In terse statement, AB InBev sez it has “resumed it application for the listing of a minority stake of its shares on the Hong Kong Stock Exchange.”  No more details available, but one source told Financial Times that revived IPO “more of a China story” this time around, whatever that means.  Then too, “decision to proceed will depend on a number of factors and prevailing market conditions.”  Recall, ABI abandoned planned IPO on Hong Kong exchange to raise near $10 bil a coupla mos back, as “prevailing market conditions” turned out to be not so hot.  Then it sold Aussie biz to Asahi.  China is key to ABI’s Asia biz and has been growth driver in recent yrs, tho competition in premium segment heating up there with Heineken, Carlsberg.  Oh, and ABI still has that big debt to pay off from SABMiller purchase.   

Western Beverage LLC will buy 4.2 mil case Double Eagle Distributing, as first reported by St Lou Biz Jnl. Deal expected to close by end of yr. Western Bev is owned by Sue McCollum, who is also chairman/ceo of Major Brands and also owns Eagle Brands in Miami.  Double Eagle is a non-contiguous AB distrib in South FL.  Between Double Eagle and Eagle, Sue will sell over 10 mil cases following this transaction.  Double Eagle owned by Orthwein family, who are Busch descendants.  Ceo James Orthwein  Jr is the grandson of Clara Busch who was Adolphus Busch’s granddaughter.  James Orthwein Sr for many yrs headed ad agency which had Bud account and served on AB board for almost 40 yrs.  So Orthwein family another part of legacy AB that is exiting the system. But one of most intriguing angles of this deal is that Double Eagle is also a Constellation distrib.   Double Eagle competes with Reyes operation Gold Coast.  Double Eagle sells in Del Ray Beach, which is where Sands family winters. And a supplier can redirect in a sale in FL, sez source. So could yet more Constellation volume be headed towards Reyes Holdings? Several more AB distrib deals in works.  Stay tuned.   

AB will launch Bud Light Seltzer, it officially told distribs yesterday at its Equity Agreement Manager meeting in St Lou.  Yes, it’s going there.   The largest beer brand franchise in US, which already has multiple line extensions and is declining, will launch a seltzer variant to combat the explosive growth of White Claw and Truly.  AB reportedly showed pic of black cherry-flavored Bud Light Seltzer to distribs yesterday, getting what one source called a “muted response.”  But that was just tease; more details on brand launch coming.  Bud Light Seltzer will be largest beer co’s 3d seltzer, following Bon & Viv and Natty Light Seltzer.  So far it hasn’t made much headway into this ultra-hot segment (although more than MillerCoors or Constellation).  AB seltzers got a 6 share of segment for last 12 weeks thru Aug 31 in Nielsen all outlet. Nielsen doesn’t seemingly yet include Natty Light Seltzer, which many tho not all distribs report off to fast start. AB at 7 share of seltzers yr-to-date.  With Natty Light Seltzer already launched, plus Bud Light and Corona seltzers clearly comin’, that will make 3 of top 10 beer brands with seltzer variants in 2020.  How much share will beer brands capture in seltzer segment, dominated by White Claw and Truly?

Here are a few key stats.  Nielsen tracked 1.1 bil cases of beer sold thru week 35 (Aug 31), down 780K cases, 0.1%. But hard seltzers up 17.7 mil cases, 186%.   So beer down almost 1% without seltzer in tracked channels.  Meanwhile, White Claw up 10.6 mil cases, 248% YTD in Nielsen.  Truly up 5.1 mil cases, 173%.  Bon & Viv up 745K cases, 59%.  Time for a reset to the reset for AB.

In latest move to pull back on Ballast Point, Constellation opted to shut down Ballast’s additional taproom location in Daleville, VA, reported local news channel, 10 News. Recall, after Constellation took second impairment charge on Ballast earlier this yr, it closed Ballast Point’s Temecula brewpub and Trade Street brewery (sour and barrel-aged facility), while “halt[ing]” any further expansion plans or any future “broad-based” brand intros. Decision to close “had nothing to do with the location’s profitability but rather the brand as a whole,” one employee told news channel. Taproom site officially closes on Sep 29 while the brewing facility next door will remain open. Keep in mind, Constellation has been using Ballast VA production brewery for innovation experiments such as Western Standard barrel-aged lager. Co plans to continue to use site as “innovation hub” to produce beers, FMBs, hard seltzers and more, and “may consider, down the road, leasing the facility to a third-party operator. Meanwhile, Ballast Point declines continue to steepen in natl scan data. Sales dropped 37% by $$, volume down 35% for latest 12 wks thru Aug 24 in Nielsen All Outlet data provided by Morgan Stanley’s Dara Mohsenian; $$ down 27%, volume down 22% for 52 wks.

