Beer Marketer's Insights
03/10/2014
EXPO WEST: Year Coldbrew Coffee Breaks Out? New Entries Suggest Optimism that Awareness Is Growing
So far, it's been category with low consumer awareness and chaotic mix of approaches: concentrate vs RTD, refrigerated vs shelf-stable. But this year's edition of Natural Products Expo West offered plethora of new entries amid optimism that word is getting out, with single-serve refrigerated versions showing some signs of being dominant approach in shifting terrain. Here are profiles of trio of players with news at bustling show that concluded yesterday in Anaheim, Calif.
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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, coming up next month, June 9-10. The program features an interview with Crown prexy Bill Hackett and Boston Beer founder Jim Koch, moderated by BMI prexy Benj Steinman. Consultant Mike Mazzoni will be sure to shake things up with his provocative industry analysis. The hottest craft brewer of recent yrs, Lagunitas founder Tony McGee will also join us for a candid conversation. 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, 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. We'll include 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. Per usual, BMI's Benj Steinman will present an overview, with plenty of numbers and insights. Space is limited. For more info, click here. To register, click here.
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Data from two large 2013 natl surveys provide timely reminders. Mediamark's annual report on drinking rates shows again that women represent huge challenge and oppy for brewers, especially vs spirits. Annual Scarborough surveys show that tho big brand volumes suffering, they're still very popular in key metros, and in fact growing popularity in some.
Gender splits for beer vs spirits remain remarkable. Mediamark reports that 42.8% of Americans age 21+ drink beer, a figure that's been stable for yrs, exactly the same as in 2008. But while 55.2% of men drink beer, only 31% of women do, a 24-point difference. That means approx 62% of beer drinkers are men, less than 40% are women. And their respective "indexes" are 129 and 73. That's barely changed since 2008. Oddly, overall figures for spirits haven't changed much either, but they're vastly different than beer. In 2013, 41.5% of adults drank spirits, again virtually same % as 2008. But men are only slightly more likely to drink spirits (42.4%) than women (40.6%). That means 49.3% of spirits drinker are men, 50.7% are women and their respective indexes are 102 and 98. Wine, by the way, has a "male" challenge and oppy tho the gap isn't as wide as it is for beer. Only 26% of men drink wine vs 37% of women, so over 60% of wine drinkers are female.
Are there key racial differences? White Americans are slightly more likely to drink beer (44.6%) than spirits (42.5%). So are Hispanics, 42.9% vs 37%. But black Americans are much less likely to drink beer than spirits, 33.3% vs 44%. There isn't much difference in propensity to drink beer/spirits by household income. For both bevs, likelihood of drinking rises directly, and quite sharply, with income. Less than 1/3 of those with household incomes under $20K annually drink beer or spirits. But over 54% of those with household incomes over $200K drink beer and/or spirits. And beer isn't that much more of a blue-collar beverage than spirits. About the same 40% of those with annual HHIs between $30K and $75K drink beer, only slightly above the % that drinks spirits. Note: Mediamark does not reflect volume consumed, only the % that drink the beverages.
Similarly, Scarborough's annual consumer surveys don't reflect volume, but simply the brands that consumers drank in the 30 days prior to being asked. Across 10 major metro mkts, 44.7% of adults said they drank any beer in last mo, again steady for yrs and very close to the Mediamark #s. About 57% of beer drinkers said they had an import (way ahead of imports' mkt share) and/or domestic light and 14.5% consumed "any microbrew/craft."
Bud Light's Strengthening Popularity in Some Cities; MC's Mixed Bag Only 2 brands made top 10 list in each of 10 mkts: Bud Light and Coors Light. A smaller % of beer drinkers named each vs previous yr: 26.3% said they had Bud Light, -0.6 pt, 18% said Coors Light, -2 pts. But check out continued strength of Bud Light in key mkts, even while its volume down 3% last yr. It's #1 in LA, Boston, Dallas/ Fort Worth, Atlanta and Houston, #2 in NYC, Chicago, DC, and #3 in SF. In Atl, over 34% of beer drinkers said they had a Bud Light in last mo, +4.6 pts in latest survey. That widened to 13 pt lead over #2 brand. In DFW, 35.6% of drinkers had a Bud Light, +4.1 pts to 16 pt lead. In Houston, it gained 1.2 pts to 42.6% of beer drinkers, a 21+ pt lead. Coors Light is #1 brand in NYC, reported by 23.2% of beer drinkers, -2 pts to just 0.6 ahead of Bud Light. A larger % of beer drinkers in LA and Chi said they had a Coors Light than in 2012, but % saying so dropped almost a pt in Atl and DC, 2 pts in Houston, 3 in Boston and over 5 in SF, Philly and DFW. Miller Lite remained on top in Chi, but % of beer drinkers naming the brand dropped 8 pts, tightening lead to just 5.5%. Lite lost ground in Philly, DC and DFW too, but jumped 2 spots in Atl (to #3) and Houston (to #2).
Corona Popularity Oddly Extra Light; Yuengling Pops; Lotsa Drops A change in survey wording may have caused some confusion for respondents naming Corona brand (or not, as case may be). In most recent surveys, Scarborough changed from listing "Corona" to "Corona Extra," its true brand name. Oddly, tho Corona's sales healthy in 2013, these surveys show dips in % of beer drinkers reporting the brand. It still leads in SF, named by about 24% of beer drinkers (-1.3 pts) and a steady 15% of beer drinkers in Philly. But % of beer drinkers naming Corona dropped 4-9 pts in each of a handful of mkts, as Corona slipped in ranks in most of 'em. Corona Light gained ground in DC, where the brand moved ahead of Extra. Corona Light debuted on LA, Chi, SF, Philly, Boston and Atl lists.
