Day after AB filed counterclaims over charges that MC stole trade secrets in corngate saga, US Appeals Ct remanded to US District Ct judge to rewrite (and possibly change, if he chooses) his original injunction and modifications so far.  Tho one judge on Appeals Ct panel said he was ready to consider appeals from MC and AB, two others pointed to several procedural issues and decided to remand.  It all seems pretty technical, but panel also pointed that “if the district court wants to make still further changes, in light of discovery in the ongoing litigation, it is free to do so – though the judge is also free to enter an injunction consolidating all decisions made to date but leaving all else to the permanent-injunction phase.  We leave this decision in the capable hands of the district court.”  That would be the same hands that the panel said fumbled numerous procedural issues. 

MC’s response: “The appellate court sent the variety of appeals in this case back to the district court to have them consolidated into a single order. We have already won three federal rulings against Anheuser Busch in this case and we will continue to hold them accountable for intentionally misleading American consumers.”

AB’s response: “The discovery process in this litigation has been enlightening – we believe this case is bigger than simply a dispute over marketing. That is why we have alleged MillerCoors misappropriated our trade secrets. We also maintain that corn syrup is in the finished Miller Lite and Coors Light products. We welcome a review of this new evidence.”

 MC will host discussion with distribs on its new Miller Lite campaign, reportedly late this afternoon. As with its Coors Light work, new Miller Lite ads purported to be a fresh, new direction.  INSIGHTS and others will likely write more on this campaign tomorrow.

AB debuted first Natty Light Seltzer tv ads this past weekend on college football programs on CBS, Fox, and Fox Sports 1, reported Ad Age.  AB is “putting more marketing muscle behind Natural Light Seltzer as the brewer tries to make up ground in the hot-selling category dominated by White Claw and Truly,” said Ad Age.  New slogan: “Crash the Party.” That “embodies the Natty mindset,” AB’s sr director of US value brands Daniel Blake said. Ad shows “Natty Light branded sailboats parked at a football tailgate,” wrote Ad Age.  “You’ll continue to see disruptive Natty Seltzer moments that reinforce the party-crashing attitude,” added Daniel.  These tv ads follow deal AB struck to make Natty Light “the official hard seltzer of the Big 12 Conference.” 

US beer still “offers much growth opportunity for brands that offer a premium positioning, flavor varieties, portability (more cans) and light options,” wrote Macquarie’s Caroline Levy on Constellation Brands this morn.  Bud Light’s annual “5-6% decline is an excellent source of volume for STZ,” sez Caroline.  STZ’s “arsenal remains strong, led by Modelo, which arguably could grow 50%+ from here, given its relative penetration/SKU proliferation vs Corona.”  And base Corona brand “returned to growth in recent measured data, showing weather was a factor for weak 1H19 [1^st half 2019] sales.”  Then too, Corona Premier is “growing strongly again” and Corona Hard Seltzer “will continue to drive momentum in the Corona family in 2020 and beyond, even if White Claw and Truly maintain their #1 and #2 spots.”  The other key for Caroline is that “leaky bucket of domestic light beer,” which she called “a 1 billion case opportunity.”  Modelo is “currently the biggest beneficiary of consumers switching away from domestic light beers.”  While some of that “leaky bucket” will “shift to non-STZ FMBs (particularly hard seltzers)… we believe Modelo and the Corona family (Extra, Light, Premier, Chelada, Refresca, Familiar, Seltzer) will be winners too.”  Constellation’s brands are “not over saturated in most markets (arguably with the exception of Southern California for Corona) have powerful distributors backing them, and enjoy exceptional marketing support, led by Jim Sabia,” concludes Caroline. All-in, Caroline expects 7% per year shipments growth for Constellation long-term (up 6% for 9 mos thru Aug). 

Canopy “Worse Before It Gets Better”? New CEO Before Yr End?  While bullish on beer, Caroline cautionary on cannabis and co that STZ invested in, Canopy Growth. “Canopy can get worse before it gets better,” she said. “We expect near-term losses to exceed those anticipated by the street.” Yet Caroline views appointment of STZ cfo David Klein as Canopy chairman as “positive step” to get “more seasoned management.” Also, STZ has “indicated it is close to naming a new CEO, likely by the end of 2019. We expect the person to have CPG experience,” adds Caroline. 

