**Key Themes This Week:**

- Broad-based U.S. volume declines across beer (-5.9% full-year shipments), spirits (-7% value), and wine (DTC -14% volume in OR/WA)

- Distribution tier structural contraction: Breakthru cuts ~500 jobs; RNDC shed 1,700+ in past year; Reyes in active talks for further consolidation

- RTD cocktails as the dominant growth engine: +7.1% dollar sales (NIQ), +35.2% value growth and +382 bps share gain (Jefferies)

- K-shaped consumer spending visible across every category and channel

**Major Earnings & Financial Results:**

- **Pernod Ricard:** H1 revenue €5.26B (-14.9% reported, -5.9% organic); U.S. sales -15% vs. consensus -13%; global headcount reduced by ~2,400

- **Molson Coors:** Q4 net sales $2.66B (-2.7%); U.S. depletions -5.1%; FY26 EPS guided -11% to -15% YoY — shares fell 7.4%

- **Heineken:** U.S. net revenue down high-single digits; U.S. volumes down low-teens; planning 5,000–6,000 global job cuts over two years

- **Treasury Wine Estates:** A$770.5M U.S. asset impairment; A$649.4M statutory loss; dividend paused

- **Suntory:** Alcohol sales -0.4% to ¥1.38T; pausing Kentucky Beam campus production through end of 2026

- **Brown-Forman preview:** Citi expects organic sales -3.6%, EPS $0.46 for fiscal Q3 (reports March 4)

**Distribution & Route-to-Market:**

- Breakthru Beverage: ~500 layoffs across FL, IL, CO and other markets

- RNDC: 1,700+ cuts in 2025; exited California; additional cuts in IN, WA, OR; Becle (Jose Cuervo) exited RNDC near-nationwide

- Reyes Beverage Group in "active discussions" with RNDC across six states + D.C.

- Hand Family Companies formed Sunset Distributing (Stone + Classic Beverage + Scout) in SoCal

- NBWA survey: Distributors expect beer to drop from 76% to 67% of portfolios within five years

**Wine Sector Distress:**

- Gallo closing Ranch Winery (St. Helena); 93 total jobs cut across five CA locations

- Trinchero listing Haystack (Atlas Peak) and Clouds Nest (Mt. Veeder) vineyards for sale

- Foley Family Wines closed Chalone Vineyard's Soledad facility; laid off entire winemaking staff

- Vineyard/winery transaction market projected at less than half of 2021's ~$3.5B volume

- DTC bright spot: $200+ Cabernet +14% value; $10,000+ bottles +28% YoY

**Strategic Moves & Deals:**

- Tilray signs five-year U.S. licensing deal with Carlsberg Group (Carlsberg, Kronenbourg 1664, others) effective Jan 2027

- Hotaling & Co. closing Pier 50 distillery; pivoting to import/brand-building model

- Stoli Group: founder Yuri Shefler steps in as interim CEO; Amber Beverage Group confirms loan default; U.S. ops and Kentucky Owl in bankruptcy

- Oregon Beverage Collective formed; Crux Fermentation acquired by Cascade Lakes owners (~40K barrels combined)

**RTD & Emerging Categories:**

- RTD cocktails: only growing major segment in NIQ data (+7.1% dollars); 36.2% of on-premise packaged volume

- Top RTD performers: Cutwater +114.7%, Surfside +223.5%, Sun Cruiser +349.5%, Buzzballz +41.8%

- Non-alcoholic beer: 5.4% of on-premise packaged share (+1.4 pts); 94% of distributors added NA suppliers in past year

- THC beverages: Indeed Brewing at 15–20% of volume, 25–35% of revenue; Scofflaw expects THC >50% of revenue

**Regulatory & Legal Updates:**

- **New York:** SB 9220 would allow liquor retailers to sell THC beverages (=5mg/serving); separate bill would allow grocery stores to sell wine and liquor

- **Iowa:** HF 2403 advances to end state liquor distribution monopoly (13-8 committee vote)

- **Maryland:** Legislation introduced to allow grocery beer and wine sales

- **Illinois:** Considering lowering BAC limit from 0.08 to 0.05

- **Kentucky:** HB 612 would add 4% license fee on top of 6%...

