Two yrs after it bought 7-mil-case Western Bev in Eugene, Oreg,  AB will buy 2-mil case Morgan Dist in Portland, Oreg.  Following closing of this deal, AB will sell over 70% of its volume in state where craft has its highest share and where AB has one of its lowest.  That’s likely biggest % of its volume that AB sells in any one state (Okla could be close).  AB down 137,000 bbls, 14% to 855,000 bbls in Oreg 2008-2012 and it lost 3.6 share to 30.3 there in those 4 yrs. 

Morgan Dist also has Craft Brew Alliance Brands and CBA had about a 3 share in Oreg in 2012.  But just as in Southern Calif where AB branches compete predominantly against megadistrib Reyes Bev Group, AB branches increasingly compete against Columbia in Pac NW, another megadistrib with dominant share of mkt and even more so of margin pool.  Besides Eugene and now part of Portland, AB also has branch in Seattle; these are all Columbia mkts.  Negotiations for Morgan reportedly went on for quite some time.  But at 11^th hour, AB chose to match offer of Maletis Bev, its other distrib in Portland.  Including Maletis, there are just 4 indy AB distribs left in Oreg.

“Anheuser-Busch has agreed to buy Morgan Distributing in Portland, Ore.  We expect the transaction to close shortly,” said AB sales veep David Almeida. “Terms will not be disclosed.  As a brewer and owner of brands, we understandably have the responsibility to assure they receive the proper sales and marketing support, and we examined a number of possibilities, after the distributorship had been for sale for some time.  Ultimately, we decided to purchase the territory, which is adjacent to Western Beverage, our distributorship in Eugene, exercising our match right because we felt it was the best option,” David added.  “Morgan has been a good business partner and active in the community; we are eager to meet with those employees.  We also are glad to be making an additional economic investment in the state of Oregon, where we have been developing our business,” said David. 

Heineken.com topped new list of “20 Most Influential Beer Websites in the World” this week, compiled by organizers of the Beer Bloggers Conference.  The site’s high numbers of incoming links and Facebook fans put it well above BeerAdvocate, at number 2, and New Belgium’s site, at number 3.  All but 4 of top 20 sites represent brands or breweries; RateBeer.com (13), Beer Pulse (14) and Untappd (15) also made the list.  Two AB brands, Budweiser (6) and Bud Light (8) were in top 10 while SAB Miller (12), Miller Lite (16), Coors Light (17) and Carlsberg also ranked.  The rest were craft brewers, including Dogfish Head (4), Sierra Nevada (5) and Stone (7).  Rankings were based on analysis of 4 metrics: Alexa rankings (based on site visitors), Google’s measurement of incoming links to a site, Facebook likes and Twitter followers.  Writers acknowledged that these may not be perfect metrics for “influence” and analysis is limited as it is “a snap shot in time,” between Dec 20 and Jan 2, but believe “this is a start.”

Crown revs up an extraordinary $114 mil, 20.6% in Constellation’s fiscal 3d qtr thru Nov, “primarily due to volume growth driven by strong consumer demand, the return of distributor inventories to more normal levels and a favorable comparison versus last year’s third quarter,” wrote Constellation.  Crown shipments up 6.1 mil cases, 17% in 3d qtr to 42.2 mil cases.   So revs fully 4 points ahead of shipments in qtr, suggesting very solid price increases.  Meanwhile, depletions up a whoppin’ double digits (10.1%) as “all core beer brands” up.

Crown posted “exceptional results,” crowed Constellation ceo Rob Sands.  “From an innovation perspective, the draft format is growing in all key markets and the new Modelo Especial Chelada is exceeding expectations” in states where it’s been intro’d, added Rob.   Just yesterday, Crown also told distribs that it would embark on major expansion of its Corona Light draft initiative in 2014 as Corona Light draft presence “contributed to a brand trend that is 12% better than non-Corona Light draft markets,” wrote exec veep Bruce Jacobson.

Crown depletions up 6.6% for 9 mos, still slightly ahead of shipments up 6.2%.  Crown revs up $179 mil, 8.6% for 9 mos.   Such strong sales results will lead to big profit jump in current fiscal year too, even tho Constellation expects “brewery capital expansion investments to significantly increase in the fourth quarter” (thru Feb), said the co.   “Due to strong year-to-date performance, we now expect Crown’s underlying profit growth to be in the low-to-mid-teens range for the year.”  

