Solid Dec (+8%) and double-digit Q4 increase (+12%) not quite enuf for import shipments to eke out gain for the year.  Despite that strong finish, import shipments for the year were 27.7 mil bbls, -182,000 bbls, 0.7% (including no-alc imports), reports Lester Jones of Beer Inst from Commerce Dept data.  So total US shipments down 2.7 mil bbls, 1.3% last yr, before revisions. 

One mystery cleared up in final mos.  Recall, Mexican shipments had been lagging known trends for Modelo/ HUSA portfolios thru Sep.  But with big Q4 numbers (including 25% jump in Dec), Mexican shipments came in +700,000 bbls, 4.6% for the yr, which seems just about right.  Mexican shipments just below 16 mil bbls and grabbed 57.6 share of total imports for the yr.  That’s a 10-pt share gain over last 5 yrs.  Indeed, imports sagged from all other major importing countries last yr.  Dutch shipments down 370,000 bbls, 7%; Canadian shipments down 103,000 bbls, 5%.  Even Belgian shipments down slightly (0.6%), tho recall some Stella Artois being shipped outta Germany.  Still, German shipments down another 10.5% last yr.  Imports from Ireland, UK and Italy also down.  One of few bright spots: Japanese shipments up 29%, but still just 31,000 bbls.      

For mos, we've been hearing that AB in hunt to purchase another craft brewer and that it's pursuing a regional strategy to build craft biz.  This morn, AB announced it's buying Blue Point Brewing Co in Patchogue, NY on Long Island.  Brand very popular there and sold 60K bbls in 2013.  Half of that in Toasted Lager flagship, AB said in release, a brand that’s already made inroads on draft in NYC-metro.  Deal makes sense for 2 reasons.  First, Blue Point only in 15 states and majority of Blue Point volume already with AB distribs in NY area (Rose, Union, L Knife) and beyond.  So not likely to create as big a "footprint" issue as if AB had purchased larger player with most of its volume in MC system.  Second, packaged Blue Point contract brewed at High Falls in Rochester, we understand.  So shouldn’t be too difficult to flip that volume to its own plants, tho AB sez it will invest in LI brewery too and we don’t know details of contract relationship. 

Deal expected to close in early Q2.  AB’s other craft acquisition, Goose Island for $38.8 mil in early 2011, has worked out well.  AB said last Nov that it had more than tripled volume and grown EBITDA by more than 10x in less than 3 years.  In that time it’s been expanding Goose Island footprint thru AB distribution network.

Join us for the 2014 Beer INSIGHTS Spring Conference at the Ritz Carlton in Chicago Jun 9-10.  The Spring Conference once again will focus on the dynamic and growing high-end of US beer biz.  We just added a panel led by consultant Bump Williams featuring execs from fast expanding craft brewers including: Allagash Brewing founder Rob Tod; Ninkasi Brewing ceo Nikos Ridge; Odell Brewing ceo Wynne Odell, along with Steve Crandall, founder of Devils Backbone.  They join other key execs on our program including: Crown Prexy Bill Hackett; Boston Beer founder Jim Koch; MillerCoors innovations veep David Kroll; Lagunitas founder Tony Magee; consultant Mike Mazzoni, along with BMI’s Benj Steinman.   You won’t want to miss the key insights and networking opportunity with execs leading growth in the high end so sign up today. Click here for more info, click here to register.    

Spirits had “another good year” in 2013, Distilled Spirits Council CEO Peter Cressy said at NY press conference this morn, with “everything moving up nicely at a good steady pace.”  US liquor volume up 1.9% in 2013, sr veep/ economist David Ozgo reported.  That’s slightly higher than earlier estimate we reported from Impact Databank, but still implies spirits picked up another half share or so of absolute alcohol consumption in US.  In fact, DISCUS figures spirits picked up 0.6 share of alc bev volume in 2013 to 32.5, a 5.1 share gain since 2000.  (DISCUS’ volume share figures differ a point or so from our estimates, but the trends match up.)  While control state volume up just 1.1% last yr, volume in license states up healthier 2.9%, said David.

Meanwhile, spirit suppliers’ $$ sales up 4.4% in 2013.   So DISCUS estimates spirits gained 0.4 share of alc bev supplier dollars to 34.7 last yr, vs 48.3 share for beer (-0.5) and 17 for wine (+0.1).  Since 2000, liquor share of supplier $$ up 6 points.  Each share point worth about $640 mil, David added.   As in beer, trade up to higher end products (especially whiskey) also driving spirits’ dollar trends.  Volume of two highest-end spirits segments up 6-7% in 2013, vs 1.6% gain for premium and a 1.2% decline in value volume.  Of 4.4% revenue pop, David estimates 1% was price, rest was mix.  Total liquor sales at retail now approx $66 bil, DISCUS figures.  

