The Beer Insights Seminar is coming up in 2 weeks on Monday, November 11^th at the Waldorf=Astoria in NYC.  A few seats remain.  Click here for more info.  Click here to register. 

Here we go again.  Lengthy Reuters article this morn cranks up possibility of AB InBev - SABMiller deal, for around $100 bil, which would make it 5^th largest corporate buy ever. “Time may be right,” say Reuters writers, as AB’s debt-to-EBITDA ratio drops below 2 next yr, ABI is “serial acquirer,” not a lotta big brewers otherwise available, US govt could be raising interest rates before too long and big shareholders in SABMiller (Altria and Santo Domingo family) “may think this is as good as it gets,” one banker said.  Then too, SABMiller mkt value ($84.5 bil) has grown 41% since start of 2012, Reuters notes, and trading at 20.2X forecast earnings for next 12 mos, just slightly more than AB at 19.9X.  So “AB might want to move fast before SABMiller gets more expensive,” Reuters speculates. Mostly anonymous quotes in article, but analyst Andrew Holland at Societe Generale pointed out “if you do a deal, say, with ThaiBev, it’s not going to move the needle.  If you do it with SAB it would give them another leg up.”  As in past, Reuters recognizes antitrust issue in US, potential problem in China, but ABI-SAB really boosts ABI in several Latin American mkts and Africa. Combined entity would have to “pick sides” between ABI’s relationship with Pepsi and SABMiller’s with Coke.  SABMiller might have blocking move via purchase of partners Castel in Africa and/or Efes in Turkey, Reuters points out.  Then too, ABI and SABMiller “have strategic alternatives to making further large acquisitions in beer,” SAP IQ’s Carl Short reminds, i.e. soft drinks.     

We finally caught up with Mike’s Hard Lemonade Co (Mark Anthony Brands Inc)  exec veep Phil Rosse following a whirlwind string of regional meetings with distribs over last couple weeks.  Mike’s has returned to very solid growth in recent mos and now expects to end 2013 over 20 mil cases (almost 1.5 mil bbls) for first time, with 7% growth for the yr, Phil told INSIGHTS.  That’s far better than trends in scan data, where Mark Anthony is just even in IRI multichannel + convenience yr-to-date thru Oct 6.  But Mark Anthony brands are up 4% in IRI last 13 weeks.  Better yet, Mike’s Oct shipments up 25%, according to Phil.  That’s Mike’s best month in over 2 yrs.  And Nov orders already up 10%, with about 7 more days of  orders still to come. 

Following these recent meetings, Phil and Mike’s founder Anthony von Mandl had key messages for distribs about the growth of FMBs in recent yrs and the growth still to come.  FMBs have gone from between 40-50 mil cases to around 70 mil cases in last couple of yrs (with the advent of the Ritas and Redd’s).  And cider has gone from 10 to 20 million cases.  So FMBs jumped nearly 40% in the last 18 mos, said Phil, “include ‘all Apple products’ and those products have almost doubled” to 90 million cases. 

“We, like the entire industry, see a sustained flavor growth trend”  and it’s “a tremendous opportunity for us and our distributor partners to build sustained growth together.” In 2014, distribs can “expect fewer, bigger, more- focused bets” from Mike’s, said Phil.  Phil didn’t give many details about a reported SKU rationalization, but he did say that Mike’s would be “SKU smart,” adding that “even with our coming innovation we will have fewer SKUs in 2014 than in 2013….  I understand that in order to achieve all the distribution and display scale that we expect against our brands that we must prioritize for our distributor and retail partners.”  In last 1-2 yrs, Mike’s Hard (Mark Anthony) moved to Seattle, changed top leadership, came out with a flurry of new entrants and faced “substantial FMB innovation” from AB and MC, yet it still will be up 7% in 2013.  “We are proud of that,” said Phil.  Now after spending much of last period “getting our internal house in order,” the company has its “ducks in a row.”  Going forward, Mike’s will be “much more focused” and therefore able to “capitalize” on continued growth in FMBs in “a bigger way,” said Phil.

The Beer Insights Seminar is coming right up on Monday, November 11^th at the Waldorf=Astoria in NYC.  Click here for more info.  Click here to register. 

Radlers are “huge success” in Western Europe, noted HUSA prexy Dolf van den Brink in CNN interview that popped just prior to HUSA’s big personnel announcements last eve.   Radlers are a mix of beer and natural juice that is only 2% alcohol which Heineken had touted earlier this week as one of key reasons for its 2% growth in Western Europe this summer.  “It’s super-refreshing,” said Dolf. “And it’s certainly something we are considering for the US market,” Dolf added to CNN. (Unstated, but Heineken will reportedly test an Amstel Radler next yr.)  Asked if radlers were effort to appeal more to female consumers, Dolf said: “Yeah” that “one of the challenges is that beer still skews very much to males” and “one of the initiatives we are taking is to be more relevant to the female consumer.”  Strongbow, he said, skews about 50/50 male/female.  

Perhaps more than usual, NBWA-sponsored Center for Alcohol Policy legal symposium’s day 1 entertained broad array of point, counter-point, viewpoint and even what’s the point.  Panels ranged from weird anti-monopoly rant (Barry Lynn of New American Foundation) to painfully close to the bone (an undressing of pay-to-play in Ariz including brewer and distrib bad actions) to barely relevant (review of recent Sup Ct decisions with but-a-tangential link to alc bevs).  State-based regulation got plenty of love, natch.  “Evil-doers” -- big brewers, Walmart, DoJ, Amazon, hard to tell who was worst -- got plenty of scorn, natch.  Public health perspectives on alcohol policy got a voice.  Supplier perspectives on same, not so much, if at all.  Here are some statements that stuck out.

