- **Market pulse:** Total alcohol dollars down 2.4 percent to 8.1B and volume down 4.5 percent to 156.9M cases (NIQ, four weeks ending Oct 10). Prepared cocktails were the only segment up in dollars (plus 1.7 percent). Beer was down 3.4 percent, wine down 3.2 percent, spirits down 2.1 percent.

- **Spirits:** Pernod Q1 organic sales down 0.9 percent to ?2.23B (US down 10 percent, China down 25 percent, India up 19 percent). Destocking continues through FY27. Diageo cut about 2,000 roles. Citi modeled Diageo Q1 FY27 at negative 0.1 percent (North America negative 5.8 percent). IWSR found $100-plus spirits down 6 percent in the US. India is both an opportunity (UK trade deal) and a risk (bulk Scotch probes).

- **Uncle Nearest:** Receivership sale hearings, a possible Chapter 11, three buyers in talks, and a Sixth Circuit appeal brief due Nov 12. MB Roland Distillery goes to auction Dec 7 to 14.

- **Beer earnings:** Boston Beer's revenue missed (down 3 percent to $520.1M) but adjusted EPS of $4.37 beat. Guidance was raised to $9 to $10.50 on lower tariffs and flat selling expenses. Depletions fell 5 percent, and Koch flagged a real price cut of about 200 basis points across the category.

- **Category scans:** Cider and NA beer are growing. Domestic premium is down sharply, craft is easing (negative 3.3 percent in dollars per Circana), and total beer improved to negative 2.1 percent.

- **Constellation:** September depletions turned positive, with about 8M cases overshipped in H1 and the Veracruz delay adding about $75M of depreciation in FY28. Hispanic consumer pressure tracks ICE enforcement. SpikedAde reached about 2M cases. Savings exceed $600M. BofA is Underperform, Jefferies Hold.

- **Distributors:** NBWA convention themes were flat-to-slightly-up goals, RTD and NA as lifelines, caution on brand collecting after the RNDC collapse, and cannibalization risks.

- **Franchise law:** Titan v. Cervecera (Florida law overrides a 30-day termination clause). Coors Distributing v. Crown and Constellation in Colorado (order expected by Oct 29, termination Dec 13).

- **Consumer research:** RBC and Aaru find low-income drinkers are cyclical and high-income drinkers are structural. GLP-1 use is concentrated in high-income households, and non-alcoholic and "no hangover" are mass-market opportunities.

- **Wine demand:** Value down 3.2 percent and volume down 4.9 percent. NA wine up 18.5 percent. Wine Group, Delicato, Trinchero and Gallo down, Deutsch up. Josh, LaMarca, Avaline and Whitehaven rising.

- **Wine supply:** California removed 47,229 acres. Bulk wine is oversupplied, and Italian cellar stocks are up 14.2 percent. Treasury Wine is cutting brands from 76 to fewer than 30. City Winery's Dorf reports vineyards offered at 50 percent or more below values of three years ago. Concha y Toro is open to acquisitions, and Wine Institute launched Project One Voice.

- **DTC and tasting rooms:** Oregon DTC up 4 percent, Washington down 8 percent, Napa visitation down 3 percent. Top Oregon wineries are growing faster, but club membership is shrinking. Napa and Michigan zoning fights continue.

- **Legal and regulatory:** Supreme Court declined Ohio's shipping appeal (Wilson v. Miller), leaving three conflicting rulings. SCOTUS will hear McNutt on home distilling. Hemp ban deadline is Dec 11, and Illinois enforcement starts Nov 12. Costco Kirkland tequila suit dismissed. Cesari v. Peju petition. Steffanci v. Deutsch jury selection Oct 27. NY SLA chair donation controversy. TTB trade practice reminder.

- **Control states and events:** NABCA conference in Biloxi, Pennsylvania's low uptake of 4 a.m. permits, experiential retail events, DHL AI gains, Ohio Liquor Best of the Best.

- **Deals and people:** González Byass USA and Villa Marcello, Brother's Bond joins the American Whiskey Association, Claudia Schubert chairs Pollen Projects (Sylva), VIP layoffs, Guala Closures buys G3 screwcap equipment.

- **Retail and private label:** Kroger's $5B price investment and 7 to 11 percent EPS growth plan, Walmart and Costco gaining on tariff refunds, Kroger and Albertsons trial, Olive Garden collective action. Private label is growing through Bettergoods, Good and Gather and Our Brands, and store brands lead AI citations.

