Tussles over local pot bans in Wash made the front page of the NY Times today, as the speed and fervor of legalization there and in Colo caused an uptick in pushback.  Some Wash communities already voted to ban legal sales and others, like Pierce County, the state’s 2d most populous, just south of Seattle, threatened to last month, according to NY Times.  Municipalities in Calif and Oreg have also started pulling back on rights afforded to medical marijuana growers and retailers.  Proponents of legal pot sales are asking regulators not to throw the baby out with the bongwater, proposing legal action against local bans and reminding of the potential for lost tax revenue and economic activity at every turn.  

It’s that possible “financial windfall” that one NJ Senator hopes will influence his state to legalize pot sales.  Democratic Sen Nicholas Scutari plans to intro a legalization bill within a month, modeled after the Colo bill but passed thru the legislature rather than public referendum, the Wall St Journal wrote.  Similarly, a senator from Okla announced plans to intro a pot legalization bill there while picking up familiar safety comparison to alcohol, “which is far more deadly and dangerous than marijuana,” she told KFOR-TV.  Yikes.  Pre-filed bill proposed $50/oz tax, 30% of which would head to Dept of Ed, another 20% to Dept of Health, charged with regulating the industry, and the remaining dropped into the general fund.  Interestingly, the bill already includes a provision that would bar local communities from banning pot sales.  

Elsewhere, the “meteoric rally” behind pot legalization here in the US opened a “wild west of public companies targeting the former black market,” the Financial Times wrote in its assessment of pot investment oppys, which seem to be growing like, well, you know.  A slew of public cos are seeing green in this new market, mostly in Colo where sales opened up Jan 1, including Full Circle Capital which recently packed $30 mil into a Colo-based firm focused on marijuana-growing facilities.  But “trading is driven by legalization news, rather than company news,” the paper warns, citing cautions about “penny-stocks” from 420 Investor.

Fed court judge denied latest effort led by activist atty Joseph Alioto on behalf of consumers to revive case to unwind AB InBev-Modelo-Constellation deal as violation of US antitrust laws. She had originally dismissed suit back in Sep, saying plaintiffs hadn’t shown Constellation would act as ABI “puppet.”  But Alioto argued that based on reports in beer marketers INSIGHTS, Constellation abandoned its plan to be price maverick and hiked prices last yr in a number of mkts, including Calif and Fla.  Those moves, he told court last week were “shocking in the extreme,” reported Law360 legal news site, and contrary to earlier pricing strategy.  ABI and Constellation attys countered that Constellation violated no laws by simply raising price, even if they were following competition.  “The decision to announce a price increase offers no showing that [Anheuser] is controlling Constellation,” ABI’s atty told the court, according to Law360.  “Even if we did follow another company,” Constellation atty added, “it’s not illegal to look at what a bigger company is doing.”  After hearing Friday, judge denied Alioto’s motion to reverse her earlier dismissal.

Final figures show spirits volume in 17 control states and one Md county slowed to just 1.1% growth last yr, Natl Alc Bev Control Assn reports.  That was lowest growth rate of last 14 yrs, according to NABCA, and followed 3.6% growth in 2012, 3.2% in 2011.  Dollar sales in 2013 up 3.9%.  Recall that running 12-mo gain pace in control states dipped below 2% mid-year and never got back over 2%.  Key holiday period didn’t help: volume off 2.8% in Nov, up just 0.7% in Dec.  Still, despite slowdown, spirits trends better than beer in 2013.  Next week, distillers assn DISCUS will provide its take on national liquor trends for the yr.  

In a “difficult overall environment for beverage stocks,” Santander’s Anthony Bucalo is making AB InBev his top stock pick for 2014.  ABI “will stand out” in his view for 3 key reasons: 1) “ABI is not dependent on a European turnaround and the core US market is stable.” 2) “ABI’s profitability metrics remain best in class.”  In his view, “with the era of major M&A behind us, it appears impossible for any large brewer to approach the size and scale of ABI.”  ABI’s EBITDA of $17 bil in US for 2013 “is nearly equal to the combined total of its next four competitors,” he added.  3) “ABI’s dominant positions in top profit pools remain unchallenged,” and ABI will likely be getting boost from “dual catalysts of the World Cup in Brazil and ongoing cost and top-line” oppys in Mexico, said Anthony.  

Indy bill with numerous proposed changes to franchise law, supported by AB distrib assn Indy Bev Alliance, sure got the attention of rest of beer biz last week.  (See Express #11 for bill details.)  Joint letter signed by AB, MC, Crown, HUSA and Diageo-Guinness, plus Beer Inst, 3 non-AB distribs in state and 2 retailer assns, calls on legislators to reject bill.  “This legislation is an unnecessary intrusion into private business contracts with unintended consequences that could adversely impact” Indy consumers, they wrote.  Brewers and retailers could “reasonably interpret” the proposed changes, “as well as other unnecessary and fundamental changes to beer franchise law…as market restraints.”    Letter didn’t specify proposals these players object to the most. 

Negotiations continue between wholesalers and suppliers.  Already in the last week, agreements have been reached to “hold off” on some key provisions on pricing rules, approval and transfer issues and more, but many of the original measures remain in the bill right now, according to IBA’s prexy Marc Carmichael.   Meanwhile, there’s a hearing scheduled on the bill for this Wednesday, so it may be best for all parties to reach an agreement before then.   

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 trends and off premise craft trends for dozens of top brewers and brands, with new in-depth cuts of the data, plus state and market level data including craft-centric mkts like Portland, Seattle and San Diego, analysis of craft M&A so far,  profiles of top craft players, financials of public companies, insight into big brewer-entries, and much more.  Available digitally or in a portable 6”x9” volume, Craft Brew Guide gives you the most and 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 and INSIGHTS Express.  Click here for more information and to order this one-of-a-kind book, available April 4. 

