Five years ago, AB sold near 1 mil bbls in Oreg.  In 2013, it barely sold 800,000 bbls. AB dropped 191,000 bbls, 19.3% in last 5 yrs there. Its mkt share fell more than 1 point a yr from 33.9 to 28.6. MillerCoors also lost 112,000 bbls, 11% of its biz, and dropped 2.6 share in Oreg during same period.  But in 2013, MC still had 31.5 share and was #1 in state.  In those same 5 yrs, All Others (suppliers below the top 5) climbed 176,000 bbls, 30% and jumped 7.2 share to 27.5.  Vast majority of that is craft. 

Unless trends change dramatically, All Others should pass AB in Oreg state shipments in 2014.  That would be first state in entire country where that has happened in the 40 yrs that INSIGHTS has tracked state data.  As our 90-yr old founder Jerry Steinman said over the weekend, this is especially significant because no one could have foreseen such a development.

Not coincidentally, this striking development will occur in most craft-centric mkt in entire US (recall Portland foodstores over 40% craft in $$ during holiday season).  Stats slightly complicated by AB’s 32% stake in Craft Brew Alliance, which had about 3 share in Oreg last yr.  Then too, over half of AB volume in Oreg sold thru company-owned branches.  Last yr, AB down 51,000 bbls, 6% in Oreg, its 3d softest trend in 42 states and it lost 1.6 share. AB’s sales director in Pac NW (Oreg, Wash, and Alaska), Jim Brady recently left to become Full Sail’s regional sales manager in northwest.  Jim had received AB’s “Sales Excellence Program” award in 2013 and was “1^st Place Sales Director” in US last yr, according to Full Sail press release.

Rapper Jay Z joined LA’s mayor on steps of City Hall earlier today to announce that Budweiser Made in America festival on Labor Day Weekend will happen in LA “alongside” original festival in Philly, first music festival to happen simultaneously on both coasts.  In 2d yr, Philly festival doubled from 40,000 to 80,000 attendees, reported Billboard.  About 50,000 expected in LA, but 2 festivals likely will be quite different as LA is 40-45% Hisapnic, noted Bud veep Brian Perkins to Billboard.  

Molson Coors and SABMiller are headed back to court to settle battle over distribution rights for Miller brands in Canada after four months of negotiations failed.  “We are asking the court to schedule a trial date for the matter to be heard,” announced both brewers.  Molson won injunction last July to keep brands after Miller gave 6 month notice to terminate long-standing distribution agreement in Jan.  At time, judge felt “Miller had the stronger case on many” issues but ruled “either side” may prevail in court, wrote The Globe and Mail.  Both sides put off Dec trial date in hopes they could strike a deal but apparently they are still far enough apart they are ready to start trial. Recall SABMiller argued Molson failed to hit sales targets from 2010-12 and believed that triggered termination rights, while Molson claimed it had right to reset those targets and also claimed loss of MGD in its Canadian portfolio would cause “irreparable harm.”  This battle over Miller brands distribution rights in Canada started back in 2005, when Miller sued to terminate agreement after Molson Coors merger, noted Globe and Mail. After “more than a year of legal battles,” the agreement was extended in 2007.     

“In the context of the BA’s recent vocal concerns about market access, franchise laws, carve-outs and special protections, etc… the following quote from the prologue of Steve Hindy’s new book is quite enlightening: BA’s ‘Paul Gatza… says that 48.4 percent of brewery-restaurants that have opened since 1980 are still in business, and 66.2 percent of the production brewery start-ups are still brewing. That is an amazing record of success, a much higher winning percentage than the average business startup can claim.’ [Emphasis added.]

Perhaps heady from quaffing their latest 12% imperial stout, these guys seem to have lost sight of the structural contributors to this ‘amazing record of success,’ including very low barriers to entry in the core process of brewing, a significantly discounted route to market made possible by independent distributors and the success of scale brands that keep the lights on and the trucks rolling [at distribs], not to mention favorable tax treatment at the federal and, often, the state level. 

