Beer Marketer's Insights
Coca-Cola Enterprises' operating profit contracted 4% to $272 mil on 2.5% net sales decline to $2.16 bil in 2d qtr, but analysts took heart from continued growth of up-and-coming brands like Coke Zero, Monster Energy and Capri Sun. Total second-quarter volume declined 2.5%, Atlanta-based co reported. CSDs were off 2.5% and so were Coca-Cola trademark brands, tho Coke Zero managed to gain more than 13%. Energy portfolio was up 3% mainly on strength of 15% gain of Monster. Noncarbs were off 2%, with bottled water off 5% and Capri Sun up high single digits. Total volume in Great Britain declined 1.5% percent, while volume in continental Europe (including Norway/Sweden) fell 2.5%.
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Campbell Soup continues to tinker with taste and other issues that have dogged its durable V8 franchise, while broadening successful V8 extensions like Fusion and Splash and venturing into new store sections like produce and mixers, Campbell North America prexy Mark Alexander said Wed during co's annual analysts day at its Camden, NJ, hq. But judging from Webcasts audited by BBI and transcripts prepared by SeekingAlpha, not a word was said about future of DSD distribution alliance with Coca-Cola, which many in bev biz believe is headed for breakup upon its conclusion this year, much as KO and Nestle dissolved their tea alliance last year. Does that herald return to indie DSD houses? While nothing's been set yet, sources indicate CPB is eyeing returning to brokers for task.
Venerable V8 brand does $340 mil at retail, but has been in decline, a victim, CPB brass said, of usual pressures that see consumers gravitating to value and premium offerings while middle gets squeezed, as well as of migration from center store to perimeter aisles like produce, where CPB now plays via its Bolthouse Farms acquisition last year. Big priority is to stabilize core V8, in part by continuing to work on taste issues, as with Jan refresh, and upgrading packaging with view to adding pizzazz while taking costs out, Alexander noted. "We've got opportunity to execute better," svp/cfo Craig Owens said later in day. "Our taste hasn't been where it needs to be. We have opportunity to innovate better and more forcefully." Meanwhile, co continues to expand successful specialty items like V8 V-Fusion fruit/veggie blends, which at $270 mil (retail) are approaching core line in size. V-Fusion subline is being expanded next year with Black Cherry Apple and Pineapple Strawberry flavors, Alexander indicated. V8 V-Fusion kids boxes launched last year are adding Grape flavor and variety packs while broadening distribution across channels. Another route to expansion is V8 V-Fusion Refreshers juice cocktails, with promise of clean taste and no HFCS. That gets Black Cherry Berry, Peach Strawberry, Cranberry Grape and Tangerine Passionfruit additions.
Meanwhile, kid-targeted V8 Splash itself has become $208 mil brand at retail, and its current 4 sku's are being expanded with Lemonade and Strawberry Lemonade offerings to close big flavor gap, Mark said. Another subline doing well in early days, green-tea-based, canned V-8 V-Fusion Energy, targeting adults, has added diet versions in Strawberry Lemonade and Cranberry Raspberry and dialed up advertising.
More audaciously, brand is pushing into new parts of stores with such innovations as bloody Mary mix being tested in limited retail locations, Alexander indicated, as well as brand's first foray into refrigerated space via collaboration with CPB's Bolthouse Farms unit under Harvest brand (BBI, Jul 24).
Has Coke Distribution Alliance Had Its Day? That said, alliance with KO that put V8 brand on bottling trucks once was viewed as key to better penetrating immediate-consumption channels with both core V8 offering and more relevant extensions. But recent indications are that has been unraveling, a victim of CPB's dissatisfaction with lack of focus by Coca-Cola Refreshments even as Coke has resented Bolthouse acquisition that made CPB a direct rival of Coke's Odwalla unit (BBI, Dec 11). Recent visitor to CPB hq told BBI in recent weeks that employees there seemed to be leaning toward re-assembling broker network, at least as stopgap were KO alliance to go by boards. During analyst day, only apparent reference to distribution was remark by Bolthouse prexy Jeff Dunn, a former Coke exec, that seemed to suggest there are lots of other fish in the sea. Noting likelihood of Coke's refranchising N Amer bottling territories, he said: "They're going to do whatever they're going to do." While Bolthouse just teamed with Core-Mark to work immediate-consumption channel, "there are lots of routes to market today on both the refrigerated and ambient side that didn't exist before," he added. "You've got big-scale distributors who're looking for partnerships. And I think our ability to align with them will be a competitive advantage over time." Of course, Jeff was speaking mainly about refrigerated Bolthouse brand, not ambient V8, but remark may reflect broader rethinking of distribution options within co.
No Reason Seen to Merge V8, Bolthouse Units Asked whether it might make sense to merge existing V8 unit with Bolthouse Farms unit acquired nearly a year ago, ceo Denise Morrison noted that convergence between 2 that led to recent launch of refrigerated V8 Harvest "is not necessarily structural . . . There are 2 fundamentally different business models to go to market" via shelf-stable/warehouse for V8 and refrigerated for Bolthouse. From selling perspective, too, "it's 2 different buyers." So the 2 divs' sales forces collaborate but not much synergy is seen on day-to-day mgmt side, nor much opportunity for cost reduction aside perhaps from realm of joint purchasing. "I think what you can take away from this is, behaviorally, we're leveraging scale where it makes sense to do that," ceo said. In his own remarks during analyst day, Dunn had noted Morrison's promise not to "Campbellize" Bolthouse and joked that hq employees would need visa to visit Bolthouse's Calif offices.
Venerable V8 brand does $340 mil at retail, but has been in decline, a victim, CPB brass said, of usual pressures that see consumers gravitating to value and premium offerings while middle gets squeezed, as well as of migration from center store to perimeter aisles like produce, where CPB now plays via its Bolthouse Farms acquisition last year. Big priority is to stabilize core V8, in part by continuing to work on taste issues, as with Jan refresh, and upgrading packaging with view to adding pizzazz while taking costs out, Alexander noted. "We've got opportunity to execute better," svp/cfo Craig Owens said later in day. "Our taste hasn't been where it needs to be. We have opportunity to innovate better and more forcefully." Meanwhile, co continues to expand successful specialty items like V8 V-Fusion fruit/veggie blends, which at $270 mil (retail) are approaching core line in size. V-Fusion subline is being expanded next year with Black Cherry Apple and Pineapple Strawberry flavors, Alexander indicated. V8 V-Fusion kids boxes launched last year are adding Grape flavor and variety packs while broadening distribution across channels. Another route to expansion is V8 V-Fusion Refreshers juice cocktails, with promise of clean taste and no HFCS. That gets Black Cherry Berry, Peach Strawberry, Cranberry Grape and Tangerine Passionfruit additions.
