Some weeks back we wrote about AB’s coming big bet on aluminum bottles noting that AB “now believes it has competitive advantage to MC as its aluminum bottle tested higher on quality and refreshment cues and uses less aluminum.”  MC veep Pete Marino weighed in that MC’s bottle actually 32% lighter than AB’s.  But our report was incomplete.  In the prepared remarks from Investor’s Day, AB prexy Luiz Edmond said that its bottle “beats competition according to consumer research” and “uses a lot less metal than our earlier version.”  Not lighter than MC’s but lighter than AB’s previous aluminum bottle.

Here’s wishing you and yours a Happy New Year!  See you in 2014.   

Terry Nauslar had a long and distinguished career at Coors, including opening many mkts for the brands and he also ran Coors branch biz for yrs with notably open mind about necessity of carrying other suppliers’ brands.  Terry had an “insatiable desire and passion for the business,” said Kohler veep Frank Politano (NJ distrib).  Our condolences to the Nauslar family, including 2 brothers still in the biz, Dennis at Glazer’s and Deacon at Bay Area Bevs. 

As we noted back in Oct, one of staunchest beer distrib advocates and longtime prexy of Associated Beer Distribs of Illinois, Bill Olson, is retiring.  His last day is today.  Back in late Nov, Bill did a rare, deep dive talk with Chicago beer blogger posted on Guys Drinking Beer site.  Blogger was “struck by the candor of our discussion.”  So were we.  Highlights included big changes Bill has seen over last 3 decades, starting with consolidation.  The number of distribs in Ill fell from 178 to 62.   Then too, “when I first started [the state house] was a lot less partisan.”  Used to be parties where entire Assembly would show up and interact.  That “built a camaraderie and a rapport that is absolutely missing today.”   Tho many think lobbyists have great power, sez Bill, “lobbyists aren’t in control of almost anything.  They are constantly in reaction mode.”

Bill gave fascinating chapter and verse on lawsuit and ultimately successful legislative effort to ban brewer branches (specifically AB stake in City Bev) and compromise reached with small brewers for limited self-distribution.  Tho many small brewers view cap put on self-distribution in final legislation (7,500 bbls) as far too restrictive, Bill insists it was small Ill brewers who came up with the number.  Meanwhile, there remains dispute over craft brewers owning both brewery license and brewpub license.  Bill claims “accommodation” was made for one brewer (Revolution) to have both licenses until it hit 15K-bbl production cap.  Revolution “gave us every indication” that when it hit cap, it would give up brewpub license.  But, once accommodation on the books, “we found that they didn’t want to get rid of their brewpub.  They had no intention of stopping being in two licensed levels” of  3-tier system.  After this interview ran, Revolution’s Josh Deth told Guys Drinking Beer that he never had plans to sell his brewpub, that at time Goose Island had both brewpub and brewery under common ownership and wasn’t until ABDI added “screwy provisions” to the legislation that it became an issue.  Imagine that: a disagreement over legislation between distribs and brewers.  In any case, for all this and much more, check out the entire interview at www.guysdrinkingbeer.com/bill...    

AB hasn’t filed legal response yet to craft brewer Big Sky’s trademark infringement lawsuit over the phrase “hold my beer and watch this.”  (See Dec 26 Express.)   But AB sent this statement: “These humorous Bud Light videos explore the unexpected things that could happen when you ask someone to hold your beer.  There is no trademark use of the phrase ‘hold my beer and watch this,’ nor is there intent to create any association with Big Sky.  Countless other videos and jokes use the same or similar words as a punch line or hashtag.”   Big Sky’s atty told St Lou Post-Dispatch that “we are talking back and forth” with AB and “trying to reach a resolution,” but did not comment further. 

Distribs are betting big on their futures, with sometimes massive construction projects which seemingly run counter to sluggish or even declining overall industry volume trends.  Take a look at couple of the upcoming projects of HDA Architects, which has completed more than 100 beverage projects over the last 20 yrs.  Capitol Beverage in Austin is building a 327,000 sq foot facility, reportedly at a cost of $28 mil.   Making that especially notable is that Capitol is Coors/Crown/Shiner distrib in an unconsolidated MC mkt.  Recall, Keg One bought Miller/Heineken distrib there in early 2011, hoping to be buyer of much bigger Capitol Bev.  Doesn’t look like that’s happening anytime soon. 

HDA does many projects in Tex and it is embarking on its 9^th with Standard Sales (not all in Tex), headquartered in Odessa.  Recall, Standard has operations in Miss and Colo as well.   This one will cost over $20 mil, prexy Lanny Layman told Odessa American a couple of weeks back.   It will be more than 150,000 sq feet and house about 4 mil cases, ¼ of Standard’s overall volume, Lanny told the American.  With the oil economy booming again, beer sales are growing in area, up 800,000 cases, and that’s why it needed new facility.  “We’ve kind of outgrown our old one,” said Lanny.   The town offered $1 mil over 5 yrs to keep Standard in Odessa.  “The facility is going to be the showpiece to the new entrance of Odessa” as it expands eastwards, Odessa’s economic development director said. 

“I don’t see any hesitation” on the part of owners in embarking on such big construction projects, HDA prexy Jack Holleran told INSIGHTS.  “We used to plan” facilities for 5 years out, now “we are planning 10 years out,” he added.  Facilities are made taller and with ability to reconfigure warehouses, parking lots etc, as owners aim to accommodate plans for future growth vertically as well as horizontally.  Not an HDA project, but recall Reyes Holdings spent over $50 mil acquiring facility in SoCal this fall.  By the time it renovates could be as much as $70 mil all in.  Three projects for about $120 mil.  If total beer biz is declining, likely not these distribs, and not in these mkts. 