TTB’s “Large Investigation” of Category Mgt Robert Angelo, TTBs director of trade investigations, updated status of bureau’s investigation of Category Management practices.  “No secret,” he said, that TTB has conducted “large investigation” of CatMan Dos, nor that he considers them “unlawful inducement.”  No final decisions yet on what TTB will do, but options include: 1) going forward, taking action; 2) continuing investigation; 3) providing a “guidance document” to industry; 4) issuing proposed rulemaking.  None of these options, he noted, include TTB doing nothing.  “Something is absolutely going to happen.”

Ariz Crackdown on Pay-to-Play Something has already happened in Ariz, as sr officer Craig Miller for state dept of liquor licenses and control pointed out in painful detail.  Using e-mails, invoices other data in evidence, with barely disguised names of players who paid, played and received, he laid out extensive pay-to-play payments/arrangements between suppliers and wholesalers – beer, wine and spirits – to get retail placement.  Included dizzying array of payments for special events, advertising, draft systems, IRCs only redeemed by retailers, gift cards, promotion support, local mktg fees, “bottle service,” free furniture, “conference fees,” you name it.  Handful of big distribs paid $10K to $50K each in settlements but likely to save hundreds of thousands in long run from rules that will ultimately “knock off some of this garbage.”  Retailers “really pushing” for payments, Craig acknowledged, and dept now focused on retailers and suppliers.  Two beer distrib assn execs praised Ariz program.  One said biz needs not modest fines but “shock and awe” fines and suspensions as wholesalers getting “shook down” by retailers” and regulators need to “step up” and come up with “million dollar fines, month long suspensions.”  Another praised “awesome job” by Ariz regulators and said similar action “needed in every state.”  

Simon Sez “Shut Up” on Excise Taxes; That Would Be a “Victory” More than any other industry org, NBWA and CAP have reached out to public health advocates. How’s that workin’ out?  Alcohol Justice’s Sarah Mart and Michele Simon (ex-AJ) were on one CAP panel. Each acknowledged some industry-public health collaboration.  But Sarah emphasized unequal voice/power in industry-public health dialogue on local, state and fed levels and also pushed for higher excise taxes.  Michele noted public health advocates understand and support three-tier.  Indeed she put 3-tier defense on AJ’s agenda before leaving that org.  But she also pointed out that 3 “pillars” of prevention are “price, access and availability” and said “it’s not enough” for the industry to go to public health and ask for help on 3-tier issues (she testified on behalf of CARE Act, recall) but not talk about those 3 pillars.  That’s “not acceptable.”  All of these issues “need to be on the table.”  As for excise taxes, she said it would be a “victory” if distribs just “shut up” about excise taxes.  That led to interesting comment from one state beer distrib assn exec who pointed out that higher prices may be point of agreement between distribs and public health.  PH wants higher prices to discourage consumptions.  Distribs don’t mind higher prices/profits.  Question is “who gets the money, the government [via taxes] or us?”  Distribs against increase if “someone else gets the money.”  

But other speakers noted positive collaborations of industry-public health interests in several states, i.e. removal of defective tequila bottles, caffeinated FMBs in Okla, limits of alcohol outlets in Mich, beer wholesaler support for safe ride programs in Minn.   

The Beer Insights Seminar is coming right up on Monday, November 11^th at the Waldorf=Astoria in NYC.  Click here for more info.  Click here to register. 

While it’s true that many more folks in sales than mktg will be among those whose jobs are eliminated as we noted last issue, there are many times more employees in sales than mktg.  So on relative basis, the percentages of departures are very similar, noted MC veep Pete Marino.   Still, MC is reducing the # of general managers, losing at least 2 in Northwest, sources say, and several more around the country.  

Craft up 3.4% and Cider up 52% on premise in 3d qtr according to GuestMetrics.  They continue to be lone bright spots in otherwise grim overall beer category on-premise for Q3.  “Both growing significantly slower than in off-premise due to the overall traffic declines in on-premise as well as the higher share base both enjoy in the on-premise vs off premise,” noted GuestMetrics. 

Yet Craft grabbed an additional 190 basis points of beer volume share on premise in Q3, and continues to steadily augment its piece of the pie.  Biggest style gainer was IPA by far, up 110 bps in Q3.  “Bitter Ale (up 40 bps), Belgian Wit Ale (up 30bps) and the seasonal Pumpkin/Fruit (up 60bps),” were other notable style gainers, noted GuestMetrics. “Cider has gained about 40-50 basis points of y/y share during each of the quarters, while Imports lost 70 basis points in Q1, 60 basis points in Q2, and only 40 basis points in Q3.”  Both Premium (-8%) and Premium Light (-12%) saw further drop-offs in Q3 vs prior quarters 2013, and “Imports have been down mid-single digits for most of the year.”

Angry Orchard, Redds Apple Ale, Lagunitas IPA and Dos Equis were brands that gained the most share on premise in latest 4 weeks thru Oct 6.  Angry Orchard, Redds Apple Ale, Bud Black Crown, Goose Island, Lagunitas IPA and Third Shift were brands with “greatest gains in distribution,” in same period.

Not many stats available yet, but word is that Modelo Especial Chelada off to very fast start this fall in Calif, Nev, Ariz, New Mex, Tex and Chicago.  Today, Crown put out release announcing that brand will be available nationally in the first quarter of 2014, except in 4 states (CO, WV, VT and ME), tho not clear why those states are excluded from the rollout.