Meanwhile, kid-targeted V8 Splash itself has become $208 mil brand at retail, and its current 4 sku's are being expanded with Lemonade and Strawberry Lemonade offerings to close big flavor gap, Mark said. Another subline doing well in early days, green-tea-based, canned V-8 V-Fusion Energy, targeting adults, has added diet versions in Strawberry Lemonade and Cranberry Raspberry and dialed up advertising.
More audaciously, brand is pushing into new parts of stores with such innovations as bloody Mary mix being tested in limited retail locations, Alexander indicated, as well as brand's first foray into refrigerated space via collaboration with CPB's Bolthouse Farms unit under Harvest brand (BBI, Jul 24).
Has Coke Distribution Alliance Had Its Day? That said, alliance with KO that put V8 brand on bottling trucks once was viewed as key to better penetrating immediate-consumption channels with both core V8 offering and more relevant extensions. But recent indications are that has been unraveling, a victim of CPB's dissatisfaction with lack of focus by Coca-Cola Refreshments even as Coke has resented Bolthouse acquisition that made CPB a direct rival of Coke's Odwalla unit (BBI, Dec 11). Recent visitor to CPB hq told BBI in recent weeks that employees there seemed to be leaning toward re-assembling broker network, at least as stopgap were KO alliance to go by boards. During analyst day, only apparent reference to distribution was remark by Bolthouse prexy Jeff Dunn, a former Coke exec, that seemed to suggest there are lots of other fish in the sea. Noting likelihood of Coke's refranchising N Amer bottling territories, he said: "They're going to do whatever they're going to do." While Bolthouse just teamed with Core-Mark to work immediate-consumption channel, "there are lots of routes to market today on both the refrigerated and ambient side that didn't exist before," he added. "You've got big-scale distributors who're looking for partnerships. And I think our ability to align with them will be a competitive advantage over time." Of course, Jeff was speaking mainly about refrigerated Bolthouse brand, not ambient V8, but remark may reflect broader rethinking of distribution options within co.
No Reason Seen to Merge V8, Bolthouse Units Asked whether it might make sense to merge existing V8 unit with Bolthouse Farms unit acquired nearly a year ago, ceo Denise Morrison noted that convergence between 2 that led to recent launch of refrigerated V8 Harvest "is not necessarily structural . . . There are 2 fundamentally different business models to go to market" via shelf-stable/warehouse for V8 and refrigerated for Bolthouse. From selling perspective, too, "it's 2 different buyers." So the 2 divs' sales forces collaborate but not much synergy is seen on day-to-day mgmt side, nor much opportunity for cost reduction aside perhaps from realm of joint purchasing. "I think what you can take away from this is, behaviorally, we're leveraging scale where it makes sense to do that," ceo said. In his own remarks during analyst day, Dunn had noted Morrison's promise not to "Campbellize" Bolthouse and joked that hq employees would need visa to visit Bolthouse's Calif offices.
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Xyience Xenergy has taken pair of steps that should further cement its stature as rare unaligned energy drink with some staying power: it's tightened links to Ultimate Fighting Championship and signed on 2 key Honickman Group distribution operations.
The corporate news first: ownership shuffle has now made Zuffa a direct partner in Xyience, which is controlled by Fertitta Enterprises. Since Fertitta bros control both Xyience and the UFC thru Zuffa, that's a paper shuffle in some ways. But it should make for better alignment between Xyience and the UFC, Xyience prexy John Lennon said. Moves came as Xyience pulled in further round of capital as it continues to rebuild brand. Recall that UFC tie has been one of key assets that kept brand in the energy fight, so to speak, tho over past year it's also extended activities into areas like art and done more to reach women with all-natural, zero-calorie line that's intended to carry broad appeal.
Meanwhile, on distribution front, brand has just signed powerful Honickman Group for territory running from southern NJ south to DC area, via Honickman's Canada Dry Delaware Valley and Canada Dry Potomac operations. It succeeds Metro in Philadelphia area and Beverage Network of Md in DC area. Tho Honickman also has operation in NY, John emphasized that no change was happening there, where brand moves thru Oak/Boening beer houses and chains are lately expressing greater interest in brand. John also nixed frequent rumor in recent months that brand might be migrating to Lenore and Haralambos in another key market, Southern Calif. He said brand is sticking with young, aggressive mgmt team at newcomer Statewide. "Our feeling is they're a group we can grow with," he added. "They're young and hungry just like we are."
Moves are occurring after Xyience came off difficult first half, which saw flattish 1st qtr in US and outright decline in Canada, an important market for brand. Fortunately, brand popped back 16% in Q2 in US, Lennon said, and eased decline in Canada, and he's bullish about rest of year.
The corporate news first: ownership shuffle has now made Zuffa a direct partner in Xyience, which is controlled by Fertitta Enterprises. Since Fertitta bros control both Xyience and the UFC thru Zuffa, that's a paper shuffle in some ways. But it should make for better alignment between Xyience and the UFC, Xyience prexy John Lennon said. Moves came as Xyience pulled in further round of capital as it continues to rebuild brand. Recall that UFC tie has been one of key assets that kept brand in the energy fight, so to speak, tho over past year it's also extended activities into areas like art and done more to reach women with all-natural, zero-calorie line that's intended to carry broad appeal.
Meanwhile, on distribution front, brand has just signed powerful Honickman Group for territory running from southern NJ south to DC area, via Honickman's Canada Dry Delaware Valley and Canada Dry Potomac operations. It succeeds Metro in Philadelphia area and Beverage Network of Md in DC area. Tho Honickman also has operation in NY, John emphasized that no change was happening there, where brand moves thru Oak/Boening beer houses and chains are lately expressing greater interest in brand. John also nixed frequent rumor in recent months that brand might be migrating to Lenore and Haralambos in another key market, Southern Calif. He said brand is sticking with young, aggressive mgmt team at newcomer Statewide. "Our feeling is they're a group we can grow with," he added. "They're young and hungry just like we are."
Moves are occurring after Xyience came off difficult first half, which saw flattish 1st qtr in US and outright decline in Canada, an important market for brand. Fortunately, brand popped back 16% in Q2 in US, Lennon said, and eased decline in Canada, and he's bullish about rest of year.
