Fairly big article in Crain’s Chicago Biz this morn on what has become a very small brand. MillerCoors will discontinue Miller Chill.  MC “very vocal about our desire to evolve our portfolio to the fast-growing and higher margin segments of the beer business especially at the high-end,” MC spokesman Jonathan Stern told Crain’s.  “As part of this initiative we are trimming low volume and low value SKUs and brands,” including Chill.  Chill sold 65,000 bbls in 2012, down from a peak of 500,000 bbls in 2007, we estimate.  It’s down 40% in IRI multichannel + convenience yr-to-date thru Oct 6 and sold 285,000 cases in those channels.  MC also already discontinued Southpaw Light and will scale back Red Dog.

Members of the Mass Brewers Guild will testify this afternoon at the statehouse in favor of “essentially the same bill” it proposed earlier in the year that exempts brewers that are less than 20% of a wholesaler’s volume from current franchise laws.  The bill would create an arbitration process to establish appropriate compensation when brewers seek to move brands, according to the Boston Biz Journal. Jim Koch of Boston Beer, Dan Kenary of Harpoon and reps from Idle Hand and Riverwalk will argue that bill will help grow biz, create jobs.  But state distribs remain opposed, claiming the change would discourage wholesalers from investing in smaller brands and that it would “create an unfair burden” since “brewers can typically change their distributors without much of a hassle,” the paper wrote.  While the Beer Distributors of Mass explained to the paper that only 6 instances of brand movement have appeared before the Mass ABCC in 20 yrs, brewers guild prexy Rob Martin said one member has been fighting to move its brands for 3 years.  

A number of distribs that we’ve talked to since INSIGHTS last went to press have expressed far more positive views of AB’s SAMCOM convention than in the “classic rock” amalgamation and commentary from a distrib that INSIGHTS published last week (which some at AB found insulting).  Incoming panel chairman West Side Beer prexy Don Klopcic went so far as to say: “By far the best meeting since ABI bought Anheuser Busch,” and that “vast majority” of wholesalers he talked to expressed “very positive” views on SAMCOM.  We got several similar comments from distribs at our seminar yesterday.  

Crown jumped over 20% in Fla, the month after a price increase.  Now up 12% yr-to-date.  

A wholesaler “who pays a manufacturer for distribution rights will direct their… (sales force) to sell that product to the detriment of other products in an effort to recoup” those dollars.  So sez Bruce Stevenson, chief of alc bev enforcement in Oh in letter to distrib assn after looking at issue of whether it’s permissible for distribs to sign contract to pay for distribution rights, as Oh distribs agreed to do for New Belgium recently.  He didn’t refer specifically to New Belgium, but wrote last week that “in other words,” such a contract “by its very nature creates an implied promise to give preference to that manufacturer’s product line” over others.  Such an agreement runs afoul of Oh law that states any contract where distrib “promises…to give preference” to some products over others “shall to the extent of that promise be void.”  That ain’t all.

Same law states that “the making of a promise in any such form shall cause for the revocation or suspension of any permit to any party” and chief wrote that distrib who enters such a contract “may subject its liquor permit to a citation.”  Whoa!  So does this letter issued late last week to Wholesale Beer and Wine Assn of Oh (WBWAO) mean a bunch of Oh distribs have their licenses under threat?  Probably not.  Div of Liq Control has indicated it will operate under assumption that no one has signed such a contract in Oh that it has paid for distrib rights, we understand.  By the way, New Belgium payments were due this week, INSIGHTS heard. 

Turns out that WBWAO had sent request to Oh Div of Liq Control asking whether it is permissible for Oh distrib to enter contract that requires payment to obtain distribution rights and whether such contract prohibited under Oh law.  Answer was loud and clear.  Recall that New Belgium co-founder Kim Jordan told Express that Oh arrangements were “not significantly different from the way we’ve gone to market in the past,” that NBB has always asked for upfront commitments based on everything that it spends in new mkts, including training, kick-off parties, staffing, heavying up on media, truck paint etc.  But this specific arrangement clearly a no-no in Oh.  Key question is what happens going forward.  Does New Belgium still have agreements with distribs it appointed?   Will it be able to structure payments in way that complies with Oh law?  What happens in other states, where distribs and assns gotta be loving this letter?  Stay tuned. 

In first Reyes beer deal post-Chesbay, Reyes Beverage Group will buy Allied (owned by Kevin Williams and Williams family), nearly 13 mil cases in Southern Calif.  This deal could be just as big as Reyes deal for Schenck in Florida and that one was for around $250 million.  Recall, between Harbor/Gate City in LA area and Crest JV in San Diego, Reyes already sells 50 mil cases in Calif.  This will put it at about 63 million cases, or about 4.5 mil bbls.  That’s about 20% of biz in nation’s largest state.  RBG does even more biz in Calif than AB’s branches. 

