Beverage Dynamics

Beverage Dynamics NovDec 2018

Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.

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www.beveragedynamics.com November/December 2018 • Beverage Dynamics 5 FOR THE FULL STORIES, VISIT WWW.BEVERAGEDYNAMICS.COM. Fear among some brewers is that legal cannabis will siphon sales away from beer. (The pot industry does not assuage these concerns when it advertises as the "safer" alternative to alcohol.) But do consumers really trade one product for another? Not necessarily, according to Bart Watson, chief economist for the Brewers Association, which represents small and inde- pendent breweries. According to data compiled by the national trade organization, sales of craft beer are actually better in states with recreational cannabis. Explosive in past years, craft beer's growth has slowed in recent time. But those gains are actually higher where pot is fully legal, according to Watson. "States that have the most ac- cess to cannabis have the best beer trends," he says. The second-best craft beer trends are in states without rec- reational cannabis, but with operational medicinal pot markets. Again, according to Brewers Association research, the more cannabis is legal, the better for craft beer. This would seem to oppose news released last year by the Cannabiz Consumer Group (C2G). The company's research found that legal cannabis had already sapped into beer revenue by a wide margin — 7.1%. Moreover, 27% of beer drinkers polled by C2G said they had already substituted cannabis for beer, or would substi- tute their retail beer purchases with cannabis in the future if legal. C2G predicted that if cannabis became legal nation- ally, the beer industry would lose more than $2 billion in retail sales. Why the confl icting reports? DOES CANNABIS HELP CRAFT BEER SALES? MGP has become three dirty letters that stand for sourced. If a new whiskey brand tastes of high-rye bourbon or grassy dill rye — and says "Bottled in Indiana" — you know it's likely from MGP. The company's facilities, in- cluding its massive Indiana distillery formerly owned by Seagram's and LDI, supplies much of the industry's sourced whiskey and vodka. This includes around 80-85% of the market's rye, according to MGP estimates. Purists bemoan when large-batch spirits are purchased and passed off as craft. And there's entrepreneurs who buy MGP stuff and mar the product with bad branding, poor fi nishing or misleading statements of origin. While these are not MGP's fault — it's just a business that sells premade spirits — that has not stopped some consumers from criticizing the company. Perhaps for this reason, and out of courtesy of its customers, MGP has stayed largely out of public view. Its vast, Willy Wonka Chocolate Factory-esque distillery has re- mained closed off, even from journalists. That has changed. MGP recently ditched its low profi le and opened the doors for media in Indiana, as the company launches its own whiskey and vodka brands. While there were no Oompa Loompas in this sprawling facility, there was plenty celebrating the site's distillation history in Lawrenceburg, Indiana, which dates back to the early 1800s. The new MGP house brands include Till Vodka, George Remus bourbon, Ross- ville Union Master Crafted rye, and the Indiana-only blended bourbon Tanner's MGP Opens its Doors Creek. Till launched in 2016, Remus in 2017, and Rossville hit markets this past May. Consumer tours are in the plans, once the company "gets its brands right." Which, when combined with these new house brands, should go a long way towards making MGP three letters that stand for quality.

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