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Last Call: Rumored Merger of Supermarket Giants; Yuengling to 3 Midwestern States

Grocery Giants Kroger and Albertsons in Merger Talks

U.S. grocery chain giants Kroger and Albertsons are involved in merger discussions, which would create the largest supermarket chain in the U.S., Reuters reported.

The cash-and-stock deal values Albertsons at around $25 billion, Bloomberg reported. The transaction could be announced as soon as this week.

One reason for the possible merger is the threat of Amazon, which Wedbush Securities analyst Michael Pachter estimated has stripped about $4 billion in market share from the two traditional brick-and-mortar retailers.

Kroger’s chain of around 2,800 supermarkets includes Fred Meyer, Ralphs and King Soopers, while Safeway falls under Albertsons’ umbrella of 2,278 stores, Progressive Grocer reported.

The food channel is the second largest off-premise sales channel for the beer category, trailing the convenience channel. Year-to-date through October 2, retail sales of beer in food stores totaled more than $10.16 billion, a -2.4% decline year-over-year (YoY). Those declines amounted to a more than $250 million decline.

Consumer Price Index +4.5% in September

The Consumer Price Index (CPI) for beer at home increased +4.5% in September 2022 compared to September 2021, the U.S. Bureau of Labor Statistics (BLS) reported this week.

Meanwhile, the CPI, which measures the average price change over time paid by consumers for goods and services, for beer away from home (off-premise beer sales) in September increased +6.4%.

Brewers Association chief economist Bart Watson noted on Twitter that “beer prices [were] growing at roughly the same YoY rate as they have been in the past quarter. Worth noting that seasonally adjusted at home (i.e. off premise) prices were actually slightly lower in September vs August.”

Over the previous five months, the CPI for beer in the off-premise channel increased +4.9% in August, +4.6% in July, +4.3% in June, +4.5% in May and +5% in April, according to the BLS.

The increase in beer’s CPI continued to outpace distilled spirits (+0.3%) and wine (+2.7%).

The September CPI for all urban consumers increased +0.4% (seasonally adjusted) and is up +8.2% over the last 12-month period (not seasonally adjusted).

Yuengling Heads to Kansas, Missouri & Oklahoma via Molson Coors JV

Following last year’s launch into Texas, Yuengling will hit Kansas, Missouri and Oklahoma in January 2023 via the Pennsylvania brewery’s joint venture with Molson Coors.

Yuengling’s traditional lager, light lager, golden pilsner and Flight will be included in the three-state roll out.

In Kansas, Yuengling products will be distributed by A&A Coors, O’Neil Distributing, Crown Distributors, LDF Sales and Distributing and Central States Beverage Company.

Yuengling’s Missouri distributors will include Central States, Lloyd Distributing, St. Joseph Beverage, Nauser Beverage, Kohlfeld Distributing, Fechtel Beverage & Sales, Grellner Sales & Service, Heart of America Beverage and Breakthru Beverage.

In Oklahoma, Yuengling will be carried by Jett Distributing, Hitchcock Distributing, Pope Distributing, O’Neil Distributing, Fisher59, Capital Distributing and LDF Sales and Distributing.

Yuengling’s off-premise dollar sales in Texas since beginning to cycle its August 2021 launch are down -54% over the six-week period ending October 1, 2022, according to NielsenIQ data, shared by Bump Williams Consulting. At launch, Yuengling claimed 3.5-4% share of beer but has declined to around 2% in Q4 2021, the data showed. The company’s dollar share of beer through 2022 has also continued to decline weekly from 1.7% in the first week of January 2022 to 1.4% for the week ending October 1, 2022.

Yuengling’s offerings are sold in 22 primarily eastern states.

Tilray Refreshes Green Flash Brand & Portfolio, Expanding Distribution

Canadian cannabis firm Tilray is giving its Green Flash brand both a packaging refresh and a portfolio with two new year-round beers as the company plans to expand distribution.

The Green Flash brand is expanding its distribution across California and adding distribution in Arizona, Colorado, Georgia, Minnesota, Ohio, Pennsylvania, Virginia, Wisconsin and Minnesota, the company said. Eight additional states (Alabama, Connecticut, the District of Columbia, Indiana, Maryland, Michigan, North Carolina, South Carolina and Tennessee) and Washginton, D.C. will follow in early 2023.

