The Consumer Price Index (CPI) for beer away from home increased +7% in October 2022 compared to October 2021, the largest price increase ever recorded for the category, according to the Bureau of Labor Statistics (BLS).
Similarly, beer at home increased +6% year-over-year (YoY) in the month, the category’s largest increase for at-home prices since January 1992 (+6.5%).
The CPI measures the average price change over time paid by consumers for goods and services.
The YoY price increase for beer far outpaced at-home price increases for distilled spirits (+0.5% YoY, the largest increase since August) and wine (+3.2%, the largest increase since March 2009). Away from home, distilled spirits increased +5.7% YoY, the largest increase since December 1991 (+8.2%). Wine away from home increased +8%, the largest increase since June 2002 (+8.2%).
The total beverage-alcohol category (+5% YoY) recorded its largest increase since January 1992. Prices for total bev-alc at home increased +3.8% YoY, the largest since January 2009 (+4.1%), while bev-alc away from home increased +7%, its largest increase since December 1991 (+8.2%).
Despite these increases, beer was below the CPI for all items, which increased +7.7% YoY in October – the smallest 12-month increase since January 2022. An increase in the cost of housing “contributed over half of the monthly all items increase,” along with price increases for gasoline and food, according to the BLS.
“Some positive overall signs for inflation in today’s report,” Bart Watson, chief economist for the Brewers Association (BA) wrote on Twitter Thursday. “That said, beer pricing arguably picked up a bit of steam with more suppliers instituting a fall price increase than many years. Lots of ways to cut this data but most show prices increased a bit faster in October.”
Empirical Brewery Closes, Allegedly Owes More Than $30K in Rent
Empirical Brewery closed last month after seven years in the Ravenswood neighborhood of Chicago.
The brewery announced the news on Facebook October 21, with its last day on October 23. While the brewery did not give a reason for the closure in its Facebook post other than it will “explain more soon,” the closure is allegedly the result of unpaid rent which caused the brewery’s landlord to terminate its lease, Block Club Chicago reported.
Empirical was allegedly served a five-day notice from Hayes Properties, the owners of the brewery’s building, in May after the brewery failed to pay more than $16,000 in rent, according to Block Club Chicago, citing court documents. On September 6, after Empirical allegedly failed to pay the back rent – owed from January 1 through May 19 – an eviction request was granted by Cook County Judge Theresa Smith Conyers.
The fight continued two days later, when the landlord returned to court to report the brewery was still operating and now owed about $30,600 for continued unpaid rent. A second order for eviction and back rent was granted by Smith Conyers on September 22. That notice was reportedly enforced by the Cook County Sheriff’s Offices on October 21 – the day the brewery announced its closure on Facebook.
Empirical produced an estimated 1,740 barrels of beer in 2021, a +16% increase YoY according to the BA. The production increase followed a -24% YoY decline in 2020 and +115% increase in 2019, according to BA estimates.
Michigan Senate Passes Bill for Permanent Cocktails-to-Go
The Michigan Senate passed S.B.1163 Thursday, which would permanently allow bars, restaurants and distilleries to sell cocktails to-go.
The Great Lake State already allows the sale of cocktails to-go (in sealed containers) from a House bill (H.B. 5811) signed in July 2020. However, that allowance is set to expire January 1, 2026.
The updated bill, which passed with a Senate vote of 37-1, now moves to the House of Representatives and, if approved, will continue to Gov. Gretchen Whitmer. Whitmer signed the temporary cocktails to-go bill in 2020.
“Cocktails to-go continue to provide a stable source of revenue as Michigan businesses cope with the lasting challenges related to the pandemic, including staff shortages, supply chain disruptions and inflation,” Andy Deloney, VP of state government relations for the Distilled Spirits Council (DISCUS), said in a press release. “This is a great step towards offering increased support for Michigan’s hospitality businesses.”
Since the COVID-19 pandemic caused shutdowns and restrictions for on-premise establishments, 18 states and D.C. have passed laws permanently allowing cocktails to-go, while 14 others have enacted temporary allowances, according to DISCUS. Temporary bills in Maryland, Massachusetts, Tennessee, Vermont and Washington are set to expire at various points in 2023.
