Could be high-drama in St Louis courtroom today when  former AB chmn August Busch III makes very rare public appearance to take witness stand in Francine Katz’s discrimination suit vs his old co.  His testimony is expected following Marlene Coulis and Steve Burrows.  Earlier this wk during 2 days on stand, Francine said Aug III became “red faced” and called her “ungrateful” when she complained that her stock options were not as high as other executive committee members.  Crux of case is that AB contends Francine well paid (above market rate) for her position as top PR exec while she argues her duties as vp of corp communications went beyond that, noted St Louis Post-Dispatch. 

Francine’s atty Mary Anne Sedey estimated to jurors that she missed out on $9.4 mil in salary and bonuses from 2002-07.  In video testimony her former boss John Jacob said “yes” he considered her to be his replacement and complimented her performance. “She was just flat out good at what she did,” he said during Nov 2013 deposition.  But John also contended he served in other aspects that Francine did not, including being an advisor to Aug III.  Francine’s atty showed jurors evidence that she was lowest paid member of strategy committee.

Mary Anne highlighted disparity between August IV’s $9.2 mil bonus linked to InBev sale in 08 vs $824K paid to Francine.  AB’s atty contended that Francine has been well-compensated, growing her salary from $65K in 1988 to ultimately $14.4 mil in stock options she amassed in 08. This morning, Marlene testified that she was paid $100K less than her predecessor Bob Lachky and that AB mktg budget was slashed in half from $1.2 bil to $600 mil when she took over for him.  Courtroom “is packed” right now in anticipation of Aug III testimony, per Twitter feed.  

Teamsters voted “by a large majority” to ratify new 5-yr agreement with AB earlier this week, effective immediately.  Agreement covers 4,500+ workers at each of 12 breweries and is “worth more than $2 billion in wages and benefits,” according to Teamster statement.  It also said “AB Teamsters currently earn more than $70 per hour in total compensation” and “new contract provides more than $24,000 in additional wages and bonuses for the average employee” over next 5 yrs.  AB statement much more bare bones, crediting “hard work and professionalism of the union negotiators that helped craft an agreement that responds to changes in the marketplace” and that’s good for both sides.  Oddly, Wall St Jnl reported that contract calls for “no plant closings,” citing Teamster statement, but that’s not in either of the official statements. Meanwhile, AB had conference call with distribs a few weeks back to talk about bringing down inventories, which had grown to prepare for potential labor issue, and to intro new communication tool on logistics.  AB distribs continue to grumble about logistics issues/inventories, as they’re carrying tons of some packages, unable to get others.        

NAB’s James Pendegraft, vp of sales since its inception (who also headed up mktg last few mos),  will leave May 9.  So will cfo Dan Harrington.  Sr sales exec Doug Smith will become interim head-of-sales in addition to his upstate NY role. Both he and mktg teams will report in to new ceo Kris Sirchio.  New cfo (and also head of strategy) will be Carlos Rojas, who has held sr finance roles at parent co FIFCO and worked closely with FIFCO ceo Ramon Mendiola for over 20 yrs.  Kris and Carlos will together review NAB’s strategy in coming mos to prepare for “next chapter of growth,” according to Kris. 

Tho NAB grew sales in early yrs, it was down 4.6% in 2013, including a double digit drop on its craft brands.  And NAB down 8% in IRI multi-channel +convenience yr-to-date thru Apr 20 (IRI doesn’t include Seagram’s).  Labatt Blue down just 1%, Blue Light down 3% and Magic Hat down 0.5%.   But big drops in Genny, down about 25% and Pyramid families, down 14%.  

Instead of putting focus on key selling season, beer biz is taking a “massive step backwards with all the in-fighting and taking shots at the geese that are laying all those golden cases,” lamented consultant Bump Williams in his latest client letter.  Retailer execs are “starting to get annoyed at all the bickering and negativity going on with the three-tier system,” Bump noted.  “They seem to think and I agree, that it will have long-term damage, perhaps even some short-term damage” on trends.  “I’m confused” as are retailers, consumers, distribs, brewers, by “all the complaining, accusations, in-fighting, open animosity, barbed insults that are being traded between business partners these days, when Craft beer has enjoyed phenomenal growth, access to market and what I think is fairly decent execution. I’ve said it a million times; the Beer Distribution network is the The BEST in the world when it comes to delivering products to the retail environment!” Some distribs better than others and “the ones who hide behind franchise laws are going to be found out for what they are and their portfolio will diminish as new brewers enter the marketplace.”  Craft brewers have to do their homework before choosing partners. But “great partners” should “never take it to the public and say things about their partners that can never be taken back.”  Retailers “continue to shake their heads and question the long-term strategies of the industry and the key players within…. We’re better, MUCH better than what we are being portrayed to be,” he said of industry, “and “it’s time we start focusing on the business end of things as opposed to the finger-pointing end of a challenging but fixable situation.” 

