Boston Beer stock surged $7, 2.4% again yesterday to $309, crossing $4 billion in total stock market capitalization.  Catalyst appeared to be initiation of coverage (with a “buy” rating) by investment firm Jeffries last Friday.  In 50-page report called “Long Runway for Strong Secular Growth Story,” Jeffries analyst Kevin Grundy wrote: “SAM remains one of the best secular growth stories in consumer staples.”  He estimates Boston Beer over $900 mil in revs in 2014 ($924 mil) and will easily cross $1 bil in revs in 2015.  Over next 5 yrs, he expects cider to continue to grow 25% per yr and ultimately become 50% or so of Boston volumes within 5 yr period.  

MillerCoors sales-to-retailers trend improved slightly in 4th qtr; down 1.7%, reported SABMiller.  But recall it had built excess inventory in 3d qtr and so that now reversed with around a half-mil-bbl, 3.7% shipments drop.  Miller Lite STRs up low single digits, “posting its first quarter of volume growth since 2007” as it “continued to benefit from the return to its original iconography and intrinsic-focused marketing campaign.”  Yet total MC premium lights down low singles, as Coors Light still down low single digits, more than offsetting Lite growth.  Another notable trend improvement: Miller High Life down low single digits “on the strength of its current marketing campaign and associated packaging.”  MC’s above premium STRs up just low singles as Blue Moon and Leinie’s “together were level.”  Growth led by “high single digit growth for the Redd’s franchise” plus new brands Fortune and Smith & Forge.  Total subpremium biz still a drag on biz, down mid-single digits.   But Steel Reserve “grew mid-single digits”on strength of its “Alloy” series. 

Globally, SABMiller lagers down 1% in qtr, “reflecting continuing volume weakness in China and in US shipments,” reported SABMiller.  Beverage volumes up 4% but beer results short of expectations.  “The most significant element of the quarter’s results… was the shortfall in lager volume,” said RBC Capital Mkts James Edwares Jones, adding he expects as a result “group margin expectations will remain under pressure.” 

Tho a few skeptics remain about the benefits of moderate drinking, especially for heart health, the research is becoming increasingly conclusive.  The latest: a long-term (24+ yrs) study of nearly 15,000 adults (age 45+) from 4 US states found men who averaged a drink/day reduced risk of heart failure by 20%, women by 16%.  Not many self-reported heavy drinkers in this group (suggesting under-reporting, which only strengthens the results), but the researchers also found that “no level of alcohol intake was associated with increased risk for heart failure,” tho heaviest drinkers had increased risk of dying from any cause over the years of the study.  Despite the strength of these findings, the authors were guarded about the implications.  They concluded, typically wary, that the findings “suggest that despite the dangers of heavy drinking, mild alcohol consumption in early-middle age may be associated with lower risk of heart failure.” 

But separately, Dr. Emanual Rubin from the Dept of Pathology of Thomas Jefferson Univ recently reviewed the evidence of the benefits of moderate drinking across heart health, stroke, obesity, dementia, bone density and more and dispensed with the typically cautious response.  Dr. Rubin actually concluded that while patient advice should be individualized, “the overwhelming evidence suggests that physicians should counsel lifelong nondrinkers at about 40-50 years of age to relax and take a drink a day, preferably with dinner.” Not surprisingly, two longtime researchers/advocates responded to this suggestion in the journal where it was published, by adding cautions.  We’ll have more details on both articles in the next edition of Alcohol Issues INSIGHTS.         

Last week we printed that other above premium segments “have taken some craft beer business,” via Nielsen’s Danny Brager during his BA Power Hour presentation.  But that’s true of only smaller cider and FMB’s, which Danny warned craft to “be wary of.”  Overall, it’s the reverse: craft beers are taking from other above premium segments, tho taking more from premium and below premium domestics.  Imports and super premium make up “about 1/3 of the shifting gains to craft,” and have “high interaction” with craft segment. 

Scant details available on AB layoffs so far, but St Lou Biz Jnl had more than most, saying “recent layoffs have affected at minimum many dozens of employees across numerous departments.” (Recall, last week Wall St Jnl wrote “one person estimated hundreds of jobs could be eliminated.”)  AB “cut jobs” in IT, field sales, procurement, brand, experiential and trade mktg, Mark Greenspahn told St Lou Biz Jnl.  Mark, a 31-yr AB vet, now a “resume writer” at St-Lou based Two Feet in the Sand.  “At least 20 marketing employees were let go,” said Jnl, citing “people familiar with the matter” and over 3 dozen IT employees, citing 2 sources by name.  “Members of Busch Media Group also lost their jobs.”  

Here’s how “layoff process” described to Greenspahn who told St Lou Biz Jnl: Affected employees “received an email in the morning scheduling a meeting.  During the meeting, they received a severance package, and were then escorted out of the offices, unable to return to their desks.” ABI has “done everything they set out to do,” Greenspahn told Jnl. “They’ve returned value to the shareholders.  They’re brilliant businesspeople.  They’re just tough on people stuff.”  

