The Craft Brewers Alliance, a consortium beer brands including Kona, Redhook Ale, and Widmer Brothers Brewing (as well as the recently acquired Appalachian Mountain Brewery, Cisco Brewers, and Wynwood Brewing) is currently a tale of its three longest-held breweries, one on the upswing and two in decline.
In 2015 the Craft Brewers Alliance (CBA), which is partially funded by Anheuser-Busch InBev and benefits from its considerable wholesaler network, adopted a Kona Plus strategy where they put their marketing juice primarily behind the Hawaii-imaged brand that some call the ‘Corona of craft’… and it’s paying off.
Kona depletions (which refers to the speed a brand moves from the distributor to a retail outlet and basically serves as a proxy for consumer demand) are on the rise in 2018 – up 3% in the first quarter, 6% in the second, and now 9% in the third.
And in the competitive on-premise channel, (beer sold in bars and restaurants), Kona depletions were up 12% for the period. And its flagship, Big Wave Golden Ale alone was up an atounding 40%!
According the Motley Fool, Kona benefits from its positioning.
It plays like a craft beer, but also taps into the preference for imported brews because consumers assume that it is shipped in from Hawaii while the truth is it’s primarily brewed in the states.
Kona does have a brewing facility and pub in Hawaii, but it only produces around 12,000 barrels of beer a year, the majority of which stay in the islands.
But no matter the reality the brand is hot, hot, hot. But unfortunately the CBA’s to other long-held brands, Widmer Brothers and Redhook Ales, are not…and their declines are dragging down Kona’s meteoric momentum and the collective’s overall profits.
The Craft Brewers Alliance’s third quarter net sales decreased by 6.6 percent to $52.9 million, primarily driven by lower shipment volume compared to the third quarter in 2017.
And while the recently purchased Appalachian Mountain Brewery, Cisco Brewers, and Wynwood Brewing have seen a combined 18% year-over-year increase in depletions, Widmer Brothers shipments tumbled 25% in the third quarter and Redhook Ales’ plunged more than 33%.