Legendary consultant Bob Weinberg passed away yesterday at 87.  Anheuser Busch hired Bob as its honcho thinker (vp of corp planning) in mid-60s after August Busch III met him at Wharton.  Bob had been chief technical planner at IBM.  Bob then worked closely with August III, spearheading key strategic shifts, like rapidly building series of breweries, that helped AB lead industry growth for a couple of decades.  In that period, AB hired a buncha bright MBAs who went on to become a lot of the company leaders, including Pat Stokes (who became prexy, later ceo) and many more.  “August recognized at an early age,” Bob said in the book Under the Influence  “that the cheapest thing you can buy is brains.”  After Bob left AB, he was smack in the middle of many important industry events, including big deals in 80s (such as Stroh purchase of Schlitz).  For many yrs after that, Bob played influential role behind scenes.  He also spoke to Brewers Assn meetings a number of yrs running, and became a favorite of craft brewers too, with his massive database, endless charts and his many jokes.

Bob was a big influence on our thinking here at BMI too.  After founder Jerry Steinman, he may have played the most important role in the way longtime BMI editors Benj Steinman and Eric Shepard think about writing about numbers, and writing about business.  Many of his lessons are with us still.  “He was the great analyzer and compiler of data about beer…volume and trends,” said Jerry Steinman “and imparted his knowledge to many appreciative industry audiences.”  He was a great teacher and mentor to many, one of the smartest guys we ever met, but he also had a tremendous sense of humor.   By the way, he was also literally a teacher, a longtime prof at Wash U and in his heyday a public speaker of note.  Bob did work for the government as well. He was massively learned, often buying non-fiction books by the dozens from NY’s Strand bookstore, well versed in a wide range of topics.  We never met anyone like Bob, owe him a great debt of gratitude and at the time of his passing, wish to recognize his many contributions to the beer biz.  We were notified of his passing by friend and disciple Allen McCoy, who can be reached at 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..  

In a striking speech for Redburn Partners in London last mo, consultant Mike Mazzoni strongly countered those who suggest “happy days are here again” and the industry is about to return to growth.  He showed all the “factors to consider” this yr and beyond, including declining per caps, millenials of legal drinking age peaked in 2013, megabrands in decline phase of product lifecycle, “strong spirit growth,” light beer softness, on premise softness, etc. And Mike pointedly asked “what’s different?” that would make one think industry will grow. 

“Ergo, same old, same old” with “same management” at major suppliers, “economy is about the same,” “brand and category trends are well established,” “strong profitability should continue.”  And so his “educated guess” is that 2014 will be “a mirror image of 2013.”  This is not “gloom and doom” said Mike, but rather a “new business model,” with $$ up and volume down.

But then Mike takes it a step further and sez “absent evidence to the contrary, the best predictor of future events is historical experience,” and he ventures a guess at what 2020 could look like for the beer biz.  Mike’s assumptions are that the beer biz continues as it has been for the last 5 years, and he simply projects same trends, with industry down about 1% per yr, AB and MillerCoors averaging about a 2-2.5% volume decline.

If that occurs, then the beer biz will lose another 15 mil bbls over next 6 yrs to 191 mil bbls.  AB will lose another 11 mil bbls to 86 mil bbls and MC will lose another 10 mil bbls to 47 mil bbls.  Under this scenario, AB and MC would have lost over 20% of their volume and about 40 mil bbls in a dozen yrs.  But they would still have 45 and 25 share of the biz respectively.  This is not a prediction per se; Mike is just projecting out the trends from the last 5 yrs.  AB and MC will try mightily to put their volume on a different trajectory.  What do you think of Mike’s possible 2020?  Send your comments 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..  

Miller Lite really is getting big boost from retro can.  It’s down only 0.5% in Nielsen scan data (and about 2% overall), easily its best trend in many a moon.  Miller Lite also outperforming Coors Light (-2.2%), and Bud Light (-3.1%) and Bud (-3.5).  Still, each of the industry’s 4 leading megabrands started yr soft.  And top subpremium brands still takin’ it on chin for most part: Natty Light down 7.7%, Busch Light down 1.5%, Key Light down 9.9%, Busch down 4.6% and Miller High Life down 7.2%. 