For 1st time, these surveys may be more accurately capturing popularity of Yuengling, as it was added as option in many more mkts. It still leads in Philly, named by over 32% of beer drinkers, up slightly. But it debuted at #2 in Atl and #1 in DC (21.2%). Heineken reported by smaller % of beer drinkers in each mkt except SF (up 2 spots to #4) and DFW (in top 10 for 1st time). It no longer made top 10 in DC and Houston, making it 1 of 8 brands no longer on top 10 in 2 or more mkts (incl Corona). Lots more detail from each of these surveys in our 2014 Beer Industry Update.
Gender splits for beer vs spirits remain remarkable. Mediamark reports that 42.8% of Americans age 21+ drink beer, a figure that's been stable for yrs, exactly the same as in 2008. But while 55.2% of men drink beer, only 31% of women do, a 24-point difference. That means approx 62% of beer drinkers are men, less than 40% are women. And their respective "indexes" are 129 and 73. That's barely changed since 2008. Oddly, overall figures for spirits haven't changed much either, but they're vastly different than beer. In 2013, 41.5% of adults drank spirits, again virtually same % as 2008. But men are only slightly more likely to drink spirits (42.4%) than women (40.6%). That means 49.3% of spirits drinker are men, 50.7% are women and their respective indexes are 102 and 98. Wine, by the way, has a "male" challenge and oppy tho the gap isn't as wide as it is for beer. Only 26% of men drink wine vs 37% of women, so over 60% of wine drinkers are female.
Are there key racial differences? White Americans are slightly more likely to drink beer (44.6%) than spirits (42.5%). So are Hispanics, 42.9% vs 37%. But black Americans are much less likely to drink beer than spirits, 33.3% vs 44%. There isn't much difference in propensity to drink beer/spirits by household income. For both bevs, likelihood of drinking rises directly, and quite sharply, with income. Less than 1/3 of those with household incomes under $20K annually drink beer or spirits. But over 54% of those with household incomes over $200K drink beer and/or spirits. And beer isn't that much more of a blue-collar beverage than spirits. About the same 40% of those with annual HHIs between $30K and $75K drink beer, only slightly above the % that drinks spirits. Note: Mediamark does not reflect volume consumed, only the % that drink the beverages.
Similarly, Scarborough's annual consumer surveys don't reflect volume, but simply the brands that consumers drank in the 30 days prior to being asked. Across 10 major metro mkts, 44.7% of adults said they drank any beer in last mo, again steady for yrs and very close to the Mediamark #s. About 57% of beer drinkers said they had an import (way ahead of imports' mkt share) and/or domestic light and 14.5% consumed "any microbrew/craft."
Bud Light's Strengthening Popularity in Some Cities; MC's Mixed Bag Only 2 brands made top 10 list in each of 10 mkts: Bud Light and Coors Light. A smaller % of beer drinkers named each vs previous yr: 26.3% said they had Bud Light, -0.6 pt, 18% said Coors Light, -2 pts. But check out continued strength of Bud Light in key mkts, even while its volume down 3% last yr. It's #1 in LA, Boston, Dallas/ Fort Worth, Atlanta and Houston, #2 in NYC, Chicago, DC, and #3 in SF. In Atl, over 34% of beer drinkers said they had a Bud Light in last mo, +4.6 pts in latest survey. That widened to 13 pt lead over #2 brand. In DFW, 35.6% of drinkers had a Bud Light, +4.1 pts to 16 pt lead. In Houston, it gained 1.2 pts to 42.6% of beer drinkers, a 21+ pt lead. Coors Light is #1 brand in NYC, reported by 23.2% of beer drinkers, -2 pts to just 0.6 ahead of Bud Light. A larger % of beer drinkers in LA and Chi said they had a Coors Light than in 2012, but % saying so dropped almost a pt in Atl and DC, 2 pts in Houston, 3 in Boston and over 5 in SF, Philly and DFW. Miller Lite remained on top in Chi, but % of beer drinkers naming the brand dropped 8 pts, tightening lead to just 5.5%. Lite lost ground in Philly, DC and DFW too, but jumped 2 spots in Atl (to #3) and Houston (to #2).
Corona Popularity Oddly Extra Light; Yuengling Pops; Lotsa Drops A change in survey wording may have caused some confusion for respondents naming Corona brand (or not, as case may be). In most recent surveys, Scarborough changed from listing "Corona" to "Corona Extra," its true brand name. Oddly, tho Corona's sales healthy in 2013, these surveys show dips in % of beer drinkers reporting the brand. It still leads in SF, named by about 24% of beer drinkers (-1.3 pts) and a steady 15% of beer drinkers in Philly. But % of beer drinkers naming Corona dropped 4-9 pts in each of a handful of mkts, as Corona slipped in ranks in most of 'em. Corona Light gained ground in DC, where the brand moved ahead of Extra. Corona Light debuted on LA, Chi, SF, Philly, Boston and Atl lists.
For 1st time, these surveys may be more accurately capturing popularity of Yuengling, as it was added as option in many more mkts. It still leads in Philly, named by over 32% of beer drinkers, up slightly. But it debuted at #2 in Atl and #1 in DC (21.2%). Heineken reported by smaller % of beer drinkers in each mkt except SF (up 2 spots to #4) and DFW (in top 10 for 1st time). It no longer made top 10 in DC and Houston, making it 1 of 8 brands no longer on top 10 in 2 or more mkts (incl Corona). Lots more detail from each of these surveys in our 2014 Beer Industry Update.