Much-anticipated new Miller Lite campaign intro’d to distribs yesterday.  It focuses on “reimagining the iconic ‘It’s Miller Time’” theme aimed at today’s drinkers, company sez.  Ninety-second version of “Followers” ad (there are also 15-, 30- and 60-second versions), mostly black and white, suggests negative aspects of being followed on social media.  Folks literally get followed – down the street, thru stores, thru restaurants, etc – by packs of contemporaries.  Not quite zombies, but.  Along the way, commercial sends up selfies, trendy fashion and social media itself.  At the end, 3 principal characters escape to bar and share a Miller Lite (in color).  Key messages then flashed on screen: 1) “A few friends are better than a few thousand followers”; 2) “Here’s to the original social media”; 3) “It’s Miller Time,” under a Miller Lite neon.  First ad will run on first World Series game tonight and Jimmy Kimmel, then NFL this Sunday and more.  A print ad will run in Rolling Stone’s Nov 5 issue.  Other commercials, more product-oriented, will follow in 2020.

Accompanying campaign will ask consumers to “unfollow us to the bar.” Consumers who unfollow Lite on Facebook and Instagram can earn a free Miller Lite.  Details at www.unfollowmillerlite.com.  At same time, Miller Lite will be “taking a break from posting on its Twitter, Facebook and Instagram” channels to encourage consumers to enjoy an in-person beer with friends.  Social media break, which begins today and will run for 2 weeks, not complete, natch: “social media influencers will also be deployed to amplify the new campaign and to encourage and inspire” in-person beers. “We understand it’s risky for a brand to say that we want you to unfollow us on social media,” sez Miller brand family veep Anup Shah, when that’s one way MC stays in touch with its own consumers. “But we value those in-person connections and are committed to inspiring people to do the same, even if that means losing a few followers along the way.”  

Asked about relatively light branding message in ad, Anup said “Followers” was “not intended to be a beer ad,” noting what mktrs call a “beer blindness” among younger consumers who tune out typical ads.  Rather, “we wanted to hold their attention and disrupt” and push the theme of personal connection.  Hard to tell how Miller Lite’s base consumer will respond, tho ad tested with core consumers and “they got it,” Anup said.  In any case, “Followers” clearly taps into growing discomfort, at least among some consumers, with social media’s omnipresence, time demands and privacy concerns.

Is MC taking a chance?  Miller Lite trends by far best among premium lights.  Its volume off just 0.3% yr-to-date thru Oct 5 in Nielsen all-outlet scans.  Bud Light -7.5%, Coors Light -4%.  So, Lite added 1.1 share of premium light volume thru early Oct. Lite’s dollar sales up 0.7% yr-to-date.  MC “pleased with Lite performance,” said Anup, as it’s “moved in the right direction.  But we want to get it back to growth.”     

Most of the wide media coverage of AB’s amended answer and counterclaims filed yesterday in corngate lawsuit focused on AB’s new charges that MC violated laws by stealing trade secrets, formulas and other confidential info via ex-AB employee who now works for MC.  A re-read also shows AB pounding point that corn syrup/byproducts are in final Coors Light and Miller Lite products, contrary to MC’s insistence.  They show too how public ostensibly private messages can become.   “Corn syrup sugars and byproducts are present in the finished Miller Lite and Coors Light beers,” AB mentions repeatedly, adding: “Corn syrup byproducts, such as sulfated ash, are also present in the final beers.  The degree of fermentation of MillerCoors’ corn syrup is less than 100%.”

AB claims that “on February 6, 2019, MillerCoors chief Communications Officer, Pete Marino, published a Tweet stating that AB uses corn syrup in Bud Light Lime and Orange.  This statement is false,” AB sez.  “This false tweet is still posted online.”  Also: “MillerCoors has advertised false statements about Bud Light’s products in reference to rice syrup in media interviews.”  Joshua Edgar, now an MC brewer in Golden, who used to work at AB’s Cartersville brewery and was still under confidentiality obligations to AB, it sez, texted with a “source” at Cartersville before and after Super Bowl about AB ingredients, which breweries used corn syrup and info about Bud Light’s ABV.  Asked whether Busch, Natty Light or Busch Light were “using dextrose,” source texted back: “No. Grits.”  Also from Edgar on Feb 4 to source: “I got a few calls already from Corp folks asking about bud light, we must be prepping a retaliation.”  On Feb 8: “First time I’ve been cc’d ON Emails with Pete and CEO.”  AB has the phone and computer of Edgar’s source in Cartersville.