So what are biggest growth brands?  Top 2 are key intros from last yr that aren’t yet lapping launch #s: Bud Light Straw-Ber-Rita gained 0.6 share of $$ and Redd’s gained 0.5 share.  Biggest growth among pre-existing beer brands: you guessed it, Modelo Especial.  Volume up 23% yr-to-date and it gained 0.4 share of $$.  A growth engine, especially in Calif.  Then too, Angry Orchard still absolutely flying, volume up 234% YTD and it gained 0.4 share of $$ too.  So 4 brands gained 1.9 share.  Corona (+7%) up 0.2 share of $$, Redd’s Strawberry gained 0.2 share too. 

With 6 weeks of data, beer biz in 2014 starting off with broadly similar trends to 2013.  Total off-premise beer biz down 0.4% yr-to-date thru Feb 15 in Nielsen all outlet + convenience.  But AB volume down 2.6% and MC volume down 1.5% (MC said total STRs off low singles thru Feb 1).  Both losing share.  AB off 1.7 share of $$ and 1.1 of volume.  It’s early in yr, but AB has ways to go to get to professed aim of share “neutrality.”  MC down 0.3 share of volume and 0.2 share of $$.  Big $$ share gainers are the same as last yr, Crown and Boston.  Crown volume up 12%, gained 0.7 share of $$.  Boston volume up 34% in scan (same trend it reported for all channel STRs earlier this week) and it gained 0.6 share of  $$.  HUSA up 2.6% and gained 0.1 share of $$.  Total craft keeps on truckin’, volume up 15.7%, $$ 20% and gained 1.3 share of $$ yr-to-date in Nielsen.

“Sweeping overhaul” of tax code proposed by Mich Rep Dave Camp landed with heavy thud in DC yesterday.  “Everyone hates” it, one insider told us.  That position supported by variety of quotes from NY Times today.  For example, House Speaker John Boehner’s response, typically cerebral: “Blah, blah, blah, blah.”  NY Sen Chuck Schumer said it “doesn’t have a snowball’s chance.”   Camp’s “discussion draft” cuts rates and simplifies code, but to get there it eliminates/alters a “veritable killing field of sacred cows,” one analyst said, including deductions for state/local taxes, retirement savings, mortgage interest, etc.  On other hand, Beer Inst “encouraged that Chairman Camp did not include any changes” in fed excise tax on beer.  BI expects “many months of intense discussions with tax writers” going forward.  It will stress that beer already “heavily taxed and should not be considered as a ‘pay-for’ to lower other corporate rates.”  BI members and staff hosted mtgs earlier this week and had reception on the Hill with a dozen or so smaller breweries plus big 4 on hand, reportedly picking up a few more co-sponsors for BEER Act.  Many in Congress lying low tho right on making further commitments now until Camp fire clears a bit, we’re told.

During trading yesterday, ABI’s mkt cap value rose to “above $167 billion” which moved it a few hundred mil ahead of Coca-Cola Co., “temporarily displacing” KO “from its decades-long perch atop the beverage industry,” reported Wall Street Journal. By end of trading, KO had moved back ahead by slim margin at $166.86 bil vs $166.83 bil for ABI.  This battle could go back and forth for some time.  ABI narrowed gap in 2013 by increasing revs 3% to $43.2 bil while KO slipped 2.4% to $46.85 bil.  Going forward many observers see both co’s expanding as well.  KO just took 10% stake in Green Mountain Coffee Roasters for $1.25 bil and “many on Wall Street think it’s only a matter of time” til ABI “pulls the trigger again” on another deal, noted WSJ.  Could that trigger be KO itself at some point, creating a beverage behemoth worth well over $300 bil?

Domestic brewers’ taxpaid shipments up 100,000 bbls, 0.7% in Jan, estimates Lester Jones at Beer Inst.  That’s not too bad, given horrible weather in much of country, no huge brand rollouts and relatively tuff comp (+2.7% in Jan last yr).  Hopefully, this yr won’t be repeat of 2013.  Recall solid Jan gain followed by 6% dropoff Feb-Mar, a hole industry shipments never dug out of.  At least the comps are easy rest of Q1.  Recall, Nielsen reported off-premise biz off slightly (0.5%) for 4 wks thru Jan 25, -0.7% for 4 wks thru Feb 15 and ABI ceo Carlos Brito said yesterday that Jan-Feb “have not been easy.”  Yet IRI reported mid-single-digit gain in Jan scans and AB analysis of calendar-day impact expected approx. “1 to +1.5% positive impact” from additional Super Bowl build day (see Feb 24 Express).  Then too, we’re getting very mixed reports from distribs on Jan-Feb.  So stay tuned.  Still lots and lots of noise in the numbers and a long, long way to go.    

