World’s largest retailer, over 20% of grocery sales in US, reported a “rare” rise in US sales, headlined Wall St Jnl.  Same store sales were up (tho just 0.5%) for the first time in 7 qtrs in its fiscal qtr ending Oct 31st, and it’s  sales aided by lower gas prices and improving economy.  But “traffic remained weak,” noted WSJ, (down 0.7%) and Walmart gave “tepid guidance.”  The retailer is expecting intense competition and “highly promotional environment” over holiday season, as WSJ noted.  Walmart is also of course largest beer retailer, on mission to double its beer sales over 5 yr period.  Not exactly sure what read thru is for beer biz in Walmart’s report, but as several Wall St analysts noted in their takeaways from our Seminar in NYC this past Monday, overall trends in beer biz are improving lately, while opportunities to increase price are not quite as robust as they were. 

AB made several personnel announcements yesterday communicated as forward-looking and aimed at strengthening AB’s relationship with its distribs.   But the change which likely resonated the most with distribs won’t necessarily be viewed as progress.  AB announced departure of its business and wholesaler development veep Don Johnson at the end of the yr.  Don, a 35-yr AB veteran, has long been well-liked and respected by lotsa distribs.  Here’s AB: “In his many roles, Don has been a highly respected leader, delivering results and bringing camaraderie to his teams, while building strong bonds with wholesalers.”  Distribs have often described Don as a kind of last link to some of the best elements of the old AB culture.  It will be interesting to see how/if AB looks to replace the kind of touch Don brought AB distrib relations in recent yrs.  Taking on Don’s role will be Bob Tallett, also a 30-yr vet of AB, who most recently ran region 1 and “developed a team that has led the country in sales performance and market share growth despite many challenges in the Northeast,” sez AB.  Bob’s a hard-driving guy, whom AB calls a “recognized team builder and communicator.”    

Bob will report to Ricardo Melo.  Ricardo just got promoted to veep of sales strategy and wholesaler development.  He’ll keep his “current responsibilities” for trade mktg, tech sales and branch sales depts, but adds “business and wholesaler development” to “further strengthen our wholesaler partnerships.”  He’s appointed to ABI’s North American Zone Mgt Committee. That committee comprised of a dozen execs, prior to addition of Ricardo.  A handful of them have been around long enough to have links to the old AB.  One who does, zone veep and legal counsel Gary Rutledge, will also be leaving at end of yr.  Gary is the last member of old AB’s mgt committee still there.  His replacement is Katie Barrett.   Interestingly, AB didn’t name new region veep replacing Bob.  Could still be working through that.  But could also be there are more changes to come, with lotsa talk about reducing AB field sales structure by a coupla regions.  Stay tuned.  

MillerCoors longtime chief customer officer Kevin Doyle named chief commercial solutions officer yesterday, effective Feb 1.   Kevin will “lead integration of our commercial support teams” including commercial ops, channel solutions and customer solutions.

Join us for BMI’s annual Spring Conference May 11-12 in Chicago, another deep dive into the High End of the US beer biz, which remains an engine of growth and opportunity.  Several leaders of high end segments are already on our program including:  Dolf van den Brink (Heineken USA), Jim Koch (Boston Beer) and Anthony van Mandl (Mike’s Hard).  We’ll also feature Scott Whitley, who just took the reins of Tenth & Blake at MillerCoors as well as David Walker, co-founder of fast-growing craft brewer Firestone Walker.  Dan Wandel and Bill Pecoriello will dig into the off- and on-premise trends probing the extensive IRI and GuestMetrics databases.  BMI publisher Benj Steinman will provide his annual detailed review of the segment.  More speakers will be added.  Once again, we’re returning to the centrally located and appropriately high-end Ritz-Carlton in Chicago for a full day of thought-provoking presentations, Q&A and plenty of networking time, including two receptions.  Click here for more info.  Click here to register.    

Cider grabbed over 1 share of $$ in IRI multioutlet + convenience yr-to-date, over 2 share in supers and more like 2.5 share last 4 weeks.  This small category remains a significant growth engine, up 78% YTD.  And it’s beginning to matter more, especially as most of the key players are primarily brewers and cider is giving some a real boost. 

