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Younger drinkers today ‘are like cross drinkers’ with their tastes: Dogfish Head Founder

Dogfish Head Founder & Brewer Sam Calagione sits down with Yahoo Finance Live to discuss the outlook of the craft beer and brewing industry, Dogfish Head's collaboration with Patagonia, the pandemic shifting consumer buying habits, and the supply chain impact on grains and ingredients.

Video transcript

- All right post-pickleball this weekend, many Americans will crack open a cold one. So why not curb the climate crisis at the same time? Dogfish Head Brewery teaming up with Patagonia, a brand that stands for sustainability above all else. For more on this, we're joined by the founder of Dogfish Head Brewery, Sam Calagione.

Sam, good to see you, my man. So where did this idea come from to pair up with Patagonia? And what sets this beer apart? What makes it sustainable?

SAM CALAGIONE: So Dogfish Head opened 27 years ago, David. We were the smallest commercial brewery in the country. But kind of how we made our name and grew to a top 10 indie craft brewery was introducing unexpected culinary ingredients into the world of craft beer. In the case of our partnership with Patagonia, what that meant was they brought to us this amazing grain called Kernza. So Kernza is inordinately strong at drawing carbon out of the atmosphere. It's sort of a long-rooted perennial wheat.

But what it does from a sensory perspective is you put it in this beautiful pilsner. And it gives it a nice dry peppery undertone that we can build this nice hop, sort of green tea and pear fruit hop character on top of.

- Sam, what do you make of some of-- you sold it for me. We have it on site right here. I'm dying to try it. Dave's going to crack it open.

[CRACK]

He's going to join you there with the drink.

SAM CALAGIONE: Oh, I love that sound.

- Yeah, it's the best sound, especially on the Friday ahead of Memorial Day weekend. Sam, talk to us just about some of the trends that you're seeing in the industry. Because from craft beer to some of the mixed drinks, I know you're getting involved with that. Seltzers has been all the craze as of lately. How does Dogfish, how do you guys fit in with this?

SAM CALAGIONE: Well, I think when we came up, sort of in first gen, craft beer, '80s and '90s, there was an interest in finding like some go-to beer brands. And consumers would stick to them. And a beer drinker was mostly a beer drinker.

But I think the younger drinkers today are kind of like cross drinkers. They like seltzers. They like craft beers. They like spirits based, you know, ready-to-drink cocktails in cans.

So it's never been a better moment to be a lover of diverse beverages. Because there's over 10,000 breweries in America, thousands of distilleries, obviously, thousands of wineries. And everyone's kind of let their freak flag fly in different directions when it comes to creative recipes for alcohol beverages.

- Sam, it is fantastic. I'm having a cold one with you now. If you can comment about the state of the beer industry, every industry we follow here is about how you fared in COVID and how you're coming out of it. So how did COVID impact the beer industry? And how are you able to deal with inflation?

SAM CALAGIONE: Yeah, great question. So first of all, the pandemic actually accelerated what pantry, like loading. So it kind of-- obviously, with restaurants closing, there was less draft beer being sold, incredibly less. And then what did happen is people were not shopping for beer, they were buying beer. Meaning they were going to big-box stores, finding brands like Dogfish 60 Minute, Sam Adams Lager, recognizable brands, and buying bigger packages of 12 packs, 24 packs.

But the other thing that happened is the beyond beer category really started accelerating during pandemic. People wanted to try new experiences. They were sick of being in their houses and doing the same old thing. So that's when seltzers like truly, and White Claw, really saw a rise.

And then even more recently, with restaurants being cold, people can get their go-to like signature high end cocktails. And that meant that at-home cocktails and ready-to-drink cans really accelerated. And Dogfish Head was one of the original craft distilleries, not just brewery. We've been making gins, rums, and vodkas for over 20 years. So now Dogfish Head canned cocktails is growing triple digits and is actually the fastest growing part of the Dogfish beverage portfolio.

- Sam, have you had any trouble getting the ingredients you need or keeping up with the demand that's out there?

SAM CALAGIONE: Yeah, as you guys mentioned, the supply chain challenges are very real. With breweries, we buy natural products-- grains, hops. And we usually buy them on a three-year contract. So every year, one third of our volume is at risk. And so, yes, we felt it a little bit on glass for our, you know, our bottled beer. Cans, a little bit. Thankfully, we did a great job with our partners on the grain and the hop front. And we haven't been as stressed out about that.

- Yeah, I hate to go geopolitical events with you, but yesterday "The Washington Post" reported that the Russian navy is actually blocking grain shipments out of Ukraine. You mentioned that you're OK in the short term. Long term, can that impact the global beer supply?

SAM CALAGIONE: Yeah, it certainly can. Because to some degree, grain pricing is a commodity. So we may feel that in the future, which is, frankly, another reason why Dogfish is so focused on finding innovative grains [CRACK] that are grown right here in North America like the Kernza that we use that was developed by the Land Institute in Kansas. Patagonia Provisions really helped to commercialize it and scale it. So our rallying cry for this specific beer is "drink up to draw down." And it invites every consumer to actively engage in the climate crisis. And with every six-pack they buy, they're helping to plant more acres of Kernza, which not only tastes delicious, but it pulls carbon out of the atmosphere.

- It certainly does taste delicious, Sam. During that last answer, I cracked one open for myself. And I have to tell you, it's very, very good.

SAM CALAGIONE: Yeah.

- All right, Sam Calagione, thanks so much for taking the time to join us.