Founders Brewing, one of fastest growing mid-sized craft brewers in recent yrs, broke 100K bbls in 2013, up 58% to 112,000 bbls.  Its 41,000-bbl gain was bigger than all but a handful of much larger craft cos.  Growth rate more or less in line with past six yrs, when compound annual growth rate  “has averaged 63%,” noted CEO Mike Stevens in yr-end review.  Co will continue to boost sales force in 2014 after growing “from 12 to 30,” in 2013, he noted.  Could be 40 by yrend, he told INSIGHTS.  Founders “continue(s) to see very strong growth” in existing markets where volume up 43%, sez Mike, yet new mkts still a solid contributor to growth, consisting of 18% of total volume in 2013 and 32% of growth with entries into Florida, Texas, Nebraska, Kansas, and Maryland, as well as a small portion of volume exported internationally in 2013.  This indicates “our brand can travel and has legs,” said Mike   And while Midwest sales up solid 34%, co grew fastest in Northeast (+89%) and Southeast (+101%) regions.  In 2014, Founders will enter Calif and perhaps one other Western state.

Major driver of growth is All Day IPA, up 569% in its first year as a yr round product, and representing 27% of co’s total volume in 2013, with “expectations that it will reach upwards of 35%” in 2014.  That would be over 60,000 bbls and more than doubling.  Founders has contracted for enuf hops to brew upwards of 95,000 bbls of All Day, Mike told INSIGHTS.  Founders just yesterday announced 15-pack of All Day for same price as 12-pack and thereby became first craft brewer to launch a multipack strategy.  Not surprisingly, Founders lookin’ for “much stronger chain growth in 2014 as we now have the capacity to pursue the opportunity in an even more aggressive fashion,” sez Mike.  Overall chain volume grew 56% in 2013. More in Craft Brew News. 

Hearing yesterday on Hand Family buying AB’s 30% stake in Chicago’s City Bevs reportedly went smoothly and ILCC approved Hand.  That paves way for Hand Family Co to partner with 70% owner of City, BDT Capital, not only in Chi metro, but presumably beyond.  Deal expected to close by the end of mo.  

That was pretty fast.  Montana brewery Big Sky and AB came to quick solution over the “Hold my beer and watch this” Bud Light videos that popped on YouTube in early Dec.  Recall that Big Sky filed fed lawsuit claiming ads violated its trademark for that phrase, which has appeared on its packaging, promotion, etc for yrs.  (See Express, Vol 15, No 164.)  AB claimed no trademark use, no violation, no intent to create association with Big Sky.  Now there are no videos up on YouTube and no lawsuit, which Big Sky voluntarily dismissed yesterday.  Big Sky’s not talkin’, but AB spokesperson said “we may revisit the concept.”  No financial settlement, she added, and AB stands by original position.  “We like the videos,” AB’s Lisa Weser told AP, “they got great views.”  But AB figured they “had run their course” and is now focused on Super Bowl ads.         

Lotsa commentary/research about AB ads lately.  As AB’s mktg veep Paul Chibe will soon leave AB, leading mktg publication Ad Age featured extensive review of AB ads during his tenure, ranking efforts for Bud Light and Bud over past few yrs.  Paul’s work on Bud was generally rated higher by mag than ads for Bud Light in that time.  He is credited for pushing AB “into more aggressive social-media” mktg and for signing “high profile endorsement deals with the likes of Jay-Z and sought to craft a more sophisticated brand humor,” per Ad Age.  However on Bud Light, “he veered from one agency to the next” and ad performance “has been inconsistent.” 

Preliminary scores from Ace Metrix consumer panels ranked Bud Light ads #7 in beer category last yr, down from #5 in 2012 and #3 in 2011, when Paul started, but Bud climbed up to #3 in 2013 from #8 previous yr, noted mag. Grading different campaigns, Ad Age scored Bud Light Platinum spots with Justin Timberlake a C- and Bud Light “It’s Only Weird if it Doesn’t Work” spots a C+. 

Even editor-in-chief Rance Crain chimed in, calling Bud Light’s “It’s only weird if it doesn’t work” campaign  “unsuccessful and pitiful” since Bud Light’s own survey showed those ads featured successful teams that were found to have least superstitious fans.  “Such confusion might explain why the ‘It’s Only Weird’ campaign is such a failure,” said Rance. He noted that “AB brass took pride” that ads tested well, “but now that I see the superstition survey, I get the feeling they may have tested them with the wrong crowd,” he added. 

Bud spots were all given higher marks by mag: an A for last yr’s Superbowl spot for Bud with Clydesdales, a B+ for “Track Your Bud,” spots that featured regional brewmasters and a B- for “Made in America” music festival mktg with Jay-Z.  Former AB chief creative officer didn’t agree AB’s music push was a success however.  “Music is not a strategy. That mistake was made by us back in the late 1990’s when we had a year or two of nothing but a music strategy for Budweiser. You can’t own music,” said Bob Lachky.  The campaign was meant “to connect with beer drinkers through music. It’s not to own music,” countered Rob McCarthy, veep for Bud Light who had worked on Bud previously. 

No Super Buzz So Far   Teaser ads, “Madison Avenue’s latest must-have accessory,” to build buzz for Super Bowl spots are not working for AB, reported NY Post, citing survey by brand mgt co Kontera which found consumer interest for Bud Light fell 25% after teaser spots with Arnold Schwarzenegger ran this past weekend.  AB doesn’t make top 5 according to tracking so far, and in contrast survey found consumer interest up 700% for SodaStream after teaser with Scarlett Johansson aired.