Constellation Brands’ Motion for Summary Judgment in A-B Lawsuit Denied
A judge has denied Constellation Brands’ motion for summary judgment in the lawsuit Cerveceria Modelo de Mexico and Trademarks Grupo Modelo (both Anheuser-Busch InBev subsidiaries) filed against it over Constellation’s use of the Corona trademark for hard seltzer.
U.S. District Court for the Southern District of New York district judge Lewis A. Kaplan wrote that the first of Constellation’s four arguments is “insufficient to carry the day on summary judgment.”
The A-B subsidiaries filed the lawsuit in Febraury 2021 and allege that Constellation has violated the companies’ licensing agreement by using Corona’s trademark to make Corona Hard Seltzer, which A-B argues is not a beer. Constellation argues that its hard seltzer and similar products fall under “the prevailing regulatory definition of ‘beer’” and are considered “‘other versions’ of either a ‘beer’ or a ‘malt beverage,’” Kaplan summarized.
Constellation’s “regulatory definition argument fails because the parties quite obviously were well aware of the varying regulatory definitions of ‘beer’ but elected to negotiate their own, different definition for purposes of the sublicense,” Kaplan wrote. “And its remaining arguments raise genuine issues of material fact.”
Constellation produces and imports Corona, Modelo and Pacifico to sell in the U.S. and Guam under a 2013 licensing agreement that followed A-B’s 2012 acquisition of Grupo Modelo. In the agreement, beer is defined as “beer, ale, porter, stout, malt beverages, and any other versions or combinations of the foregoing, including non-alcoholic versions of any of the foregoing.”
Constellation Brands Shareholders Vote to Reclassify Stock
Constellation Brands shareholders approved to reclassify the company’s stock during a special meeting this week, the company announced.
As a result, Constellation will eliminate its Class B stock and solely offer Class A stock. Shares of Class B stock came with stronger voting power, and the move to Class A stock will result in “‘one share, one vote’ rights,” the company wrote in a press release. Much of the Class B stock belonged to members of the Sands family, which founded the company, then Canandaigua Industries, in 1945.
To complete the conversation, Constellation distributed about $1.5 billion ($64.64 per share) to Class B stockholders, it wrote in the release.
“This change enhances Constellation’s corporate governance profile and capital structure, enabling us to better meet the expectations of our existing stockholders and potentially appeal to a larger base of investors,” president and CEO Bill Newlands said in the release. “Together with other meaningful governance improvements approved as part of the reclassification agreement, we now have an even stronger foundation to pursue our strategic growth initiatives and capital allocation priorities to build shareholder value.”
With the reclassification, executive chairman Robert Sands and executive vice chairman Richard Sands will retire from their roles, but will continue as board members. Robert Sands will serve as the chair of the board of directors.
Shareholders also elected to amend Constellation’s charter, particularly as it applies to board seats. As long as they own more than 10% of the company’s Class A stock, the Sands family will retain the right to appoint two board members, and one board member if their share drops to 5%. Class A stockholders “will now be entitled to elect all directors” at future shareholder meetings; previously, they were entitled to elect 30% of directors.
The plan to amend the charter and reclassify stock was announced in June.
Sheehan Family Companies Sells Maine Branch to 3 A-B Wholesalers
Sheehan Family Companies (SFC) has sold Craft Maine to three A-B distributors, according to reporting from Beer Marketer’s Insights (BMI).
The Westbrook, Maine-headquartered craft distributor will be split among South Portland-based National Distributors, Bangor-based Maine Distributors, and Lewiston- and Oakland-based Valley Distributors. All three companies sell A-B’s portfolio, as well as craft offerings from Mass. Bay Brewing (Harpoon, Clown Shoes, Arctic Chill, Long Trail, Otter Creek), Brooklyn Brewery, Jack’s Abby and other regional and national brands.
National’s primary territory includes Maine’s two southernmost counties, while Valley covers central Maine from the coast to the New Hampshire border, and Maine Distributing covers the northernmost third of the state.
Craft Maine’s portfolio includes national producers such as CANarchy Craft Brewery Collective, Lagunitas, Left Hand, and local brands, including Maine Beer Company, Gneiss Brewing, Bunker Brewing and Banded Brewing. The distributor sold “well under” 500,000 case equivalents per year, according to BMI.
SFC did not return requests for comment.