NABCA Control State Results. Control State News. License State News. International News. Public Health News. Industry News.

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1 NABCA Control State Results Control State Results for August 2018 Control State News VA: Miss Virginia Partners with Virginia ABC to Teach Students about Making Smart Choices License State News NY: Local liquor stores lobby against giant newcomer in Greenburgh International News Iceland: Bill Proposes End to State Monopoly on Alcohol New Zealand: Ginger beer recall amid alcohol fears Public Health News Drugs, Alcohol and Suicide Are Killing So Many Young Americans That the Country's Average Lifespan Is Falling Industry News Oregon Wine Volume Rises 6% To 3.6 Million Cases Direct-Shipping, Part 1: DTC Channel Goes Mainstream BevMo! Gets On Board With Women's Empowerment Organization Daily News Agenda for Center for Alcohol Policy Conference Released Hard seltzers on the rise, sold as a better-for-you way to catch a buzz September 21, 2018 NABCA HIGHLIGHTS The Public Health Considerations of Fetal Alcohol Spectrum Disorders (White Paper) Native American Nations & State Alcohol Policies: An Analysis (White Paper) Alcohol Technology in the World of Tomorrow - (White Paper) The Control State Agency Info Sheets. Please view website for more information. NABCA Survey Database (members only) Upcoming NABCA Meetings Statistical Data Reports

2 Control State Results for August 2018 Control State Results NABCA CONTROL STATE RESULTS NABCA Daily News Update (9/21/2018) 2 During August 2018 nine-liter spirits case sales in the control states grew 4.3% over same period sales last year. Alabama (12.0%), Iowa (6.7%), Idaho (4.9%), Montgomery County Maryland (0.1%), Michigan (4.8%), North Carolina (8.6%), New Hampshire (2.3%), Ohio (6.6%), Pennsylvania (0.2%), Utah (4.9%), Virginia (7.0%), and Vermont (5.4%) reported monthly growth rates exceeding their twelve-month trends. The growth rates for Maine (1.7%), Mississippi (-5.0%), Montana (-1.2%), Oregon (2.4%), West Virginia (1.9%), and Wyoming (-2.3%) fell short of their twelve-month trends. Control state rolling-twelve-month volume growth, 2.3%, was nearly flat with July s reported 2.4%. Volumes in the control states grew 2.7% year-to-date compared to 3.0% a year ago. Control state spirits shelf dollars were up 7.6% during August while trending at 4.9% during the past twelve months. Alabama (17.1%), Iowa (10.4%), Idaho (7.0%), Michigan (9.2%), Montana (3.1%), North Carolina (11.4%), Ohio (10.5%), Oregon (4.9%), Pennsylvania (3.2%), Utah (5.7%), Virginia (9.7%), and Vermont (6.5%) reported growth rates exceeding their twelve-month trends, while Montgomery County Maryland (3.4%), Maine (5.8%), Mississippi (-4.0%), New Hampshire (0.9%), West Virginia (2.7%), and Wyoming (-1.5%) grew shelf dollars at rates below theirs. Shelf dollars in the control states are up 5.4% year-to-date compared to 5.1% last year. Price/Mix for August is 3.3%, up smartly from July s 2.1%. Irish Whiskey, with 1% share of the nine-liter case control states spirits market, was August s fastest growing category with 14.3% growth reported and a twelve-month trend of 13.5%. Vodka, with 35% share, grew during the same periods at 4.0% and 2.2%, respectively. Every category--brandy/cognac (0.4%), Canadian Whiskey (3.3%), Cocktails (7.4%), Cordials (1.5%), Domestic Whiskey (7.3%), Gin (1.2%), Irish Whiskey (14.3%), Rum (2.4%), Scotch (0.6%), Tequila (12.6%), and Vodka (4.0%)--grew at a rate above its twelve-month trend. August s nine-liter wine case sales growth rate was -1.8%. Pennsylvania (reporting -2.8% nine-liter case growth for wines), New Hampshire (1.6%), Utah (0.8%), Mississippi (-1.2%), Montgomery County Maryland (-1.8%), and Wyoming (-9.1%) are the control states that are the sole wholesalers of wines and spirits within their geographical boundaries. Rolling-twelve-month wine volume growth in these six control states was -1.4%, slipping from July s reported -0.6%. 9L Cases CM % Chg Shelf $ CM % Chg Price/Mix Control States Total Control States % Central Region % IA, MD, MI, OH, PA, WV NE Region % ME, NH, VT NW Region % ID, MT, OR, UT, WY Southern Region % AL, MS, NC, VA

