Beer Marketer's Insights
03/17/2014
Crown Grew 32 Mil Cases in 4 Yrs as Modelo Especial Up 24.4 Mil Cases; Fast Start in 2014
Crown (now Constellation Brands Beer Division) is sitting pretty these days, growing the most bbls in the biz 3 of last 4 yrs, off to strong start again in 2014. Co currently has good relations with distribs plus strong demographic headwinds blowin' its way. Since 2009, Crown put together 4 yrs in a row of better and better growth. Up 1.8% in 2010, 4.5% in 2011, 4.7% in 2012 and 6.1% in 2013, prexy Bill Hackett said at its celebratory "Gold Network Summit" in Orlando. "This is a momentum business," said Bill. "We clearly have momentum." Last yr, Crown up over 10 mil cases. Portfolio up over 20% last 4 yrs, even while total beer biz down slightly. Crown outperformed industry by over 8 percentage points in 2013 (on depletions), said execs. Constellation ceo Rob Sands reiterated how "very important" Beer Division is to Constellation (over half its earnings) adding "growth potential is greater than ever" and "we fully intend to continue to invest to keep it growing." Editor's note: Constellation Brands Beer Division is tearin' it up again so far in 2014; got 16% STR gain in Jan and reportedly had another solid mo in Feb. It's up double digits in scan data yr-to-date.
Modelo Especial's Big Mo; Muchos Modelo Mktg; "As It Gets Bigger, It Grows Faster" In 2013, Crown fueled predominantly by Modelo Especial, which "blew through 50 million cases," pointed out Bill. Modelo Especial gained over 7.5 mil cases last yr alone. Especial up 24.4 mil cases, 90% in just last 4 yrs. So Modelo Especial alone about 3/4 of Crown growth both in 2013 and for last 4 yrs. Execs talk ever more confidently about what used to seem like far-out stretch goal; 100 mil cases. They expect brand to double again in next 7 yrs. Modelo Especial is "extremely well-positioned," said exec veep Bruce Jacobson, especially with expected decline of premium and premium light beers plus surging population of legal drinking age Hispanics, to get "at least 50 million cases" next 7 yrs. Modelo Especial up double digits in 27 of last 30 yrs, pointed out Bruce. In 2014, Modelo Especial will get over 40% more mktg investment in Hispanic Media, said cmo Jim Sabia. For 1st time will get support on World Cup. It is a growth engine, and picking up steam as it gets bigger, said Bruce. Modelo Especial up 25% in largest biz unit, West, over 40% of volume. It's flying again in early 2014, with some Calif distribs talking of growth in 30%+ range and 20%+ growth in scan across US.
The Portfolio Play; Corona Summer Spending Spree; Corona Light Draft, Modelo Chelada Tho Modelo Especial is vast majority of growth, Corona is still big dog at over 100 mil cases and it grew 2.5% last yr. Corona is "clearly back on the trajectory it had before recession," said Bruce and its "trends are accelerating." Corona will get over 25% more support this summer, new can graphics in Q4 and draft will be tested in 3 mkts. Corona Light, up 3% last yr and that is big draft play, going into 35 new mkts after test mkt intros changed trend to double digit growth for brand in each. Corona Light also getting 78% more media with new campaign, Jim told Ad Age. Negra Modelo up 3.7% too. While Pacifico up slightly, draft up 38%. Some of overall growth offset by absence of St Pauli Girl, (Crown had for part of 2012) and Victoria decline in 2013. Now that it is priced in line with Corona, Victoria trend improving. Modelo Chelada sold over 400,000 cases last yr in test, and it's rolling out this yr. But word is ABI has ceiling on what it has contracted to make. That's about 1.5 mil cases, which will limit upside until Constellation can make it itself. Still an incremental 1 mil+ cases expected from brand this yr.
The Gold Network Building Strength; 5 Distribs Near 30% of Volume; Calif Gains For last few yrs, Crown has pushed concept of Gold Network, separate from AB and MC distribution networks. As some key distribs gain scale and strength and still have momentum with Constellation beer brands, that concept appears to be gaining traction. Gold Network is more concentrated at top than AB or MC networks. Top 5 distribs sold 53 mil cases in 2013, 29% of Gold Network volume. Reyes Bev Group alone over 23 mil cases (including just acquired Allied), Manhattan Beer at 13 mil cases. Gold Coast lauded at GNS for 7 mil cases. Andrews Dist in Dallas and Ace Bev in LA each reached 5 mil cases.
Recall, Gold Network longterm goal is 20 share of $$. It had 13 share of volume in Calif in 2012. Gained about 10%, 1 share or so in Calif in 2013. That's about 300,000 bbls, or 40% of its nationwide growth in Calif alone. And Constellation Brands Beer Division is already probably 16-17 share of $$ in nation's largest state.
