Tho INSIGHTS and everyone else has written all summer about summer of seltzer and  the dislocation that’s already caused in traditional beer, could it be possible that data so far understates the case?  That’s thought that popped this morn looking at latest IRI multi-outlet + convenience data.  Premium beers down to 31.65 share of $$ for last 4 weeks thru Aug 11 in IRI MULC.  Down 3.01 share. Meanwhile, FMBs at 12.99 share, up 3.71 share.  That’s nearly a 7 point share swing compared to same period a yr ago.  Not only that, but FMBs less than 1 share point behind subpremiums same period.  Subpremiums down to 13.65 share.  FMB $$ sales seemingly about to zoom right past subpremiums, which remain 2d biggest segment in volume (subpremiums still over 20 share of volume). 

Premium Dropped from Near Half of $$ to One Third in 7 Yrs  While changes yr-to-date not quite as extraordinary, it’s still a nearly 5 point swing. Premium beers down 2.6 share to 33.2, while FMBs up 2.1 share to 10 YTD in IRI MULC.  Consider that 7 yrs ago in calendar 2012, premium beers still nearly half of beer $$.  Got 47 share.  Now down to one third.  Back then, FMBs only 4 share of $$.  Now 10 share, and 13 in most recent periods.  How high is up? 

AB won’t be buying rest of CBA as deadline expires today to purchase the 69% it doesn’t own.  "While we are not making an offer to purchase the remaining shares of CBA, our existing commercial partnership with CBA continues to be a key complement to our industry-leading craft portfolio and we look forward to working together for many years to come,” said Mika Michaelis, prexy of AB’s Brewers Collective.  “The long-standing and strong partnership we have with Craft Brew Alliance (CBA) is extremely valuable to Anheuser-Busch,” he added. 

AB “confirmed it will be making a $20  million one time incentive payment today,” wrote CBA.  And CBA’s existing Master Distribution Agreement and Contract Brewing Agreement with AB “remain intact” until 2028 and 2026 respectively.  So CBA brands will still go thru AB distribution system and AB will still contract-produce AB beers.  “While disappointing,” said CBA ceo Andy Thomas,  “with this decision made, management can turn its attention to refining strategic alternatives to maximize shareholder value.”  In last few yrs, CBA “built a sustainable infrastructure, optimized our footprint, and amassed a diversified portfolio of brands to support future profitable growth,” Andy added.  “Looking to the future,” he noted, “we are optimistic that our healthy balance sheet, bolstered by the $20 million payment, and strategic investments in innovation and increased brand awareness will enable us to deliver long-term shareholder value.”

Still, stock down this morn in pre-market trading.  And given recent events, one can’t call this a surprising outcome.  AB just purchased OH-brewer Platform and CBA stock dropped by more than 1/3 in last yr and stayed stubbornly down at a little more than half the value that AB would have had to pay to exercise its option.  Those certainly seemed like strong indicators that AB wouldn’t pick up this option.  Then too, purchasing 69% of CBA would have cost AB hundreds of mil it’s apparently not inclined to spend on this asset, as their partnership continues.

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Here come new Pabst ads for its 8% ABV harder seltzer, leaning into stronger ABV positioning with “Stronger Than You Think” tagline, reported AdAge. Three 15-second videos depict “quirky” cartoon characters in quirky scenes (ads can only be viewed with AdAge subscription currently): one shows a Pabst can getting a tattoo that sez 8% ABV; another shows a bald man with a large moustache flexing his moustache; and another shows a woman with unshaven legs carrying a Stronger Seltzer, “strutting down the sidewalk that cracks open to reveal a hand extending another can of the stuff.”

