A Denver brewery known as a hub for the Latino community closed suddenly this week after city officials seized the property’s assets due to unpaid back taxes.
Raíces Brewing Co. in Lincoln Park owed $98,703 in sales and personal property taxes, according to a distraint warrant issued by the city. The business closed on Wednesday when the warrant was issued.
Brewery CEO José Beteta was not immediately available to comment on the circumstances, but a detailed goodbye note on Raíces’ website states the company had been working with the city for about a year to establish a payment plan for the taxes. The company blamed “a series of unexpected charges” issued by the city that it said are related to what’s called a business personal property tax. That’s essentially a tax on whatever assets a business owns.
The note alleged that Raices had “never received prior billing notices” and that all invoices dating back to 2019 “arrived together in 2024, already including years of interest and penalties — despite our lack of prior information.”
However, city spokesperson Laura Swartz said in a statement that the personal property taxes owed only amounted to $10,765, or about 10% of the business’s total outstanding balance. Raices owed nearly $69,000 in sales tax and about $30,000 for penalties and interest, she said.
“It’s unfortunate that this situation has gotten to this point. We want Denver’s businesses to succeed and that means offering the best customer service we can to them,” Swartz said. “Before issuing a warrant, we attempt to reach the business by phone, mail, email, and in person to both collect the sales tax and ensure they can continue to operate. As Raices has noted, the city has attempted to work with them for years, including on a payment plan that was not fulfilled.”
Opened in late 2019, Raíces Brewing Co. offered a welcome dash of diversity to Denver’s craft beer scene. Raíces means “roots” in Spanish, and the brewery quickly became a hotspot for events and traditions celebrating Latino culture. Its annual Suave Fest spotlighted Latin beer makers from across the country.
Raíces’ closure is notable because of its unique space in the community, and also because the beer was worth seeking out. In 2022, it won a silver medal at the U.S. Open Beer Championship for its Furia imperial red ale.
“Raíces Brewing Co. has always been more than a business – it has been a space of community, culture, and human connection. A meeting place where thousands of people celebrated their roots, their identity, and their diversity. We are profoundly proud to have built a place that served our people and the city of Denver with love, respect, and purpose,” the goodbye note says. “In times when the world often feels increasingly divided, spaces like this become essential.”
Revolution Brewing will close its Logan Square brewpub in December after nearly 15 years along Milwaukee Avenue. Revolution found Josh Deth says the restaurant, which opened in February 2010 will close on Saturday, December 14. Deth owns the building at 2323 N. Milwaukee Avenue and plans on selling.
“Hopefully someone else will come around and want to take over and do something new concept in this space, and then we’ll consolidate down to one location,” Deth says.
Revolution’s taproom, 3340 N. Kedzie Avenue, won’t be impacted. It opened in 2012 and was one of the first bars in the city to able to serve beer made on premises. Deth admits Revolution canibalized its clientele by forcing them to pick between the Avondale taproom and Logan Square brewpub: “We created that component of it,” Deth admits.
The brewery, the state’s largest independent craft brewery, is known for its Deth’s Tar barrel-aged beers, Anti-Hero IPA, and more. The Milwaukee Avenue brewpub was once a hotspot with long waits, as Revolution followed in the footsteps of Deth’s former employer, Goose Island Beer. Goose Island’s original location in Lincoln Park, along Clybourn, created a strong business model mingling a full-service restaurant under the same roof as a brewery. Brewery taprooms, which don’t have kitchens and only serve the beer produced on premises, had yet to catch on.
Yet Revolution amplified Goose Island’s blueprint, bringing more of a gourmet edge to the experience without alienating the customers who came for the company’s bread and butter — beer. Now, come December, Goose Island and Revolution’s original locations will have closed, while their taprooms will remain: “The brewpub was like a predecessor, in some ways, of today’s taproom model,” Deth says. “That is a better model for most breweries they find because it’s easier to manage, right to have to manage your brewery business, and have to manage all the complexity of a restaurant is it’s a lot.”
Deth notes that Revolution’s cocktail program — something that didn’t exist when the brewpub opened — has improved over the last year as the craft beer industry declines, something Deth says was starting to happen even before the pandemic started in 2020. More and more customers are looking for hard seltzers, cocktails, and THC-infused drinks.
“Our business is going to this simplification… it’s probably going to be good for our team long term, to be the more focused on the primary thing that we’re doing these days, which is wholesale production of beer,” says Deth.
The brewpub temporarily closed during the pandemic in October 2020 as state COVID protocols closed restaurant dining rooms. While most restaurants scrambled, trying to deal with delivery and to-go, sorting through third-party couriers and their fees, Revolution had a safety net with home alcohol consumption rising and packaged good sales at stores through the roof. When it opened, the terrain for restaurants was radically different, as the cost of running restaurants had skyrocketed with labor and inflation costs exploding. The brewpub had to find new footing in this world of restaurants that had radically changed since 2010, with Chicago’s culinary expectations also changed. Revolution was once of the only games in town along Milwaukee Avenue in Logan Square, but now they struggled with standing out in a crowd that includes many heavy hitters from Federales, Andros Taverna, Bixi Beer — another brewpub — and more.
Revolution attempted to recreate the magic, searching for a chef with a new voice. Earlier this year, they hired Rasheed Amedu, a native Chicagoan who they had high hopes to breathe new life into their menu. His run was cut short. The closure, coupled with places like Kuma’s Corner in Fulton Market, paints a dreary picture for restaurants that focus on craft beer. That’s something Three Floyds will attempt to navigate as the Munster, Indiana company preps to reopen its brewpub. Piece Pizza in Wicker Park might be the most stable of all brewpub thanks to its pizza which brings a robust carryout and delivery business. It’s also a regular winner at the Great American Beer Festival.
Deth sees some breweries have adopted kind of a food hall experience, with an outside vendor handling the food service — Pilot Project Brewing (also on Milwaukee Avenue) and District Brew Yards are two examples. District Brew Yards relies on Lillie’s Q barbecue in West Town and Paulie Gee’s pizza in Wheeling.