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5 CONTROL STATE NEWS NABCA Daily News Update (9/21/2018) 5 VA: Miss Virginia Partners with Virginia ABC to Teach Students about Making Smart Choices The Roanoke Star Beginning this fall, Miss Virginia Emili McPhail will share the importance of making healthy choices with students in Virginia elementary schools as part of a Virginia Alcoholic Beverage Control Authority (ABC) educational program. Virginia ABC has a long-standing partnership with the Miss Virginia Organization. Last year, Miss Virginia Cecili Weber reached thousands of elementary school students with her message about making smart choices. Virginia ABC s Education and Prevention Section is continuing that working relationship with McPhail for the Miss Virginia School Tour in Supported by a $10,000 ABC grant, her tour will feature programs at elementary schools across the state throughout the school year. McPhail, a resident of Roanoke and 2018 graduate of Hollins University, was named Miss Virginia in June. During presentations at elementary schools, she plans to encourage students to make healthy, smart and informed decisions. Her platform, which centers on ending hunger in the U.S., depends on breaking the cycles of poverty, hunger and substance use that break communities. It is so very important that we all contribute to making our communities healthier places to live, and that begins with making good choices, said McPhail. I hope to leave every place I go on the tour a little bit better than I found it. The Miss Virginia Organization and Virginia ABC share the combined mission of educating students about making positive decisions to better prepare for success. As Miss Virginia travels around the commonwealth speaking to young children, it s important to share ageappropriate information about alcohol to protect them from dangerous behaviors as they grow older, said Virginia ABC Education and Prevention Section Manager Katie Weaks. Participants in the school programs will learn: how to identify what is safe and healthy for their bodies; what positive choices are and how to make them; how to say no to unhealthy choices; what it means to be a leader in their community and among their friends; and how to identify who is a trusted adult and the role they play in their lives. I am excited to have this opportunity to help young people and hopefully strengthen our communities, added McPhail. Schools interested in scheduling a Miss Virginia appearance may request a school tour stop by visiting The Virginia ABC Education and Prevention Section provides free publications that can be ordered online. This includes one created specifically for elementary school students, which is distributed to all tour stop participants. For the order form, visit

6 LICENSE STATE NEWS NY: Local liquor stores lobby against giant newcomer in Greenburgh Lohud By Richard Liebson NABCA Daily News Update (9/21/2018) 6 Aries Wine & Spirits owner Tony Russo says he's worried what the Total Wine franchise moving into Greenburgh will do to his business in White Plains. There are no rocks or slingshots involved, but a group of local "Davids," in the form of small mom-and-pop liquor stores, is taking on the nation's largest family-owned liquor retailer, saying if Total Wine receives a license to open in Hartsdale, it may run many of them out of business. Total Wine & More, a Maryland-based chain with almost 200 stores in 23 states, has applied to the state Liquor Authority for a license to open a store in a 21,000-square-foot space in the Dalewood Shopping Center on North Central Ave. "They're huge, they have a lot of money and they use predatory business practices," said Tony Russo, owner of Aries Wines & Spirits in White Plains, who is rallying opposition to Total Wine. "They'll come in and sell major brands of wine and liquor at or below cost. We can't compete, and many of us will go out of business. They're like the Walmart of package stores." Total Wine was founded 25 years ago by brothers Robert and David Trone. Their company employs about 6,000 people nationwide and took in $2.7 billion in revenue last year, according to Market Watch, which reports on the wine and spirits industry. The typical Total Wine store averages 25,000 square feet and carries 8,000 wines, 3,000 spirits and 3,000 beers. The company usually maintains a large stock of locally produced wines, craft beers and spirits, along with its own. Robert Trone, who will own the Hartsdale store separately from his brother, said that if the permit is approved, it will employ 40 to 60 people and sell wine and distilled spirits, but not beer. "We'll have a tremendous focus on New York-produced wines and spirits," he said. Trone said he wanted to open in Hartsdale "because Westchester fits our business model perfectly. It has a dense population of wealthy consumers who appreciate