While spirits and wine continued to take volume from beer over last decade, annual Gallup Poll reports on what alc bevs adults say they drink “most often” has shown little change since 2005 when wine briefly passed beer in the poll and caused a stir.  Figures for 2014 poll show 41% said they drink beer most often, 31% wine, 23% liquor.  Beer got nice pop last yr, according to Gallup, with increase from 36% in 2013 poll, but little change vs most years 2006 thru 2013.

Those numbers don’t correspond to volume, of course.  Last yr, beer had about 51 share of absolute alcohol consumed, liquor 1/3 and wine just 16%.  In fact, Gallup figures on preference for 2014 virtually the same as in 2004, even while beer shed about 6 share of absolute alcohol volume during this period.  Gotta note that given relatively small sample size, margin of error for preference is 4 full points in either direction.   Then too, not much demographic breakdown in this yrs’ poll.  But recall that some earlier polls showed significant shift in younger drinkers’ preferences.  Key: back in early 90s, 71% of 18-29 yr-olds preferred beer.  By 2012-2013, that dropped to 41%.  That shift is what really explains volume shortfalls. 

MillerCoors STRs down 1.2% in 2d qtr, reported SABMiller today, notable improvement from 3.4% drop in Q1.  What’s more, MC pricing stayed very healthy; net rev per bbl up 4% in qtr.  Each of Coors Light and Miller Lite down low single digits, sez SABMiller, compared to mid-single digit drop in Q1.  And above premium biz again grew at double digit rate, “driven by” Redd’s, Fortune and Smith & Forge.  At same time, Tenth & Blake declined for 2d qtr in a row (low singles) as Blue Moon Seasonals dropped high singles, offsetting low single digit growth of flagship Belgian White and “high single digit growth” of Leinie’s (a slowdown).  Subpremiums still down mid-single digits and remain the biggest drag on MC biz.  Total MC shipments fell 1.7%.  That’s another 270,000 bbls drop, going against easy comp.  MC shipments were off 5% in Q2 2013.  MillerCoors shipments down 660,000 bbls, 2.3% in 1^st half.   

Globally, SABMiller revs up 6% in qtr and volume up 3% organically. But soft drinks, about 20% of volume according to Nomura, up 10% and accounted for about 2/3 of growth.  Lagers up 1% with growth in Europe, Africa and Asia.  SABMiller beat estimates, according to Bloomberg but down slightly today.

HUSA’s top sales exec, Scott Blazek, will be leaving  after 7 yrs at HUSA and 3 as sr veep to pursue other opportunities, HUSA said this morn.   His replacement will be Ray Faust, an 18-yr Coke vet who is currently Coke’s sr veep of Commercial Strategy leading a 300-person team. Scott “decided to leave,” Dolf told INSIGHTS and “we’re grateful for what he’s done.”  But that gave HUSA a chance to “rethink profile” of head of sales job as beer biz continues to change dramatically.  Ray ran a big sales division for Coke (almost $2.5 bil) out of Dallas, so he has “classical field sales experience,” said Dolf.  He also worked at Coca Cola Enterprises, “giving him both a ‘distributor’ and ‘supplier’ point-of view.”  Another key is that Ray has some “complimentary competencies,” according to Dolf that will aid in ongoing “transformation” of HUSA, including his extensive experience in rev mgt, rev growth mgt and category mgt, plus biz development and biz intelligence.  

Scott is one of several sr level departures at HUSA in last couple of mos.  Recall, region veep John Poppy left last mo for Moet Hennessey, biz development veep Chris Wade left and others.  But HUSA sales still has “strong team,” noted Dolf, adding that total HUSA turnover rate at 2.5%, below many major CPG cos.  Meanwhile, many distribs and other sources tell INSIGHTS of increased tension at HUSA recently.  Then too, Dolf is coming up on 5 yr anniversary with Heineken USA, traditionally a time of transition at global co, but Dolf sez he still “needs to complete transformation” of Heineken USA.

After strong growth in 2012, Heineken USA has had to grind it out more in last 18 mos, down slightly but gaining slight share, as total mkt also got tuffer.  While Mexican beer growth strong, Dutch has continued to be a struggle.  Recall, Heineken USA sales-to-retailers down 1.2% in 1^st qtr, following 0.6% decline last yr.  Heineken USA up 2.3% in Nielsen all-outlet thru Jun 14, with results reportedly improving in 2d qtr.  Recall, HUSA also intro’d lotsa innovation in 2d qtr and should get boost from that.

The consumer price index for beer increased 0.8% for month of Jun vs a yr ago while CPI for general inflation increased 2.1%, with much of that hike due to higher gasoline prices.  That’s lowest monthly increase for beer prices since Feb 2013.  Meanwhile CPI for spirits increased slightly in Jun vs yr ago (+0.1%) while wine prices (-0.6%) were down for 5^th straight month.  YTD thru Jun, CPI for beer up 1.5% vs 1.7% increase for general inflation.  Spirits prices up 0.5% and wine down 0.5% Jan-Jun.      

