Even tho last yr was a “little bit of a transition year” when Heineken USA got back Strongbow brand in US, the brand grew rapidly in 2013, noted HUSA sr director portfolio brands Charles van Es.  Strongbow up 86% last 12 mos in Nielsen, he said.  Recall, HUSA changed distribs in 50% of Strongbow volume last yr.  And on mktg side, “we didn’t do that much in 2013,” added Charles.  But this yr, it’s a different story: Strongbow will get big push.  It’s HUSA’s #1 innovation play.  HUSA debuting new global liquid called Strongbow Gold and new Honey & Apple Flavor, launching a natl media campaign (at its upcoming natl distrib convention) and new packaging.  HUSA will also look to sample 1 mil consumers.  HUSA expects Strongbow growth to “really explode” this yr, said Charles.

Belief in Strongbow opportunity is substantially based on cider’s growth potential in US.  It’s already becoming a “real business,” Charles said citing Beer Inst stats that showed cider mkt in US grew from 10 mil cases to 16 mil cases last yr. And category basically doubled in Nielsen.  Cider category is “truly built on consumer trends,” said Charles, like desire for variety, premiumization, natural, quality and “mixed [gender] occasions.”  Cider will have “a significant place” in the upscale mkt for yrs to come.  Strongbow sources 80% of its volume from outside beer and 50% of its consumers are women.  It has “extremely high repeat levels” and is 1 of only 3 cider brands growing share in rapidly evolving US cider segment. 

There’s still lots of upside in cider even though “everybody is going in,” asserted Charles.   Editor’s note:  AB, MC also have significant new efforts in 2014, after Angry Orchard took category by storm in 2013 and C&C tries to regroup, having lost its #1 position in yr after it acquired Vermont Hard. So that’s at least 5 big players jockeying for position, not to mention the many, many smaller artisanal ciders.  Recall, Heineken is #1 player globally in cider, selling 1 of every 4 ciders.  

Driven by “insane growth” of micros, as Brewers Assn economist Bart Watson put it, craft volume jumped 2.4 mil bbls, 18% in 2013 to 15.63 mil bbls, he estimates.  That’s by far biggest bbls gain that BA has ever estimated for craft segment, following BA growth estimate of 1.77 mil bbls in 2012, 1.3 mil bbls in 2011 and 1.1 mil bbls in 2010.  The BA growth number for 2013 is also well beyond what measured channels are showing.  Then again, such venues as tasting rooms, brewpubs and sales of most of the smaller micros aren’t captured by measured data.  Microbrewers are defined by BA as brewers of less than 15K bbls annually, and they’re poppin’ up all over.  Last yr, 413 new breweries opened their doors, reports BA, while 45 closed ’em.

That’s 4^th straight double-digit volume gain for craft – an acceleration from bigger base in each of 3 previous yrs – and nearly a doubling of craft since 2007.  Puts craft at 7.8 share of total volume, up from 4 share in 2008.  Numbers are preliminary, sez Bart, with more complete analysis coming at Craft Brewers Conference.

Meanwhile, retail craft $$ sales up 20% to $14.3 bil in 2013, Bart estimates, grabbing 14.3 share.  Craft has just 6.3 share of off-premise $$ sales in IRI’s multi-channel + convenience data.  But it had almost 1/3 of $$ sales on-premise, according to GuestMetrics data for 2013. BA counts 119 regional craft brewers in 2013 (that’s craft brewers over 15K bbls), 1,412 micros, 1,237 brewpubs.        

AB will “make a significant new investment” behind Shock Top as it launches first nat’l TV ads for brand during NCAA’s March Madness on CBS, reported Ad Age.  AB will also run digital ad and “takeover” of ESPN.com to promote brand.  AB “plans to more than triple spending” on Shock Top in 2014, said Eli Aguilera, dir of imports, craft and specialty beers.  Last yr Shock Top’s ad budget was just north of $1 mil compared to $18.9 mil for Blue Moon, the brand it’s trying to catch up to, according to Kantar Media.  Shock Top’s brand awareness is in 30% range vs 60% for Blue Moon. “We feel that closing (that) gap will definitely help us,” added Eli.  Shock Top grew around 10.5% to over 1 mil bbls in 2013 while Blue Moon gained 6% to over 2 mil bbls, we estimated.  Besides spending hike, Shock Top is adding its 4^th flavor: Honey Bourbon Cask Wheat.  But Blue Moon isn’t sitting still either, and plans to ramp up mktg investment “40% in the summer period,” per Ad Age. “We still feel like we have a lot of room to grow, a lot of people to talk to and a lot of people to introduce to Blue Moon,” said Kevin Reilly, brand dir.    

