After revamped Miller64 packaging design received resounding (and surprising) applause at MC distrib meeting earlier this yr, co “opted to relaunch the brand” with new packaging and new marketing campaign set to hit “later this fall,” MC announced on its Behind the Beer Blog. On top of new sleek design with “more uplifting vibe” that champions 64 calories and 2.8% ABV attributes, Miller64 packaging also includes new descriptor: “extra light beer.”

It’s been yrs since Miller64 received this level of marketing attention after it was rebranded from MGD 64 to Miller64, blog acknowledged. Indeed, Miller64 has declined low double-digits every yr since 2013 in IRI data, losing more than half of its volume by 2018. And it’s currently down 12% YTD thru Aug 11 in IRI multi-outlet + convenience data. But since MC “last made any significant marketing investment, a new generation of drinkers has entered the category,” and “they’re clearly more open to beers with this type of flavor profile than we’ve ever seen before,” said Miller64 marketing manager Nigel Jones. Brand still does “significant volume in its core markets” and “we see a lot of volume sitting out there and an untapped opportunity for this brand to carve out its own space,” he added. Marketing campaign is “mostly” digital/social-focused, and will have “an emphasis on the Great Lakes,” staring next mo, MC comm manager Marty Maloney told INSIGHTS. 

While they continue to duke it out in court with MC getting win today, both cos are losing ground in marketplace.  And their share losses, especially AB’s, have recently accelerated.  AB down 2.2 share of $$ last 4 weeks in Nielsen all outlet thru Aug 24, while MC down 1.2 share.  AB down 1.5 share of $$ yr-to-date, MC down 1.1.  And Bud Light lost 1.6 share of $$ for 4 weeks, 1.4 yr-to-date. Volume down 8%, $$ down 6%.  Coors Light and Miller Lite are gaining share of segment but both are still down and losing share of total mkt $$.  Coors Light lost 0.4 share of $$ for 4 weeks and yr-to-date.  Coors Light $$ down 2% for 4 weeks, 3% yr-to-date. Volume down over 4%.  Miller Lite $$ up 0.1% yr-to-date, but it lost 0.1 share of $$ (0.2 for 4 weeks).

Corona Refresca didn’t launch until early May, no ads until late May.  And yet brand’s sales-to-retailers “well over a half million cases” by end of July, Constellation cfo David Klein said at Barclay’s Back-to-School Conference.  While Constellation used to think “success” for Refresca “would be a few million-case brand,” now “it could be a bit bigger than that.” 

No surprise, but Constellation will be back in seltzer after discounting Svedka Seltzer test.  “We are coming to market with a seltzer next year,” acknowledged David, with announcement in next 60-90 days.  Its Svedka test didn’t work because “brand didn’t resonate…. We think we had the brand proposition wrong.” So, challenge was to get “brand proposition that resonates with consumers” and “be profitable producing that. We think we’ve cracked the code of bringing a profitable seltzer to the market that resonates with consumers.”  (Editor’s note: Many will recall “cracked the code” as words that then-AB cmo Paul Chibe used to describe new Bud Light ads, several campaigns ago.  Many other execs have used that phrase as well.)  Yet still Constellation’s “growth engine for the past several years” is clearly Modelo Especial, noted David, adding “and we think for the next several.”  Brand slowed slightly last yr with Familiar launch, but it has “reaccelerated” this yr. 

Hard seltzers have created billions in value for distribs in last couple of yrs, noted consultant Mike Mazzoni.  Consider that hard seltzer segment should be about 65 mil cases this yr, according to latest estimates.  And gross profit per case is almost $7 per case.  If hard seltzers valued at Constellation-like multiples (could be more), that’s 6-7x GP in many of most recent transactions.  Means hard seltzer segment worth $3 bil or more at distrib level.  And that’s up near 40 mil cases this yr alone.  So almost $2 bil of that value created just this yr. Many forecast a doubling in next 2 yrs or less, creating that much more value at distrib level. It’s ”an unexpected but welcome windfall for both sellers AND buyers!” said Mike. 

MillerCoors won another court victory in “corngate.”   US Dist Ct judge ordered AB to stop using “no corn syrup” phrase and icon on its secondary packaging for Bud Light, Bud Light Lime, Orange and Lemon Tea.   But he gave AB until Mar 2, 2020 to use up packaging it had on hand as of Jun 6, 2019.  That Mar 2020 date was when AB said its on-hand inventory would “expire” based on AB’s “quality control policy.”  So, just as AB ads can’t suggest corn syrup is in Miller Lite or Coors Light, nor can Bud Light packaging do so, even if that packaging does not specifically refer to MC’s brands.  Why?  “Viewed in context of the full advertising campaign, a reasonable jury could find that the implicit message of the packaging is that other beers contain corn syrup,” the judge wrote.  Also, since Bud Light, Miller Lite and Coors Light represent nearly all premium light beer sold in US, “that same jury could also find a substantial segment of consumers would infer that Bud Light’s principal competitors contain corn syrup, especially after a hundred-million dollar television and print campaign misleadingly suggesting the same thing.”  

