Spring 2014 | V.78 ORIGLIO BEVERAGE MEXICAN BEERS AR EONFIRE Retail Edge Seasonals The Beer Guy New Products Programs ALAN NEWMAN OF ALCHEMY & SCIENCE | SPRING SELECTION S|SERVING DRAUGHT BEER Letter to THE TRADE In This Dear Valued Customer, SAVED AN ARTICLE I READ ONLINE ISSUE in Harry Schumacher’s Beer Business Daily from I January of this year. It is called “The Coming Beer Boom?” The question mark at the end of the title set the tone for the first paragraph. Harry is a good Cover Story .........................1 journalist, yet he seemed a bit uncomfortable with this story and with good reason. The volume of beer sold has not been increasing. The population is Brewer Highlight ..................2 aging and older people tend to drink less. Different segments of the industry are gaining share – craft, cider and FMBs – but the pie hasn’t been getting Skippack Beverage ...............3 bigger. Who would predict an upcoming beer boom and what could they base that claim on? The Phil’s Tavern ...................4 The person is Judy Hong, an analyst at Goldman Sachs, whose area of expertise is alcohol beverages. Quoting her as it appeared in Schumacher’s piece, New Products ......................5 she stated very confidently that, “after delving into the demographic drivers of the alcohol beverage category, we remain bullish on the prospects for alcohol consumption growth Seasonal Selections ............11 over the next few years and believe mainstream beer is likely to show the greatest volume acceleration.” Her research is summarized in just four points. • As unemployment declines, the core beer drinker will have more money to Available Year-Round .........20 spend on his/her favorite beverage. Perfect for the Season • Beer isn’t just a beverage consumed by people in the 21 to 30 year-old age bracket. The preference for beer has shifted to the 31 to 50 year-old Programs ..........................21 demographic and that trend continues to intensify. Millennials will probably drink more beer as they age. • The price gap between beer and wine/spirits is closing. Retail Edge ........................24 • Beer is more innovative (think Redd’s, Blue Moon, shandys, cider and FMBs) plus it has developed its own high end. Beer is not just a poor The Beer Guy ....................25 man’s drink any longer. From her mouth to God’s ears was my initial reaction, but Ms. Hong made some interesting observations that made me realize she could be onto something. Consumers continue to seek products with more flavor, but 85% of beer drinkers don’t drink craft – they prefer “social beers” with less alcohol, particularly “when they’re having more than one.” Or they may enjoy a craft beer and then switch to social beer because they want to stay out, having fun. Those tendencies translate into more beer volume sold. Whether it is a boom or not remains to be seen. But when you read our cover story, Mexican Beers Are On Fire, keep in mind what you’ve just read here. These tea leaves are signaling that sales will be better and as we move into the spring and summer months, that is a cause for real optimism. As always, thank you for your business and I wish you every success. ® Sincerely, Heady Times is published five times a year, courtesy of Origlio Beverage. Dominic Origlio President Cover STORY Mexican Beers Are On Fire EERS FROM MEXICO WERE THE SHINING STARS OF THE import beer category, which finished 2013 down less than 1%. B That’s not too bad compared to recent years. But that number would have been different had it not been for the 12% rally in last year’s 4th quarter – a rally fueled almost entirely by a spike in the sale of beers from our neighbor South of the Border. In an environment where the success of craft beer has been the beer industry’s Constellation Brands Beer lead story, Mexican imports tell another tale. Shipments of Division is re-launching Victoria beer from Mexico into the United States were up 4.6% at the in 4/6 NR packages. This beer close of 2013 and that upward trend is holding this year. is a taste of home for Mexicans Tecate continues to grow at a nice pace and Tecate Light new to the United States. sales have increased 40% compared to the same time last Perhaps the most exciting and year. Dolf van den Brink, the president of HeinekenUSA, innovative news from Constellation which owns the Tecate and Dos Equis brands, couldn’t Brands this year is the introduction be more pleased, adding that the success of Tecate Light of a brand new product, Modelo will continue as more points of distribution are secured. Especial Chelada. The Chelada is a And all the beers in the Dos Equis portfolio are up an blend of Modelo Especial with the impressive 