Bonus Content - Ozempic's Effect on Bev-Alc Consumption

0:28Thanks for tuning into Taste Radio.

0:40Hello and welcome to the Rebound Podcast. I'm Justin Kendall. I'm Jess Infante. And I'm Zoe Licata. And this episode, as I plugged at the top, we are going to be talking about Ozempic, the weight loss drug and its potential effect on alcoholic beverage consumption. Joining us later in the show will be Nadine Sarwat and Trevor Sterling. You might know them as analysts with Bernstein. They've done extensive research on Ozempic and the potential effects on alcoholic beverage consumption. So we'll hear all about it with them and tell you what you should know. But first, let's plug the BrewBound Live Business Conference coming up December 6th and 7th in Marina del Rey, California.

1:26That's coming up pretty quick. We've got a great lineup coming together. I think it's one of the best lineups we've done. Yeah, I'm excited for Rebound Live. I booked my flight yesterday, but I actually booked two flights because my baby is coming. I can't promise she will be at the conference, but she will be in the area with my mom. That's very exciting. I also booked my flights this weekend. I think that means it's real. It's happening. We're actually going to be there. It's happening. Yeah. There are two ways to take my baby is coming. So like, I'm glad that it's she's coming with instead of, you know, she's not here yet, but she's going to be here.

2:06Yeah, we're not doing a live birth on stage. No, no. She she will be six months old at that time. Yeah. And mine will be two. Like the day that the show ends, she will have her second birthday. Oh, that's right. Great. That's right. Yeah. Enough of that. Let's talk about the things that are going to happen at Brewbound Live. And I will say that there's going to be a lot of networking, some with Jess's baby, maybe. And then, yeah. And, you know, people will probably be excited for that. They'll also be excited to hang out with a lot of our speakers. You know, we've got C-store buyers, we've got leaders from Rheingeist, Crowns and Hops, the National Black Brewers Association, the Brewers Association, Extra Mile Convenience Stores, Circle K, Stone Distributing, Breakthrough Beverage.

2:57We've got a whole lineup that is just you're not going to find a lineup like this anywhere else. No, no. It's diverse in terms of like age of presenters, ages of the companies involved, in terms of like angle of the industry, segments, geography. We've got some old favorites. We've got new faces. I'm pretty pumped. Yeah. And this is a chance to interact with a lot of these folks, network with them, set up meetings, you know, make new partnerships. One of the things that you two did was interview Schilling Cider about National Cider Month. And that program was largely born, I think, out of conversations that we had.

3:43that Schilling had with Mary Guyver from Whole Foods at Brewbound Live. Yeah, it was just one of many stories that we've heard. We're not making them up. They really are happening where there is productive networking happening at Brewbound Live and we are seeing things come about because of those conversations that happened there. So that was just the most recent one that we've heard of. And it's turned into a big program for both Whole Foods and for Schilling and for just all cideries who are involved with National Cider Month and doing some programming for it. So it was really cool. So set up some meetings.

4:19Join us in Marina Del Rey. You won't regret it. You can get tickets at brewboundlive.com. With that, let's get to the news of the week. And speaking of Brewbound Live, our keynote address will be delivered by new Ryan Geist CEO Adam Bankovich. And he'll be joined on stage a little bit later by Ryan Geist co-founder, Brian Goulding. But Reingeist announcing its leadership changes, a lot of promotions. Reingeist dropped the interim tag from Adam's title, and he is now the full-time CEO of the company. Yeah, we saw Adam get that interim tag earlier this year. And when we talked to both him and Brian at that time, they said, you know, we're being genuine about saying, you know, he's not just guaranteed this job.

5:06We're going to do a full search of who's going to be right as our next CEO. And it turned out that it really was Adam and he showed the right kind of leadership that they were looking for and was on the same base with everyone about this new focus approach that they're having going forward. So we also got to talk to them about some of their new strategies going into this coming year, which is another one of the reasons why they'll be kind of kicking off Brewbound Live for us is because they've reached this decade mark and they're trying to figure out what Reingeist looks like now and how to do that in the best, most productive way, both in terms of just physically what a company can do, but also in what's best for sales, what's best for morale, so many different aspects of the business.

