Pair of publicly traded craft cos announced letter of intent to form “strategic partnership” for future growth, Craft Brew Alliance announced today of its relationship with Appalachian Mountain Brewery. Not a full takeover, the partnership allows for resource and knowledge sharing and could pave way for closer ties. AMB’s revs grew to over $266K in 3d qtr, that co reported, +38%. It produced just a thousand bbls in 2013, according to Brewers Assn stats.

AB makin’ more strides to connect with millennial consumers, and not just focused on Bud family of brands (see Nov 24 issue).  Co is “running six photos” of Stella Artois on social media platform, Instagram, for the holidays starting Dec 1, marking “the first beer maker to buy ads from Instagram,” reported Adweek.  Editor’s Note: Instagram is a website that allows users to share photos and videos with other users.  Indeed, “as a leading social platform for 21+ consumers, Instagram is a very important channel for us,” AB vp of consumer connections, Lucas Herscovici told paper.  “Facebook, which owns Instagram, uses targeting data to only show Stella Artois ads to appropriately aged consumers.”  Take a look at the ad campaign at bottom of Adweek article here.  

Two seemingly contradictory pieces of info crossed our desk this morn.  “The Best Ad of 2014 Was Brilliant and Subversive and It Wasn’t Even Real,” headlined Adweek as it named Newcastle’s very funny fake Super Bowl ad  the best ad of any kind in 2014.  Meanwhile, Newcastle Brown volume down 19% for 12 weeks in IRI data thru Nov 23, even steeper than the 12.6% drop for 52 weeks.  Isn’t there a disconnect here? How can it be the best ad if the brand is down double digits?   Turns out brand decline has steepened as yr went on.  But perhaps ad did have some positive effect at time.  In 4 weeks thru Feb 23 (including Super Bowl), Newcastle down 4% in IRI, a 2-pt improvement from prior 4 wks.

Still, almost seems a textbook case of an ad award that honors creativity more than it honors ad that actually improved sales.  The Newcastle ad’s very amusing and well-done, but did not move the needle much.  At our Beer Insights Seminar, HUSA prexy Dolf van den Brink blamed that at least in part on “execution” at retail surrounding Super Bowl, saying HUSA didn’t fully capitalize on the 11 mil views, 600 media placements and 1 billion media impressions (in short massive free publicity) that this ad created.  But we wonder if people simply watched, laughed and moved on. 

First work for Miller Lite from new agency TBWA Chiat Day Los Angeles will debut with a 15-second “placeholder” TV ad tomorrow, reported Chicago Business Journal.  Spot titled “Golden Rule,” celebrating Lite’s gold medal in American-style lager category at GABF, is start of “major theme, namely quality, that will be pursued in the months to come in a bigger campaign,” noted report. The quick spot highlights new message on Lite bottleneck, “quality uncompromising and unchanging.”  Campaign will be supported with print ads in popular men’s mags including Sports Illustrated, Wired, Men’s Health and Men’s Journal, per CBJ. 

While MillerCoors looks forward to dawn of new campaign to push “quality” theme for Lite, Anheuser Busch is cutting ties with Translation, the agency in charge of Bud’s “much-hyped Made in America summer music festival,” reported Advertising Age. Translation had been lead agency for Bud Light in 2012 but lost account to BBDO the next yr and eventually lost duties for Platinum as well. The Made in America concerts will continue under direction from Anomaly (lead shop for Bud) and AB’s collaboration with Jay Z is “ongoing” and “will continue,” a spokeswoman told Ad Age.         

With new White Paper and Industry Insights Panel at well-attended meeting on Capitol Hill today, Beer Inst highlighted its members’ responsible drinking efforts across key areas.  They are: responsible advertising/mktg, prevention of underage drinking and drunk driving and promotion of responsible retailing.  White Paper combines detailed stats on significant progress that’s been made in reducing teen drinking/drunk driving.  Report includes info on brewers’ extensive efforts to reach out to and work with parents, govt officials, law enforcement, entertainment figures and more.  Lotsa references to FTC Report released earlier this yr highlighting brewers’ successful self-regulatory efforts to avoid marketing to underage, plus positive stats on declining rates of underage drinking and declines in drunk driving.  For example, natl surveys show teen drinking rates at “historic lows” and the number of fatalities in drunk-driving crashes fell from over 26,000 in 1982 to 10,300 in 2012, BI points out.  But more work needs to be done in both areas, BI repeatedly acknowledges, as some youth drinking rates remain stubbornly high and number of drunk driving fatalities remains “too high.”  Recall, FTC’s most recent review found that over 97% of total alc bev ad impressions are reaching industry standard of audiences at least 70% adult. And over 99% of digital placements met that adult audience standard.  Use of designated drivers has skyrocketed since industry started supporting programs and BI member companies “have provided millions of people free or discounted rides since the 1980s.” 