Long-batted around tweaks to Mich alc bev laws gave small brewers, distribs and retailers each some of what they wanted but really scaled back from original, expansive proposals recommended by legislative reform committee back in 2012.  Legislature passed package of new laws, guv still has to sign.  Key changes:

$1·         Definition of “microbrewer” changed to cap production at 60K bbls, from 30K bbls, allows them to have more than 1 production facility with taproom. Now, brewers under 30K bbls can have unlimited # of facilities with taproom, those between 30K and 60K can have up to 3 and those over 60K can have 2, tho neither of Mich’s two larger small brewers (Bell’s or Founders) apparently have plans to open 2d outlets.

$1·         Brewpub cap expanded too.  Now, a brewpub company can have up to 6 locations if total production under 18K bbls.  (Previously caps were 3 facilities, 5K bbbls.)

$1·         Brewers under 1K bbls production can self-distribute, if they haven’t already contracted with a distrib.

$1·         Retailers can purchase specific list of branded promotional items for beer and wine (glasses, trays, shirts, hats, etc), but only from independent 3d parties, not breweries or wholesalers. Same liquor items can be bought from spirits producers, as under current law.  After 18-mo period, liquor commission can add or delete specific items, but only 1 at a time, and can’t add “furniture,” i.e. draft systems, refrigerators, etc.

So, small brewers got some breathing room to expand retail sales, start-ups can self-distribute and retailers can at least buy some trinkets and trash, but distribs don’t have to provide them and avoid slippery slope of much more valuable items.  From distrib perspective, limit on self-distribution about as tight as you can get it.  Then too, package provides for “down streaming” of excise tax payments to state by wholesalers, from the suppliers, who pay it now.  (In-state brewers will have option of paying it or having distrib pay.)  Advantage to distribs is that they increase their value to the 3-tier system by being tax collector for state (as they are in most states), enhancing their public interest role.  Then too, easier for state  to monitor 50 or so distribs than 100s of suppliers across US, points out Mich Beer and Wine Wholesalers Assn prexy Mike Lashbrook. 

Equally important is what’s not in final version of bills.  Reform committee originally proposed such measures as direct shipments to retail, self-distribution for brewers up to 30K bbls, cross-tier licensing for manufacturers, franchise law exemptions for small brewers, widely expanded gas station retail licenses, distributor-paid ads for retailers and more, Mike reminds.

As we’ve seen elsewhere, with constant evolution in alc bev industry, legislative churn and growing clout of retailers and small producers, not likely this marks the end of reform efforts in Mich.  Indeed, one of the legislators who wrote the bills told AP that “frankly, the 60,000 [cap] is another arbitrary cap,” arrived at by simply doubling current one.  “I have a lot of confidence that we’re going to butt up against that threshold in the coming years.”  And the beat will go on.  

It’s often a long and winding road to getting deals done these days. Two approx 1-mil case distribs in upstate NY in process of selling for quite some time and both deals split off key brands.  One closes today.  Recall, Saratoga Eagle (Vukelic family) is buying near 1-mil-case Bartyzel in Amsterdam, NY.  That’s Vukelic family’s 4^th acquisition on Eastern side of state since 2005 and Saratoga Eagle will be about 6 mil cases.  Added together with Try-It in Western NY and Vukelic family’s total biz is about 14 mil cases, including about 1.2 mil cases of NAs.  But Heineken USA brands (around 100,000 cases) in Bartyzel deal will go to DeCrescente, a key MC consolidator upstate, about 10 mil cases, including 3 mil NAs.

Another deal coming down home stretch for Owasco Bev in Auburn, NY. And it has further twist.  There, the non-AB volume exceeds the AB volume (about 600,000 cases to almost 400,000 cases).  And Owasco has deal to sell 600,000 cases of mostly NAB, Pabst, Mike’s etc to Wright Wisner, the other big upstate MC consolidator.  That’s expected to close next week.  It will be the 3d deal for Wright Wisner in just the last 2 yrs (following Finger Lakes in 2012, Rochester Bev in 2013), making it about 11.5 mil cases, including 3 mil NAs.  Wright Wisner is also the largest NAB distrib.  Meanwhile, word is AB hasn’t yet approved buyer for its volume and looks like there will be separate closing.  Stay tuned.   