5:57It's been really interesting to watch Reingeist mature and grow and evolve the past few years. Because two years ago, two plus years ago, Brian and his co-founder, Bob, decided to step down from being really in the nitty gritty of the day-to-day step and hire an external CEO to take over. And that person came from outside the industry and they were around for a little bit, but I think eventually they had decided to part ways as well. And that's a tough call when you're a founder and you decide, Hey, you know, I've got, I built this thing and I've gotten it to this point, but, but what we need is someone else to steer the ship.

6:35But that's a big choice to make. And I remember feeling so impressed with, with Brian and Bob that they knew that they didn't quite have like the skills to build and the skills to maintain at scale are very different. So, and I'm just so excited to see what Adam does with the role because, you know, he started with them last year as chief commercial officer, joined us at BrewBound Live on stage for a conversation about fourth category. And here he is. So it's really interesting to be able to watch all of these things happen. Yeah. One of the things that Bryant kept repeating in the most recent conversation we had with him was about getting out of your own way.

7:12And I think that part of that was that change away from the co-founders in such involved leadership roles was they acknowledged that they don't need to be as involved in some of those business-making decisions and can get away from some of that big craft entrepreneurial environment that can get a little extensive in innovation and other things sometimes. And so it's been this new theme for them. It's just getting out of your own way and figuring out what's best for the company overall. Perfect segue for what I was just gonna say, which is that in terms of getting out of your own way, like they told us that they're really kind of re-imagining, but kind of discontinuing the RG Bev's line, which was what Adam was joining us at BrewBound Live to talk about was their line of, you know, fruit forward malt beverages that like aren't quite F &Bs, but aren't quite beer and aren't quite cider.

8:05And I think they really listened to consumer feedback who said, hey, I remember the way that, you know, your bubbles used to be and why is bubbles different now? So one thing that they were doing in terms of getting out of their own way is to just going back to basics to something that worked, which you don't see too many companies innovate that quickly and kill the innovation product as quickly as they did because they just said, hey, this isn't working for us. So they got out of their own way. Yeah. They said that the consumer found it confusing that they didn't know what RG Bev's was. And so getting the Rheingeis name on Bubbles made a lot of sense.

8:44Yeah, there are going to be themes interwoven within that keynote address that are, you know, themes that are going to carry from 2023 on into 2024. And that's focus. And that's leadership change at the top of major craft breweries. And Zoe and I have tracked it all year long in your absence, Jess. And we've got a whole list. It reads like a giant scroll of leadership changes this year. And Adam represents some of that new blood that's coming in and taking over some of these roles. So very excited for him. Very excited also for everybody that got a promotion at Ryan guys. Cole Hackbarth is the new VP of brewery operations.

9:28Mark Fingoni has been promoted to VP of sales and Tracy Ireland has been promoted to VP of Marketing. Congrats to all of them. Awesome news for everybody. Good to see the company promoting from within and just paying off some longtime workers. Let's talk about something else that involves workers and culture, and that's at Creature Comforts. And the Brewers Union of Georgia, BUG as it's known as, they had a union vote at creature comforts and it fell short. Yeah, we've been waiting to see Bug even have this vote, let alone see a result for the majority of this year. They had been waiting for this result of this pre-election hearing that they had back in February to just be able to have an election vote.

10:21And they got the answer that the basically the allowance of being able to have this election in August. And so that election was held and had a majority vote, 32 against 21 in favor of the Creature Comforts union being recognized and being supported by BUG. So we have gotten statements directly from Creature Comforts as of this point, but we have been in contact with BUG and should have some more information from them soon. But Creature Comforts told us that BUG is fighting the results of it. So this might not be the end of this conversation. We might have more coming out of this, so stay tuned for that.

11:05But Creature Comforts told us in a statement shared with us that they were pleased but not surprised by the results and that there was a pretty large voter turnout. 90 % of eligible employees participated in the election. I think it was a bit of surprise just by the amount of vocalization there was around this vote happening. But stay tuned because there will certainly be more to come. One of the things about craft is that unions are surprisingly rare within it. We saw anchors, workers succeed at forming a union, and they were on the verge of another contract when Sapporo made the decision to cease operations at Anchor and liquidate the business.