great prices, great service and a fantastic selection." Russo, a former member of the Metropolitan Package Store Association executive board, said there are about 200 small liquor stores in Westchester County. His store is about 5,000 square feet and employs four people. "Most of us are family-owned mom-and-pop stores that have served our communities for years. And believe me, Total Wine is a threat to all of us," Russo said. "And there's a ripple effect; They'll also hurt wholesalers and delivery companies." The local stores have been writing letters of opposition to the SLA, and asking their customers to do the same. They're also calling on local and state officials for help. Most are members of the Metropolitan Package Store Association, which represents some 3,000 retailers in the New York City metro area and is leading the fight against Total Wine. "Total Wine expects stores they open in New York to draw customers in a 50-mile radius," said association spokesman Steve Malito. He said the mega store comes in "with a plan to undercut longtime local merchants and take over their market share, even if it means losing money until the mom-and-pop businesses are forced to surrender and close up shop for good." State Sen. Shelley Mayer, D-Yonkers, said she's preparing a statement to the SLA opposing Total Wine's license.

7 NABCA Daily News Update (9/21/2018) 7 "We're talking about small neighborhood liquor stores owned by people who are part of the fabric of our community," she said. "They're at tremendous risk. The experience in Long Island is very disturbing." Mayer was referring to Total Wine & More's first New York store, in a 26,000-square-foot building in Westbury, owned by David Trone. "Local stores all across Nassau County are experiencing an average percent business drop-off since the Westbury mega-store opened," Malito said. "This forces these local merchants to cut staff in order to survive Total's anti-competitive scorched-earth business practices." Robert Trone did not address the concerns raised by local store owners, saying the key should be on how well the needs of consumers are served. "Consumers really want to make their own choices on where to shop," he said. "If I provide great value, selection and service, I'll be successful. If not, I won't. But the focus should be on meeting the consumer needs. Government should be supporting the interests of consumers.they're not there to guarantee the success of small businesses." If there's a ground zero in this booze business battle, it's the Hartsdale Wine Shop, a 3,000-square-foot store four doors down from the planned Total Wine store. It opened in 2007 and owner Linda Giacopelli employs four people. "I'm angry that they think they can just come in and destroy all the mom-and-pop package stores within a 50-mile radius," she said. "They'll undercut everybody, which will even hurt Stew Leonard's, Costco and bigger stores like that." Still, she said, "I don't think we're doomed at all. We have a very strong organization, we're lobbying hard and I think we have a good chance of convincing the Liquor Authority to turn them down. I can't see how they would allow them to come in and hurt so many local businesses." Spokesman William Crowley said the three-member Liquor Authority board will consider Total Wine's permit application in a public meeting. "We've received a lot of letters on this one," he said. The board will look at the proximity of Total Wine to other liquor stores, the local population and demographic information, and whether the new store offers any unique products not otherwise available. They also consider public input, including the letters of opposition being sent by local store owners, officials and the Package Store Association. "There's a lot of interest in this, so we may end up holding a special meeting," he said. Although a date for that meeting has not been set, Crowley said it will most likely be scheduled for some time in November. For local wine and spirit merchants, the stakes are huge. "If the application for a license in Hartsdale is granted, Total will put stores throughout Westchester, Rockland, Putnam and Duchess in financial peril," Malito said. INTERNATIONAL NEWS Iceland: Bill Proposes End to State Monopoly on Alcohol Iceland Review By Larissa Kyzer September 21, 2018 A new bill has been introduced to parliament that, if passed, would abolish the state monopoly on alcohol sales, RÚV reports. This is the fifth time that a bill of this kind has been submitted for parliamentary consideration.

