is it you know, the per sign up for the beer purchasers index?
53:01
SPEAKER_01: Is there anything you would say?
53:02
SPEAKER_00: Oh, absolutely.
53:03
SPEAKER_00: I got a ton of asks, guys.
53:05
SPEAKER_00: First of all, we have a we have a webinar coming up on October 23rd.
53:10
SPEAKER_00: I work with FinTech.
53:11
SPEAKER_00: FinTech and MBW have a partnership.
53:13
SPEAKER_00: We share data, we collect data, we do presentations every quarter, and we talk about the industry.
53:18
SPEAKER_00: Uh, if you hit my LinkedIn site, hit the uh the fintech site, you'll maybe I'll give you, I'll send you a link too that you could post as well.
53:25
SPEAKER_00: Would love to have you guys log on, participate in the webinar.
53:30
SPEAKER_00: It's unique data.
53:32
SPEAKER_00: Uh, and uh use one-of-a-kind data set.
53:35
SPEAKER_00: It's, you know, and it's just us doing this for fun because we like to help the industry.
53:40
SPEAKER_00: That's the first ask.
53:41
SPEAKER_00: Please log on to that October 23rd webinar.
53:45
SPEAKER_00: Second ask if you are a beer distributor and you have a beer purchaser, send them my way.
53:50
SPEAKER_00: L Jones at MBWA.
53:51
SPEAKER_00: I like that.
53:52
SPEAKER_00: This is a closed panel of beer distributors, of beer purchasers.
53:56
SPEAKER_00: So I need to bring them in.
53:58
SPEAKER_00: It's just not a random send emails out, and anyone who wants to participate, I need I need the guys that are managing the inventory, that are ordering the beer.
54:06
SPEAKER_00: I need them in my set of uh of panelists that I like to uh to uh interview every month.
54:13
SPEAKER_00: It takes a minute or less.
54:15
SPEAKER_00: Uh and uh, you know, third, uh, you know, you know, reach out, ask questions.
54:21
SPEAKER_00: I'd love to hear, you know, people's responses to this and call me batshit crazy, you know, or way off the rails.
54:28
SPEAKER_00: Uh I'm very useful.
54:30
SPEAKER_00: That feedback is useful uh because uh, you know, that's it's good stuff to have.
54:35
SPEAKER_00: And those are my asks.
54:37
SPEAKER_00: Those are and I will send you a presentation that you can post uh along with this podcast so people can go back and see the data to which I am referring to.
54:47
SPEAKER_00: And I'll send you a link to the uh October 23rd webinar as well for your people to look on to.
54:53
SPEAKER_01: Lots of great resources.
54:54
SPEAKER_01: Lester, you're the best.
54:56
SPEAKER_01: Thank you so much for your time today.
54:57
SPEAKER_01: Thank you for having me.
54:59
SPEAKER_01: Thank you for listening to the Kraft Brewery Financial Training Podcast, where we combine beer and numbers so that you can improve financial results in your brewery.
55:08
SPEAKER_01: For more resources, tools, guides, and online courses, visit Craft Brewery Financial Training dot com.
55:14
SPEAKER_01: And don't forget to sign up for the world famous Kraft Brewery Financial Training newsletter.
55:19
SPEAKER_01: Until next time, get out there and improve financial results in your brewery today!