In addition to self-regulation and voluntary efforts, BI notes brewers’ support for: graduated drivers’ licenses, state-level social host laws, fed STOP Underage Drinking Act, public service announcements, designated driver/safe ride programs and other traffic safety programs.  Brewers are also big supporters of responsible retailing programs via relationship with Responsible Retailing Forum, TIPS, TEAM, fed agencies and more.  White Paper also plugs BI’s more recent Know Your Drink efforts “to help consumers understand the differences between beer, wine and hard liquor – how they are made, served and consumed.”  In DC, BI expected near 100 Congressional staffers, fed agency figures and folks from governors’ offices for briefing on these efforts.

Beer consumption in Europe could be “more or less flat” this yr over last, the Brewers of Europe prexy Demetrio Carcellor told the Financial Times, but the assn counted almost 5700 breweries operating in Europe by the end of 2013. That’s up 73%, almost 2400 breweries since 2008, “astonishing,” Carcellor said, particularly as consumption down 8% same period.  The assn considers almost 80% of the active breweries that opened in 5 years to be microbreweries, producing less than 1000 hls (852 bbls) per yr. Over 3600 microbreweries operated last yr in Europe, more than double the number operating in 2008 and up 17% in 2013 alone. The org’s report shows huge increases in active breweries particularly in Western Europe. Half the total breweries in Europe operated in the UK (1,490) and Germany (1,349) last yr. But nearby France, Italy and Spain have seen the largest increases since 2008, particularly in the number of super-small micros. The number of breweries in Spain quintupled to 221, with 92% producing less than 1000 hls last yr. The count more than quadrupled in France to 580 and more than doubled in Italy to 509. Almost a thousand new breweries have opened in these 3 countries since 2008. Brewers there point to similar trends as in the US: Europeans “tend to drink less but better,” particularly in mature beer markets, Michel Moortgat, ceo of Duvel Moortgat, told the paper, as “the consumer realizes there’s more to beer than just thirst-quenching.” Larger companies have picked up on this change. “As a beer industry, we can do a better job in creating a better experience for the consumer,” Carlsberg ceo Jorgen Buhl Rasmussen told the Financial Times, and small brewers “can help create that experience,” in his view.

Interesting comments from a coupla corners recently about emerging marijuana industry.  As Marley Natural brand announced with cooperation of Bob Marley’s estate and $50 mil in private equity funding, ceo of co behind it, Privateer Holding, told NBC: “We see the inevitability of large, well-run companies to sell cannabis. That train left the station a long time ago.”  Indeed, “alcohol and tobacco interests are also keeping an eye on the burgeoning market,” according to NBC.  Pot advocate Allen St Pierre of NORML (Natl Org for Reform of Marijuana Laws) said he got “one of his warmest receptions” from DISCUS, distillers’ lobbying arm.  In meeting, DISCUS exec estimated “that a third of the DISCUS board want to get into the marijuana business, a third oppose legalization and a third believe that the industry should take a neutral position,” as St Pierre recalled to NBC.

But some distribs already investing in pot biz in Wash where it’s legal, former Wash beer assn exec Phil Wayt (who now lobbies for pot) told Calif Beer and Bev Distrib Assn meeting during pot panel, moderated by BBD’s Harry Schuhmacher.  “Wholesalers in Washington are invested in the cannabis industry in some form or another,” Phil said. “They want to be part of this blossoming industry and there is a way.”  Meanwhile, legal pot has had no big effect on beer biz in Colo, said atty Josh Kappel, associate director of Sensible Colorado.  “We haven’t seen the sky falling.”  (Beer shipments up 1.3% in Colo thru Oct.)  There are now 10-15,000 legal marijuana jobs in Colo, which has unemployment rate of 4.3%.  And it’s the “best tourism year ever.” 

Finally, beer and wine “seem to be complements” to pot, according to Amanda Reiman, manager at Marijuana Law & Policy, Drug Policy Alliance, whereas liquor and marijuana are more “substitutes.”  Echoing theme we’ve heard before, she found beer and pot to be “more complementary types of social behavior.”  As enthused as all panelists were for pot’s prospects, both Josh and Amanda emphasized that political change “could hurt it a whole lot…. This can all go away. It’s still very vulnerable.” With pot as growing issue including referendum likely in Calif in 2016, panelists raised possibility that pot “could affect the Presidential election.” 