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Several big-bevco execs have cited promising momentum heading into Q3, and that's now borne out by preliminary snapshot of c-store activity from Nielsen data reported by Wells Fargo's Bonnie Herzog. For 4 weeks ended Jul 6, including Jul 4 holiday weekend, CSDs excluding energy drinks scored 2.2% rise in $$ sales, with 4.7% price gain offsetting 2.4% unit decline. True, that's a tad off from 2.5% of 12-wk period and half rise of 5% in prior year. But Coca-Cola $$ sales rose solid 4% as volume edged up 0.3% and pricing rose 3.7%. "We are encouraged by brand Coke posting its strongest sales in a year and continued improvements in Diet Coke," Bonnie noted. Pepsi, meanwhile, scored 0.9% $$ increase as steep 6.3% volume decline was offset by 7.7% price gain. "Consistent with our Beverage Buzz (retailer) survey, it appears KO was far more promotional with pricing than PEP this period, a strategy that drove its strong dollar sales performance," Herzog wrote. As for Dr Pepper Snapple, its CSD $$ sales edged up 0.2% as 1.9% volume decline was offset by 2.1% price gain.
Trends were favorable in other category Bonnie tracks, energy. Energy posted 5.8% $$ sales gain vs +5.7% prior month and +16.2% in year-earlier, as volume grew 6.2% and avg price declined 0.3%. Monster continues to take volume and value share in category, led by intros and good movement on Zero Ultra. While PEP (Amp) and DPS (Venom) lag category, KO rode its NOS brand to overall 12.8% $$ gain, including Full Throttle and other marques.
Trends were favorable in other category Bonnie tracks, energy. Energy posted 5.8% $$ sales gain vs +5.7% prior month and +16.2% in year-earlier, as volume grew 6.2% and avg price declined 0.3%. Monster continues to take volume and value share in category, led by intros and good movement on Zero Ultra. While PEP (Amp) and DPS (Venom) lag category, KO rode its NOS brand to overall 12.8% $$ gain, including Full Throttle and other marques.
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Starbucks blew doors off Wall St expectations in 3d quarter and made case that its many interconnected businesses - in coffee, tea, juice, energy and baked items, in cafes, groceries and digital realm - are achieving "flywheel effect" that should keep growth coming well into 2014.
Net revenues soared 13% to $3.7 bil on same-store sales gain of 8% (with all regions up, incl US +9%). Operating income rose 25% to $615.2 mil. Margins expanded 150 basis pts to 16.4% driven both by bigger volumes and lower coffee costs. Dollars loaded onto Starbucks cards rose 30%. Co shipped its billionth Starbucks- or Tazo-branded K-Cup. "Starbucks' Q3 results represent the best across-the-board 3d-quarter performance in our 42-year history," exulted chmn/ceo Howard Schultz. "Our more than 19,000-store global footprint, our fast-growing CPG presence and our best-in-class digital, card, loyalty and mobile capabilities are creating a 'flywheel' effect elevating the relevancy of all things Starbucks, and driving profitability." On conference call Howard cited as key contributors "continued innovation in our core coffee and beverage portfolios, solid progress against the reinvention of our food platform and an increasing ability to leverage and translate Starbucks' brands and strong US revenue growth into revenue and profit growth in multiple markets and channels around the globe." Added cfo Troy Alstead: "Looking forward to fiscal year 2014 and beyond, I am as confident as ever in our ability to continue to deliver strong revenue and earnings growth." SBUX now anticipates 10-13% $$ growth in 2014, including thru net addition of 1,400 new stores.
Yowza. That was reaction of investors, too, as shares surged 7% in down market where KO led industrials south. For co that had seemed adrift as recently as 3 years ago, nearly everything seems to be panning out now. Refresher energy platform has proved a winner, and latest addition, in-store Valencia Orange Refresher, is "exceeding even our most optimistic expectations," along with limited-time Caramel Ribbon Crunch Frappuccino. Chronic in-store Achilles heel - lousy pastries - seems on way to being solved by acquisition of La Boulange bakery chain, with La Boulange-branded items now available in over 1K stores across NorCal and Pacific NW and heading into NY, Chicago, Boston and LA by fall. As for mall-based tea chain acquired a few months back, SBUX is "deep into the strategic development and integration of Teavana," Schultz said, with results visible this fall in opening of "our first reimagined Teavana streetfront store" on NY's Upper East Side and in Tazo tea concepts store in Seattle that's being rebranded as Teavana store. Along with Schultz's promise that "over time many in these handcrafted Teavana tea beverages will also find their way in Starbucks stores," the moves give further evidence that new acquisition has eclipsed Tazo as SBUX' premium tea offering. Even long-challenged European biz, where SBUX recently changed mgmt team, seems to be movin' in right direction.
On grocery side, co has been broadening Green Mountain alliance on K-Cups while price cuts seem to have helped bagged Starbucks coffee. Alliance with Dannon on Evolution Fresh "Inspired by Dannon" ready-to-eat Greek yogurt for cafes will be expanded to grocery in 2015 under Evolution Fresh brand. Co's "All Other" segment comprising Seattle's Best Coffee, Teavana and Evolution Fresh along with digital ventures scored $108 mil in revenue, more than double last year. Teavana contributed $51 mil of that and Evolution Fresh, tho still small, grew by 21%, cfo Alstead said. "We continue to increase share and velocity in grocery channels and our new state-of-the-art juiceries began production in June, which will enable us to meaningfully expand availability of Evolution Fresh Juice in both Starbucks stores and CPG channels," he said. Evolution's share of superpremium juice out West is now nearly 6%, he said.
Indeed, Schultz cited Evolution Fresh as perfect example of flywheel effect - in this case, exemplifying how consumer pkgd goods biz can ride tailwind of core retail stores as new brands first build awareness and loyalty in cafes, then move out. Evolution replaced Naked Juice, via longtime SBUX' longtime partner PepsiCo, in stores and yielded significant sales lift, Schultz said. That in turn encouraged Whole Foods and major grocery chains to take on brand in hundreds of their units, and Evolution now is graduating to national listing in Whole Foods.
Net revenues soared 13% to $3.7 bil on same-store sales gain of 8% (with all regions up, incl US +9%). Operating income rose 25% to $615.2 mil. Margins expanded 150 basis pts to 16.4% driven both by bigger volumes and lower coffee costs. Dollars loaded onto Starbucks cards rose 30%. Co shipped its billionth Starbucks- or Tazo-branded K-Cup. "Starbucks' Q3 results represent the best across-the-board 3d-quarter performance in our 42-year history," exulted chmn/ceo Howard Schultz. "Our more than 19,000-store global footprint, our fast-growing CPG presence and our best-in-class digital, card, loyalty and mobile capabilities are creating a 'flywheel' effect elevating the relevancy of all things Starbucks, and driving profitability." On conference call Howard cited as key contributors "continued innovation in our core coffee and beverage portfolios, solid progress against the reinvention of our food platform and an increasing ability to leverage and translate Starbucks' brands and strong US revenue growth into revenue and profit growth in multiple markets and channels around the globe." Added cfo Troy Alstead: "Looking forward to fiscal year 2014 and beyond, I am as confident as ever in our ability to continue to deliver strong revenue and earnings growth." SBUX now anticipates 10-13% $$ growth in 2014, including thru net addition of 1,400 new stores.