Class action atty Joe Alioto will get at least one more day in court to argue ABI-Modelo-Crown deal violates antitrust law.  Judge cancelled hearing scheduled for Dec 20, but subsequently granted motion to hold Jan 24 hearing.  Recall that tho judge tossed case back in Sep, Alioto argued that “substantial and massive price increases” this fall “affecting tens of millions of Americans every day,” plus alleged misrepresentations by defendants, justify another oral argument (see Dec 4 Express).  “Mere paper argument” via motions not enough, Alioto argued, tho judge had “deemed the matter suitable for decision on the papers.”   Looks like she changed her mind, and granted hearing for late Jan.

Lotsa trademark tiffs out there in craft land, given challenge of coming up with new names/themes.  But here’s a twist.  Montana’s Big Sky Brewing Co sued AB in fed ct over widely publicized new videos for Bud Light by actor John Krasinski using theme “hold my beer and watch this.”  Three videos have been on YouTube for weeks and garnered plenty of press and plays (see Dec 2 Express).  Turns out Big Sky has been using same phrase since “at least as early as February 24, 2004,” on packaging, promos, ads, glassware, events, you name it.  What’s more, Big Sky got trademark registration for phrase in 2009.  After 3 videos hit YouTube Dec 1, Big Sky sent AB a cease and desist letter on Dec 9, explaining how it has used phrase and has trademark, claiming that AB’s use of it is “likely to cause confusion” among consumers.  Demanded AB “immediately” stop using it and remove videos from YouTube.  It hoped to avoid lawsuit, atty wrote, and sought “mutually satisfactory resolution.”  On Dec 20, Big Sky filed lawsuit claiming trademark infringement and irreparable harm, seeking injunction and monetary damages.   (This article originally appeared in our Craft Brew News publication on Dec 24.)  

ABI struck global deal with “dance-focused new company” called SFX Entertainment that puts on electronic dance music festivals, reported NY Times.  The deal could be worth $25 mil in 2014 and $35 mil in 2015 as “SFX’s events grow,” wrote NYT, citing Stifel Nicolaus’s Canadian analyst Benjamin Mogil.  SFX is a public company founded by media mogul Robert F.X. Sillerman.  Traditionally, “mainstream sponsors have been tentative about supporting dance events,” noted NY Times, “which have never shaken a long association with mass drug use.”  But in recent mos, Motorola struck deal with Live Nation Entertainment, world’s largest concert promoter.  And now this deal between ABI and SFX.  SFX just went public in Oct.  

For 4 weeks thru Dec 14, beer volume dropped 1.3% in Nielsen all outlet + convenience data.  But $$ were up 1.8% as avg prices up 67 cents, 3.2% per case to $21.58.   Most of that is trading up.  Indeed, above premium volume up 10% for last 4 weeks. And all above premium segments gained 3.6 share of $$ to 36.6.  Led by FMBs up 38% and 1.8 share of $$ and craft up 18% and 1.4 share of $$.  In supers, hi-end’s most developed channel, above premium beers at fully 50 share.  And still growing double digits.  Meanwhile, back to all channel data: premium beers and below premium beers each declined by around 5% in volume.  Premium beers lost 2.4 share of $$ (premium lights down 1.9 share) and sub premium beers lost 1.2 share.  

While Pennsy privatization debate has died down, Oregonians for Competition (big grocers are main drivers) filed 5 petitions to privatize liquor in Oreg, AP reports, a move anticipated in wake of Wash going down that road.  OC org plans to pick one to turn into ballot initiative in 2014.  Each would allow current stores selling beer and wine which are over 10K sq-ft to add liquor.  Looks too like accommodations will be made for existing stores/ specialty shops.  But goal is to get liquor into big grocery, other chains, natch.  As elsewhere, state officials reluctant to relinquish revs and regulatory roles: “Personally I’m unwilling to throw the baby out with the bathwater,” chairman of Oreg Liq Control Comm told AP.

Even more skeptical: Oreg Beer & Wine Distrib Assn and small Oreg distillers.  Joint op-ed in Portland Tribune by Paul and Danelle Romain from distrib assn and Hood River Distillers’ Ron Dodge point to Wash experience to argue privatization would jump prices, lower state revs, reduce choice and hurt small in-state distillers.  They cite significantly higher prices for specific liquor brands in Wash vs Oreg, note liquor sales are 5^th largest rev source for Oreg govt and point out lower taxes to achieve lower prices would reduce dollars for state programs.  Current consumer choice in Oreg unparalleled in US, they claim, since consumers can obtain “any distilled spirits product available in the US” while big box stores have “extremely limited choice.”  Privatization in Wash hurt small distillers, they add: Hood River sales dropped 50%, with “estimated losses around $4.5 mil.”  Big box stores seeking to sell high-volume brands “could knock Oregon producers off the shelves,” they warn.  Net-net: “don’t let out-of-state big box grocers sell you a bag of goods called privatization,” op-ed ends.  Finally, Oregonian reports recent poll that showed 48% of readers supported privatization, “about an equal number said not to privatize.”  Could shape up to be another expensive PR battle for various industry groups.