Only 3 volume gainers among top 10 suppliers in 2013, our preliminary estimates of shipments show: Crown, Boston and Mark Anthony (Mike's). Everyone else took a volume hit, including 2-3% drops for each of top 2 and mid-single digit losses for 2 others. Table below also includes a 5-yr look of top players since 2008, the year of AB-InBev and formation of MillerCoors JV. These 5-yr trends more mixed: top 2 shed a ton o' bbls; combo of gains/losses for other big suppliers; and craft-driven bump for those below top 10. Please note there will be revisions in final numbers, as figures for Dec taxpaids and imports still not available.

After bouncing back with modest gain in 2012, AB dropped all of that 700K-bbl increase and then some in 2013. AB shipments off 2.5 mil bbls, 2.5%, we estimate. At just below 97 mil bbls, that's lowest AB total of the century. Gotta go back to 1999 when AB shipped same volume as last yr, and that was before addition of InBev Euro brands. Also looks like AB shed close to 4 share from its peak just below 50 and now around 46. MillerCoors down for 5th straight yr. MC down another 1.75 mil bbls, 3%, we estimate. Dipped another half-share or so, like AB. Since 2008, AB and MC collectively lost over 17 mil bbls, down 10% and 11% respectively from their peaks. And they combined to lose over 5 share since 2008. But AB and MC also combined to increase their EBITDA by more than $3 bil.

Crown was by far biggest gainer in 2013: up 700,000 bbls, 5.7% and came in at 13 mil bbls. Over last 5 yrs (Crown got Modelo for full US in 2007), Crown gained 1.4 mil bbls, 12%. Recall, it was down in 2008-2009. Crown also cracked 6 share in US last yr, we estimate. After solid gain in 2012, HUSA dipped 160,000 bbls, nearly 2%, we estimate. Some of that was timing/inventory issues, but HUSA shipments off 4 of last 5 yrs and almost 1 mil bbls, 10% below 2008 shipments. Pabst returned to the red again in 2013, following small gains in 2011 and 2012. Off about 2.7%, and 2% below 2008 level.

Boston guided analysts to 21-24% total shipments gain for the yr. But that includes massive gain in cider, which is not part of beer industry totals, or our Boston estimate. Numbers in table above are our estimates of Boston's beer/tea volume, up about 200,000 bbls, 7.5% in 2013, teasing out well over 400K bbls of cider. But that's a tricky target: Boston's never broken out tea or cider. (Data for several other suppliers include much more modest cider volume.) In any case, Boston's malt bev shipments surpassed Yuengling again. Yuengling lost volume for 1st time in memory, -65,000 bbls, about 2.3%. Tuff comps in Oh drove the loss. Note too: each of Boston and Yuengling expanded their beer biz by over 40% over last 5 yrs. Boston up almost 1.4 mil bbls since 2008, including cider, about same as Crown.

Following 3 straight gains, NAB stumbled in 2013, off 125,000 bbls, 4.6%. But NAB still about 300,000 bbls bigger in 2013 than same brands sold in 2008, we estimate. Diageo/Guinness dropped another 200,000 bbls, 8%, we figure, its 3d-straight drop and 6th loss in 7 yrs. DGUSA down about 500,000 bbls, 17% over last 5 yrs with most of that loss in FMBs. Much of that volume picked up by #10 supplier Mark Anthony's Mike's brands. Up 6% in 2013 and gained almost 700,000, 81% since 2008. Craft gain very likely to be double-digits again, in neighborhood of 1.7 mil bbls, including Boston's piece; craft blew past 7 share in 2013. For 5 yrs, craft gain in 6.5-mil-bbl, 75% range.  