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Coors Distributing Co in Denver, Colorado is unique as sole company-owned distributorship in MC system especially because unlike AB branches, it has long-pursued a strategy of embracing a multi-supplier portfolio. Veep and gen mgr Scott Whitley runs lone MC branch like an indy distributor would run its biz. That's been approach, since it first got rights to Crown in 1999 and then Mike's Hard Lemonade shortly thereafter. CDC has added outside suppliers ever since, especially in series of transactions it did 2009-11, shortly after Scott became GM. CDC bought rights to New Belgium in 2009, bought local Miller distrib in 2010, which also had Pabst, HUSA, Boston and more. And CDC acquired DGUSA portfolio in 2011. These deals basically doubled CDC volume. "We're doing what good distributors do," Scott said, "leveraging our scale to significantly improve profitability and invest back against the business."
CDC did 13.9 mil cases last yr, but only about 7 mil cases of MC. It also sold over 2 mil cases of Constellation Brands beer. Yet CDC represents 31 suppliers in all with 1200 SKUs. That includes a deep book of craft in a key craft mkt, natch and it also sells almost all key cider brands. CDC sells, HUSA, Pabst, DGUSA, Mike's Hard Lemonade, but it also sells Boston, Sierra, New Belgium, Lagunitas, Oskar Blues, Breckenridge, Alaskan and more. CDC is largest single location NBB distrib. "We are neck deep in the craft game," said Scott. Craft has 15-20 share in all in Denver metro, but "optics of craft" are much larger. Craft "punches above its weight" in Denver, said Scott. Great American Beer Festival there, gov was formerly a craft brewer. Brewers Assn in nearby Boulder. There are also at least 100 craft brewer sales reps selling on streets of Denver. Draft at about 18.5 share of Denver mkt, compared to 10% nationwide. And 20% of CDC biz in draft.
Multi-supplier approach appears to be paying off for CDC and its corporate parent. In past 5 yrs, AB volume down 263,000 bbls, 17% in Colo and it lost almost 7 share, down to 35.5. Meanwhile, MC volume down 53,000 bbls, 5% and it lost just 1 share. Total mkt flat. Last yr, AB down 7% in Colo and MC down 1%. CDC has 350 employees working in 300,000 sq feet, including 200,000 of warehouse space and a Vertique system. About 80% of its volume is sold within a 15-mile radius. CDC figures it has over a 50 share including all its suppliers and that its principal competitor, an AB branch, has share somewhere in the 30s. Selling only AB brands, branch is effectively fighting with one hand tied behind its back in this craft-crazy mkt. There are 15-20 distribution options splitting the rest, Scott figures, including giant wine and spirits distribs Charmer and SWS that sell some beer, craft specialists like CR Goodman (lead brand Left Hand) and Elite Brands, plus a plethora of self-distributing Colo craft brewers.
CDC negotiates an annual biz plan with corporate parent, focusing on EBITDA, volume and safety, but Scott operates "pretty much autonomously" other than that. As for CDC's results and plans for each of its suppliers, "none of that gets to MillerCoors," Scott said. It's all "ring-fenced," he said, tho INSIGHTS spoke to one supplier that expressed skepticism. Still, CDC has "done well by our major suppliers," who "see us as objective enough to do the best job possible" for their brands. For example, Scott is a member of Heineken USA's distributor council. And Denver is 3d largest Pabst Blue Ribbon mkt, after Portland and Seattle. Denver is largest Coors Banquet mkt, as you'd expect.
Tho city proper is 23d largest city in US with population of 650,000, entire Denver metro area (including Boulder) over 3 mil people and ranked 16th. What's more, it's #1 in migration for 25-34 yr olds and has become even more of a tourist destination with recent legalization of marijuana. Denver is also 30% Hispanic. As biggest city in 500-mile radius, with growing population and influencer status, Denver mkt closely watched by many key beer suppliers. It's notable that they entrust their brand's fates to a distrib owned by a key competitor, MillerCoors. And also notable that MC chooses not to monetize this asset, probably worth $250 mil or more, with several prospective buyers.
CDC did 13.9 mil cases last yr, but only about 7 mil cases of MC. It also sold over 2 mil cases of Constellation Brands beer. Yet CDC represents 31 suppliers in all with 1200 SKUs. That includes a deep book of craft in a key craft mkt, natch and it also sells almost all key cider brands. CDC sells, HUSA, Pabst, DGUSA, Mike's Hard Lemonade, but it also sells Boston, Sierra, New Belgium, Lagunitas, Oskar Blues, Breckenridge, Alaskan and more. CDC is largest single location NBB distrib. "We are neck deep in the craft game," said Scott. Craft has 15-20 share in all in Denver metro, but "optics of craft" are much larger. Craft "punches above its weight" in Denver, said Scott. Great American Beer Festival there, gov was formerly a craft brewer. Brewers Assn in nearby Boulder. There are also at least 100 craft brewer sales reps selling on streets of Denver. Draft at about 18.5 share of Denver mkt, compared to 10% nationwide. And 20% of CDC biz in draft.
Multi-supplier approach appears to be paying off for CDC and its corporate parent. In past 5 yrs, AB volume down 263,000 bbls, 17% in Colo and it lost almost 7 share, down to 35.5. Meanwhile, MC volume down 53,000 bbls, 5% and it lost just 1 share. Total mkt flat. Last yr, AB down 7% in Colo and MC down 1%. CDC has 350 employees working in 300,000 sq feet, including 200,000 of warehouse space and a Vertique system. About 80% of its volume is sold within a 15-mile radius. CDC figures it has over a 50 share including all its suppliers and that its principal competitor, an AB branch, has share somewhere in the 30s. Selling only AB brands, branch is effectively fighting with one hand tied behind its back in this craft-crazy mkt. There are 15-20 distribution options splitting the rest, Scott figures, including giant wine and spirits distribs Charmer and SWS that sell some beer, craft specialists like CR Goodman (lead brand Left Hand) and Elite Brands, plus a plethora of self-distributing Colo craft brewers.
