Beer and alcohol companies are not doing well as of late.
Before the COVID-19 pandemic struck, the beer industry was thriving, marked by an explosion of craft breweries across cities and a growing public fascination with artisanal brews. This period saw an increasing number of beer aficionados discussing the nuances of their favorite ales, often critiquing them for being either “too hoppy” or “not hoppy enough.” Fortunately, for those who weren’t satisfied, there was likely another brewery just steps away, ready to serve up something different.
Delta Apparel, Inc. ( $DLA) 14 #Ohio pic.twitter.com/aubJTmgauY
— Joseph Angelo (@Beachdudeca) July 2, 2024
Craft breweries didn’t just cater to walk-ins; many secured regional and even national distribution deals, making their unique brews accessible in liquor stores nationwide. However, the pandemic drastically altered this landscape. Lockdowns and social distancing measures meant that the previously common brewery crawls were no longer possible, significantly impacting the way people consumed and enjoyed beer.
Moreover, a shift in consumer preferences emerged during the pandemic. A segment of younger adults began to embrace alcohol-free, mixology-driven beverages, diverting attention from traditional beer consumption. This shift contributed to a broader market contraction for the beer industry. Reports highlighted by industry analysts showed that by the end of 2023, U.S. beer shipments were expected to hit a 25-year low, following a more than 5% decline in the first three quarters of the year alone.
The US stock exchange is delisting US clothing retailer Delta Apparel after it filed for bankruptcy with the Delaware District Court and its Salt Life brand is expected to be sold to FCM Saltwater Holdings, Inc. for approximately $28m.https://t.co/3A7xRYKkNS #JSDaily
— just-style.com (@juststyle) July 2, 2024
Amidst these market challenges, one beer brand faced issues that weren’t directly related to the pandemic or changing consumer tastes. This brand, affiliated with the lifestyle apparel brand Salt Life—known for its ocean-inspired clothing and accessories—found itself in troubled waters due to financial issues faced by its parent company, Delta Apparel. Delta Apparel, which recently entered Chapter 11 bankruptcy, has had a significant influence on Salt Life’s operations, despite the latter’s strong brand identity centered around oceanic and beach lifestyles.
Salt Life originally started as a simple decal brand, but grew into a major name in lifestyle branding, appealing to those passionate about the sea and coastal living. The brand’s offerings expanded beyond apparel to include performance gear, sunglasses, and accessories, all tested and approved by a team of water enthusiasts to endure the challenging marine environment.
Salt Life Set for Sale as Delta Apparel Files for Bankruptcy https://t.co/9dEcnMhGRA
— WWD (@wwd) July 1, 2024
Interestingly, Salt Life had also ventured into the brewing industry, launching its own beer under a separate entity. The Salt Life lager was marketed as a modern take on the classic American lager, crafted specifically for those who embody the watermen lifestyle—crisp, clean, and refreshing. Despite this strategic brand extension, the beer’s website was recently taken down, and Salt Life Beverage LLC, along with Delta Apparel, filed for bankruptcy on the same day, in the District of Delaware.
The bankruptcy filings revealed that Salt Life Beverage had assets ranging from $50 million to $100 million but faced substantial liabilities. The situation was complicated by its intertwined financial and operational dependencies with Delta Apparel. Despite appearing to be in a relatively stable financial position, the need to address obligations to unsecured creditors and the broader financial struggles of Delta Apparel pushed Salt Life Beverage into bankruptcy. This case highlights the often complex and intertwined challenges that businesses can face, especially when broader market conditions and internal corporate strategies misalign.
Major Points
- The craft beer industry was booming pre-pandemic with an increase in breweries and widespread distribution, making diverse beers readily available.
- COVID-19 restrictions halted brewery visits and pub crawls, significantly impacting beer consumption habits.
- A shift in consumer preferences towards non-alcoholic, mixology-based drinks contributed to a decline in beer sales, with projections showing a 25-year low in U.S. beer shipments by the end of 2023.
- Salt Life Beverage LLC, linked to the lifestyle brand Salt Life by Delta Apparel, filed for Chapter 11 bankruptcy due to financial issues from its parent company, rather than direct market pressures.
- Despite having substantial assets, the intertwined financial struggles of Delta Apparel forced Salt Life Beverage into bankruptcy, illustrating the complexities of business dependencies and market changes.
Fallon Jacobson – Reprinted with permission of Whatfinger News