Judge not only agreed with MC on basic charge that Bud Light packaging could be deemed misleading, he took shots at several of AB’s other arguments.  AB challenged MC veep Ryan Reis’ claim that packaging can drive purchase consumer decisions for Ryan’s “lack of personal knowledge or expertise on consumer behavior.”  But given his experience, AB’s arguments “fall flat,” judge noted.  “Reis’ background and expertise appear to make him eminently qualified to testify about the marketing of beer,” judge added.  He also appeared to side more with MC’s expert than AB’s expert in that sideshow battle.  What’s more, AB’s “position that packaging is not material to the [consumer’s purchasing] decision is contradicted” by AB’s own brief, “which contends that its consumers would not tolerate stickering over certain words.”  Then too, judge deemed AB’s claim that stickering over current packaging in inventory would cost $1.10 per pkg, 3X the cost of the pkg itself, or a total of over $76 mil, “an absurdly high estimation.” 

Net-net: MC “demonstrated some likelihood of success on the merits and benefits from a presumption of irreparable harm.”  But since there was no direct comparison language on the packaging, and potential harm to AB from having to replace/change it, judge decided on “more tailored injunction,” giving AB time to use up what’s on hand.  But after Mar 2, 2020, AB “shall remove the ‘no corn syrup’ language and icon from its packaging until resolution of this case or the preliminary injunction is lifted.”  Finally, judge gave MC yet another potential bite at this apple.  “The court is open,” he wrote, to modify this injunction “with an earlier deadline for the defendant to change its packaging” if MC can show that a sticker option is “feasible” for existing packaging or how soon AB “could practically obtain replacement packaging without interrupting its ability to offer Bud Light for sale.”  But that would “likely require” MC to post a “far higher bond to account for stickering over misleading language or rendering old packaging suitable.”

MC and AB Respond  “Today’s ruling is another victory for MillerCoors, but more importantly it is another victory for the American public against deceptive advertising like Bud Light’s,” said MC ceo Gavin Hattersley. “Bud Light’s campaign was bad for the public, bad for the industry and against the law. With this ruling, we are holding Bud Light accountable for their actions, and we will keep holding their feet to the fire every time they intentionally mislead the American public.”  AB’s response: “Bud Light is brewed with no corn syrup – plain and simple. We look forward to defending our right to inform beer drinkers of this fact at trial and on appeal. MillerCoors is resisting consumer demands for transparency in the ingredients used to brew its beers, but those demands are here to stay. We will continue leading this movement in the beer industry.”

Over the decades, numerous attacks upon and policies aimed to restrict alc bevs based on risks incurred by youth drinking and/or consumption by pregnant women.  In some cases, US Surgeon Generals (think Everett Koop and Antonia Novello) led the rhetorical charge, seeking ad and availability restrictions, higher taxes and more.  So, yesterday’s advisory from US Surgeon General Jerome Adams warning about “Marijuana Use and the Developing Brain,” rang some bells.  Intending to “raise awareness of the known and unknown potential harms to developing brains posed by the increasing availability of highly potent marijuana in multiple, concentrated forms,” SG Adams provides a long, detailed list of risks to pregnant women, newborns and adolescents, actually up to age 25. 

Even before he gets to those specifics, the SG notes that avg THC concentration tripled between 1995 and 2014 (4% to 12%), cannabis now available in dispensaries has avg concentration between 17.7% and 23.2% and concentrated products, i.e. dabs, can be up to 76%.  Meanwhile, marijuana use during pregnancy raises risks for lower birth weight babies and brain development (cognitive function, hyperactivity), the advisory notes.  Then too, cannabis smoke contains “many of the same harmful components as tobacco smoke.  No one should smoke marijuana or tobacco around a baby.”  A final problem for the SG: despite these risks, “alarmingly, many retail dispensaries recommend marijuana use to pregnant women for morning sickness.”  Many of these risks track the same risks linked to drinking by pregnant women.  And remember the “alarm” raised by health officials when some doctors advised pregnant women to take an occasional drink to ease stress? 

