Craft Brew Alliance posted $45.8 million in sales during the first quarter of 2020, down nearly $4 million from the same time last year, according to the Form 10-Q the company submitted to the U.S. Securities and Exchange Commision and posted to its website Wednesday.
“I am proud that even against this unprecedented backdrop, complete with all of its challenges, our decisiveness in quickly adapting allowed us to manage our financials while still looking out for the well-being of our employees and stakeholders,” CEO Andy Thomas said in a press release. “We are mindful that thus far, we have been able to weather the initial impacts remarkably well compared to others in our space.”
This quarter, CBA opted not to host an earnings call for investors and analysts and has stopped issuing forward-looking statements in advance of its impending merger with Anheuser-Busch InBev. CBA investors voted unanimously in favor of the merger in February. It is expected to close this year.
Nearly all CBA brands’ volumes declined during the quarter. The company’s total shipments (sales-to-wholesalers) declined 6.1% and total depletions (sales-to-retailers) declined 6%. The company shipped 154,400 barrels in Q1, 10,000 fewer barrels than the same time last year.
The only major CBA brand to post a positive volume figure was Omission Brewing Co., the company’s line of gluten-free beers, with a 5% increase in depletions. Omission’s shipments declined 3.3%. CBA attributed this to shipments of Omission’s new hard seltzer offering.
Kona Brewing Co., the Hawaii-based brand that has long fueled CBA’s sales, had its shipments decline 1.7% and its depletions decline 5%.
“While Kona’s first quarter shipments were impacted by the current crisis and significant reduction in demand for draft beer, the 2% decrease compared to last year was in line with our internal expectation,” the company wrote in a press release.
In Q1 2019, CBA launched its “largest-ever national marketing investment” behind the Kona brand with a distribution drive in February and promotions in March.
“As a result, we anticipated Kona’s growth rate would flatten comparatively in 2020,” CBA wrote.
So far this year, Kona’s flagship Big Wave Golden Ale is up 20% in off-premise sales, according to Nielsen numbers CBA provided. The whole Kona family is up 9% in off-premise sales for the last 17 weeks, compared to the same time last year.
Widmer Brothers Brewing, CBA’s Portland, Oregon-based craft beer brand, posted the largest declines in the quarter, with a 25.9% decline in shipments and a 13% decline in depletions, compared to Q1 2019. Redhook shipments declined 10.8%, while depletions declined 9%.
CBA’s other brands — Square Mile Cider, Cisco Brewers,
Appalachian Mountain Brewery, Wynwood Brewing Company — shipped 9,400 barrels in the quarter, a decline of 6.9%. The company attributed the decline to Cisco and AMB, and noted that Wynwood shipments increased and slightly offset the losses.
Since the COVID-19 pandemic forced the closure of on-premise dining and drinking nationwide in mid-March, CBA’s draft-to-package mix unsurprisingly shifted toward package in Q1. The company shipped 18.3% of its volume in kegs, down from 22.8% in Q1 2019.
This pivot toward packaged beer could result in price increases.
“We expect the demand for draft beer to remain low for the second quarter of 2020 and, potentially, into the second half of 2020,” the company wrote. “As our shipments further trend towards packaged beer, we expect our average unit pricing to increase as the sales price for packaged beer is greater than draft.”
The loss of several on-premise selling weeks in the quarter also led to a $1 million decline in sales at CBA’s brewpubs, compared to Q1 2019. The brewpubs’ net sales for the quarter were $5.1 million.