While AB ponied up big bucks to air 6 spots during most watched Super Bowl in history (111.3 mil viewers), Pabst “paid pennies” for a local affiliate spot seen by just around 15,000 in North Platte, Neb, but “hit social media gold,” reported Bloomberg Businessweek. Quirky Old Milwaukee ad featured comedian Will Ferrell “striding through a wheat field” as he catches a can of Old Milwaukee. But just as he opens it the commercial cuts out. Despite “its tiny TV audience,” Pabst “managed to outperform some of the nationally broadcast spots in an increasingly important metric of Super Bowl advertising bragging rights: chatter on social media networks,” noted Bloomberg. Old Milwaukee ad cost no more than $1,500 per Brand Keys estimate, but it already had 155,000 views on Facebook and had 1,640 Twitter mentions, much more than several of larger advertisers. Popularity of ad, “just shows you don’t need to spend millions to make a big impression,” boasted Daren and Evan Metropolous. Recall back in 2010, they signed deal with Ferrell’s co called Funny or Die to incorporate Pabst products into comedy sketches. Other spots with Ferrell have run in local mkts including Davenport, Ia and Terry Haute, Ind, part of campaign “paying homage to great Old Milwaukee towns,” added Daren and Evan.

Heineken USA held press conference for about 20 trade journalists last week to update folks on its progress. Tho HUSA prexy Dolf van den Brink shared lotsa improved fourth qtr Nielsen #s (INSIGHTS Express reported highlights a few weeks back), he couldn’t say much about all-channel depletions or Jan because Heineken in quiet period before releasing results. But HUSA too had strong Jan, INSIGHTS hears. It’s up 13.7% for 4 weeks thru Jan 22 in Symphony IRI Group food/drug/convenience data. This meeting mostly about HUSA’s plans to “grow core and innovate more,” as Dolf put it. Diageo has innovation rate of 20% (meaning 20% of volume comes from new brands/packages in a given year), beer around 5%, but HUSA used to be only 1%. Hence, HUSA’s increased focus on innovation, which cmo Lesya Lysyj called “top priority.” She pointed to upcoming US launch of Indio, up 36% last 3 yrs in Mexico, she said, compared to Victoria down 5%. Then too Newcastle’s Limited Editions will go national. Last yr’s Werewolf Limited Edition sold 3 mos of inventory in 3 weeks. HUSA also expanding Amstel Wheat and its Beers of Mexico, which sells 1 mil cases in club channel, will be expanded to grocery stores in 12-packs in 2012. At presstime, HUSA announced Brian Fried as new regional sales veep in West. Brian at HUSA since 2004, most recently director of biz development.

HUSA spends 15% of its mkt budget online, which is “probably a higher % than most of our competitors,” said Lesya. But HUSA went from 200,000 to 2 mil likes on Facebook for Heineken brand in US alone last yr, and up to 5 mil globally. And Dos Equis at 1.5 mil Facebook fans. Heineken and Dos Equis are the #1 and #2 brands on Facebook, said Dolf. And now HUSA created new custom App called “Serenade” where consumers can “send humorous personalized songs to potential partners, inviting them on a date” just in advance of Valentine’s Day. Song based on the one in Heineken ad “the Date.” A total of 640 different serenades are available in 20 languages, depending on answers to a few questions. At luncheon, HUSA execs stressed its media strategy is both/and, i.e digital and traditional media. Even more important is “creating linkages” between various media. So on Feb 9, Heineken will host “Serenade Live” an 8-hour You Tube event. Meanwhile, back in 2010, HUSA ads only on air 16 weeks, but that went up to 30 weeks last yr and expected to hit 35 in 2012. While spirits cos generally spend bigger % of revs on mktg, last yr HUSA “closed that gap.”