Increasingly, beer biz in Calif is battle between nation’s largest distrib and AB branches.  In last couple of yrs, Reyes is winning, largely because it has Crown.  Crown is on a major tear throughout Calif, including a Sep that was reportedly through the roof and a strong Oct as well.  Allied sells 3+ million cases of Crown.  

Shipments were down 5%, 175,000 bbls in Mo thru 3d qtr as big brewers struggled while craft gained 10%, 15,000 bbls.  Recall Mo shipments were up just 0.6% in 2012 following 3 straight yrs of declines.  AB shipments fell 6.4%, 135,000 bbls for 9 mos in Mo while MillerCoors was off 5%, 43,000 bbls.  AB lost 0.8 share to 61.4 YTD while MC held share at 24.4.  Pabst was down 5%, 4400 bbls.  Crown down too: -3%, 2000 bbls but Heineken gained 9%, 3500 bbls.  Eight of top-10 craft brewers increased shipments, including 8% gains for each of Boulevard and Boston Beer, while Schlafly up 4.3% and New Belgium picked up 10.5% YTD.   

Here’s “meeting recap” of AB’s recently concluded distrib sales meeting (SAMCOM) in San Antonio, viewed thru lens of classic rock songs, by one distrib who was there.  Not everyone will agree with these remarks, but we found them playful and insightful regarding some AB communication challenges.  They are intended to be neither definitive nor insulting.  Send additional feedback to This email address is being protected from spambots. You need JavaScript enabled to view it.This email address is being protected from spambots. You need JavaScript enabled to view it.. 

Here’s how distrib characterized what AB is saying to distribs:

“Let It Be. 

 We can work it out 

 Come together.

 Have sympathy for the devil.”  

Distributor response:

“(I can't get no) satisfaction

Who will stop the rain

You’re so vain

We gotta get out of this place.”

“Summary” from same distrib: “ABI senior management betting on new media and five thousand data points to confirm they are right. Wholesalers and field know the data is wrong.” (Editor’s note: obvious disconnect here as AB sr mgt maintains data is right and distribs who use it perform better.) “There is lack of respect,” maintained this distrib as “team knows no one will listen.”  He concluded: “Long term, wholesalers believe, due to ABI power. Short term, they believe ABI still has cultural misconnect.”

Boston Beer will continue its expansion to realms beyond beer next year, with the introduction of Twisted Lemonade, multiple sources say.  

Earlier this week, AB concluded its 2-day SAMCOM meeting with distribs in San Antonio, where it unveiled a boatload of new plans and programs for 2014.  The tone was far more upbeat and healthier than AB’s recent meeting with distribs in Vegas.  AB drew a line in the sand on its market share losses.  “Enough” mkt share “erosion,” said North American prexy Luiz Edmond.  Mkt share losses “must stop.  That is our number one priority.” 

To get there, AB ramping up in many areas of biz.  “We have to win on every front,” said mktg veep Paul Chibe, from “value” to “premium” to the “high end.”  AB bringing “more resources than ever before,” Paul added.  AB will spend significantly more on high end brands.  One of key focus areas will be on-premise, noted sales veep David Almeida.  In that channel, “we backed off,” said David.  In typical ABI fashion, AB will now attack problem from several different angles, including big expenditures (with distribs matching funds) adding sales folks AB calls BAM (brand activation managers), plus it has programs on beer with food, on draft, events and more, all with very specific objectives and targets.  AB has “solid plan” to take back on-premise said David. 

AB will also add and shift lotsa digital spending in 2014.  For 1^st time, AB featured its expanded efforts in digital marketing, including an extensive presentation from vp of digital media Lucas Herscovici that was 1 of meeting highlights.  AB has office in Silicon Valley to collaborate more closely with leading digital cos like Google, Facebook etc.  ABI goal: to “become the best CPG company in digital period.” AB has already extensively benchmarked against companies doing a “great job” in digital such as Red Bull, Nike and Coke.

As much as AB meeting had improved tone, most distribs we talked to were still disappointed in absence of new Bud Light ads or clear picture of where AB going with its #1 brand, tho AB sez it got “MANY” comments from distribs who were pleased with presentation and explanations.  “We have cracked the code,” promised Paul, “we’ve got it figured out.” Results of new Bud Light work from new lead agency BBDO will be shown at last on Super Bowl.  AB also has lots more plans, new brands and packages that it sez will lead to a better 2014.