In the October issue of INSIGHTS, we suggested that, despite the claims of public health advocates, education/awareness efforts have had an impact in reducing US teen drinking rates, given their sharp long-term decline in the face of few "environmental" interventions being adopted here. Indeed, most of the environmental changes in the US have been in the direction that would ostensibly boost teen drinking, from the perspective of the advocates. (Alcohol beverages have become more affordable, more available and more heavily marketed.) Now come two evaluations of non-US educational efforts that show some promise in changing not only knowledge levels, but teen behaviors, at least among some students.

In the UK, the industry-supported Alcohol Education Trust (AET) has a school-based program called Talk About Alcohol. The program includes lesson plans, a DVD, a 500-page supporting website with information for teachers, students and parents, information booklets and other resources. It takes a harm reduction approach and has 3 aims: 1) delay the age of drinking onset; 2) ensure that if students choose to drink, they drink responsibly; 3) "reduce the prevalence of drinking to get drunk and the anti-social consequences of drunkenness." AET sought an independent evaluation of the program from the National Foundation for Educational Research (NFER). The Foundation surveyed over 2,000 students who were exposed to the program at 3 different times in the 2011-2012 school year as well as over 2,000 students not exposed to the program. NFER examined 3 key issues: drinking onset, knowledge of alcohol and drinking frequency. Their findings:

• "Significantly fewer students in the intervention group (49%) than in the comparison group (63%) had ever had" a drink by the time of the 3d survey.



• Also at the time of the 3d survey, 44% of the intervention students "still sometimes drank" compared to 59% of the non-intervention teens. In both groups of drinkers about 70% usually drank at home with their parents/ caretakers present and 75% "said their parents did not mind them drinking alcohol so long as they did not drink too much." (These students were age 13-14 by the way.)



• Levels of frequent drinking (once per month or more) were also lower among the intervention group (14.5% vs 18.1%) but there was "no evidence of a statistically significant difference in frequency of drinking…or in terms of prevalence of drinking to get drunk at this stage."



• There was a "significantly greater increase" in knowledge about alcohol and its effects among the intervention group. Students in the intervention group were much more likely to say they'd received "helpful information" about alcohol from educational lessons.

Regarding the lack of significant difference in the frequency/drunkenness measures, the NFER authors pointed out that the self-reported drunkenness figures were "relatively small…which makes it more difficult to detect the impact of an intervention." Also, the frequency/drunkenness measures are "arguably longer term impacts that may be achieved when students are older and more likely to drink alcohol more frequently." Net-net: "the evidence shows that participation in six Talk About Alcohol lessons over two academic years brought an increase in students' knowledge about alcohol and its effects, and decreased their likelihood of ever having had an alcoholic drink." Not a panacea perhaps, but a program with promise.

In Australia, a group of researchers tracked the effectiveness of Game On: Know Alcohol, a 4.5-hour program that combined social marketing with education among one group each of 14-16 year-olds boys and girls. They found that the program improved drinking attitudes (students became more negative about drinking to excess) "in both schools with stronger effects observed in the girls' school." At the same time, "the girls' school demonstrated positive behavioral intention" (planning to drink moderately on social nights out) "whereas no change was observed for boys." (The study did not measure actual drinking behavior.)

The authors acknowledge that "there are many critics of health education with some remarking on education's inability to change behavior." But they also note that "alcohol education programs have shown success in supporting both prevention (abstinence) and harm minimization (moderate drinking) programs in both community and school settings." In addition, "social marketing theorists have suggested that combining education with social marketing can be an effective approach to generate change in social behaviors across a broad range of areas, including alcohol consumption." They also remind that "share of voice for messages promoting moderate drinking are significantly outweighed by messages promoting alcohol" so that any changes in attitudes or behaviors, such as those shown from a single, half-day participation in Game On: Know Alcohol "represents an important step in the moderate drinking direction." Again, no panacea, but as the authors conclude, "a positive influence." Ref 2  

Rather than focus on drivers' drinking habits or other policy issues, both NHTSA and Mothers Against Drunk Driving (MADD) remain mostly focused on technological solutions to reduce impaired driving deaths: alcohol detection devices, ignition interlocks and seatbelt interlocks. On the same day it released the 2012 fatality numbers, NHTSA announced its "Significant and Seamless" initiative that calls for cooperation between the agency and auto makers to "aggressively accelerate achievable technological advances" to reduce crash deaths and injuries. NHTSA highlights 3 technologies: 1) seatbelt interlocks which prevent a vehicle from being driven if the driver/passengers are not belted; 2) alcohol detection devices/ignition interlocks that prevent drunk drivers from starting/driving the vehicle; 3) "forward collision avoidance" devices that alert drivers to take corrective action to avoid a collision with a vehicle or pedestrian in front of them. On the interlock issue, NHTSA points out that while it has worked with auto companies to advance the technology, it "will now begin working on the legal, public policy and consumer acceptance issues to ensure that when the technology is ready for commercialization, manufacturers that choose to offer the system as an option will find a marketplace with few to no impediments to consumer adoption."