Yuengling working a dual track in legal battle vs All Star Distrib over stalled deal for All Star to sell to Origlio (see Express #13). First, Yuengling filed motion in home county court to “coordinate” cases there. (Recall, Yuengling filed first in its county ct; All Start subsequently filed suit in its home county.) Since both suits “directly turn on” what legal document applies here – the original appointment letter or actual Distributor Agreement – both actions “should be coordinated” in court where dispute “first filed,” Yuengling argues. Also, coordinating case will “ease the swiftness of the ultimate resolution” and “there may be a better chance for a global settlement” if everyone “litigating in the same venue.”

Separately, Yuengling filed motion in All Star’s home court to dismiss all charges. Tho All Star seeks injunction to preclude Yuengling from terminating it and refusing consent to sale, Pennsy law that All Star cites for support, “does not provide for injunctive relief,” Yuengling argues. It cites an earlier, similar case involving 2 Pennsy distribs and Rolling Rock rights. Lookin’ at another part of Pennsy law, since Yuengling has not “modified, rescinded, cancelled or terminated” any part of agreement (All Star still selling the brands), All Star claims must fall, it adds. Proper remedy, if All Star claims prove true down the road, would be “money damages” and “no reason why these damages cannot be ascertained with a reasonable degree of certainty by merely determining how much All Star would receive via the proposed asset purchase agreement” with Origlio. Regarding All Star bid for declaration that it is exclusive distrib of Yuengling and has right to transfer brands, that should be dismissed since it is subject of Yuengling’ first-filed suit and will be resolved in Yuengling’s hometown court.

Further, each of the breach of contract, tortious interference and “conversion” claims – each seeking $10 mil+ in damages – all legally “insufficient,” Yuengling argues, and should be tossed as well. Among reasons: 1) Yuengling has not breached its contract with All Star and isn’t obliged to approve Orgilio deal; 2) Yuengling’s Transfer Policy contemplates that Yuengling will talk to other distribs, like AB distrib Gretz which All Star also sued for interference, when proposed transactions come up, so there’s no breach there; 3) no indication Yuengling acted with “intent to harm” All Star; 4) since Yuengling consent necessary to transfer brands, and it has “substantial financial and legal interest” in where brands go, its conduct “legally privileged, justified and proper,” and so Yuengling can’t be “held liable for tortuously interfering with a proposed transaction of which it is an integral part”; 5) all of Yuengling alleged conduct “specifically authorized under the terms of the documents relied upon by All Star” as its agreement with Yuengling. All Star clearly has different view on these matters. Plus question remains whether broader issue of Pennsy laws regarding brand transfer under pressure here. Stay tuned for more.

” After mos of negotiations, deal closed yesterday for undisclosed sum for MC’s 10th and Blake to buy Crispin. Crispin is now independent division of 10th and Blake, its almost 80 employees part of MC. Production will continue at its Colfax, Calif cidery (45 of those employees). Crispin is 3d largest cider co, tripling to about 350,000 cases in 40 states in 2011. “Demand is starting to really skyrocket,” founder Joe Heron told INSIGHTS. “We will definitely triple again” in 2012, he added, with the only question about “scaling up capacity fast enough.” He describes deal with MC as “putting muscles on Mighty Mouse.” Interestingly about a third of Crispin’s volume in draft, and another 15% or so goes thru natural channel. So part of what MC brings to the party is its chain capability. It “takes a lot of dough” to take advantage of this cider opportunity, according to Joe. “What happens now,” said Joe, is “Tom Long wants his money back,” meaning to recoup MC investment. Joe added: “We want to go fast” and “this is best way of doing it.”

Crispin “approached by many people,” said Joe, including private equity, venture capital and other beer cos. But “nobody else fit,” besides Tenth and Blake, said Joe. He called Tenth and Blake a “cultural fit” and “very personal.” Tenth and Blake prexy Tom Cardella said: “Joe is now part of our family.” Crispin deal very consistent with T&B principles of partnership, said Tom, where it seeks to take “power of entrepreneurs” and “galvanize” that with “scale of MillerCoors” in a “longterm, win-win” relationship of “mutual value” that is “tailored to unique circumstances.” Tom credited Tenth and Blake’s sr director of strategy and operations Jeff White with making the connection last summer at a Crispin sales conference in Calif and forging the relationship that led to deal. Tom cited Crispin as “most progressive and innovative producer” in field and said “we shared great personal chemistry…. We love their energy, creativity and unsurpassed innovation capability.” Joe sez his innovation pipeline for 2012 is “already full,” pointing to several new products, including ciders themed on music, like Marvin, “the first soul cider,” named after Marvin Gaye, with chocolate, cherries, molasses and more.

