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Most “Difficult” Period Yet for Sierra, Sez Founder Ken; +10% in Q1; No Layoffs So Far

“This is the most difficult thing we’ve had to deal with in our 40-year history,” Sierra Nevada founder Ken Grossman told CBN late last week. “We’ve had fires, we’ve actually had floods,” but nothing compares to effects of COVID-19.  Yet Sierra Nevada has not had one COVID-positive employee.  And Sierra Nevada never laid off employees previously and “we haven’t laid anyone off as of now,” said Ken. 

But Sierra Nevada did “shut down all customer facing parts of our operations” about 1 month ago and “everyone received full paychecks through” Apr 3.  Now the approximately 400 folks that work in restaurants, tours and gift shops have 3 options, said Ken.  They can either stay on as Sierra employees, deployed in other areas of the co, given as many hours as possible or they could take personal leave for a period, but still get full benefits, or they could “part ways” with Sierra to get enhanced unemployment benefits.  “Nearly everyone took option one and two.”  Sierra Nevada has about 1100 total employees. Many working in areas like repacking variety packs, additional cleaning, food-to-go, selling vintage beers, etc. 

Shipments Up Almost 10% in Q1; Not Highly Leveraged; Both Breweries “Full Speed Ahead”   Sierra Nevada perhaps one of the best-positioned craft cos these days. “We’re not a heavily leveraged company,” said Ken. “So we’ll be able to weather this.” Sierra’s shipments “up close to 10% in” first qtr, said Ken, “and depletions are tracking close to that, with orders still coming in strong through the end of April and into May.”  Yet Sierra “planning on potentially being down for the year.”  While in “many regions depletions remain strong,” in some of the COVID-19 hot spot markets, trends have already turned sharply negative, -20% or worse.  In the meantime tho, “we’re full speed ahead at both plants.” 

Hazy “Making All the Difference”; “There’s a Lot of Truth” Re Return to Familiar Brands  Hazy Little Thing is “making all the difference in our company right now,” Ken said.  It’s up 123% in IRI multioutlet + convenience yr-to-date thru Mar 22. Hazy now represents over 1/4 of Sierra Nevada’s $$ and more than all of its growth. Hazy $$ sales up $8.5 mil to $15.4 mil in IRI MULC YTD, while Sierra Nevada up $7.2 mil, 13.6% to $60 mil.  What’s more, Hazy is #6 craft brand in IRI, nipping at heels of  Elysian Space Dust for #5 brand (and #2 IPA).  Meanwhile, each of flagship Sierra Pale and Torpedo “up” these days.  Many folks are saying there’s a return to familiar brands. “There’s a lot of truth in that,” sez Ken.  “Older flagships that were struggling for years are seeing some significant support…. We’re happy and fortunate that we’re in that club of attractive brands. We’ve been around for a long time now and have a lot of street cred built up.”  

Strainge Beast Kombucha Shifts Plans; Coming in Cans; Wild Little Thing Good “Velocity”   “Our original plan was to launch draft first in a handful of receptive markets,” said Ken regarding launch of new Strainge Beast hard kombucha. “We changed that. We’re moving most of that volume into cans. Our bigger canning line is on order,” and that’s now “delayed. We have a small canning line.  We’ll start up with that.  We won’t be able to do a serious launch until July or August.”  Wild Little Thing session sour, the 2d “Little Thing” launch, is already in market and “has really good velocity where we’ve got it.”  Since a lot of chains haven’t done resets yet, “it’s not getting some of the placements we had hoped for.” Its distribution about 25% of where Hazy is. “We need to get into a lot of the sets that we aren’t getting into.” 

Many Smaller Brewers Already “Struggling”; Thousands Could Fail  “We’re close to a lot of small brewers,” said Ken. “Going back about a year, we were starting to see brewers struggle” as “the market started to flatten and the competition grew.” Now “throw this kind of calamity into the mix. Their business was marginal 6 months ago or a year ago and they were just hanging on. They’re probably not going to be able to come back from this.” Consumers “aren’t going to go right back to filling up their taprooms the way they were…. I don’t know what % will fail,” Ken said. “It depends how long this goes on.”  But looking at BA projections and “just getting a sense, it’s going to be thousands.”

M&A Possibilities But Not a Top Priority; “Focus on Our Current Business”; Integrating Sufferfest   In these more difficult times for lotsa craft brewers, “we’re already getting some of those pitched at us,” said Ken. “Out of desperation in many cases.” But “right now we have so many things in our innovation pipeline that we can bring to the market on our own. We’ll look at a few opportunities,” but “it’s not a priority right now. We’ve got to keep focused on our current business and how to manage that.”  Sierra Nevada’s first-ever acquisition, Sufferfest, started somewhat slowly.  “We were part of the delay,” said Ken, “getting packaging printed and beers brewed,” as well as “getting our sales team focused on adding a new brand, a whole new company to our portfolio” that “wasn’t in their business plans. We stubbed our toes a little bit integrating that.”  And “we’ve got to develop that” integration as a core competency.

Sierra “Changed Every Aspect of What We Do”; CEO’s “Steady Hand,” “Teams Really Stepped Up” Sierra Nevada has had to “change every aspect of what we do at work,” said Ken. “The fact that we’re social distancing our workforce put the production folks into teams that don’t overlap… We used to have overlaps.  Now we have underlaps.” When a group leaves, “we shut down. Another group comes in, we start up.”  That’s “less productive” and “less efficient,” but “the right thing to do.” It also means breweries are back to operating 24/7. “We’re trying to do the right thing for our folks,”said Ken. “They’ve really been coming together.” Ken praised his first-ever CEO (other than himself) Jeff White’s “steady hand. He’s done a really great job of keeping everybody comfortable and motivated.”  Ken concluded: “The human spirit and support of each other at our facilities is just amazing. Our teams have really stepped up.”

Publishing Info

  • Year: 2020
  • Volume: 11
  • Issue #: 34
Read 311 times Last modified on 04/15/2020