Numlock News: June 14, 2023 • Bang, Margaritas, Downsizing
By Dave Infante
Today’s edition comes to you fromnewsletter about the alcohol business.
Yesterday was scams, today is booze! Numlock is all mine, and all alcohol news, and Walt can’t stop me because he’s out of office. Bottoms up!
Growth in the American craft brewing industry is basically flat right now, which is to say there isn’t really any. As such, macrobrewers like Anheuser-Busch InBev and Constellation Brands that collectively spent billions of dollars last decade acquiring small, independent firms are now cutting costs and shedding staff in their craft portfolios. Molson Coors, the country’s second-largest brewer, hasn’t yet made such drastic moves, but it did take an $845 million non-cash partial goodwill impairment charge on its North American business earlier this year. The company won’t say what portion of that eye-popping write-down, if any, pertained to its craft division, Tenth and Blake. But considering that portfolio (which includes acquired microbreweries like Oregon’s Hop Valley and Georgia’s Terrapin) features production declines of 3 percent to 14 percent, the answer probably isn’t “zero.”
Margs in Charge
That explicit TikTok song notwithstanding, margaritas are incredibly popular with American drinkers. According to the most recent Cocktail Sales Tracker by market intelligence firm CGA by Nielsen IQ, margs were once again the most-ordered tipple in the U.S., beating out the Moscow mule and the martini. The tequila-based beverage has dominated the chart, which CGA assembles with data from 10,000 on-premise establishments across the country; this makes seven straight quarters on top.
Once upon a time, wine was kept in clay pots. Then it was wineskins, then glass bottles, then boxes of Franzia, and so on and so forth. Being as how the inexorable march of progress grinds ever forward, the fact that volume sales of canned wine grew over 3,800 percent from 2017 to 2021 shouldn’t surprise me, although it very much does. Big players are scrambling to acquire single-serve wine brands in hopes of cashing in on some of that sweet, sweet growth; E. & J. Gallo, for example, just bought out Bev, a very Instagrammable brand that sells wine and spritzes in cans.
Imagine going to law school, passing the bar, committing your life to the noble ideal of justice… then one day being told by your boss that Jack Daniels needs you to sue a dog toy manufacturer over the alleged trademark infringement of a spoof product called “Bad Spaniels Silly Squeaker.” This is not the greatest moment of your career. But it’s better than the moment immediately following, when you learn that this toy has a defecation theme, boasting “43% Poo by Vol.” and “The Old No. 2 On Your Tennessee Carpet.” Woof. But you take the case, you do your best, and eventually, you find yourself convincing all nine justices on the Supreme Court — yes, the Supreme Court — that lower courts erred in ruling that this crap deserves First Amendment protection. A unanimous ruling! You’re the man now, dog.
It’s been a rough nine months for Jack Owoc, the founder of the Bang Energy drinks empire and its parent company, Vital Pharmaceuticals (VPX). After losing a few lawsuits in 2022, Owoc’s South Florida-based firm found itself on the hook for about half a billion dollars in damages, penalties and fees; by March 2023, Owoc found himself ass out of a job, with his board ousting him in hopes of steering the company to a favorable Chapter 11 bankruptcy auction. With said auction scheduled for the end of this week, Owoc and his wife filed an emergency motion asking a federal judge to allow them to access a VPX “data room,” where they allege their former company may be preparing for sale 13 trademarks’ worth of intellectual property that Jack says he owns through another company named — and this is real — Entourage IP Holdings LLC. Hell yeah.
San Francisco’s agèd, iconic Anchor Brewing Company is staring down some of the most dire straits of its 127-year history. The Anchor Steam maker, which was acquired by the U.S. subsidiary of Japan’s Sapporo in 2017, confirmed this past weekend that it would not brew its beloved Christmas Ale this year due to time and cost constraints, an end to the seasonal’s 48-year run that is neither holly nor jolly. What’s more, the brewery — considered by many to be America’s first microbrewer — is planning to pull back its 50-state distribution footprint to just one: California, where the company’s reps say the Anchor brand does roughly 70 percent of its business.
Spike the Hike
The American beverage alcohol industry has been going hog wild with new types of hard drinks, but that boozy bonanza has coincided with (and may even be exacerbating) a renewed push by lawmakers, public health advocates and anti-alcohol activists to crack down on the trade. One lever teetotalers and their fellow travelers can pull is taxes, and there’s evidence suggesting increasing the state’s vig on alcoholic beverages decreases the social ills and costs related to said bevs. It can also raise a bunch of dough for said state: A proposed 50-cent increase in tax collected on liquor bottles in Oregon would’ve raised $90 million over two years for behavioral health care services. Last week, Governor Tina Kotek withdrew the proposal, though, saying revenue forecasts indicate that sufficient funds will be available sans surcharge. Good thing the services are getting funded one way or another, considering Oregon has the fifth-highest rate of alcohol addiction in these United States.
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