Join us for the 2014 Beer INSIGHTS Spring Conference at the Ritz Carlton in Chicago. Once again, our focus will be on the dynamic and growing high end of the beer biz, off to another great start in 2014. This yr’s program will feature an interview, moderated by BMI editor Benj Steinman, with the industry’s current growth leaders: Crown prexy Bill Hackett, who has led Crown to an enviable growth position, and Boston Beer founder Jim Koch, who just reported sparkling results for 2013 and early 2014. Also from craft land, hottest craft brewer of recent yrs, Lagunitas founder Tony McGee, celebrating the opening of his new Chi brewery, is on tap. Consultant Mike Mazzoni returns; his presentation on product life cycle in beer biz a few yrs back in this venue is still being talked about. And consultant Bump Williams will lead a panel discussion with a handful of also-hot craft brewers: Allagash founder Rob Todd, Ninkasi ceo Nikos Ridge, Odell ceo Wynne Odell and Devils Backbone founder Steve Crandall. That ain’t all, David Kroll, MillerCoors innovations veep will talk about MC’s recent big bets in the high end. More speakers to come. Per usual, BMI’s Benj Steinman will present an overview of the segment, with plenty of numbers and insights. You won’t want to miss this unique event. Reserve your seats early as the last 2 conferences sold out completely. For more info, click here. To register, click here. _____________________________________________________________________________________  

Hall of Famer Ozzie Smith is heading to DC on behalf of Budweiser to deliver a petition to make Major League Baseball Opening Day an official National Holiday.  “Nothing can top that optimism,” of season opener, “with the excitement felt at every level of play-from players to the most casual fans,” declared Ozzie.  Bud’s petition needs 100K signatures before Mar 31 (Opening Day) to get an “Administration review and a response from the White House.”  As we went to press, petition had nearly 19K signatures so far. Bud noted that a recent survey found 22.2 mil Americans 21 and over admit to playing “hooky” that day anyway.  AB encouraged folks to tweet about idea to spread word about petition online.  

Volume growth in 20%+ range, and 35% in Q1 2014, comes with a cost.  So does being a Rebel.  Indeed “sheer volume growth” has Boston Beer “racing to keep up…from a supply perspective and has not allowed us to get the efficiencies we would like,” ceo Martin Roper told analysts on conference call yesterday.  Spending to increase capacity, plus heavy sales/ad support are putting pressure on Boston’s margins, led to big earnings miss in Q4 and knocked back stock price about 5% in after-hours trading.  Off 4% as Express goes to press. 

For the yr, tho gross profits up 22%, margin thinned from 54.3 to 52.1.  And tho operating income up 18%, operating margin narrowed from 16.5 to 15.3.  And margin pressure not likely to ease in 2014, Martin acknowledged.  Back in Nov 2013, Boston guided to 52-54% gross margin for 2014.  That expectation dropped to 51-53% in yesterday’s announcement.   Then too, Boston’s pricing guidance for this yr slipped from expectation of 2-3% in Nov to 2% currently.  But lower margin guidance “more relates to [fact that] we continue to struggle a little bit on the operational side to get the leverage that we anticipated from the volume,” Martin said.  Basically, Boston focused on “supporting the growth” of beer, cider and tea and “not so focused on the cost side right now.”  Boston hopes to see some cost leverage from higher volume long term, “but we don’t expect to see it this year.” No change in expectation for $34-$42 mil increase in ad, promo selling expense from Nov.  But Boston did raise guidance for expected capex for this yr from $140-$180 mil to $160-$220 mil and that “could be significantly higher dependent on capital required to meet future growth.”  As he has in past, Martin said again that Boston is “prepared to forsake earnings that may be lost as a result of these investments in the short term, as we pursue long term profitable growth.”

Cider and IPAs also pressure Boston margins.  Both products more expensive to make and thus have lower margins.  Northwest hops in Rebel IPA “have been reasonably expensive over the last couple of years due to supply demand issues,” said Martin. As result, from margin perspective, Rebel “probably not as exciting as we would like, but obviously we need to go where the drinker is going” and drinkers want “more unique or different flavors perhaps than…five years ago.”  (Cider has “some similar margin issues,” Martin said too.)  Net-net: “if Rebel was to be significant for us, that would probably have a negative impact on margin.”