Hard to argue with superlatives used by Goldman Sachs in reporting latest Nielsen numbers in food, drug, mass merch and Walmart.  While total beer volume up 0.5% for 4 wks thru Mar 15 in these channels and $$ sales +3.4%, Crown and Boston both on a tear.  Crown’s volume jumped nearly 13% for 4 wks continuing “exceptionally strong” trends as GS noted, reminding “comps in beer do not start to get tougher until July.”  Ain’t just Modelo Especial either, Citibank analysis of same numbers shows: ME flyin’ at +32.4%, but Corona  and Corona Light each up 10.3%, Pacifico up near 10%. 

Meanwhile Boston “booming as Rebel IPA rolls out,” Goldman Sachs pointed out.  Overall, Boston biz cracked 40% growth rate (+40.7%) for 4 weeks, as beer up near 30%, ciders nearly tripled.  Cold Snap is hot: Sam Seasonals jumped 54%.  Boston Lager +12% and “Rebel IPA launch added about 8 points to total SAM in the period.”  And more happy talk for Angry Orchard: “SAM’s share of cider volume is up to 60.1% in this channel which is up from 40% in this period a year ago.”  

 Fortune has already sold more than 1 mil cases and gotten to 0.4 share in Nielsen in its first few weeks, said ceo Tom Long at distrib convention. It has repeat purchase rates that are 2x the size of Black Crown and “in line” with Bud Light Platinum. MC got about 330,000 points of distribution in 1st 3 weeks, “almost twice what we expected,” said sales prexy Ed McBrien. There’s “a lot of runway for us,” said Tom. Miller Lite is “in black” in volume share in Nielsen, while Bud Light down 0.4 share. Lite has had trend swings of 10 or more points and is growing in Phoenix, Atlanta, and Portland. “Original can has been so successful because it disrupted how millenials see Miller Lite.”

“Disruption and fragmentation seem to be the new normal in the beer business,” said MillerCoors ceo Tom Long in pointed address to open MC distrib convention yesterday. “Disruption” in brands, segments, even “drinking patterns.”  Tom called this disruption “tricky” because so much of it is “driven by” smaller local brands.  That’s creating “value-destroying churn,” according to Tom. So challenge for MC and distribs is “how do we harness this new era of disruption and fragmentation” into “revenue growth and operating productivity.”

Tom gave telling examples of “churn”: between 2009-2012, MC’s top 1/3 of distribs by volume increased # of brands they sell by “nearly 50% to 375” and number of SKUs by a third to 1700. In same period, “they’ve seen volume per brand drop by 26% and volume per SKU by 19%.”Meanwhile, operating cost per case way up. “That’s what churn looks like.”

MC “leaning into that disruption with the intent to lead the industry to brand-led growth.... Put simply,” stressed Tom, “MillerCoors is the antidote to churn” because of its scale. MC will “leverage scale to turn disruption into competitive advantage” with “sustainable growth in emerging segments,” by “renovating core scale brands to increase their relevance” and by “leveraging partnership approach” to “better shape” future of beer biz. To illustrate that last point, Tom contrasted MC’s better recent relationship with distribs compared to AB as a way to win in the mkt. “Disruption in the beer industry has hit ABI hard.” Some of their distributors are “unhappy,” he asserted. And “biggest single difference between us and ABI is... our approach to partnership. ABI has a telling model -- they tell their distributors what to do.”  But MC has “partnership model” based on “collaboration and alignment” with distribs. 

Harris Poll EquiTrend polled 40K consumers on “aspects such as familiarity, quality, purchase consideration and a brand’s ability to generate conversation online, offline and across” social media, Motley Fool reports. So this is one way of measuring brand equity, or perhaps, buzz.   Of top 10 beer brands in poll, 7 are imports.  This may be surprise given softness in non-Mexican import mkt, as we’ve detailed in beer marketer’s INSIGHTS.  But like Scarborough’s annual consumer surveys of popular brands in major metros, Harris results suggests imports still have some cachet. 