11:51And we saw an effort at Surly fail. It came up, I believe, one vote short of being able to unionize there. And then the one example I think that we've seen, management recognize the union, is Fair State Collective in Minnesota as well. Yeah, and all of those three things have something in common that Bug did not. Those were all attempts to join existing organized labor forces. So in Minnesota, both breweries were trying to join the Unite Here Local 17. Unite Here is a hospitality workers union. At Anchor, they were part of the ILWU, the, I'm going to get this wrong, but International Longshoremen, which is a long, long established union that certainly has deep roots in San Francisco.

12:39But Bug was new and the workers were trying to create their own organization. And they were taking a page out of the playbook that worked so well at Amazon and Staten Island, but that didn't quite work out down in Georgia. But really hard to build your own, you know, labor organization from scratch. Yeah. And this was also plagued with some other internal issues and allegations of some of the leadership members being fired or other consequences because of their involvement with this. So just the trying to unionize alone, there's a lot going on there, but then also tackling any other things that might be happening in your workplace.

13:19It adds even more complications. Tough. All right, let's round out the news segment with a little bit of catch up coverage. I went to the Beer Institute meeting in Denver earlier this month. And one of the highlights for me was Danelle Cosmal's conversation with Mary Giver from Whole Foods and Matthew Crompton from CGA. And Mary's comments really stood out to me because we've seen a lot of folks try and get into the non-alcoholic beer space. And Mary is pretty much saying, look, we are near or very much at our limit of what we can take. We've got all the space that we can handle for non-alcoholic beer.

14:03and at this point it's supporting the brands that they already have who she said are some of their top brands period yeah which is super impressive but i mean i know we've seen recent comments oh on our own taste radio uh bill schufeldt told our colleague ray latif that he thinks not not beer could get to be 20 percent of the beer category and he's an optimist he's a very very big optimist and good on him. I don't know that I see that, but I think what we're seeing there kind of jives a little bit with what Mary's saying is that there's only so much room on shelves. Yeah. But NA brewers have one thing in their toolkit that they can play and that is DTC shipping.

14:53I think it's also a nice reminder for when, I mean, we've been talking about all year, looking at the data and non-alc has been one of the few segments within beer to record any sort of growth and so a lot of producers are starting to look at it we've heard a couple of announcements of some bigger players getting into non-alc this coming year but just because a segment is growing and scans doesn't mean there's actually more room for it or that that's going to continue or that everybody can play in that space so i think it's a little bit of a warning or a wake of call from Mary being like, hey, just we understand this segment is really important to us.

15:33It's really important to a lot of you, but don't get too ahead of yourselves there. There's only so much space we can really give you. One of the things that she also did say is she's not trying to dissuade suppliers from getting into this space. She did say there are other paths in. So if you want to do this as a seasonal or a one-off, there's an opportunity potentially there. But it's also one of those where it's like, look outside of IPA and lager, find your space. And maybe she brought up Oktoberfest or flavored hop waters or those spaces, which I think that would be a smart play for some folks.

16:16And it would be interesting to see that some brewers treat this as a seasonal product where it comes in first half of the year cycles back out. Or maybe you have a couple of seasonals, you know, one for dry January, one for sober October, who knows? And the other thing that she brought up, and I thought that this was really powerful, was in a room full of some of the leaders of the biggest beer companies in the United States. And she's telling them that, look, there is a diversity issue in this industry, but there are producers who are women and who are black, indigenous people of color who are rising up in the industry and they're doing it at a craft level.

17:03And those are voices that need to be heard. And I think that that was an important message to send to everybody in that room who looked a lot like me. I mean, if everybody in that room hasn't heard that before, then I would question many things about them. But yes, for sure, absolutely needs to be said. It needs to be said until people actually start taking that into serious consideration. Yeah. And I'll just read her quote real quick. There is a ton of energy around the fact that there is just a missing component of the human population in the U.S. that aren't represented in beer right now. And what a great time to finally have this dialogue and start to support those brands.