- **Soft drinks and adjacent:** PepsiCo and Taco Bell renew through 2036 after the KFC loss, and Elliott pressure on PepsiCo. Vita Coco beat and raise, but freight worries. Philip Morris International beat, with ZYN shipments up 4.1 percent. Cronos closes CanAdelaar.

- **Big takeaway:** Price, mix and cost control are holding profits while volume erodes. Growth is in RTDs, NA, cider and private label. Legal and distribution rules are shifting fast. The holiday off-take, hemp deadline and key court rulings are the next tests.

- **Spirits near a floor:** Pernod Ricard Q1 FY27 sales were ?2.234B, with US down 10% on destocking. Jameson, Kahlúa, Skrewball and Malibu were bright spots. India grew 19% on pipeline fill ahead of a possible IPO.

- **Brown-Forman:** US is about 42% of sales. Gross margin of 60.2% is likely the year's peak, with pressure through FY27 and a roughly two-year whiskey inventory clearance. No new restructuring planned.

- **Spirit tracker data:** Jefferies shows value at -1.7% (+3.0% with RTDs). RTDs grew 23.3%, and Surfside passed Cutwater as top contributor. Citi shows prepared cocktails +23.4% against core spirits -1.2% in sales.

- **Category movers:** Tequila grew on lower prices (Lunazul +39.7%, Lalo +75.9%, Espolon +14.1%). Scotch, Irish and American whiskey improved. Canadian whisky and Crown Royal stayed weak.

- **Diageo and peers:** Diageo's $1B restructuring and Cameronbridge strikes, with Q1 FY27 trading Nov 5. LVMH's Moët Hennessy beat on a Hennessy RTS and Chandon. Rémy reports Oct 28. Proximo closed Great Jones in Manhattan.

- **Beer:** Total US beer volume ran about -3.9%. ABI's Michelob grew while Bud Light fell 11.3%. Heineken USA was the laggard. Constellation, Molson Coors, Boston Beer and Brown-Forman improved on a four-week basis.

- **Colorado franchise fight:** Coors Distributing is seeking an injunction against Constellation/Crown Imports. Mark Anthony and Sierra Nevada are also leaving CDC for Reyes' RBG. Judge Espinosa's order is due Oct 29.

- **RNDC breakup:** Great Lakes took Michigan, Martignetti took 17 control-state brokerages and Girardi, Keg 1 River City took Kentucky, and Reyes took Western Maryland Distributing. NBWA's convention put the "whole deck" message on stage.

- **Courts and enforcement:** SCOTUS denied cert on Ohio retail wine shipping, leaving a circuit split. Home distilling decision expected Oct 19. FTC proposed a Southern Glazer's Robinson-Patman settlement. Arkansas Supreme Court ruled on wholesaler appointments, including Kirkland Signature.

- **Wine:** Treasury is cutting from roughly 75 brands to 30 to 35, with a US strategic review. Gundlach Bundschu filed Chapter 11, and Adelaida and 86 Napa licenses are in distress. NIQ shows wine -2.1% in dollars, with NA wine +19.1% and sparkling +3.3%.

- **Distressed assets:** Uncle Nearest is nearing a Chapter 11 sale. Passaggio is closing its tasting room. Pacific Rim, SIMI and Iris are under WarRoom Cellars.

- **Hemp:** Federal ban after Dec 11. Minnesota liquor stores are cutting orders, and Total Wine is leaving shelf space blank.

- **Retail and consumer:** KFC switching to Coca-Cola in January. Kroger cutting 3,000 corporate jobs. Albertsons pulled guidance, with the Kroger trial Oct 19. Costco comps strong. No/low is additive, and GLP-1 effects were flagged.

- **Other:** MGP becomes Sempreon (ticker CASK) on Nov 2. 71% of bourbon exports ship in bulk. Hormuz freight costs are up. Ontario's LCBO is sitting on $79.1M of unsold US alcohol. Campari chairman faces a ?1.29B tax case.

**Distribution reshuffle:** RNDC's Chapter 11 and asset sales are moving territory to beer-led wholesalers (Reyes, Quality Brands, Columbia, Morales, Manhattan Beer). Reyes' 11-market, $5B+ deal makes RBG Spirits and Wine the No. 3 wine and spirits house.

- **Southern Glazer's:** dropping "Wine & Spirits" from its name in early 2027, buying beer assets (AB's NYC operation, Clare Rose, Eagle Rock), and facing a $12.5M DOJ non-prosecution agreement, an FTC Robinson-Patman consent decree, and a California price-discrimination probe.