It’s pretty easy to predict where this is all headed… pigs get fed, hogs get slaughtered.” A brewer source

(Editor’s note: Interesting that BA atty Marc Sorini used exact same phrase about pigs and hogs to describe “toll taker fee for growlers” for distribs in Fla.)

“BA took sponsorship from NBWA and individual large distributors only to have their general counsel call individual distributors out by name as not being worthy of franchise protection. Is that how it's going to be?” An industry source.

Responding to comment we printed in Beer Marketer’s INSIGHTS that some craft brewers said they had tried to work with NBWA on a joint solution for over a decade: “How in the hell does NBWA negotiate any issue on franchise when it’s mission is to advocate for beer distributors at the national level?” NBWA does not “control any state or state association.  If you want to see an exodus of beer distributors from a national association, just let” NBWA “come out advocating that ‘states’ change any of their franchise laws.  It would be a disaster.  This message has been expressed in no uncertain terms to the leadership of that other association from the beginning…. Each and every state has different approaches to these laws and regulations, and whatever changes come in the future will have to be dealt with there…. We DO support a state’s right to make these decisions.” A distrib

“Where in the universe does the consumer have greater access to variety of brands?  I’m not certain they really understand what they want.”  A distrib 

This story is a timely example of distribs working with a key brewer, potentially even against their own best interests, to come to a reasonable solution that will enable that brewer’s brands to enter mkt. Connecticut has long been known as 1 of tuffest franchise laws in country; in perpetuity rights extend to successor distribs in deals. Yuengling had left CT way back in 1993. Most of its distribs from back then had sold. Last yr, Yuengling met with state govt officials about its inability to go to mkt choosing its distribs and made it known that in absence of ability to enter mkt in way it wished, Yuengling would just not go to Connecticut.

What happened instead? Distribs with Yuengling rights all released their rights to Yuengling, giving Yuengling a “clean slate” said coo Dave Casinelli (Star’s Tony Gallo reportedly leader in process). That paves way for Yuengling to reenter the state later this yr, hopefully during summer selling season. Yuengling will enter Rhode Island simultaneously. Connecticut wholeslaers “stepped up and did the right thing,” said Dave. “I respect them immensely for that.” Following intros in RI and CT, Yuengling products will be available along full corridor from NY to Mass. Yuengling up just 1% in 1st qtr, even with some Mass intro numbers included, as much of its volume in very challenging mkts. Recently, Yuengling launched a Summer Wheat that Dave said is selling as fast they can make it, getting “tremendous response.”

IRI and GuestMetrics, leading providers of off-premise and on-premise data, have formed “exclusive alliance” to “offer new insights into how consumers shop and eat.” IRI is “taking an equity position in the company.” Integrating GuestMetrics data with IRI data “will enable CPG decision makers to drive growth of their brands everywhere they are sold,” said IRI prexy Americas Piyush Chaudhari. Marketers “can study the impact of on-premise sales on off-premise purchase behavior,” said GuestMetrics release, “and more effectively coordinate activities to maximize opportunities” in both channels.

As you might guess, BA leadership comments at CBC about franchise laws touched off a number of interesting responses. We only have space for one today, but we’ll keep ’em comin’. “What I am finding increasingly ridiculous are craft brewers’ desires for two separate systems,” shared one industry observer. “One tightly regulated system that handcuffs the majors and another with an open playing field for craft brewers.” (BA’s perspective may have become clearer in the last few weeks, but BA flagged when it wrote a position statement on franchise laws: “Franchise laws were enacted to protect wholesalers from the undue bargaining power of their largest suppliers. Applying those laws to the relationship between a small brewer and the wholesaler is unfair and against free market principles.”) Also “increasingly ridiculous” to our observer: “The conflation of franchise laws and self-distribution” and “BA’s persecution complex.” Franchise laws can and do accommodate self-distribution. Then too: “20 points [growth rate] between crafts and the industry and BA is feeling hamstrung?”