Yowza. That was reaction of investors, too, as shares surged 7% in down market where KO led industrials south. For co that had seemed adrift as recently as 3 years ago, nearly everything seems to be panning out now. Refresher energy platform has proved a winner, and latest addition, in-store Valencia Orange Refresher, is "exceeding even our most optimistic expectations," along with limited-time Caramel Ribbon Crunch Frappuccino. Chronic in-store Achilles heel - lousy pastries - seems on way to being solved by acquisition of La Boulange bakery chain, with La Boulange-branded items now available in over 1K stores across NorCal and Pacific NW and heading into NY, Chicago, Boston and LA by fall. As for mall-based tea chain acquired a few months back, SBUX is "deep into the strategic development and integration of Teavana," Schultz said, with results visible this fall in opening of "our first reimagined Teavana streetfront store" on NY's Upper East Side and in Tazo tea concepts store in Seattle that's being rebranded as Teavana store. Along with Schultz's promise that "over time many in these handcrafted Teavana tea beverages will also find their way in Starbucks stores," the moves give further evidence that new acquisition has eclipsed Tazo as SBUX' premium tea offering. Even long-challenged European biz, where SBUX recently changed mgmt team, seems to be movin' in right direction.
On grocery side, co has been broadening Green Mountain alliance on K-Cups while price cuts seem to have helped bagged Starbucks coffee. Alliance with Dannon on Evolution Fresh "Inspired by Dannon" ready-to-eat Greek yogurt for cafes will be expanded to grocery in 2015 under Evolution Fresh brand. Co's "All Other" segment comprising Seattle's Best Coffee, Teavana and Evolution Fresh along with digital ventures scored $108 mil in revenue, more than double last year. Teavana contributed $51 mil of that and Evolution Fresh, tho still small, grew by 21%, cfo Alstead said. "We continue to increase share and velocity in grocery channels and our new state-of-the-art juiceries began production in June, which will enable us to meaningfully expand availability of Evolution Fresh Juice in both Starbucks stores and CPG channels," he said. Evolution's share of superpremium juice out West is now nearly 6%, he said.
Indeed, Schultz cited Evolution Fresh as perfect example of flywheel effect - in this case, exemplifying how consumer pkgd goods biz can ride tailwind of core retail stores as new brands first build awareness and loyalty in cafes, then move out. Evolution replaced Naked Juice, via longtime SBUX' longtime partner PepsiCo, in stores and yielded significant sales lift, Schultz said. That in turn encouraged Whole Foods and major grocery chains to take on brand in hundreds of their units, and Evolution now is graduating to national listing in Whole Foods.
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AB sales veep David Almeida gave an upbeat, all-industry message to the Beer Insights Seminar: beer is a "top performing cpg category," up in $$, while many other major categories are down. Beer is big and turns fast, so it is "efficient," added David, tho he acknowledged volume is not "where we want it to be." He backed up each of his points with data, spending less time promoting AB than the overall industry. In real departure for AB, David said: "I take my hat off to our friends from Boston Beer, with what they've done with Angry Orchard" which is a "huge success." Slides showed pictures of hot competitive brands like Redd's and Angry Orchard. David had on his industry steward hat and noted recent change AB made in compensation that has "really resonated with retailers." AB's category mgt team is "incented on category performance" not just AB performance, so has more "unbiased view." David also pointed to evolution toward customizing its balance portfolio approach (called "Your Balanced Portfolio") using "big data" to show retailers detailed view of difference between top performing and underperforming chains.
His speech set out as its objective to dispel some of the "gloomy sentiment" and "myths" out there about beer. Beer $$ sales up 2.7% yr-to-date in IRI multichannel plus convenience, while the total store is up 1.6%. Beer is 4.1% of sales and 6.9% of growth. Compare to other big cpg categories, like carbonated soft drinks down 3%, milk down 0.6%, etc. Beer is also deepening its household penetration, adding 4 mil households since 2011 and jumping from 42.9% to 45.4% of households, according to IRI panel data. That's up 1.6% compared to the past yr, again outperforming other leading CPG categories.
"A lot of good things are happening in the beer category," stressed David. "One of the key drivers has been the premiumization of beer…. Beer has premiumized substantially, which has really driven value for all industry participants." David showed that above premium accounted for 93-97% of all category growth in 2010-2012 and 129% of category growth so far this year, according to IRI MULC. And tho beer used to be perceived as a "stale non-innovative category, that is no longer the case." Beer "very innovative" and Bud Light Platinum was the #2 innovation across all categories in IRI last yr. "We've made big strides in bringing innovative new products to the market that help grow the category and make the category more robust and importantly at a premium price point."
High end averages a 130 price index to premium, but innovations avg 160 and cider indexes at 175. In a "mature industry," said David, "part of the game has become more about value, as opposed to just volume…. Volume is critical, but it's also important to make sure the value is there." AB has 30 share of above premium biz, but 60 share of premium and below. "We love the high end," but "can't ignore the bread and butter," David concluded. Go To Top
Best Wishes,
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Several common themes sounded across presentations at Nov 11 Beer Insights Seminar this yr. Indeed, supplier sales execs and retail experts crisscrossed many times in their remarks as they tackled key industry issues, providing different perspectives and sets of data. Here are some insights arranged by topic.
Driving Per Capita Beer Consumption vs Riding the High End Wave "One segment can't drive the industry," MC chief customer officer Kevin Doyle insisted during panel on retail landscape. While MC (and AB) participating in high-end growth, "real issue is per capita beer consumption is not growing," Kevin said, while wine and spirits per caps are growing. "That's something we all need to take care of." Kevin, as well as AB sales veep David Almeida and Pabst prexy Kevin McAdams, stressed need for balance/health across mainstream categories, not just above premium. Beer trends in top 25 US retailers ranged from -6.1% to +24.1% yr-to-date thru Oct 20, consultant Bump Williams showed. Craft biz up across the board, natch; import trends varied. But where overall beer did best, premium segment up. "Where premium category is strong, the total category is strong," Bump pointed out.
While, MC "not happy" with where industry is, Kevin said, Crown exec veep sales Bruce Jacobson and Boston Beer sales veep John Geist welcome transition to high end (neither sells mainstream beer). US beer is "very big leaky bucket right now," said John. "We're just trying to grab a little bit of that 3 million bbls that's leaking every year." And while Bruce sees oppy for overall growth, especially as multi-cultural consumer "very centered on beer category," John said "I don't know if that bucket's going to stop leaking soon."