8 NABCA Daily News Update (9/21/2018) 8 Vice chair of the Reform Party Þorsteinn Víglundsson introduced the bill, which was supported by six other MPs from the Reform, Pirate, and Independence Parties. With the abolishment of the state monopoly on alcohol sales, private wine and liquor stores would be allowed to operate. However, supermarkets and grocers would still not be permitted to sell alcohol under the terms of the new bill. The bill also stipulates that alcohol could be advertised within certain limitations. For instance, all such advertisements would have to be accompanied by a warning of the dangers associated with alcohol and ads would not be allowed to target children and/or young people. The history of Iceland's state monopoly on alcohol is a rather interesting one and is summarized (in English) on the website of Vínbúðin, the state-run liquor store chain. Back in 1912, Iceland implemented a total ban on the production, consumption, and importation of alcohol under the thinking that "...alcohol consumption was so excessive that it could hinder progress in society." The ban was partially lifted in 1922, when "an exception was made and Icelandic fishermen could sell Spaniards bacalao for Spanish wines. Import was later permitted if the strength of the alcohol was under 21%. Beer was however still banned." The first state-run liquor store also opened in 1922; the production of alcoholic beverages was under state control from Today, there are 50 Vínbúð around Iceland, 13 of which are in capital area. New Zealand: Ginger beer recall amid alcohol fears Otago Daily Times September 21, 2018 Beverage company Lion is recalling Mac s Non-Alcoholic Ginger Beer after concerns some bottles have been accidentally filled with alcohol. Customers are being urged to check the product due to the possibility some bottles have been incorrectly filled with beer and labelled as non-alcoholic. Batches with the best before date of March 20 or 21 next year are those affected by the false labelling. If customers have the product they are asked to put it aside and to contact Lion on , which is offering a full refund. This recall does not affect any other batches of this or any other Mac s brand product, a recall notice said. If you have consumed any of this product and have any concerns about your health, seek medical advice. Lion also apologises to any customers for any inconvenience the recall might cause. In 2016, ginger beer rivals Bundaberg recalled batches of their brew due to a safety hazard when some caps popped off and caused minor injuries. Two people had been hurt when caps from the bottles hit them in the face, popping off due to pressure in the bottle. Consumers are advised not to open these bottles but to return them to the place of purchase for a full refund, a spokesman said at the time.

