## 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