Turns out Heineken has sponsored the US Open for 28 yrs, its “longest-running sponsorship,” sez Yahoo.  And it’s still worth the cost, sez cmo Jonnie Cahill (“reportedly more than $4 million per year,” per Yahoo).  This yr, Heineken’s “focus” on Heineken 0.0, including that brand “tapped” two former stars to help market it: Lindsay Davenport and Andy Roddick.  “Heineken Asks: Would You Want to Have a Beer With Andy Roddick?” Yahoo headlines. “We place a lot of stock in the question, would you want to have a beer with Andy? 99% of the world would say, Totally,” according to Jonnie.  Meanwhile, Heineken 0.0 is “flying,” Jonnie said.  He positions brand as a timely response to a changing mkt: “The market has been under pressure, especially with the younger demographic.  You see younger people looking for different solutions, like White Claw, and drinking less. What we have to do is not worry about that.  We have to respond.”  

This week’s Publix ad features buy 2 get 1 free on some of the hottest brands, which is always surprising, but one distrib sez it’s “a legal form of chain arm-twisting.” Those who don’t participate risk losing space.  Each of Michelob Ultra, Truly Hard Seltzer, Blue Moon offered for buy 2, get 1 free and save up to $16.99 on 3.  Means that you can get 3 12 packs for $34.  Or less than $5.70 per 6 pack.  Same ad offers Bud Light, Miller Lite and Coors Light 12-packs for $11.99.  Kona has a BOGO (buy one get one free); ad sez save up to $10.29. 

Day after US Dist Ct judge ordered AB to remove “no corn syrup” language/icon from Bud Light secondary packaging (see Sep 4 Express), AB filed “emergency motion” asking judge to “vacate, modify and stay” that injunction pending appeal.  Coupla days later, judge did modify his modified injunction, again accommodating AB production/packaging timetable issues.  Lotsa pieces to AB’s emergency motion, but gist was that AB had already used up pkgs it had on hand as of Jun 6, the pkgs subject to judge’s Sep 4 order that gave AB until Mar 2020 to use ’em up.  So, literal reading of order meant AB couldn’t use any of already-filled Bud Light packages, or pkg materials it subsequently produced, approx 4-6 weeks of inventory.  AB said it could replace current inventory within 4-6 wks, but claimed that if not allowed to use current inventory of pkgs or Bud Light already in system, “the resulting damages could approach $100 million in obsolete packaging, lost sales, dumped beer, damage to the Bud Light brand and other interruptions that could permeate all aspects of AB’s business.”  Plus, “stickering is not an option,” AB insisted again, given costs involved.  (That was MC’s proposed solution.)  “Such a massive disruption was not intended,” by judge’s Sep 4 order, AB suggested. 

Judge apparently agreed, tho somewhat reluctantly.  “Although the court is troubled by defendant’s decision to continue to print new packaging containing language that almost certainly violated the spirit of the court’s earlier injunction with respect to its television and print media,” AB correct that “court intended to craft an injunction that would not impinge on the orderly production of Bud Light.”  So, he “further modified” his order to give AB until Nov 1, 2019 to use up current packaging inventory, the date AB said it could comply by.

Sideshow to the Sideshow   In same emergency motion, AB also argued that “the facts have changed” in this case and “critical new evidence exists” which supports AB’s side.  Much of this new evidence redacted from AB’s motion.  But AB insists that mid-Aug deposition from MC brand mktg veep Ryan Reis, whose opinions judge relied on in granting Sep 4 injunction, included “critical admissions that contradict MillerCoors’ prior representations that formed the basis of its motion for preliminary injunction.”  Then too, MC decided not to name Reis as expert witness in the case and has no expert on pkg question.  “Thus none of the opinions relied upon by the Court” regarding pkg issues, “will be admitted at trial.”  What’s more, Reis’ mid-Aug deposition very damaging to MC’s case, AB claims.  Again, most details redacted, but AB’s motion repeatedly uses phrase “MillerCoors admits” certain things, including that a Miller Lite “ingredients” list includes corn syrup and that “at the hearing on the motion, AB noted, however, that Coors Light has so much residual sugar that it needed to be listed on its nutritional panel.”  According to AB: numerous MC statements “contradict” MC’s basic theory behind charges “because they make clear that MillerCoors seeks to impose Lanham Act liability on AB for using the very same language that MillerCoors itself uses to describe its beers.”  Other redacted statements seem to involve MC’s claims of irreparable damages.  Two other AB requests in its emergency motion: permission to use “Brewed with No Corn Syrup” on packaging and that injunction be stayed while AB appealed it in US Appeals Ct for 7^th Circuit. Recall, MC also appealing part of judge’s original order.

Since judge modified order again, he didn’t address last two questions.  But he did point out that AB’s new arguments about mid-Aug Reis deposition “which does not concern the issue of packaging supply and instead covers purported evidence and argument [are] not properly in front of the court.”   Because of that, “bulk of” AB’s motion, judge wrote, “is contrary to the parties’ agreed plan of action and is entirely inappropriate.”  So, judge struck that material, for now, and advised that AB “should review” his original opinion/order “carefully before seeking to modify the injunction based on evidence not relevant to the court’s findings.” 