Parade of Horribles from Youth Use  Risks of youth use of cannabis, especially chronic use of these more potent products, pointed out by the SG include: brain development, memory and attention deficits, learning, IQ declines, school performance, social achievements, psychotic disorders, schizophrenia, other substance use and suicide attempts.  Also alarming in the context of spreading legalization/normalization of use: reduced perception of cannabis’ risks among youth.  Net-net: “no amount of marijuana use during pregnancy or adolescence is known to be safe,” SG Adams concludes.  Thus, “safest choice” is “not to use.”  More info and info-sharing to prevent such use is needed, he adds. 

CAP Debate, Don’t Commercialize Insists SAM  A lively discussion of cannabis at this week’s Alcohol Law and Policy Conference showed just how top o’ mind this issue is to alc bev interests.  Legal counsel to Massachusetts biz building out cannabis sales in that state made familiar points about need for proper state regulation.  He focused on progress and potential for recreational sales, arguing too that expansion is inevitable at this point.  But chief of staff for Smart Approaches to Marijuana (SAM) forcefully made case against expanded legalization.  A key SAM point: with severe alcohol, tobacco and prescription drug problems ongoing in US, we should not add yet another legal drug to the panoply and particularly must not allow its “commercialization.”  He also warned about growing potency, claiming products with 99% potency now broadly available, cited continued local resistance to the biz even where legal (large majorities of Colo and Calif town/cities/counties still ban retail outlets) and noted cannabis bizzes’ reliance on heavy users for their profits.  Like the SG, he also cited risks to youth.  In terms of specific policies that should be adopted where legalization adopted, SAM’s, man made some very familiar recommendations: hold industry accountable, don’t allow industry to write the regs, ban all advertising/promotion, use zoning laws to restrict outlets, educate about the harms of use and more.

Happy Labor Day!  Relax with a beer or two.

Earlier this week, Barclay’s analyst Laurence Whyatt downgraded Anheuser Busch InBev to “underweight” with 80-pg report that had some striking comments on AB’s US performance.  Tho ABI “has had a good share price run,” Laurence decided to “go against the 92% of analysts who are buyers or holders of the stock” for 3 big reasons.  Laurence sees “3 critical operational issues” for ABI globally.  First, “key markets of Brazil, Columbia and South Africa are likely to cede share to Heineken.  2) ABI’s largest market, the US, is likely [to] remain in structural decline. 3) ABI’s Chinese business is likely to underperform other European operators in the market.” Here are highlights of what Laurence sez re US, not startlingly new, but tuffer in tone/projections than other views.

In US, “we forecast declines in volume and value throughout the medium term.  Within this, we expect Bud Light to worsen due to a lack of successful marketing.” (Editor’s note: not much mktg of any kind lately on Bud Light, sources say.)  “There is evidence” that this yr’s campaign “is exacerbating declines,” he sez.  Laurence shows 12-mo running trends in Nielsen that got steadily worse over last 3 yrs from -2% to -7%. 

Michelob Ultra’s “double digit growth is not sustainable due to limited expansion opportunities and competition from other health and wellness positioned beers, as well as hard seltzers.”  Interestingly, using data shared by ABI at recent Investor’s Day on US, Laurence notes that “states with high Michelob Ultra shares are significantly warmer than those with low share. We believe this is due to the flavor profile of Michelob Ultra…. Michelob Ultra will struggle to expand outside its core markets because these markets are cooler and prefer cooler style beers.”  In high share mkts, Ultra already 8 share or more.  Tuff to keep compounding double digit growth on that, Laurence sez (at some point, “law of large numbers” kicks in).  Yet Ultra still up 15% in Nielsen all outlet  yr-to-date thru Aug 17, and Ultra Pure Gold up 162%.  Finally “we see the Beyond Beer portfolio as too small to move the needle, despite some brands’ good performance.”  Three newer brands, Natty Rush, Bon & Viv and Ritas only about 1% of AB volume. And Laurence also “skeptical” about Drinkworks for several reasons. 

Certainly, ABI would disagree with most of this assessment.  But its share losses have recently accelerated in scan data.  Lost 2.2 share of $$ in Nielsen all outlet thru 8/17, compared to 1.5 yr-to-date.  It will be presenting its programs for 2020 to distribs at its EAM (Equity Agreement Manager) meeting in a couple of weeks.

Per usual, ain’t too hard to find a good beer deal over final summer holiday weekend.  For this year’s Labor Day survey, we looked at grocery/liquor store flyers from 5 biggest state beer mkts in US.  Most prices good thru Monday.  Spoiler alert:  best deal we found: $9.99 30-pks of High Life in Chi, 33 cents a pop, a steal for the Champagne of Bottled Beers! 