Constellation way ahead of consensus earnings expectations on beer strength, noted RBC Capital Markets analyst Nik Modi. Constellation came in at earnings per share of $1.10 compared to consensus of 91 cents.  Wine “fell below expectations,” according to Nik, but beer “more than offset the softness,” not only with revs that were fully $73 mil above his expectations, but with “far better margins of 32.1%.  We believe the margin delivery was driven by pricing initiatives that we are now seeing in the Nielsen retail data,” Nik added.  “The core to our bullish thesis on STZ,” he concluded, “is the significant revenue and margin opportunities the beer business has ahead of itself over the coming years.”  

While retailers have launched privatization effort in Oreg, talk is surfacing again in perennial privatization targets: Pennsy and Va.  Legislators and Pennsy Gov Corbett “are quietly working on a plan to expand private alcohol sales” with an aim to have bill on Gov’s desk “early this year,” reports Pitt Trib Review.  Recall, efforts fizzled last yr after House passed a bill and Senate amended it.  But Gov’s position “hasn’t changed; the state should not be in the business of selling alcohol,” Senate majority leader told the paper and they’re apparently working on what will likely be a “hybrid” alternative that broadens private sales of liquor and “at least begins to scale back the 600 state-owned wine and liquor stores,” according to Trib Review.  Head of union that represents 3000 workers in state store downplays revived effort, saying selling stores would risk hundreds of millions in state revs and legislators won’t put state workers out of jobs in an election yr. 

Meanwhile, tho privatization talk in Va died off when Gov McDonnell’s 2011 attempt failed, state legislator is trying to advance bill that would replace current ABC board of highly paid state employees with less expensive “citizen board.”  Gannett-owned News Leader paper took oppy to editorialize for full privatization, arguing familiarly that “the state has no business in the liquor business.”  Added that ABC “likes its power” to enforce laws and that “cronyism is also a problem.”   With challenge of replacing state revs from liquor sales a constant barrier, “perhaps the best we can hope for,” editorial concludes, is that citizens and legislators keep “pushing for change, because the Virginia ABC, as it is, makes little sense.” 

Last week we noted that Technomics estimated beer down just 1% on-premise and that other sources had softer numbers.  Turns out they’re much softer!  This afternoon, GuestMetrics came out with its 2013 number and it was down 4%.  That’s a much tuffer trend, and closer to what Beer Inst had reportedly estimated earlier in yr. 

More concerning, “the picture towards the end of the year was even weaker,” noted GuestMetrics.  On premise beer volume dipped 5.2% in 4^th qtr and 7.3% for the final 4 weeks of yr.  And check this out: even spirits numbers while “slightly better” were “still weak.”  Down 5.8% for the last 4 weeks and down 2.5% for the yr in GuestMetrics data.  Wine dropped 4% in Dec and 1% for yr.  Bars/clubs particularly soft in 4^th qtr, down 6%, “likely symptomatic of young adult consumers” in US “remaining under significant economic pressure.”  While such soft trends are “discouraging,” acknowledged GuestMetrics, some of yr end weakness could have been “due to unusual factors” like a “more compressed shopping season and unfavorable weather.”  So the “key will be… whether there might be a rebound in traffic and alcohol volume trends to kick off 2014.”  

Biz eked out tiniest of volume gains, +0.1% in Nielsen’s all outlet + c-store data for 52 wks thru Dec 28. But that includes cider more than doubling. So call it flat, following 2% volume gain in same channels in 2012. Meanwhile, $$ sales up 3.1% for the same period, following 5.2% gain in previous yr. 2013 was another yr of significant trade-up, as we’ve reported all along. Above premium segments increased volume share 2.6 to 26.4 with 11% gain. Craft gained 0.8 share to 5.7, imports +0.5 to 11.1 and malternatives +1.2 to 4.5. That’s while premium lights dipped 1.2 share to 36.6 and premium regulars shed 0.4 to 9.7. Below premium segment dropped 1 share to 27.3. Each of those 3 segments took 3-4% volume hit. Even more impressive, above premium beers rang up 3.3 share gain of $$ to 36.5, with imports +0.4 to 14.5, craft +1.2 to 8.7 and malternatives +1.7 to 7. Premium light $$ share down 1.6 to 34.4. Premium regular down 0.6 share to just 9.2. Below premium dipped just below 20 share with 1.1 loss. Avg prices up 62 cents/case, 3% to $21.21, but again, mostly driven by trade up. Premium light prices up just 1.4%, below premium prices up 1.1%. Craft pricing up 2.1%, imports just 0.7%. Looking at pack sizes, 36-pk biz up 6.4% (volume), but 18-, 20-, 24- and 30-pack volume each off. Twelvers eked out 0.5% volume gain, but sixers off 0.8%. Another sign of craft strength: 4-pk volume + 8%. Singles scored 5.2% volume gain, 9.2% dollar gain. That means singles got 5% growth even with 4% avg price hike. Don’t know whether that was trade up, more aggressive pricing on singles or combo of the two.  

