Beer Marketer's Insights - Throwback Thursday

This week in 1999, in intriguing talk at NBWA, consultant Bob Weinberg said imports were going to hit a wall but didn't put timetable on it. Bob reminded that growth rates can just stop, that he had forecast flattening of specialty and no one had believed him. His theory: recent import surge substantially "induced by the decline of the relative price of beer" in the 90s. As beer prices didn't keep up with inflation, higher priced beers became a better buy. He also took time to praise distribs: "The success of imports in the US is really yours. It's a distribution phenomenon." But he expected as stakes get higher, big brewers "should" be able to "recreate" superpremium segment, because "opportunity is too great." AB's Michelob Ultra brand still capitalizing on oppy Bob correctly identified. This week in 2000, AB sponsored Presidential debate #3 in hometown St Louis between George W. Bush and Al Gore, and that in and of itself became part of the debate. AB veep Francine Katz appeared on C-Span to discuss sponsorship which led to back and forth among callers. Some supportive of AB involvement, some downright rude, noted INSIGHTS. AB "is no better than a crack dealer on the corner," claimed one caller. Another ranted about "hypocrisy" of a beer co-hosting a debate when America in middle of a "drug war." One caller at least felt beer co's should not be held responsible for people's alcoholism.This week in 2001, while reporting Barton Beers sales, fueled by Corona, jumped 10% in first half of yr thru Aug, parent co Constellation ceo Richard Sands shared some interesting commentary on imports. Said Constellation had studied historical data and based on last 20 yrs, import beers should "not in any way be affected by a recession" and there&#39;s "strong evidence that there&#39;s no trade-down activity" even in tuff economic times. Noted as well that imports "not a true premium biz" since price points not 2.5X that of avg product.This week in 2004, Fortune profiled "new No. 1 in the world of beer" calling InBev a "work in progress" that is "king of beers right now" but "doesn't rule the world." InBev "has difficulty describing what it represents," according to Fortune, but had "major presence in far more markets than" AB. Article wondered why "top brewers are so obsessed with globalization." One motive, "global brands sell at significantly higher prices," according to InBev ceo John Brock. "Kinda like old days when national brands like Bud sold at higher prices than regional brands, noted INSIGHTS. Brahma will go "head-to-head" with Corona "around the world," Brock told Fortune. Labatt "completes our dream of becoming a Pan-American player" said Carlos Brito, AmBev ceo. "Brito says he plans to squeeze more profit from Labatt by applying Ambev's tight-fisted business methods," wrote Fortune.This week in 2007, the cost of craft beers was creeping up. The six pack of high-brow beer is about to come at a higher price, thanks to the sharpest surge in decades in the cost of hops and barley, reported Wall St Jnl. Many craft brews were expected to raise prices by 50 cents to $1, tho some small brewers were expected to eat the hikes. "The cost increases have been the largest we've ever faced, both in barley and in hops," Boston Beer chairman Jim Koch told Jnl. Boston raised prices 3% so far that yr and was "probably looking at the same or maybe more" in 2008, Jim added. Cost pressures "could slow" craft growth, said Jnl, "and even put some smaller ones out of business." Other cost increases don't help, including glass, cardboard, gasoline, etc. "People are very concerned," said New Belgium co-founder Kim Jordan. In recent weeks that yr, firms that turn barley into malt raised prices 40 to 80%, while hops suppliers raised prices from 20 to 100%, noted Jnl. Ken Grossman, founder of Sierra Nevada, said he also planned some price hikes. Sierra was better positioned tho, because it had long-term contracts. "I've gotten calls of panic from other brewers," Ken added. Impact "isn't nearly as great" for big brewers, said WSJ.This week in 2011, Consultant Bump Williams was one of leading voices out there suggesting price increases above inflation that yr hurt beer category. "Early results" of Bump Williams Consulting analysis suggested that "we are LOSING more Below Premium Beer Shoppers to spirits than we are convincing them to 'trade up' into the premium beer segment," Bump wrote in his monthly letter to clients. "Increase in price to consumer has forced more shoppers OUT of beer." While brewers "making more money," retailers are "telling me that their margin is up slightly but their total revenue is DOWN and this is not a winning game plan for them." Craft and mix shift are "keeping the category profitable." Yet retailers leery that craft "bubble will also pop in 2012 when craft brewers are forced to take their pricing up" because of increased costs, he added.This week in 2015, AB ceo Jo&atilde;o Castro Neves delivered a high-impact message to distribs during NBWA convention. AB was "evolving on the WOD [branches] strategy," Jo&atilde;o said. "We have to be as clear as possible. We believe in the status quo." As far as branches go, "we want to be around 10% of volume," right around where it is now. "We want to continue that way. It can vary from time to time." But "buy everybody?" It's "exactly the opposite," emphasized Jo&atilde;o. AB "wants to maintain" level of around 10%, because it "really diminishes the noise," added Jo&atilde;o, so "we can focus on our business." Going forward, there will be both "acquisitions and divestitures," but AB will "pretty much" stay "where we are" in terms of % of volume sold through branches. That was a new position and a striking departure from what most distribs thought AB desired. It "helps diminish the anxiety" said Jo&atilde;o. AB mostly sold off branches in recent years, down to perhaps 6% of its volume.

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