Fair BEER Act, latest edition of fed excise tax reform supported by Beer Inst, will drop this morn, sponsored by Rep Steve Womack of Ark and Ron Kind of Wisconsin with 19 co-sponsors.  As we’ve seen in past, # of cosponsors does not equate to getting bill passed.  But still gotta note that Fair BEER actually launches with more cosponsors than BA’s Small BREW has so far gotten in House; it has 16 co-sponsors nearly 1 month after its intro on Jan 8.  Ah but look at the Senate. BA’s Small Brew launched in Senate late yesterday, perhaps anticipating coming battle with BEER, with 23 Senate co-sponsors.  Fair BEER will likely launch in Senate sometime in Feb.

“No tax reform will pass unless there is one bill,” BI prexy Jim McGreevy told INSIGHTS.  BI is “open for further discussion whenever the time seems right.”  The Fair BEER Act is “not your father’s BEER Act” which had sought massive $9 per bbl tax rollback, rather it “reforms system” in “comprehensive, fair and equitable manner” that is “well different” than in past and includes some tax relief for all, including importers.  It’s actually based on discussions with BA board last summer that got far along, but ultimately broke down.  So perhaps they’ll all come back to table later down line.  In meantime, “they’re working on their bill.  We’re working on our bill.” And beer industry also “can’t take our eye off the ball,” concluded Jim.  While beer tax increase “not on table,” it could be and “don’t lose sight of that.”  Editor’s note: Odds of beer tax increase would seem slim in nearterm with Republican-controlled Congress, and presidential election next yr.  Jim’s statement that there needs to be one bill to have any realistic chance of passage sounds right on.    

Mike’s is in “early stages of exploring a sale that could value it at more than $1 billion,” reported Reuters yesterday afternoon, sourcing “two people familiar with the matter.”  Mike’s has “initiated a sale process that is likely to attract the interest of large beverage companies.”  But Mike’s parent co Mark Anthony Group Inc “may decide against a sale of the company based on any offers received,” Reuters sources “added.”   Mike’s is coming off a solid yr in 2014, with sales up 6% to about 1.6 mil bbls. 

“In Mike’s, we have a very iconic brand and we hear this kind of speculation every other year or so,” Mike’s prexy Phil Rosse told INSIGHTS.  “As a privately owned company we have never responded to rumors and this will remain our policy….  We have a very big year ahead of us.  In addition to continuing to accelerate the entire Mike’s franchise,” Mike’s “excited about our pending Palm Breeze brand launch.   We remain focused,” added Phil.   

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“Hard Way” Super Bowl ad continued to generate tons of noise since we last went to press, lotsa jeers and cheers, but  some cogent commentary too. Last night, MillerCoors joined fray, aiming to differentiate itself from AB. It tweeted “We stand for beer” along with attached graphic stating co’s belief that “all beers should be fussed over.”  Text in graphic follows in line with other MC “quality” talking points, implying line between it and bigger competitor but not between beer segments or drinkers. Notably, it also shows Miller Lite and Coors Light with Blue Moon and Leinenkugel Summer Shandy. Tho “not intended” as consumer-facing message, as discussion over ad mostly “intra-industry,” MC’s Pete Marino told us, it is one of 1st times this group of biggest MC and Tenth and Blake brands pictured together and broadly circulated.

The image concerns itself with fussing MC does to “deliver on the promise of consistently brewing and distributing” its beer. But Bud’s ad lampooned fussy beer drinkers, not fussy brewers; AB is one of those too, many pointed out.  Meanwhile, Elysian Brewing employees are still “dealing with the anger of the beer community in reaction” to announcement it’s selling to AB, a disappointed Dick Cantwell, co-founder of Elysian Brewing, told Chicago Tribune in widely circulated quote.  The ad “made a difficult situation even more painful,” particularly for sole-dissenter on Elysian’s mgmt team. (Outvoted by 4-1 on board and by each of his 2 partners.) 