Music is yet another industry that has taken turn towards the smaller players, with the help of streaming services, YouTube, and social media. Sound familiar? “The growth of streaming music services and shared playlists, and the continued strength of YouTube, unleashed new forces on the music business last year – catapulting independent artists onto the charts with growing regularity,” reported NY Post. Since 2007 Indie music has surpassed largest record label, Universal, grabbing additional 8+ share of the music biz to 34 share in 2013, according to Nielsen data. Universal has stayed about flat in same time, right around 28 share of music biz.  

Following modest increase in 2012, beer volume dipped 1% on-premise last yr, Technomic’s 2013 BarTAB report projects.  Other sources suggest steeper dropoff on-premise, but lotsa complexity and missing data points in this channel and available methodologies/samples differ.  Meanwhile, spirits slowed, flat to slightly down after near 2% gain in 2012, sez BarTAB.  But wine up “just shy of 1%,” matching 2012 trend, Technomic’s Donna Hood Crecca told Express last week.  “On-premise trends reflect many of the trends in the general market,” said Donna, “premiumization and changing consumer taste preferences are driving the higher-priced categories, namely craft and imports, to the detriment of the mainstream domestic categories, including light.”  Indeed, craft volume up 12.3% on premise in 2013, BarTAB says (again much higher than other estimates we recently published), while imports +0.1%, domestic light volume off 3.8% and domestic regular

-7.7%.  Trade up not just a beer trend.  “Premiumization is at play across adult beverages,” Donna points out, “as is the consumer quest for new and interesting flavor experiences, so we see spirits, wine and beer competing intensely for the consumer on-premise occasion.” 

Technomics’ consumer surveys show 3 in 10 “indicate they’re ordering craft beer more often in restaurants and bars than they were 3 years ago.”  But expanded choice can also be “overwhelming.”  Managing cooler space and tap handles a growing challenge and many operators “are getting very serious about their criteria for taking on a new or seasonal brand and their rationales for tap handle rotation,” Donna said.  “They’re asking serious questions about supply and looking at the quality/flavor attributes,” as well as margins, ABV and question of whether higher strength beers reduce consumption.   Back to consumers, while 18% “say they’re ordering drinks on-premise more often now than three years ago, 42% disagree with that statement.”  And over 1/3 say they’re drinking at home more often to save $$, reducing on-premise occasions.  Tho occasions and overall volume soft, “interestingly, the number of drinks per occasion rose (spirits, wine and beer), with more consumers reporting they order more than one drink per on-premise occasion,” according to Donna.  On pricing, “one-third of operators increased drink prices in the past year,” Technomic found, “with independent restaurant operators more likely to have done so. Chains appear more cautious on the drink price front.” 

Despite on-premise softness last yr, 52% of operators “anticipate growth in beer, and 60% of operators in the largest segment of on-premise – casual dining – indicate they expect growth in beer sales in the next year,” Technomic found.  Still, “we anticipate softness in overall on-premise beer in ’14, due to the drag caused by mainstream domestic and light categories’ ongoing slide,” Donna told us.  Craft’s 17 share on-premise just not enough to “stem the tide” of mainstream loss.   “That said, in each and every category, there will be brands with momentum in the on-premise; those brands that connect with key consumer groups like Millennials, Hispanics and women on attributes such as taste profile, unique positioning, a great back story, food-friendliness, etc.    Differentiation is crucial for restaurant and bar operators, and those beer brands that are defined and can help operators differentiate their concept will gain trade support and set themselves up for on-premise success.” 

BDT Capital (which owns 70% of CITY Bev) deal to purchase Chi AB distrib River North closed Dec 31.  But Hand Family Co’s purchase of AB’s 30% stake in CITY is awaiting approval by Illinois Liquor Control Commission.  There will be hearing later this mo.

News broke this morn that Molson Coors has sold its interest in drinks logistics JV DHL for an undisclosed amount.  That followed sale of its remaining stake in Rockies late in 2013 (this happened, several sources said), tho we haven’t seen it publicly disclosed). Why is Molson Coors selling assets?