After meeting with Bud APAC mgmt earlier this week, Bernstein analyst Trevor Stirling offered some fun facts.  One of ’em: brand Budweiser’s volume in China has “topped 20 mhl,” notably higher than 3d-party sources suggested.  That’s over 17 mil bbls.  AB hasn’t sold 17 mil bbls of Bud in US since 2011 and that slipped to 11.3 mil bbls in in 2018, we estimate.  Bud continues down mid-singles in scans this yr.  Also interesting: “we learned that the company has sacrificed the sacred cow of single source Mexican Corona and recently commenced production in China.”  That will cut costs, boost ABI’s profits there, natch.  So does higher Bud number, and addition of recently acquired Blue Girl in China’s super premium market.  ABI share of super premium segment there is now 28, Bernstein estimates, more than 2X Heineken’s 12 share.  All of these factors resulted in Bernstein upping its estimate of ABI’s fiscal 2020 EBITDA in China by $90 mil, 5% to just below $1.9 bil. 

While waters choppier for Pabst these days, analysts see more and more blue sky for Boston, which has passed Pabst as #5 US brewer (Mike’s may be ahead now too).  Cowen just upgraded SAM to outperform, joining UBS and Citi analysts who upgraded SAM in last 2 weeks, as did Guggenheim in late Sep.  They’re all on same bandwagon with Gugg’s Laurent Grandet, who observed “Truly and Claw are now the law.”  Truly’s new formulation and Lemonade innovations, in Cowen’s view, position Boston to “capitalize on the next leg of growth.”  Tho hard sodas and cider fizzled, “we now believe this category [hard seltzer] has staying power,” wrote Cowen, suggesting seltzers could be substitute for wine, which has softened.  Then too, Boston’s “Beer Blah’s” already priced in to stock price, Cowen sez. “While the addition of Dogfish Head has improved growth some, we continue to expect declines in beer as a segment turnaround has consistently proved elusive.”  Finally, while Cowen still “wonders about the long-term hand off that will be required” at the top of Boston Beer, “we’re comfortable with this key man risk as [Jim] Koch and the rest of senior leadership has clearly put the company on a good path for another leg of growth.”  In fact, one “hallmark” of Boston story has been its ability to be “nimble enough to continue to pivot to new category trends.”

Standard & Poor’s current list of “weakest link” companies “reached a 10 year high” of 263 in Sep, reported Market Watch.  To qualify as “weakest link,” co gotta be rated “B-minus” or lower and be on negative outlook, noted Market Watch, otherwise known as “junk” bonds.  “That doesn’t mean defaults… are now at crisis levels,” wrote Market Watch, but shows “S&P thinks hundreds of companies could flounder if conditions worsen.” And among new cos added to list, according to Market Watch:  Blue Ribbon Intermediate Holdings, which owns Pabst.  Last yr, S&P already warned that Blue Ribbon at 8x debt to EBITDA.  This yr, Pabst volume down 11% in Nielsen all outlet yr-to-date thru Oct 5, $$ down 7.6%.  Many have wondered what’s next for Pabst.  Curiously, given all this, recent rumblings include that Pabst could make a significant acquisition. 

AB will launch Stella Midnight Lager “just in time for the holidays… on Halloween night in historic Sleepy Hollow, NY.”  This limited edition seasonal beer is “a black lager with notes of Belgian dark chocolate and freshly brewed espresso” going nationwide on Nov 4.   This “holiday brew” is a “first for the brand.”  It’s also one of two specialty release black lagers AB marketing with brands outside its craft stable in 2019.  New Bud Reserve brand also a black lager, a style that’s gotten little to no attention from consumers even in flavor diversity of modern craft era.  Note: Stella Artois is AB’s 2d biggest hi-end brand after Michelob Ultra at estimated 2.675 mil bbls in 2018.  And by far its lead import. So a very important brand.  But after nearly doubling between 2012-2017 (up 1.3 mil bbls), Stella dropped about 1% in 2018.  So far in 2019, Stella flat as a pancake in scan.  Volume trend at 0.0 in Nielsen all-outlet yr-to-date thru Oct 5.