In Los Angeles Albertsons, Bud, MillerCoors premium 30-pks goin’ for $19.99 (Tecate too), but Bud/Bud Light 20 pks featured for $9.97.  That knocks per-bottle price back from 67 cents to 50 cents.  Mich Ultra 18 pks and Modelo Especial and Stella 12-pks also available for just under 10 bucks.  Corona/Heineken twelvers are $12.99, Pacifico/Kona for $13.99 and Firestone/Lagunitas/Sam Adams for $15.99.  Gotta note, right next to beer prices are Albertsons booze specials.  A 1.75L  handle of Smirnoff vodka is $14.99.  That’s 38 cents/drink.  Wanna trade up to Tito’s or Jack?  That’ll cost 87 cents to a buck a drink depending on how many bottles you buy.  Still less than top import/craft cost per drink.

Beer prices in Houston Kroger a bit higher.  Bud, Miller,Coors suitcases are $16.96.   Corona, Dos Equis and Modelo twelvers run $14.96, still over a buck a bottle.  But that’s a buck higher than White Claw and Truly twelvers at $13.96.  You can also get an 18-pk of Modelo for $17.96, a buck more than a Shiner Bock 18-pk at $16.96.  Mich Ultra prices much higher here vs LA: $12.96 for 12-pk. 

In Chicago Binny’s While Corona Extra twelvers are $13.99, Heineken twelvers drop down to $10.99.  That’s a buck cheaper than Blue Moon and some Surly 12-pks, and 2 bucks less than Founders All Day 15-pks and some Lagunitas 12-pks.  Two Goose Island brands – 312 and Wheat – goin’ for just $9.99 per 15-pack and twelver respectively.  Still, that’s a buck higher than Shiner Bock twelvers.  In seltzer, White Claw sixers are $9.99, twelvers are $15.99.  Better deals on Truly ($5.99 for sixers), Henry’s Sparkling ($7.99 per twelver) and Bon & Viv ($10.99 per twelver).  While PBR 30-pks go for $10.99, knock off a buck for that High Life 30-pk.  One-time Chi fave Old Style hangin’ in at 10 bucks per suitcase. 

Lookin’ for a BOGO?  Head over to Publix in Orlando, FL.  Assorted Goose Island sixers on deal with savings up to $10.99, depending on brand.  Also from AB portfolio: Landshark Lager, buy one and get one to save $8.69, according to flyer.  Otherwise, Bud, MillerCoors suitcases are $18.99, $4 off regular price.  Corona, Heineken and Stella twelvers are $14.99; same price for top craft brands Sam Adams, Sierra, SweetWater and New Belgium, as well as Truly 12-pks.  Constellation’s Funky Buddha advertised as “local” special and a buck off per sixer, but actual price not listed.

Finally, Stop & Shop on NY’s Long Island is MIR-land.  Mail in rebates range from $2 for Yuengling 12-pk, bringing price to $8.99 to a whoppin’ $10 MIR on Truly 12-pks for final price of just $4.99 twelver.  That’s best hard seltzer price among these stores.  Indeed, even with $5 MIR, White Claw twelvers are still $9.99 in same store.  Otherwise, $4 MIRs bring Heineken twelvers to $10.99, Stella twelvers to $11.99.  A $5 MIR gets Mich Ultra and Blue Point twelvers to $12.99, Fat Tire/Brooklyn twelvers to $11.99 and Sam Adams/Mike’s twelvers to $10.99.  Miller Lite 18-pks can be had for $7.99 after $7 MIR.  Better AB deals: $6 MIR on Bud Light twelvers that bring price to $4.99 and $8 MIR on Bon & Viv that brings 12-pk price to $6.99.   Don’t have a stamp?  Pick up a 15-pk of Natty Light for 7.99 or 12-pk and Corona/Modelo Especial for $15.99.

Mahou Group upping its stake from 30% to 90%, reported MiBiz.com earlier this afternoon. Founders and Mahou expect the transaction to close in Jan 2020,  “pending state and federal regulatory approvals,” wrote MiBiz.  Original deal almost 5 yrs ago, valued 30% stake at $96.3 mil, and “included a provision allowing Mahou to acquire the remainder of the company starting in the fifth year after the initial deal,” added MiBiz, citing documents it got after a Freedom of Information Act request.  Founders founders Mike Stevens and Dave Engbers stay on with 5% stakes each.  This deal allows Mike and Dave to “take some chips off the table,” Mike told MiBiz, but “a significant amount of our wealth is remaining in the company.… It’s going to give us the opportunity to take Founders to a whole other level,” he added.  

