Back in 2012, Great Lakes Wine and Spirits anointed a surprise consolidator in MC’s northern Mich distribution network.  It bought both Bay in Petoskey and Silver Foam in Jackson that yr.  Now Great Lakes has acquired Wicksall Dist in Traverse City too. “It’s time for me to head into retirement,” majority owner Pat Wicksall told Traverse City Record Eagle.  Wicksall has 60 employees and services about 600 retailers, representing beer and wine from 45 different suppliers.  “Great Lakes Wine and Spirits has an impressive track record of keeping employees and the community engagement intact as they have acquired business in new markets,” said Pat.  Great Lakes has 900 employees and 8 facilities, selling 2300 brands from 475 suppliers.   

Tom Long’s comments about importance of Hispanic and millennial consumers for future of beer dovetailed with major theme during Brewers Assn Power Hour hosted by Nielsen’s Danny Brager and Maria Monistere yesterday.  Maria and Danny focused on craft segment, but growing population of Hispanic Americans (predicted to be 46% of total US population by 2050) clearly has large impact on all beer segments, and particularly Mexican imports.  Indeed, other above premium segments “have taken some craft beer business,” Danny noted. 

Top Cities Where Hispanic Millennial Population Considerably Over-Indexes Thruout presentation, Danny stressed importance of “pinpointing opportunities.”  Pointed to Hispanic millennials (21-34) becoming a much larger part of total millennial population in top Hispanic markets; as large as 2/3 of total millennials in San Antonio, about half of millennial population in LA and Miami, and way over-indexed in Houston (42%), Phoenix (38%), Dallas (34%), San Fran (32%), NYC (30%) and Chicago (24%) too.  Danny also listed Seattle, Denver, Minneapolis, Detroit and Raleigh as mkts that’ve seen big growth in Hispanic millennial population.  

Maria’s “Must-Knows” for Hispanic Millennials Then too, Maria emphasized importance of paying attention to “what are the differences,” among these younger Hispanic consumers ‘cause it’s a “strong factor in how they consume.”  Compared to previous generations, Hispanic millennials “more likely to have college educations,” they’re “very diverse,” and have “new values.”  In part, that’s helped the emergence of “Upscale Latino,” as Hispanic households earning $75-99K per yr grew 31% vs 16% non-Latino, and Hispanics earning $100K plus grew 71% vs 49% for non-Latinos from 2000 to 2011.  Hispanics are projected to have $1.5 trillion in spending power in 2015.  Other “must-knows”: “family is paramount” and there’s a “multitude of decision makers” in “communal” households; there’s “almost a 50/50 split” between foreign-born Hispanic Americans and US-born Hispanic Americans aged 21-34; Latino culture still very present in younger generation, as nearly 3/4 live in household where two languages spoken and enjoy maintaining traditions/heritage.  “Technology” is also synonymous with Hispanics, as Hispanics are “more likely to be connected” via social media, “spending more time on these sites versus non-Hispanics.” 

MC ceo Tom Long began his presentation to Calif beer distribs assn with notable quote from famed mgt consultant Peter Drucker: “Demographics are the future that has already happened.” In Calif, Hispanics already at 37.6% of population in 2010, Tom showed. And what’s more, Hispanic pop grew 28% between 2000 and 2010 to 14 mil, while total Calif pop grew 10% to 37 mil. So Calif home to more than 1/4 of nation’s Hispanics. These simple numbers help explain why so many beer marketers so intently focused on Hispanic drinkers in Calif.

But Tom also pointed to another surprising oppy: Asians. Asian population in Calif grew 31%, 1.1 mil to 4.8 mil. That’s about 13% of Calif pop (Asians under 6% of total US pop). Noting that Asian per caps are low, Tom continued: “None of us do a good job of marketing to Asians,” adding that’s a “real opportunity for all brewers.”

Broadening his lens out to total US, Tom again focused on “weak” per capita consumption numbers in recent yrs (even weaker in Calif, he pointed out).  “That’s a problem,” Tom said. And it’s “not just a big-brand problem,” Tom added, referring to earlier presentations that showed decline of big brands. “It’s our industry problem.” And to improve per caps, “you’ve got to drive weekly drinkers. All big brewers should be focused on that.”