Current competitive nature of alc bev biz also shows up in latest on-premise data from GuestMetrics.  Craft spirits have just 6 share of spirits on-premise, but up 50% and gained 2.1 share in 4-wk period thru Nov 2, GM reports.  All in, spirits trend even for 4 wks (volume), a slowdown from Q3, but much better than 1^st half.  Wine down 1.1%, with $$ up just 0.2%.  While wine eked out 0.1 volume share gain for 4 wks, spirits +0.6.  With soft pricing, wine lost 0.3 share of $$, spirits gained 0.4.  Beer had strongest price/mix trend for 4 wks, +3.7%, vs 2.3% for spirits and wine just 1.3%.

Joining chorus of industry observers that SKU proliferation ain’t ending any time soon: consultant Bump Williams in his latest missive to clients.   “Anyone preaching that SKU-mageddon is over or coming to an end is not in touch with reality and it’s all about the ‘shell game’ and organized chaos at retail for the big brewers and all about innovation, points of differentiation and staying alive for the smaller players.”  Bump’s pickin’ up on themes from recent speakers at Tamarron SCOL conference and Beer INSIGHTS Seminar that SKU proliferation simply a “fact of life” that suppliers, distribs and retailers have to deal with.  Indeed, Bump just had mtg with big retailer who was showing one big brewer’s plans for Q1 2015.  Combo of “new ‘crafty’ brands, new looks and labels to established” mainstream brands, plus variety packs, extensions etc, added up to “well over 25 incremental packages.”  And how many SKUs was this brewer ready to pull?  “None of them of course.”  (That reminded us of comments from MC execs back at NBWA that they planned to “amplify” subpremium biz before they “simplify”: i.e. significant number of SKUs not about to disappear soon.)  That strategy, in Bump’s view, “spells trouble for the non-Mothership brands in this brewers’ distribution network.”  At same time, Bump’s sees “diminished focus on beer only” from distribs who “embrace the notion that a full truck (of anything DSD) is a happy truck,” just as big brewers getting more focused on moving volume.  He expects “more reasonable” prices to consumers, “more frequent promotions on key packages (NOT the 24 and 30 packs),” plus “massive investment in increased innovation,” new products. 

Meanwhile, as beer execs continue to look to steal occasions from wine and liquor, some wine experts lookin’ over their shoulders too.  And everyone’s lookin’ to millennials, natch.  At Wine Vision mtg in London last week, one expert advised wineries to “forget their own brands and simply focus on marketing wine to a new generation of consumers,” reports Beverage Daily.  That’s counter to beer execs who continue to preach brands.  Vintners should drop “technical language” about wine, he advised.  Rather “people want to know ‘this wine works on a date, this one on the beach -- this is good with fish, or chicken.’  Just the basic information.”  

Second expert reminded that neo-prohibitionists now lump wine with other alc bevs, that wine “under attack as alcohol” and not a “cultural food.”   Then too, “there’s another set of combatants”: craft brewers.  He’s got a book coming out with chapter that “sometimes the best wine is a beer,” noting less expensive wines have been “dumbed down” in recent years, and “not very interesting.  So for the same price you can get craft beer, craft cider or perhaps a very interesting spirit.”  Wine, he said, has to be “more authentic, more interesting and more affordable.”  Toss in front-page feature in NY Times last week about growing strength of craft distillers and looks like 2015 shaping up to be mighty competitive as well.   

After 3 yrs with San Fran-based Goodby Silverstein & Partners, top importer Constellation is ready for a new ad agency to handle work for its growing #2 and #3 brands, reported Ad Age.  “With both of these brands we see a ton of potential for additional growth and we’ve got aggressive goals behind them,” said a spokesman, who added, “because of that we think that these goals require a different approach.”  This past yr, Corona Light ads by Goodby were “aimed at middle-age drinkers, rather than the twenty-something drinkers,” noted mag.  “We enjoyed working” with Constellation but “both parties agree that it’s time for a change,” said a Goodby spokesman.  Constellation hopes to have a new agency in place by early 2015. Ad duties for its #1 Corona Extra remain at Cramer-Krasselt, “where it has been for many years,” added Chicago Biz Jnl.