News of the closure began leaking out on Friday as Revolution told customers with private events that the brewpub could no longer host their event. Deth notes that customers often book their weddings and other functions two years in advance. They broke the news to workers earlier in the week, and hoped that workers and customers alike would hear about the news long before the annoucement made its way on the Internet.
Deth is open to hosting more food pop-ups and food trucks at the taproom to make up for the loss of the brewpub, but says he hasn’t had time to come up with concrete plan. They’re focused on closing up the brewpub and going out on positive. He has gratitude for all his customers and says the taproom is going strong. They just secured a city permit to put in solar panels to the building and hope to invest more in the venue.
While Goose Island moved its Lincoln Park operations to the Salt Shed, Revolution doesn’t have the backing of a multi-national corporation (Goose Island’s parent is the owner of Budweiser). Much like Taqueria Chingón’s Oliver Poilevey, who will closes his Bucktown restaurant later in November, Deth notes Revolution doesn’t have the deep pockets to compete.
“This is our only restaurant, right?” Deth says. “We’re not a big company — we’re not a restaurant group — we don’t have the depth that a larger company has to call upon.”
Escargot wontons would get anyone’s attention. But French onion soup nachos seals the deal.
Adam Branz, the chef behind Ultreia and Split Lip: An Eat Place, is introducing a new concept at Dewey Beer Co.’s Denver taproom. The Delaware-based brewery has been running Mockery Brewing’s former space in the River North Art District since January.
The kitchen, called Cul-de-Sac, will feature what Branz calls “sleazy French street food” served out of a food trailer. In addition to the wontons and nachos, the menu will eventually include other tantalizingly off-centered plates like coq au vin nuggets-on-a-stick, duck confit quesadillas made with “a stinky French cheese,” and even slow-poached frog’s legs served with clarified butter, like a lobster roll.
Adam Branz of Ultreia, Split Lip and Cul-de-Sac. (Photo by RJ Sangosti/The Denver Post)
“My first chef job was at Bistro Vendome, so I have a special place in my heart for French food — and Parisian food in particular,” said Branz, who attended Le Cordon Bleu College of Culinary Arts before moving to Denver and working his way up through the restaurant group founded by Jenn Jasinski and Beth Gruitch, which included Bistro Vendome, Ultreia and Rioja.
But for Cul-de-Sac, he wanted to approach French food in the same way he does with the menu at Split Lip, which specializes in flavor-packed, cheffed-up versions of casual regional dishes like Nashville hot chicken, Oklahoma-style fried onion burgers, and Buffalo wings.
“The Split lip lens is playful, raw and even abrasive at times,” he said.
That means treating fun food with the extreme attention to detail — timing, balance, degrees of heat — that classically trained chefs use in more formal settings.
For the wontons, for example, Branz and his team braise the snails low and slow to bring out the aromatics, pre-cooking them in a classic French butter sauce. Then they are cooled down and folded into the wontons. (Before landing on wontons as the vehicle for the escargot, Branz experimented with jalapeno poppers and ravioli.) “But the wontons came out incredible.”
Branz’s inspiration for this approach comes from an usual place. “I once spent nine months working on a dish at Ultreia,” he said, making minor adjustments and tweaks over that time in order to find the perfect balance of flavor and texture. Then after work one day, he went to the drive-thru at Carl’s Jr. — Branz loves fast food — and ordered a Western Bacon Cheeseburger. “The amount of balance was perfect. … That’s the beauty of casual American food.”
To run the trailer, Branz and his team, including chef Cameron Tittle, will prep all of the food in a commissary-style kitchen inside the Number Thirty Eight bar and venue where Split Lip is located. Then they’ll carry it down the alley to Dewey for the final stage of cooking.
The partnership with Dewey came about first because of proximity: Number Thirty Eight, at 3560 Chestnut Place, is right around the corner from Dewey, at 3501 Delgany. “I used to finish up my shift at Number Thirty Eight and go have a beer at Dewey,” Branz said — the brewery’s Pizzetta Pilsner in particular, a lighter, floral “Italian-style” lager with a gentle hops profile. After a while, he and his friends and co-workers became friends with Dewey’s Matt Lindy.
The logo for Cul-de-Sac, a new concept from chef Adam Branz. (Provided by Cul-de-Sac)
“It was because of us hanging out there that the conversation started up,” Branz explained. The name Cul-de-Sac comes from Dewey’s location on Delgany, which dead ends, while the logo plays off of the Canadian street signs for cul-de-sacs, which are accidentally provocative.
Cul-de-Sac will open today, Oct. 3, with a very limited menu and hours, growing slowly during October before a grand opening on Nov. 1. It will have extended hours — as will the brewery — Oct. 10-12 while the Great American Beer Festival is taking place in Denver.
When Mike Schalau first launched Is/Was Brewing five years ago, a Redditor shared an image of the poster for the brewery’s release party with the note: “It’s a new project focusing on saison, so they’ll be making hazy IPAs in two weeks.”
The demand for hazies has since cooled, but the Redditor’s remark still resonates with Schallau.
“I’m not a petty person, but I saw that and I said to myself ‘hold my saison,’” he says.
Is/Was still hasn’t released anything but saisons, and drinkers can try six different versions of the French/Belgian style at their new taproom at 5121 N. Ravenwood Avenue., which opened in August. Schallau, who lives in Ravenswood and has been contract brewing from Begyle Brewing, says he’d been eyeing the Malt Row building since Urban Brew Labs closed in 2022.
The taproom is simply decorated with a colorful board on the exposed brick wall showing off the draft list. There are plenty of outlets in the curving booths to welcome locals who want to use the place for remote work along with a scattering of small tables and seats at the bar. A secondary space with room for 50 more is currently being used for overflow seating but Schallau is considering adding Skeeball or other fun activities.