CDC negotiates an annual biz plan with corporate parent, focusing on EBITDA, volume and safety, but Scott operates "pretty much autonomously" other than that. As for CDC's results and plans for each of its suppliers, "none of that gets to MillerCoors," Scott said. It's all "ring-fenced," he said, tho INSIGHTS spoke to one supplier that expressed skepticism. Still, CDC has "done well by our major suppliers," who "see us as objective enough to do the best job possible" for their brands. For example, Scott is a member of Heineken USA's distributor council. And Denver is 3d largest Pabst Blue Ribbon mkt, after Portland and Seattle. Denver is largest Coors Banquet mkt, as you'd expect.
Tho city proper is 23d largest city in US with population of 650,000, entire Denver metro area (including Boulder) over 3 mil people and ranked 16th. What's more, it's #1 in migration for 25-34 yr olds and has become even more of a tourist destination with recent legalization of marijuana. Denver is also 30% Hispanic. As biggest city in 500-mile radius, with growing population and influencer status, Denver mkt closely watched by many key beer suppliers. It's notable that they entrust their brand's fates to a distrib owned by a key competitor, MillerCoors. And also notable that MC chooses not to monetize this asset, probably worth $250 mil or more, with several prospective buyers.
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Assembly bill 1928 in Calif intro'd quietly awhile back and it remains largely unopposed so far, INSIGHTS hears. Could sail thru Calif legislature as big brewers, wholesalers and craft brewers all favor this sweeping reform that would outlaw the kind of couponing and scanbacks that have run rampant in Calif in recent yrs. Recall, a similar provision passed in Fla a few yrs back and helped clean up that mkt. Last Sep, ABI prexy Luiz Edmond foreshadowed this bill as he told mtg of Calif distribs that AB would favor a Calif bill like the one in Fla. "We see that as an improvement," he said. "We need to level the playing field." This bill comes on heels of ongoing Calif ABC investigation of abuses of coupons that started sometime last yr and involved a very heavy dose of what are known as "barbucks." INSIGHTS has seen pictures of stacks of them at retail accounts, which supposedly get supplier favored placements, displays etc. But ABC has taken no action.
Those barbucks are widely used but coupons would be broadly outlawed under bill 1928. This bill would prohibit a beer manufacturer or beer and wine wholesaler from offering, funding, producing, sponsoring, promoting, furnishing or redeeming any type of coupon." That about covers it. Also prohibits retailers from accepting same. Even defines coupons to include IRCs, scanbacks, but not mail-in rebates. "'Coupon' means any method by which a consumer receives an instant discount at the time of a purchase that is funded, produced, sponsored, promoted or furnished, either directly or indirectly" by a beer mfr or distrib. Furthermore, "This Alcoholic Beverage Control Act prohibits any licensee from giving any premium, gift or free goods in connection with the sale or distribution of any alcoholic beverage," reads bill, "except as specifically authorized." Stay tuned.
Those barbucks are widely used but coupons would be broadly outlawed under bill 1928. This bill would prohibit a beer manufacturer or beer and wine wholesaler from offering, funding, producing, sponsoring, promoting, furnishing or redeeming any type of coupon." That about covers it. Also prohibits retailers from accepting same. Even defines coupons to include IRCs, scanbacks, but not mail-in rebates. "'Coupon' means any method by which a consumer receives an instant discount at the time of a purchase that is funded, produced, sponsored, promoted or furnished, either directly or indirectly" by a beer mfr or distrib. Furthermore, "This Alcoholic Beverage Control Act prohibits any licensee from giving any premium, gift or free goods in connection with the sale or distribution of any alcoholic beverage," reads bill, "except as specifically authorized." Stay tuned.
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05/05/2014
Growlers & Howlers; Small Brewer-Distrib Franchise Tensions Take Center Stage at NBWA Mtg
A few yrs back, NBWA Legislative conference was annual oppy for distribs and brewers, large and small, to hit the Hill, together, to advance shared fed tax and other concerns.
Then came CARE. Big brewers bailed; distribs went it alone. This yr, most notable feature of NBWA conference did not concern fed legislation at all, it was about big spat brewing between distribs and craft brewers on state franchise laws. This topic has dominated industry discussion in recent weeks and it did so again in DC. Always-packed small brewer party Sunday evening before opening reception was packed again. While still collegial, it had entirely different tone this yr as talk turned to recent broad attacks on state franchise laws by Brewers Assn leaders in media and at CBC. Yes, there's a new
f-word. Also lurking in background this yr: nasty fight in Fla, which pitted small brewers vs distribs over retail rights, including growlers. That battle exploded into name-calling, invective, even threats to legislators, all public and widely reported. But in end, looks like nothing will happen in Fla this yr.
Somehow, the kumbaya/collaboration ethos that crafties claim reigns in their world turned seriously sour, tho mostly directed at middle tier (not toward each other or "crafty" big brewers for now). At NBWA, distribs leaders returned fire in kind, even invoking barnyard animals in reference to craft brewers. Many distribs had privately pressed NBWA for more forceful response than initial letter in NY Times, INSIGHTS understands. And they got it. Battle took center stage at NBWA's conference, pushing issues on NBWA's stated agenda into the background. Fed excise taxes, which used to drive discussion at this mtg, barely on the agenda. NBWA prexy Craig Purser told distribs that if asked they should tell Congress distribs support neither BEER nor BREW bills. Man, times have changed.