9 PUBLIC HEALTH NEWS NABCA Daily News Update (9/21/2018) 9 Drugs, Alcohol and Suicide Are Killing So Many Young Americans That the Country's Average Lifespan Is Falling TIME By Jamie Ducharme Young Americans are dying in rising numbers because of drugs, alcohol and suicide, according to new federal data. The Centers for Disease Control and Prevention's National Center for Health Statistics (NCHS) issued its annual comprehensive health and mortality report, which analyzes trends in death rates by cause and demographic. Drugs, alcohol and suicide, the report says, have contributed to the first drops in U.S. life expectancy since While U.S. life expectancy rose from 77.8 to 78.6 years between 2006 and 2016, the trend reversed during the end of the decade, leading to a 0.3-year decline between 2014 and in large part because of rising rates of drug overdoses, suicide and liver disease, as well as Alzheimer's. Death rates for Americans ages 15 to 44 rose by around 5% each year between 2013 and 2016, and drugs, alcohol and suicide are chiefly to blame, the CDC report says. Drug overdoses alone killed more than 63,600 people in 2016, the report says. Among men ages 24 to 35, overdose rates rose by more than 25% each year between 2014 and 2016; nearly 50 out of every 100,000 deaths in this population were overdose-related by Women ages 45 to 54 had the most overdoses overall, but those ages 15 to 24 saw the highest rate of increase: about a 19% jump per year between 2014 and Alcohol is also a major public health concern. Liver disease replaced HIV as the sixth-leading killer of adults ages 25 to 44 in Among men and women ages 25 to 34, deaths from liver disease and cirrhosis increased by about 11% and 8% per year, respectively, between 2006 and Older adults, however, still die of liver disease at much higher rates than young adults. Suicide, meanwhile, is on the rise in nearly every demographic - but a few trends emerged. Suicide is now the second-leading cause of death among people ages 15 to 24, increasing by 7% in this group each year between 2014 and It's also the third-leading cause of death among people ages 25 to 44, accounting for almost 17 of every 100,000 deaths in this population in Suicide rates even rose among children ages 1 to 14, increasing around 9% each year during the study period - though suicide was the cause of fewer than one of every 100,000 deaths in this group in And while men still die by suicide much more frequently than women, increasing rates among young women are starting to narrow that gap. Suicide rates among young and teenage girls rose by 70% between 2010 and 2016, according to previous CDC data. Nearly three-quarters of the Americans who died in 2016 were older than 65. Rates of many common killers decreased in this population during the preceding decade; deaths from heart disease and cancer, the top two killers of adults older than 65, both declined, as did those from strokes.the exception, however, was Alzheimers, the death rate of which rose by 21%. According to separate CDC data released Thursday, that trend is likely to continue. The number of people affected by Alzheimer's and related dementias is projected to double by 2060, rising from 5 million people (1.6% of the U.S. population) in 2014 to an estimated 13.9 million people (3.3% of the population) in 2060, according to the CDC.

10 Oregon Wine Volume Rises 6% To 3.6 Million Cases Shanken News Daily By Daniel Marsteller INDUSTRY NEWS NABCA Daily News Update (9/21/2018) 10 The Oregon wine category advanced by 6% in volume terms last year to 3.6 million cases, according to the Oregon Wine Board. On a revenue basis, the state s wine industry increased by 4% to $551 million in Meanwhile, at the retail level, Oregon wines continue to move at a brisk clip, with dollar sales up 16% in Nielsen channels in the 52 weeks through August 11. While Oregon s in-state wine sales were down slightly last year, slipping 2% to 579,000 cases, domestic U.S. volume outside Oregon was up 9% to 2 million cases. Export shipments posted strong growth, jumping 44% to 94,000 cases, with Canada accounting for just under half of international sales. Tasting room sales rose by 1% to 490,000 cases. With sales on the rise, new wineries continue to spring up across Oregon. Last year, the state s total count rose by 44 wineries to reach 769, with most of the expansion taking place in emerging regions along the northern border and in the Rogue Valley in Southern Oregon. Daniel Marsteller Direct-Shipping, Part 1: DTC Channel Goes Mainstream Shanken News Daily By Carol Ward & Kevin Barry September 19, 2018 Direct shipping of wine is now mainstream in much of the United States. Last year, volume of direct-shipped wine was up 15.3% to 5.78 million cases, with consumer spending growing 15.5% to $2.69 billion, according to the 2018 Direct to Consumer Wine Shipping Report by Sovos and Wines & Vines. The channel is on pace to eclipse 6 million cases and $3 billion in sales by year-end, to reach nearly 2% of the U.S. wine market in volume and 5% in sales. And those figures include only wines