## SHOW NOTES

**Key Leadership & Corporate News**

- Constellation Brands CEO transition: Nicholas Fink succeeds Bill Newlands effective April 13, 2026

- Heineken announces 5,000-6,000 job cuts (7% of workforce) over two years; targets €400-500M annual savings

- AB InBev FY25 EBITDA at $21.2B; guides FY26 organic growth of 4-8%

- Coca-Cola consolidates Red Tree Beverages and BodyArmor under North American Operating Unit

**M&A Activity**

- E.&J. Gallo acquiring Four Roses Bourbon from Kirin for $775M

- Crimson Wine Group acquires Raeburn brand (~250K cases) from Purple Brands

- Carolina Premium Beverage and United Beverages NC merging to form 18M-case United Carolina Beverages

**Financial Distress & Restructuring**

- Uncle Nearest: $164M total debt; receiver alleges $30M revenue overstatement, unpaid taxes since 2018

- Stoli USA: Judge orders Chapter 11 trustees for orderly asset sale

- RNDC layoffs continue (~100 in FL, ~40 in TX); potential sale of 7 markets to Reyes Beverage Group

**Market Performance (4 weeks ending Jan. 31)**

- Total Alcohol: $7.2B (+0.6% dollars); 136M cases (-0.2% volume)

- RTD: +8.8% dollars, +3.0% volume

- Beer: +0.9% dollars, -0.4% volume

- Wine: +0.3% dollars, -1.4% volume

- Spirits: -2.8% dollars, -1.3% volume

- NA Beer: +7.0% dollars, +5.7% volume

**Wine Industry Reset**

- DTC wine: 5.4M cases, $3.7B in 2025 (down 15% volume, 6% value YoY)

- California vineyard removals: ~40,000 additional acres expected in 2026

- Average DTC bottle price: $56.78 (up 11%)

**Trade & Tariffs**

- US Scotch exports down 4% value, 9.2% volume in 2025

- Post-April tariff (10%): May-December shipments down 15% volume, 7% value

- Mexico tequila oversupply: ~500M liters unsold; agave prices collapsed from 30-32 pesos/kg to 2-5 pesos/kg

**Consumer Trends**

- Dry January: 88% adherence among participants; 17% overall participation (Gen Z 32%, Millennials 26%)

- Oral GLP-1 (Wegovy pill) availability in 2026 may accelerate medication adoption

- World Cup 2026: 58% plan to follow; 49% say beer will be drink of choice at bars/restaurants

**Regulatory Watch**

- Supreme Court case challenging Arizona's in-state retailer requirement for wine shipping

- New York grocery wine/spirits legislation gains momentum

- Chicago liquor tax changes effective March 1, 2026

- Heaven Hill defending Lunazul "100% agave" class action

**Key Takeaways**

1. Growth is increasingly mix-led—RTDs, NA, cider, and select imports carrying the market

2. Distribution restructuring is a first-order commercial variable affecting supplier strategy

3. Whiskey oversupply creating M&A opportunities and production adjustments

4. Wine's reset is structural—supply, DTC, and regulatory changes converging

5. Moderation is normalizing beyond January with potential GLP-1 acceleration

### Key Themes This Week:

- **RTD Revolution**: Ready-to-drink cocktails drove +17.1% volume growth; spirits excluding RTDs were -2.7% volume

- **Historic Milestone**: Spirits overtook beer in U.S. revenue share (42.4% vs 41.8-41.9%)

- **Consumer Caution**: Affordability-first behavior intensifying; Hispanic consumer concern affecting on-premise traffic

- **Wine's Structural Reset**: Participation down to 29% of adults; 512 fewer wineries YoY

- **Distribution Disruption**: RNDC California exit causing ripple effects; consolidation accelerating

### Major Company Moves:

- **Kirin** selling Four Roses bourbon to E&J Gallo for up to $775 million

- **AB InBev** acquiring 85% stake in BeatBox for $490 million

- **Johnson Brothers** becomes #3 U.S. wine wholesaler via Maverick acquisition

- **Barrell Craft Spirits** consolidating facilities, selling Jeffersontown site

- **New Belgium** restructuring with workforce reductions

- **WhistlePig** CEO departure; Alex Roberts named new CEO

- **Uncle Nearest** receivership continues; ~$100M debt, potential Q2 sale

### Key Data Points:

- U.S. spirits overall: +1.9% volume, -2.2% value (2025)