Additionally, Green Flash is adding two year-round offerings to its core lineup to go with West Coast IPA. Those new beers include Imperial West Coast IPA (8.9% ABV), a c-store play that will be sold in 19.2 oz. single-serve cans, and Hayz West Coast IPA (6.5% ABV).

All three beers will be sold in 12 oz. 6-packs, and will also be packaged together in a West Coast IPA variety 24-pack, likely for club stores.

In its first quarter fiscal year 2023 earnings report last week, Tilray reported that its beverage alcohol business, which includes SweetWater Brewing and Breckenridge Distillery, increased revenue +13%, to more than $20.65 million, for the three months ending August 31. Beverage alcohol costs for Tilray in the quarter were nearly $10.85 million.

Report: Pabst Discontinues PBR Hard Coffee

Pabst Brewing Company is discontinuing Pabst Blue Ribbon Hard Coffee and selling through its remaining stock, according to Beverage Digest, citing two distributors who said the product is unavailable for future orders.

PBR Hard Coffee is the top-selling hard coffee brand, with 55% dollar share of the hard coffee segment, Beverage Digest reported. However, off-premise sales of the product have declined nearly -40% year-to-date through September 17, the outlet reported, citing NielsenIQ data from Bump Williams Consulting. The overall hard coffee segment generated $28 million in off-premise retailers for the 52-week period ending September 17.

Freight Workers Reject Deal

The Brotherhood of Maintenance of Way Employes Division of the Teamsters (BMWED), which represents around 12,000 freight workers, rejected a tentative contract agreement reached last month by the railroad companies and the 12 unions, according to Axios.

By rejecting the deal, which the White House helped to negotiate, a potential nationwide rail strike is once again a possibility. Among the outstanding issues is stick time for freight workers. Four of the 12 unions have ratified the deal, with the other seven slated to vote over the next month with the largest unions representing conductors and engineers expected to vote on November 17, Axios reported.

For how a potential strike could impact the beer industry, read Brewbound’s previous reporting.

Drizly Announces First Participants in ‘Sip with Purpose’ Brand Accelerator Program

E-commerce alcohol delivery platform Drizly has announced the three inaugural participants in its Sip with Purpose brand accelerator program: AAPI-owned Lunar Hard Seltzer (Brooklyn, New York-based and winner of Brewbound’s 2020 Pitch Slam); Black-owned Sorel Liqueur (Brooklyn, New York); and woman-owned Inspiro Tequila (Chicago, Illinois).

The brand accelerator program gives participants access to “training and insights” across bev-alc’s three tiers, free advertising across the Drizly platform and access to Drizly’s data insights, according to a press release. Additionally, the companies will receive training sessions from the program’s advisory counsel, and will be set up with introductory meetings with “top retailers and distributors in target expansion markets.”

Drizly’s advisory council includes woman-owned PRESS Premium Alcohol Seltzer (Milwaukee, Wisconsin), Black-owned Uncle Nearest Premium Whiskey (Shelbyville, Tennessee) and Black-owned wine company, McBride Sisters (Oakland, California).

Drizly announced Sip with Purpose in August, with applications opening in September. Eligible participants in the program must have “one or more owners of the beverage alcohol brand identify as a member of a historically underrepresented group – AAPI, Black, Hispanic, Latin, LGBTQIA, Native-American and women —and hold at least 50 percent ownership of the brand’s equity or interests.”

Judge Dismisses Stock Undervaluation Claims Against New Glarus

A judge in Wisconsin’s Green County Circuit Court has dismissed the investor lawsuit filed last year against New Glarus Brewing CEO Deb Carey, which accused her of underpaying investors, the Milwaukee Journal Sentinel reported.

The lawsuit was filed against the New Glarus, Wisconsin-based brewery in 2021 – originally in Dane County Circuit Court – by three early investors – Karen Eichhoff of Middleton, Wisconsin, Steven Speer of Camas, Washington and Roderick Runyan of Lawrence, Kansas – who claimed Carey undervalued the company and underpaid for share sold by the plaintiffs in 2019.

The suit also claimed Carey “operates the company with no regard for established corporate rules and instead exercises complete autocratic control with no personal accountability,” and that the company has “compiled $100 million in retained earnings and $40 million in cash, and repeatedly refused to distribute any of those profits and reserves beyond the tax distributions that are specified in the shareholder agreement.”