Predictably, a group of researchers led by and including a number of prominent public health advocates found a correlation between "stronger [alcohol] policy environments" on the state level and "less adult binge drinking." The group was led By Dr. Tim Naimi (responsible for some of CDC's pro-advocacy stances) and included veteran advocate-researchers like Paul Gruenewald, Jim Mosher and, as consultants, Thomas Babor, Frank Chaloupka and Harold Holder. These "alcohol policy experts" ranked 29 state alcohol polices - from excise taxes to drunk driving/commercial liability laws and availability limits - based on how effectively they believed such policies would reduce adult binge drinking. After rating each state's policy environment, they looked at adult binge drinking rates (4+ drinks for women, 5+ for men once or more in past month), from national surveys. Using 5 different methods of calculating their "alcohol policy scale," the researchers found each was "significantly associated with lower binge drinking prevalence among adults."

The study did not provide detail about how much lower binge drinking rates were by level of strictness. But comparing policy scores in 2008 across the states with binge drinking levels in 2009, one assessment method showed "the median state binge drinking in ascending quartiles of APS scores" (in other words, as the environment grew increasingly strict) "were 17.4%, 15.8%, 15.6% and 13%," suggesting about a 4-point spread from lax to strict. Also: "The six states with the highest APS scores fell below the median in terms of binge drinking prevalence and the six states with the lowest APS scores had prevalences above the median binge drinking prevalence." Potential limitations of the study: levels of enforcement were not assessed, nor were binge drinking trends and public opinion supporting stricter policies in the first place might naturally be linked to lower binge drinking levels. Also: "a different group of investigators or policy panelists might have differing opinions about what constitutes key provisions of a given policy." All in, the authors conclude: "The findings suggest that the alcohol policy environment is an important determinant of drinking behaviors at the population level, and provide new evidence that population-based policies are an effective, modifiable means by which to reduce excessive drinking." In short, expect the study to be used by these same advocates and others to advance stricter environment policies. Ref 5    Go To Top

References
1 Johnston, L, et al, "Monitoring the Future, National Survey Results, 2013," University of Michigan, Institute for Social Research, December, 2012.
2 "Global Action Plan for the Prevention and Control of Noncommunicable Diseases, 2013-2020," World Health Organization, May 2013.
3 Jernigan, D, et al; "Youth Exposure to Alcohol Advertising on Television - 25 Markets, US, 2010," Morbidity and Mortality Weekly Report, CDC, Nov 8, 2013, Vol 62, No 44, 877-860; Smith K, et al, "Regulating Alcohol Advertising: Content Analysis of the Adequacy of Federal and Self-Regulation on Magazine Advertisements, 2008-2010," American Journal of Public Health, e-view ahead of print, Nov 14, 2013.
4 whiskycast.com; FredMinnick.com; nymag.com
5 Naimi, T, et al, "A New Scale of the US Alcohol Policy Environment and its Relationship to Binge Drinking" American Journal of Preventive Medicine, Vol 46, No 1, 2014: 10-16.

Adding to the advertising attention in recent weeks: a pair of ads from huge industry players that drew attention/criticism and quickly disappeared. One came from a coalition of the UK's (and the globe's) biggest brewers (AB InBev, SABMiller, Molson Coors, Carlsberg and Heineken) in support of their joint "Let There Be Beer" campaign to "reignite people's love of beer" in the UK, where beer's popularity has faded. Instead, the ad ignited the ire of Alcohol Concern which filed (the only) complaint with UK's Advertising Standard Authority. ASA agreed with the non-profit health group that the ad "breached" UK's ad code rules in a half-dozen instances, as we reported in a recent Update. ASA's terse conclusion: "This ad must not be broadcast again in its current form."

The ad cut back and forth between 3 scenarios: 1) a man hosting a barbecue, heating up and ultimately finding relief from ice water and opening a beer; 2) a young woman leaving work at the end of the day and ending up in a bar enjoying a beer; 3) a nervous young man encountering his date's father, but in the end clinking beer bottles provided by the date and relaxing together. The Coalition of Brewers, and an ad clearance agency called Clearcast, argued that the ad sounded themes of beer as refreshment, relaxation, reward and "responsible social lubricant." Alcohol Concern charged the ads violated ASA standards by portraying that beer: could "contribute to an individual's popularity or confidence"; was a "key component of social success"; "indispensable; could help drinkers "overcome problems"; had "therapeutic qualities"; and is "capable of changing mood and behavior."