- Prepared cocktails: +37.3% volume (latest 4W)

- Tequila: -6.5% December sales (NIQ); Casamigos -22.1%, Don Julio -11.4%

- Beer: +2.2% volume latest 4W vs -1.1% prior; improving trend

- Michelob Ultra: +9.0% volume; Bud Light -6.2%

- Modelo: +4.5% volume; Pacifico +14.9% dollars; Victoria +29%

- NA Beer: +24.9% dollar growth

- Wine: $114B value (+5%) on 366M cases (-1.7%); 29% participation rate

- California vineyards: 38,134 acres removed Oct 2024-Aug 2025

### Regulatory & Trade Updates:

- U.S. importers paid $200M+ in tariffs through October

- U.S. spirits exports to Canada at ~25% of prior levels

- Washington state Senate passed 0.05% BAC bill

- NY denied Trader Joe's wine store application

- Supreme Court amicus brief on AZ wine shipping rules

- Cannabis rescheduling executive order could impact THC beverage competition

### Consumer Trends:

- 54% of U.S. adults drink alcohol (near 90-year low)

- ~50% of Gen Z adults drink

- 12% of U.S. adults on GLP-1 medications

- Cannabis drinks +8.2% YoY; shots +23.1%

- 18M frequent cannabis users vs 15M frequent alcohol users

## SHOW NOTES

### Key Themes This Week:

- **U.S. demand showing modest improvement** but still negative; off-premise total alcohol -1.2% (improved from -3.4%)

- **RTD/Prepared Cocktails remain the clear winner** at +7.4% dollar growth

- **Wine DTC in structural decline**: -15% volume, -$230M value, average bottle price up 11% to $56.78

- **Distribution disruption accelerating**: RNDC losing major suppliers; Delicato, Johnson Brothers, Breakthru expanding

- **Inventory overhang persists**: wholesaler levels ~45% above 2019 average

### Notable Deals & Moves:

- **AB InBev acquires 85% of BeatBox** for $490M (implies ~$575M valuation)

- **ABC Fine Wine & Spirits acquires Applejack** (Colorado) — first out-of-state acquisition in 90 years

- **Sazerac partners with Piedmont Distillers** for Midnight Moon distribution

- **Columbia Distributing acquires Point Blank Distributing** in Portland

- **Scribe Winery acquires Arrowhead Vineyard** (150 acres, Sonoma)

### Supplier Earnings Signals:

- **LVMH Moët Hennessy**: Q4 organic sales implied at -9%; Cognac & Spirits -12% for the year

- **Diageo**: Potential Q3 destocking risk; H1 organic sales outlook -2.2%

- **Campari**: Q3 organic sales +1.3% projected; holiday season slower than expected

### Regulatory & Legal Updates:

- **Chicago permits hemp THC beverages** (up to 10mg/12oz) at licensed venues; United Center to sell

- **Federal HEMP Act introduced** to place CBD under FDA oversight

- **Retailer shipping cases** seeking Supreme Court review (Arizona, Indiana)

- **Wynn Resorts** under federal probe for alleged liquor-contract issues

- **McIlhenny (Tabasco) sues Stoli** over pepper vodka trade dress

- **Uncle Nearest** remains in receivership; Feb. 9 court hearing scheduled

### Consumer & Market Data Points:

- Only **54% of U.S. adults** say they drink alcohol (Gallup) — lowest in 90 years

- Wine drinkers reducing: **46% cite calories, 39% cite sugar**, only 21% cite cancer risk

- Gen Z = **4% of alcohol sales**; Gen X + Boomers = **70%**

- Super premium beer now **40.7%** of beer volume

- High-ABV products **+11% YoY**; Non-alcoholic **+26% YoY**

- California wine crush estimates: **~2.1-2.25M tons** — potentially smallest since 1980

### Key Takeaways:

1. **The market is stabilizing, not recovering** — growth requires activating specific occasions and channels

2. **On-premise is the relative bright spot** — experience-led occasions showing better price elasticity

3. **Wine's challenge is as much perception as consumption** — sugar/calorie misconceptions driving substitution

4. **Distribution is a strategic lever** — realignments creating winners and losers

5. **The competitive set is expanding** — hemp THC, NA, and high-ABV all claiming occasion share

- **Theme of the week:** Stabilizing demand signals, but rising execution risk—driven by value-conscious consumers and major distribution disruption.