New BI prexy Jim McGreevy hit the ground runnin’. With just 29 days in role, Jim’s had 35 mtgs so far with Hill staffers and legislators, he told Express this morning.  And all of those mtgs since Jul 7.  Interestingly, he pointed out that in recent years, soft drinks (his previous gig was govt affairs at American Bev Assn), “have taken a lot of hits in public opinion” and from some non-profits and folks on the Hill who “want to demonize” that industry.  But “I don’t feel the same level of animosity” towards beer, “at least from some quarters.”  We reminded Jim that beer and other alc bevs have taken lotsa hits in DC and elsewhere in decades past and he pointed out that during recent soft drink policy battles (over taxes, availability and health ‒ sound familiar?) one city mayor told him “every industry gets its time in the barrel.  For soda companies the time is now.”  He suggested that after beer companies hit with taxes, higher minimum age, lower BAC levels for driving and lots of attention in DC in 80s and 90s, they “took on the mantle of responsibility in a big way” and that was then chance to “change the dialogue.”  Talk now is more around jobs beer provides and responsibility programs. “I feel like there’s an open audience for our point of view.  It feels better.”  Then too, “political and social issues go in cycles,” Jim suggested, and “one of my most important jobs is to get the BI and membership united around a set of common goals so that when the beer business is back in the barrel, we’re ready for it.”  Biggest surprise so far: coming in, Jim thought soft drinks and beer pretty similar, but there are a lot of differences, especially the extent to which beer and alc bevs are so “highly regulated” at local, state and fed levels compared to soft drinks. 

But Jim finds receptive audience on the Hill ‒ “when I walk in, people generally have smiles and want to hear our issues.”  That’s given Jim oppy to focus more on matters like aluminum mkt and spent grains, where industry has made some progress, and Know Your Drink, which is just getting started.  Fact that NIAAA and NIH share some of BI’s thinking on “mythologies” of standard drink pushed by distillers (and others), which BI insists is “not sound scientifically,” will help.  But getting KYD message across is “just one part of Brand Beer,” Jim reminded, and “educating people is a much longer term” effort.

Still Working on One Voice, One Tax Bill Recalling comments from BI annual mtg back in May, “echoed in recent weeks,” Jim acknowledged that “when an industry is divided on an issue, it’s easy for legislators to say ‘go back to the drawing board and get your house in order.’  That’s what we’re hearing.”  As we’ve reported previously, there have been discussions with BA and others about going to Congress with one voice and a single tax bill to get 350+ co-sponsors, but nothing concrete to report yet.  (“We’re chatting away about it.”)    But BI and BA on same page on “lots of other issues,” he adds, including aluminum, spent grains, etc.  One other unresolved issue: no small brewer right now on BI board after Steve Hindy rotated off in May.  “We have to pick up that discussion and resolve it.  That’s going to happen.”  Jim had plenty of experience managing competitive members in previous job at American Bev Assn, given relationship between “fierce competitors” Coke and Pepsi.  Job of DC assn is to focus on policy that affects all member companies, Jim said.  When dealing with policy it’s important to “take off the competition hat” and show that “rivals can work together for the good of the consumer” and good policy. 

Still Learning on Pot Issue; Structure of State Law is Key  Brewers and BI still studying legalized pot and how that’s playing out in Colo, Wash and other states where it will be on ballot soon.  “Everybody is looking at it internally,” Jim said, and right now legal pot still “in the top of the first inning.”  So lots more coming.  The “structure of the state law is important,” Jim stressed, and “should be based on an understanding of how the market works and doesn’t make assumptions about what’s safe or not.”  Like with casino gambling, some legislators simply “looking for a pot of money.  That’s not all that needs to be dealt with here” and states need to take time to figure out how legalization “affects other participants in the marketplace.”  Then too, beer biz “knows what it means to be responsible” on issues like underage use and drinking/driving; pot industry has to be as focused on that as well, he advised.                    

June was reportedly good mo for many (extra sell day at end), but scan data shows 4-weeks thru just past Jul 4 not so hot and sources say the Fourth ok but week after not so hot.  While all-outlet IRI off 0.3% for 4 weeks thru Jul 6 (see Express, Vol 16, #88), c-store weakness isolated in Nielsen data thru Jul 5, reported by Goldman Sachs Judy Hong.  “Beer sales decelerate sequentially” Judy noted.  Volume down 1.8% for 4 weeks thru Jul 5 in Nielsen c-stores, well below 12-week trend of down 0.6%.  AB volume down 3% and MC volume down 4.1%.  But AB’s avg prices up only 1.3%, while MC’s still up 3.1%, so MC $$ sales trend better than AB’s.  MC $$ sales down 1.1%, while AB down 1.7%.  AB down to 55.7 share of $$ in c-stores latest 4 weeks, compared to 57.2 a yr ago.  Constellation gained 1.1 share to 8.4. Constellation Beers still up double digits; up 10.5% in c-stores for 4 weeks.  And that’s with avg prices up 4.5%.  Boston Beer volume up 24.4% with avg prices up 2.7%.  