Delicate, yeast-driven saisons were Schallau’s favorite style when he first started getting into beer while working at West Lakeview Liquors, a shop at Addison and Leavitt that specializes in imported brews. But when Schallau joined Pipeworks Brewing Company, he devoted himself to learning and drinking their preferred styles — hoppy IPAs with high ABV.
“As I went from an intern there to running all daily operations and overseeing recipe development, I’d kind of fallen out of love with making beer,” Schallau says. “I was kind of lost. Then I had a saison, La Vermontois, a collaboration between Belgian brewery Blaugies and Hill Farmstead in Vermont and I was like, ‘Ohh, I forgot. This is what I really fell in love with.’”
He began experimenting with what would become his flagship, Will Be, seeking to fill a void in the Chicago market while appealing to evolving tastes. Most of Is/Was’ beers are about 3.2 percent ABVs, topping out with a rare 6 or 6.5 percent.
“I think that a lot of craft beer drinkers are getting a little older and their palates are developing in a different way than when they wanted to drink super hoppy beers and really acidic kettle sours,” Schallau says. “Saison has these flavors that are really complex if you want to dive into what’s going on in the beer, or you can kind of crush a couple of them and they’ll be super satisfying and refreshing.”
The taproom shows off the style’s versatility by pouring Is/Was’ Will Be, Wisp smoked saison, and Saison Effyrayant — which is conditioned with fresh sage leaves — along with rotating pours developed in collaboration with other breweries including Revolution Brewing. Schalau plans to start making some other styles once his new production brewery is up and running in about a month. Until then, there’s a selection of six guest drafts including Goldfinger Brewing Company’s flagship lager and Hop Butcher For The World’s Snorkel Squad double IPA.
Barry Brecheisen/Eater Chicago
“Instead of making a mediocre version (of a style), we’d rather get the best version from our world-class brewery friends,” Schallau said. “We want people who don’t like saison to have a good time.”
To that end, the brewery also serves Shacksbury Cider, Dark Matter nitro coffee, and a blackberry shrub prepared with Mick Klug Farms berries and housemade malt vinegar. Schalau would like to see the brewery become a third space for the neighborhood and while he doesn’t have a kitchen, he’s already hosted a popup with Motorshucker and arranged a 15% percent discount for customers who want to pick up a Detroit-style pie from Fat Chris’s Pizza and Such around the corner. He’s also planning on hosting makers markets to show off works made by his employees and artists the brewery works with.
Schallau says he’s been overwhelmed with the response to the opening, which brought lines out the door for nearly five hours.
“I spent most of the last five years (brewing beer) in a 600-square-foot room without windows and most of that time I was alone, wondering if anyone was drinking it or if anyone even really cared about this thing that I cared very deeply about,” he said. “It was a nice way to kind of physically manifest the fact that people had been paying attention. It was pretty emotional.”
Is/Was Brewing, 5121 N. Ravenswood Ave., open noon to 9 p.m. Sunday and Tuesday through Thursday; noon to midnight on Friday and Saturday
Lagunitas Brewing Company is closing its Chicago taproom and relocating its brewing operations back to its original California brewery. The company will maintain its warehouse next to the Douglass Park brewery, according to a news release.
The announcement comes a little more than a year after Lagunitas reopened its North Lawndale taproom which was closed for three years due to the pandemic. The brewery opened its Chicago facility, 1843 W. Washtenaw, in 2014. Lagunitas was founded in California in 1993. The closure impacts 86 workers, according to the brewery, and some will move west to work at the Petaluma, California facility.
Lagunitas served food when it first opened in 2014.Marc Much/Eater Chicago
They’re moving operations back to California.Marc Much/Eater Chicago
“Chicago remains a priority market for Lagunitas, and the company will continue servicing the many partner bars, restaurants, and stores in and around Chicagoland with its fresh and high-quality hop-forward IPAs and other brews,” according to a news release.
The taproom was once a destination for beer lovers, as beers like A Little Sumpin’ Sumpin’ were popular in Chicago’s bars. The Chicago brewing facility presented a gateway to the Midwest and East Coast, as Lagunitas pursued expansion. In September 2015, Heineken’s parent company bought a 50-percent stake in Lagunitas. Two years later, the multinational company purchased the remaining 50 percent.
When the taproom reopened in 2023, it did so without food. The news release singles out needing to “future-proof” the company and “to allow for a more efficient and flexible supply chain, with a greater focus on innovation and the acceleration of more sustainable brewing practices.” Simply put, craft breweries have struggled in recent months with several closures.
On Monday, Renegade Brewing Co. (925 W. Ninth Ave., Denver) announced it will close in just a couple of weeks, on May 3. The social media post suggested the closure came as a surprise to ownership.
Michael Mulcahy, managing partner with Silver Fox Partners, which owns the brewery in the Art District on Santa Fe, declined to elaborate on factors that played into the closure. When reached by phone, he attributed it to “seen and unforeseen circumstances.”
One certain thing is that head brewer Jack Meyer is preparing to leave. Meyer, who started by washing kegs at Renegade in 2014, will soon move to Bozeman, Montana, and start a job at Julius Lehrkind Brewing. The move was not about the job, however.
“I always wanted to live in a mountain town so I’m going to do that,” Meyer told The Denver Post. “I’ve found a job, but the catalyst for the move was the opportunity to buy a house with my buddy.”
Founded in 2011 by Brian O’Connell, Renegade was one of the first of a new kind of brewery taproom that kicked off a string of openings over the next few years. And it quickly garnered locals’ attention with its boisterous ethos and beer menu.
The following year, The Denver Post lauded Renegade for its “gusto that separates the brewery from some of the city’s more traditional, comfortable venues.”
“As the super-sized logo that hangs inside the entrance proclaims, the beer for sale here is ‘offensively delicious,’” the reporter wrote.