Modelo Especial's Big Mo; Muchos Modelo Mktg; "As It Gets Bigger, It Grows Faster" In 2013, Crown fueled predominantly by Modelo Especial, which "blew through 50 million cases," pointed out Bill. Modelo Especial gained over 7.5 mil cases last yr alone. Especial up 24.4 mil cases, 90% in just last 4 yrs. So Modelo Especial alone about 3/4 of Crown growth both in 2013 and for last 4 yrs. Execs talk ever more confidently about what used to seem like far-out stretch goal; 100 mil cases. They expect brand to double again in next 7 yrs. Modelo Especial is "extremely well-positioned," said exec veep Bruce Jacobson, especially with expected decline of premium and premium light beers plus surging population of legal drinking age Hispanics, to get "at least 50 million cases" next 7 yrs. Modelo Especial up double digits in 27 of last 30 yrs, pointed out Bruce. In 2014, Modelo Especial will get over 40% more mktg investment in Hispanic Media, said cmo Jim Sabia. For 1st time will get support on World Cup. It is a growth engine, and picking up steam as it gets bigger, said Bruce. Modelo Especial up 25% in largest biz unit, West, over 40% of volume. It's flying again in early 2014, with some Calif distribs talking of growth in 30%+ range and 20%+ growth in scan across US.
The Portfolio Play; Corona Summer Spending Spree; Corona Light Draft, Modelo Chelada Tho Modelo Especial is vast majority of growth, Corona is still big dog at over 100 mil cases and it grew 2.5% last yr. Corona is "clearly back on the trajectory it had before recession," said Bruce and its "trends are accelerating." Corona will get over 25% more support this summer, new can graphics in Q4 and draft will be tested in 3 mkts. Corona Light, up 3% last yr and that is big draft play, going into 35 new mkts after test mkt intros changed trend to double digit growth for brand in each. Corona Light also getting 78% more media with new campaign, Jim told Ad Age. Negra Modelo up 3.7% too. While Pacifico up slightly, draft up 38%. Some of overall growth offset by absence of St Pauli Girl, (Crown had for part of 2012) and Victoria decline in 2013. Now that it is priced in line with Corona, Victoria trend improving. Modelo Chelada sold over 400,000 cases last yr in test, and it's rolling out this yr. But word is ABI has ceiling on what it has contracted to make. That's about 1.5 mil cases, which will limit upside until Constellation can make it itself. Still an incremental 1 mil+ cases expected from brand this yr.
The Gold Network Building Strength; 5 Distribs Near 30% of Volume; Calif Gains For last few yrs, Crown has pushed concept of Gold Network, separate from AB and MC distribution networks. As some key distribs gain scale and strength and still have momentum with Constellation beer brands, that concept appears to be gaining traction. Gold Network is more concentrated at top than AB or MC networks. Top 5 distribs sold 53 mil cases in 2013, 29% of Gold Network volume. Reyes Bev Group alone over 23 mil cases (including just acquired Allied), Manhattan Beer at 13 mil cases. Gold Coast lauded at GNS for 7 mil cases. Andrews Dist in Dallas and Ace Bev in LA each reached 5 mil cases.
Recall, Gold Network longterm goal is 20 share of $$. It had 13 share of volume in Calif in 2012. Gained about 10%, 1 share or so in Calif in 2013. That's about 300,000 bbls, or 40% of its nationwide growth in Calif alone. And Constellation Brands Beer Division is already probably 16-17 share of $$ in nation's largest state.
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03/03/2014
Sign Up Now for Beer INSIGHTS Spring Conference June 9-10 in Chicago; We've Got the High End Covered
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.
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03/03/2014
AB Mktg Has "Solid Foundation" But New Mktg Veep Seeks to "Restore Pride" "Break Through"
AB's new mktg veep Jorn Socquet made his debut before distribs at AB's recent meeting in Vegas, noting that AB's mktg dept was "historically most respected" in CPG world, but "living more off our past successes." His objective is to "restore pride" in AB mktg and "break through" with "disruptive," innovative and "better focused" ads. Jorn will be looking for "work that feels right, that touches the hearts and minds of our consumers" and this will be quantified by sales results. "I don't like guesswork," he added. Still, Jorn praised "solid foundation" of current work, calling AB mktg today "pretty good, outstanding in some instances," adding that it has "potential to carry us through 2014." In particular he noted AB "won" on Super Bowl, especially in social media. Jorn cited 48 mil views of Bud "Puppy Love" ad and 18 mil views of Bud Light longform video (Brito too had praised ABI dominance of social media surrounding Super Bowl.) "What is great, we now have some momentum," he added. New Bud Light campaign will "build multiple floors" on top of "foundation" created by Super Bowl. By this summer, there will be new execution of "Up for Whatever" campaign, Jorn promised. But Jorn also asked distribs for patience and support, noting that "by the next time we meet [at SAMCOM in November] I will have answers" to "your questions" and "your impatience." He pointed to his track record in Canada, where he "helped Bud regain the #1 spot" and built Bud Light to #3, asking distribs to "believe in me and what I have done" as he works to "inspire pride again in our marketing" and build the "best" mktg team, portfolio and programs.