Tom sees rays of hope in steady influx of new legal age drinkers every year. It’s oppy to start fresh. “If we want to change the game, let’s try to learn how these drinkers think and give them what they want.” In particular, he noted that every yr 680,000 drinkers turn 21 in Calif and 48% of them are Hispanic. So that every January 1st, “it’s like a gun goes off.  We’ve got a new race” to capture those emerging drinkers.

The consumer price index for beer increased 1% for month of Oct vs Oct 2013 compared to 1.7% gain for general inflation.  CPI for beer has lagged inflation hikes for 7 straight months.  Spirits prices up 0.8% in Oct and wine index (+0.3%) up for 1^st time since Jan.  YTD thru Oct, CPI for beer up 1.35% vs 1.7% increase for general inflation. Spirts prices were up 0.6% while wine off 0.4% Jan-Oct.  

Yet more fallout from pay-to-pay investigation in Mass.  Boston Globe editorial today tore into “complicated distribution system” set up for alc bevs in state, warning pot advocates not to follow that example.  Globe has history of animosity toward “middlemen” in Mass which, along with caps on retail licenses, it believes has created a “stifled market” and a “morass that limits consumer choices, enriches special interests and invites misconduct.”  Indeed, Globe believes that with limits on retail outlets and on brewers’ ability to “shop around” for new wholesalers, “it’s no wonder they may feel pressured to pay off restaurants to carry their products, and that restaurants may be tempted to demand such payments.” 

State’s scheme for medical marijuana “repeated some of these same problems,” in Globe’s view, by sharply limiting retail operations that are likely to build same kind of “political clout” that liquor stores and distribs have wielded to “keep competition-stifling rules…in place.”  If Mass legalizes pot, Globe advised, “it should not spawn another regulatory monster in the process.”  Rather, state should allow “anyone” to grow or sell marijuana as long as taxes paid and other state requirements met. The kicker: “businesses shouldn’t be required to use middlemen, unless they choose to.”  Seems like brewers seeking franchise reform in Mass still have a serious ally in the media.        

Asked about “any improvement” in on-premise beer biz during MillerCoors conference call Nov 6, ceo Tom Long said nothing of “substantive size,” tho disposable income freed up from lower gas prices was “very encouraging for beer.”  Latest data from GuestMetrics supports Tom on both ends.  Overall on-premise traffic still behind last yr.  Trends improving in casual dining but still down near 2% in bars/clubs.  GM cited “lower gas prices and higher consumer confidence” as contributors to better trends in casual channel.  Beer trends also only modestly better.  Volume off 3% same 4-wk period, sez GM, a slight improvement from -3.5% yr-to-date.  With wine down 1.1%, spirits flat, beer continued to lose share of alc bevs, -0.7, again only slightly better than 0.8 share loss yr-to-date.  As trade up continued, beer lost less share of $$, -0.3 yr-to-date.  Interestingly, craft share gains continued to slow.  Following 2.3 share gain (in beer) in Q1, 2 share gain in Q2, craft up 1.3 share in most recent period.  Echoing GM, recent survey from National Restaurant Assn found some reasons for optimism.  Tho post-recession spending remains “sluggish” for services category, including on-premise, and many consumers remain “concerned about the economy” and “cutting back” on spending, survey also found consumers “relatively optimistic that conditions will improve in the year ahead.”  Add that “significant proportion of American public say they would like to be patronizing restaurants more often,” and NRA reasons that there’s “pent-up demand” for increased traffic. “Stage is set,” sez NRA, for better days ahead.

The pub system in Great Britain could undergo major, if gradual, changes after vote in Parliament yesterday, based on numerous reports from The Telegraph, Guardian, Morning Advertiser and Propel. British pub owners may gain more freedom to buy any beer on the open market rather than from large landowner pub cos if amendment passed by House of Commons yesterday becomes law. About a third of UK pubs operate under the centuries-old “beer tie” (and folks complain about post-Prohibition-era laws here), designed to offer lower rent and other costs for pub-operating tenants. But those tenants are also often required to buy all their beer from the pub cos, some of which are breweries themselves, and often for higher prices than on the open market, critics claim. The bill passed yesterday would allow tenants to gradually break away from that system. Stocks for the largest pub cos dropped in response to the vote: Enterprise Inns (-13%) and Punch Taverns (-9%) stocks dipped furthest as the pair of cos operates about 9000 pubs between them, per the Wall Street Journal.