Renegade first linked up with Silver Fox Partners in 2017 as it underwent an expansion and eyed new markets for distribution. Silver Fox Partners’ founder Anne Mulcahy served as Xerox’s CEO in the 2000s; the company invested an undisclosed amount into Renegade, The Denver Post reported at the time.
Thereafter the brewery tried to find creative ways to partner with other local beer makers. In 2019, for example, Renegade inked a deal with Good River Beer Co. to contract-brew its beers at Renegade’s large production facility, which had opened in 2015 at 1st Avenue and Santa Fe. Little Pub Company, which owns nearly 20 bars and restaurants in the metro area, was also in on the deal and the three operations formed a new brand they called the Brewers Co-Hop. Originally, they hoped to open a restaurant and bar in Arvada.
However, less than a year later – during the height of the pandemic – Good River pulled out of the deal and shuttered the taproom it had opened inside Renegade’s production facility.
Meyer worked as brewer and production manager for much of that time and helped Renegade reopen its taproom in 2020 amidst the pandemic. He loved the flexibility of the job.
“I get to brew whatever beers I want, I get to make my own schedule. If I want to make beer on a Saturday and go snowboarding on Wednesday I can do that,” Meyer said, adding he is now ready for a change of scenery.
Renegade’s closing announcement said the business is evaluating options to reopen in the future. Michael Mulcahy declined to comment on the specifics of how — or if — Renegade might reemerge.
“There is no way around the fact that they have stolen our business in Russia, and we are not going to help them make that look legitimate.”
That’s new Carlsberg CEO Jacob Aarup-Anderson, according to a Reuters account of a journalist call on Tuesday, after Russian President Vladimir Putin this summer ordered the seizure of Carlsberg’s stake in its Baltika subsidiary. Earlier this month, Carlsberg ended license agreements that allow for its beers to be produced in the country.
According to the presidential decree, Carlsberg retains title to the shares in Baltika Breweries but no longer has any control or influence over the company.
Carlsberg reported a 3% decline in organic volume growth, as a 6.3% slide in Central and Eastern Europe and a 5.2% decline in Western Europe was partly offset by a 1.5% rise in Asia.
The brewer said two-thirds of the volume decline was due to bad weather and another one-third to consumer sentiment.
Organic revenue, however, rose by 5.8%, on price hikes. It kept its operating-profit guidance for the year unchanged at 4% to 7% growth, and launched a new stock-buyback program valued at 1 billion Danish crowns.
Carlsberg said comparisons in the fourth quarter will be positive in China, in light of the year-ago lockdown, but the weak macro environment in Southeast Asia will continue to impact markets.
Carlsberg shares CARL.B, -0.83%
were steady on Tuesday but have dropped 8% this year.
Beer giant Heineken N.V. is the latest Western company to exit Russia, announcing Friday the sale of its Russian operations to Arnest Group for one euro.
Under the terms of the deal, all of Heineken’s HEIA, +0.77%
remaining assets, including seven breweries in Russia, will transfer to the new owners, the beer giant said in a statement. The Russian Arnest Group has also taken over responsibility for Heineken’s 1,800 employees in Russia.
Heineken began the process of exiting Russia in March 2022, following that country’s invasion of Ukraine. The company said it expects to incur a total cumulative loss of €300 million ($324.1 million) as a result of its exit.
“We have now completed our exit from Russia. Recent developments demonstrate the significant challenges faced by large manufacturing companies in exiting Russia,” Heineken CEO Dolf van den Brink said in a statement. “While it took much longer than we had hoped, this transaction secures the livelihoods of our employees and allows us to exit the country in a responsible manner.”
Earlier this week, DP Eurasia, the master franchiser of the Domino’s Pizza Inc. DPZ, +0.49%
brand in Turkey, Russia, Azerbaijan and Georgia, also announced its exit from Russia.
But Heineken is “no hero,” according to Mark Dixon, the founder of the Moral Rating Agency, an organization set up after the invasion of Ukraine to examine whether companies were carrying out their promises of exiting Russia. “It failed to leave Russia for a year and a half,” he told MarketWatch via email. “The explanation that it took longer than expected doesn’t hold water, because of course it’s difficult to find a buyer if you remain so long a pariah state.”
The Ukraine Solidarity Project said that Heineken’s move should increase the pressure on companies that remain in Russia, such as consumer-goods giant Unilever PLC ULVR, +0.44%.
“The point here is that major companies, like @Heineken, are and have taken loses of hundreds of millions and billions in leaving the Russian market. It is possible,” the Ukraine Solidarity Project tweeted Friday. “We’re sure @Unilever can do it, too.”
The Ukraine Solidarity Project recently launched a high-profile campaign urging Unilever to get out of Russia, using images of Ukrainian veterans injured in the war with Russia. Last month, activists from the Ukraine Solidarity Project held up a giant poster featuring the veterans outside Unilever’s London headquarters.
“We have always said we would keep our position in Russia under close review,” a Unilever spokesperson told MarketWatch earlier this month. The spokesperson also directed MarketWatch to a statement on the war in Ukraine that the company released in February 2023.
U.S. banks and regional banks fell across the board on Tuesday, after S&P Global Ratings downgraded five smaller players after a review of risk related to funding, liquidity and asset quality with a focus on office commercial real estate.
Adding to the gloom, Republic First Bancorp. Inc.’s stock FRBK, -41.90%
tanked by 39%, after Nasdaq told the company that its stock would be delisted on Wednesday, after it failed to file its annual report in time.
S&P’s move comes just days after Fitch Ratings analyst Christopher Wolfe reduced his operating environment score for U.S. banks to aa- from aa due to the unknown path of interest rate hikes and regulatory changes facing the sector.
And Moody’s Investors Service just two weeks ago upset investors when it downgraded some lenders and said it was reviewing ratings on bigger banks, including Bank of New York Mellon BK, -1.71%,
State Street STT, -1.59%
and Northern Trust NTRS, -1.73%.