shipped directly from wineries to consumers not wines shipped from retailers to consumers, which pass through the supplier and wholesale tiers. Those sales, according to Wine.com, are estimated at a further $1 billion. Direct-to-consumer (DTC) shipments are now clearly part of the wine-selling landscape, particularly for smaller wineries. Since the Granholm v. Heald U.S. Supreme Court decision back in 2005, the number of states where wines can legally be shipped has risen from 31 to 46. It s a far cry from two decades ago, when the DTC channel was all but nonexistent. At the time of the Granholm decision in 2005, DTC still totaled only 500,000 cases. Today, smaller wineries are often content to stick with DTC and leave the three-tier system to larger players. According to the Sovos report, wineries with volume of 5,000-50,000 cases accounted for 43% of all DTC shipments and 46% of sales last year. At Beckham Estate Vineyard in Oregon s Willamette Valley, DTC accounts for about 85% of the winery s 2,000- plus-case production. Co-owner Annedria Beckham has seen recent interest from wholesalers, but notes that a three-tier approach would likely require a shift in product range and pricing structure. Distributors are our partners, and they re out promoting our wines, Beckham says. But if we get on a great restaurant wine list and a customer then can t find the wine in their local market, they ll go directly to my website and order from me. Larger winemakers stress the importance of the three-tier system even as they work to develop a stronger DTC presence. Three-tier is critical to our success, as is DTC, says Peter Mondavi Jr. of Charles Krug Winery. They re complementary. The wines we re selling for DTC are higher-priced, small-production items that don t move very fast within the three-tier system.

11 NABCA Daily News Update (9/21/2018) 11 Natasha Hayes, vice president of marketing and direct-to-consumer for national brands at WX Brands, agrees that three-tier and DTC are symbiotic. Usually what we re promoting in DTC is not out in wholesale labels that are unique and exclusive, she says. We re building the brand out in wholesale with certain SKUs, and creating unique accessibility for wines that have limited access through DTC. There s not much conflict. WX Brands portfolio includes Bread & Butter, Jamieson Ranch Vineyards, Chronic Cellars, and others. In the second part of this feature, we ll focus on how the retailer and wholesaler tiers are adapting to the rise of direct-shipping. Carol Ward & Kevin Barry Direct Shipping, Part 2: The Retail and Wholesale Landscape BevMo! Gets On Board With Women's Empowerment Organization California Beverage Retailer Partners with Women of the Vine & Spirits to Drive Professional Development and Advancement of Women in Alcohol Beverage Industry News Release News Provided by BevMo! CONCORD, Calif., Sept. 20, 2018 /PRNewswire/ -- Pushing for greater representation and advancement of women in its industry, the California-based alcohol beverage retailer BevMo! announced today that it is partnering with Women of the Vine & Spirits, the world's leading organization giving women globally a platform and voice to thrive in the alcohol beverage industry. In partnering with Women of the Vine & Spirits, BevMo! employees and teams will gain access to a global and diverse network where they can connect across sectors with like-minded member companies to best tap the potential of current and future female employees. Women of the Vine & Spirits is committed to taking action and making a positive impact on the alcohol beverage industry, worldwide. BevMo! is encouraging all its employees to take advantage of the partnership by joining as individual members at no charge (a benefit of its corporate membership) in order to access the group's strong networking programs, utilize its professional development and advancement programs, and gain access to member forums and its career development resource center, to name a few benefits. "We are thrilled to have BevMo! on board," said Deborah Brenner, founder and CEO, Women of the Vine & Spirits. "We share a commitment to provide women in the industry with tools, resources and access to role models to advance their professional careers, and we look forward to connecting and collaborating with BevMo! employees for their continued growth in this industry." "We continually strive to ensure our employee base reflects a team of empowered individuals who value diversity and a focus on attracting a wide variety of experiences and perspectives," said Kelly Purves, vice president of human resources of BevMo! "In particular, we embrace the mission of Women of the Vine & Spirits as it provides business and professional opportunities for women to advance in the alcohol beverage industry. DAILY NEWS Agenda for Center for Alcohol Policy Conference Released Healthy Alcohol Marketplace By Pam Erickson The agenda for the Center for Alcohol Policy's 11th Annual Alcohol Law and Policy Conference taking place October 9th - 11th, 2018, in St. Paul, MN at The Saint Paul Hotel, is now available online.