No one more so than Boston Beer, which continues to dominate the segment with Angry Orchard, despite all the big guns aimed at it this yr. Angry Orchard $$ sales up 107% yr-to-date thru Oct 19 in IRI MULC, tho it’s “slowed” to 60-70% growth in some recent periods.  C&C Group is still #2 yr-to-date with a 13.5 share of segment (used to be #1 before A-O exploded). But it is the only top 10 cider player in decline, down 15%.  What’s more, for last 13 weeks, AB is #2 in cider.  AB up 223% YTD and climbed to 11.3 share of cider segment.  MC also up over 200% (209%) and it jumped to 8.3 share.  As rapidly as they grew, they are both still smaller players in cider and they didn’t put a dent in Angry Orchard.  Meanwhile, Heineken USA is #5 cider player with just a 4 share of $$ in segment.  Up slightly slower than segment, but growing at a still impressive 74%.  The top 5 players had 93 share of $$ in this segment. No other co had even 1 share of cider $$. So this very hot segment is increasingly in hands of very few and very large cos. 

HUSA prexy/ceo Dolf van den Brink dug deep into digital revolution at Beer INSIGHTS Seminar yesterday.  Dolf jammed comments with eye-popping stats and facts about just how “disruptive” digital has been.  Good news is that beer itself “can’t be digitized”; it still has to be brewed.  But digital trends affect virtually all other parts of the biz chain, from mktg to sales execution to shoppers themselves. And there’s lotsa new oppys to target and measure impact of messaging.  Just a coupla Dolf’s points: while two-thirds of beer ad $$ still focused on tv, total time spent on digital devices has already surpassed television and “mobile is taking over.”  How much?  Avg person “checks their phone” 150X per day (three separate attendees we chatted with later pled “guilty” to that), 89 mil people in US watch 1.2 bil videos daily and 84% of people use a smartphone while watching tv.  So it’s tuffer and tuffer to reach key millennials via “traditional media.”  Indeed, look at median age of audience for big 3 networks:  CBS is 57, ABC is 54, and NBC is 47.  Even MTV and ESPN are reaching fewer 18-34 yr olds these days, Nielsen data shows.

At same time, shoppers increasingly using digital technology, whether to check reviews, get coupons, upload info, earn rewards, you name it.  At store level, “mobile is the new end cap,” one slide suggested.  Paper coupons still dominate but their use flattening while digital coupon growth rates thru the roof.  Chain stores and indy companies developing new platforms to provide info/deals to millions of shoppers.  E-commerce, including for beer, expanding rapidly; 33 states allow direct beer shipments covering almost 80% of US volume, said Dolf.  Amazon is comin’ in that biz and there’s been spate of recent stories of how Drizly, Minibar and other apps easing direct delivery of beer and other alc bevs to consumers in less than 1 hr.  Good news is that digital revolution making it easier for cos like Heineken to target and engage consumers, drive sales and measure impact of messaging.  Dolf gave examples of how digital programs for Dos Equis and Heineken specifically improved both sales lift and ROI. 

“What’s a wine guy doing talking to a bunch of beer guys?”  So asked Constellation Brands ceo Rob Sands at our Beer INSIGHTS Seminar yesterday. His key point: “no such thing” as a “wine guy” anymore, or a beer guy or a spirits guy, for that matter.  These categories increasingly “blurring” across consumers, products and retailers, Rob stressed, and “everyone has to adapt” to this reality.  Recall at previous INSIGHTS Seminar, Rob made parallel point about “SKUmageddon” in beer and growing concern about SKU proliferation.  Noted that wine guys lived in “post-apocalyptic world” compared to beer, with many thousands more SKUs for lots less volume.  “Almost nobody” drinks just beer, wine or spirits these days, said Rob.  Indeed, only 10% of beer drinkers drink only beer, and just 4% of wine drinkers, 3% of spirits drinkers are exclusive to those bevs, according to  IRI panel data.  “Shared buyers” between bevs accounted for 85% of alc bev growth, sez IRI. 

There’s also channel blurring at retail with more and more cross bev buying oppys and Total Beverage Alcohol (TBA) purchasing being “rolled up” into single buyer at big retailers who is in charge of category.  Finally, plenty of category blurring across bevs themselves with spirit flavored beer, wine infused spirits/beer, hopped spirits, you name it.  With some new products “no one will know” whether they’re drinking beer, wine or spirits, Rob believes.  Constellation, of course, is leading TBA co in US, Rob reminded, and engaged in plenty of category blurring of its own: i.e., its new tequila will be sold/distributed by spirits/wine division, but marketed by Constellation’s beer folks and cross merchandised with beer.  Despite focus on blurring, Rob did say beer distribs not likely to be selling more of Constellation’s wine/spirits as beer network is “different” than wine/spirits.  And while TBA approach raises questions about Beer Inst’s continuing efforts to distinguish between alc bevs, Rob did say that current excise tax levels should stay same, that beer taxes “should not be raised” and current tax scheme “should remain as is.” 