Given tuff, tuff weather comps in much of US in Jan, no surprise that beer sales didn’t jump outta the gate goin’ gangbusters.  Volume off 0.5% in Nielsen’s all-channel data for 4 wks thru Jan 25.  But dollar sales up 2.7%, and avg price up healthy 3.2%, again with continued trade-up driving much of that.  Premium volume down near 3% in Jan, same trend across light and regular.  Below premium biz took a near 6% hit, with lowest-price budget brands down 9.3%.   But good news keeps comin’ above premium.  Craft up 16.4% in Jan, with $$ gain over 20% and avg price up 3.2%, nearing $34 per case.  Imports +6-7%, with price hike about half of craft increase.  FMBs kept cookin’: +38%.  But superpremium volume up just 0.3%, Nielsen reports. So above premium picked up  2.7 share of volume to 25.9 in Jan;  grabbed additional 3.6 share of $$ to 36.1.           

Heineken USA named new chief mktg officer today.  Nuno Teles will join HUSA in Mar.  He’s currently CMO in Brazil, where Heineken has even broader portfolio than in US, with extensive premium and mainstream brand book, plus Desperados intro’d there 1-2 yrs ago.  Heineken biz in Brazil about same volume as in US.  Nuno is a “heavy hitter” and has deep knowledge of Heineken’s biz, chief exec Dolf van den Brink told INSIGHTS yesterday, two key qualifications HUSA sought.  He came to company when Heineken bought Scottish and Newcastle in 2008.  Over last 4 yrs in Brazil, Heineken brand up 500% and is now top-selling premium import there, said Dolf.  Another plus: Brazil is “one of most sophisticated countries” for social mktg, Dolf pointed out, and Nuno brings those skills to US where digital growing in importance.  Nuno also has entrepreneurial chops, having run his own start up, plus experience in retail and wholesale bizzes.  He spent 8 yrs at Unilever; recall HUSA’s new sr veep of commercial mktg, Dirk de Vos, also a Unilever vet.  Nuno “exactly the right leader to take our portfolio of upscale, badge brands into the next phase” of growth, Dolf said in announcement.  Nuno noted that in competitive US beer mkt “we need to challenge the status quo and aim to change things with bold moves.”

Meanwhile, Dolf and other Heineken execs still crowin’ over success of Newcastle’s tongue in cheek “If We Made It,” non-Super Bowl campaign.  Video views on YouTube and Facebook passed 9-mil, with Anna Kendrick vid alone getting nearly 5 mil views across the 2 platforms.  Keyshawn Johnson video got over 1 mil too.  Overall Heineken approaching 1 bil total impressions, it sez, plus a ton of consumer and media engagement.  Elsewhere, Poptip.com, which measures digital communications, reports that AB’s “Puppy Love” ad earned Budweiser 5,491 Twitter mentions between 3:30 and 6:30 PM on Sunday, most of any brand.  Pepsi was #2, Coke #3 and Bud Light #4 at (4,427).     

You may have seen story earlier this mo that 5 German brewers hit with approx $142 mil fine for fixing prices there in 2006 and 2008.  Media reported too that AB InBev not one of those fined since it had provided key info on the scheme and helped get investigation going.  (Similar situation occurred in 2007 when Dutch brewers paid hefty fines for price-fixing in Netherlands in late 90s, while InBev provided info.)  Lengthy article in German beer mag Brauwelt uncovered tons interesting details, plus some insider info and speculation, not all verifiable. But most important perhaps is huge difference in development between German beer industry and US industry, plus possibly a lesson for those who suggest cutting prices can cure a volume problem here.  Net-net: German brewers have suffered double whammy over last decade of declining volume and margins.  Despite agreement to raise prices approx 1 euro for 20-bottle (half-liter) case in 2008, brewers subsequently adopted huge discounts – suffering margin pain not shared by retailers, according to mag – and German consumers still pay remarkably low prices.   At same time, German volume continued to decline: down 23% between 1993 and 2012.  That’s even while author suggests “beer retail prices are nominally as low as they were 20 years ago.”   Then too, when AB InBev tried to raise price last yr, competitors did not follow and Beck’s took volume hit. 

Brewer discounts, according to article, also served to squeeze out smaller players.  Number one brewer in Germany lost nearly ¼ of its volume from 2004-2012, but retained its lead position.  Meanwhile, over 100 small breweries closed between 1993 and 2012.  And Brauwelt expects total volume to continue to decline 2%/yr, squeezing out even more brewers.  Consolidation still has a ways to go in Germany.  Top 10 brewers have just 50 share there. So, the author does not expect brewers to “give up their old habit of whittling away any gains from price hikes through their bad habit of near ubiquitous price promotions.”  She quoted anonymous German brewer who told her: “Price competition is a growth drug in young and hungry emerging markets -- but it’s like assisted suicide in mature markets like Germany.”  If volume does not grow, “value of the brand has to grow,” brewer said. “Anyone who does not understand this and does not draw the necessary conclusion from this and raises prices will not survive.”  Net-net, from author’s point of view, “If German brewers had not worshipped the “Volume God” they would not have needed a cartel to raise prices – all the while counteracting it through increased promotional activity.”  In fact, she contrasts this behavior to AB InBev in US in recent yrs.  Tho ABI lost significant volume here since 2008, EBITDA soared as it “continued to hike prices” and “other brewers did the same.”   US antitrust watchdogs didn’t act, author concludes, “because it’s standard business practice, dictated by economic logic, to raise prices.”        