12 NABCA Daily News Update (9/21/2018) 12 This conference features regulators, lawmakers, public health officials, academics, alcohol industry representatives and alcohol law attorneys during two days of intense panel discussions on today's hot topics in the field of alcohol regulation. It is a must-attend event for anyone interested in or involved with alcohol policy! CONFERENCE AGENDA This year's educational sessions will include: Brave New World of Age Verification: This panel will explore fraudulent ID's, e-commerce and current challenges with age verification and underage drinking. High-Risk Drinking on College Campuses: Can we make a difference? Another Date with the Supremes?: Is there one, or more, alcohol-related court challenges poised for the Supremes? Toward Marijuana Control: Can lessons from Toward Liquor Control help guide marijuana regulators? State of the States: Leading state legislators explore alcohol regulatory developments in the states. (Happy) Hoppy Trails: This breakout session will explore challenges and opportunities with alcohol tourism - trails, festivals, tasting rooms and more. Can I (Anti)trust You?: This panel will discuss the federal antitrust issues in the review of the largest alcohol supplier merger in history, outstanding issues as well as state antitrust issues impacting alcohol regulation. Trade Practices Update: This session will explore federal and state regulators' increased focus on trade practice enforcement. For full session details, please download the conference brochure and the conference agenda found here. Sessions are subject to change. Additions or updates will be posted to the conference's page on the Center's website. Hard seltzers on the rise, sold as a better-for-you way to catch a buzz The Virginian-Pilot By Greg Trotter Chicago Tribune (TNS) Hard seltzers, the feistier cousins of nonalcoholic sparkling waters like LaCroix, are surging in popularity a small but growing reason for optimism within the flagging beer industry. Flavored malt beverages, driven by the explosive growth of hard seltzer sales, are one of the fastest growing segments within beer and are helping to offset some of the market share lost to wine and spirits in recent years. Time will tell whether the boozy bubbly waters led by brands like White Claw, Truly Spiked & Sparkling and SpikedSeltzer continue to rise or fall flat. Not too long ago, hard sodas, such as Not Your Father s Root Beer, were the talk of the industry, a nostalgiainduced fad that lasted only a couple of years before sales began to sharply decline. But some executives and industry experts believe the less-sugary seltzers are likely to continue booming as more American consumers reach for products they consider to be healthier. They re selling the crap out of it. The biggest question is, Will the traction hold? said Eric Shepard, executive editor of Beer Marketer s Insights, a trade publication covering the beer industry. No hard seltzer has been more successful than White Claw, the top-selling brand in the Chicago market and throughout the U.S. Our aspirations are significant not only transformational for the beer industry but transformational for our organization. We think the true potential of the brand is still relatively untapped, said Phil Rosse, president of Chicago-based Mike s Hard Lemonade Co., which makes White Claw. Sales of White Claw have exceeded $117 million this year, according to sales data ending Sept. 2 provided by the company, which do not include sales at Costco or liquor stores. The entire Mike s Hard business is up more than 20 percent, largely due to White Claw, which launched in May 2016.

