Make that official.  MillerCoors corporate hq will be moving to downtown Chicago, totaling a few hundred people.  That’s reportedly being announced to employees today.   MillerCoors’ desire to be in “neutral” location and make a new co ultimately trumped other considerations, including still strong local allegiances.  MillerCoors will retain significant offices in Milwaukee and Golden.  Crain’s Chi Biz had reported recently that it was down to Chicago and Dallas, noting that MillerCoors had shopped several locations in Chi for 100-150,000 sq feet and “as many as 400” people.  MillerCoors went thru extensive process to arrive at this decision, and no doubt entertained various constituencies and offers.  But some have said it was basically a foregone conclusion from git-go.  Miller had seriously considered moving to Chicago under Philip Morris back in 90s.   It’s centrally located, a major city, a marketing hub and potentially a magnet for talent.  Chicago made the most sense and so Chicago it is.   

AB Board unanimously rejected InBev’s $65/share offer as “financially inadequate and not in the best interests of AB shareholders.”  Bid “significantly undervalues” AB’s “unique assets and prospects” and doesn’t “reflect the strength of AB’s global, iconic brands” said Chairman Pat Stokes.  Offer also “undervalues the earnings growth actions” that AB has already planned, as well as AB’s market position in world’s most profitable beer mkt and “high value of its existing strategic investments.”  AB Board “thoroughly studied” bid with advisers on “multiple occasions” over last 2 wks and indie members “also met alone to fully examine its merits.”  InBev bid “fails to be competitive with the alternative plans” that AB has “to generate significant top-line and bottom-line growth” that will increase value, said lead independent director Douglas Warner.  Added that Board will continue to consider all oppys to build value. 

In letter to InBev CEO Carlos Brito, August Busch IV thanked him for his “public comments and high regard” for AB.  Noted that original letter “is expressly not an offer, but only a non-binding proposal” which AB board “carefully and thoroughly examined” with indie advisers.  Then made same points cited above, with more details, including expansion of “Blue Ocean” cost-cutting effort that will “deliver more than $750 million in savings through 2009 and $1 billion in savings through 2010.”  August points out too that there is “little overlap in AB and InBev bizzes, that “many of the suggested synergies seem not to be synergies at all, but are instead profit enhancements,” which AB can deliver itself.  Timing may be right for InBev with value of dollar,” sluggish” stock mkt, August wrote.   But not right for AB shareholders who will ultimately “realize the inherent value of AB” through its own plan.  “As you say yourself, you dream big,” August concludes.  “We respect your desires to grow your company.  But your growth should not come at the expense of our stockholders.” 

More to follow, natch. A conference call is scheduled for Friday AM.

In move/process not unlike the Spykes experience, AB decided to reformulate its caffeinated malt bevs, and will pay 11 states total of $200,000 for investigation costs.  Recall that in Feb this yr, a handful of state AGs subpoenaed records from AB and Miller.  They expressed concerns about mixing caffeine with alcohol and that products targeted to kids.  AB and Miller defended their brands and mktg, pointing to popularity of caffeine-laced, higher-alc cocktails and noted that TTB cleared the labels and formulation.  But in the end AGs won this battle, just as they did on Spykes.  At least against AB.  Tuff letter from NY AG announced AB will pull brands “after an investigation showed the company was illegally marketing these drinks to young people.”  Same investigation “revealed that AB was making false or misleading statements about the health and energizing effects of Tilt and Bud Extra.  Furthermore, the company’s advertisements were being directed to consumers under the age of 21,” Cuomo wrote.  Ouch. 

While AG Cuomo played this as an acknowledgement of guilt, AB had different take.  Said it was “reformulating” brands to remove caffeine and guarana “in response to the AG’s concerns.”  And in what had to be hard swallow, said it was answering the “call” of AGs, “as well as the Center for Science in the Public Interest.”  Tho adults will continue to drink caffeinated cocktails, AB VP Francine Katz said, “we have determined that competing in the pre-packaged caffeinate alcohol beverage sector may detract from our reputation as the global industry leader in promoting responsibility among adults who drink and discouraging underage drinking.”   Miller hasn’t yet responded.  

InBev ain’t waiting.  It’s “taking what could be the first steps toward a hostile takeover of” AB, reports AP.   InBev filed lawsuit in Delaware Chancery Court, where AB officially chartered as a corporation, sez AP.  “The lawsuit seeks a judgment to confirm that Anheuser-Busch shareholders can remove without cause the company's board of directors.”  YIKES.  AB has still not responded to InBev’s offer, tho Wall St Jnl reported last night that AB board expected to reject deal, come up with its own strategic plan to increase value, including stepped-up cost-cutting.   

Here’s the just-announced leadership team at MillerCoors under CEO Leo Keily and prexy/chief commercial officer Tom Long.

