Confusing Cowlitz County Superior Ct judge’s decision a few weeks ago that both supported and questioned constitutionality of Costco-backed initiative to privatize liquor sales in Wash took new twist at hearing yesterday. He reversed himself. Initiative did not have two separate subjects, he now believes, and therefore privatization measure is constitutional. Recall, he originally ruled it did have two subjects – privatization and local funding – which normally would void it, but called for another hearing to clarify. Challengers, including Wine and Spirits Wholesalers Assn, thought he was right the first time. Atty for plaintiffs challenging the initiative said they will appeal directly to state Supreme Ct, reports the Seattle Times, where most observers figured this would end up all along. Meanwhile, state Liquor Control Bd has already started auctioning off licenses to sell liquor; private sales on tap to start Jun 1. If state Sup Ct goes the other way and tosses the initiative, can genie be put back in the control bottle? Another point: as one initiative expert noted at NABCA legal symposium earlier this month, even if courts were to toss initiative, legislature would likely act to follow the lead of 59% of Washington voters who passed it.

Lotsa AB wholesalers say they have way more inventory than they need or more than a yr ago, and it’s a “huge issue,” as one sizable distrib put it. “It’s horrendous,” said another, noting that he’s “jumping up and down” but “can’t get any form of response” from the brewery. We’ve talked to distribs in many parts of US on this. In past when this occurred, AB said this would not be such an issue going forward, yet here it is again. Problem especially acute on smaller brands, some say, as AB is now making these beers less often and making bigger batches when they do make them. So they ship a ton of beer with same code date which is going to back up in Q2, say distribs. We’ve even heard of distribs refusing orders. “They are force feeding so much right now and everything is an argument,” said yet another distrib. “They’re trying to make their number,” said another.

AB downplayed these inventory issues, telling INSIGHTS it had written distribs in Jan that “2012 inventory plan has wholesaler inventories slightly higher than 2011 during the first four months of the year. We have experienced higher inventories on some packages as we try to rebalance the supply chain following the success of Bud Light Platinum. We expect inventory levels to return to 2011 levels in May. We continue to monitor wholesaler inventory levels within each region to avoid significant inventory dispersion between wholesalers.”

Interestingly, several distribs pointed to good sales so far in 2012, up mid-single digits or even higher yr-to-date. They wondered how severe their inventory issues would be if sales weren’t off to good start. Yet that early sales success is diminished by the carrying cost of AB pushin’ all that extra beer down, higher breakage/shrinkage rates as distribs move around close-coded beer and concerns about sales later this yr. Recall, ABI has already said that Q2 shipments will be “softer.” AB is “starting to clean up all their problems other than this logistic piece,” said one of those distribs. “It’s the last big one they’ve got to fix.”

Join us May 15-16 in Chicago at the Ritz Carlton for another deep dive into the growing, dynamic high end: craft beer, imports, FMBs/PABs, cider and more. We’ll have a full-day of presentations plus plenty of networking time. You won’t want to miss our top-notch, wide-ranging panel, including 3 leading execs of high end beer cos. Heineken USA president Dolf van den Brink will join Crown Imports president Bill Hackett, Boston Beer chairman Jim Koch, wholesaler Joe Salois of Atlas and HEB’s biz development mgr-beer Rusty Woodland. This unprecedented panel will be moderated by consultant Bump Williams. Also speaking will be New Belgium co-founder/ceo Kim Jordan and Diageo Guinness USA president Sheila Stanziale. Crispin Cider president/founder Joe Heron will speak on emerging cider category. Simon Thorpe, ceo of Duvel Moortgat USA and Ommegang, will speak on emerging “luxury” or ultrapremium segment in hi-end. BMI publisher Benj Steinman will set up the day with data and insights. And there’s more to come. Click here for more information. Click here to sign up.

Craft Brew Alliance does not expect a higher gross margin in 2012. Rather, it anticipates a gross margin “approximately 100 basis points lower than in 2011, reflecting pressure from grain prices and assuming fuel prices remain relatively consistent with current levels.”

Recall article on NABCA legal symposium about industry innovations running ahead of state regulations. One speaker, from Oreg Liq Control Comm, said his agency was thinkin’ about granting first-ever annual liquor license to popular food cart areas in Portland. Well, that license has been granted, by a 5-0 vote, for one location. It “amounts to a permanent go-ahead to serve beer and wine” in roped off area near popular “pod of food courts,” reports The Oregonian. Interestingly, a “parade of police and city officials expressed concern about a rush of copycats” in Portland, paper reported, but OLCC chair called it “a positive step forward for modernization.” She did not expect huge number of requests because “each applicant must get individual approval from the full commission, and most would not meet the requirements, which include a permanent location, a designated consumption area, monitors and other restrictions,” that paper reported.