Stone’s already sprawling empire is about to get that much bigger and bolder as it will become the “first American craft brewer to own and operate a facility in Europe.” This partly symbolic move will fulfill a long-held dream of Stone co-founder and ceo Greg Koch, who came back from his roughly 6-mo sabbatical with a bang.  He had first announced Stone wanted to build a brewery in Europe about 5 yrs ago, according to CNBC.  Tho Greg visited more than 100 locations, he “knew the Berlin site would be a perfect spot upon his first visit in 2009,” according to CNBC.  “It’s a turning of the table but only in the very best of ways,” said Greg as Stone will take big steps to advance craft revolution in Europe.  He’ll spend a “great deal” of time there in next 18 mos.  

“We have no attitude that we are coming to save anybody or conquer anybody,” Greg told San Diego Union Tribune, acknowledging “nascent” craft brewing scene in Germany.  “We are coming to add our shoulder to help push that boulder up the hill.” Yet as Trib notes, Stone “will also challenge entrenched notions about what beer ought to be in the nation that did so much to define the beverage.”  At groundbreaking ceremonies on Saturday, Greg drove a forklift, “dropped a boulder on a pyramid of mass-produced lagers, soaking the German earth with fizzy yellow brews,” wrote the Trib.  Then he offered 200+ attendees a pint of Stone.  And he didn’t pull punches.  “I am not critical of German brewing,” said Greg. “I am critical of the state of German brewing…. I’ll agree that German commodity beer is better than American commodity beer, but who cares about commodity beer?”  

Stone will invest over $25 mil in a brewery/restaurant in Berlin that it expects to open in late 2015 or early 2016 with 85,000 bbls of capacity, a “minimum” 70-bbl brewhouse and what it calls “a spectacular red-brick main hall built in 1901 measuring 43,000-plus square feet” housing latest World Bistro & Gardens Restaurant, Stone store and a brewhouse.  Stone intends to sell its beers throughout Europe from this location.

Recall, Stone reached $137 mil in revs last yr as it sold 213,000 bbls, plus had big wholesaling arm and several wildly successful restaurants and tasting rooms, basically operating in all 3 tiers. Stone also plans to announce another US brewery east of Mississippi “soon” in 30-60 days, 90 “at the very most,” said Greg. 

While beer scans slowed in Jun, liquor sales picked up, at least in control states.  Volume up 3% for the mo, $$ sales +5.5%, reports NABCA.  That pushed 12-mo volume gain to +1.8%, $$ sales to +4.6% in control states.  Similar trends for 1^st half: volume +1.9%, $$ up same 4.6%.  

Last yr at AB’s fall SAMCOM meeting for distribs, then digital mktg veep Lucas Herscovici gave one of best talks, detailing AB’s extensive digital mktg efforts.  Now he’s been “elevated” as Ad Age put it by AB’s new mktg veep Jorn Soquet to a new position called vp of consumer connections “which encompasses sports, entertainment, media and digital.”  That’s the old Tony Ponturo role, plus.  So Lucas, clearly a  young rising star at AB.

Perhaps he and Jorn will bring more continuity to these roles.  These positions changed frequently so far in ABI era.  Jorn took over as mktg veep from Paul Chibe who took over from interim mktg veep Frank Abenante who took over from Keith Levy.  Lucas inherits new duties in part from recently departed Blaise D’Sylva, who was US vp of media sports and entertainment since early 2012.  Recall, Tony Ponturo had role for a long time but left after deal to buy AB.  Since then, Dan McHugh, Mark Wright, Blaise D’Sylva and now Lucas have overseen AB’s massive sports and entertainment buys, plus media-buying. AB is 22d largest ad spender overall, sez Ad Age, but it is one of tops in sports for sure.  AB is also in “midst of a formal media agency review” for US, Ad Age reported Friday, and is “holding a three hour joint-agency review briefing session on July 22,” i.e. tomorrow, which will include global cmo Miguel Patricio, sez Ad Age, citing an internal document.

On Friday afternoon, Governor Brown signed off on Calif Assembly Bill 1928, a sweeping reform that outlaws the kind of scanbacks and barbucks that have run rampant in Calif in recent years.  Among biggest supporters of bill were AB and MC; they were also reportedly biggest users of scanbacks and barbucks.  “Stop Us Before We Scan Again,” the bill might have been called.  Others who used scanbacks frequently like HUSA and DGUSA were reportedly neutral on legislation, viewing scanback as valued competitive tool.  Constellation and Calif Craft Brewers Assn also favored the legislation (neither Constellation nor Sierra scan at all).  While some retailers pushed back, a number of retailers and their assns also favored bill. And distribs were steadfastly behind it too.  Bill becomes law on Jan 1, 2015.

“From that date forward, the use of consumer coupons funded, produced, promoted or furnished by a beer manufacturer or beer and wine wholesaler for the purchase of beer or cider will be prohibited, except for mail-in consumer coupons offered by beer manufacturers,” wrote Calif Beer and Bevs Distrib prexy Victoria Horton to members.  At same time, prohibition “does not apply to wine or distilled spirits products or coupons for beer or cider funded by retailers.”