The two parts of the suit were separated by a Dane County judge, with the latter scheduled to go to trial in December, according to the Journal Sentinel.

Judge Faun Marie Phillipson dismissed the undervaluation claims, stating that “no material misrepresentations or omissions could have been made – nor, once the legal conclusions are peeled away, do any appear to have been alleged,” as the investors’ stock purchase agreement warned there was “no recognized market” for New Glarus shares, so the brewery “essentially set the market for Plaintiffs’ shares in the transactions at issue based upon nothing more than a dollar figure known to both seller and purchaser.”

Phillipson also dismissed claims that Carey “oppress[ed] the plaintiffs, including frustrating plaintiffs’ reasonable expectations regarding receiving value from their investment,” which would have resulted in a relief order to sell the company.

Carey was disgusted by the investor claims, calling them “egregious” “ridiculous” and “slanderous.” She filed a defamation lawsuit against the law firm representing the plaintiffs in October, claiming a press release on the original filing “contain[ed] multiple false statements and creates false implications with regard to Carey.” That lawsuit was dismissed by a Dane County judge in April, the Wisconsin State Journal reported.

Marblehead Brewing Owner Charged with Wire Fraud After Obtaining $3.6 Million in Covid-19 Relief Funds

The owner of Marblehead Brewing Co. in Massachusetts was arrested Thursday for allegedly fraudulently applying for $3.6 million in COVID-19 relief, according to a release from the Massachusetts State Attorney’s office.

Brian Andrew Bushell – as well as Tracey Stockton, Bushell’s attorney – were both charged with conspiracy to commit wire fraud and unlawful monetary transactions.

Bushell is an alleged Orthodox Christian monk who runs Marblehead Brewing as a monastic brewery. He also owns several other Marblehead-based businesses and organizations, including the St. Paul’s Foundation charitable organization; the Shrine of St. Nicholas the Wonderworker, Patron of Sailors, Brewers and Repentant Thieves, a “monastic house”; the Annunciation House residence for clergy; and the Marblehead Salt Co. craft saltern.

Bushell and Stockton allegedly submitted “numerous” applications to the Small Business Administration (SBA) for Economic Injury Disaster Loans (EIDL) for his organizations, beginning in April 2020. In those applications, the duo allegedly “vastly overstated the organizations’ 2019 operational expenses” and “submitted false documents” including income statements, and revenue and expense reports. As a result, Bushell received $3.5 million in EIDL funds.

Bushell and Stockton also allegedly submitted multiple applications for Paycheck Protection Program (PPP) funds, which “inflated the number of employees” – listing at least eight individuals who were “never employed” by Bushell – and the amount of payroll expenses” each of Bushell’s organizations had. The applications resulted in $146,608 in PPP funds.

Bushell and Stockton then allegedly used some of the fraudulently obtained money “to line their own pockets,” “spending tens of thousands of dollars on exclusive memberships, expensive wine, property, renovations” and a “$40,000 wristwatch,” according to Joseph Bonavolonta, special agent in charge of the Federal Bureau of Investigation (FBI), Boston division.

The defendants allegedly spent more than $1 million in COVID-19 relief funding on renovations to two Marblehead properties, which they planned to develop into a chapel, brewery and beer garden, complete with a $90,000 audio video system and nearly $40,000 worth of antique furniture. Money was also allegedly used to buy a new residential property, as well as over “$40,000 in Swiss watches, a nearly $7,00 Goyard designer handbag for Stockton,” $2,400 worth of Hermès items and other luxury goods.

“We allege that these two individuals engaged in brazen, criminal behavior that took advantage of our government’s efforts to rescue organizations – both for-profit and non-profit – by assisting with specific, legitimate expenses during the global pandemic,” U.S. Attorney Rachael S. Rollins said in the release. “Pandemic relief funds are not ‘free money’ – they are a lifeline designed to help business owners and non-profit leaders experiencing real economic hardship. Our government should not and will not foot the bill for fancy designer handbags and lavish lifestyles. Hard-working people deserve these funds.”

Bushell and Stockton could face up to 20 years in prison, three years of supervised release and a fine of at least $250,000 if found guilty of wire fraud, as well as up to 10 years in prison, three years of supervised release and a fine of at least $250,000 for the charge of unlawful monetary transactions, according to the U.S. Attorney’s office.


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