Joe just started Crispin in his basement a little more than 3 yrs ago, and his co grew rapidly but still small by time of deal, yet he is not exactly modest in his ambitions. Cider will be same size as PABs in 5 yrs, predicts Joe. Or about 3% the size of beer mkt. From there it will grow to be 5-6% size of beer, that is typically found in developed cider mkts (it’s near 20% in UK). At 5-6%, US would be largest cider mkt in world. And as the “hot brand in the hot category,” Joe aims high. Joe looks for Crispin to be #1 and half of US cider mkt down road (Crispin about 7% of cider in 2011). Let’s not even talk about all the global opportunity Joe sees. But recall Joe already sold one co before, Ardea maker of Airforce Nutrisoda to Pepsi Americas. Does he plan to stick around this time? He’s signed on for 3 yrs, he sez but “I hope that I work for MillerCoors for a long time.” It’s hard “catching lightning in a bottle,” quips Joe.

What about distribution? About 40% of Crispin volume is not in MC network. “As with anything in our portfolio, we want to evolve things so” the brands are in MC network, said Tenth and Blake prexy Tom Cardella. So Tenth and Blake will begin “constructive conversations” about “desire to move our brands,” acting on a mkt-by-mkt basis.

Lotsa attention lately on this fast-growing (+26% in 2011 sez MC) segment: AB just announced Michelob Ultra Light Cider; Boston Beer intro’d Angry Orchard. The #1 player is recently renamed Vermont Hard Cider Co, with Woodchuck and Strongbow brands (Strongbow owned internationally by Heineken). It had 56 share of cider $$ in SIG supers last yr. C&C already had Irish import Magners and recently bought #2 brand Hornsby’s from Gallo. It now has about 30 share of cider in SIG. With Crispin, MC clearly intends to push the limits of this opportunity and see how much there is there. Joe sez: “There’s nothing wrong with a lot of players…. Category growth floats a lot of boats.”

Here’s more evidence that this is the year of big attention paid by big cos to tiny cider segment. AB has come up with its own twist on nascent (in US) category. “The proposition is simple,” innovations veep Pat McGauley wrote to distribs late last week, “a less sweet, lower calorie, all natural alternative to traditional FMBs and Ciders.” So AB using Michelob Ultra name as “uniquely positioned to be a pioneer once again in a new sub category: ‘Light Cider.’” Michelob Ultra Light Cider has 118 calories and 4% ABV and “because it is made from fermented apples, is naturally gluten free.”

Michelob Ultra Light Cider will launch nationally, except in CO, KY, OK, UT and WY; pricing will be “set at parity to leading FMBs.” With Bud Light Platinum, Ultra 19th Hole, Shock Top Wheat IPA already announced, AB will have very full plate of new brand initiatives in 1st half. It is throwing a lot against the wall, and it will be very interesting to see how much sticks.

“Marketers once again deployed countless animals to woo the crowd…. One of the best animal spot awards,” said WSJ ad columnist, went to AB InBev for Bud Light spot with rescue dog named “Weego.” That ad was AB’s highest placing on USA Today’s Ad Meter, at #6 (but AB sez it’s not focused on Ad Meter these days. Pre-ABI, it won Ad Meter 10 yrs in a row). “A toast is in order,” sez longtime NY Times ad columnist Stuart Elliott to AB InBev: “The frat boy humor with misogynistic overtones that has long sullied Super Bowl spots for Bud Light beer was refreshingly absent.” That may seem like faint praise, but it’s vastly superior to last yr when Ad Age wrote: “If there’s an opposite of most improved,” AB “would take home the prize.” While AB got more compliments for its ads overall this yr, and fewer stinging critiques, there were also more questions concerning whether all the money it spends is worth it. AB was biggest advertiser on Super Bowl with 4.5 minutes. But Bud ads just in middle of pack and Bud Light Platinum ads were among lowest ranking on USA Today’s Ad Meter. In last 10 yrs, AB spent nearly $250 mil, about 10% of all media spending on Super Bowl, calculated one article. But AB ads are “no longer cooler conversation,” said one longtime observer this morn.

