Anderson Valley Brewing Company (AVBC), has committed to holding price – at least through the summer – despite inflationary headwinds, supply chain strain and continued effects of COVID-19 felt throughout the beer industry, the Boonville, California-based craft brewery announced Wednesday.
In a press release headlined “We Actually Like Our Customers,” AVBC called out beer giants such as Constellation Brands and Heineken for “using the perception of inflation – not the actual economic impact of inflation – as an excuse to raise prices.”
The Consumer Price Index (CPI) for beer, which measures the average price change paid by consumers, increased +5% in April, the U.S. Bureau of Labor Statistics reported last week. For the first four months of 2022, CPI increased +3.7%.
Similarly, the average case price for beer in tracked off-premise channels increased $1.36 year-to-date through April 30 compared to 2021, according to NielsenIQ.
AVBC has committed to hold price for at least the next six months – until sales from the summer months can be evaluated – in an effort to support consumers, distributors and retailers, AVBC president Kevin McGee told Brewbound.
“Frankly, everything is fly by wire,” McGee said. “But I’ve got a lot of other levers to pull before I would go to a price increase.”
McGee acknowledged that AVBC is uniquely positioned to make such a commitment, in part because it is a “family-owned, family-operated business,” so the company has the “flexibility” to make decisions simply because “it’s the right thing to do.”
McGee said he and his family have been upfront with its distribution and retailer partners since acquiring the company in 2019, that they did not plan to take price, and would focus on other efficiency needs first.
“That was one of the primary questions that I would get from all of our distributor partners is, ‘What are you doing about price?’” McGee said of his first conversations in early 2020. “And I wanted to make it clear, ‘No, we’re not taking price up.’
“And this is a time when the sales are obviously very challenged, but we thought it was important, because it’s a way of literally putting our money where our mouth is, on where our priorities are,” he continued.
To “make the math work,” AVBC has made adjustments over the past two years to increase efficiency, including:
- Eliminating plastic 6-pack rings and glass packaging and replacing transitioning to aluminum cans, reducing trucking by nearly 60%. Some glass is still in use, but will stop once all existing stock is depleted, in order to reduce waste, according to McGee;
- Reevaluating pallet limits to allow for about 10% more full cases per pallet, while maintaining safe weight;
- Adopting “the shipping principles that built IKEA” with flat pack cardboard packaging, so supplies can be shipped “as efficiently and cheaply as possible.” The brewery uses recycled cardboard, reducing its cardboard usage by 70%;
- Installing a nitrogen generator in 2020 to “harvest nitrogen from the surrounding air” and replace CO2 needs in the brewing process.
“We basically did a dozen things that normally you would do one at a time, all simultaneously,” McGee said. “Through that, it’s given us that flexibility.”
Additionally, AVBC runs its own solar panels, which help reduce power costs, and is working on an expansion plan of its solar array that would generate more than 100% of the brewery’s power needs, allowing the company to be “totally energy independent.” The company also operates a self-contained water treatment system, with water sourced from 10 wells on the brewery’s property.
“We’ve got a pretty deep moat around the brewery in terms of our operations that make it unique,” McGee said. “And that helps it be more stable than, unfortunately, other people may have the opportunity to.”
After a slow start to 2022 due to the Omicron COVID-19 variant, AVBC is focused on strengthening its chain placements over the rest of the year, and will continue to adjust its distribution network, which stretches across 39 states.
Under McGee’s leadership, AVBC ended its partnerships with Reyes Beer Division, and created or adjusted more than half a dozen other distributor partnerships across the U.S.
The brewery is also expecting continued traffic this summer to its 30-acre “beer park,” AVBC’s taproom and former “visitor center,” which was renovated in 2021 to include a 9,000 sq. ft. lawn with free-range seating and an 18-hole disc golf course. The company has already hosted several events in the space, including the Boonville Beer Fest and a circus.