IRI's Dan Wandel, Nielsen's Andrea Riberi and GuestMetrics' Bill Pecoriello provided new look at data that suggested shift to craft may be hurting overall volume. Following sample of beer buyers (about 1,300) 1 yr after they added craft to beer basket, IRI found beer $$ ring increased 2.6%, but "volume purchased per trip declined by 9.2%," Dan said. While avg $$ ring similar when craft or premium in basket, Andrea pointed out, avg volume for craft is 12-pk vs a case when it's premium light. Plus, premium light buyers shop more often, suggesting "a big effect." When craft on the on-premise ticket, Bill showed, volume takes at least a 10% hit vs when premium on the check. That partially supported point from Kevin: pulling premium light taps is "just a really bad business decision."
How to Restore Growth? Basic Math A bunch of suggestions popped from these execs/ experts on addressing soft overall volume. Educating retailers about "basic math" of beer's faster turns vs other categories is part of answer, said Kevin. High margins in high end also a point to press, said John. Oppy too in expanded warm space, several execs said, especially for long tail of craft. MC, Crown and Boston execs agreed lead brands deserve cold box space, long tail brands have to "earn" their way in. Some good news on space. Nielsen's Andrea showed survey of retailers earlier this yr that found beer space has "grown appreciably" in about half of those surveyed. So beer gaining space, but "not the merchandising support for the space that we should be." Many categories showing weaker trends than beer (i.e. carbonated bevs, snacks, water, etc), IRI's Dan showed, getting more feature/display support in grocery, another oppy to educate retailers.
Premium Lights Losing Share Across Board, But "We Ain't Dead" Premium lights still 37% of volume in Nielsen all outlet data (40% in c-stores), Andrea showed, and drive the most traffic, velocity, avg annual beer spend and loyalty among beer shoppers. Premium light drinkers, she added, not switching to other brands but are simply drinking less. Result: premium lights shed 12.3 mil cases over last 12 mos in Nielsen all-outlet data, lost full share. Segment even softer on-premise, off about 10% and losing 1.9 share in that channel Jan-Sep this yr, according to Bill. Premium lights getting especially whacked in critical late-night period, he pointed out, where volume off an ugly 16.7% this yr. Overall, light beer category slipped from 54.9 share of $$ in IRI's multi-channel data in 2009 to 50.9 share YTD thru Oct 6, losing 18 mil cases this yr alone, Dan showed. Subpremium lights got hit hardest this yr and only 6 of top 30 light brands up in 2013 in IRI.
Premium lights "under pressure," Kevin said, "but we ain't dead yet." Even millennials choose premium lights first and twice as often as any other segment when they "play in beer." So premium light is "entry point for the rest" of beer and important to "recognize if you lose the premium light consumers you lose other consumers in the cohort, especially craft." Bill picked up on Bump's point, noting that "when premium light is strong, beer is strong" on-premise. Segment is "4.5X more efficient" (volume per brand) in casual dining than crafts/imports and 7X more efficient in bars. Kevin also reminded, amidst talk of sku proliferation and signs that some retailers showing "sku fatigue" (Bruce), that 7th largest Lite sku in grocery has "more velocity that all but 1 craft sku."
Cutting the Long Tail vs Letting it Grow MC's Kevin seeing some signs that retailers understanding long tail of tiny brands "not productive." Variety important, he agreed, but "lower part" of long tail probably going to get cut going forward. Nielsen's Andrea showed that while beer skus continue to rise, $$ per item is falling; spirits/wine sales per item are growing. Long tail of craft growing especially fast on-premise, Bill showed, including 30% increase in # of craft brands in Q3 alone. But craft's long tail performing better than top brands on-premise. Indeed, top 20 craft brands have 40 share of craft biz on premise, but collective volume down 2% for 9 mos. Meanwhile, massive tail of 6K+ brands, 40% of craft volume, up 7.9%. Craft volume up 4% on-premise thru Sep.
Supporting notion of cutting the tail, Bump wondered whether consumer getting "confused" by variety now available. Kevin suggested some grocery retailers "have figured out that they got ahead of the demand curve when it comes to above premium and you've got a reckoning coming with skus." Bump supported that notion with slide that showed 3.3% of skus account for 80% of all beer $$ sales in IRI multi-outlet data. Even in craft 8% of skus do 80% of the dollars. Looked at another way, top 15 craft brands did 36% of craft dollars in IRI multi-channel data for 52 weeks thru Oct 6, Dan showed. Sales of top 15 up 10% while share slipped 2 points. Still, their "per brand importance to overall dollar change …far exceeds all other tiers" in craft. Each of top 15 brands grew about $2.5 mil on avg. Next 216 brands were 44 share of craft, $$ up 19% and per brand $$ growth was $380K. Long tail of 2,420 brands, just 5% of craft $$, up 12%, but just $2,620 of growth per brand.
Beer vs Wine/Spirits Spirits and wine volume each up about 2% in IRI multi-outlet data YTD thru Oct 20, while beer still down 0.2%, Bump showed. Beer continues to lose share of alc bev biz, but Nielsen data shows beer, wine and spirits avg pricing trends about the same off premise. Each has gotten about 2% from mix and 1% from price hikes, so each seeing about 3% avg price increase over last 52 weeks. Top wine/spirits brands are outperforming top beer brands. Dan looked at 5 geographies -- liquor stores in Fla/Tex, all outlets in Calif, Ariz and Chi -- and found that while top 15 beer brands up 1.7% in $$ sales in those mkts (implying volume flat at best), top 15 spirits brand families $$ up 3%+, top wines +4.5%. On-premise, Bill showed how beer getting especially hurt in bars/clubs (vs casual/fine dining) and in late-night period this yr. Beer lost "just" 0.4 share during dinner hours across on-premise, with wine and spirits splitting the gain. But in late night, beer lost 0.8 share, with spirits getting 0.6 of that, wine, 0.2. Bill's hypothesis: "at least partially caused by Craft's strength in dinner, causing consumers to switch from beer to spirits (due to craft's lower sessionability)," another signal that transition to craft taking bite out of total volume.
Driving Per Capita Beer Consumption vs Riding the High End Wave "One segment can't drive the industry," MC chief customer officer Kevin Doyle insisted during panel on retail landscape. While MC (and AB) participating in high-end growth, "real issue is per capita beer consumption is not growing," Kevin said, while wine and spirits per caps are growing. "That's something we all need to take care of." Kevin, as well as AB sales veep David Almeida and Pabst prexy Kevin McAdams, stressed need for balance/health across mainstream categories, not just above premium. Beer trends in top 25 US retailers ranged from -6.1% to +24.1% yr-to-date thru Oct 20, consultant Bump Williams showed. Craft biz up across the board, natch; import trends varied. But where overall beer did best, premium segment up. "Where premium category is strong, the total category is strong," Bump pointed out.