Indeed, some have suggested that the ad might reveal AB’s underlying attitude toward craft and therefore makes getting other craft deals done tougher down the road. Other private comments point to way ad highlighted internal struggle some distribs (and retailers too, no doubt) deal with: they have to effectively sell both Bud and craft brands. Many tweeters characterized ad as somehow “political,” and one observer even wondered if ad more a part of AB’s political agenda than an appeal to beer drinkers. So lots of angles in play here.

Some potential up-sides to ad gotta be acknowledged too. Tho Twitter convo quickly overtaken by haters, Bud’s Facebook fans told brand-owners in no uncertain terms that not only did they like the ad, but it made them want a Bud.  Ad serves key function of making existing drinkers feel better about their choice, as some noted.  And even some craft folks acknowledged that ad provided “awesome exposure” for “other options,” as BA prexy Charlie Papazian wrote. “By hating on craft, it did kind of add legitimacy to it to some degree,” BA director Paul Gatza told the Westword Beer Man blog. But plenty of small brewers and their supporters have taken opportunity to grab a piece of media attention, releasing response or spoof videos in similar style to ad, promising Pumpkin Peach Ale collaborations and special releases and reworking “brewed the hard way” line. Still others express desire to let conversation die and get back to selling beer.

Prexies at beer’s hottest big co’s reapin’ the rewards.  At Constellation, Bill Hackett just acquired 18,400 shares for nice option price of $27.24.  He sold same amount for $111.30 per, for an even nicer $2 mil+.  Rob and Richard Sands made similar moves, tho with lots more shares.  Rob acquired 128K shares at same $27.24 price and sold same amount for just over $14 mil.  Over at Boston Beer, Martin Roper picked up 50K shares at prices between $244 and $248 per and sold at mkt price between $311 and $320 for total near $16 mil.  

Spirits volume rose 2.2% last yr, DISCUS economist David Ozgo said at press conference this morn.  That was a bit better than 1.9% gain in 2013 (and slightly ahead of another industry estimate we’ve seen), and slightly below 5-yr avg gain of 2.4%.  At same time, $$ sales at supplier level increased 4% to $23.1 bil.  As result, spirits gained another 0.4 share of alc bev volume (to 32.9) and a half-share of supplier $$ (to 35.2), Dave figures.  That’s while brewers/importers lost 0.5 share of supplier $$, slipping to 47.8 share of dollars last yr.  (Brewer sales grew 1.6% in 2014 to $31.5 bil, Dave estimates.)  Ten yrs ago, distillers had 31.1 share of alc bev supplier $$ while brewers had nearly 53 share.   So brewers lost about 5 share of $$ while distillers picked up 4 (and vintners 1).  Dave pegs spirits retail $$ at nearly $70 bil; Beer Inst has retail beer $$ over $100 bil.   Meanwhile, tradin’ up continuing apace in spirits as well as beer.  While total spirits $$ sales rose 4% in 2014, value category off slightly (-0.8%) and premium biz up 1.9%.  But top 2 tiers in liquor, high end premium and super premium, up 6.6% and 8.3% respectively and grabbed just below 50 share of supplier $$ vs 28 share of volume.         

While we’d been hearing spotty reports about Jan sales, data from Nielsen All Outlet + Convenience came in on positive side: volume +2.3%, $$ +4.9% for 4 wks thru Jan 24.  Above premium segments continued to lead increase, but premium light volume up 1.2%  and $$ +2.1%.  Craft volume still up 11.7%, while imports up 8.3%, malternatives +15% and super premium +2.7%.  Below premium segment off 1.7%, with least expensive budget beers taking 4% hit, tho near premium eked out 0.4% gain.  Cider still surging, +52%.  C-store trend just slightly better than supers: +2.8% vs +2.5%, with $$ sales up 5%+ in both.   Avg case price across outlets up 55 cents, 2.6%, but mainstream pricing still tuff: premium light prices up just 18 cents/case, 0.9%, while craft up more than $1, 3%+.  So price gap between premium lights and crafts expanded by 86 cents/case, more than 6% yr over yr.     