Recall, original NY Times op-ed on franchise law penned by Brooklyn's Steve Hindy called "Free Craft Beer" got relatively mild letter in response from Craig. But by time of conference, NBWA board passed position statement voicing strong support for state franchise laws. And Craig made even more aggressive remarks at general session. Craig stressed NBWA "will not reverse course" in defense of state laws. Franchise issues aired out yet again on panel of industry leaders. On that panel, Dogfish Head founder and BA board member Sam Calagione said real problem with franchise laws is just "a few laws in a handful of states that we can fix." Whoa! Initial BA comments were sweeping broadsides against franchise laws. So why not say that in the first place instead of the public display of pique?
NBWA chairman Greg LaMantia thanked Sam for clarification and said he "could not understand why small brewers were attempting to use an atomic bomb to kill a gnat's ass." Amidst all the sturm and drang, HUSA prexy Dolf van den Brink's comments sounded most reasonable. HUSA "would not be sitting here without the 3-tier system." While he doesn't "always" like franchise laws, he came to understand they are "part of this bigger thing that's been incredibly beneficial, the 3-tier system. We should cherish that," said Dolf, "not start chipping away against that." Steve Hindy's NYT column "had a tremendous negative impact on our industry," he said. Dolf called for leaders with "understanding of grievances to resolve issues in a mature way."
Are We Having Fun Yet? Such leadership seems to be in short supply these days. Indeed, franchise law flap has been fraught with misinformation, exaggeration and commentary like the NY Times op-ed designed to "shock," as Steve Hindy told a New York Public Library audience last week, rather than to educate or resolve grievances. Indeed, Greg said that "whatever the effect was wanted" in op-ed, "you got the opposite effect, which is not good for where we collectively want to go." Plenty of shocking statements in nasty Fla fight too, as battle ostensibly over growlers descended to charges of extortion on part of distribs and actual death threats from some dumb craft fans to legislator who penned bill that put some limits on craft brewer retail options. All this in context of NBWA chair Greg LaMantia insisting beer biz is still "a damn good industry," Sam saying he's had "awesome conversations" with distribs in aftermath of Times op-ed and Montana distrib Brian Clark of Fun Dist telling mtg that his people answer the phone saying: "This is Fun."
Is there way out? Can craft brewers be accommodated? Timing of objections remains very strange since craft brewers growing by leaps and bounds and they largely do not face access challenges at this time. Indeed, many are extracting significant commitments from distribs to simply get brands. Can industry leaders get together behind closed doors, "beat the hell out of each other" a bit to find workable solutions, as Greg suggested, that don't "crash" the 3-tier system? Key issues remain self-distribution and ability to move brands, which franchise laws can and some do allow. Meanwhile, on heels of distribs hitting the Hill last week will come small brewers' Hill visits, then big brewers, all singing from different hymn books. Over time, public displays of disunity "affect our ability for collective action," as Dolf pointed out. Something's gotta give, because current state of affairs and level of acrimony ain't doing anyone any good.
Somehow, the kumbaya/collaboration ethos that crafties claim reigns in their world turned seriously sour, tho mostly directed at middle tier (not toward each other or "crafty" big brewers for now). At NBWA, distribs leaders returned fire in kind, even invoking barnyard animals in reference to craft brewers. Many distribs had privately pressed NBWA for more forceful response than initial letter in NY Times, INSIGHTS understands. And they got it. Battle took center stage at NBWA's conference, pushing issues on NBWA's stated agenda into the background. Fed excise taxes, which used to drive discussion at this mtg, barely on the agenda. NBWA prexy Craig Purser told distribs that if asked they should tell Congress distribs support neither BEER nor BREW bills. Man, times have changed.
Recall, original NY Times op-ed on franchise law penned by Brooklyn's Steve Hindy called "Free Craft Beer" got relatively mild letter in response from Craig. But by time of conference, NBWA board passed position statement voicing strong support for state franchise laws. And Craig made even more aggressive remarks at general session. Craig stressed NBWA "will not reverse course" in defense of state laws. Franchise issues aired out yet again on panel of industry leaders. On that panel, Dogfish Head founder and BA board member Sam Calagione said real problem with franchise laws is just "a few laws in a handful of states that we can fix." Whoa! Initial BA comments were sweeping broadsides against franchise laws. So why not say that in the first place instead of the public display of pique?
NBWA chairman Greg LaMantia thanked Sam for clarification and said he "could not understand why small brewers were attempting to use an atomic bomb to kill a gnat's ass." Amidst all the sturm and drang, HUSA prexy Dolf van den Brink's comments sounded most reasonable. HUSA "would not be sitting here without the 3-tier system." While he doesn't "always" like franchise laws, he came to understand they are "part of this bigger thing that's been incredibly beneficial, the 3-tier system. We should cherish that," said Dolf, "not start chipping away against that." Steve Hindy's NYT column "had a tremendous negative impact on our industry," he said. Dolf called for leaders with "understanding of grievances to resolve issues in a mature way."
Are We Having Fun Yet? Such leadership seems to be in short supply these days. Indeed, franchise law flap has been fraught with misinformation, exaggeration and commentary like the NY Times op-ed designed to "shock," as Steve Hindy told a New York Public Library audience last week, rather than to educate or resolve grievances. Indeed, Greg said that "whatever the effect was wanted" in op-ed, "you got the opposite effect, which is not good for where we collectively want to go." Plenty of shocking statements in nasty Fla fight too, as battle ostensibly over growlers descended to charges of extortion on part of distribs and actual death threats from some dumb craft fans to legislator who penned bill that put some limits on craft brewer retail options. All this in context of NBWA chair Greg LaMantia insisting beer biz is still "a damn good industry," Sam saying he's had "awesome conversations" with distribs in aftermath of Times op-ed and Montana distrib Brian Clark of Fun Dist telling mtg that his people answer the phone saying: "This is Fun."