At the same time, OLCC approved beer and wine sales in more of its state-owned liquor outlets and eased restrictions on grocery store sales of liquor. All of this fits into theme picked up by Economist mag this week of easing restrictions across US, whether it’s privatization in Wash, expanded Sunday sales in Georgia, legalized liquor tastings, more and more counties in South going wet, etc.

Chief mktg officer of P&G, world’s largest consumer products goods co and advertiser, gave his view of future of mktg in Wall St Jnl interview last week. And it wasn’t onwards and upwards. P&G cmo Marc Pritchard aims to snip $1 bil, over 10% from $9.3 bil in ad spending over next 4 yrs. How? “By thinning the ranks of marketing executives and spending more efficiently, leaning more heavily on lower cost digital marketing and easing up somewhat on pricey broadcast ads,” wrote the Jnl. Key to getting there, and “what will revolutionize the industry,” according to Marc, is “to define EGRPs.” Howzzat? Electronic gross rating points, “a measure of audience reach…. You can look at what an impression from Google or Facebook or Twitter is actually worth.” Good luck with that. Cover story in Ad Age last week said 57% of 243 CMOs surveyed “don’t establish their budgets according to ROI measures” with 68% basing budgets on “historical spending levels, while 28% said they go with gut instinct.” Takeaway from these two articles: between budget pressures, new media methods and difficulty of measuring their efficacy, there’s going to be some wrenching changes in world of big media mktg in coming yrs, including in beer.

Consumer price index for beer increased 2.7% in Feb vs yr ago, per latest gov’t figures. Beer prices continue to lag general inflation as CPI for All Items was up 2.9% in Feb. CPI for spirits up just 0.1% while wine prices fell 1.6%. Over last 12 mos, CPI for beer up 1.6% vs a 3.3% increase for All Items while spirits up 0.2% and wine prices off 1%.

Peter Swinburn, ceo of Molson Coors, told Smart Money last week that expanding its small intl biz, up about 50% last yr (outside US, UK, Canada), “eventually will contribute significantly to our growth, but our core business is so big that that’s what we have to continue to concentrate on.” He also acknowledged that Molson Coors stock has sagged, despite higher earnings (up 30% in 3 yrs) and reduced debt, in part because investors are saying: “We don’t know where growth is going to come from. Until you prove to us that you can show growth, we’re cautious.”

Peter focused on familiar factors hurting beer biz: economic downturn hitting mainstream beer consumers especially hard and lack of innovation. Plus, beer has lost occasions to other bevs. “When you look at the needs of our consumers, undoubtedly there’s white space that we’re not filling and that is being filled to some extent by non-beer products.” How to fill that space? With combo of pkg (Coors Light cold-activated bottle) and brand innovations, (Batch 19, Leinie’s Summer Shandy). A heads-up tho from Peter re new brands: “Unless you understand what needs you’re satisfying, just coming out with a flavor or color or taste is like throwing mud at a wall.” There’s lotsa new flavors, colors and tastes flyin’ around out there this spring; it will be interesting to see what sticks.

Pabst’s latest hire is 20+ yr AB vet Dan McHugh, who will become chief mktg officer. Dan joins prexy John Coleman, another longtime ex-AB veep. Will be interesting to see how their big company mainstream beer expertise plays with Pabst’s more guerilla mktg, entrepreneurial approach. At AB, “McHugh directed the day-to-day marketing and management of the company’s largest beer brands, representing 98% of the volume and revenue and over $9 billion in variable margin,” sez Pabst. Dan was veep of trademark brands for a time, also Bud Light veep. But after Tony Ponturo left, Dan briefly took his role and became veep of media, sponsorship and activation. He left AB in Oct 09. Since then, Dan has been managing partner at mktg consultancy Scoot Over Mktg and veep group account director for Marc USA. “This is the opportunity I’ve been waiting for,” sez Dan. Pabst still showing solid growth in scan data, following turnaround in 2d half of 2011.

Our annual Beer Industry Update provides a detailed and comprehensive picture of the US beer industry, plus global insights. The first batch of data for the 2012 Update is now available in CD-ROM. It includes key industry shipments figures for 2011: total shipments, brewer data, brand data, segment data, retail trends and much more. As the leading source of beer industry info for 40+ years, Beer Marketer’s INSIGHTS is uniquely positioned to compile the most accurate figures and insightful commentary available. Order the CD-ROM version of the 2012 Beer Industry Update now for immediate delivery. We’ll send you the final CD-ROM version of the book June 1. Or you can reserve a print edition of the book, available June 15. Click here to review details of the offer. Click here to order your copy of the 2012 Beer Industry Update. And if you order your copy now, you’ll save $100 off the publication price.