MADD shares NHTSA's faith in a technological fix. Speaking at the Center for Alcohol Policy Symposium last month in DC, MADD's national policy director JT Griffin reiterated the organization's main areas of policy focus: ignition interlocks for all offenders, sobriety checkpoints and high visibility enforcement. He pointed out that 50-75% of convicted drunk drivers continue to drive on suspended licenses, 15 peer-reviewed studies recommend ignition interlocks for all offenders, 70% of the public supports interlock laws and there are projections that interlocks reduce recidivism by 65%. Twenty states now have interlock laws for all offenders, he added, another 12 require interlocks for drivers convicted at higher BAC levels (.15+). There are approximately 305,000 installed interlocks in the US today, up from 101,000 in 2006.

Griffin acknowledged the recent recommendation by the National Transportation Safety Board to reduce the legal driving BAC level to .05, but reiterated that MADD remains "very focused" on its campaigns which all involve a .08 BAC level. MADD is also advocating "no refusal" laws that don't allow drivers to refuse BAC tests and laws that apply tougher penalties to drunk drivers when there are children under 16 in the vehicle. Public health advocate Michele Simon voiced "frustration" that MADD has not adopted a more "environmental focus" in its advocacy (i.e. taxes, ad/availability restrictions, etc) that could affect the "other 84%" of annual fatalities linked to alcohol. Griffin cited the importance of educating parents to "stop the next generation of heavy drinkers," but gave no signal that MADD intended to (re)join some of those broader policy battles.

MADD is not solely focused on technology and enforcement. It remains very much dedicated to changing habits. A recent MADD survey found that 73% of adults said "they have been at an event and seen someone try to drive home after drinking too much." MADD used the finding to advise adults to use non-drinking designated drivers and to "step in and offer help" when they see drinkers intending to drive.  

Just as Monitoring the Future surveys showed a 2012 reversal in the long-term decline in teen drinking, recent data from the National Highway Traffic Safety Administration shows a rare increase in the number of alcohol-impaired (AI) crash deaths in 2012. (Recall, NHTSA defines an alcohol-impaired crash death as a "fatality in a crash involving a driver or motorcycle operator with a BAC of .08 or greater.") While overall traffic crash deaths rose 3.3% in 2012, alcohol-impaired deaths increased 4.6%, from 9,865 in 2011 to 10,322 in 2012. So the percentage of crash deaths involving impaired drivers ticked up to 30.8%, from 30.4% the year before.

The longer-term trend remains one of significant progress in reducing alcohol-impaired driving deaths. The 2012 figure was still 4% lower than in 2009 and 21% lower than in 2004. But the percentage of total crash deaths deemed alcohol-impaired has barely changed over the last decade. NHTSA pointed out that the majority of AI crash deaths "involved drivers with a BAC of 0.15 or higher - nearly double the legal limit," but provided no further detail or trend data on that stat. Similarly, NHTSA did not detail the observation that many pedestrian deaths, which also increased, "involved alcohol."

The number of AI driving fatalities increased in 32 states in 2012, decreased in 18 states and DC. Per usual, trends varied widely, from a 29% decline in Alaska to a 113% increase in Maine (two states where the numbers are very small and subject to especially wide swings). But in 10 mostly large population states, where AI driving deaths exceed 300 annually, there was an increase in each, including these trends in 5 states with the most AI driving deaths: +6.6% in Texas; +3.6% in California; +0.4% in Florida; +2.5% in Pennsylvania; +12% in North Carolina.