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ABI already "one of the largest CPG [consumer packaged goods] companies on the planet," said sales veep David Almeida at AB's "wholesaler excellence" mtg in Vegas. "And we're just getting started." ABI remains "audacious, confident and passionate." That's even tho 2013 "was tough, no question…. We're not entirely in control of the market environment" but "we don't accept status quo," said David. Faced last fall with a "gap against plan" in financials and volume "shortfalls," what did AB do? "We decided to go against the grain and increase marketing investment" in Q4. Result, "performance improved substantially," AB cut "share loss in half" with "our best trends of the year in IRI."
Last fall, ABI North American prexy Luiz Edmond said that "we will not accept share loss." Tho Luiz didn't speak at this meeting, David showed those words in big letters on a screen. AB "is absolutely committed to maintaining our share now and in the future," David reiterated. To accomplish this objective, "we may need to bring incremental resources to the market," said David. So again in 2014, AB will be "investing beyond our plan…. We will bring the heat." ABI's plan includes "the mother of all 'all-in' big bets," said David, i.e. AB's on-premise initiative. Then too, AB will add upcoming natl launch of Johnny Appleseed, new Rita flavors, plus new Bud Light campaign, major Bud programs, big increases in hi-end spending and more. AB in process of helping fund 350 new on-premise reps; 95% of 'em now hired with distribs. Objective: stop share loss in on-premise. That objective attained in NYC test, said AB execs, showing GuestMetrics data. Another "bet that is paying off," AB's new packaging. With 16 oz resealable aluminum bottle, AB "doubled share" of aluminum bottle biz to 30% in recent IRI data. AB just introducing 2 new Rita flavors, Mango and Raspberry with big upcoming push dubbed the "Rita Apocalypse." Another element of AB's 2014 plan: upcoming natl launch of mainstream cider Johnny Appleseed. Then too, AB will jump its spending in entire hi-end in 2014, focused on Shock Top, Goose Island and Stella. On top of all that, new mktg veep Jorn Socquet brings "intensity and focus" to AB mktg. Put it all together and "I'm more optimistic than I have been about our business," concluded David.
Last fall, ABI North American prexy Luiz Edmond said that "we will not accept share loss." Tho Luiz didn't speak at this meeting, David showed those words in big letters on a screen. AB "is absolutely committed to maintaining our share now and in the future," David reiterated. To accomplish this objective, "we may need to bring incremental resources to the market," said David. So again in 2014, AB will be "investing beyond our plan…. We will bring the heat." ABI's plan includes "the mother of all 'all-in' big bets," said David, i.e. AB's on-premise initiative. Then too, AB will add upcoming natl launch of Johnny Appleseed, new Rita flavors, plus new Bud Light campaign, major Bud programs, big increases in hi-end spending and more. AB in process of helping fund 350 new on-premise reps; 95% of 'em now hired with distribs. Objective: stop share loss in on-premise. That objective attained in NYC test, said AB execs, showing GuestMetrics data. Another "bet that is paying off," AB's new packaging. With 16 oz resealable aluminum bottle, AB "doubled share" of aluminum bottle biz to 30% in recent IRI data. AB just introducing 2 new Rita flavors, Mango and Raspberry with big upcoming push dubbed the "Rita Apocalypse." Another element of AB's 2014 plan: upcoming natl launch of mainstream cider Johnny Appleseed. Then too, AB will jump its spending in entire hi-end in 2014, focused on Shock Top, Goose Island and Stella. On top of all that, new mktg veep Jorn Socquet brings "intensity and focus" to AB mktg. Put it all together and "I'm more optimistic than I have been about our business," concluded David.
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Visit to Reyes Holdings just before news broke that it will become major Coke distrib in Chi metro area showed this already huge co still has keen appetite for growth, and in multiple directions. Reyes Beverage Group by far largest beer distrib at projected 120 mil cases in 2014. But parent Reyes Holdings also one of top dozen US private cos at $22 bil in revs in 2013. It owns 140 properties, totaling 13 mil sq ft in 17 countries. In addition to beer and upcoming Coke distribution, Reyes is largest McDonald's distrib (Martin Brower unit) and #5 broadline foodservice co (Reinhart). Beer is over 10% of Reyes Holdings revs but significantly higher % of oper income. It's still key for founders Chris and Jude Reyes, who don't forget their roots, and can vividly recount obscure distribution details from the 1970s just as easily as latest sales results.