Is there way out? Can craft brewers be accommodated? Timing of objections remains very strange since craft brewers growing by leaps and bounds and they largely do not face access challenges at this time. Indeed, many are extracting significant commitments from distribs to simply get brands. Can industry leaders get together behind closed doors, "beat the hell out of each other" a bit to find workable solutions, as Greg suggested, that don't "crash" the 3-tier system? Key issues remain self-distribution and ability to move brands, which franchise laws can and some do allow. Meanwhile, on heels of distribs hitting the Hill last week will come small brewers' Hill visits, then big brewers, all singing from different hymn books. Over time, public displays of disunity "affect our ability for collective action," as Dolf pointed out. Something's gotta give, because current state of affairs and level of acrimony ain't doing anyone any good.
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04/15/2014
Beer INSIGHTS Spring Conference Focused on Hi-End Coming June 9-10 in Chicago; New Panel Added!
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.
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Volume losses for top 2 remarkably consistent across US last yr, while Crown up in most places, tho its volume gain concentrated in 3 big states. All Others -- suppliers below top 5, principally craft -- collectively gained in every region and most states. Pabst and Heineken trends spottier, but down in more places than up. AB shipments flat or down in every region and 40 of 42 "reporting states," Beer Inst data shows. In only 1 region - New Eng - did AB lose less than 150K bbls. Dropped over 450K bbls in SEast (-2.3%) and WS Cent (-3%). Kept dropoff pace below 2% only in EN Cent region. And biggest % dropoffs were in NJ-Pennsy (-4.1%) and WN Cent (-3.9%). At same time, AB lost full share or more in 3 regions: New Eng, Mtn and Pac. It's below 28 share in NJ-Pennsy, below 40 in Pac and non-reporting states/exports. But AB still has 55+ share in SEast, WN Central and WS Central. In big states, AB off 2% in Calif, losing more than full share to 37.5. Since 2008 formation of AB InBev, AB down 1.4 mil bbls, almost 5 share in nation's largest beer mkt. AB also slipped nearly 3% in Tex last yr, tho still just below 55 share and down 1.6 share in 5 yrs. Fla dropoff just 1.3% but share down 0.9 in 2014 to 55.5. Other big state losses in same range: off 1.8-3% in big Midwest and other states. AB's only gains in reporting states in 2013: 0.5% in Vt, 1% in Nev.
MC picture not much prettier, despite more gains. Also down in every region, 9 of 10 biggest reporting states and 35 of 42 states. MC slipped to 18 share in New Eng, but didn't lose full share in any region last yr and held share in WN Cent. Dropped near 400K bbls in Tex-driven WS Cent, -5.1%. MC also down over 300K bbls in non-reporting states/ exports, 200K bbls or more in 3 eastern regions. MC took a 5.5% knock in Tex, near 5% hit in Ga and down over 4% in Ill and Pennsy. MC bounced back with modest gain in Oh after losing 13% there 2009-2012. And off just 0.5% in Mich; gained share in both states last yr. MC also up in half-dozen smaller mkts: SC, Ark, Ida, Ut, Wyo and Oreg.
In sharp contrast to top 2, Crown gained volume in each region and 9 of top 10 reporting states. Down in only 4 of 42 states. Crown up double-digits in 2 regions: SEast and WSC, and up 8% on west coast. That included almost 9% pop in Calif (254K bbls to 13.8 share), 11% in Tex (123K bbls to 6.4) and 11% in Fla (108K bbls to 8.3). So Crown got 485K bbls of growth, 69% of entire gain, in 3 states which were 42% of its total volume. Crown slipped 3.5% in Ill tho and off in 3 other smaller mkts: Ut, NM and Vt.
HUSA down in 7 of 9 regions, gaining only in WS Cent and Mtn. But HUSA hit thruout Northeast; down 9% in New Eng, 6.5% in NJ/Pennsy and 5.6% in non-reporting states and exports (including NY). Up double-digits in Tex, 2.1% in Ga and 3.8% in Ariz. But down 5% or more in Oh, Mich. Pabst up slightly (about a half %) in 2 regions, New Eng, and Pac. But down in all others, including 6.6% drop in NJ-Pennsy, 5.4% in WS Cent and 6.8% in WN Cent. Long string of gains in Mtn region ended and Pabst's Pac trend really slowed.