Interesting too: the breakout of 2012 AI driver deaths by vehicle type. Of the 184 additional AI drivers in fatal crashes only 1 drove a passenger car. But there were an additional 140 AI drivers in fatal crashes involving light trucks (utility and pick up, +5.2 and 3.7% respectively.) And there was a notable 86% increase (37) among AI drivers of large trucks. While there was a significant increase in the number of motorcycle operators killed overall in crashes in 2012, there was a slight decrease in the number of AI motorcyclists in fatal crashes. Then too, NHTSA pointed out that while overall AI driving deaths increased, "fatalities involving young drivers and alcohol … decreased by 15% (16-20 year old drivers with 0.1BAC)," or any detectable ethanol.

Another piece of good news from NHTSA: preliminary estimates for the 1st half of 2013 indicate a return to previous trends. NHTSA projects a 4.2% decrease in the number of total crash deaths January-June in the US. Ref 1  

It took 7 years and two trips to the US Court of Appeals, but campus newspapers at two Virginia colleges finally won the right to run alcohol beverage ads (beyond references to a dining establishment), based on free speech grounds. After a US District court tossed the laws in 2008, the US Appeals Ct reversed and sent the case back to federal court for further consideration. A second US District decision upheld the ban. But on the second appeal, decided recently, the US Court of Appeals for the 4th Circuit found the ban unconstitutional "because the advertising ban is not appropriately tailored to Virginia's stated aim" of reducing underage and abusive drinking among students. The ban failed to meet the 4th prong of the US Supreme Court's Central Hudson test for speech restrictions, in that it was more restrictive than necessary, and it therefore violated the 1st Amendment. Critically, while the ban was aimed in part to reduce underage drinking via reducing exposure to messages about alcohol, the papers showed that the majority (59%+) of the student readers on both campuses - Virginia Tech and University of Virginia - were over the age of 21.

The Virginia Alcohol Beverage Control Commission defended the ban as "reasonably tailored" to reduce underage and abusive drinking. It did not prohibit all alcohol ads, the ABC argued, and was "one facet of a multi-faceted approach to combat the problem of underage drinking." The district court agreed. And while acknowledging that the ban did prevent "dissemination of truthful information to legal adults, this was not unduly out-of-proportion to" the state's interest in also reducing abusive drinking by legal age students, the trial court ruled. But the Appeals Court disagreed and found that the ban failed the Central Hudson test "because it prohibits large numbers of adults who are 21 years of age or older from receiving truthful information about a product they are legally allowed to consume." Given that a majority of the papers' readers were 21 or older, the papers had a "protected interest in printing non-misleading alcohol advertisements, just as a majority of" the readers had a "protected interest in receiving that information." So the ban was "unconstitutionally overbroad."

Public Health Economist Acknowledges Alcohol Ad Bans Don't Reduce Demand Each side in the case relied on expert testimony. The Virginia ABC called on well-known public health advocate/economist Henry Saffer, long a supporter of advertising restrictions and higher excise taxes. Even so, Saffer "testified that…the vast majority of studies found that alcohol advertising bans do not, in fact reduce the overall market demand for alcohol." This is a rare, but revealing admission. Yet, he also testified, that those studies were "inapplicable" in the Virginia case. Why's that? Because college papers are "very targeted, specific kind of media" that other types of media can't replace. Because of their unique nature, in Saffer's view, the general assumption that ad restrictions simply move advertising to other forums doesn't hold, and ad bans in campus papers "actually do have a significant effect on market demand." Another economics professor, Jon Nelson, testified flatly that "advertising bans, partial or comprehensive, do not reduce the demand for alcohol" and that advertising in as mature a market as alcohol beverages primarily serves to "create and maintain brand loyalty." He also noted that the numerous advertisements college students would see in other forums would "totally offset any possible temperance effect of the ABC regulation." Saffer provided no evidence for his support for "selective bans," but did concede that other methods, including higher taxes and counter-advertising, had been more effective in reducing underage drinking than bans.

Reviewing the decision, veteran alcohol beverage attorney Richard Blau pointed out that "Stats Matter" and "evidence is key," especially when alcohol regulations implicate 1st Amendment issues. He also noted that the decision "did not even reference the 21st Amendment" establishing states' rights to regulate alcohol beverages. While many simply assume college student populations are "comprised of kids," that's not admissible evidence, Richard reminds. "It might be a good idea" for regulators to actually perform demographic analyses when adopting laws to protect the public, especially if those laws are ostensibly targeted to a specific group, like students.