23%. The brand has been growing refreshing flavors of tomato, salt and consistently in the low 20% range for a long time lime. Available in our market in April, it now. “Dos Equis doesn’t get a lot of attention, but it’s is already being enjoyed in other parts a sizeable brand at 21 million cases,” says van den Brink. The of the country and the reception has brand may not get a lot of attention, but it benefits from some of the been tremendous in both on and off- most consistent and effective advertising in the premise accounts. business. Everyone knows the Dos Equis spokesperson, The Most Interesting Man, and who If you are not familiar with Pacifico, hasn’t heard his iconic tag line? “I don’t always drink this beer was first brought into the beer, but when I do, I prefer Dos Equis. Stay thirsty, my country by surfers in Southern friends.” His exploits and sense of humor continue to California who live the “La Surfeza” attract new consumers who love the liquid and become lifestyle. Looking for a beer to loyal to the brand. HeinekenUSA also offers a variety complement their active lifestyle, pack for the off-premise called the Beers of Mexico. It Pacifico became their unofficial contains Sol, Tecate and Dos Equis, but this summer a new emblem. In line with the active product, Azul, will make its debut, but only while supplies lifestyle, Pacifico’s sponsorship of last. (Be sure to take advantage of Dos Equis’s newest the Burton U.S. Open programs – Dos Equis Tough Mudder and Dos Equis Dos de Snowboarding Championships in Mayo. Turn to page 22 for details.) Vail, Colorado this year, opens up the world of winter sports to the brand. Pacifico Millions have “found their beach” drinking the beer in the clear bottle with will be the official beer of the competition a conspicuous wedge of lime protruding. That beer is Corona Extra, which through 2016. The event will feature Shaun along with Corona Light, tops the list of the 25 best-selling imports in the White, Mark McMorris and Kelly Clark, country. Constellation Brands Beer Division, formerly Crown Imports, the who will compete in Halfpipe and company that sells Corona, also imports Modelo Especial (the third best- Slopestyle competitions. Look for Pacifico’s selling import), Pacifico, Negra Modelo and Victoria – all in the top 25. “Original Explorers” TV spot airing In fact 2013 was a record-breaking year for Constellation Brands. Sales nationally on FoxSports2. of Corona Extra and Modelo Especial topped 100 million and 50 million Need more evidence that the Mexican beer cases respectively and President, Bill Hackett sees plenty of room for scene is heating up? Offer your customers growth in the company’s entire portfolio. “The roll-out of Corona Light the beers from Cerverceria Berber, a leader draught has had a halo effect on Corona Extra as consumers recognize in the country’s new, artisanal beer that these beers are perfect for so many different occasions.” The same revolution. Check out their lineup on page can be said for Modelo Especial and Negra Modelo, which are also 5. Berber’s Porter, Stout, Pilsner and Ambar, available in draught. Both are well-balanced and flavorful Vienna-style a distinctive Vienna-style lager provide more lagers. Negra Modelo is darker with an appealing bitterness, balanced evidence that drinking Mexican is an by just the right amount of sweet chocolate notes in its dry finish. In American thing to do. Mexico it is known as the “elite of beers”. And new this spring, www.origlio.com HeadyTimes v.78 1 Brewer HIGHLIGHT Alan Newman President of Alchemy & Science LCHEMY & SCIENCE IS AN INDEPENDENT SUBSIDIARY of The Boston Beer Company – a self-proclaimed “craft beer A incubator.” Headquartered in Burlington, Vermont, Alchemy & Science has launched projects all around the country from Angel City Brewery in Los Angeles to Coney Island Brewing Co. in New York and now, Concrete Beach Brewery, a work-in-progress located in Miami. The Traveler Beer Company also falls under the Alchemy & Science umbrella. As President, Alan Newman has put his years of experience and insight to good use alongside the company’s co-founder, Stacey Steinmetz. Newman’s first foray into the beer business was in the mid- 90s when he founded Magic Hat Brewing Company and hired Steinmetz as the brewery’s first employee. Newman left Magic Hat in 2010 and founded Alchemy & Science in late 2011. Named for Newman’s fascination with the fact that making beer is a combination of math, science and some magic, Alchemy & Science is not an actual brewery. Newman explains, “As Jim Koch put it, there are lots of opportunities in the craft beer world that Boston Beer just can’t pursue because it’s not what they do.