CHICAGO -- The retail beer category in convenience stores and beyond could take hits from several directions in the near future if pending issues take root and grow beyond initial concepts.
Here are three ventures we're watching ...
1. Increased import taxes
Constellation Brands CEO Rob Sands got out in front of changes in the political winds early this month by addressing possible increases to United States' import tariffs by the imminent Trump administration.
"I believe it's the changing political and legislative landscape in the U.S. that has recently impacted our stock price," he said Jan. 5, referring to a drop in share prices, "particularly as it relates to potential changes to tax structure, tariffs and trade policies."
Chicago-based Constellation Brands is one of the biggest importers of Mexican beers—Corona and Modelo—into the United States. And the at-this-point-hypothetical increase to the import tariff comes at a time Mexican import beer sales are exploding in the United States.
Constellation is keeping a close eye on legislation that has yet to be written and is “prepared to respond accordingly." Bottom line, Sands believes any import-tax increase would not have an effect on Constellation's product sales.
And industry watchers agree: "While undoubtedly an import tariff or border adjustment tax would negatively impact Constellation’s earnings, we continue to believe the downside to earnings is being overestimated by the market given," said Bonnie Herzog, senior analyst for Wells Fargo Securities, New York.
2. A Keurig for beer
Anheuser-Busch InBev and Keurig Green Mountain Inc. entered into a joint venture focused on the research and development of an in-home alcohol drink system.
The venture will build on Keurig Kold technology and system innovations and AB InBev’s brewing and packaging technology, and evolve them within the realm of the full adult beverage category, including beer, spirits, cocktails and mixers. The partnership will focus on North America, according to the companies.
Keurig Kold was a short-lived soda brewer that aimed to “revolutionize cold beverages in the home.” It was shelved in June 2016.
“We’re thrilled to be … working closely with the Keurig Green Mountain team to explore the possibilities of what we can achieve together,” said Nathaniel Davis, CEO of the new venture. “We can’t wait to get started.”
The joint venture employees will come from the current AB InBev and Keurig teams and will be located in facilities in Massachusetts and Vermont.
3. Setting a precedent
Utah could become the first state to lower the legal alcohol limit, pending action by state Rep. Norman Thurston, who said he intends to introduce a bill to make the legal blood-alcohol concentration for driving 0.05%.
The National Transportation Safety Board recommended decreasing the limit—currently 0.08% in all 50 states—in 2013, according to a report in the Los Angeles Times.
“Impairment starts with the first drink, and we want to establish this state as one where you just simply do not drink and drive,” Thurston told the newspaper, noting he worked with officials from the Utah Highway Patrol while drafting the legislation. “This is all about safety.”