While some regulators reacted negatively to the decision, blaming the industry for pressing the ability to send messages to college students, Richard also pointed out that the lawsuit was brought by the newspapers, and was "supported by a broad coalition of professional organizations" and highly respected free-speech attorneys. Instead of frustration, Richard advised that the case calls for "focus" on "balancing genuine public safety concerns against legitimate liberties to arrive at a solution that advances the former while respecting the latter." Ref 3    Go To Top

References
1 Kerr, W, et al "The Blurring of Alcohol Categories," prepared for the National Alcohol Beverage Control Association, June 2013.
2 Opinion, Tracy Ah Mook Sang, et al, v Michael Clark, et al, Supreme Court of Hawaii, No SCAP-110000536, Sep 3, 2013.
3 Opinion, Educational Media Company and Virginia Tech, Inc, et al v J. Neal Insley, et al, US Court of Appeals for the 4th Circuit, No 12-2183, September 25, 2013.

Speaking at last week's Center for Alcohol Policy Conference in DC, Stephen Wing, associate administrator for alcohol policy at the federal government's Substance Abuse and Mental Health Services Admin (SAMHSA) pointed to the "quite remarkable" declines in teen drinking over the last decade, especially among the youngest teens. He noted the 26% decline in past month use among 12-17 yr-olds found in national household surveys from 2002 to 2012, and the 35% decline in binge drinking. Since changes in public health generally occur at a "glacial pace," it appears that the US and "not just government is doing something right in this particular area." Wing then outlined the comprehensive federal program (ICCPUD) that pulls together leaders across 15 agencies, including high-up officials like the US Surgeon General and Secretary of HHS, a resulting series of webinars and reports, plus the innumerable state and community efforts to address this issue, as well as expanded media attention. "Paying attention to underage drinking makes a difference," he concluded. Wing didn't mention it, but industry members have also significantly expanded their efforts to convince parents to talk to their kids about the risks of underage drinking. Almost all of these efforts have taken the form of outreach or education to inform about the dangers of youth drinking and ways that parents, physicians, teachers and significant others can work with young people to reduce the problem.

In sharp contrast, the day before Wing spoke, public health activist Michele Simon declared the public health mantra flatly (again) that "education doesn't work." Simon had earlier pointed to the 3 "pillars" of "price, access and advertising," as the top policy options to reduce harm. But how much have thee 3 pillars changed in the US over the last decade, indeed over the last few decades that have seen significant progress in reducing youth drinking? Very little. Indeed, if anything, affordability has increased, and both advertising and availability have expanded, all of which would exacerbate harm, in public health theory.

The average prices for beer, wine and spirits have declined relative to inflation over the last decade, according to the consumer price index. That's especially true for wine and spirits, somewhat less so for beer. Drinking rates changed little among adults, during this period, according to Gallup, though there was a slight uptick in per capita absolute alcohol consumption given the switch from beer to spirits/wine. But again, youth drinking rates declined significantly despite soft pricing. Advertising has not declined. CAMY continually reminds of the "over exposure" of youth to media, spirits significantly increased media spending/presence and everyone jumped into social media with robust programs. Similarly, availability has expanded, whether via Sunday sales, wine in grocery stores, new outlets and more. Public health advocates mostly failed in their efforts to increase excise taxes, so any decline in teen drinking surely can't be a reaction to that. Nor was there any crimp on product innovation, despite some scattered bans of specific products in specific neighborhoods. In fact, beer, wine and spirits producers all introduced sweeter products that would ostensibly appeal more to younger drinkers than established ones. That raises the question. So what worked? The answer seems obvious.  

While State Appeals Courts in Maryland and Wisconsin recently refused to extend commercial host liability in those states, (see August/September AII), Hawaii's Supreme Court appears to have done the opposite with social host liability. It reversed a lower decision and sent the case back for further action, noting that, given the facts of the case, the social hosts may be liable for the death of an intoxicated minor at their house.

The facts of this case are especially painful. The 25-yr-old defendant invited a15-yr-old teen girl, as well as other underage female friends, to a party at his house. His mother (another defendant) was present. He "provided large amounts of alcoholic beverages… facilitated drinking games and encouraged the guests…to participate." The teenager "visibly sickened and became unconscious" at the party but neither the son nor the mother provided any aid or sought medical attention that night or the next morning. The son did assist in "loading [the teen's] body into the car" of her friend who had driven to the party the next morning and instructed her "to leave the property." The friend drove to the hospital where the young woman was pronounced dead, "although it appeared she was already deceased prior to that time." The parents of the girl subsequently sued.

