US: Redhook blames sales slide on Widmer deal
US craft brewer Redhook Ale has blamed its venture with Widmer Brothers Brewing Co. for its falling sales in the west of the country.
Redhook, which is based in Washington state, has seen sales fall in its home market, California and Oregon during the third quarter. Sales in Colorado, the company said, slumped 25% in the three months to 30 September.
The brewer has pointed the finger at Craft Brands Alliance, a sales and marketing venture it set up with Widmer two years ago to serve the Pacific Northwest of the US.
Redhook said the region accounted for 42% of its total US shipments during the third quarter - compared to 55% last year - and blamed Craft Brands for the downturn.
"The company believes its third-quarter sales in Craft Brands territory have declined due to Craft Brands' unsuccessful execution of its sales and marketing strategy for Redhook's core and emerging products," Redhook said.
The brewer noted that the venture had been "very successful" in selling Widmer products, as well as brands owned by Hawaii-based Kona Brewing Co. Redhook said it benefited from growing sales of Widmer and Kona products but insisted it is "critical" for the venture to drive sales from the Redhook stable.
Redhook added: "The company has communicated this concern to Craft Brands, and is working with Craft Brands' management to establish new brand management throughout the portfolio of Redhook products.
"If Craft Brands is unable to increase shipments of the company's products in the west, the company's operations will become more dependent on lower margin contract brewing, and profit margins will suffer."
Redhook warned that it faces "extreme competitive pressure" in Washington state, the brewer's largest market. Since 2000, Redhook has seen its sales slump 20% in the state.
Despite its problems in the west of the US, the company yesterday (13 November) posted an operating profit of US$598,368 for the third quarter of the year, swinging from a net loss of over $109,000 last year.
The brewer saw revenues rise to $10.8m from $9.5m last year thanks to the success of price increases in the mid-west and in eastern US states during the quarter.
Redhook sells its products in those states through a distribution agreement with brewing giant Anheuser-Busch.
Sectors: Beer & cider
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