Beer Marketer's Insights

Beer Marketer's Insights

Gold Coast and Florida Distributing (Reyes Bev) joined Florida Beer Wholesalers Assn today, heretofore comprised of only 21 AB distribs. Florida Distributing joined the Beer Industry of Florida simultaneously. Gold Coast, which has not been a member of BIF in yrs, joined only FBWA. Recall, AB and non-AB distribs split back in late 80s, following passage of Fla franchise law. When Reyes moved to Fla in early 2011, it originally harbored notions of bringing the 2 assns back together, a notion since rejected by both sides. So it joined both assns. Gold Coast is largest distrib in state at about 26 mil cases and Florida Distributing is 3d at 13 mil cases. The 2 are well over half the non-AB volume in the state. Gold Coast is also the largest distrib of AB import brands. We asked FBWA exec Mitch Rubin if his members had any objections to non-AB distribs joining the assn. “We’re on the same page” with Gold Coast and Fla Distributing, “and that’s what’s important to our members.”
Chain grocers have been just about the tuffest channel for top 2 brewers in last yr or 2. And with their new programs, AB’s “balanced portfolio approach” and MC’s “power of premium lights,” the Big 2 aim to bend that trend. But latest scan data shows it will be a tuff row to hoe. Premium lights down 1.6 share of $$ yr-to-date thru Mar 17 in Nielsen grocery store data with case volume down nearly 5%. At 29.1 share of $$, premium lights now smaller in foodstores than craft and imports, which climbed 1.2 share to 31.8 (1.1 of that gain is craft). Then there are superpremiums, with volume up 19% and $$ share up another 1.3 share to 7.7, led by Bud Light Platinum launch. So 3 above-premium segments at near 40 share of $$ in supers, up 2.5 share, while premium lights are under 30 and down 1.6 share. Given those trends, it will not be that easy to convince grocers that they should focus more on premium lights at the expense of craft/high end.
One of the last of the lions, Mike McKinney, who’d been state exec for Tex since 1989, passed away last night after 4-yr bout with cancer. He’d joined Wholesale Beer Distributors of Tex in 1979, working for his predecessor Mike Hopkins, currently an AB distrib in Brenham, Tex. Mike said of his friend Mike: “Selfless for those he represented, his family, and friends." Over his 22-yr run, Mike surely one of the strongest and most savvy of the state execs. NBWA prexy Craig Purser sent a letter to board members and state execs calling Mike “a gentleman, a leader, a friend and a tireless advocate for beer distributors…. Mike made it look easy. He will be missed.”
Henry Dominguez, who ran region 6 that included big Tex, will move back to Calif, where he’s originally from. He’ll take John’s job. Taking over for Henry will be Keith Driggs, who only recently got promoted to region veep in Region 5. And Tom Doyle, who most recently ran state of Massachusetts, gets promoted to veep of region 5, where Keith was. Since David Almeida became sales veep in Sep, at least half of AB’s region veeps have changed, and several have departed AB. Separately, global ABI lost its director of digital connections Erin Matts yesterday as she left to join Glam Media as sr veep. She had joined ABI in Feb 2011.
More change among AB’s region vice presidents but this time with a twist. Western region veep John Coleman has left AB, reportedly to join Pabst at a very sr level. Recall, former Pabst chief operating officer Chris Steffanci had also come from a sales role as HUSA sr sales veep. Both Chris and ceo John Cochran announced they were leaving Pabst late last yr after less than a year. Pabst owners, the Metropoulos family, including father Dean and sons Daren and Evan, announced they were taking the reins as co-ceos.
Despite some noise about beer biz gains in early 2012, 2d largest brewer MillerCoors STRs down low single digits thru Feb 4, cfo Gavin Hattersley said on conference call this morn. But Coors Light “returned to growth” in first 4 weeks, sales prexy Ed McBrien noted. (Interesting that time periods cited were different. What about that 5th week?) While “four weeks not a trend,” as MC ceo Tom Long said, in all, MC gets “a better sense of momentum” in its biz, noted Tom, both from distribs and beginning of improved trends in some key channels like c-stores/on-premise. “On-premise is still down, but it’s getting better.” MC’s Miller 64 “off to a rocking early start,” said Tom, tho again it’s “early.” Brand is just shipping now, media starts in March.