Still some final-final state total figures to come in, but brewers below top 5 collectively up in every region: up 5%+ in 6 of 9 regions. All Others have nearly 1/4 of the biz in New Eng, over 20 share in NJ-Pennsy, and others/exports, and near 20 in Pac. Still under 10 in SEast, WN Cent and WS Cent. In biggest states, All Others up double-digits in Fla, near 9%+ in Calif (at 17+ share), 7%+ in Ga, Ill and Ariz. Here's how reporting-state regions break out: NE=ME, MA, NH, RI, VT; MA=NJ, PA; SE=AL, FL, GA, MS, SC, TE, WV; ENC=IN, IL, MI, OH, WI; WNC=IA, KA, MN, MO, ND, NE, SD; WSC=AR, LA, OK, TX; MTN=AZ,CO, ID, NM, NV, MT, UT, WY; PAC=CA, HI, OR, WA. Go To Top
| 2013 Volume Trend - By Region 42 "Reporting" States - % Change | ||||||||||
| NE | MA | SE | ENC | WNC | WSC | Mtn | PAC | Other | Total | |
| AB | -2.6 | -4.1 | -2.3 | -1.9 | -3.9 | -3.0 | -3.7 | -2.3 | -2.3 | -2.7 |
| MC | -2.8 | -4.6 | -3.3 | -2.1 | -2.5 | -5.1 | -1.4 | -1.7 | -3.1 | -3.0 |
| Pabst | 0.5 | -6.6 | -0.9 | -4.9 | -6.8 | -5.4 | -4.6 | 0.4 | -0.3 | -2.8 |
| Crown | 0.5 | 1.0 | 10.1 | 0.3 | 6.2 | 10.9 | 5.7 | 8.1 | 0.9 | 5.7 |
| HUSA | -9.1 | -6.5 | -0.7 | -4.9 | -3.3 | 8.2 | 1.7 | -2.0 | -5.6 | -1.9 |
| Others | 7.2 | 2.2 | 9.2 | 4.7 | 5.1 | 5.5 | 8.5 | 7.6 | 4.2 | 5.7 |
| Total | -0.4 | -2.7 | -0.9 | -1.2 | -2.5 | -2.1 | -0.7 | 0.8 | -1.1 | -1.1 |
| 2013 Volume Trend - Top States - % Change | ||||||||||
| CA | TX | FL | OH | MI | GA | IL | AZ | PA | WI | |
| AB | -2.0 | -2.9 | -1.3 | -1.8 | -2.1 | -2.3 | -1.7 | -2.3 | -3.1 | -2.1 |
| MC | -1.9 | -5.5 | -3.4 | 0.7 | -0.5 | -4.9 | -4.2 | -1.2 | -4.3 | -2.8 |
| Pabst | 2.2 | -3.8 | 5.4 | -5.2 | -7.2 | -4.9 | -5.8 | 3.6 | -5.1 | -1.8 |
| Crown | 8.8 | 11.0 | 11.0 | 5.7 | 4.6 | 7.5 | -3.5 | 8.7 | 0.8 | 0.9 |
| HUSA | -2.1 | 10.1 | -2.2 | -5.2 | -9.5 | 2.1 | -4.1 | 3.8 | -6.2 | -3.6 |
| Others | 8.6 | 2.4 | 12.8 | -2.2 | 5.5 | 7.4 | 7.6 | 7.6 | 0.7 | 9.3 |
| Total | 1.2 | -2.0 | 0.3 | -1.2 | -0.7 | -1.8 | -2.2 | 0.0 | -2.6 | -0.5 |
In sharp contrast to top 2, Crown gained volume in each region and 9 of top 10 reporting states. Down in only 4 of 42 states. Crown up double-digits in 2 regions: SEast and WSC, and up 8% on west coast. That included almost 9% pop in Calif (254K bbls to 13.8 share), 11% in Tex (123K bbls to 6.4) and 11% in Fla (108K bbls to 8.3). So Crown got 485K bbls of growth, 69% of entire gain, in 3 states which were 42% of its total volume. Crown slipped 3.5% in Ill tho and off in 3 other smaller mkts: Ut, NM and Vt.
HUSA down in 7 of 9 regions, gaining only in WS Cent and Mtn. But HUSA hit thruout Northeast; down 9% in New Eng, 6.5% in NJ/Pennsy and 5.6% in non-reporting states and exports (including NY). Up double-digits in Tex, 2.1% in Ga and 3.8% in Ariz. But down 5% or more in Oh, Mich. Pabst up slightly (about a half %) in 2 regions, New Eng, and Pac. But down in all others, including 6.6% drop in NJ-Pennsy, 5.4% in WS Cent and 6.8% in WN Cent. Long string of gains in Mtn region ended and Pabst's Pac trend really slowed.
Still some final-final state total figures to come in, but brewers below top 5 collectively up in every region: up 5%+ in 6 of 9 regions. All Others have nearly 1/4 of the biz in New Eng, over 20 share in NJ-Pennsy, and others/exports, and near 20 in Pac. Still under 10 in SEast, WN Cent and WS Cent. In biggest states, All Others up double-digits in Fla, near 9%+ in Calif (at 17+ share), 7%+ in Ga, Ill and Ariz. Here's how reporting-state regions break out: NE=ME, MA, NH, RI, VT; MA=NJ, PA; SE=AL, FL, GA, MS, SC, TE, WV; ENC=IN, IL, MI, OH, WI; WNC=IA, KA, MN, MO, ND, NE, SD; WSC=AR, LA, OK, TX; MTN=AZ,CO, ID, NM, NV, MT, UT, WY; PAC=CA, HI, OR, WA. Go To Top
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04/15/2014
Hi-End Up 3 Share of $$ in Q1 Nielsen; AB Lost 1.5 Share of $$; Crown, Boston Big Gainers
Total off-premise beer mkt up 0.4% in Nielsen all outlet + convenience for the qtr thru Mar 29. Mkt still trading up, with avg prices up 67 cents per case, 3.1%. And above-premium segments gained more than 3 share of $$, led by craft up 1.2 and FMBs up 1.3 share. But AB and MC still losing share, especially AB. AB volume down 1.4%, MC down 1.1%. But AB lost 1.5 share of $$$, compared to just 0.3 for MC. AB $$ sales flattish, up 0.4%, while MC up 2.4%. Avg prices for AB brands up 36 cents/case, 1.8%, while MC prices up 66 cents, 3.5%.
Crown volume up 13%, $$ up 16% as avg prices up 3%. So its share gains accelerated; gained 0.8 share of $$ YTD. And Boston Beer volume up 36%, $$ almost 40%. Boston gained 0.5 share of $$. So those 2 cos picked up 1.3 share while AB and MC lost 1.8 share of $$ YTD in Nielsen. HUSA volume up 2.5% and $$ up 4%, so it gained very slight share YTD. But interestingly, its Mexican portfolio growing at same 13% rate as Crown's. Pabst volume down 0.4% and it lost 0.1 share.
