AB and Teamsters “continue to work towards a new labor agreement,” said Brito in response to question on conference call and are “making progress.” However, “there are still of course some complex issues to work through,” he added.  So AB and Teamsters have agreed to extension until March 31^st, with every expectation that agreement can be reached. 

ABI beer volumes dropped 2% globally and yet once again ABI grew global earnings a strong $1.3 bil, 8% to a whopping $17.2 bil.  In Mexico alone, ABI grew EBITDA $420 mil, 54% as it already realized $460 mil in synergies.  Amazingly, its Mexican EBITDA margin jumped from 30% to 46% in less than 1 yr.  And Asia Pacific volumes jumped 9%, led by China with EBITDA there up $124 mil, 31.5%. 

Tho ABI earnings strong, volume and share losses in key countries have gotta be concerning.  Volume down 4.3% in Brazil, about 3% in each of US, UK and Belgium, 2% in Mexico, Canada and Argentina and down double digits in Russia and Ukraine.  ABI figures it lost 0.5 share in US, 0.6 in Brazil, 0.4 in Canada.  ABI sez it gained share in China and Mexico.  Expects better industry volume in 2014 in Brazil and Mexico as well as in US.  And ABI sez it expects “a low to mid-teens percentage increase in our sales and marketing investments” to “drive top line performance.” Bottom line: bottom line looks great, but volume has been a challenge. 

AB US sales to wholesalers dropped 2.675 mil bbls, 2.7% in 2013 (slightly steeper than INSIGHTS estimated) and sales-to-retailers down 2.9%.   That’s almost identical to MC’s dropoff pace, STRs down 2.8%.  AB STRs improved in Q4, down 1.4% (compared to MC’s -1.9%).  But AB spent a lot of dough to get that better 4^th qtr retail sales result.  North American 4^th qtr sales and mktg expenses up $41 mil, 9.5%.  And tho AB rev per bbl up 3.1% for yr (including 90 basis points from mix),  only up 1.3% in qtr.  That’s much lower than usual, “adversely impacted by some delays in the timing of our 2013 price increase,” said ABI.   

Even with less incremental price and much more mktg, AB still lost almost the same amount of mkt share as for full yr.  ABI figures it lost 0.5 share in US for yr, 0.4 for the qtr as total industry STRs improved to down 0.7% in 4^th qtr, compared to -1.8% for yr.  What’s more, ABI North American EBITDA up just 0.4% to $6.7 bil (recall, AB US-only EBITDA at $5.9 bil in 2012), including 1% drop in 4^th qtr.  US EBITDA margin up 20 basis points to 41.9%. 

Brito also broke with tradition and gave somewhat sobering early read on 2014.  “First two months” in US “have not been easy,” Brito said, with “tough winter weather dampening consumer demand” in much of country, “especially on-premise.”  But Brito added: “Where weather has been good, volume has been fine.”  In fact, ABI is forecasting improved “trend of US industry volumes compared to 2013, driven by a stronger economy, partly offset by challenging winter weather in 1Q 2014.”  

Lotsa positives in Boston’s just-released figures for 2013 and early 2014, especially on volume.  Most eye-poppin’ is yr-to-date depletions trend for 7 wks thru Feb 15: +35%.  That’s quite an acceleration from very healthy +23% depletions trend for calendar 2013.  Boston booked a 20% depletions gain in Q4, but shipments rose 29% in Q4 to catch up some production shortages in Q3.  For the full yr, Boston core shipments up 25% to 3.4 mil bbls. Boston doesn’t break out portfolio, but we estimate that includes in neighborhood of 500,000 bbls of cider.  So looks like malt bev shipments up 8-9%.  Net revs up 27.4%, but cost of goods sold and ad, promo, selling expenses rose sharply too.  Plus Boston had much bigger asset write-off in 2013 than 2012.  So operating income up “just” 18% to $113 mil.  Still, that’s more than double its 2009 operating income, while Boston built core volume by about 2/3.

Boston expects 2014 depletion growth of another 16-20%.  Sees natl price increase of approx 2% for the yr. That’s down from expectation of 2-3% back in Nov. (In 2013, net rev/bbl rose 2.4%.)  Boston plans increased ad, promo and selling spend of $34-$42 mil (+15-20%), excluding any potentially higher freight costs.  That includes expected brand investments for existing Alchemy & Science projects expected to come in between $5 and $7 mil.     

GuestMetrics announced it is merging with Restaurant Sciences LLC effective today with new co to be called GuestSciences.  Merger will enable GuestSciences to provide detailed sales data from “nearly 16,000 full service restaurants and bars,” and “approximately 8,000 locations in quick serve and fast casual space,” said ceo Bill Pecoriello.  (GuestMetrics’ database for 2012-2013 was 4300+ outlets.)  “While there will be a period of transition over the next few months, the goal is to have both systems fully integrated in the spring of 2014,” added Jeffrey Katz, majority owner of Restaurant Sciences.   

EU beer production and consumption increased 2% and 1% respectively in 2011-12 as it begins to rebound after “a very challenging three years at the start of the economic crisis, where beer consumption declined 8% across the EU, noted a new report by The Brewers of Europe.  EU brewer exports were also up 4% in 2012 vs 2010, giving EU brewing sector “a trade surplus amounting to 3 billion Euro.”   EU brewers created 2 mil jobs, or 1% of all jobs in EU, according to the report and, while happy with positive shifts, “it is however important that this potential be supported, not hindered,” by tax increases.  “Some 14 European Union countries have raised beer excise duties,” since 2010, noted Financial Times, and “trend towards rolling back” tax increases (in UK and Denmark) have helped brewers recover somewhat.  “Instead of considering the sector as a means of filling government coffers, they recognize its potential to create jobs,” said Pierre-Olivier Bergeron, secretary-general of BOE.