While, MC "not happy" with where industry is, Kevin said, Crown exec veep sales Bruce Jacobson and Boston Beer sales veep John Geist welcome transition to high end (neither sells mainstream beer). US beer is "very big leaky bucket right now," said John. "We're just trying to grab a little bit of that 3 million bbls that's leaking every year." And while Bruce sees oppy for overall growth, especially as multi-cultural consumer "very centered on beer category," John said "I don't know if that bucket's going to stop leaking soon."
IRI's Dan Wandel, Nielsen's Andrea Riberi and GuestMetrics' Bill Pecoriello provided new look at data that suggested shift to craft may be hurting overall volume. Following sample of beer buyers (about 1,300) 1 yr after they added craft to beer basket, IRI found beer $$ ring increased 2.6%, but "volume purchased per trip declined by 9.2%," Dan said. While avg $$ ring similar when craft or premium in basket, Andrea pointed out, avg volume for craft is 12-pk vs a case when it's premium light. Plus, premium light buyers shop more often, suggesting "a big effect." When craft on the on-premise ticket, Bill showed, volume takes at least a 10% hit vs when premium on the check. That partially supported point from Kevin: pulling premium light taps is "just a really bad business decision."
How to Restore Growth? Basic Math A bunch of suggestions popped from these execs/ experts on addressing soft overall volume. Educating retailers about "basic math" of beer's faster turns vs other categories is part of answer, said Kevin. High margins in high end also a point to press, said John. Oppy too in expanded warm space, several execs said, especially for long tail of craft. MC, Crown and Boston execs agreed lead brands deserve cold box space, long tail brands have to "earn" their way in. Some good news on space. Nielsen's Andrea showed survey of retailers earlier this yr that found beer space has "grown appreciably" in about half of those surveyed. So beer gaining space, but "not the merchandising support for the space that we should be." Many categories showing weaker trends than beer (i.e. carbonated bevs, snacks, water, etc), IRI's Dan showed, getting more feature/display support in grocery, another oppy to educate retailers.
Premium Lights Losing Share Across Board, But "We Ain't Dead" Premium lights still 37% of volume in Nielsen all outlet data (40% in c-stores), Andrea showed, and drive the most traffic, velocity, avg annual beer spend and loyalty among beer shoppers. Premium light drinkers, she added, not switching to other brands but are simply drinking less. Result: premium lights shed 12.3 mil cases over last 12 mos in Nielsen all-outlet data, lost full share. Segment even softer on-premise, off about 10% and losing 1.9 share in that channel Jan-Sep this yr, according to Bill. Premium lights getting especially whacked in critical late-night period, he pointed out, where volume off an ugly 16.7% this yr. Overall, light beer category slipped from 54.9 share of $$ in IRI's multi-channel data in 2009 to 50.9 share YTD thru Oct 6, losing 18 mil cases this yr alone, Dan showed. Subpremium lights got hit hardest this yr and only 6 of top 30 light brands up in 2013 in IRI.
Premium lights "under pressure," Kevin said, "but we ain't dead yet." Even millennials choose premium lights first and twice as often as any other segment when they "play in beer." So premium light is "entry point for the rest" of beer and important to "recognize if you lose the premium light consumers you lose other consumers in the cohort, especially craft." Bill picked up on Bump's point, noting that "when premium light is strong, beer is strong" on-premise. Segment is "4.5X more efficient" (volume per brand) in casual dining than crafts/imports and 7X more efficient in bars. Kevin also reminded, amidst talk of sku proliferation and signs that some retailers showing "sku fatigue" (Bruce), that 7th largest Lite sku in grocery has "more velocity that all but 1 craft sku."
Cutting the Long Tail vs Letting it Grow MC's Kevin seeing some signs that retailers understanding long tail of tiny brands "not productive." Variety important, he agreed, but "lower part" of long tail probably going to get cut going forward. Nielsen's Andrea showed that while beer skus continue to rise, $$ per item is falling; spirits/wine sales per item are growing. Long tail of craft growing especially fast on-premise, Bill showed, including 30% increase in # of craft brands in Q3 alone. But craft's long tail performing better than top brands on-premise. Indeed, top 20 craft brands have 40 share of craft biz on premise, but collective volume down 2% for 9 mos. Meanwhile, massive tail of 6K+ brands, 40% of craft volume, up 7.9%. Craft volume up 4% on-premise thru Sep.
Supporting notion of cutting the tail, Bump wondered whether consumer getting "confused" by variety now available. Kevin suggested some grocery retailers "have figured out that they got ahead of the demand curve when it comes to above premium and you've got a reckoning coming with skus." Bump supported that notion with slide that showed 3.3% of skus account for 80% of all beer $$ sales in IRI multi-outlet data. Even in craft 8% of skus do 80% of the dollars. Looked at another way, top 15 craft brands did 36% of craft dollars in IRI multi-channel data for 52 weeks thru Oct 6, Dan showed. Sales of top 15 up 10% while share slipped 2 points. Still, their "per brand importance to overall dollar change …far exceeds all other tiers" in craft. Each of top 15 brands grew about $2.5 mil on avg. Next 216 brands were 44 share of craft, $$ up 19% and per brand $$ growth was $380K. Long tail of 2,420 brands, just 5% of craft $$, up 12%, but just $2,620 of growth per brand.
Beer vs Wine/Spirits Spirits and wine volume each up about 2% in IRI multi-outlet data YTD thru Oct 20, while beer still down 0.2%, Bump showed. Beer continues to lose share of alc bev biz, but Nielsen data shows beer, wine and spirits avg pricing trends about the same off premise. Each has gotten about 2% from mix and 1% from price hikes, so each seeing about 3% avg price increase over last 52 weeks. Top wine/spirits brands are outperforming top beer brands. Dan looked at 5 geographies -- liquor stores in Fla/Tex, all outlets in Calif, Ariz and Chi -- and found that while top 15 beer brands up 1.7% in $$ sales in those mkts (implying volume flat at best), top 15 spirits brand families $$ up 3%+, top wines +4.5%. On-premise, Bill showed how beer getting especially hurt in bars/clubs (vs casual/fine dining) and in late-night period this yr. Beer lost "just" 0.4 share during dinner hours across on-premise, with wine and spirits splitting the gain. But in late night, beer lost 0.8 share, with spirits getting 0.6 of that, wine, 0.2. Bill's hypothesis: "at least partially caused by Craft's strength in dinner, causing consumers to switch from beer to spirits (due to craft's lower sessionability)," another signal that transition to craft taking bite out of total volume.