Founders founders also simultaneously wrote to distribs this afternoon.   Mahou “now coming on as a majority investor in Founders” and “will be buying out all shareholders except” Mike and Dave, “who will stay on to continue guiding the business.”  Mike and Dave wrote distribs: “We’re writing to you directly to confidently state that nothing will change for our wholesaler partners and retailers’ business….  Our entire team remains intact.”  They continued: “Founders sales strategies and goals remain, pricing stays the same, innovations continue. It’s business as usual…. With Mike and Dave leading the charge, we see endless possibilities.”  They conclude: “This is a great day for all of us and a critical milestone in us becoming America’s Next Great Brewery.” 

This move is certainly not surprising, but it is significant.  Mahou initially took a 30% stake in Dec 2014.  Deal must have worked out pretty well as  Founders growth exploded, basically tripling in last 4 yrs.  Founders at 193K bbls in 2014 and catapulted to 563K bbls last yr. It was the craft brewer that grew the most bbls in each of last 2 yrs.  Founders volume up 12% in IRI multi-outlet + convenience yr-to-date thru Aug 11.  All Day IPA is up 11% and ranks as #1 IPA by volume, #2 by $$ behind just Lagunitas IPA.  All Day is over 60% of Founders volume in scans.  It slowed to 4% growth in most recent period. 

Call it disruption.  Call it deregulation.  Call it whatever you want.  But alc bev retailers never stop seeking new ways to connect consumers with alc bevs, constantly testing status quo and current alc bev laws.  Just 3 yrs after opening up Pennsy mkt to more beer and wine sales in grocery stores and c-stores, PA House held hearing yesterday for new bill that calls for next steps, even broader expansion.  One source told Express it was “Walmart’s wish list.”  Bill’s sponsor touted it as “all about convenience to the constituents.”  He pointed to “what many would call an archaic Pennsylvania system of liquor laws,” reports WENY News and PennLive. 

What’s in the bill, on the list?  Grocery/convenience stores would no longer have to provide permanent “restaurant seating” (for 30) to sell beer/wine for off-premise consumption.  No more limits on how much consumers can buy.  No more dedicated registers.  Store aisle displays would actually be okay.  Basically, bill opens door to full-blown grocery store/c-store/big box sales of beer and wine.  Opponents include, natch, union rep for state liquor store workers, who sees even more biz leaving state stores.  Also, small home D retailers, who call bill a “nail in the coffin” for their bizzes.  Proposed reforms “too much too soon,” they say, especially since the 2016 reforms not fully rolled out.  Then too, unfair for the 900 licensees that made changes in order to add beer and wine since then.  “There’s no reason to grant Walmart the excuse to do it wrong just so they can save a buck,” union rep said.

Pennsy bill would disrupt Pennsy’s current system, perhaps, but it ain’t exactly futuristic.  It’s more like the status quo in many states.  Elsewhere, wine-searcher.com followed up on its exposé that Amazon set up non-store store in Los Angeles simply to allow it to provide Prime Now service to area customers (see Aug 20 Express).  Turns out Amazon has 7 “nearly identical liquor licenses” for stores adjacent to their Calif warehouses.  In coupla cases, wine-searcher able to choose from tiny list of offerings (i.e. just 3 wines, a single vodka brand).  Even if these locations somehow meet Calif law’s definition of store, “Amazon is making a mockery of California law by doing the bare minimum to comply,” wine-searcher charges.  Not surprisingly, “some owners of dedicated bricks-and-mortar liquor stores are not happy about it.”  Meanwhile, Amazon rolling Prime Now in handful more mkts, including beer/wine in Houston.

Finally, at CAP’s Alcohol Law & Policy Conference yesterday, Real Identities ceo Susan Dworak once again warned about “Uberization of alcohol.”  She reminded that several companies, one called QYKBAR (which uses “Uberization” in its pitch), another called HipBar, have set up online bizzes based in the cloud (now only in other countries).  They allow consumers to create virtual “wallet” to purchase volumes of specific brands online at competitive prices, then pick up their drinks in multiple on-premise locations by simply swiping a phone.  (“QYKBAR’s consumers will be able to choose and stock their favourite drinks on the cloud, without having to worry about prices as QYKBAR standardizes this categorically throughout its platform,” according to its website.)  Not a lotta ID being checked, Susan sez, in setting up profiles.  Plus, tracking of sales by regulators won’t be easy given that these services use blockchain tech.  Ain’t here yet, but coming, sez Susan.  And by the way, HipBar’s partners in India include AB InBev and Diageo.