Bump’s comments come on heels of several public comments at NBWA earlier this week by NBWA’s top execs, by HUSA prexy Dolf van den Brink and more.  Then too, the Widmer brothers also blasted Brewers Assn for “creating dissent” and “unnecessarily provoking” wholesalers and brewers in their interview in the Street.  That’s quite a few voices that have challenged recent BA attacks on franchise laws and distribs this week alone.  Not too many craft responses so far.  Got comments?  Send to This email address is being protected from spambots. You need JavaScript enabled to view it.This email address is being protected from spambots. You need JavaScript enabled to view it.

AB dropped 1.8 share of $$ last 4 weeks thru Apr 20 in IRI multichannel + convenience (down 1.6 share yr-to-date).  A big reason for steep share loss last 4 weeks is that the Ritas can’t match up against impressive intro numbers of last yr.  In fact, Straw-Ber-Rita dropped a whopping 62% last 4 weeks and Lime-a-Rita down 42%.  Straw-Ber-Rita dropped 0.9 share of $$ and Lime-a-Rita fell 0.3.  What’s more, Black Crown also off 62% and lost 0.3 share of $$.  Those drops so big that Mang-O-Rita and Raz-Ber-Rita couldn’t make up for it, even tho they did well, garnering about 0.9 share of $$ between ’em.   One of challenges for AB this yr is not enuf incrementality from new brands to make up for declines of last yr’s (and the yr before’s) models. 

Meanwhile, MC losing far less share of $$ so far this yr in IRI. Down just 0.3 share of $$ for 4 weeks and yr-to-date.  And that’s because Redd’s and Fortune still providing lotsa incremental share.  Redd’s $$ sales still up 83% last 4 weeks and gained 0.2 share to 0.5, plus Redd’s Strawberry provided another 0.2 and even Variety Pack adding (smaller) incremental share.  Meanwhile, Fortune at .36 share of $$ last 4 weeks and about as big as fading Gen Draft.  But Third Shift bumping up against last yr’s intro #s, and it’s down 39% last 4 weeks.

Editor’s Note:  Trends in IRI scanned outlets considerably more robust than industry all-channel data would suggest.  For example, IRI sez top 3 light brands flattish or up in MULC yr-to-date, but MillerCoors last week reported that Lite and Coors Light sales-to-retailers each down mid-single digits in 1^st qtr.   Even with tuff on-premise, difficult to reconcile IRI with MC’s reported all channel trend. Still, IRI info incredibly in-depth and provides lotsa useful trends to analyze as per this article. 

Stay on top of beer’s rapidly growing high end trends.  Join us at the 2014 Beer INSIGHTS Spring Conference at the Ritz Carlton in Chicago, June 9-10.  Space is limited.  For more info, click here. To register, click here.   

As expected given early-yr scan trends, Boston scored another super volume gain Jan-Mar.  Shipments up 202,000 bbls, 32%.  Depletions up 34%.  Boston clicked on all key cylinders: Sam Adams Family, especially Seasonals, rollout of Rebel IPA, tea and cider.  And Q2 off to just as fast a start: depletions still up 33% for 16 wks thru Apr 19.  Still, with tuffer comps coming, Boston maintains guidance of 16-20% depletions/shipments growth for full yr.  While Boston was “racing to keep up” with volume growth in late 2013, as ceo Martin Roper said back in Feb, and that put squeeze on margins, its keeping pace a bit better so far this yr.  Combo of high demand, “unseasonal weather” and efficiency improvements boosted operations/freight costs more than anticipated.  Yet gross profits up $23 mil, 34% as Boston got about 2% price increase in Q1.  So gross margin dipped 0.7 to 49.2 (after thinning 2+ pts in 2013).  And again, Boston maintaining guidance of 51-53% gross margin for the yr.  And even while ad, promo and selling expenses boosted 41% in Q1, admin costs kept in check.  So operating income up $3.7 mil, 38% and operating margin inched up 0.2 to 7.3.  “Supply chain performance improved during the quarter,” said Martin, “but still remains below our expectations.”   Most projects to add capacity for summer selling season expected to be “fully operational” in Q2, Martin added, and compared to same time last yr, “we will have significantly increased our brewing, packaging and shipping capabilities and our tank capacity” at Pennsy and Cinci breweries.