Also picking up on comments to distribs at NBWA and in Q3 financial report, MillerCoors ceo Tom Long focused intro remarks at Beer INSIGHTS Seminar yesterday on “quality.”   Big brewers have big oppy to mkt mainstream lagers via messages of “intrinsic qualities, ingredients and heritage.”  Repeated that biz has “allowed a big misperception,” in his view, that hoppier, more intense flavor equals quality, facilitated by mktg that wasn’t focused on beer itself, but on “lifestyle, fun, humor and camaraderie.”  But “mass brands don’t need to be common,” Tom insisted.  Lagers and pilsners like Miller Lite “perfectly engineered for the most occasions,” and MC will speak “loudly and proudly” about its beers going forward. 

Tom disputed notion that there is “preordained life cycle effect” and that big brewers are somehow “passengers” in changing times.  Rather, they can “capitalize on the fact that Americans want sessionable beer” and “shape the future of American beer.”   A focus on quality, Tom believes, will also drive improvements in per capita beer consumption habits, another key theme from Tom in recent years.   Tom’s take on that theme yesterday was that when “pricing dynamic changed” and industry focus shifted to earnings and net revs and away from volume, drinkers shifted to wine and spirits.  Beer lost “weekly drinkers” and “share of mind.”  For big brands especially, Tom said, it’s “troublesome when frequency drops below weekly.”  Now, it’s gotta get ’em back, win occasions from wine/spirits.  Lots more from Tom in next BMI. 

A bit of a Dec surprise, as domestic taxpaid shipments up estimated 600,000 bbls, 4.6%, according to Beer Inst.  That was by far best mo of the yr for shipments.  So unless flow of beer reversed back to Mexico in big way in Dec, US beer biz booked solid gain for the yr, especially if you include cider.  Domestic brewers’ taxpaid shipments closed yr down 920,000 bbls (before final TTB tweaks), -0.5%.  Recall, imports up almost 2 mil bbls thru Nov.  And cider likely up in neighborhood of 800K bbls last yr.  So right now, US biz lookin’ at gain of over 1 mil bbls, and very close to +1%.  Not too shabby, especially as spirits volume up just 1.5%, according to Shanken News Daily estimate.      

 Hearing in Franklin Circuit Court yesterday on AB’s “request to force a state regulator to approve its license in Owensboro” ended inconclusively, but suggested more fireworks to come, according to report in Ky Courier Jnl.  AB effort to buy Owensboro “is causing a beer battle throughout the state that could spill into next year’s legislature,” wrote Jnl.  AB atty Richard Clay called KY ABC administrator Stephanie Stumbo “an administrator who is out of control,” suggesting Stumbo had “assumed the role quite frankly of a super court and a super legislature” and is stalling to push the issue into next year’s state legislative session.  ABC atty responded in court “that Clay’s characterization of Stumbo was offensive,” wrote the paper.  But judge’s “pointed questioning” concerned relevance of some arguments to license transfer.  Questions concerning whether AB getting too much power or violating antitrust law are better suited to other forums, said judge.  “I would not say there would be any issue at all if you approve the license and then called Anheuser Busch on the carpet and hold a hearing” that “dealt with any complaints they’re acting in an anticompetitive fashion. But that’s not what’s going on here,” he added, according to Jnl “referring to the transfer.”  Judge ordered AB and ABC “to talk and try and reach a compromise and report to him Monday.  If they are unable to agree, he would make a ruling.” 

AB has a friend at Bluegrass Institute, Ky’s self-described “Free Market Think Tank.” Prexy Jim Waters wrote piece for Bowling Green Daily News blasting 3-tier advocate “shenanigans” that “offer an example of how the policy is misused by those who live in a constant state of populistic frenzy about larger successful companies.” Among AB’s opponents are “competitors and their lobbyists who serve up a keg full of misinformation and magnify misperceptions that allowing this voluntary exchange would be a slippery slope.”  He chastised “smaller producers crying tears in their craft beers” saying they should find “innovative ways to meet the challenge” of getting to mkt, “not deny legitimate private transactions.” Then he went further and got to point free market think tanks often stick in: “Actually the small craft-beer makers should be pushing to eliminate their forced participation in the outmoded 3-tier system.”