- **Other deals:** Martignetti acquiring Girardi; Breakthru exiting the RNDC Kentucky and Indiana deal; Keg 1 River City and Morales stepping in; Sierra Nevada, Constellation, and Mark Anthony leaving Coors Distributing in Denver, with CDC suing under Colorado franchise law.

- **WSWA forum:** Brager says all categories are declining but stabilizing, on-premise is beating off-premise, and premiumization is largely absent. Michael Hertz succeeds Cutter Smith as chairman.

- **Control states:** the Mississippi warehouse failure ruling (*Uno Mas v. Ruan*); NABCA August spirits volume down 3.0%, wine down 6.4%, cocktails up 12.4%.

- **Supreme Court:** *Wilson v. Miller* cert decision on Ohio's wine shipping law, with both sides seeking review.

- **Beer:** Constellation beat ($3.74 EPS, $2.63B sales) but depletions fell 0.6% against shipments up 5.5%. The SpikedAde acquisition ($75M plus up to $278M). BPI at 39, craft at 23, at-risk inventory at 54. Beer Institute shipments down 3.5%. Imports and craft playbook from Bump Williams.

- **Spirits and brands:** craft volume down 8.0% with 2,131 distillers; Irish Mist sold to Old Canal Quay; Tigner joins El Tequileño; Casamigos and Don Julio class action dismissed; Guinness Open Gate closing; TKC Distilling fires Wes Henderson; BuzzBallz and Pop-Tarts RTD pullback.

- **Wine:** private-label glut, 2.2M-ton crush, the shortage-versus-glut debate, Napa distress (Signorello, Gundlach Bundschu, 86 licenses at risk), East Coast freeze losses, global consumption at the lowest since 1957, Treasury Wine's restructuring, NielsenIQ category and brand data, and the Josh Cellars trademark trial.

- **Regulation and legal:** hemp THC ban delay, the Canadian-origin alcohol border question, Poland and Germany excise proposals, the Red Boot Distillery TTB case, the Mitra-9 kratom case, the Massachusetts DPH pushback, and Smith-Madrone and Summit Lake in Napa.

- **Consumer:** K-shaped split, NIQ volumes down 2.5% with prepared cocktails up 4.8%, PepsiCo guidance cut, Amazon Prime Big Deal Days spend, Tesco and GLP-1 commentary, and the Lancet cancer study versus longevity messaging.

- **Operators and tech:** menu shifts away from Burgundy, bulk buying, AI in winery software and fault detection, and Uber's $2.3B ezCater deal.

- **Big takeaway:** a consolidating middle tier under enforcement pressure, a value-seeking consumer, and growth concentrated in RTDs and convenience formats.

Distribution redraw (Martignetti-RNDC control states, RNDC bankruptcy breakup, Colorado franchise lawsuit vs. Constellation/Mark Anthony/Reyes); Diageo cost cuts and production pauses alongside Guinness strength; California wine supply-credit crisis (vineyard removals, custom-crush collapse, Napa lawsuits/foreclosures); post-Labor Day volume softness (beer/wine down, RTDs decelerating except pockets); status-spirits reset except agave; hemp-THC boom vs. possible December federal ban; ABI execution and share gains; experience-led on-premise and retail (wine bars, Costco, TGI Fridays).

- **Notable stories**: Coors Distributing vs. Crown/Constellation/Mark Anthony over Colorado franchise law; Legend Napa Valley custom-crush shutdown and harvest shocks; BuzzBallz trademark win vs. Patco Big Sipz; Monster’s Rob Gehring to Coca-Cola NA; Google YouTube alcohol ads; SCOTUS excessive-fines Cessna case; Canadian liquor import ban and Cognac tariffs; IWSR status spirits down 10 percent globally; JAMA four-drinks brain study; Two Roads–U.S. Beverage and Faire la Fête–BGPL/Southern Glazer’s partnerships.

- **Big takeaways**: Growth is share-shift, not category expansion. Resilience sits in Guinness, agave, RTDs/prepared cocktails, premium trusted brands, small formats, NA beer, and experience venues. Distribution legal fights, wine distressed M&A, hemp regulatory cliff, and trade/health policy will define risk through year-end. Operators must lock route-to-market, manage credit, and treat discovery as strategy.

- **Key themes:** Two-speed US beverage alcohol market—volume contraction and credit stress in wine and mainstream beer versus price/premium/RTD/NA/digital resilience at scale players; California wine oversupply, vine pulling and bankruptcies; policy fights over dietary guidelines, New York grocery access, hemp/kratom, Canadian whisky tariffs; distribution consolidation and cargo-theft enforcement.