The S&P 500 Financials Sector has fallen for seven consecutive days, and is on pace for its longest losing streak since April 7, 2022, when it also fell for seven straight trading days.
Individual bank names are also performing poorly, with Goldman Sachs Group Inc. GS, -0.94%
and Citigroup Inc. C, -1.68%
down for 10 of the past 11 days and Charles Schwab Corp. SCHW, -4.84%
down 11 straight days.
Goldman alone has fallen for seven straight days for a total loss of 6.3%. It’s the longest losing streak since Feb. 28, 2020, when it also fell for seven straight days as the pandemic was taking hold.
The KBW Nasdaq Regional Banking Index KBWR
is down for 11 straight days. and the KBW Nasdaq Bank Index BKX
is down for seven straight days.
S&P downgraded Associated Banc. Corp. ASB, -4.20%,
Comerica Inc. CMA, -3.82%,
KeyCorp KEY, -3.58%,
UMB Financial Corp. UMBF, -2.42% % and Valley National Bancorp. VLY, -4.19%
by one notch and said the outlook on all five is stable.
The rating agency affirmed ratings on Zions Bancorp ZION, -4.17%
and maintained a negative outlook, meaning it could downgrade them again in the near-term. And it affirmed ratings and a stable outlook on Synovus Financial Corp. SNV, -3.37%
and Truist Financial Corp. TFC, -1.36%
“We reviewed these 10 banks because we identified them as having potential risks in multiple areas that could make them less resilient than similarly rated peers ,” S&P said in a statement.
“For instance, some that have seen greater deterioration in funding—-as indicated by sharply higher costs or substantial dependence on wholesale funding and brokered deposits—-may also have below-peer profitability, high unrealized losses on their assets, or meaningful exposure to CRE.”
The steep rise in interest rates orchestrated by the Federal Reserve over the past year has raised deposit costs as banks are now competing for savers seeking higher returns and that’s forced some to pay up on deposits and discourage their clients from heading to other institutions and instruments.
However, S&P said about 90% of the banks it rates have stable outlooks and just 10% have negative ones. None have positive outlooks.
The widespread stable outlooks shows that stability in the U.S. banking sector has improved significantly in recent months.
S&P is expecting FDIC-backed banks in aggregate to earn a relatively healthy ROE of about 11% in 2023.
KeyCorp. and Comerica both fell more than 3% on the news. Of the two, KeyCorp. has more outstanding debt and its 10-year bonds widened by about 5 to 10 basis points, according to data solutions provider BondCliq Media Services.
As the following chart shows, the bonds have seen better selling on Wednesday with buyers emerging around midmorning.
KeyBank net customer flow (intraday). Source: BondCliQ Media Services
The next chart shows customer flow over the last 10 days.
Most active KeyBank issues with net customer flow (last 10 days). Source: BondCliQ Media Services
The next chart shows the outstanding debt of the downgraded banks, with KeyCorp. clearly the leader with almost $16 billion of bonds.
Outstanding S&P downgraded banks debt USD by maturity bucket. Source: BondCliQ Media Services
Anheuser-Busch InBev is planning to cut jobs in the U.S. after a sharp deterioration in sales following a boycott that’s still impacting Bud Light.
The industry publication Brewbound said the company was going to cut 2% of its U.S. workforce, where it employs 19,000. The company told the publication that front-line workers, including warehouse staff and field reps, will not be impacted. The company did not specifically identify slumping Bud Light sales as the cause of the layoffs.
Bud Light sales have tumbled after the company’s ill-fated social media promotion with Dylan Mulvaney.
Citing Nielsen U.S. beer data, analysts at Bank of America said volumes at the brewer tumbled by 15.3% year-over-year in the four weeks ending July 15, compared to the 2.7% decline for the broader U.S. beer category.
Bud Light sales over that same time period skidded 29.8%, and Budweiser volumes skidded 14%. In contrast, Coors Light sales rose 17% in the last four weeks, Miller Lite volumes rose by 12.5% and Yuengling sales surged 38%.
Anheuser-Busch InBev’s U.S.-listed shares BUD, +0.22%
have dropped 2% this year. In its home market of Belgium, shares ABI, +0.97%
rose 0.6% on Thursday.
Bud Light sales are still falling, as the impact of a boycott against the beer continues to stick. But Morgan Stanley analysts on Thursday said that impact was already reflected into shares of its parent company, Anheuser-Busch InBev, and that AB-InBev’s global footprint and the falling costs of beer ingredients would help sales and margins up ahead even if struggles in the U.S. spill over into next year.
Morgan Stanley assumed coverage of AB-InBev BUD, +0.51%
with an overweight rating, a step up from its prior equal-weight rating. The firm bumped its price target on the stock higher, to $68.50 from $64. Shares of AB-InBev were up 0.4% on Thursday.
The analysts also said that AB-InBev’s second-quarter results, set for Aug. 2, could be a clarifying moment for investors.
“While investors are currently sitting on the sidelines, waiting for the company to fully quantify the impact of the Bud Light situation, we see upcoming H1 results as likely timing for such clarification,” the analysts said in a research note.
“We think ABI shares now price in the U.S. Bud Light challenges, which have stabilised, but not the gross margin recovery and de-leveraging upside into next year,” they added later.
The conservative-led boycott against Bud Light began in April, after the brand briefly partnered with Dylan Mulvaney, a trans influencer. That anti-trans anger has translated into weeks of sharp declines, generally above 20%, for Bud Light sales. Mulvaney said Bud Light never reached out to her, despite what she said was “more bullying and transphobia than I could have ever imagined” as a result of the partnership and calls for a boycott.
Still, the Morgan Stanley analysts emphasized Anheuser-Busch’s worldwide reach, and said that even a 13.5% drop in U.S. yearly sales — broadly, where things stand in the U.S. now — would only mean a 4% drop for the company’s sales overall. And they said double-digit growth expected elsewhere, in regions like South America and the Asia-Pacific, would drive organic sales growth of 6% for the company overall in its fiscal 2023. They also said a “wind-back” on commodity costs and sales incentives to U.S. beer sellers would help margins up ahead.