Western Europe has been tuff beer mkt for a long time, but things may be lookin’ up, or at least stabilizing.  UK beer biz posted 1.3% volume gain last yr, reports British Beer & Pub Assn.  That was first gain in a decade while volume tanked 24% from 9 straight declines.  Pub biz continued down slightly, -0.8%, but off-premise up 3.5% and surpassed on-premise for 1st time.  (In US, off-premise has been way ahead for many yrs, with Beer Inst estimating a better than 80-20 split for off/on volume here.)  Meanwhile, Wine and Spirit Trade Assn is citing recent poll that 60% of UK consumers now say they choose wine over other alc bevs.  In Germany, total beer volume up 1% last yr, WSJ and others report, but that includes exports.  Domestic volume “broadly flat,” tho again that’s improvement over recent yrs.  German beer biz off for 7 straight yrs before evening out in 2014.  Across Europe, beer off 9% over last 5 yrs, according to Euromonitor. Note too that while some policy observers in US and elsewhere point to supposed “devastating effects” of deregulation of UK mkt over last decade leading to more abusive drinking, per capita alc bev consumption dropped 19% over last decade there. 

Battle over AB branch in KY continues to draw lots of attention as lobbying and rhetoric has heated up.  Another long article ran in Lexington Herald Leader over weekend, staking out each side's arguments, with AB and Teamsters supporting branch and coalition of craft brewers, distribs and retailers opposed.  Bill to ban branches has been assigned to committee, but no hearing scheduled yet, paper reports.  Meanwhile, sponsor of bill said he’s met with all sides and “we are still working to see if a compromise is reachable.”    

At same time, economics prof from Univ of Louisville's College of Biz opined in same paper that “instead of opposing Anheuser Busch, the craft brewers should support self-distribution and distribution by anyone who chooses to be in business.”  That includes allowing direct shipments to bars and stores, “eliminating the powerful middleman.”  Indeed, “eliminating the three-tier system,” this prof concludes, “will lead to an increase in the number of breweries in Kentucky,” not to mention more jobs, more beer choice, lower prices, a veritable panacea. Reviewing state data, he sez, shows that “states that allow self-distribution have over 100% more breweries per capita than states like Kentucky that do not.”  Given ongoing explosion of craft biz across US, including KY, hard to believe anything really holding it back, but here’s an academic selling the story that “government-created middle man” is making it tuff for “craft breweries to get their beers out to the public. The result is less choice, higher prices and less economic activity, including job opportunities.” Is that really what's happenin’ out there?   

Long profile of Hensley Beverage in Arizona Republic over weekend showed how much even major AB distribs have had to change.  Tho priority #1 is “Protecting Big Blue and Anheuser Busch” as posters on sales room wall attest, a key to “continued success” was Hensley’s “expansion into the booming craft beer market” in 2008.  Last yr, Hensley scored record revs, according to communications veep Doug Yonko, even tho case volume way off peak. It’s at still hefty 20 mil cases. From its longterm history as an exclusive AB distrib, Hensley now handles 850 brands of beer, spirits, wine, energy drinks and other brands.  Even tho “we are a very loyal company” and it was “a very difficult decision” to become non-exclusive said chief oper officer Andy McCain, it was the right thing to do, he said. “You have a fiduciary responsibility to run a company in a way that it will be a successful entity in the long run.  If we would have done nothing, we would have compromised our ability to do that.”  

A few other fun facts about Hensley, celebrating its 60th yr in 2015:  It has 800 employees, 700,000 sq feet of warehouse space and 750 vehicles serving 8000 retail customers. When Jim Hensley started the biz in 1955, it sold 73,000 cases of AB and had a 6 share of mkt.  Editor’s note: Hensley has developed a strong craft book in a relatively short period of time, including local fave Four Peaks, Sierra Nevada, Firestone Walker, Stone (late last yr), Odell, Founders, Deschutes and more.