In one way or another, ASA agreed that each of the scenarios violated its rules. For example, the young man meeting his date's father "could be considered to imply that alcohol contributed to his popularity and confidence," that the introduction of the beer was "likely seen as a key component of social success," that the alcohol helped him "overcome" the problem he was having with the father and that "the beer was responsible for the change of mood and behavior." The other two scenarios nearly escaped without issue, but ASA found the scenario with the young woman presented alcohol "as a form of escape" and "a solution to the problem of a large workload." Finally, the barbeque host's beer was "likely seen as more than just refreshment and reward, but also as a solution to his problem of being hot and uncomfortable," again suggesting beer as a way to "overcome problems." This type of analysis not only raises questions about what kind of pro-beer ads would pass ASA's muster but also suggests how difficult it may be, even for a savvy group of global brewers, to succeed with such a campaign. The Coalition subsequently announced "it will continue in its mission to reignite people's love of beer," celebrate brewers' and pub landlords' passion and "safeguard" beer's future. The Coalition also pointed out that "no consumers have complained" about the ad. Click here to read ASA's assessment.

Elsewhere, an on-line ad for Bacardi's Dewar's brand ran into a firestorm of on-line criticism. Bacardi quickly pulled the ad, even before DISCUS quickly reviewed it and deemed it in violation of its ad code. In brief, "The Baron" portrayed a dashing "wingman" who saves a buddy, in part by being the kind of guy who "on the battlefield wouldn't just take a bullet for you; he'd be the one throwing himself on the explosives." Specifically in the ad, The Baron intervenes with an overweight woman apparently prepared to make a move on the buddy. The men end up celebrating with a bevy of "Swedish Bikini models." (Veteran beer industry execs may remember that Stroh had to pull its "Swedish Bikini Model" ads back in 1991 (!) following charges of sexism.) One whisky blogger started a petition to have the ad removed, charging the Baron was "jumping the grenade" (see definition in Urban Dictionary). Others used words like "misogynistic," "offensive" and "just plainly hateful toward women." DISCUS's Code Review Board very quickly reviewed the ad after being petitioned by the whisky blogger, ruling it violated provision #24 of its Code of Responsible Practices: "Beverage alcohol advertising and marketing materials should not degrade the image, form, or status of women, men, or of any ethnic, minority, sexually-oriented, religious, or other group." Bacardi put out a statement acknowledging the DISCUS review and noting that it had already pulled the ad after "internal review." "While we strive to be inclusive of many demographics, we have a wide array of consumers who respond to a variety of unique and focused marketing messages, in different ways."

Each of these examples shows how critical, sensitive and impactful specific messages can be when it comes to alcohol beverages. Given the constant scrutiny of government officials, public health advocates, the media and the blogosphere, getting those messages "right" (and/or assuring they're not somehow "wrong") may be more important than ever. Ref 4  

Alcohol beverage advertising was not a front burner issue for most of 2013, other than the US Appeals Court decision protecting college newspapers' right to run them (see October AII). But public health advocates haven't given up on attempts to seek restrictions, as both the Center on Alcohol Marketing and Youth (CAMY) and Alcohol Justice (AJ) put out new reports this fall. More recently, a pro-beer ad funded by UK brewers and an on-line ad for Dewar's scotch ran into troubles and were pulled. Meanwhile, the industry awaits the FTC's latest report on marketing practices.

CAMY Claims Industry Violates Its Own Standards in Local Markets CAMY put out two reports in November. The first suggested that "the alcohol industry has not consistently met its 2003 self-regulatory standards to avoid airing alcohol advertising during programs where >30% of the audience is underage." While industry codes use national level data to gauge audience demographics, CAMY looked at audiences in 25 local markets using Nielsen data in 2010. It also used a sample of 40 programs with the highest numbers of youth viewers, 10 each from network sports/ non-sports and cable sports/non-sports. Slicing the data this way, CAMY researchers found that "of the 196,494 alcohol advertisements that aired on television programs with the largest number of youth viewers in these local markets, placements of 23.7% exceeded the industry threshold" of a maximum 30% audience of underage viewers. Nearly 1/3 of the ads that ran in Houston had audiences exceeding the 30% threshold and 25-30% in Chicago, Atlanta, Dallas/Ft Worth and Los Angeles, compared to 16-17% in DC and Boston.