Recent Reyes Beverage Group highlights include investing (estimated) over $400 mil in 3 beer deals alone over approx 15-mo period, plus reported $50+ mil on new warehouse/ offices for Harbor Dist. In Oct 2013, Reyes bought 500,000 sq foot facility, which will be Harbor's new home in Huntington, Calif. In Nov, it announced purchase of Allied Bevs in Sylmar, Calif, a 12.4-mil-case distrib at around $225 mil. Allied transaction seamlessly integrated into RBG almost from git-go. Team of 50 went out there and switched systems over after first weekend. By now RBG has this down to a science (with checklist over 800 tasks). RBG made another key purchase, Windy City, at end of 2012 for $70 mil. And Chesbay in Va in late 2012 for over $120 mil. That deal which initially led to lawsuits between Reyes and MillerCoors, ultimately resulted in dramatically improved relationship between MC and RBG, and will help pave way for future deals.
Goin' and Blowin' in Windy City Windy City purchase proved an eye-opener for RBG, about power of craft-centric distribution. Recall, Windy City grew 43% in 2013 to near 1.4 mil cases and expects to grow about 50% in 2014 to 2 mil cases, led by Lagunitas and Two Brothers. Those 2 brewers nearly half of Windy City sales in 2013, but Windy City has 52 suppliers and over 1000 SKUs. How did RBG deal with such complexity? It embraced Windy City model, leaving mgt and methods intact, but added lotsa resources to make it hum. Some key Windy City details: RBG virtually doubled total employees to 83 from 42 (sales force went from 12 to 26), loading 180 cases per hour up from 60, reducing loading errors from 15% to 3%, adding 9 new trucks to a total of 22, tripling coldbox space from 6,000 square feet to 18,000 sq feet. Also spiffed up Windy City's 176,000 sq ft warehouse (plenty of room for growth). Result: Windy City even more of a force on Chi distribution scene, up 50-60% this yr even amidst horrible weather.
Groundbreaking Coke Deal And now in new move that's big departure (since Reyes traditionally barely participated in non-alcs), Reyes Holdings will become major Coke distrib too. Signed letter of intent for Coke distribution in huge swath of territory stretching from Chi metro up into Wisc and over into Ind. Pending "definitive agreement," Reyes could sell tens of mil cases of Coke products starting next yr, in new sales and distribution co, separate from beer division. Deal could be for about $300 million, estimates Andy Christon of Ippolito Christon (Andy worked for Coke for many yrs valuing bottlers). Presuming deal goes down and works out, could be first of multiple Coke deals. Sources saw this deal as step towards inevitable beer and soft drink integration somewhere down road.
Investing in Technology to Improve Selling Processes RBG has increased investments in its existing bizzes too, notably integrated suite of custom applications designed to improve customer experience, and achieve goal of being "easiest distributor to do business with," said RBG regional inside sales mgr Mike Koridek. Last yr, it started national inside sales center, this yr it's rolling out upgraded website called Beerline in all RBG entities by May, and an i-ordering system to enhance pre-sell process. It also continues with RBG mobile applications that design custom sales reports by account. Overarching objective: to free up a salesperson's time to actually sell, instead of just focusing on replenishment. Inside call center now up to 22 reps, all Cicerone-trained, 6 speak Spanish and 2 Korean. They took 250,000 orders from 600,000 calls last yr. All RBG entities now use this call center designed to improve experience for smaller accounts. Typically around half of total accounts do about 5% of total biz. Website "simplistic by design," so far gets 600 orders per week, with 24/7 capability and notable spike in Sunday night orders. These applications "transformational" in RBG biz, especially in way "all play together," said director of information technology Dave Van Volkenburg. It's all part of RBG effort to prove that "bigger must be better."
With Reyes Holdings expanding in so many directions and spending many millions to improve bizzes it already has, RBG is ahead-of-curve. "Where they are is where beer distribution may be going in next 5-10 years," sez consultant Joe Thompson. He credits RBG with "taking its logistics skill set and applying it to better selling skills." Worth noting: Reyes Holdings founders Chris and Jude already have 3 sons active in the biz. So expect a lot more changes and growth in coming yrs. Just how big can Reyes Holdings get?