Maybe beer biz trends really are improving in a big way. Certainly, Crown’s recent sales trends suggest a huge lift for #3 US beer supplier in recent mos. Crown depletions up mid-to-high teens in January, Crown prexy Bill Hackett told INSIGHTS. That means its overall trend basically reflected in Symphony IRI Group food/drug/convenience data for 4 weeks thru Jan 22, with Crown up 18% in SIG. Crown’s big Jan gain followed high single digit gain in Dec. The last qtr “really popped,” added Bill. Crown “fully expects we will beat” 5% growth target in 2012, Bill said. Crown has “accelerating momentum” in early 2012. Bill attributed some of recent uptick to “a lot of incremental marketing” late in yr.

“The best barometer of the health of our business” is that Corona returned to growth in 2011 (up 0.5%), sez Bill, after 4 yrs of declines. And Crown expects Corona to grow again in 2012. Meanwhile, Crown had broad-based portfolio health in 2011, growing about 5% on Mexican brands, following 2% growth in 2010. Biggest growth for Crown came from Modelo Especial; up 14% in 2011. And Victoria sold less than expected, but still depleted 3 mil cases, nearly all incremental. Corona Light up 1% in 2011. Both Negra Modelo up 2% and Pacifico up 4% had solid yrs in 2011 too.

Asked about Crown’s big inventory build in early 2012, Bill pointed to “unanticipated acceleration” in its biz, currently “depleting far faster than we envisioned.” At same time, Modelo gained 2 share in Mexico last yr, and accelerated growth there put further pressure on breweries to keep up with demand. What about profitability and margin sacrificed over last couple of yrs as Crown got its volume back on track? That was “conscious decision” by partners to “to expand resources” placed against Crown’s portfolio. But Crown has already ramped up mktg and aims for “improved margins” from here. Crown flirted with intro of Modelo Light (a very successful brand in Mexico in a cobalt blue bottle that might seem familiar), but after dancing up to edge of an intro, pulled back for this yr. “We’ve got plenty on our plate,” Bill said.

Took a while to track ‘em down, but turns out Yuengling and Reading, PA distrib All Star sued each other separately in Dec over All Star’s pending deal to sell its 6.5-mil-case biz to giant Origlio Dist. Yuengling is about 400K cases of All Star’s volume, we understand. That deal was supposed to close at end of 2011, but it didn’t happen, at least in part because Yuengling didn’t approve transfer of brands. In lawsuits, Yuengling relies heavily on its contract, All Star relies heavily on state law. In most interesting details, looks like Yuengling would prefer to go with AB distrib in Reading, even while Origlio allegedly committed to big additional bucks to support Yuengling brands after deal closed. To give an idea what’s at stake, All Star not only wants court to force Yuengling to approve deal, but over $10 mil in damages.

Yuengling sued first in home county court. Seeks declaration that its Distrib Agreement applies here. That agreement, Yuengling insists, gives it “sole discretion” to approve or disapprove distrib transfer of brand rights and gives Yuengling right to purchase those rights back at a specified formula. Last fall, All Star informed Yuengling that it had deal to sell to Origlio and “requested” Yuengling’s approval to transfer distrib rights. In turn, Yuengling told All Star that its Distrib Agreement would apply. After process begun, All Star advised Yuengling that it “did not believe” Distrib Agreement was applicable. Now, Yuengling wants court to rule that it does, that Yuengling has right to approve transfer of brands and/or repurchase brand rights. Distrib Agreement does state Yuengling has “sole and absolute discretion” over transfer of brand rights. Yuengling also reserves the right, “however not the obligation,” to terminate and purchase brand rights. If Yuengling brands have 2% or less mkt share in territory, payment is 1.5X average EBITDA for brands over 3 yrs. If mkt share is 2-4%, Yuengling pays 2X. If share over 4, Yuengling pays 3X EBITDA.