Top brand in survey was Blue Moon.  (Recall, Scarborough shows Blue Moon made top 10 list in 9 of top-10 metros last yr.)  Hot imports Stella Artois, Modelo Especial and Dos Equis also made Harris top 10.  But a couple of head-scratchers: Bass Ale (#5?!), Newcastle Brown and Guinness, each of which lost volume last yr, also made top 10.  And modest Negra Modelo grabbed #2 spot.  Interestingly, only 2 crafts on list, but the two biggest: Sam Adams and Sierra Nevada.   No big brands from big brewers.  Indeed, not one brand from top-selling dozen brands in US.  Go figure.        

Brewers Assn-defined craft brewers exported almost 283K bbls in 2013, +49% over 2012 as part of org’s Export Development Program, it announced today.  These exports nearing 2% of craft shipments, based on BA stats.  Over 130K bbls sent to Canada alone, +93%.  That’s almost half of total craft exports, over ⅔ of craft export growth. Sweden bought almost 44K bbls of BA craft in 2013, 15.5% of shipments and #2 mkt, according to report. Recall, Sweden also Brooklyn Brewery’s 2d largest mkt after NYC metro.  Brooklyn shared goal last fall to export 400K CEs to the mkt in 2014, about 29K bbls.  Brooklyn likely over 20% of all BA-defined craft exports, we estimate.  UK neared 8% of exports last yr, followed by Australia (5%) and Japan (3%).  “New distribution agreements” led to significant growth, BA coo Bob Pease said in statement, particularly in Asia-Pacific, showing fast gains in Singapore, Hong Kong and Thailand especially.  

FTC did detailed analysis of nearly $3.5 bil in ad and promo spending in 2011 by 14 leading alc bev cos. About a quarter of that spending still on tv.  And another 29%, about $1 bil, on point of sale.  But a couple of trend changes since 2005 stood out.  Just 4.6% of supplier spending is “devoted to promotional allowances – funds the suppliers provide the distributors.”  That’s a “substantial decrease from the 7.49 percent share reported in 2005.” FTC goes on to note distribs “may use those funds to purchase local advertising, in-store signage, the execution of local marketing programs and production of coupons.”  Distribs have a lot less to use from their suppliers (almost $100 mil less) across beer, wine and spirits than they did 6 yrs earlier. Did someone say cost shifting? Another key change since 2005: these 14 cos now spend 8% of their mktg budget on digital. That’s “four times as much as the amount devoted to these media in 2005.”

AB celebrating on several fronts.  Over the weekend, AB and Teamster officials announced “a tentative agreement for a new five year contract covering Teamster-represented employees at the 12 breweries.”  Details not announced, language needs to be finalized and it’s subject to ratification, but looks like they got a deal. 

Meanwhile, Barron’s named AB InBev’s Brito as one of its top 30 “superstar” CEOs again.  Only other alc bev CEO on list was Moet & Chandon’s Bernard Arnault.  Only other bev CEO was Starbucks’ Howard Schultz.  Barron’s cited Brito’s “bold acquisitions” that built ABI into 4^th largest consumer company in the world, as well as Brazilian style of “sharp cost controls, innovative brand-building and informal corporate culture” that focuses on nurturing in-house talent.  Mag notes “stagnant” US and Brazilian beer bizzes, but Barron’s “betting on the Brazilian to reinvigorate growth.”

Meanwhile, AB was one of 14 major alc bev suppliers whose 2011 ads/mktg FTC reviewed with fine-tooth comb for its 4^th special report.  Key test was whether company ad placements across media met threshold that audience is at least 70% adult.  Grades came in high, very high.  Indeed, FTC especially focused on digital this time around.  Turned out that in 1^st half of 2011, “99.5% of alcohol ads that advertisers placed on sites owned by others – such as news, entertainment and sports sites – met” the 70% standard.  Can’t get much better than that.  On traditional media, 93.1% of placements met the standard, including 99.4% for mags, 94.6% for natl television.  Figure was even higher for overall impressions, 97.3% hit the standard.  FTC also included praise for Beer Inst and DISCUS for their “proactive efforts” to address digital issues.  Reminded again why it supports self-regulation instead of govt regulation: self-regulation is less expensive, more flexible and quicker to adapt and is an “appropriate response” to any concerns about alc bev mktg in context of “substantial protections” for commercial speech under 1^st Amendment.  Lots more detail on this report in current edition of our sister publication Alcohol Issues INSIGHTS. 