Still, they didn’t expect much of a break for sales trends in the U.S. They said they expected the 13.5% drop in U.S. sales to ease to a 12% drop in AB-InBev’s fiscal 2024.
Overall, however, the analysts were upbeat on beer sales and profits for next year. Falling ingredient costs would help brewers overall. A pandemic-era jump in U.S. demand for spirits — or hard liquor like gin, Scotch and vodka — had now “normalized,” they said.
Shares of Anhueser-Busch InBev are down 1.4% so far this year. By comparison, the S&P 500 Index SPX, -0.68%
is up 18.9% over that period.
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Constellation Brands‘ earnings beat Wall Street’s expectations as the company reported strong beer sales for the latest quarter on Friday. The stock fell anyway.
The summer haze settling over stocks doesn’t look ready to budge Thursday, with the S&P 500 index SPX, -0.52%
in the throes of its longest losing streak since May.
On the bright side, the index is looking at a 6% gain for the June quarter, whose end is just a few days away.
In other corners of the market, the quarter has been less forgiving. Consumer staples, those things you can’t live without, have lost over 1%, perhaps reflecting the tougher economic times we are living in. Within that sector, though, is beer and one name that has indeed had a quartarius horriblis.
BUD, -0.05%
U.S.-listed shares are down about 15%, as Bud Light sales have tumbled following consumer backlash to a social-media campaign featuring trans activist Dylan Mulvaney in April.
But our call of the day from Deutsche Bank says it’s time to buy this unloved stock, even if those Bud Light sales never recover. A team of analysts led by Mitch Collett have upgraded Anheuser-Busch shares to buy from hold and lifted their price target to €60 euros from €59 euros (they didn’t offer an ADR price target).
Recent underperformance of the stock “implies a permanent reduction in ABI’s U.S. business. Our proprietary survey data suggests these headwinds are likely to fade even if we do not expect the U.S. business ever to fully recover from its current challenges,” said Collett.
The analysts pointed to recent Nielson data that showed ABI’s U.S. business currently down 12%, with Bud Light sales off 24% and the rest of its portfolio down 7%. But an analysis of distribution data shows ABI itself isn’t “losing shelf presence” as sales velocity is the primary driver of the decline, which bodes well if consumer sentiment improves, said Deutsche Bank.
Those declines are about a 12% headwind to ABI’s annual net income, which is in line with European underperformance seen by the stock, added Collett and the team.
Deutsche Bank conducted its own survey that showed 24% of Bud Light consumers are no longer buying that brand, with 18% buying less, but 21% buying more and 37% buying the same amount. Those findings are largely consistent with Nielson;s, said the analysts.
Deutsche Bank’s own survey also showed that 42% of Bud Light drinkers expect to be buying Bud Light again in three to six months, versus 29% who see that as unlikely. And 50% expect that battered beer’s reputation will recover in time, versus 30% who says it won’t. “We believe this bodes well for the brand, recapturing some of its lost share,” said Collett and the team.
Analysts at RBC Capital also recently pushed back on the selloff for the stock, saying the hit to the shares and forecasts for the stock are “excessive,” as they don’t see Bud Light’s troubles hurting AB InBev outside the U.S.. They said AB InBev is a “nerve-racking buying opportunity.”
Ahead of Thursday’s open, U.S.-listed Bud shares were up about 1.3%, tracking gains from its Belgian shares.
TMUBMUSD10Y, 3.743%
on the rise and oil prices CL.1, -1.82%
also weaker. The Norwegian krone USDNOK, -0.80%
is up 1.5% against the dollar after the country’s central bank hiked interest rates 50 basis points. Switzerland also hiked rates, but the Swiss franc is steady USDCHF, +0.12%.
The British pound GBPUSD,
is higher after the Bank of England also hiked interest rates by 50 basis points. The Turkish lira was falling slightly after the central bank, under new management, hiked interest rate to 15% from 8.5%, against forecasts for a hike to 20%.
China markets were closed for a holiday, with losses elsewhere, such as Japan NIK, -0.92%
and Australia XJO, -1.63%.
Federal Reserve Chair Jerome Powell’s second day of testimony on Capitol Hill kicks off at 10 a.m. Eastern. On Wednesday, he said higher interest rates should be expected , but didn’t offer any clues on timing. U.S. weekly jobless benefit claims and current account data are due at 8:30 a.,m. ET, with leading indicators also at 10 a.m., alongside a speech from Cleveland Fed President Loretta Mester. Richmond Fed President Tom Barkin will speak at 4:30 p.m.
The Bank of England will announce an interest-rate decision at 7 a.m. ET and after worse-than-expected inflation data on Wednesday, a 50 basis-point hike hasn’t been ruled out.
Darden Restaurants DRI, +0.36%
will report ahead of the open, with Smith & Wesson SWBI, +0.52%
due after the close.
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Bud Light as the nation’s top-selling beer, punctuating the impact of a boycott that followed the brand’s controversial promotion by a transgender activist.
Bud Light’s recent troubles should worsen in the summer, to the benefit of its competition’s brands, enough to turn Roth MKM analyst Bill Kirk bullish on the stocks of Constellation Brands Inc. and Boston Beer Co. Inc.
Kirk raised on Tuesday his rating on Modelo, Corona, Pacifico beer parent Constellation Brands to buy, after being at neutral since January 2021, while boosting his stock price target to $270 from $216.
Kirk said a lot of the market share Anheuser-Busch InBev SA’s Bud Light lost, amid backlash from the beer brand’s partnership with trans influencer Dylan Mulvaney, went to other premium light products, but he expects that to shift to Constellation’s favor.
“As the weather warms, we expect the share gains for Modelo Especial and Corona to accelerate,” Kirk wrote in a note to clients.