You may have seen story earlier this mo that 5 German brewers hit with approx $142 mil fine for fixing prices there in 2006 and 2008.  Media reported too that AB InBev not one of those fined since it had provided key info on the scheme and helped get investigation going.  (Similar situation occurred in 2007 when Dutch brewers paid hefty fines for price-fixing in Netherlands in late 90s, while InBev provided info.)  Lengthy article in German beer mag Brauwelt uncovered tons interesting details, plus some insider info and speculation, not all verifiable. But most important perhaps is huge difference in development between German beer industry and US industry, plus possibly a lesson for those who suggest cutting prices can cure a volume problem here.  Net-net: German brewers have suffered double whammy over last decade of declining volume and margins.  Despite agreement to raise prices approx 1 euro for 20-bottle (half-liter) case in 2008, brewers subsequently adopted huge discounts – suffering margin pain not shared by retailers, according to mag – and German consumers still pay remarkably low prices.   At same time, German volume continued to decline: down 23% between 1993 and 2012.  That’s even while author suggests “beer retail prices are nominally as low as they were 20 years ago.”   Then too, when AB InBev tried to raise price last yr, competitors did not follow and Beck’s took volume hit. 

Brewer discounts, according to article, also served to squeeze out smaller players.  Number one brewer in Germany lost nearly ¼ of its volume from 2004-2012, but retained its lead position.  Meanwhile, over 100 small breweries closed between 1993 and 2012.  And Brauwelt expects total volume to continue to decline 2%/yr, squeezing out even more brewers.  Consolidation still has a ways to go in Germany.  Top 10 brewers have just 50 share there. So, the author does not expect brewers to “give up their old habit of whittling away any gains from price hikes through their bad habit of near ubiquitous price promotions.”  She quoted anonymous German brewer who told her: “Price competition is a growth drug in young and hungry emerging markets -- but it’s like assisted suicide in mature markets like Germany.”  If volume does not grow, “value of the brand has to grow,” brewer said. “Anyone who does not understand this and does not draw the necessary conclusion from this and raises prices will not survive.”  Net-net, from author’s point of view, “If German brewers had not worshipped the “Volume God” they would not have needed a cartel to raise prices – all the while counteracting it through increased promotional activity.”  In fact, she contrasts this behavior to AB InBev in US in recent yrs.  Tho ABI lost significant volume here since 2008, EBITDA soared as it “continued to hike prices” and “other brewers did the same.”   US antitrust watchdogs didn’t act, author concludes, “because it’s standard business practice, dictated by economic logic, to raise prices.”        

Walmart is creating kiosk called “The One Stop Beach Shop” and encouraging stores in Fla to use set up that will pair Corona Extra/Light along with Coca-Cola and other brands to create a one-stop experience for shoppers looking to load up for spring break later this mo and beach time around Memorial Day.  We don’t recall Coca-Cola ever doing cross-promos with beer before.  Walmart shoppers “want to save above all else” and “want a simple, easy-to-navigate store experience,” noted co.  One stop kiosk is putting top sellers together with coupon books at point of purchase as well.  Images of One-Stop  kiosk note Coke is Walmart’s #1 sparkling soft drink and Corona Extra is its #1 import brand, while other featured products are top sellers in their categories too such as Banana Boat sunscreen, Tyson chicken, Snyder’s pretzels and Cape Cod chips.  Promo also includes Choice Hotels, chain that includes Comfort Inn, Econolodge, Rodeway Inn, Clarion and others.

The positive buzz for Bud’s Clydesdale/Puppy Super Bowl ad that had been building since last week’s online release only grew and it was ranked #1 by USA Today’s Ad Meter, which tracked preferences of nearly 6,300 viewers.  That’s 2 wins in a row and AB has now taken top spot 12 of last 14 yrs.  “The Anheuser-Busch blowout off the field was almost as impressive as the Seattle Seahawks on the field,” wrote paper. Impressive ranking with viewers considering spot didn’t’ air ’til there was 2 min left in a blowout.   Bud’s “Hero’s Welcome” ranked 3^rd, as AB “has discovered the most effective ads are less about belly laughs and more about plucking heartstrings,” noted USA Today.  Bud Light spots didn’t resonate much with viewers but did with Ad Age.  Bud Light ranked just 26^th and 45^th for its “Epic Night” and “Cool Twist” ranked last at #57. 

Critics at Ad Age gave top rankings to Radio Shack and T-Mobile but still gave “Puppy” and “Epic Night” 3 ½ stars.  On Bud, mag noted that “Bud’s in weird position of feeling like it absolutely has to provide one of these every year. But, hey, wouldn’t you love it if consumers demanded to see your ad every year?” As for Bud Light, while “teasers for this one were worrisome,” Ad Age felt “happily the in-game ads were fun, appropriate for the Super Bowl and exactly what we expect from Bud Light.”  While premise of a night evolving like that “is preposterous,” it’s “fun watching it happen.”