CAMY cited 3 limitations on the study: the local audiences might not be representative of the national audience, it focused on national ads run on broadcast/cable and the sample of 40 programs known to appeal to youth means the "findings are unlikely to be representative of youth exposure to alcohol advertising on all television programs." Still, for CAMY, these findings meant the industry has not always lived up to its own self-regulatory standards and at least the voluntary codes would "benefit from the use of local as well as national data." Beer Institute and DISCUS responded quickly and sharply. Beer Institute noted that "once again a CAMY study is rooted in shaky ground," noting criticism from Forbes about an earlier study on brands and emergency room visits and pointing out that the last time FTC looked, 97% of ads met the BI voluntary code standard. DISCUS also pointed out its members "rigorously comply" with its code and are "regularly monitored" by FTC. It mentioned the emergency room study too, where CAMY researchers donned physicians' garb to garner info from patients. Neither association addressed the specifics of the study's findings, though each pointed out that the sharp decline in teen drinking over the long term "completely undermines" CAMY's basic premise that links advertising exposure to teen drinking. Indeed, CAMY's report notes that from 2001 to 2009, youth exposure to alcohol advertising on television in the US increased by 71%." But it neglected to point out that during the same period monthly drinking rates fell by 13% among 12th graders, 22% among 10th graders and 31% among 8th graders.

Print Ads Adhered to Codes, but Content Still Shaky: 2d Study A second study found that almost 99% of print ads in national magazines in 2008-2010 "adhered to existing regulations and codes" regarding content. But the codes are ambiguous, according to the authors, and content was "often culturally positive in terms of aspirational depictions" and included "degrading and sexualized images, promoted risky behavior and made health claims associated with low-calorie content." As such the codes aren't protective enough but rather "promote unhealthy and irresponsible consumption and degrades potentially vulnerable populations." More oversight is needed, the authors conclude. Ref 3

Falling teen drinking rates in the US once again beg the question of how this remarkable progress was achieved, especially given the fact that strict "environmental" policies - around price, promotion, place or product - advanced by public health advocates have not been broadly adopted. Indeed, trends in the "4Ps" would predict increased drinking rates, from the public health perspective (see October and November AII). What has been broadly adopted - from industry, government, media and elsewhere - are educational/ awareness efforts to raise the profile of risky and especially youth drinking. Yet public health advocates insist such efforts, especially in isolation, "do not work." Unfortunately, rejection of alcohol education seems to have gotten traction among some policymakers, even while education continues to be viewed as an effective means to tackle other similar problems.

A prime example of this emerges from the World Health Organization's May 2013 Global Action Plan for the Prevention and Control of Noncommunicable Diseases. This sprawling report addresses many issues and plenty of policy to promote strategies to address "largely preventable" deaths and disease associated with tobacco use, unhealthy diet, physical inactivity and harmful use of alcohol. But, as one veteran alcohol policy observer pointed out to us recently, WHO's Plan endorses education to reduce each of those four "modifiable risk factors" except harmful use of alcohol. Among policy "options" to address tobacco control, for example, are media campaigns consistent with WHO's "education, communication, training and public awareness" standards. Similarly, healthy diet policy options include "evidence based public campaigns and social marketing initiatives to inform and encourage consumers about healthy dietary practices" and "nutrition education in schools, child centers and other educational institutions." Options for promoting physical activity include "improved provision of quality physical education" in schools.

But, while options to reduce harmful drinking include measures to address availability, marketing and pricing of alcohol, together with broader health care and other approaches, there's not a word about alcohol education or awareness campaigns. How can education "work" to improve diets and promote physical activity and prevent obesity, diabetes and tobacco use but not help reduce harmful alcohol abuse? Ref 2

It looks like the modest increases in some teen drinking rates in 2012 reported by the Monitoring the Future Surveys, which we reported last December, were a blip. MTF reports a return to the long-term decline in teen drinking in 2013. Monthly drinking rates not only declined for 8th, 10th and 12th graders in 2013, but each dropped below 2011 levels as well. Indeed, the rates fell to record lows for each age group.

