Beer sales heat up ahead of July 4th weekend

Yahoo Finance's Brian Sozzi and Myles Udland discuss how beer sales are faring as the world continues to reopen.

Video Transcript

MYLES UDLAND: All right, welcome back to Yahoo Finance Live on this jobs Friday morning, of course, talking about the jobs report. But really, we're focused on the three-day weekend here. July 4th holiday on Sunday. We are off on Monday, Brian Sozzi.

And we talked yesterday on this program with Constellation Brands CEO Bill Newlands. And I know something that you were looking at within the company's report and then their conference calls, what's happening in their beer business. And it's certainly a big part of that portfolio, but Newlands is quite upbeat about what's been happening on that side of the business, especially as wine and spirits continue to lag.

BRIAN SOZZI: Yeah, we'll get to that in a second, Myles. And we're not seeing the beer demand. And we're not seeing that boom. We're not seeing a boom. But we are seeing, at least according to data out of Beer Board-- they're a tech outfit that manages or tracks $1 billion worth of bar sales among 60,000 products across the US-- you are starting to see a slow build in beer sales.

And Goldman Sachs pointing this note out, this data out, in its latest report. They're finding that the percent of locations open and pouring beer stood at 92% for the week-- weekend of June 17 or 20th. That's up from 90% in January. Good, a positive indicator there for the bar scene.

Also, the percentage of taps pouring beer ticked up to 71% for the weekend, up from 70% in the two weekends prior. Total volume of beer served per location rose 1% sequentially nationwide. So minor gains, but progress nonetheless. And what you're seeing there on the screen now is a decline of 36% in volume per location.

And it's still-- you're still seeing the industry really down below pre-COVID levels in terms of beer volume. So while beers and restaurants are opening back up, selling more stuff, it's not back to those 2019 levels. And we put that question to Constellation Brands CEO Bill Newlands yesterday. I asked him, when will you get back to pre-COVID levels? And for them, it might take a little time.

BILL NEWLANDS: We're very excited of how it's gone so far. Our depletions in our first quarter in the on-premise was up 250% versus last year. So on the surface, you think that's fantastic. But you also realized that it was only 11% of our business. Before the pandemic, that channel was 15% of our business. So we still think there's a long way to go and a lot of opportunity as people begin to get out and really decide how they are going to engage and in what channels they're going to make their purchases.

BRIAN SOZZI: And important to note, beer sales for Constellation were up double digits. The company reiterated that beer sales for this year will grow in a 7% to 9% range. And Myles, just continuing along my thinking here, that is a slow build in the beer industry.

And just in terms of recovery, the best beer performing stock this year from the beer industry is Molson Coors. The stock's only up 19%. Constellation is up 6%. Budweiser, that stock is barely up. And Boston Beer is actually down 2%. So investors are taking a cautious approach to the recovery in beer. But nonetheless, it's good to see some form of recovery starting to take place. There's more out there to drink than hard seltzer, Myles.

MYLES UDLAND: Yeah, and I thought-- and we talked about it a little bit with Newlands yesterday. But I just thought his commentary on the seltzer piece of it-- because we discussed seltzer from that Bank of America note-- I think it was on Tuesday we talked about it-- that, I mean, it's still the fastest growing part of what are pretty boring and stodgy portfolios, right? I mean, alcohol sales aren't going to be anything more than a single digit grower. They're going to grow with GDP, basically. You can pull some levers here and there, but.

So when you have 30%, 40% growth, whatever it might be in hard seltzer, everyone gets excited about it. But I mean, it just does feel, right? Like, it always felt faddish. And it feels like in year three, some of the air is coming out of that. Obviously, they've got the Corona seltzer, which I don't really find that interesting, as a part of that.

But, you know, maybe, Sozzi, it just brings people back to kind of the bread and butter, at least from Constellation's standpoint, of some of those-- let's call them the macro brews, your Coronas, your Modelos, not playing too, too much in the craft space. And, you know, people go buy a 30, go home, everyone's happy, right?

BRIAN SOZZI: Yeah, or go out and buy a 40. I'm all about the Corona Premier this week, a new brand out of Constellation. Very, very low carb. It helps to keep me slim, trim, and mean, so I can continue to appear on this show every day with you.

MYLES UDLAND: There you go, trading your Mich Ultra for a Corona Premier. A classic trade, a classic trade in business.