Recent Reyes Beverage Group highlights include investing (estimated) over $400 mil in 3 beer deals alone over approx 15-mo period, plus reported $50+ mil on new warehouse/ offices for Harbor Dist. In Oct 2013, Reyes bought 500,000 sq foot facility, which will be Harbor's new home in Huntington, Calif. In Nov, it announced purchase of Allied Bevs in Sylmar, Calif, a 12.4-mil-case distrib at around $225 mil. Allied transaction seamlessly integrated into RBG almost from git-go. Team of 50 went out there and switched systems over after first weekend. By now RBG has this down to a science (with checklist over 800 tasks). RBG made another key purchase, Windy City, at end of 2012 for $70 mil. And Chesbay in Va in late 2012 for over $120 mil. That deal which initially led to lawsuits between Reyes and MillerCoors, ultimately resulted in dramatically improved relationship between MC and RBG, and will help pave way for future deals.
Goin' and Blowin' in Windy City Windy City purchase proved an eye-opener for RBG, about power of craft-centric distribution. Recall, Windy City grew 43% in 2013 to near 1.4 mil cases and expects to grow about 50% in 2014 to 2 mil cases, led by Lagunitas and Two Brothers. Those 2 brewers nearly half of Windy City sales in 2013, but Windy City has 52 suppliers and over 1000 SKUs. How did RBG deal with such complexity? It embraced Windy City model, leaving mgt and methods intact, but added lotsa resources to make it hum. Some key Windy City details: RBG virtually doubled total employees to 83 from 42 (sales force went from 12 to 26), loading 180 cases per hour up from 60, reducing loading errors from 15% to 3%, adding 9 new trucks to a total of 22, tripling coldbox space from 6,000 square feet to 18,000 sq feet. Also spiffed up Windy City's 176,000 sq ft warehouse (plenty of room for growth). Result: Windy City even more of a force on Chi distribution scene, up 50-60% this yr even amidst horrible weather.
Groundbreaking Coke Deal And now in new move that's big departure (since Reyes traditionally barely participated in non-alcs), Reyes Holdings will become major Coke distrib too. Signed letter of intent for Coke distribution in huge swath of territory stretching from Chi metro up into Wisc and over into Ind. Pending "definitive agreement," Reyes could sell tens of mil cases of Coke products starting next yr, in new sales and distribution co, separate from beer division. Deal could be for about $300 million, estimates Andy Christon of Ippolito Christon (Andy worked for Coke for many yrs valuing bottlers). Presuming deal goes down and works out, could be first of multiple Coke deals. Sources saw this deal as step towards inevitable beer and soft drink integration somewhere down road.
Investing in Technology to Improve Selling Processes RBG has increased investments in its existing bizzes too, notably integrated suite of custom applications designed to improve customer experience, and achieve goal of being "easiest distributor to do business with," said RBG regional inside sales mgr Mike Koridek. Last yr, it started national inside sales center, this yr it's rolling out upgraded website called Beerline in all RBG entities by May, and an i-ordering system to enhance pre-sell process. It also continues with RBG mobile applications that design custom sales reports by account. Overarching objective: to free up a salesperson's time to actually sell, instead of just focusing on replenishment. Inside call center now up to 22 reps, all Cicerone-trained, 6 speak Spanish and 2 Korean. They took 250,000 orders from 600,000 calls last yr. All RBG entities now use this call center designed to improve experience for smaller accounts. Typically around half of total accounts do about 5% of total biz. Website "simplistic by design," so far gets 600 orders per week, with 24/7 capability and notable spike in Sunday night orders. These applications "transformational" in RBG biz, especially in way "all play together," said director of information technology Dave Van Volkenburg. It's all part of RBG effort to prove that "bigger must be better."
With Reyes Holdings expanding in so many directions and spending many millions to improve bizzes it already has, RBG is ahead-of-curve. "Where they are is where beer distribution may be going in next 5-10 years," sez consultant Joe Thompson. He credits RBG with "taking its logistics skill set and applying it to better selling skills." Worth noting: Reyes Holdings founders Chris and Jude already have 3 sons active in the biz. So expect a lot more changes and growth in coming yrs. Just how big can Reyes Holdings get?
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While each top-5 domestic brand lost ground last yr, 4 of top 5 imports gained volume and share. Three up double-digits. Corona continued its comeback. After a very modest gain 2010-2012 (+1.1% over 3 yrs), Corona picked up 175,000 bbls, 2.4% in 2013, we estimate. Gained 0.8 share of imports, 0.1 share of US biz. In 2013, Corona 1 mil bbls, 12% below peak volume in 2006, but still has dominant 27 share of all import biz. Heineken was only top-5 import down in 2013: off estimated 145,000 bbls, 3.5%, following modest gain in 2012. Heineken peaked at 5.265 mil bbls in 2007; down 1.25 mil bbls, almost 25% since.