Finally, when atty Marc Sorini sez there are too many products and too few distribs to expect 3-tier to accommodate every new product, our observer asks: “What’s the idea, fewer franchise laws will result in more wholesalers?” He likens argument to “the call for smaller brewer franchise carve outs using fair market value payments…. If the BA has indeed offered a workable definition of FMV, please let me know because I haven’t heard it or read it. It is like we are all supposed to believe that removing laws would result in more distributors and twice the retail shelf space.”

It’s spreading. Those 50% off prices on AB’s Shock Top and Goose Island brands now cropping up in Oreg branch territory too, INSIGHTS hears. In Wash, AB reportedly told retailers deal would be available for 2 weeks on, 2 weeks off over next 3 mos.

MillerCoors shipments down 3% and depletions dropped 3.4% in 1st qtr with total premium light sales-to-retailers still down mid-single digits, reported SABMiller. Total MC sales-to-retailers down 2.9% for 12 mos. But 1st qtr negatively affected by weather, Easter timing, tho going against easy comp last yr (-3.3%). Don’t forget MC had already sold over 1 mil cases of Fortune by late Mar sales convention, so trend almost 1 point worse ex-Fortune. All the hoopla at convention about Miller Lite retro can now placed in perspective by news that Lite’s sales-to-retailers still trended down mid-singles for qtr (tho doing much better in scan data). More concerning: Coors Light down mid-singles too. With continued mid-single digit growth of Coors Banquet, MC’s premium regular trends better than its premium light trends, down low singles, even with Gen Draft still down double digits. But subpremiums down high single digits for qtr.

Redd’s, Fortune, Tenth & Blake, According to SABMiller and in Nielsen Data A few bright spots too, like above-premium biz, and especially Redd’s. “Total above premium STRs grew by double digits for the quarter… driven by innovations, including the notable success of the Redd’s franchise.” Redd’s at 0.8 share of $$ in Nielsen all channel + convenience data for qtr thru 3/29. That’s up 0.6 share, including Redd’s Strawberry Ale. But SABMiller didn’t say anything about Fortune, which is at 0.4 share of $$ last 4 weeks thru 3/29 in Nielsen and 0.36 share of $$ last 4 weeks thru 3/23 in IRI. Sold 300,000 cases in IRI last 4 weeks, a little more than 1% of MC volume. SABMiller didn’t mention Blue Moon either. “Within Tenth & Blake,” said SABMiller, “Leinenkugel’s growth of double digits was more than offset by declines in smaller brands.” Does this mean T&B down? Tenth & Blake down 2.5% last 4 weeks in Nielsen.

To stay on top of trend towards beer’s rapidly growing high end, you won't want to miss the 2014 Beer INSIGHTS Spring Conference at the Ritz Carlton in Chicago. We’ve just added a panel with two of the industry’s top economists, Lester Jones from Beer Inst and Bart Watson from Brewers Assn. They’ll dig into some of the key industry macro trends and forces driving change. The program features an interview with the industry's current growth leaders: Crown prexy Bill Hackett and Boston Beer founder Jim Koch, moderated by BMI prexy Benj Steinman. The hottest craft brewer of recent yrs, Lagunitas founder Tony McGee will also join us for a candid conversation. Consultant Mike Mazzoni will be sure to shake things up in his provocative industry analysis. We’ll have a panel with a handful of fast-rising craft brewers: Allagash founder Rob Tod, Ninkasi ceo Nikos Ridge, Odell ceo Wynne Odell and Devils Backbone founder Steve Crandall. That will be moderated by consultant Bump Williams. Also on our program: new Heineken USA chief mktg officer Nuno Telles and MillerCoors innovation veep David Kroll on a panel about innovation. More speakers to come. Per usual, BMI's Benj Steinman will present an overview of the segment, with plenty of numbers and insights. For more info, click here. To register, click here.