What brands are gaining the most share of $$ so far this yr? Modelo Especial, Redd's and Angry Orchard each gained 0.4 share of $$ yr-to-date. Modelo Especial up 24%, Angry Orchard up 194% and Redd's up 342%. Miller Fortune, plus AB's new Rita extensions, Mang-O-Rita and Raz-Ber-Rita each grabbed 0.4-0.5 share of $$ in last 4 weeks. But all 3 at 0.2 share YTD. Mich Ultra, Corona and Redd's Strawberry Ale each up 0.2 share YTD too. Of top-10 growth brands in beer biz so far in 2014, 9 are above premium, 6 are FMBs or cider and 4 are new brands in 2014 (Redd's Strawberry started last fall).
With so much new brand activity, pressure still on big mainstream brands. Amazingly enuf, Miller Lite is best-performing mega brand in Nielsen. And it's flat. Bud Light volume down 1.5%, Coors Light down 1.7% and Bud down 2.9% YTD. But those 4 brands are down 1.5 share of $$ (out of 1.8 AB and MC down overall), with Bud Light down 0.7. Total economy biz doing a little better in 2014, down just 1.2%, about same trend as overall premium biz. But sharp divergence between what Nielsen calls "near premium" brands and those brands it calls "budget." (Near premium averages about $16 per case, budget closer to $15.) Near premium flat, but budget down 8% YTD. Here are some leading subpremium brand volume trends: Natty Light down 6.8%, Busch Light down 0.2%, Busch down 2.9%, while Keystone Light down 9.2% and High Life down 6.5%. So MillerCoors so far taking bigger hit on low end. Pabst Blue Ribbon has slowed some, but still up a solid 7%.
Crown volume up 13%, $$ up 16% as avg prices up 3%. So its share gains accelerated; gained 0.8 share of $$ YTD. And Boston Beer volume up 36%, $$ almost 40%. Boston gained 0.5 share of $$. So those 2 cos picked up 1.3 share while AB and MC lost 1.8 share of $$ YTD in Nielsen. HUSA volume up 2.5% and $$ up 4%, so it gained very slight share YTD. But interestingly, its Mexican portfolio growing at same 13% rate as Crown's. Pabst volume down 0.4% and it lost 0.1 share.
What brands are gaining the most share of $$ so far this yr? Modelo Especial, Redd's and Angry Orchard each gained 0.4 share of $$ yr-to-date. Modelo Especial up 24%, Angry Orchard up 194% and Redd's up 342%. Miller Fortune, plus AB's new Rita extensions, Mang-O-Rita and Raz-Ber-Rita each grabbed 0.4-0.5 share of $$ in last 4 weeks. But all 3 at 0.2 share YTD. Mich Ultra, Corona and Redd's Strawberry Ale each up 0.2 share YTD too. Of top-10 growth brands in beer biz so far in 2014, 9 are above premium, 6 are FMBs or cider and 4 are new brands in 2014 (Redd's Strawberry started last fall).
With so much new brand activity, pressure still on big mainstream brands. Amazingly enuf, Miller Lite is best-performing mega brand in Nielsen. And it's flat. Bud Light volume down 1.5%, Coors Light down 1.7% and Bud down 2.9% YTD. But those 4 brands are down 1.5 share of $$ (out of 1.8 AB and MC down overall), with Bud Light down 0.7. Total economy biz doing a little better in 2014, down just 1.2%, about same trend as overall premium biz. But sharp divergence between what Nielsen calls "near premium" brands and those brands it calls "budget." (Near premium averages about $16 per case, budget closer to $15.) Near premium flat, but budget down 8% YTD. Here are some leading subpremium brand volume trends: Natty Light down 6.8%, Busch Light down 0.2%, Busch down 2.9%, while Keystone Light down 9.2% and High Life down 6.5%. So MillerCoors so far taking bigger hit on low end. Pabst Blue Ribbon has slowed some, but still up a solid 7%.
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Constellation Brands beer division grew revs $248 mil, 10% to $2.835 bil for 12 mos thru Feb 2014. Shipments jumped 11.8 mil cases, 6.9% to 182.4 mil cases during same 12-mo period. So rev per bbl up 3% for full yr. Depletions up 8%, including 10% jump in last 6 mos. In Constellation's fiscal 4th qtr, revs jumped 13%, shipments 9.9% and depletions 11.6%. Constellation now more of a beer co than a wine co. It earned $773 mil in operating income on beer last yr, compared to $638 mil on wine and spirits. (Revs about equal.) Beer oper income up $325 mil, 73%, including "100% of Crown's operating income" for entire yr and "brewery profits since the date of acquisition in June 2013." Beer operating margin at 33.5% in 4th qtr and 27.3% for the yr. As expected, Constellation hadda revise way upwards its estimates for its total expansion investment. Constellation now sez total expansion investment "to be in the range" of $900 mil to $1.1 bil. That's almost double what it initially thought. The "most significant incremental cost increase relates to outsourcing to third party external engineering resources" and consultants, noted ceo Rob Sands on conference call. But investors shouldn't be concerned, because "although the brewery expansion capex is higher than our original estimate, beer volumes and profits are also higher," said cfo Bob Ryder. "We remain confident" brewery expansion will be completed in 2016. Constellation targets "mid to high single digit net sales growth" for beer in current fiscal yr that ends Feb 2015 (that would be slowdown from trends in past 6 mos). And expects "beer segment operating income to grow in the low-to-mid 20 percent range." Excluding benefit from acquiring brewery, Constellation expects underlying beer oper income to be up 10-12%.
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