17:45And it's happening at a craft level. They haven't had the support at a larger level historically. So here comes this wave of producers who are demanding to be represented in retailers and on tap. And I'm so excited to be a part of that conversation. And there's more to it. You can read it all at brewbound.com. But the gist of this is a lot of the younger voices out there need to be heard, and they are critical to helping this category grow. It's not new news, but important message in that room. Yeah. And I think people may be more susceptible to hearing it now because there's been more large scale representation of some of these brands with the creation of like the National Black Brewers Association.

18:32There seems to be like there's just more brands in general that are out there trying to directly combat some of the statistics out there of just how well represented some people are and some demographics are and ownership of breweries and all those other things. So there are some things that are moving towards trying to actually take some actionable steps and not just keep talking and having the same data points every year. And so I think Mary is trying to point to that and be like, hey, these are some actual direct people that you can look at and try to support right now. Now's the time. If you haven't been doing anything, look, there's people out there.

19:13We're not just kind of making this up. Yeah, I mean, as beer is losing share to spirits and people are drinking less, it just makes sense to go find people who haven't traditionally been drinking beer and try to welcome them. All right, let's play another rounder tabbing out. And we've seen a lot of crossover beverages. Coca-Cola continues to get in this space. The next one up is Sprite and Absolute. It's going to be in Europe. We don't know when it's coming to the US, but are you here? Are you tabbing out buying another round of Absolute and Sprite? do we have a time machine to 20 years ago because that version of me yeah she's it yeah yeah i can't say i'm a big soda drinker but when i would have soda sprite was normally the one i would go with as a teenager or college student and like this 100 speaks to that version and that demographic, I think.

20:14I'll be interested to see if it translates. I have a hard time seeing a lot of these canned cocktails be adapted by consumers who are making their own just like makeshift mixer and spirit spaces. If they're switching to the canned versions, I don't know. I mean, it's worked for Jack Daniels and Coca-Cola with their Jack and Coke RTD. Sprite and Absolute feels a little bit more makeshift to me, but I don't know. We'll see if people are into converting to ready-made versions. I hate this word, but Jack and Coke is iconic. I feel like iconic is mostly overused and usually not applicable, but in this case, I think it applies.

21:02Sprite and vodka, I don't know. I'm sure I've had many of them in the past. I mean, it's convenient. You know, I think one thing that these RTDs do all have going on is that they're super convenient. And in some cases, it's not something you can make that easily. So like, look at like all of high noon, like you don't just have like, say watermelon juice kicking around. Yeah. It'd be easy to make like vodka, sparkling water, watermelon juice sounds tasty. and I would like one right now, but it's not realistic to have that much different kinds of juices hanging in your fridge in the quantities that you would have to buy them in the grocery store.

21:44So yeah, high noon. Great. Perfect. Very handy. Yeah. I think there, maybe this brings up the conversation that people might start having about like, how do you tow the line of convenience where it's almost going past that and you're not actually providing an added convenience? I feel like most people, if you're making a Sprite and Absolute, you care about your own quantity of each of those in your drink. The two easy things that you can pick up at most stores around. But like you said, like if you're looking for more flavors or more intricate cocktails, a canned version of that that's already made is so much easier.

22:18So I don't know if this is actually providing a more convenient option. It might be. We'll see. Are we fatigued on this? Is this losing its novelty of, you know, X big brand is now partnering with an alcoholic brand? Personally, yeah. Yeah. But and we pay much closer attention to this than any normal person does. Yep. Or should. So who knows? Yeah. Like the thing that I heard the most about from my friends was Jack and Coke. people were seem to be excited about that most other you know crossover rgd launches i don't think get that much traction yeah i think it depends on how big the base of those two brands like that consumer base is already and how excited they're going to be about having this i think with this brand the same as all the other brands that have come by there's going to be a lot of initial excitement and momentum possibly.

23:17I think we are past that being long lasting or sustaining because it's not novel anymore. Yeah, I think we're well past it. But I'm also way too close to this to know or have a good feeling for it. You know, so when you talk to your friends about Duncan, and they seem excited or something, I think that sort of, you know, raises a flag for me, but I don't know. Like at this point, it's like everything is BevAlk. If it's not already, it's going to be before too long. And then we're going to have to take a Zen pick. God, no. So let's get into that conversation with Nadine Sarwat and Trevor Sterling from Bernstein.