Hawaii law does not recognize social host liability other than a "limited exception" that allows claims brought by a third party injured by an underage drinker served by social hosts. This exception, the defendants argued, means that "an intoxicated guest has no similar claim against the host under that statute." Previous decisions, mostly involving commercial host liability, supported their position. But the parents of the teen pointed out that the previous cases involved instances where the intoxicated person left the premises where the drinking had occurred and an injury ensued. Critically, they argued that defendants were liable under a broader legal duty of hosts when a "special relationship exists" with specific factors, as was the case here. The lower court agreed with the defendants, dismissing the case, albeit reluctantly. The judge wrote: "No one I don't think could defend the actions of the defendants here. But that is not my role." The statue is "sufficiently clear," the judge concluded, in not conferring liability and "I do not find there's any special duty" or "special relationship."

The Hawaii Supreme Court reviewed the statute and earlier cases and did not question those findings. But, significantly, the Supreme Court judges did insist that "whether a legal duty is owed to the plaintiff must be determined on a case by case basis" and that "the unique facts of this case require us to distinguish it from those previous cases." And those cases did not "foreclose the existence of a duty in this case," because they did not involve social hosts or a suit by a guest "directly against the host." Ultimately, the Court ruled that a "special relationship" did exist between the host and the guest here that "weighs in favor of imposing a duty of care in this case." In fact, seven of the eight key factors in establishing a "special relationship" weighed on the side of the plaintiffs here, the Court found. They included:

• Providing the alcohol and encouraging consumption created a "clearly foreseeable risk" of harm.
• "It is certain" the teen was not conscious when driven away and the defendants "were or should have been aware"of the injury and that the teen needed assistance.
• The teen's injuries were a "direct result" of drinking and the defendants' inaction and "contributed to her eventual death."
• "It is not only immoral but also criminal for 25-yr-old to provide any amount of alcohol to a 15 yr-old minor."
• The "onus of preventing harm to guests, particularly minors" lay with the defendants.
• Since the defendants were in "complete control of the property," if they take the risk of providing alcohol to minors "it seems fair that they should bear the burden of exercising care for the safety of those minors while on the property."

Given the facts and these factors, "we are convinced that [the defendants] owed a legal duty to [the teen] while she was at the property to protect her from harm and, failing that, to render or summon aid once the harm occurred." Then too, while the defendants had argued that the statute in question barred liability in this case and the lower court agreed, the Supreme Court found "there is actually no indication that [the statute] was meant to encompass this situation." What's more, the court suggested that if the legislature had wanted to prohibit a claim like the one involved here, it could have used language that "clearly barred first-party injury claims against social hosts." But they didn't and so the court ruled current law "does not bar the claims" made by the parents in this case. Ref 2  

A NABCA-funded research project titled "The Blurring of Alcohol Categories" raises this question. The report from scientists at the public health-oriented Alcohol Research Group starts out definitively with a familiar claim: "The US standard drink contains 0.6 oz of ethanol. This is also 14 grams of ethanol and is equivalent to 12 oz of beer at 5% ABV, 5 oz of wine at 12% ABV or 1.5 oz of sprits at 40% ABV." Oddly, almost everything that follows over the next 17 pages belies the notion of a "standard drink." First, the report notes that other countries have different standards, ranging widely from 8 to 23.5 grams, so there is "not an international standard drink size." Then, in great detail, the report shows just how "variable" (the word or a variant of it appears 6 times in the following 3 short paragraphs alone) the notion of what a "drink" is in the US. Among those variations: ABV, beverage types, taxation, regulation, on-premise vs off premise pours and definitions which vary not only among beverages but between the states. Then too, none of these factors are static. Each changes over time due to industry innovation, policy concerns and consumer habits. Indeed, the real world "blurring" of any lines drawn by those who would define a drink, say the NIAAA or the US Dietary Guidelines, is ongoing, as the report also shows.