The next 3 import brands remain segment stars. Each gained double-digits for the 4th straight yr. Modelo Especial up 570,000 bbls, 18% in 2013 and picked up more than 2 share of imports. At current trends, Modelo Especial will easily vault Heineken to become #2 import this yr. Especial should also pass Keystone Light and Miller High Life to become #10 brand in US. Fact that Modelo has gotten to this point with advertising in English limited to 2 test mkts in 2012 and 4 more in 2013 makes its story -- and potential -- that much more remarkable. Stella Artois up estimated 185,000 bbls, 13% last yr. Dos Equis (including Ambar) up nearly 200,000 bbls, 14%. And while Corona and Heineken down since 2008, each of these 3 brands more than doubled over last 5 yrs. Their combined share of imports grew from 11.8 to 25.1. All in, the top 5 imports collectively gained nearly 1 mil bbls in 2013, picked up just below 4 share of import mkt. That's opposite of what's going in domestic mkt, as most top brands -- across premium, subpremium and even craft -- are losing share. In fact, top 5 domestic brands shed 4.4 mil bbls and 1.4 share last yr.
Tecate and Guinness each down slightly in 2013, but each remained above 1 mil bbls, we estimate. Tecate lost 475,000 bbls, almost 1/3 of its volume over last 5 yrs; Tecate Light's growth offset about 100,000 bbls of that. Guinness has hovered in 1-mil-bbl range for about 4 yrs after dipping to 915,000 in 2009. Corona Light nearly joined 1-mil-bbl club in 2013, we figure, up almost 3%. Labatt Blue stabilized in 2013 following a double digit-dropoff in 2012. It was still down, but just 10,000 bbls, 1.5%. Even so, Blue shed over a quarter of its volume since 2008. Newcastle off about 5% in 2013, putting it back to its 2009-2011 shipments level, including limited editions. The top 10 imports had 82 share of all import biz. Interestingly, the long tail of imports not nearly as successful as long tail of craft. That's both oppy and challenge.
The next 3 import brands remain segment stars. Each gained double-digits for the 4th straight yr. Modelo Especial up 570,000 bbls, 18% in 2013 and picked up more than 2 share of imports. At current trends, Modelo Especial will easily vault Heineken to become #2 import this yr. Especial should also pass Keystone Light and Miller High Life to become #10 brand in US. Fact that Modelo has gotten to this point with advertising in English limited to 2 test mkts in 2012 and 4 more in 2013 makes its story -- and potential -- that much more remarkable. Stella Artois up estimated 185,000 bbls, 13% last yr. Dos Equis (including Ambar) up nearly 200,000 bbls, 14%. And while Corona and Heineken down since 2008, each of these 3 brands more than doubled over last 5 yrs. Their combined share of imports grew from 11.8 to 25.1. All in, the top 5 imports collectively gained nearly 1 mil bbls in 2013, picked up just below 4 share of import mkt. That's opposite of what's going in domestic mkt, as most top brands -- across premium, subpremium and even craft -- are losing share. In fact, top 5 domestic brands shed 4.4 mil bbls and 1.4 share last yr.
Tecate and Guinness each down slightly in 2013, but each remained above 1 mil bbls, we estimate. Tecate lost 475,000 bbls, almost 1/3 of its volume over last 5 yrs; Tecate Light's growth offset about 100,000 bbls of that. Guinness has hovered in 1-mil-bbl range for about 4 yrs after dipping to 915,000 in 2009. Corona Light nearly joined 1-mil-bbl club in 2013, we figure, up almost 3%. Labatt Blue stabilized in 2013 following a double digit-dropoff in 2012. It was still down, but just 10,000 bbls, 1.5%. Even so, Blue shed over a quarter of its volume since 2008. Newcastle off about 5% in 2013, putting it back to its 2009-2011 shipments level, including limited editions. The top 10 imports had 82 share of all import biz. Interestingly, the long tail of imports not nearly as successful as long tail of craft. That's both oppy and challenge.