"The use of alcohol by teens has dropped dramatically over roughly the last two decades - particularly among the youngest teens - and continues to drop in 2013," as researchers from the University of Michigan pointed out when announcing the results. "All three grades are now at the lowest point that they have been at least since the mid-1990s and likely longer." While INSIGHTS focuses on monthly/heavier drinking, the authors cite another long term improvement: "Among 8th graders, most of whom are 13 or 14 years old, the proportion who have ever taken 'more than just a few sips' of alcohol by 8th grade has fallen by half since the 1990s." So there has also been a remarkable increase in abstention among the youngest students, a key measure given the importance of delaying first use.

In 2013, the monthly drinking rate of high school seniors fell by a significant 2.3 points, dropping below 40% for the 1st time since the MTF surveys were launched in 1975. (That year, 68.2% of high school seniors were monthly drinkers.) In the last 5 years alone, the drinking rate among high school seniors dropped nearly 10%. The drinking rate dropoff among 8th graders has been especially sharp, as the MTF researchers noted. It fell to just above 10% in 2013, down by more than 1/3 over the last 5 years and down nearly 60% over the last 20 years. Heavier drinking rates, again especially among young students, have also declined significantly long term and even more recently. There was a double-digit decline in the rate of so-called "binge drinking" (5+ drinks at least once in previous 2 weeks) among both 10th and 12th graders over the last 5 years. For 8th graders, there was a 40% decline in that measure since 2008. There were similar, though not as sharp, declines in teens reporting drunkenness during the previous month.

There is now a 9-year series of data on flavored alcohol beverages. Though public health advocates and some policymakers have long tagged these "alcopops" as being targeted to youth, MTF surveys show they're not especially popular among these age groups and their use among teens has declined even more sharply than alcohol beverages in general. What about marijuana use? Monthly usage rates increased among 8th and 10th graders in 2013 and were stable among 12th graders. Rates have "drifted up" over the last decade, MTF researchers reported, but are below rates in the late 90s. "But more noteworthy," according to MTF's principal investigator Lloyd Johnston, "is the fact that the proportion of adolescents seeing marijuana use as risky declined again sharply in all three grades." This "perceived" risk associated with a drug "has been a leading indicator of use" and a sharp decline "could foretell further increases in use in the future." Surely, Johnston and other researchers will be asked to investigate whether legalization in Colorado and Washington affect teen usage rates down the road. Ref 1

Law enforcement checks at an establishment led to a reduction in pseudo-underage sales" for weeks to follow after the initial action, researchers assessing the effect compliance checks have on sales of alcohol to underage found. Like with prior research, this study found a "strong and consistent effect of compliance checks on the likelihood" retail stores and on-premise accounts would sell to underage customers. Compliance checks completed at an establishment within the prior month reduced alcohol sales to minors by 61%. "This effect was consistent across establishments in areas with both higher and lower alcohol establishment density," noted authors. This study also established "the first evidence that law enforcement compliance checks not only affect the behavior of the targeted establishment but also have a general deterrent on nearby neighbors," the authors wrote.

Compliance checks within 90 days at a nearby establishment, defined here as within radius of 125 meters, or about 1 city block, reduces the likelihood of underage sales by average of 31% at other locations. This "spillover effect" as authors call it, however occurred "within a very limited geographic distance." Reductions at stores/bars beyond 125 meters were not found to be statistically significant. So obviously word spreads among retailers but apparently not very far or for a long period of time.