Finally, AB’s attempt to persuade 100K adults to sign petition to make Major League Baseball’s Opening Day a national holiday hit the mark 5 days before the Mar 26 deadline.  Now up to Obama Admin to respond, which it has done in past with similar efforts, including petition to request White House to “reveal its home-brewed beer recipe,” St Lou Post-Dispatch reported.  Petition asks that Mar 31 become a day of “national observance, declared by presidential proclamation,” St Lou P-D explains, not a day that bizzes, govt would be closed. 

Beer owners/execs dominate Forbes list of the richest alc bev billionaires in the world, snatching up 10 of top-12 spots worth a staggering $89.8 bil combined.  Top liquor spot goes to Jorge Paulo Lemann of Brazil, his ABI holdings contributed to his estimated worth of $19.7 bil, per Forbes.  Other 3G execs with big chunks of ABI on list too of course: Marcel Herrmann Telles ($10.2 bil) and Carlos Alberto Sicupira ($8.9 bil).  Alejandro Santo Domingo Davila and his family, which owns a 15% stake in SABMiller had estimated worth of $11.1 bil, while Charlene de Carvalho, daughter of Freddy Heineken, is worth $10.4 bil, per mag estimates.  Another beer baron’s daughter also made list, Maria Asuncion Aramburuzabala, who inherited stake in Grupo Modelo when her father Paul passed away back in ’95, is worth estimated $5.2 bil.  Others beer billionaires on list include Castel family of France (Flag and Castel brands) worth $8 bil, Walter Faria of Brazil (Grupo Petropolis) worth $3.8 bil and Lorenzo Mendoza (Polar) worth $3.5 bil.    

Four craft brewers and 3 NY distribs just won lawsuit over early 2013 termination of Garal Wholesalers.  Case was first test of NY law that allowed termination without cause, if brands less than 3% of distrib’s biz and brewer under 300K bbls production, as long as distrib losing brands gets fair mkt value.  Judge upheld terminations as legit.  Recall, Abita, Belfast Bay, Flying Dog and Shipyard terminated Long Island-based Garal under law in Jan-Feb last yr.  So did Total Bev Solutions, as agent for Southampton.  Flying Dog sent check for $260K, Abita $220K and Total $150K.  Garal insisted Southampton brands were worth $525K and wanted to arbitrate amount.  Garal then sued brewers and 3 distribs that got brands, claiming those brands, at time of termination, were more than 3% of its biz since it had sold off Pabst (70% of its biz) in Dec 2012. 

Key was language in bill noting distrib’s “total annual brand sales.”  Defendants insisted that meant Garal’s total sales for 12 mos prior to termination, including the Pabst.  Garal insisted it meant its sales without the Pabst.  Judge sided with Defendants, noting the language is “unambiguous” and that “plain meaning” of key phrase “includes all sales made by the wholesaler during the 12-month period prior to the termination and not just the sales of those brands the wholesaler still had rights to sell as of the date of the termination.  The phrase cannot reasonably be construed any other way.”  Only charge judge did not dismiss was Garal’s contention that Total Bev not a “brewer” as defined by NY law and so not entitled to terminate. Total had argued that Garal’s bid for arbitration voided charges against it, but judge is keeping that charge alive. In the end, lotsa money has been spent on attys to get a ruling on what is some pretty clear language to begin with.  And it ain’t over yet.

To those wondering if continued AB and MC softness, plus AB putting a priority on holding share would lead to increased promo activity, here’s a couple of early signs that could happen.  AB has 10+ IRCs and mail-in coupons already in Wisc. That’s “unusual” degree of action during this period, said source also noting such offers “increasing.”  MC will add to its own activities in its highest share state, where it continues to lose about 1 share a yr. 

AB also has big cross promo with Pepsi in Fla, including in Publix flyer over Memorial Day in a 3 week circular for 8-packs at $8.99.  That will reportedly be $3 bucks cheaper than MC’s comparable pack for 2 of the weeks and $1 less in 3d week.  AB will also have $10 mail-in-rebate off the purchase of 3 8-packs.