Constellation Brands’ stock STZ, +1.79%
rose 1.5% in afternoon trading Tuesday toward the highest close since Dec. 12, 2022, while Anheuser-Busch shares BUD, -4.71%
slumped 4.5% toward the lowest close since Nov. 10.
He noted that weekly scanner data has shown that Constellation’s beer portfolio outperformed the broader beer market by seven percentage points in early 2023, and that outperformance improved to 10 percentage points at the beginning of Bud Light’s market-share losses in April.
“With temperatures warming and substitutability with Bud Light increasing, recent weeks have seen 13 [percentage points] of outperformance,” Kirk wrote. “This trend should continue as Bud Light [declines/peak] over summer holidays.”
For Samuel Adams, Truly, Twisted Tea parent Boston Beer, Kirk raised his rating to buy, after being at neutral for at least the past three years. He raised his stock price target to $386 from $274.
Boston Beer’s stock SAM, +5.37%
jumped 6.8% toward the highest close since Feb. 15.
Earlier this year, Kirk was concerned that Truly hard seltzer’s weakness continued, offsetting Twisted Tea’s success, and that gross margins weren’t improving even after moving more production in-house.
“Now, we believe seltzer and Truly will benefit in the summer from Bud Light share losses (occasion overlap increases with warmer weather) and gross margin lift from production shift will be realized in 2Q (given inventory days timing),” Kirk wrote.
He believes that will shift investor focus away from Truly’s weakness and toward Boston Beer’s brands that are growing.
And while Wall Street expects the trends Boston Beer saw in the first quarter to continue throughout 2023, Kirk now believes the company will beat expectations for shipments and depletions, and sees opportunities for margins to also beat forecasts.
“While we had written at 1Q that the ‘timing of upside surprises remains unclear,’ we now believe the timing is Summer 2023,” Kirk wrote.
Constellation Brands’ stock has gained 5.7% over the past three months and Boston Beer shares have advanced 4.8%, while Anheuser-Busch’s stock has dropped 10.1% and the S&P 500 index SPX, +0.00%
has gained 5.9%.
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World soccer’s governing body FIFA rebuffed an offer from Ukrainian President Volodymyr Zelensky to share a message of world peace at the World Cup final, according to a CNN report.
Citing an unnamed source, CNN reported that Zelensky’s office offered an appearance via video link prior to kickoff at Sunday’s final. Defending World Cup champion France takes on Argentina in the match at Lusail Stadium, several miles north of the Qatari capital Doha.
The source told CNN that Zelensky’s office was surprised by the negative response. It’s unclear if the message was to be delivered live, or taped, the report said. “We thought FIFA wanted to use its platform for the greater good,” the source was quoted as having told CNN, reportedly adding that talks between Ukraine and FIFA are ongoing.
MarketWatch has reached out to FIFA and Zelensky’s office with requests for comment.
Since Russia launched its full-scale invasion of Ukraine on Feb. 24, Zelensky has used high-profile video addresses to rally international support for his embattled nation. These have included addresses to the U.N. General Assembly, the U.S. Congress, Britain’s House of Commons, the German Bundestag, the European Parliament and a G-20 summit, as well as video-link appearances at the Grammys and the Cannes Film Festival.
The last World Cup was held in Russia, with Russian President Vladimir Putin in attendance as France defeated Croatia 4-2 in the final. (FIFA, controversially, announced its host-country selections for 2018 and 2022 — Russia and Qatar — on the same December day in 2010.)
The 2022 tournament is perhaps the most controversial in World Cup history, with Qatar facing a barrage of criticism over its treatment of migrant workers and its approach to LGBTQ+ rights in the country.
The criticism of Qatar, the first Arab nation to host a World Cup, reached a crescendo before the tournament kicked off last month. During a press conference on the eve of the opening game, FIFA’s president, Gianni Infantino, launched into a lengthy defense of the decision to hold the tournamentin Qatar and accused the West of “hypocrisy.”
This World Cup is also the first to take place during the northern hemisphere’s winter. Traditionally, the tournament takes place in June and July, but this year’s tournament was moved to minimize the impact of Qatar’s searing heat.
Branding experts have observed that this controversial World Cup poses challenges for the big-name corporations involved in the event. FIFA’s list of partners includes U.S. corporate titans Coca-Cola Co. KO, -0.57%
and Visa Inc. V, -0.49%,
who are both involved in the Qatar event. McDonald’s Corp. MCD, -2.06%
and Crypto.com are also World Cup sponsors.
The tournament’s beer sponsor, Budweiser, an Anheuser-Busch InBev BUD, -0.18%
brand, has had a particularly eventful several weeks in Qatar. In an abrupt reversal just two days before the soccer showpiece kicked, Qatar organizers banned beer sales in the tournament’s eight stadiums.
The reversal of that decision appeared to take Budweiser by surprise, with the company tweeting “Well, this is awkward …” before deleting the post. Budweiser quickly shrugged off the beer ban and promised a huge victory party for the country that wins the soccer showpiece.
Fox Sports, which is owned by Fox Corp. FOX, -0.21%,
a sister company of MarketWatch publisher Dow Jones’s parent company, News Corp NWSA, +0.28%,
holds English-language broadcast rights in the U.S. to the Qatar World Cup.
Income-seeking investors are looking at an opportunity to scoop up shares of real estate investment trusts. Stocks in that asset class have become more attractive as prices have fallen and cash flow is improving.
Below is a broad screen of REITs that have high dividend yields and are also expected to generate enough excess cash in 2023 to enable increases in dividend payouts.
REIT prices may turn a corner in 2023
REITs distribute most of their income to shareholders to maintain their tax-advantaged status. But the group is cyclical, with pressure on share prices when interest rates rise, as they have this year at an unprecedented scale. A slowing growth rate for the group may have also placed a drag on the stocks.