24:03All right, let's welcome our guests, analysts and leaders at financial services firm Bernstein Autonomous. We have Nadine Sarwat. Thanks for being here, Nadine. Thanks for having me. And we have Trevor Sterling. Thanks for being here, Trevor. Great to be with you. So in our space, in your space, there seems to be a lot of concern over the long-term effects of Ozempic and other GLP-1 diabetes and diet drugs and how that might affect alcoholic beverage consumption. We've seen stories in the New York Times and Bloomberg. In your estimation, how much of this concern over these drugs impact on alcoholic beverage consumption is either founded or maybe overstated at this point?

24:48Well, that's a billion dollar question. So I think it'd be actually helpful to answer your question, to take a step back and consider how did we get here? Because that's going to help us understand where could we go forward. So if we compare, you know, we now have the set of drugs, GLP-1s. If we look back, historically used perhaps for diabetes, that's where the origin was. And the side effect was weight loss. And so now we are seeing these drugs used for either people who are obese or overweight as a way to kickstart that weight loss process. And ideally, you're doing that with the help of a physician and a support network.

25:25The side effect of that is, in addition to losing weight, you lose the appetite for alcohol for some people. Now, this is where we start to get into the questioning. What does that look like? Is it the same for everybody? And that's why that's coming up so much. So if we look at how that's going to play out, we actually did a little piece of analysis. I'm going to consult some numbers to get those right here. So if we start with the, you know, how big is the population in America that's obese? Well, we have it at about 42 percent. So that's your core demographic to start with when we're starting to understand what the impact is going to be on alcohol.

26:02Then we get into the line of making assumptions to understand, is this going to actually have an impact? So you have to make assumptions, for example, of those 42 % of people who are obese, how many have access to these drugs, either through insurance or are willing to pay for it themselves. You then have to make assumptions about how long they are willing to stay on it. Sometimes we're seeing data that people last on 12 months. Others are saying they want to be on this for the rest of their lives. And so that's another assumption. After we have that, we have to go one layer deeper. Of the people who are on the drugs, how much are they actually cutting their alcohol?

26:38And then of that cut, volume-wise, it's not just frequency, but volume, how is that impacting? So when we go through all of the layers and we put what we consider are some realistic worst-case assumptions, we get to an impact of about minus 2 % on volumes over the span of 10 years. and now that's per capita consumption i should actually add or about 0.2 to 0.3 per year after you go through all of the layers so this might not be the you know disaster that many people are expecting but there are clearly a huge number of assumptions that we're making there okay anything to add yeah i think the first thing to say is glp1s aren't new they didn't come yesterday they've been using the treatment of diabetes for quite a few years now.

27:28And it's really only the last month or two that the feeding frenzy has sprung up about the threat to the alcohol industry. So I think the first thing you say, until a few months ago, nobody was raising this as an issue. I think that gives you some sense of there's a lot of people out there who have been treated for diabetes with GLP-1s, and we haven't seen dramatic reductions in alcohol consumption. So I think it's absolutely certain to say some people, if they take these drugs for weight loss, do have reduced appetite for alcohol. But all the maths that we've done so far says the impact on the total alcohol industry is likely to be relatively limited.

28:06What's different now? Why is it that at this point, if they've been around for this long, that over this last month or so that we're hearing more about it, sing more about it? I think the first thing is celebrities. We have a lot of celebrities out there talking about it. It's a joke at the Oscars. So the whole awareness of the category has become much greater. I think also probably all of us know somebody who's tried Ozympic or Wigofi, and we all know some person who has said, you know what, I don't want to drink as much as I used to. So I think that's part of it. I think there is also the whole category of drugs seem to be having more and more benefits.

28:47So there are clinical studies out there looking kind of help on heart disease, clinical studies out there on addiction. It acts in two ways. One is to make you feel fuller. So you don't need to drink or sort of eat and drink as much as you would do. But the second one is it interferes with the receptors in your brain and the whole dopamine. So for instance, if you smoke, the nicotine receptors in your brain that give you the nicotine rush, the dopamine rush comes with nicotine, potentially these drugs could interfere with those receptors. So they could reduce your appetite to smoke as well. So it's a very uncertain science at the moment about how these things are going to work.