Issues go back to “old” AB and execs who’ve long left the co.  But could be some interesting moments in trial starting today over charges that an alleged AB “frat party” work environment led to pay discrimination vs communications/consumer affairs veep Francine Katz.  Francine was on AB’s key strategy committee before she left after InBev bought AB.   Closely watched trial in St Lou has eye-catchin’ witness list.  Katz side plans to call August Busch III, August Busch IV, plus ex-prexies Dave Peacock and Pat Stokes, according to local tv station KSDK.  Francine’s key financial claim: John Jacob made $1.25 million in 2001, and when Katz got same duties AB paid her $500,000. It wasn’t until legal documents attached to 2007 InBev bid surfaced that Francine recognized disparity, sez suit. Katz also claims she complained to those top execs above. 

Jury selection started today.  KSDK asked for and got camera in courtroom.  AB’s perspective: "Anheuser-Busch strongly believes Francine Katz's claims are false and unjustified and the facts and evidence presented at trial will prove that she was treated and compensated fairly.  Ms. Katz was always paid generously during her 20 years of employment at Anheuser-Busch. Her compensation was determined through a fair, rigorous and gender-blind process, which involved outside independent compensation experts.”

New amendment to endlessly-discussed Fla Senate bill announced today loosens some of clauses upsetting small brewers in the state, but apparently not quite enough to appease them.  In the meantime, some craft fanatics got personal, reportedly sending expletive-laced messages and threats to the bill’s sponsor.  Amendment announced today allows brewers, regardless of size, to sell packaged beer for off-site consumption.  Recall, previous version of bill only allowed brewers under 1000 bbls to sell packaged beer to-go.  Packaged sales limited to 20% of annual of production with this amendment.  Bill now also allows brewers to transfer up to 1000 bbls produced at another brewery owned by same brewer to sell for on-premise consumption.  Brewers still allowed to sell unlimited amounts of draft beer brewed on-site, consumed on-site, as in previous version of bill.  Brewers also get 64-oz growler, ostensible reason for this whole battle.  But amendment just “lipstick on a pig,” Florida Brewers Guild lobbyist Josh Aubuchon told Saint Peters Blog, and still “creates a layer of bureaucracy where one currently does not exist.”  Senate votes today.  If passed, bill heads to House, where its chances of passage are not very good, CBN hears.  Legislative session ends Friday. 

Meanwhile, overwhelming support for small brewers from Fla press and consumer-base turned into some ugly name-calling directed at the bill’s sponsor Sen. Kelli Stargel, according to Political Fix Florida.  While media has latched onto arguments that bill could “kill” Fla craft brewing industry, Stargel’s been called “the c-word, the b-word” and gotten threats from craft fanatics via social media and calls to her cell phone and home.  In a year Stargel has also intro’d or supported bills on education, immigration and abortion, she’s getting the harshest criticism from so-called beer lovers.  Go fig.  Some small brewers have since asked backers to cool it via social media.  But impassioned support of local brewers ain’t anything new (recall FDA recently flooded by support of brewers on potential new spent grain regs) and Fla has seen its fair share of that passion getting out of hand recently.  Indeed, Saint Peters Blog evokes Cigar City founder Joey Redner’s comments after this year’s Hunahpu’s Day mess to describe the situation: “We used to say we liked the craft beer scene because it was 99 percent asshole-free, but I don’t think you can say that anymore….  I had never seen the ugliness I’ve seen in the last couple of years.”  Is there enough lipstick to go around?

Clear that public fireworks between distribs and craft brewers are presently in full swing.  This is risky turf for all.   Original op-ed in NY Times by Brooklyn founder Steve Hindy, speaking for BA, and subsequent BA comments continue to resonate as lightning rod for distrib anger.  Behind scenes, Steve as well as Brooklyn’s present owners, the Ottoway family, have made numerous efforts at outreach to distribs, reportedly either distancing themselves from NYT column (Ottoways) or backing off at least somewhat (Steve), at least so distribs perceived. 

But at NY Public Library event hosted on Friday night by star interviewer Paul Holdengraber about Steve’s new book “The Craft Beer Revolution,” Steve acknowledged the column was “meant to shock.”  Several hundred attended lively and engaging panel discussion which also included craft luminaries BA prexy Charlie Papazian and New Belgium ceo Kim Jordan. Moderator Paul said Steve seemed “proud” of column, partly no doubt because it appeared in NYT.  “I have never been able to give up being a journalist,” said Steve. “I like to write things that have an impact.”  On franchise laws, Steve said private negotiations have gone nowhere for a decade or more and column basically said: “If you want to have a fight publicly about this, we’re going to win.”  But then Steve sought to have it both ways (with numerous Brooklyn distribs in room), adding that craft brewers “owe” distribs for success, especially in last 10 yrs.