Reading our latest Beer Marketer’s INSIGHTS, which included a riff on decreased dominance of AB distribution network, especially in top metro areas where MC distrib with full portfolio of craft and imports is often top dog, a source who identified himself as “Mr Big” wrote: “it looks like the Third’s insistence on exclusivity and how we followed has really f-d the AB distributors for turning down all those brands. The other guys picked up a helluva lot of big profit gone forever from us. This makes consolidation for us all the more important.”  

AB could be facing another class-action suit over what’s in its beers and on its labels.  Latest beef from proposed class action suit in Calif is that labels for its Bud Light Lime-a-Rita misled consumers because it has too many calories to be considered “light” product, per Law360.  Plaintiff Sheila Cruz claims label “led her to believe it would be low in calories and carbohydrates,” but suit claims Rita brands are filled with 192-220 calories and 23g of carbs per 8-oz vs 110 calories and 6g of carbs in 12-oz Bud Light.  “As a result, consumers are purchasing a product that has been misbranded and falsely advertised as a ‘light product’,” but instead, consumers are getting “the highest calorie alcoholic beverage sold by Anheuser-Busch,” suit claims.  That violates “Federal Food, Drug and Cosmetics Act and California false advertising and unfair competition laws,” by “intentionally misleading” consumers.  FDA rules “generally limit the use of ‘light’ labels to products that have one-third fewer calories than the comparable reference product,” per suit.  AB had not responded to claims so far.  

AB will be dialing up innovation again in 2015, with recently announced Oculto and also a Bud Light line extension called Mixx Tails, as Ad Age reported Friday.  Mixx Tails “appears to continue the brewer’s recent innovation strategy of blurring the lines between cocktails and beer.”  ABI had recently filed trademark application and confirmed the launch to Ad Age, but provided no details. However, an AB distrib had recently tweeted that the product would come in flavors like Hurricane, Firewalker and Long Island Ice Tea, noted Ad Age.  Another version of this product already sold in Argentina “under the Quilmes brand name.” 

AB rescinded its price hikes to chains to maintain level of features and ad displays, say sources.  Could this have anything to do with potential fallout from AB 1928, the Calif bill passed earlier this yr that bans scanbacks and IRCs?  Chains are reportedly not happy to be getting less.  AB has not commented at presstime, nor does it usually on pricing.

AB just announced that region veep Henry Dominguez, in charge of Calif and several other states, will be leaving Jan 1.  Henry’s a 25 yr AB vet.  That makes the 3d region veep slot that opened in just last week, following announcements that Bob Tallett will take over Don Johnson’s slot and that Tom Doyle (veep in Region 5) will move to AB’s new high-end unit. 

It’s somewhat surprising and atypical that AB made all these changes without simultaneously announcing replacements for these slots.  There are also many other changes and several unconfirmed reports of some further layoffs in St Lou. Full picture hasn’t yet emerged, but what’s come out so far doesn’t suggest the most orderly transition as of yet.  Last week, AB also announced that it will be “consolidating our field sales structure to seven regions” on Jan 1, according to memo from sales veep David Almeida.  “Realignment of selected personnel will be announced in the coming weeks,” he added.  

Widespread additional coverage of Massachusetts pay-to-play scandal following Boston Globe story on Friday, including another Globe article over weekend that began: “Prominent Beacon Hill officials suggested Massachusetts should beef up its oversight.” Recall, state alc bev control commission down to 14 inspectors (used to be 40). Turns out its “enforcement budget” is $150,000, noted the Globe, half what it was 7 yrs ago.  “Several legislators questioned how the ABCC, with so little money and so few inspectors, can adequately investigate unfair trade practices without neglecting its enforcement of life-and-death issues of underage drinking and bars that serve patrons too much alcohol,” noted the Globe.  But “it’s not right for them to have to make that choice,” said one state representative. “When you have a law, you have to either fund it or take it off the books.”  Even Governor-elect Charlie Baker chimed in that “protecting small businesses from unfair practices and ensuring regulators have the tools they need to perform the most vital functions, such as stopping underage drinking is important to the governor-elect,” according to a spokesperson. 

Now that this can of worms has been opened, will anything come of it?  Hard to say, but one beer industry vet notes that whatever is found in beer biz is only small part of equation, as pay-to-play practices are that much more prevalent in wine and spirits biz.  