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ABI gave a non-pareil wealth of info to investors Nov 14 in its first full day meeting just on its US biz. All in, this is one of the most detailed pictures of #1 player in US and its initiatives available anywhere. AB on a communications blitz recently, somewhat similar to one it had in 2010. Investors Day happened the week after sales meeting with distribs (SAMCOM) and the day before a media breakfast with ABI ceo Brito as well as some key US execs. What follows are some highlights from all these, plus analyst reactions.
For the first time, ABI showed a number of US-only financial numbers and even brand trends. ABI's US biz (AB) in 2012 was $13.9 bil in revs and $5.9 bil in EBITDA. Revs up $600 mil, about 4% in last 4 yrs, or about 1% per yr, even tho volume declined. Yet in same period, AB EBITDA climbed $2.1 bil, 55% in 4 yrs from $3.8 bil to $5.9 bil. Or about 12% per yr. That represented 37% of total ABI EBITDA on 29% of its volume. ABI has an EBITDA margin of 42% in US, up from 29% 4 yrs ago. Wow! AB grew revs by increasing prices and selling more of higher priced brands. AB rev per bbl up 14% in last 4 yrs as it realized $1.7 bil in incremental revs in price increases and mix shift. ABI's zero-based budgeting garnered $1.3 bil in savings. Cash flow jumped from $1.5 bil to $4.7 bil.
Better Bud, Rockin' Ritas Bud trends have improved, AB showed on Investors Day. The base brand down only 2.8% yr-to-date, compared to 5.4% drops each of the prior 2 yrs, a 7.8% drop in 2010 and a 9% drop in 2009. "Stabilization is working," said Bud brand veep Brian Perkins. Including Bud Black Crown, Bud mega share only down 0.2 yr-to-date. Next yr, AB will debut new Bud Light campaign on Super Bowl and mktg veep Paul Chibe promised at SAMCOM that AB has "cracked the code" and the "B52s are coming." AB also spent $150 mil on "breakthrough technology" for resealable 16 oz aluminum bottles that will be another big bet for next yr. How big are the Ritas? "Close to 2 million barrels sold in 18 months at a 170 price index," said Bud Light brand veep Rob McCarthy. Next yr, AB bringing Mang-O-Rita and Raz-Ber-Rita. Bud Light Platinum "essentially created a new segment in beer-Higher Alcohol Premium Plus," asserted Rob. Now includes Bud Black Crown and Beck's Sapphire. "All in, this segment represents 29 million annualized cases and it's all ours." Both the Ritas and BLP source 44% to 52% of their volume from wine and spirits, said ABI, citing IRI household panel data.
Michelob ULTRA has averaged 6%+ CAGR over last 3 yrs (compound annual growth rate)and jumped to 3.8 mil bbls in 2012. Ultra is the leading brand in the "premium plus" segment, which AB dominates with 5 of the top 6 brands. That segment, at a price between premium and imports/craft, has grown to 7.1% of the biz in IRI, ULTRA brand veep Lori Schambro showed. And ULTRA has 31 share of the segment, while Modelo Especial has another 20%. The top 5 brands are 80% of the premium plus segment.
AB's volume in "value" segment is 27 mil bbls, it sez. And it has 58% share of the segment. Tho it's less profitable than other segments, "we still make more than a billion dollars here," said North American prexy Luiz Edmond. AB model estimates that half of value segment losses in recent yrs would "have happened because of economic factors alone" while 25% was "trade up" and 25% "was lost to other forms of cheaper alcohol."
The high end (defined here by AB as craft and imports) grew 5% per yr in each of the last 3 yrs, AB showed in chart, sourcing internal estimates. But Stella Artois has compound annual growth rate of 18% since 2007, AB said. Goose Island volume has more than tripled to around 350,000 bbls in last 3 yrs (and EBITDA has jumped by more than 10x). And its other high end bet is Shock Top. Shock Top brand, including extensions, up 15% yr-to-date in IRI data, AB showed. Shock Top should cross 1 mil bbls in 2013, INSIGHTS estimates.
Halting Share Loss #1 Priority ABI made commitment to at least maintaining share, articulated by ceo Brito and North American prexy Luiz Edmond at each of these meetings. Mkt share losses "must stop," Luiz said at SAMCOM, even calling that AB's "number one priority." That sentiment on share reiterated at both investor's day and media breakfast, where Brito referred to "share neutrality." But this won't happen at expense of profitability, insisted execs. Meanwhile, AB dropped 1.24 share of $$ last 13 weeks thru Nov 3 in IRI multichannel + convenience, a much steeper drop than its 0.75 share loss yr-to-date.
Santander's Tony Bucalo impressed by "dense, well organized and often rapid series of presentations," adding that mgt "made its points well." He called US margin growth "extraordinary" but "challenges remain…. What lingers is that ABI has lost roughly 10 million hectoliters…since 2008 and market share continues to slide." ABI is "set for a strong push" in US in 2014, said Redburn's Chris Pitcher, but he also noted ABI "would not be drawn on any specific comments re US profitability and the cost implications of the big push in 2014." AB "refused to get drawn into any discussion on where US margins could go," agreed ISI's Robert Ottenstein. "We believe the firm is in an investment mode and is investing in building out further capabilities," he added and Modelo synergies "give them cover for the next 2 years." Indeed, AB convinced Brito and the board "to significantly increase our investment" next yr, Luiz said at SAMCOM in everything from digital to on-premise (a major new initiative) as well as high end.
For the first time, ABI showed a number of US-only financial numbers and even brand trends. ABI's US biz (AB) in 2012 was $13.9 bil in revs and $5.9 bil in EBITDA. Revs up $600 mil, about 4% in last 4 yrs, or about 1% per yr, even tho volume declined. Yet in same period, AB EBITDA climbed $2.1 bil, 55% in 4 yrs from $3.8 bil to $5.9 bil. Or about 12% per yr. That represented 37% of total ABI EBITDA on 29% of its volume. ABI has an EBITDA margin of 42% in US, up from 29% 4 yrs ago. Wow! AB grew revs by increasing prices and selling more of higher priced brands. AB rev per bbl up 14% in last 4 yrs as it realized $1.7 bil in incremental revs in price increases and mix shift. ABI's zero-based budgeting garnered $1.3 bil in savings. Cash flow jumped from $1.5 bil to $4.7 bil.