- **Wholesaler signal:** NBWA’s January Beer Purchasers’ Index rebounded sharply vs. December, with **below-premium** reaching an expansion threshold—though overall conditions remain cautious.

- **Beer pricing reality:** Industry leaders say the era of dependable annual price hikes is fading; focus shifts to **pack/price architecture** and tighter value ladders.

- **Moderation & substitution:** Dry January and longer-run data point to sustained moderation; **NA beer and RTDs** remain key beneficiaries.

- **RTD momentum:** RTDs continue to capture occasions and attract investment, reshaping innovation priorities.

- **Wine split:** Off-premise remains pressured while on-premise—especially fine dining—acts as a stabilizer; California supply may tighten later after a sharply lower 2025 crush.

- **Spirits overhang:** American whiskey faces heavy inventory and declining shipments, driving production/asset decisions and increasing the odds of future price pressure.

- **Big route-to-market story:** **RNDC exits California**, triggering rapid supplier and brand realignments (including Tito’s and Brown-Forman moves) and creating near-term service risk—and competitive opportunity.

- **California regulatory updates:** Expanded **DTC spirits shipping** (for qualifying craft distillers) and new **mandatory EFT payments** from retailers to wholesalers starting 2026; compliance scrutiny rising around kratom products.

- **Adjacent adult products:** Hemp-THC regulation pressure builds; Curaleaf exits hemp-THC, and retailers push for federally regulated, age-gated frameworks.

- **Macro undercurrent:** Private label and value retail expansion continue to pressure pricing power and reward operational excellence.

- **Theme of the week:** A “K-shaped” U.S. alcohol market—headline declines, but strong growth pockets in NA beer, RTDs, and select super-premium brands

- **Beer 2025 wrap:** Total beer finished down in dollars and volume; **domestic premium weakened** while **domestic super premium and NA beer grew sharply**

- **Channel signal:** Convenience stores are holding up better for beer, with **NA beer surging** and seltzer stabilizing relative to broader retail

- **On-premise vs off-premise:** Alcohol pricing **away from home is rising faster** than at-home inflation, reinforcing the battle for occasions and mix

- **Distribution disruption risk:** RNDC uncertainty and supplier exits are accelerating wholesaler consolidation; **route-to-market stability is now a P&L issue**

- **Demand + inventory backdrop:** Moderation trend remains strong; elevated inventories increase the risk of shipment volatility and promo pressure

- **Hemp tightening:** Federal and state actions are narrowing the intoxicating hemp playing field—**higher compliance costs, fewer gray areas**

- **Wine watch:** Ongoing off-premise softness plus new sourcing/transparency scrutiny (including “American” labeling proposals)

- **Big takeaway:** Growth is available, but it’s concentrated—winning in 2026 means aligning portfolio bets with the right occasions, channels, and distributors while staying ahead of regulation

Holiday sales delivered a short-term lift, but total U.S. alcohol demand remains down ~5–6% YoY across beer, wine, and spirits

RTDs and prepared cocktails remain the clear growth engine, growing dollars despite softer volumes

Beer declines continue, but super-premium, import, and non-alcoholic segments are gaining share

Spirits face mounting pressure outside of RTDs, with visible financial stress among smaller operators

Wholesaler inventories remain elevated, driving tighter SKU discipline and cautious buying into 2026

Supplier distribution strategies are shifting toward regional and mid-tier partners for better execution

Health-and-wellness narratives, moderation, and substitution (NA beer, THC beverages) are now structural demand factors

Wine demand is increasingly bifurcated, with growth concentrated in imports and sparkling wines

Bourbon enters a normalization phase as Jim Beam pauses distilling in 2026 amid record barrel inventories

Major suppliers shift to margin protection and inventory management over capacity expansion

Constellation Brands expected to hold earnings despite beer depletions near -4%

U.S. consumers still spend big on alcohol, but value and occasion-based trade-offs are accelerating

RTDs dominate growth both on- and off-premise; NA beer emerges as a quiet winner

Wine DTC volumes slide hard, but ultra-premium Cabernet remains resilient

New York supermarket wine proposals and cannabis competition raise route-to-market risk

Kroger and Instacart developments highlight rising stakes in e-commerce economics and transparency