Pabst deal to sell to Blue Ribbon Intermediate Holdings closed yesterday as expected.  Blue Ribbon is partnership between entrepreneur Eugene Kashper and San Fran private equity firm TSG Consumer Partners.  Terms not disclosed, but deal reportedly for over $700 mil.  Eugene will be ceo and is already out in LA.  Earlier this week, he and some of Pabst sr mgt attended Beer Insights Seminar.  Eugene clearly eager to get started and has many ideas.  With Pabst down 120,000 bbls, 2.7% thru Sep, PBR barely up in 2014, and high debt levels (6.5x EBITDA), now the real work begins.

. . . Large Midwest AB distrib looking for gen mgr.  Send resumes in confidence to This email address is being protected from spambots. You need JavaScript enabled to view it.

For decades, AB has totally dominated largest channel in beer,  c-stores, routinely clocking in at over 60 share of volume until last couple of yrs.  But as mkt fragments and AB share slowly erodes, AB down 0.9% in IRI c-store data this yr thru Nov 2. Dropped 0.9 share of volume and now under 58 share.  Even more strikingly, AB down 1.6 share of $$ to 54.2 YTD.  Avg rev per case in c-stores up less than 1%.  On other hand, its archrival in c-stores is now Constellation Brands Beer Division (think of who are growing number of key shoppers in this channel).  CBBD beer $$ sales are up 19% YTD.  It gained fully 1 share to 7.4.  The other big share gainer, natch, is Boston Beer.  Boston $$ sales up 37% in this channel.  Gained 0.4 share.  Craft segment is flying in c-stores, with $$ up 26%. But still small, up 0.65 share to 3.46, compared to near 15 share in supers.  

Seeking to keep his brands on tap in a Waltham, Mass bar, Chris Tkach, co-owner of Idle Hands Craft Ales, was told “No, this distributor bought all new [equipment] for us, and we have to dedicate those lines to them.”  So Chris told Boston Globe, which ran lengthy story today on Mass Alc Bev Control Comm launching investigation into pay to play.  Recall, that Pretty Things co-owner Dann Paquette accused two Boston bars last mo of ugly things and refusing to sell his beers.  Now, Mass ABC has subpoenaed brewers, distribs and retailers for financial and other records, Globe reports, that might indicate pay to play via free beer, gift cards, draft equipment, etc. Among those receiving subpoenas: Idle Hands, Harpoon, Yuengling and Night Shift.  Each denied any illegal practices.  AB and MC told paper they did not get requests from ABC, tho AB said it had “strict policies” against pay-to-play and said it had contacted the ABCC on its own last mo “to assure them of our position and offer our assistance.” 

Chief investigator said he’s looking for “any and all forms of inducements,” adding that “this is ongoing, and this may not stop here.”  Potential penalties for pay to play include warnings, suspensions or revocations.  A number of Mass distribs got requests, Beer Distribs of Mass prexy Bill Kelley told Globe, and “will continue to cooperate in a timely manner.”  In addition to Chris, story cited others pointing fingers and reported “many in the beer industry contend pay-to-play is widespread and complain regulators have done little to stop it.” 

Mass ABC hasn’t cited anyone for pay-to-play for at least 18 yrs, Globe found, and no records for earlier yrs.  Same investigator said agency has gotten few complaints and couldn’t obtain evidence.  Also, ABC more focused on sales to minors and intoxicated patrons.  Another possible reason for lack of action: ABC down to 14 inspectors, from 40 back in the 80s.  It only assigned 2 to investigate pay to play, part-time.  Not surprisingly, Stone’s Greg Koch chimed in: “The fact that there haven’t been any busts seems to suggest there isn’t a problem, but everyone knows it’s going on.”     

AB just sent statement that it is “pleased” that Court “ruled in our favor and has compelled the ABC to approve our license application in order to complete the private sale of Budweiser of Owensboro” to AB.  Judge gave state a week to issue the license to AB, said Louisville Courier Jnl.   He said state regulators “provided no rational basis to deny this application or to delay final action on the license.  There are many public policy issues surrounding this controversy that deserve public debate,” said judge, but those should be reserved for legislators and alc bev regulations.  They “do not provide a basis for holding this license application hostage,” he concluded.