13 NABCA Daily News Update (9/21/2018) 13 White Claw sales tripled last year and likely will again this year, said Mike s Hard spokesman Sanjiv Gajiwala. That surge in demand has led to some supply shortages this year, prompting the company to invest in more manufacturing lines that should boost supply by early 2019, Gajiwala said. Who exactly are White Claw drinkers? They are both men and women, Gajiwala said. Some of them drink wine, spirits and light beer. Some are lapsed drinkers, he said, meaning they had stopped drinking altogether. But the common thread, according to the company s research, is that they re healthy lifestyle consumers. Marketed as a better for you option for active, healthy types, most of the top hard seltzers are relatively low in calories about the same as light beer low in carbohydrates and gluten-free. Most, including White Claw, are even sold in skinny cans. Hard seltzers fit into the work hard, play hard mentality of many young professionals, said Casey O Neill, a member of the innovation team at Boston Beer that developed Truly Spiked & Sparkling, the first hard seltzer to hit the Chicago market. O Neill said she came up with the idea for Truly about two years ago when she went out for drinks with friends after a workout. There weren t any good options for a light and refreshing gluten-free drink that wasn t either too sweet or too alcoholic, O Neill said. That lit the light bulb, she said. In perhaps a sign of the times, Truly and other flavored malt beverage brands are now driving sales growth for Boston Beer, the company long known for Sam Adams beer. Early next year, Truly plans to launch a rosé-flavored seltzer in the Chicago market a mashup of two of the hottest trends in alcohol. So far, hard seltzer has been dominated by the larger alcohol companies that already have national distribution networks in place. Anheuser-Busch InBev bought SpikedSeltzer in 2016 and rolled it out nationally last year. Chicago-based MillerCoors launched its Henry s Hard Sparkling Water last year. Diageo s Smirnoff Spiked Sparkling Seltzer is another top national competitor. The national brands that succeed in the long run likely will win on pricing and execution rather than taste, said Chris Furnari, editor of Brewbound, a beer industry publication. The consumers drinking these products are less likely to be loyal to a specific brand, Furnari said, recalling some gatherings this summer with millennial-aged friends and coolers of hard seltzers. The question Furnari said he heard several times was: Can you get me a seltzer? No requests for a specific brand or even flavor just a seltzer. There s a lot of run room for these products, but there are some question marks too, Furnari said. Can this be a year-round thing? Is someone going to drink a seltzer in December? The marketing minds at Anheuser-Busch are at work on that very question. This Halloween, SpikedSeltzer will launch an ad campaign promoting the mermaid featured on the brand s label as a costume. SpikedSeltzer also can be used as a cocktail mixer, which will be promoted around the holidays. Anheuser-Busch plans to ramp up marketing and investment behind SpikedSeltzer going forward, said Chelsea Phillips, vice president of Beyond Beer Brands for Anheuser-Busch. (Hard seltzers) are a wide-open space of nothing but opportunity that we ve just begun to dabble in, Phillips said. The opportunity for hard seltzers includes growing out West, where they ve been slower to catch on, according to recent Nielsen data that show market-share growth. They also mostly sell in stores not bars or restaurants. That too could change if demand continues to swell. U.S. sales of hard seltzers in retail stores alone garnered $336 million in the 12 months ending Aug. 11, according to Nielsen data. That s an increase of 168 percent from the same period a year earlier. That s a long way from when Nick Shields first Googled hard seltzer back in 2012.

14 NABCA Daily News Update (9/21/2018) 14 When it came up blank, I was a happy man, said Shields, co-founder of SpikedSeltzer, which is widely acknowledged as being the first hard seltzer on the market. After launching in 2013, Shields and his partner Dave Holmes grew the Connecticut-based business to distribution in 13 states before Anheuser-Busch came calling in Being acquired by the largest beer company in the world was a little stressful, but also necessary to grow the brand nationally, Shields said. We still have plenty of work to do, Shields said. We re not resting on our laurels. This and any files transmitted with it are intended solely for the use of NABCA members, free-of-charge. If you do not wish to receive this daily service, please respond with UNSUBSCRIBE in the Subject line. In addition, if there is another individual within your company who should also be receiving this service, please forward their NAME, TITLE, EMPLOYER, and ADDRESS to communications@nabca.org. Thank you for your time and attention as we continue to work to improve upon the services and benefits that we provide to our members. Please note that any views or opinions presented in this are solely those of the author(s) and do not necessarily represent those of the National Alcohol Beverage Control Association.