Will Monster’s latest moves crush craft beer?

Monster Beverage’s recent moves to lay off brewery staff and consolidate its craft beer operations are being eyed from across the sector.

The drinks giant originally made its name in the energy drinks category before acquiring the CANarchy craft beer platform in January 2022 in a US$330 million deal which marked its first foray into alcoholic beverages.

Despite the promise that the category has shown over the years, Monster has reportedly laid off a dozen staff members at its Cigar City Brewery, just two years after taking ownership of the business.

The move, according to Brewbound, to dispose of 12 positions at the Florida-based craft brewery also coincides with the site now being turned into a cross-category innovation centre and follows letting its brewmaster go after having already closed down the Oskar Blues brewery and taproom in Texas at the end of last year.

As part of the original deal, when Monster took ownership of CANarchy’s brewing brands, these included: Cigar City, Oskar Blues, Deep Ellum, Perrin Brewing, Wasatch Brewing, Squatters, and Wild Basin Hard Seltzer.

However, Brewbound outlined how on 9 February, Monster eliminated the position of Cigar City’s original brewmaster Wayne Wambles who had been due to celebrate his 16th anniversary with Cigar City in early March. Now, according to his LinkedIn profile, Wambles is seeking new employment.

With this having already followed Monster closing the Oskar Blues brewery and taproom in Austin, Texas last November and shifting production to other Monster-owned brewing facilities, the sector is braced for more upcoming consolidation news or lay offs to be communicated further down the line. Reassurances have been made in reports to quell fears however, with news circulating that employees at other Monster-owned craft breweries will remain unaffected.

According to market research firm Circana, flagship Jai Alai IPA increased dollar sales +1.1%, to US$39.55 million at off-trade retailers in the 52-week period ending 25 February. Meanwhile, Jai Alai’s volume declined -1.3% in the same period.

Reports confirmed that while Cigar City Brewery’s Tampa, Florida facility transitions to an R&D hub for beer, flavoured malt beverages (FMB) and spirits, all of the Cigar City beers will be produced at the company’s remaining Oskar Blues Brewery in Brevard, North Carolina. According to reports, Cigar City’s Spruce Street brewery and taproom, downtown taproom near the Amalie Arena and Tampa International Airport will remain open.

Looking into the figures, it was outlined with Circana findings how Jai Alai has recorded declines in both dollars (-2.9%) and volume (-3.5%) in the year-to-date through to 25 February.

Earlier this year, Monster Beverage Company CEOs Hilton Schlosberg and Rodney Sacks hinted of what may be to come by signalling issues with the company’s craft beer and hard seltzer business, formerly known as the CANarchy Craft Brewery Collective now renamed Monster Brewing Company.

For instance, in Monster’s late February earnings, the drinks firm reported a US$39.9 million impairment charge on its alcohol business, which it attributed “to the continuing challenges in the craft beer and seltzer categories.”

Despite this, fourth quarter fiscal reports showed that Monster’s alcohol business, including its brand The Beast Unleashed and craft beer brands, increased net sales +30.6%, to US$35.2 million, in Q4, up from US$26.9 million in Q4 2022.

Circana market research also highlighted how off-trade sales had suffered and pointed out that in the first two months of 2024 at multi-outlet grocery, mass retail and convenience stores the business’s dollar sales of the former CANarchy portfolio declined -10.3% to US$12.5 million.

Compared to Monster Brewing, which Circana reports separately, Brewbound outlined how Monster Brewing had still recorded dollar sales growth of +475.6% in the same period as it lapped the launch of The Beast Unleashed. Also, Monster’s non-CANarchy brands sold US$16.23 million year-to-date through 25 February. To follow The Beast Unleashed, Monster additionally expanded further into alcoholic variants with the launch of Nasty Beast at the start of 2024, but its focus on brewing beer has remained quiet.

Irrespective of the focus on other categories, the craft beer side of the business does appear to retain its reputation for quality. After all, last September, Cigar City Brewing’s Hunahpu’s Imperial Stout was named as one of the 10 highest rated beers in the US which offers some hope for the future of its craft beer arm and the kudos among beer drinkers for the brands under its remit.