| Shipments (000) | Change | Import Share | Bbls (000) | ||||||
| 2013 | 2012 | bbls | % | 2013 | 2012 | 2008 | % | ||
| Corona Extra | 7,420 | 7,245 | 175 | 2.4 | 26.9 | 26.1 | 7,940 | -6.5 | |
| Heineken | 4,015 | 4,160 | -145 | -3.5 | 14.6 | 15.0 | 4,950 | -18.9 | |
| Modelo Especial | 3,745 | 3,175 | 570 | 18.0 | 13.6 | 11.5 | 1,810 | 106.9 | |
| Stella Artois | 1,600 | 1,415 | 185 | 13.1 | 5.8 | 5.1 | 755 | 111.9 | |
| Dos Equis | 1,570 | 1,375 | 195 | 14.2 | 5.7 | 5.0 | 725 | 116.6 | |
| Tecate | 1,040 | 1,130 | -90 | -8.0 | 3.8 | 4.1 | 1,515 | -31.4 | |
| Guinness | 1,040 | 1,050 | -10 | -1.0 | 3.8 | 3.8 | 980 | 6.1 | |
| Corona Light | 995 | 970 | 25 | 2.6 | 3.6 | 3.5 | 925 | 7.6 | |
| Labatt Blue | 640 | 650 | -10 | -1.5 | 2.3 | 2.3 | 860 | -25.6 | |
| Newcastle Brown | 545 | 575 | -30 | -5.2 | 2.0 | 2.1 | 515 | 5.8 | |
| Top 10 | 22,610 | 21,745 | 865 | 4.0 | 82.1 | 78.5 | 20,975 | 7.8 | |
| All figures are BMI estimates, subject to revision. | |||||||||
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AB US shipments down 2.7% and depletions -2.9% (slightly steeper than INSIGHTS estimated). That's even while ABI North America spent additional $100 mil, 5.5% on sales and mktg expenses in 2013, including almost 10% increase in 4th qtr. ABI again proved its willingness to spend more, but results didn't improve that much, except in 4th qtr, when total industry improved (AB STRs down 1.4% in Q4). Bud Light and Bud mega didn't lose much share in 2013, according to ABI. Each down 0.15 share. But with Black Crown at 0.2 share and Ritas gaining a half share, means outside of these innovations, Bud and Bud Light families dropped 1 full share point. There probably won't be as much incrementality from Black Crown and Ritas in 2014, as they cycle big launch #s. Meanwhile, premium lights remain "under pressure," as ceo Brito noted on conference call. Brito uncharacteristically spoke of tuff start to 2014 in many parts of US, especially on-premise, driven by weather. Tho ABI does expect improved US mkt in 2014, it didn't say US biz would be up, while it did say Mexico and Brazil would grow. AB rev per bbl up 3.1% for yr (including 90 basis points from mix), but 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. But timing of price increases also helped Q4 volume.
With volume down near 3%, revs flat, mktg and sales up 5.5%, ABI North American EBITDA up just 0.4% to $6.7 bil (recall, AB US-only EBITDA at $5.9 bil in 2012). That included 1% drop in Q4. North American EBITDA up "only" $284 mil, 4% in last 3 yrs, growing just slightly each yr. Total ABI EBITDA jumped $3.3 bil, 24% those 3 yrs. As result, NA EBITDA dropped from 46% of total to 39%. That's likely to diminish further in 2014, incorporating full yr and synergy savings in Mexico, Oriental Breweries, and anticipated growth in Brazil. Tho US is biggest piece of earnings, recall, ABI groups it as "protect and maintain" country. ABI most interested in preserving US EBITDA, not in a rapid growth mode. ABI said it will up mktg and sales spend double-digits globally in 2014, but declined to break out by country/region. Elsewhere, it has said US spend will be up.
ABI gave almost no US brand trends, other than Goose Island +70%. Of other hi-end brands, ABI only said it gained 0.2 share with high end brands like Ultra, Stella, Shock Top, etc. But globally Bud brand up 6.4% and Corona up 3.9%. At same time, ABI beer volumes dropped 2% globally, including 4% drop in Brazil and 3% drop in US. And yet once again ABI grew global earnings a strong $1.3 bil, 8% to $17.2 bil.
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Early signs for 2014 volume point in different directions. Slow start seemed a given, with horrible weather in much of country and relatively tuff comp (+2.7% in Jan 2013). Indeed, ABI ceo Carlos Brito said Jan and Feb "have not been easy" in US on ABI conference call. MC said it continued down low-single digits thru Feb 1. But Boston flyin' outta the gate: up 35% thru mid-Feb. Yet domestic brewers' taxpaid shipments up 100,000 bbls, 0.7% in Jan, estimates Lester Jones at Beer Inst. Not too bad. Then again, weather great in Calif, lotsa tourism in Fla and Tex biz okay. Also: AB analysis of calendar-day impact for 2014 expected approx "1 to +1.5% positive impact" from extra Super Bowl build day in Jan, but gave back most of that in Feb. Nielsen reported off-premise biz off 0.4% yr-to-date thru Feb 15. Meanwhile, on-premise volume down 7.4% for 4 wks thru Jan 26, according to GuestMetrics. Blurring picture even more: very mixed reports from distribs on Jan-Feb. Still lots and lots of noise in the numbers and a long, long way to go. So stay tuned.
