Not Wrong, Just Early: The Sequel
Possibly yet another sign that things are not well in the economy. Here's an inside scoop from a popular Midwest brewpub.
Back in January, I shared my rationale for going long Molson Coors TAP 0.00%↑ stock.
Paid subs can read that entire post for a refresher but the summary goes something like this:
Inflation is high, craft beer drinking consumers will inevitably down trade in a high inflation environment
Down trading would ultimately be bad for brewers with high product price points and good for brewers with low product price points
Microbrewers, which have been taking revenue share from larger brewers, would be the biggest losers and some would even go out of business
Declining competition from craft would theoretically be good for Molson Coors
Of course, being the walking contradiction that I can sometimes be, I’d prefer to see microbrewers succeed rather than die. Back in late 2020 when I still had a job and alternative investments were all the rage, I tried to allocate some capital to small businesses through platforms like Netcapital, Mainvest, and Republic.
Honestly, these investments did not amount to a large sum of money so I didn’t see much issue in doing it. There wasn’t really any equity ownership either as these instruments were mainly debt notes. But I liked the idea of providing capital to smaller businesses especially during the lockdown era. Unfortunately, things aren’t well with one of my small business borrowers.
The intention of this post is not to put this business on blast. I’m absolutely still rooting for this company to succeed but things don’t look great at the moment. For the Heretic Speculator paid subs, the following may offer some fresh insight into the current market for craft brewers. Additionally, one of the stated issues from the owner absolutely jumped off the page to me and dissecting it may serve as an additional insight for any of you who are running your own consumer discretionary small businesses.
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