The British Beer and Pub Assn, which represents the pub cos, believe the change would lead to an even greater number of pub closures and job losses. But leading among proponents of the bill, Campaign for Real Ale (CAMRA) called the vote a “historic victory” after pushing for the change for 10 years. The change could “bring back market forces into a sector that frankly has become grotesquely anti-competitive,” Greg Mulholland, the Parliament member who brought the bill, claimed, adding that it would help open a system that’s “closed to many smaller breweries.” Indeed, the Federation of Small Businesses hailed the vote as a “sensational victory” on a “historic day.” Still, much uncertainty remains: it’s unclear that the bill will pass through the rest of Parliament to become law as yesterday’s vote ended up 284-269.  Further, if passed, it could be up to 5 years before much action is taken as the bill lays out an extended timeline for negotiations between pub cos and tenants that may only be initiated at specific times.

At same time as largest MillerCoors distrib in US signed deal with Coca-Cola, more speculation in press that owners of AB InBev may be looking to make move on Coke biz.  3G Capital partners Jorge Paulo Lemann, Marcel Herrmann Telles and Carlos Alberto Sicupira are “in advanced talks to set up a new fund to invest in the food and beverage industry,” per Veja, Brazil’s leading news mag, reported by Forbes.  According to original report, 3G has been in contact with private bank mgrs serving “some of the richest families in Brazil,” as well as top investment banks to amass fund with capital between $4-5 bil.  This new fund “could possibly be used to orchestrate the takeover of Coca-Cola by Lemann and his buddies,” wrote Geraldo Samor in Veja. 

Rumors on this deal have run hot and cold for couple of yrs now. “Historically the Brazilian press has been accurate on the intentions of 3G,” noted Nomura analyst Ian Shackleton.  He added, “this leaked story” could possibly “slow down” some KO initiatives such as “selling bottling assets, refranchising US bottling, reconfiguring some of the 3d party bottler franchises.”  He adds further that if there is an LBO for Coca-Cola he sees it as a “3G/Buffett deal,” but noted “we do see a role for ABI potentially to buy out owned bottling businesses from KO,” which could be worth up to $25 bil.  

Coca-Cola and Reyes Holdings’ Great Lakes Coca-Cola Distribution LLC announced they signed definitive agreement for blockbuster deal first announced back in Feb.  At the time, our sister publication Beverage Business Insights noted that Coke signing with Reyes was a “move that may redefine path of soft drink distribution in North America,” as deal represents “biggest commitment by beer house to sodas,” so far.  Back in Apr 2013, Coca-Cola said it signed letters of intent with 5 U.S. bottlers to create a new biz model with new and expanded territories.  This is 2d deal Coke has signed agreement on after formalizing deal with Troy Taylor, a longtime Coke advisor, for rights in central Fla.  “We intend to leverage our distribution experience to refresh fans of Coca-Cola’s iconic brands throughout greater Chicagoland,” said Jude Reyes, founder/co-chmn.  

Reyes Bev Group “posted a layoff notice Monday affecting 902 employees statewide,” wrote South Fla Biz Jnl last week.  That’s likely just mandatory Fed notice.  “We would like to hire Gold Coast employees,” RBG spokesperson Molly Reilly told the Jnl.  “We want to grow the business,” Molly continued.  “I don’t know exactly how many people that is, but I know we’re interested in all of Gold Coast’s employees.”  So “it’s unclear how many Gold Coast employees Reyes will hire,” wrote Jnl……  That was quick.  Former Heineken USA sr sales veep Scott Blazek has been appointed senior veep of Wirtz Beverage Nevada just a couple of mos after he left HUSA…..  Premium Dist in New Mexico will sell estimated 9.5 mil cases, according to profile in Albuquerque Journal, 94% of it AB.  Premium has about 400 employees.  When recession hit, it added non-alcs.  “You can’t rest on your present products in today’s market,” Premium exec veep and part-owner Reggie Hardaway told the paper.  “You’ve got to always look for an expansion and variety.”