Sales were described as "pseudo" underage since compliance checks were conducted by men and women older than 21 but perceived to be 17-20 yrs of age. Compliance checks took place at 942 retail establishments, of which about a third were bar/restaurants. There were 77 buyers, mostly female, who made over 7,200 purchase attempts and the study found 18.7% of establishments allowed an alcohol purchase without asking for proper identification. While this study found compliance checks can be a highly effective tool in curbing underage sales, "unfortunately, the majority of law enforcement agencies do not conduct compliance checks frequently enough to maintain these effects, likely because of budgetary, time and personnel limitation," the authors pointed out. Ref 4    Go To Top

References
1 National Highway Traffic Safety Administration, "2012 Motor Vehicle Crashes, Overview," Traffic Safety Facts Research Note, DOT HS 811 856, November, 2013.
2 Lynch S, et al, "Talk About Alcohol: an Evaluation of the Alcohol Education Trust's Intervention in Secondary Schools," National Foundation for Educational Research, , 2013. Rundle-Thiele S, et al, "Moderating teen drinking: combining social marketing and education," Health Education, Vol 113, No 5, 2013, 392-406.
3 Beer Institute Public Comments to Inform the 2015 Dietary Guidelines, Sep 24, 2013, http://www.health. gov/dietaryguidelines/
4 Erickson D, et al, "Do Alcohol Compliance Checks Decrease Underage Sales at Neighborhood Establishments?" Journal of Studies on Alcohol and Drugs, Vol 74, No 6, November 2013, 852-858.

It's not too early to start thinking about the 2015 Dietary Guidelines from US Department of Agriculture (DoA). Indeed, the Beer Institute has already filed its public comments, recommending two key changes from the 2010 version. Predictably, Beer Inst continues to object to the definition of a "drink" as "0.6 fluid ounces of alcohol" and 12 oz of beer (5% ABV), 5 oz of wine (12% ABV), 1.5 oz of 80 proof spirits (40% ABV). Just as the recent report on "The Blurring of Alcohol Categories" (see last issue) pointed out that there's really no such thing as a "standard" drink in the US, Beer Institute makes the same case to DoA.

"Despite a complete lack of endorsement for 'standard drink' in the report," BI argues, the guidelines embraced a "misleading and confusing reference point" - the 0.6 definition - "that is nearly impossible for consumers to verify." The definition is "based on the false presumption" that every mixed drink will have 1.5 oz of 80-proof liquor, every glass of wine will be 5 oz of 12% ABV etc. Among its supporting arguments, BI points out:

• A typical bottle of light beer, the most popular style in the US, is 4.2% ABV and 0.5 oz of alcohol.

• TTB has not required the term "standard drink," nor the 0.6 definition. In fact, TTB's recent ruling "reinforces the fact that alcohol products are not customarily served or consumed" in drinks with 0.6 oz of alcohol and "underscores that not all drinks are the same."
• A review of the five top selling bartender guides on Amazon found that "approximately 60% of recipes call for more than 1.5 fluid oz of alcohol."

• Studies by the same author who penned the "Blurring" report support the notion that on-premise pours show a "wide variety of alcohol content…with the average mixed drink containing 42% more alcohol than the mythical 0.6 fluid ounces."

• Wine Institute has stated that most mixed drinks/wine servings do not meet the DoA definition.

• Even NIAAA, which has used the phrase "standard drink," points out that "it can be difficult to estimate the number of standard drinks in a single mixed drink made with hard liquor."

BI acknowledges that a "standard reference point" of 0.6 oz of alcohol "is required to conduct scientific research" on alcohol "but it is a confusing reference point to consumers." Specifically, BI recommends that the box with the drink definition in the current guidelines "needs to be removed and replaced with something that more accurately corresponds to consumer behavior," and that allows consumers to "truly understand" the amount of alcohol in their drinks. BI does not detail what that "something" would be.

In addition, BI suggests a change in the definition of moderate drinking, since most drinkers do not drink daily. Instead of defining moderate as 1 drink/day for women, 2 drinks/day for men, BI recommends an "average daily intake model, not to exceed 3 drinks in any single day for women and no more than 4 drinks in any single day for men." This corresponds to NIAAA's guidance on weekly consumption patterns. (NIAAA's guidance has raised the ire of some in public health who suggest that the 3-4 drink limits condones high BAC levels for some consumers.) None of the other industry associations have yet weighed in, but they no doubt will. Ref 3