And now, with talk that the Federal Reserve may begin to temper its cycle of interest-rate increases, we may be nearing the time when REIT prices rise in anticipation of an eventual decline in interest rates. The market always looks ahead, which means long-term investors who have been waiting on the sidelines to buy higher-yielding income-oriented investments may have to make a move soon.
During an interview on Nov 28, James Bullard, president of the Federal Reserve Bank of St. Louis and a member of the Federal Open Market Committee, discussed the central bank’s cycle of interest-rate increases meant to reduce inflation.
When asked about the potential timing of the Fed’s “terminal rate” (the peak federal funds rate for this cycle), Bullard said: “Generally speaking, I have advocated that sooner is better, that you do want to get to the right level of the policy rate for the current data and the current situation.”
Fed’s Bullard says in MarketWatch interview that markets are underpricing the chance of still-higher rates
In August we published this guide to investing in REITs for income. Since the data for that article was pulled on Aug. 24, the S&P 500 SPX, -0.29%
has declined 4% (despite a 10% rally from its 2022 closing low on Oct. 12), but the benchmark index’s real estate sector has declined 13%.
REITs can be placed broadly into two categories. Mortgage REITs lend money to commercial or residential borrowers and/or invest in mortgage-backed securities, while equity REITs own property and lease it out.
The pressure on share prices can be greater for mortgage REITs, because the mortgage-lending business slows as interest rates rise. In this article we are focusing on equity REITs.
Industry numbers
The National Association of Real Estate Investment Trusts (Nareit) reported that third-quarter funds from operations (FFO) for U.S.-listed equity REITs were up 14% from a year earlier. To put that number in context, the year-over-year growth rate of quarterly FFO has been slowing — it was 35% a year ago. And the third-quarter FFO increase compares to a 23% increase in earnings per share for the S&P 500 from a year earlier, according to FactSet.
The NAREIT report breaks out numbers for 12 categories of equity REITs, and there is great variance in the growth numbers, as you can see here.
FFO is a non-GAAP measure that is commonly used to gauge REITs’ capacity for paying dividends. It adds amortization and depreciation (noncash items) back to earnings, while excluding gains on the sale of property. Adjusted funds from operations (AFFO) goes further, netting out expected capital expenditures to maintain the quality of property investments.
The slowing FFO growth numbers point to the importance of looking at REITs individually, to see if expected cash flow is sufficient to cover dividend payments.
Screen of high-yielding equity REITs
For 2022 through Nov. 28, the S&P 500 has declined 17%, while the real estate sector has fallen 27%, excluding dividends.
Over the very long term, through interest-rate cycles and the liquidity-driven bull market that ended this year, equity REITs have fared well, with an average annual return of 9.3% for 20 years, compared to an average return of 9.6% for the S&P 500, both with dividends reinvested, according to FactSet.
This performance might surprise some investors, when considering the REITs’ income focus and the S&P 500’s heavy weighting for rapidly growing technology companies.
For a broad screen of equity REITs, we began with the Russell 3000 Index RUA, -0.04%,
which represents 98% of U.S. companies by market capitalization.
We then narrowed the list to 119 equity REITs that are followed by at least five analysts covered by FactSet for which AFFO estimates are available.
If we divide the expected 2023 AFFO by the current share price, we have an estimated AFFO yield, which can be compared with the current dividend yield to see if there is expected “headroom” for dividend increases.
For example, if we look at Vornado Realty Trust VNO, +1.03%,
the current dividend yield is 8.56%. Based on the consensus 2023 AFFO estimate among analysts polled by FactSet, the expected AFFO yield is only 7.25%. This doesn’t mean that Vornado will cut its dividend and it doesn’t even mean the company won’t raise its payout next year. But it might make it less likely to do so.
Among the 119 equity REITs, 104 have expected 2023 AFFO headroom of at least 1.00%.
Here are the 20 equity REITs from our screen with the highest current dividend yields that have at least 1% expected AFFO headroom:
Click on the tickers for more about each company. You should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.
The list includes each REIT’s main property investment type. However, many REITs are highly diversified. The simplified categories on the table may not cover all of their investment properties.
Knowing what a REIT invests in is part of the research you should do on your own before buying any individual stock. For arbitrary examples, some investors may wish to steer clear of exposure to certain areas of retail or hotels, or they may favor health-care properties.
Largest REITs
Several of the REITs that passed the screen have relatively small market capitalizations. You might be curious to see how the most widely held REITs fared in the screen. So here’s another list of the 20 largest U.S. REITs among the 119 that passed the first cut, sorted by market cap as of Nov. 28:
Heineken NV shares fell Wednesday after it said organic beer volumes rose in the third quarter by 8.9%, missing market consensus expectations of 12% as taken from its website, and that its outlook was cautious.
HEIO, -9.19%
said said that the weaker than expected results were driven by low-single-digit volume growth in Africa, the Middle East, Europe and the Americas, though the Asia-Pacific region delivered a strong recovery from pandemic-related restrictions with total beer volume growth of 89.6%.
Net revenue, which excludes excise tax expenses–rose to 7.79 billion euros ($7.76 billion) in the quarter from EUR6.03 billion last year. A company-compiled consensus forecast had seen net revenue at EUR7.88 billion.
In the nine-month period, net revenue rose 23% to EUR21.27 billion while net profit fell to EUR2.2 billion from EUR3.03 billion. Net profit last year was boosted by an exceptional gain of EUR1.27 billion from the revaluation of a stake in United Breweries in India
The company backed its guidance for 2022 of a stable-to-modest sequential improvement in adjusted operating profit margin, but didn’t reiterate its previously provided 2023 guidance of adjusted operating profit organic growth in the range of mid- to high-single digits.
“We increasingly see reasons to be cautious on the macroeconomic outlook, including some signs of softness in consumer demand. We remain vigilant and confident in our EverGreen strategy,” Chairman and Chief Executive Dolf van den Brink said.
The company said it maintains its efforts to offset input cost inflation with pricing.
Write to Dominic Chopping at dominic.chopping@wsj.com
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