Scheduled hearing at Ky ABC over distrib, brewer, other opposition to AB getting distrib license in Owensboro for branch did not take place Friday.  Any appeal by those who oppose license, represented by group called Kentuckians for Entrepreneurs and Growth (KEG), put on hold unless ABC appeals judge’s ruling that it has to grant license and “court of ultimate authority reverses” it and remands decision to ABC for “further deliberation.”  KEG “disappointed” by judge’s decision, natch, and said it will renew its appeal “if a higher court reinstates the ABC’s discretion” in this matter.  No indication yet whether ABC will appeal but probably has to decide quickly as judge accommodated AB/Hand’s end-of-yr time frame to close deal.    

In ongoing attempts to stop brand Bud’s 25+ yr slide, AB “plans to concentrate future Budweiser promotions exclusively on” 21-27 yr-olds, Wall St Jnl reported today.  AB told paper 44% of consumers in that age group have never tried Bud.  There was chatter about this same point several yrs ago when AB tried to boost Bud sampling, but it appears AB will be dialing up mktg efforts to target millennials via more contemporary music artists, food festivals, college town parties etc, as well as on-premise push.  Getting less attention: Clydesdales, major league baseball and aging rockers, according to WSJ.  “This is a very considered, long-term view of what will turn around the brand,” Brian Perkins, mktg veep for Bud, told paper.  Clearly, millennials are big oppy for Bud, but focus shift also obviously a bit of risk.  “If you try to be too young and too hip, you lose your base,” ex-AB veep Tony Ponturo told WSJ.  “They’ll say: ‘That’s not my Budweiser anymore.’  You have to start with a message that resounds with a new generation of people but doesn’t throw off the core drinker.”  Ain’t easy, but AB can’t afford to give up on what’s still #3 brand in US.   

AB focus on core brands Bud Light and Bud also a theme sales veep David Almeida shared with journalists at open house in St Lou last week.  “How do you play in the high end and also grow the core?” Dave laid out the key question, according to CSPnet.com.  While AB focused big on innovation in 2012 and 2013, “our strategy in 2014 was to focus on our core,” said David. AB aims for “balanced growth” of innovation and core in 2015.  So AB execs in St Lou displayed new line extensions for Shock Top and Ritas, other new brands, plus “more innovation in packaging.”  (David said 25-oz cans helped and aluminum pints “cost a lot more…but we made it work,” claiming Bud Light gained share point in 2014, presumably of premium lights.)   AB’s takin’ a cue from Coke, mktg veep Jorn Socquet told journalists in St Lou, “referring to Coca-Cola’s multiple size strategy that aims to provide drinks for a wider variety of occasions.”  AB also wants retailers to adopt balanced growth approach to high end and core brands, by “leveraging the entire business. The best craft convenience store in the country is also the best value store in the country,” said CJ Watson, veep of small formats, reports CSPnet.com.

Montejo 12-pack marked “Clearance” at Walmart for low, low price of $6.00 per 12 pack in picture sent to INSIGHTS.  Numbers we’ve seen so far for Montejo suggest it’s selling some, tho not setting world on fire.  This low pricing likely means that it overshot the mark in supplying at least this Walmart.  AB also seemingly uses Walmart (or Walmart uses AB) at times to hit low price points.  “Walmart’s deep discounting of ABI aluminum pints last quarter” was one factor that “triggered industry pricing slips in certain geographies,” wrote Stifel’s Mark Swartzberg, following meeting with MillerCoors cfo Tracey Joubert and investor relations execs at Molson Coors.  Recall, AB also had hot-button pricing on the Ritas this summer in Walmart.  

As liquor biz enters critical holiday period, volume up 2% in October in control states, NABCA reports, +2.6% yr-to-date.  For 12 mos tho, liquor volume up 1.5% in these states.  That’s not much better than 0.9% gain for total US beer shipments for 12 mos thru Oct 2014.  Dollar wise, NABCA reports solid 4% “shelf dollar” increase.  But again, that’s just slightly ahead of 3.8% increase in off-premise beer $$ sales IRI reports for 52 weeks thru Nov 2.   So beer-spirits trends tightening up a bit.  

AB announced more layoffs yesterday, this time at its Newark brewery. “After a thorough study, we have made the decision to idle the bottle line,” gen mgr Kevin Lee said in statement.  Sixty hourly positions will be eliminated.  “The bottling equipment will be moved to other facilities,” according to NorthJersey.com.  Exact date of layoffs unknown, but AB aiming for end of 1^st qtr.  Back in 2007, Newark had 800 employees and produced 7.5 mil bbls of beer, reported NorthJersey.com.  Layoffs will affect 50 union members, and Teamster spokesman David White said: “The Teamsters will be negotiating with the company and employees to find other positions in the brewery and beverage industry.”