Tom Cardella: Eastern Div Prexy

Ed McBrien: Western Div Prexy

Andy England: Chief Mktg Officer

Dennis Puffer: Chief Operations Officer

Karen Ripley: Chief Legal Officer

Jeanine Wasielewski: Head of Info Technology

Cornell Boggs: Chief Responsibility and Ethics Officer

Steve Woodward: Chief Human Resources Officer

Chris Kozina: Chief of Staff

Nehl Horton, Chief Communications & Govt Affairs Officer

More to follow later today.

Correction: Compound in wine linked to improved longevity is resveratrol, not reservatrol.  

Tuff week in supers for Corona thru Sunday of Memorial Day weekend, according to IRI data reported by Bill Pecoriello at Morgan Stanley.  Corona Extra down 10.7% for week thru May 25, following gains 2 previous weeks, big drop 1^st week of May.  So Corona down 8% for the month.  Meanwhile, Bud Light Lime grabbed 1.2 share last week of May while Bud Light, Bud, Bud Select off combined 1.3 share.  BLL had 1 full share in May.  AB up 0.4 share for the week and full month.  Coors share gains slowed, but still up 0.4 for the wk, +0.5 in May.  Miller still soft.  Down 0.4 share Memorial Day week, -0.6 share for the month.  YTD volume trends thru May 25: total biz +0.2%, AB flat, Miller -2.2%, Coors  +6.2%, Crown -1.3%, Heineken USA +5.9%.  Finally, May volume trend in supers (-2.1%) confirms anecdotal reports we’ve been getting that May was pretty lousy.  

Correction: Compound in wine linked to improved longevity is resveratrol, not reservatrol.  

So reports Reuters in a story this morning.  Three separate AB investors with sizeable holdings reacted positively to possibility that InBev will offer $65 per share.  “I don’t think $65 is a bad price because if the company stayed the way it is now, it certainly would be, on average, two years before the stock reaches that level on a sustained basis,” said CEO of Canadian co that owned 1.7 mil AB shares on Mar 31.  A San Fran fund mgr (1.6 mil shares) said $65 “does not seem to be unreasonable,” noting one reason his co owns AB stock is belief that AB “could be run a lot better than it has been.”  Third, chief equity investment officer at AB’s 10^th-biggest shareholder (Eaton Vance, with 5.5 mil shares), wouldn’t comment specifically on price, but said “part of the investment case was that there could be a takeover.”  Takeover would “expand the globalization” of AB franchise, he added, “and we like that.” 

That was interesting subhead in recent Bud report from Bank of America’s Bryan Spillane.  “The Modelo brands, despite their price points, do skew more heavily to immigrants (documented and undocumented) from Latin America,” wrote Bryan.    “Given the pullback in housing markets and dependent industries (e.g construction), it is possible that undocumented worker purchasing power is being squeezed.”  This is precisely what distrib/Crown sources have been telling us in recent mos, especially concering mkts like S. Calif, Ariz, Fla where these effects are disproportionate.  Noting “severe dropoff in remittances” to “several Latin American countries”  (i.e. money going from US back to home country),  Bryan adds “it could be that Corona is taking a more cyclical hit than is generally realized.”  Chart from Central Bank of Mexico shows monthly Mexican remittances, up by 30% yr-over-yr as recently as Jan 2006, then growth heads steadily downward. “Remittances” were actually down in May-Jun 2007 and have been roughly flat since then.   

When the going gets tuff, the tuff get going.  That seems to be PepsiCo’s motto as it undertakes radical packaging makeovers for 1 core bev brand after another.  We’ve already seen Pepsi-Cola’s new smiley icon and Gatorade’s big new collegiate-style G.  Latest to scrap core visual equity in favor of new do: Tropicana OJ.  Gone is straw-in-orange motif that many regarded as iconic representation of Trop’s fresh-squeezed, not-from-concentrate identity – key differentiator vs rival Minute Maid from Coca-Cola.  Instead, pack now sports more conventional image of glass of OJ, intended to evoke hi nutrition content in 8-oz serving size.  Move has struck some bev vets as heresy verging on recklessness.  “Have you seen the new Tropicana package?” BBI reader involved in different bev sector emailed editor a wk ago after spotting new pack.  “OK, they have surely lost their minds.”  As with some of other initiatives, effort was masterminded by controversial branding guru Peter Arnell.  “It's time to remind consumers that Tropicana Pure Premium is pure, natural and squeezed from fresh oranges,” said Arnell, who also cooked up related marketing and ad campaign.  “In order to reinforce this message, we focused on the health benefits of the juice but showed it in a more emotional way than ever before in this category.  We want to remind consumers how it should feel to drink this juice every morning.”  Giant letters on pack now herald: “100% Orange.”  Novel element – not yet visible on packs BBI saw in NYC – is hemispherical orange twist cap intended to evoke an orange, so that consumers “squeeze and twist” orange in opening gabletop carton each morning.  Related ad campaign, called "Squeeze – It’s a Natural," aims to establish emotional connection between consumers and OJ by reminding them of positive ritual associated with starting each morning with Pure Premium OJ, Pepsi said.