Number of EU brewers has climbed to “around 4500,” which includes “1,000’s of small and medium sized companies and microbrewers.”  In EU, brewers are contending with “a further shift” towards drinking at home, which has a “negative effect on the economic impact of the sector,” points out BOE.     

Two data sources suggest good Jan sales for spirits.  Control state volume up 3.8% in Jan with dollar sales +6.7%.  Not bad, especially since Jan 2013 volume was up almost 9%.  Recall, liquor sales slowed significantly in control states mid-year last yr.  Indeed, 12-mo volume thru Jan 2014 up just 0.8%, while $$ up 3.6%, reports NABCA.  Meanwhile, Nielsen reports liquor volume up 2.1% for 4 wks thru Feb 1 in its scanner data, $$ sales +5.2%.  For 12 weeks, $$ sales up 6.3%.  Keep in mind, Nielsen sample only about 15-20% of US spirits biz, according to Barclay, from grocery, Walmart, club stores, dollar stores and military outlets.        

As new Lagunitas facility approaches opening in Chicago, founder Tony Magee continues to think big: he already has 2d brewhouse on order and his eyes open for a 3d brewery elsewhere in US.  On recent visit to new Chi-town brewery, 300K sq ft on 6 acres, with huge ceilings creating 15 mil cubic ft, Tony showed INSIGHTS new 250-bbl Rolec brewhouse, 16 750-bbl fermenters; 4 more tanks coming, another identical brewhouse on order for delivery to facility in early 2015.  Current bottling line expected to be upgraded this summer too.  Tony pegged price at $26 mil, tho that seems low for such ambitious project in major city (recall, Sierra Nevada’s rural NC plant over $100 mil; smaller 21st Amendment facility in East Bay, Calif planned for $21 mil).  Capacity of Chicago brewery starts at 300K bbls, tho current brewhouse can handle almost twice that and ultimate capacity could be 1 mil bbls or more; Petaluma plant can brew about 500K bbls.  

But wait, there’s more.  Tony told us Lagunitas is planning 3d facility in yet another part of the country, sighting locations, intrigued by abandoned Pepsi bottling warehouse.  So far in 2014, Lagunitas +50%, a significant % of orders shorted.  That’s as brand will enter Indiana with MC network, Kentucky (with L Knife & Sons’ Beer House) and Cincinnati.  Lagunitas doubled volume to 400K CEs with Windy City in Chi last yr, +70% so far this yr.  Big new brewery called for big party a few weeks back, with reported 4000 attendees. Coming tasting room expected to sit 300 and Tony has plans for amphitheater large enough to seat 1000.  More details in our sister pub Craft Brew News later this week.

 AB analysis of “calendar impact” on STRs for 2014 shows that while each month Jan-Mar has same number of selling days as 2013, Super Bowl and Easter dates this yr will have negative impacts in Feb and Mar.  In Jan, AB noted MLK holiday aligned with last yr and co expected “approximately +1 to +1.5% positive impact” for the month from “an additional day of Super Bowl build.”  That works against STRs in Feb which lost 1 Super Bowl build day, with co expecting negative impact of -1%.  With a late Easter holiday this yr (Apr 20), AB expects a negative impact on Mar STRs in

-3.5% to 4% range, since there will be no Easter build in final week of month as there was in 2013.    

Crown execs have been talkin’ for mos about pending draft push and big oppy there, since Crown draft just 2% of its biz vs 10% of overall beer.  Plan is for Corona Light to be Crown’s lead draft brand, pushin’ ahead of Pacifico.  Final figures not available yet, but Corona Light either hit 1-mil-bbl mark in 2013, or got very close; it was up low single-digits.  On heels of successful tests in Miami, Philly, Phoenix, elsewhere in Fla, Corona Light draft will be rolled to 35 markets beginning early Mar via 100 wholesalers.  In those test mkts, overall Corona Light biz outperformed other mkts by 12% when draft available, creating a “big halo effect,” cmo Jim Sabia told Express this morn.  Corona Light targeted directly to domestic premium lights and their consumers, still a huge market with broad demographics.  Brand will be positioned as the beer for “when you’re ready for a light beer that tastes like a beer.”  Crown believes it has different and stronger proposition than say a Euro import or craft light since consumers already consider Corona Extra a “refreshing, easy drinking beer,” said Jim.  “Those attributes are already there,” he adds, and eases choice of light version with fewer calories (99) and lower ABV (3.9), which many consumers still seek, along with promise of more flavor than domestic premium lights. 

At same time as Corona Light draft rolls, Crown will test Corona Extra draft in 3 mkts and watch “very closely” for impact on bottle biz, off-premise biz, possible cannibalization, etc.  For those with lime considerations, “every Corona Light and Corona Extra served on draft will come with a lime right on the glass,” Jim told CNBC.   Retailers see benefits of a light import too, Jim pointed out.  Upcharge vs domestic lights likely to “vary dramatically,” said Jim, depending on retailer and mkt, tho he thinks some will sell Corona Light at parity to craft draft.  Distribs will get more detail next week when Crown meets with distribs, including ads that will feature draft which will hit the air in mid-March.