Get all the craft data and analysis you need in one handy volume with Craft Brew Guide.  This easy-to-use reference guide will be packed with a 10-yr review of craft shipments and share trends, a 10-yr review of each of the top 30 craft players, key on-premise and off premise craft trends for top brewers and brands, with new in-depth cuts of the data in several major metro mkts.  It will also include profiles of top craft brewers, key financial data of publicly available craft brewers, big brewers efforts at selling in craft space, plus exclusive analysis of craft M&A so far, examining key aspects of deals done and their place in overall beer biz.  Available digitally or in a portable 6”x9” volume, Craft Brew Guide gives you the best data and analysis on craft that you can find.  It’s published by Beer Marketer’s INSIGHTS, the leading source for beer industry info and publisher of Craft Brew News.  Click here for more information and to order this one-of-a-kind book, available April 4. 

Giant private equity co Cerberus (with $25 bil under mgt) bought Albertson’s in 2006 and now it has $9.4 bil deal to buy Safeway, expected to close in 4^th qtr, pending govt approval.  The Safeway/Albertson’s combo would have 5.4% of groceries (with over $60 bil in sales) compared to Kroger’s 9.6% and $98 bil in sales and Wal-Mart’s 29.8% share, reported Wall St Jnl, citing Euromonitor Intl.  That’s right, 3 companies will sell almost half the groceries in the US. 

Kroger had 2.2% oper margin on its $98 bil in sales, while Safeway’s at 1.8% on its $36 bil in sales. Revs down 0.2%, “in part because it sold off stores.”  Tons of ink already spilled on deal,natch.  Here’s a few more highlights.  Safeway ceo (who will run combined co) promised more “local relevant assortment” plus “an improved price/value proposition and a great shopping experience.”  Biz Week noted several trends to watch for, that could be applied to beer biz:  “Consumers like curation,” meaning “people often equate fewer items with higher quality”; “Big brands are commodities,” and since “people know they can buy them anywhere” then “it becomes a price game”; “Private label is now a brand statement” (thankfully not yet in beer); “Local’ is a growing priority.”  Indeed, WSJ headlined that deal would give “Safeway Scope to Think Big, Act Locally,” noting that Albertson’s had succeeded by giving local store buyers more autonomy and that could now be expected for Safeway, “an area in which Safeway has sometimes stumbled.”   

New ad campaign and increased investment for Corona Light featured in lengthy Ad Age piece, noting that brand is going after “middle aged beer drinkers with taste pitch.” Aim of ads is to “break through the clutter” of big-spending domestic brews, said Jim Sabia, chief mktg officer of Constellation Brands Beer Division.  Wait a sec, wasn’t that goal of last yr’s ill-fated sheep ads too?  “The sheep is gone.  We shot him,” joked Jim at last week’s meetings with distribs, noting “we had to take a shot.  What the hell.”  New message is more sharply focused “zeroing in on older audience of drinkers age 35-44,” wrote Ad Age.  The ads, created by former Bud Light agency Goodby Silverstein ironically enough,  encourage consumers who are “ready for a light beer you can actually taste.”  Corona Light is hinging much of its pitch on its 18 IBUs, compared to mainstream domestic lights 8-10.  Corona Light “media investment will jump by 78%,” Jim told Ad Age.  Crown spent $6.8 mil on Corona Light last yr thru Nov, according to Kantar data, compared to more than $65 mil for Corona.  

Ordinarily, we wouldn’t report first mo shipments by state, because there can be big swings, but Beer Inst’s state-by-state Jan report so fits with what we’ve heard so far that we feature quick highlights:  Calif and Fla are carrying the country in early 2014.  And then some.  Calif shipments jumped 143,000 bbls, 8.4% in Jan and Fla shipments jumped 105,000 bbls, 9.9%.  Together these 2 states grew nearly 250,000 bbls, while total US state shipments up 161,000 bbls, 1.1%. 

While total industry sales-to-retailers eked out small gain in Jan, Crown (Constellation Brands Beer Division) STRs up 16%, including a 5% gain in tuff on-premise channel where total industry down mid-single digits.   Crown up 30% off-premise in Tex.  In all, Crown gained over 100,000 bbls in Jan.  Nationally, Feb slower, but still very healthy, INSIGHTS hears.