Better Bud, Rockin' Ritas Bud trends have improved, AB showed on Investors Day. The base brand down only 2.8% yr-to-date, compared to 5.4% drops each of the prior 2 yrs, a 7.8% drop in 2010 and a 9% drop in 2009. "Stabilization is working," said Bud brand veep Brian Perkins. Including Bud Black Crown, Bud mega share only down 0.2 yr-to-date. Next yr, AB will debut new Bud Light campaign on Super Bowl and mktg veep Paul Chibe promised at SAMCOM that AB has "cracked the code" and the "B52s are coming." AB also spent $150 mil on "breakthrough technology" for resealable 16 oz aluminum bottles that will be another big bet for next yr. How big are the Ritas? "Close to 2 million barrels sold in 18 months at a 170 price index," said Bud Light brand veep Rob McCarthy. Next yr, AB bringing Mang-O-Rita and Raz-Ber-Rita. Bud Light Platinum "essentially created a new segment in beer-Higher Alcohol Premium Plus," asserted Rob. Now includes Bud Black Crown and Beck's Sapphire. "All in, this segment represents 29 million annualized cases and it's all ours." Both the Ritas and BLP source 44% to 52% of their volume from wine and spirits, said ABI, citing IRI household panel data.
Michelob ULTRA has averaged 6%+ CAGR over last 3 yrs (compound annual growth rate)and jumped to 3.8 mil bbls in 2012. Ultra is the leading brand in the "premium plus" segment, which AB dominates with 5 of the top 6 brands. That segment, at a price between premium and imports/craft, has grown to 7.1% of the biz in IRI, ULTRA brand veep Lori Schambro showed. And ULTRA has 31 share of the segment, while Modelo Especial has another 20%. The top 5 brands are 80% of the premium plus segment.
AB's volume in "value" segment is 27 mil bbls, it sez. And it has 58% share of the segment. Tho it's less profitable than other segments, "we still make more than a billion dollars here," said North American prexy Luiz Edmond. AB model estimates that half of value segment losses in recent yrs would "have happened because of economic factors alone" while 25% was "trade up" and 25% "was lost to other forms of cheaper alcohol."
The high end (defined here by AB as craft and imports) grew 5% per yr in each of the last 3 yrs, AB showed in chart, sourcing internal estimates. But Stella Artois has compound annual growth rate of 18% since 2007, AB said. Goose Island volume has more than tripled to around 350,000 bbls in last 3 yrs (and EBITDA has jumped by more than 10x). And its other high end bet is Shock Top. Shock Top brand, including extensions, up 15% yr-to-date in IRI data, AB showed. Shock Top should cross 1 mil bbls in 2013, INSIGHTS estimates.
Halting Share Loss #1 Priority ABI made commitment to at least maintaining share, articulated by ceo Brito and North American prexy Luiz Edmond at each of these meetings. Mkt share losses "must stop," Luiz said at SAMCOM, even calling that AB's "number one priority." That sentiment on share reiterated at both investor's day and media breakfast, where Brito referred to "share neutrality." But this won't happen at expense of profitability, insisted execs. Meanwhile, AB dropped 1.24 share of $$ last 13 weeks thru Nov 3 in IRI multichannel + convenience, a much steeper drop than its 0.75 share loss yr-to-date.
Santander's Tony Bucalo impressed by "dense, well organized and often rapid series of presentations," adding that mgt "made its points well." He called US margin growth "extraordinary" but "challenges remain…. What lingers is that ABI has lost roughly 10 million hectoliters…since 2008 and market share continues to slide." ABI is "set for a strong push" in US in 2014, said Redburn's Chris Pitcher, but he also noted ABI "would not be drawn on any specific comments re US profitability and the cost implications of the big push in 2014." AB "refused to get drawn into any discussion on where US margins could go," agreed ISI's Robert Ottenstein. "We believe the firm is in an investment mode and is investing in building out further capabilities," he added and Modelo synergies "give them cover for the next 2 years." Indeed, AB convinced Brito and the board "to significantly increase our investment" next yr, Luiz said at SAMCOM in everything from digital to on-premise (a major new initiative) as well as high end.
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11/03/2013
Beer Insights Seminar in NYC
The Beer INSIGHTS Seminar is coming right up Monday Nov 11th at the Waldorf=Astoria in NYC. We look forward to seeing many of you there. Click here for more info. Click here to register. Go To
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Lengthy, front-page NY Times article on Oct 26 added momentum to pro-pot legalization side, making Calif's experience with expanded production/medical use look like day in the garden with few, if any, negatives other than complaints about plant odors. Two days later San Fran Chronicle echoed theme that pot poses "few problems."
NYT weighs 17 yrs of Calif's experience with medical marijuana. Not only have there been few predicted problems regarding "civic disorder, lawlessness and dramatic rise in other drug use," but pot now a booming biz with ancillary bizzes growing up around it. (One example of ancillary biz farther north in Wash from within beer itself: Redhook intro'd hemp beer "Joint Effort" with another local craft brewer.) Pot/alcohol connection and youth use issues played key role in NYT coverage. High up in story was claim that research shows pot "has become an alcohol substitute for younger people" (undefined) and that tho "driving under influence of any intoxicant is dangerous, driving after smoking marijuana is less dangerous than after drinking alcohol." This research is scant, but pro-legalization forces are getting it out there.
Another key point: despite fact that pot is "widely available" via dispensaries, "no evidence that its use by teenagers has risen since the 1996 legalization." A few points from the Times to get beer folks' attention: 1) marijuana "has become almost as culturally accepted and in some parts of the state nearly as widely used, as alcohol"; 2) "marijuana cultivation business in Northern California has been an economic boon for many communities"; 3) medical marijuana has "created a whole new cast of people who have a vested interest in cannabis"; 4) cities like San Fran, Oakland and Berkeley "which imposed strict regulations on the shops for the start, have had few problems." As in beer, lotsa support for pot regulation, but not "overregulation." Speaking of support, 65% of Californians support legalization, Gallup reports. So that looks like a lay-up next yr.
Issue of safety of pot vs alcohol all but decided, in pot's favor, at least according to NYT and San Fran Chron follow-up. "If it turns out cannabis and alcohol are substitutes, then by my scoring system, legalizing cannabis is obviously a good idea. Alcohol is so much more of a problem than cannabis has ever been," declared Mark Kleiman, drug expert and adviser to Wash state. Chronicle listed "3 things we know": 1) "alcohol is more dangerous than marijuana"; 2) pot has medical uses; 3) war on pot "is a waste of money." Not a lot of voices being raised against legalization, in these or other recent media coverage. NYT does quote director of enforcement group that "unfortunately, many have been convinced that marijuana is harmless, and many in policing do not believe that is the case." Conspicuously absent in much of debate: voices from Natl Inst on Drug Abuse or Drug Enforcement Agency, or even public health, raising alarm bells about legalization.
There has been a lot of chatter about pot and implications for beer, most recently at NBWA's Center for Alcohol Policy legal symposium in DC last week. But any "official" beer industry response remains on hold and extremely tricky. Aside from complex biz, states' rights and regulatory implications, thorniest of all may be response to growing consensus, solidified by research or not, that pot simply safer than beer.
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