Beer Marketer's Insights
Right at end of yr, Molson Coors Bev Co sent a boatload of communications to distribs re its emerging non-alc biz. Those include a new distribution agreement redlined to show the changes, a letter from veep distrib network development Jeff Agasse explaining all the changes, revised distributor standards for NAs, and a sample product data sheet. Then too, NBWA ceo Craig Purser sent a communique to all Molson Coors distribs about changes and extensive discussions NBWA had with Molson Coors that led to improvements in contract. While far too much detail to totally digest today, INSIGHTS flags key changes and issues.
New US Dietary Guidelines Hold Daily Drinking Limit for Men at 2/Day, Rejecting Advice to Halve It
Industry sources had been suggesting for a while that US Depts of Agriculture and HHS would maintain status quo in newest update of Dietary Guidelines for Americans that upper limit for men who drink should be 2/day, as it has been for decades. And that's exactly what feds announced this morning. Recall, scientific advisory committee recommended halving that limit to 1/day, citing new research and links to some cancer risks at lower consumption levels. But Dietary Guidelines for Americans, 2020-2025 state: "Adults of legal drinking age can choose not to drink, or to drink in moderation by limiting intake to 2 drinks or less in a day for men and 1 drink or less in a day for women, when alcohol is consumed. Drinking less is better for health than drinking more. There are some adults who should not drink alcohol, such as women who are pregnant." In comments on webcast this morn, govt official acknowledged that advisory committee recommended new limits for alcohol and added sugar. But Depts of Ag and HHS decided there was "not a preponderance of evidence in the committee's review of studies since the 2015-2020 edition to substantiate changes to the quantitative limits for either added sugars or alcohol at this time."
Almost a yr after 2d largest brewer in the US began operating as Molson Coors Beverage Co, pair of recent articles emerged touting MC's transformation during tumultuous 2020. Recall, flurry of moves included: JV with Yuengling, Topo Chico Hard Seltzer deal with KO, minority stake in ZenWTR, La Colombe distribution deal, importing and distribution agreement with Duvel Moortgat in Canada, and slate of niche NA bevs developed with LA Libations, as Forbes points out. "We're ready to show everybody that these spaces can be meaningful over time," reiterated emerging growth prexy Pete Marino, who has championed team's consistent messaging. Seeking Alpha also published separate
Constellation got an early Christmas present last Thursday as Federal Trade Commission officially approved full deal to sell low-end wine and spirits portfolio primarily to E&J Gallo. Constellation divesting portfolio "principally priced at $11 retail and below, including certain related facilities located in California, New York and Washington state," per release. Deal will close on Jan 4, 2021. Recall, part of Constellation/Gallo deal was already approved by FTC a couple weeks ago (see Dec 16 issue). Rest of deal includes sale of Nobilo Wine to Gallo for $130 mil and Paul Masson Grande Amber Brandy brand to Sazerac for $255 mil, both announced in Jun 2020 (see Jun 25 issue), plus "certain brands used in Constellation's grape juice concentrate business" divested to Vie-Del Company, per release. While initial part of deal with Gallo shrank from $1.7 bil price tag when originally announced to $1.03 bil (see May 29 issue), Constellation still pieced together over $1.4 bil in total expected primarily to help pay down debt.
ABI Sells 49.9% of Can Biz for $3 Bil; Will Invest $129 Mil in 2021 to Increase Can Capacity 10%
Looking to reduce debt, AB InBev agreed to sell 49.9% of its US canning operations to "a consortium of institutional investors advised by affiliates" of Apollo Global Mgt for $3 bil, announcing deal after biz hours on Wed, Dec 23d. Long-term supply agreement "will provide" for ABI's "metal container supply needs over the course of the relationship." ABI will "have the right but not the obligation to reacquire" the minority stake beginning in 5 yrs, at agreed-upon but undisclosed price. Deal expected to close on Jan 8, 2021.
It's All Over Now: Fed Excise Tax Breaks Made Permanent as Covid Relief Package (Finally) Signed
The expensive bottles stayed corked or otherwise sealed over the holiday, but beer, wine and spirits producers finally able to celebrate a signed COVID relief package that includes making 2017 reduction in fed excise taxes permanent. "The COVID-19 package should provide many breweries much-needed assistance to weather the next few months, with the CBMTRA providing certainty and continued savings," Brewers Association ceo Bob Pease said, joining Beer Inst ceo Jim McGreevy and others in applauding passage of bill and President Trump's signature last night. Securing excise tax "recalibration" was top priority for BA for over 10 yrs, and subsequently became top priority for big brewers too.
Editor's Note
: There will be no INSIGHTS Express tomorrow, unless major news breaks, which is unlikely on Christmas Eve day. We will publish sporadically next week and surpass 270 issues in 2020. That's easily a record. And more than 1 per working day. In our 22d year of publishing INSIGHTS Express, it happened. We're a daily. And then some. The pace of news keeps picking up. A bit dizzying at times, but fun too.
From Plausible to Zany, MKM Analyst Bill Kirk Makes 2021 "Low-Probability" Predictions for Beer Biz
While Beer Marketer's INSIGHTS avoids making our own predictions in ink thruout our 50 yrs covering the biz, we will occasionally print other industry observers' predictions. But with old caveat, "it's difficult to make predictions, especially about the future." So take 'em with a grain of salt, mostly as thought joggers. But take a look at MKM analyst Bill Kirk's 2021 predictions for the beer biz.
Thru Nov, State Shipment Trends Vary From -20% to +11%: TX Closing in on CA for #1 in Shipments
In 50 states + DC, beer shipments down 0.4% thru Nov, according to state-by-state data from Beer Institute, but huge variations state-by-state. Shipments up 216K bbls, 10.5% in OK, 124K bbls, 10.8% in UT and 354K bbls 9% in AZ. But down 20% in DC, down 10% in NV and HI. Hard-hit tourism destinations, all. Among biggest states, TX outshines 'em all. TX shipments up 623K bbls, 3.3%. Closing in on CA as #1 beer state. CA beer shipments down 200K bbls, 1%. CA shipments at 19.779 mil bbls thru Nov 2020. TX up to 19.5 mil bbls. If present trends continue, TX could pass CA next yr. FL shipments up 178K bbls, 1.5%. NY down 476K bbls, 5%, IL down 246K bbls, 3.3%, PA down 316K bbls, 4.3%. Those 3 states down over 1 mil bbls.
Ultimately,"it feels really, really good to be able to deliver a win for craft brewers, and all brewers" to end "a really tough year," Brewers Assn ceo Bob Pease told our sibling pub Craft Brew News yesterday, as relief bill makes fed excise tax cuts permanent. Worth taking a moment to "stop and recognize what's accomplished," Bob added, and work done by all parties to "get everybody…in the same direction to accomplish what we did." Bob's comments echoed response of Beer Inst ceo Jim McGreevy, Distilled Spirits Council's ceo Chris Swonger and other alc bev lobbyists in wake of historic reduction in fed excise taxes, first time in over 150 years for beer.