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Bud and Bud Light at over 54 mil bbls in 2013, an estimated 58% of AB volume (that's just the base brands). And they had a pretty tough yr, down about 2.3 mil bbls, 4.1% between 'em. So this yr's Super Bowl became even more of a test than usual for AB, especially with simultaneous launch of new campaign for Bud Light, impending departure of mktg veep Paul Chibe and restless distribs. How did AB do? Mixed results, according to consumers, pundits and distribs alike. And of course, it's simply too early to say as proof will be in pudding (sales results) in mos ahead, tho some recurring themes in commentary.
In general, Bud ads got higher marks than Bud Light and without a doubt both created a lot of social media engagement. AB won USA Today's Super Bowl Ad meter for 2d yr in a row. The Budweiser Clydesdale spot "Puppy Love" was top rated ad by far. But AB also had the worst-rated spot, the intro of new aluminum bottle for Bud Light. Other Bud Light ads fared ok at best on Ad Meter. Ace Metrix surveys also split along Bud/Bud Light lines, with both Bud ads in top 5 "most effective ads" and each of Bud Light Epic Night ads in top 10 least effective. Both Bud and Bud Light ads much talked about in social media, yet Bud ads didn't lift "purchase consideration" much, according to YouGov Brand Index (which interviews 4300 people each weekday). There was plenty of carping along with praise from likes of Ad Age which called Bud Light ads "fun" and "appropriate" (publisher had just recently bashed Bud Light ads). Consensus view had Bud Light ads far short of "cracked the code" standard set by outgoing mktg veep Paul Chibe. Even as "Puppy Love" garnered encomiums and a gadjillion You Tube hits (46 million at presstime), some wondered whether it sold beer.
While AB tries to figure out how to fix its mainstream brands, it's also getting deeper into craft with purchase of Blue Point, expected to close in 2d qtr. Blue Point at 60,000 bbls, mostly contract-brewed in Rochester; sold in 15 states. It was one of few top 50 craft brewers that declined in 2013, down 3000 bbls, 5% from reported BA number. But AB clearly sees potential; plans to stay regional and not produce Blue Point at its own breweries in near-term. Two NY AB distribs, Clare Rose and Union well over 2/3 of its volume. Blue Point a 1 share brand in huge Long Island mkt, sez Clare Rose. Meanwhile, L. Knife (Union's parent co, Sheehan family) has it statewide in a number of states and has previously been notoriously reluctant to give up brands. At same time, AB also stepping out more with Goose Island, which will intro 18 beers, 12 nationally, in 2014, including a series of IPAs and start first natl media campaign with slogan, "To What's Next."
In general, Bud ads got higher marks than Bud Light and without a doubt both created a lot of social media engagement. AB won USA Today's Super Bowl Ad meter for 2d yr in a row. The Budweiser Clydesdale spot "Puppy Love" was top rated ad by far. But AB also had the worst-rated spot, the intro of new aluminum bottle for Bud Light. Other Bud Light ads fared ok at best on Ad Meter. Ace Metrix surveys also split along Bud/Bud Light lines, with both Bud ads in top 5 "most effective ads" and each of Bud Light Epic Night ads in top 10 least effective. Both Bud and Bud Light ads much talked about in social media, yet Bud ads didn't lift "purchase consideration" much, according to YouGov Brand Index (which interviews 4300 people each weekday). There was plenty of carping along with praise from likes of Ad Age which called Bud Light ads "fun" and "appropriate" (publisher had just recently bashed Bud Light ads). Consensus view had Bud Light ads far short of "cracked the code" standard set by outgoing mktg veep Paul Chibe. Even as "Puppy Love" garnered encomiums and a gadjillion You Tube hits (46 million at presstime), some wondered whether it sold beer.
While AB tries to figure out how to fix its mainstream brands, it's also getting deeper into craft with purchase of Blue Point, expected to close in 2d qtr. Blue Point at 60,000 bbls, mostly contract-brewed in Rochester; sold in 15 states. It was one of few top 50 craft brewers that declined in 2013, down 3000 bbls, 5% from reported BA number. But AB clearly sees potential; plans to stay regional and not produce Blue Point at its own breweries in near-term. Two NY AB distribs, Clare Rose and Union well over 2/3 of its volume. Blue Point a 1 share brand in huge Long Island mkt, sez Clare Rose. Meanwhile, L. Knife (Union's parent co, Sheehan family) has it statewide in a number of states and has previously been notoriously reluctant to give up brands. At same time, AB also stepping out more with Goose Island, which will intro 18 beers, 12 nationally, in 2014, including a series of IPAs and start first natl media campaign with slogan, "To What's Next."
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