For the authors, this blurring means that "better understanding of how much ethanol is being consumed is needed to prevent over-consumption." For DISCUS, no doubt happy with the use of the word "equivalent" in the report's 2d sentence, the study "underscores the importance of understanding the Dietary Guidelines' standard drink definitions," senior VP for Scientific Affairs Dr. Sam Zakhari points out. "Knowing what constitutes a standard drink makes it easier for consumers to calculate the amount of alcohol being consumed and, importantly, provides a benchmark for them to follow the advice" of said Guidelines. But given the real world variations disclosed in the report, one wonders how the concept can have any meaning. Just a few of these variations:

• Beer ABVs range from 2.8% to 10% and higher. A 22-oz serving of a 2.8% beer has the same alcohol as a 6 oz beer at 10% ABV. Wine and spirits ABVs also "vary widely" and so modestly different serving sizes can yield far different measure of alcohol. " On-premise pours intend to be 1.5 "standard" servings; at home pours tend to be more variable, with beer and wine pour smaller than "standard" while spirits pours "include some very large drinks."
• To the delight of some industry members and dismay of others, different beverages are regulated differently in terms of availability, marketing, etc.
• Taxes are all over the place. Most excise taxes are based on beverage volume. Only the federal spirits tax is based on alcohol content. As a result taxes per "standard" drink of beer alone range from a low of 0.001 cent in Wyoming for a 7.5% beer to 18 cents for a weak beer in Alaska. One of the anomalies of the current tax system is that, despite the federal spirits tax being based on ABV, consumers inevitably pay less tax, the stronger the drink.
• State definitions of beer, wine and spirits vary based on process, ingredients, ABV, specific gravity and other factors. Sake and cider are treated as different beverage types in different states. Again, these definitions vary over the years and are sometimes challenged and changed.
• At different times spirits has wanted to be more like beer (taxation, regulation) and beer more like spirits (FMBs, current introduction of higher-strength brands, cocktail-like tastes).

What to conclude? For years distillers have advanced the notion of a "standard drink." At least two federal agencies have adopted the approach (HHS and Agriculture). The Treasury Dept has been more reluctant. Brewers have fiercely resisted the notion of a standard drink. The ARG scientists define a "standard," but show (quite definitively) that this standard has little or no meaning. Health researchers clearly need some way to measure alcohol's health effects. Doctors, dieticians, educators and parents need some way to advise clients and young people. Yet there is not, and there is not likely to be, any such thing as standard drink in the US, let alone internationally. This should not be surprising. Is there such a thing as a standard meal? Breakfast? Lunch? Dinner? Snack?

Given the policy and health issues at stake - it's not just a semantic issue - perhaps new language is needed. One hesitates to use the word "dose," of course, but perhaps a concept of "measure" or "unit" of alcohol separate from "drink" could avoid the "variability" detailed by ARG, neutralize the tension surrounding this issue and provide some true guidance for consumers. The issue is timely, as the next round of (potential) changes to the Dietary Guidelines is already open for comment. AII is open to suggestion. Ref 1  

After over 3 yrs at helm, Beer Institute prexy Joe McClain resigned Dec 13 to "pursue other interests." Search for a successor has already begun. While Beer Inst has kept excise taxes off table, beat back CARE and more, it faces big challenges from wine and spirits, small brewers, marijuana and more. Beer Inst is looking to change things up; will look for more of an inside DC player this time.

Have a Merry Christmas and a Happy New Year. We look forward to 2014.  

 Yuengling yet again went with mostly AB distribs in Massachusetts, 5 AB distribs, 1 MC distrib and 1 craft distrib. The MC distrib, Atlas, is the first MC distrib to get the brand in 5 states. And the craft distrib, Craft Brewers Guild of Boston, will get Yuengling in the key Boston mkt. L. Knife and Son got the brands in 3 territories, Seaboard and L. Knife, where it sells AB, as well as Craft of Boston. The choice of Craft of Boston is a paradigm shift, as Yuengling went with distrib not anchored by either of big 2. Makes you wonder where else such platforms might be possible for Yuengling or other suppliers. Yuengling is set to enter Mass at the end of 1st qtr 2014.

Is beer biz glass half-empty, because 2013 will be unprecedented 4th down yr for volume in the last 5? Or is it half-full because revs/profits (mostly) up, beer outperforming other big CPG categories and consumers continue to trade up? With craft growth and expansion showing almost no signs of slowdown and new breweries opening every day, still lotsa excitement in beer. But mainstream biz suffering significantly: 7 of top 10 suppliers likely to post losses in 2013, following bounce-back yr in 2012 when 8 of 10 were up.