- **Notable stories:** Gundlach Bundschu Chapter 11 and Signorello foreclosure (American AgCredit, Tiverton, Azur Associates, Silicon Valley Bank/Rob McMillan); ABI Capital Markets Day (BEES, Balanced Choices, Beyond Beer/Cutwater/NUTRL, 5-9% EBIT, Michelob Ultra); Diageo US reset and CFO change (Joanne Wilson succeeding Nik Jhangiani, Crown Royal/Smirnoff/Captain Morgan/Casamigos/Don Julio); Circana/NIQ/BeerBoard data (NA beer surge, FMB/craft declines, RTD share to 10%, NFL on-premise softness); Wente-Bronco partnership, Boisset-Artesa, Sazerac-Berentzen bid, Mark Anthony-Reyes Colorado shift; Hoplark Chapter 7 vs Brooklyn Brewery; Yardbird and Uncle Nearest distress; Instacart-Gopuff, DoorDash settlement; House Oversight/Synergy Enterprises alcohol study; New York supermarket wine/spirits coalition.

- **Big takeaways:** Pricing and mix still fund earnings even as cases fall; wine faces a permanently smaller, more consolidated industry with tighter cash-flow underwriting; large suppliers (ABI, Diageo, Constellation, Sazerac) can adapt via digital platforms, RTDs, NA, bottling shifts and M&A; smaller/undifferentiated players, regional wineries and some distributors/restaurants face higher bankruptcy, labor and compliance risk; watch New York three-tier reform, Canadian retaliation, federal alcohol messaging and organized-theft enforcement into 2027.

**Anniversary**

- Episode 52. One year of the DrinxAI Weekly. Thanks to the distributor and supplier partners who provided feedback all year.

- Year one defining threads: drinking participation at a record low fifty four percent; the RNDC collapse and wholesale reconsolidation under Reyes, Martignetti, and Southern Glazer's; the whiskey unwind from Stoli to Uncle Nearest; Gallo and Four Roses at seven hundred seventy five million dollars and Sazerac's rejected fifteen billion dollar run at Brown Forman; wine's physical contraction to roughly five hundred forty thousand California acres; RTDs, non alcoholic, and energy drinks carrying all the growth; tariffs turning into a direct line item; hemp THC beverages entering regulation; and repeated constitutional challenges to the three tier system.

**This week**

- Two speed US market: volumes recede across beer, wine, and core spirits while RTDs, energy drinks, non alcoholic wine, affordable premium tequila (Tito's Lalo, 818), sparkling in the fifteen to twenty dollar range, Prosecco, Champagne, and heritage beer (Modelo, Michelob Ultra, Pacifico, Guinness) deliver growth and mix.

- Beer reset: TD Cowen one hundred fifty dollar STZ target; NielsenIQ, CITI, Evercore, and Circana scanners confirm the "Cruel Summer" read; ABI outperforming via Michelob and Busch; Constellation terminating Coors Distributing in Colorado, six million cases, with Reyes likely successor; Kroger and Red Bull standoff.

- Spirits and Diageo: RTDs masking core weakness; Crown Royal down seventeen percent; Cameronbridge strike; a billion dollars of cost cuts; the 2.3 billion dollar EABL sale to Asahi cleared; new Montgomery, Alabama plant; affordability pivot for Don Julio and Casamigos.

- Wine contraction: twelve to twenty five percent of California acreage and the associated jobs gone; Boomer decline and cellar drinking; sparkling and New Zealand Sauvignon Blanc as pockets of demand; Judd's Hill winding down; tariffs against import demand.

- Distribution shocks: RNDC bankruptcy sale of control state brokerage to Martignetti at 14.5 million dollars; Summit Brewing BMO foreclosure at 8.22 million dollars; Southern Glazer's 12.5 million dollar non prosecution agreement over California supermarket incentives, with named executives and suppliers.

- Legal and regulatory: three tier challenges (Blue Sky Vineyards in California, Full Pull Wines in Illinois, Hoopes in Napa); home still circuit split (Ream); Costco Kirkland tequila class action; New York hemp THC crackdown and grocery wine push; Massachusetts ABCC penalty flexibility; Visa and Mastercard swipe fee settlement opposition.

- Tariffs and trade: planned removal of the ten percent Irish whiskey tariff; Canadian packaged alcohol ban September 29 with a bulk whisky workaround that protects Crown Royal; US spirits exports to Canada down seventy percent.