Financial results for MC’s calendar yr show continued savings and healthy rev/bbl increase didn’t offset sluggish topline in 2011. MC rev/bbl up almost $3, 2.5% (includes contract brewing, up 2.4% without it) and cost of goods sold/bbl up just 2%. So gross profit up slightly overall, +3.4%/bbl. Mktg, gen, admin costs held in check too and up just 2.4% per bbl. But after bigger special item hit in 2011 than 2010 (Sparks write-down and more), operating income dipped $59 mil, 5.7%. Without special items, operating income up 8%. Net income off about 5% too. Recall, MC operating income jumped about 60% in 2009, 25% in 2010. So long-term earnings trend still very strong: MC operating income in 2011 was just over $1 bil, up 88% vs calendar 2008. MC did post strong Q4 earnings: operating and net income up 33-34%, with better shipments trend, no special charges, solid price increase and MGA cut.
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Diageo appears to be placing more emphasis on DGUSA than it has in recent yrs. So we asked DGUSA prexy Sheila Stanziale to tell us about DGUSA’s role in Diageo. DGUSA plays “three major roles” for Diageo, she said. First off, “discovery beer,” the Diageo-defined segment where DGUSA plays is “an area of the beer space that is growing very nicely.” DGUSA defines “discovery” to include craft and imports like Guinness and Red Stripe (curiously enough), brands with “authenticity” which “have a story.” Secondly, Diageo has again become increasingly interested in “leveraging spirits trademarks in beer space” which is something “key PAB competitors can’t do.” And finally “beer distributors get our products to several hundred thousand outlets” that Diageo brands wouldn’t be available in otherwise. In some ways, this is mainly an update of the original rationale for Smirnoff Ice. But now Diageo’s thinking is more “occasion-based” and it just wants to get its products in front of consumers on as many occasions as it can. There’s also been an “evolution of approach” with PABs, said Sheila. First, Smirnoff name was enough, then flavors evolved to “premium mix cocktails” but with the “third generation,” DGUSA “taking it all the way to a bar call,” like Screwdriver. So after yrs of decline for DGUSA in PABs, judging by push behind pouches, new Smirnoff flavors and more, Diageo seemingly smells more opportunity for DGUSA. And it certainly has the resources to play, so it will be interesting to see how DGUSA evolves.
Modelo Especial up double digits for each of last 17 yrs, Crown chief mktg officer Jim Sabia told CNBC in piece called: “The Booming Beer Brand No One is Talking About.” Modelo Especial sold 35 mil cases in 2011, up around 14%, and Crown expects it to hit 40 mil cases in 2012, said Jim. “This isn’t being driven by a $50 million advertising campaign,” he added. “It’s been a very bottom-up approach. We haven’t done a lot of advertising, but what’s happened is that it has expanded to Latinos and now it’s crossing over to the general market.” Recall, Crown has goal of growing Modelo Especial to 100 million cases over time. In 2012, Crown is upping mktg on brand and making it available on draft in more states, going from 27 states to 41. “Modelo Especial is a very important part of our future at Crown,” concluded Jim. “We believe we have a lot of runway left with this beer.”
Perhaps for first time ever, INSIGHTS reports 1 week stat, but it’s a helluva stat. Before its ads even debuted on Super Bowl, Bud Light Platinum got a 1.7 share for one week thru Feb 5 in supers in Symphony IRI Group data, mktg veep Paul Chibe told INSIGHTS. “We have data that shows it’s accelerated since,” he added. Bud Light Platinum is doing “a lot better than we expected,” said Paul, noting “it came out of the box really strong” and now AB has “challenge of filling supply.” Platinum off “to an amazing start,” letter to distribs from sr director Mike Sundet said. “Due to the combination of buzz building and marketplace execution, demand for Bud Light Platinum is currently outpacing initial forecasts, resulting in tight supplies across the country.” It’s a good problem to have, but it’s still a problem. Entertaining interview in Forbes yesterday between former AB mktg chief Keith Levy and present chief Paul Chibe, called “Super Bowl Past and Present.” While it was mostly about big game, Paul did say: “Platinum is blowing away every forecast we came up with. It’s done exactly what we wanted it to do.”