Volume Erosion; AB/MC Challenge Numbers tricky but barring big reversals in Dec taxpaids and Nov/Dec imports, total volume trend in 2013 won't be better than -1.5%. That means 2013 US shipments will be more than 8 mil bbls below peak yr 2008, same yr AB InBev and MillerCoors came into being. Those 2 brewers will have lost over 17 mil bbls since then and are increasingly focused on changing that overall trend. Top execs at MillerCoors talked more this yr about restoring/growing per capita beer consumption and, along with AB brass, stressed that entire biz needs to grow, including premium and economy segments, not just above premium. AB has also said that stopping mkt share erosion is top priority.

But last 5 yrs have seen unprecedented growth in high end, up over 11 mil bbls, 20%. Are importers and craft brewers really concerned about driving overall volume when they've fed so well off the mainstream (see last issue on the "leaky bucket")? As result, AB and MC face huge challenge in 2014 of pressing against very broad portfolios while able competitors can be much more targeted. There's also basic math. Absent growth, not every segment or player can win. Innovation will be a wild card. MC betting big on Miller Fortune. AB will want to keep the Ritas rockin'. But again, each also has to invest heavily behind (often ailing) core brands. Meanwhile, spirits and wine continue to take volume share from beer. Unless brewers crack the code with women and/or more millennials and multicultural consumers, that challenge remains.

Amidst the volume softness "dollars are up," as most distribs and brewers remind us when we ask. AB and MC revs/bbl continue to show healthy increases (up 3-4%), a combo of price hikes and trade-up. For same reasons, profits are still growing for many brewers and distribs, tho not as sharply as in some previous years. ABI's North American EBIT up 1.6% Jan-Sep, while MillerCoors's operating income up 1.3%. Margin expansion may be tuffer to come by going forward, especially for top 2, as some financial analysts have pointed out recently. We'll see.

Consolidation Cooled; Bubble or Even Bigger Values? Distrib profits not as transparent as public brewers', of course, but anecdotally most seem to have managed volume declines while maintaining or building bottom-line strength. That's also suggested by high prices/ multiples that distribs are trading at these days. Tho some warned of "bubble" in distrib values several yr back, it surely hasn't burst, fueled by lower interest rates. Those high prices likely slowed consolidation, however, in 2013. Following record number of deals in AB system in 2012, pace returned to normal in 2013 and fewer deals in MC system.

How's Everybody Getting Along These Days? Per usual, brewers and distribs remain at odds over some key issues. But no huge blow ups in 2013, like Chesbay in 2012 or earlier battles. Not many big lawsuits either, as Yuengling-All Star spat in Pennsy got settled. (Major lawsuit of yr was DoJ's suit to stop ABI-Modelo deal. They settled that too.) Brewer-NBWA relations continued to improve by all accounts. But that doesn't mean 2013 was tension free. Beer Inst and Brewers Assn differ on tax policy and still have competing tax break bills in Congress. Feeding those differences in part is ongoing "craft vs crafty" debate, which big brewers tend to view as disparaging their brands while BA sees it as issue of "transparency." With new prexy coming on at Beer Inst next yr (see below), will be interesting to watch dynamics of assn relationships.

Small brewers also continue to seek carve outs from state franchise laws to allow self-distribution and/or ability to move brands more easily. As NBWA chairman Greg LaMantia said in the fall, "action is in the states" these days and that's where 3-tier will need to be defended. In same speech, Greg also sharply criticized brewer branches as "detrimental to the strength of the 3-tier system" and distrib values. Legislative battle over branches blew up in Oh with distribs getting bill passed to ban 'em in process that infuriated AB. In end, AB picked up 2d branch in state, but won't be able to buy more. Look for branch issue to remain topic of tension and much attention in 2014.

As if industry needed new challenge, legalization of marijuana for consumer use in Colo and Wash raised question about how that biz will affect beer sales, especially if/when other states follow suit, as well as bevy of regulatory, policy issues. Importantly, legalization advocates are using claim that pot "safer" than alc bevs, often specifically beer, to advance their position. Brewers are taking this as challenge to beer's historic legitimacy in US and fashioning response, while leaving legalization per se up to states.

So, a mixed bag going into the New Year. Volume remains a big challenge, especially for the big players, but US profit pool remains huge and, for now, growing. Competitive challenges, from within and outside, ain't getting any easier, for sure, but beer biz knows from competition. Brewer-brewer and brewer-distrib relations far from perfect, but at least everybody's talkin' these days. At Beer Marketer's INSIGHTS, we'll keep covering these and whatever new issues pop in 2014. (For a deeper dive into the "dollars up, volume down" issue, check out a new BMI blog post at our website www.beerinsights.com.)