- Consumer and macro: stressed, value seeking shoppers (Kroger miss, SNAP, freight); August retail sales up 1.2 percent; CPI 3.4 percent; average beer case 31 dollars and 53 cents; K shaped spending; on premise visits down five percent.

- M&A and other: Sazerac (Au Vodka, Berentzen talks, failed fifteen billion dollar Brown Forman approach, Garrard County); Veritas Vineyard; Artisanal Spirits route to market shift; Destilería Serrallés CEO; VIP and Encompass technology merger; Middleby exits brewing equipment; Marmalade Cafe bankruptcy; alcohol attributable cancer deaths doubled to 23,126.

- Compliance: Southern Glazer’s $12.5 million NPA over retailer bribery; TTB no further action; Almave NA listing continues.

- Inventories & destock: Evercore ISI July data, 1.66 inventory-to-sales ratio, pantry levels rising.

- Off-premise NIQ (4 weeks to Aug 29): total alcohol –4.3% dollars / –6.1% volume; beer weakest; RTDs, NA, imports, super-premium holding; detailed brand and manufacturer gainers (Pacifico, Victoria, Surfside, Super Lyte, Josh, LaMarca, Deutsch, etc.).

- Depletions: WSWA SipSource wine/spirits –6.8% LTM; spirits weaker than wine; on-premise less damaged.

- Earnings & leadership: Molson Coors S&P 500 exit despite beat; Pernod U.S. –14%, recovery 2029; Fever-Tree guidance; Boston Beer CMO Allison Stransky; Brown-Forman whiskey “exaggerated demise,” barrel/bulk collapse, craft distillery contraction.

- M&A, bankruptcy, capacity: Reyes/Western Maryland; RNDC DIP, Reyes settlement, Martignetti Control States; Signorello Ch. 11; Brookside/Sbragia; Saothair/FIFCO USA (Genesee, Labatt, etc.) restoring North American Breweries.

- Trade policy: Trump proclamation banning most Canadian alcohol Sept 29 (section 338, 50% duties); DISCUS/AWA export collapse; Sapporo shifting production onshore; SpiritsEurope EU exports down; O’Charley’s closures.

- Hemp: Ohio injunction (Delta Beverages v. Canepa); Hemp Beverage Alliance new directors; Dec 11 federal deadline.

- Legal/IP: Cielo e Terra TTAB win; Vintage 99 trade-secrets injunction hearing; Bordeaux Cellars fraud sentence.

- Consumer: SAMHSA AUD and use declines; Southern Glazer’s Raise the Bar H2 themes (Gen Z, RTDs 94% of spirits growth, on-premise discovery, K-shaped, NA year-round); IWSR per-capita –11% vs 2019; Costco still spending.

- Other: Wine Institute toolkit; Christina Aguilera/Beau Joie; NRA “Made in Restaurants”; obituaries (Gayheart/Buffalo Trace, Coleman/Gallo, Rinaldi/Duckhorn); Illusionist/Benchmark; Kendall Jenner/Trip; Bain holiday forecast (F&B flat).

- **Key Themes**: Prolonged U.S. volume contraction in beer (16th month of tax-paid declines, BPI at 40, craft conglomerates under 25% growth), wine (light 2026 crush, tasting-room misalignment), and spirits (destocking, tequila weakness, Canadian whisky tariffs); RTDs, NA, and price/mix as sole offsets; wholesale fragmentation via RNDC Chapter 11.

- **Notable Stories**: Saothair restores NAB/FIFCO USA independence with Labatt, Genesee, and RTDs; Brown-Forman Q1 GM 60.2%, RTD momentum, tequila drag, rejected Sazerac/Pernod; Pernod FY sales -3.9% organic, U.S. -14%, soft through 2029, Italicus close; RNDC Georgia WARN 558 jobs, lease rejections, Indiana LOI to MBG; Martignetti buys Girardi; NDC expansion; Sierra Nevada packaging refresh; Signorello Ch11, Pickett Fire claims, Napa climate plan; Gallup 54% drinkers (record low), alcohol-cancer deaths doubled; hemp prohibition delayed; Delaware DTC flawed launch.

- **Big Takeaways**: Multi-year destock and demographic moderation (Gen Z, health, GLP-1, cannabis) shrink the volume base through 2026–2029; execution now hinges on independent wholesalers, RTD/NA recruitment, small formats, and specialty grocery; wine faces overlapping harvest, fire, credit, and narrative risks; operators underwrite grind, not recovery, with 2029 as the earliest large-house ca