While AB and MC continue fierce court battle over corn syrup, and AB doubles down on medieval/corn syrup themes with new Bud Light ads, gotta note Bud Light shed roughly 10 mil cases in IRI scans from Super Bowl thru mid-Aug.  Coors Light dropped over 2 mil cases.  Mille Lite up about 300K cases. 

Cannabiniers/Two Roots officially made its Midwest move, acquiring MI’s Rochester Mills Production Brewery, co announced. Rochester Mills Production Brewery opened in 2012 and biz was sold separately from the original Rochester Mills Beer Co brewpub, which will “continue to operate as a separate business,” per release. Deal paves way for Two Roots infused THC beers to expand into Midwest, east coast and Canadian mkts, with up to 60K bbls of annual production capacity available, sez co.

This is Cannabiniers 3d brewery acquisition and counting, on top of CA’s Helm, CO’s Dad & Dudes, as well as contract brewing agreement for additional 50K bbls/yr. It now has “excess of 150,000” sq-ft of real estate “under management.” Two Roots infused beers are currently sold in ~70 dispensary locations thruout NV and CA, according to its website. It consistently has each of the top-4 THC beverage brands sold in NV, according to Headset data, and has made inroads in CA mkt since launching earlier this yr. Plus, co expanding non-alc and traditional alcoholic versions of Two Roots beers, after recently getting non-alc brews placed in 145 BevMo stores in Calif, and larger venues like Las Vegas Lights soccer games for alcoholic versions (see Aug 27 issue of sibling pub Craft Brew News).

“As the popularity of Two Roots Brewing Co and Two Roots continues to grow, it has become essential to keep up with demand,” and Rochester Mills “location is key,” stated parent co Lighthouse Strategies coo Tim Walters. Mich recreational cannabis sales expected to officially begin in early 2020, and Two Roots now set up to get out ahead of the pack there, while also looking toward oppys in Canada and MA among other mkts. Notably, MI’s Short’s Brewing (19.9% owned by Lagunitas/Heineken) recently partnered with local cannabis co, Green Peak Innovations, to develop line of cannabis infused bevs as well (see Craft Brew News, Aug 16 issue). Rochester Mills Production Brewery sold just 6,500 bbls in 2018, down slightly, with vast majority of its biz in MI, according to Brewers Assn and state level data. So Two Roots will have plenty of room to implement procedures/equipment and fill capacity (it will need to brew non-alc versions of its beers and ship to separate facility for THC infusion).

No AB ads at all on intense Monday Football opener last night, said one AB distrib who watched every minute of game.  (Could this be just regional?)  At same time, he saw 3 Truly ads with Keegan Michael Key.  The world is turned topsy turvy.  Another less well-known seltzer, High Noon, got a buncha ad time in Southeast on college football last weekend, according to another distrib source who doesn’t sell brand.  Same distrib also sez he sees some 5 and 10 case displays of it in stores in southeast.   Turns out High Noon Seltzer is made by High Noon Spirits Co in Memphis, TN (presumably City Brewing).  But 2 twists: first is that it’s made with “real vodka” and “real juice,” an obvious tax disadvantage. Second is that it’s made by Gallo, per Shanken News Daily.  This brand mostly flying under radar, but seemingly starting to make some noise.  What other new seltzer brands will still emerge?    

Thru Jun, above premium segment gained 2.9 share of $$ in Nielsen all outlet scans.  That revved up over the summer.  In Aug, above premium gained 3.9 share of $$, pushing yr-to-date gain to 3.2.  And that’s even while 6 of top 10 above premium brands just held or lost share.  No riddle to the brewers and brands that gained $$ share over summer and YTD: Mike’s (+2.3 in Aug, +1.3 YTD), Constellation (+0.9, +1.0) and Boston (+0.7, +0.5).  Then too, Michelob Ultra and Modelo Especial continued to gain $$ share too (+0.7 each YTD). 

Lookin’ at volume within above premium segments-only, Mike’s grabbed additional 3.7 share in Aug, +2.1 YTD.  Boston’s share gains in above premium were 0.9 and 0.6 those 2 periods.  Constellation still up 0.3 share of above premium YTD, but slipped 0.3 share in Aug.  Diageo eked out 0.1 share gain both periods.  MC shed 0.8 share of above premium both periods.  AB off just 0.1 share of YTD but shed full share of above premium in Aug.  Biggest share loser in above premium: HUSA lost 1.2 share YTD, 1.4 share in Aug.  Craft collectively lost share as well, according to Nielsen.  No top-10 premium or economy brand gained share in Aug or for 8 mos, as mainstream mostly a sea of red in Nielsen tables.