A few weeks after Yuengling filed suit, All Star sued in its home county against Yuengling and Gretz Dist, AB distrib in Reading which All Star claims Yuengling wants to have its brands. All Star claims it is the “primary and exclusive” distrib for Yuengling in its territory and has been since 2003. It relies heavily on PA Liquor Code which it sez prevents brewers from terminating distribs or interfering with “the sale or transfer” of distribution rights, except for good cause. All Star told Yuengling in late Oct it intended to sell to Origlio; “extensive discussions followed.” According to All Star, discussions included “significant accommodations to Yuengling,” one of which was “Origlio’s offer to commit $1,000,000 of additional support” for Yuengling brands in the All Star/Origlio territories after deal closed. Origlio also allegedly committed to maintaining All Star “as a separate operation with the same management, personnel and facilities as it has now, so that there will be no material change in the operations of All Star with respect to Yuengling.” Turns out too, Yuengling approval was “a condition to the closing” of the deal. Yuengling “refuses to comply” with Pennsy law, All Star claims, and “abide by the terms of the Agreement… thereby preventing” deal from closing. At same time, All Star charges, Yuengling has had “secret negotiations” with Gretz to transfer brand rights there. So, in All Star view, Yuengling intended to interfere with sale, “improperly profit” at All Star’s expense and distribute its brands in way that “is contrary to the letter and spirit” of Liquor code. Gretz has also interfered, claims All Star. It told retailers it would get the Yuengling brand rights, “made known to the industry its intentions to prevent Yuengling” from approving the sale to Origlio and planned to act with Yuengling to prevent the deal.

Termination of Yuengling rights, disapproval of their transfer to Origlio and/or transfer them to Gretz would “irreparably harm” All Star, it claims. All Star asks court for injunction preventing Yuengling from transferring rights to Gretz and from refusing to approve transfer to Origlio. Since Yuengling’s refusal to approve transfer has “intent to harm” All Star, it also wants compensatory damages from Yuengling and/or Gretz, in an “amount well in excess of” $10 mil, plus punitive damages.

Join us May 15-16 in Chicago at the Ritz Carlton for another deep dive into the exciting high end: craft beer, imports, FMBs/PABs, cider and more. We’ll have a full-day of jam-packed presentations on this profitable, growing and dynamic segment, plus plenty of networking time, with the key players who are building the high end malt bev biz. On tap so far is a top-notch, wide-ranging panel led by Bump Williams with Crown Imports prexy Bill Hackett, Boston Beer chairman Jim Koch, wholesaler Joe Salois of Atlas and HEB’s biz development mgr-beer Rusty Woodland. Also speaking will be New Belgium co-founder/ceo Kim Jordan, Diageo Guinness USA prexy Sheila Stanziale, Crispin Cider prexy/founder Joe Heron and more to come. BMI publisher Benj Steinman will set up the day with data and insights. Click here for more information. Click here to sign up.

When NAB prexy Rich Lozyniak spoke of Boston’s inventory turns as 7.8x, he used public #s for Boston’s cost of goods sold and inventory at $207.5 mil and $26.6 mil. That’s an inventory turnover of 7.8x per yr which he compared to Genny at 15.5x. Number ain’t wrong per se but it’s not whole story or apples-to-apples. Inventory is 3 things: raw materials, (for Boston, mostly hops), Work in Process (i.e. beer in various stages of production) and Finished Goods. Boston’s inventory $$ higher because it uses more expensive ingredients and a longer brewing process, said a source. In over 50% of Boston volume now on board with Freshest Beer program, inventory turns (of finished goods) approach 40x at those distribs, source added.