Oddly enuf, BBH New York, the agency that created these spots for Pabst, agreed to get paid in beer: 12,000 cans (500 cases) of various Pabst brews shipped in “quarterly increments” for initial spots. “We really wanted to work with them [and] wanted to prove ourselves and just thought it would be a fun perk for the agency as well, really,” biz director Alex Monger told AdAge. But this was part of “long-term plan” to “take on more projects to actually get paid for in money, not just beer, which has [already] happened,” he noted. Future projects will involve other Pabst innovations, including Pabst Hard Coffee among others.  This novel form of payment “comes as the agency industry struggles to deal with stingy clients and continued fee cuts,” said Ad Age. 

Net-net, it’s still very early days for Stronger Seltzer and remains to be seen how far-reaching these ads become with digital-only platform. But any bit of growth will be welcome for Pabst right now, as co continues to decline at double-digit pace this yr.

By now many are familiar with the phrase “Ain’t no laws when you’re drinking claws.” That went viral in funny video making rounds for last couple of mos, with comedian Trevor Wallace parodying a bro who drinks White Claw. But alas when Trevor tried to make good on the phrase by selling t-shirts with it, the law came down, as reported in SF Chronicle, in form of cease-and-desist letter from Mike’s legal team.  “We are incredibly grateful for all the support,” Mike’s Hard sr vp mktg Sanjiv Gajiwala told Chronicle. “Unfortunately we do have a trademark.  There are laws.”  

Probably inevitable that with explosive growth of seltzer, especially this summer, there was gonna be a backlash.  SF Chronicle article, written by writer with wine pedigree (there’s a clue), popped yesterday afternoon headlining “Hard seltzer is this summer’s biggest scam.”  Howzzat?  Writer dings claims that seltzers somehow a wellness bev, tracking other critiques that started late spring.  An accompanying taste test included some harshly negative comments, tho writer claimed an open mind, article concluded that (surprise!) a glass of wine, also gluten and grain free, would be a better choice, not to mention a “run of the mill vodka soda garnished with a sliver of fruit.”  Another  taste test appeared in Business Insider; it too had some harsh  comments for some brands, before ending in same place as most consumers.

 Truly “Now on Tap,” said Boston’s fact sheet as it launched nationally in a move already telegraphed on late-Jul conference call.  But this move comes with a bit of a swift kick for beer biz.  And it’s kind of curious for one of pioneering brewers that undeniably was a leader in building craft.  That was then, this is now. “Hard seltzer sales have now surpassed all IPA sales,” sez Boston, sourcing IRI thru 7/7. “And more than 2/3 of drinkers say they would trade in their beer at a bar for the opportunity to drink hard seltzer.” 

For that wild stat, Boston sources Radius Hard Seltzer Quantitative Study done just last mo.  It promises to give drinkers that seltzer opportunity: “Now it’ll be easier than ever with Truly on Tap.” Seltzers are taking from both spirits and beer.   But beer tap handles obvious target of Truly on tap.  Boston also promises: “Just in time for football season, drinkers across the country will be able to find Truly Hard Seltzer’s newest innovation, Truly on Tap.” 

Truly Bigger than Sam Adams and Angry Orchard Combined in Last 4 Weeks  And why not focus on Truly, aiming at beer? Truly is Boston’s growth engine, up 173% for 4 weeks, and 187% yr-to-date.  Truly franchise at 1.4 share of $$ last 4 weeks thru Aug 10 in Nielsen all outlet, up 0.9 share. That’s bigger than Sam Adams and Angry Orchard combined in latest period.  And each of those lost 0.1 share of $$.  Truly franchise also over 1.5x bigger than Stella and Dos Equis in latest period. Where would you focus your attention?  Boston also has Twisted Tea franchise at 1.1 share, up 0.1. 

Better Jul scans for beer not reflected in shipments by domestic brewers.  Indeed, taxpaid shipments down for 6^th straight mo in Jul, -382K bbls, -2.5%, estimates Beer Inst economist Michael Uhrich.  That was despite extra selling day, Michael points out.  Jul was a tuff comp: up 5% last yr.  In any case, taxpaid shipments down 1.67 mil bbls, 1.7% for 7 mos.  Jan-Jun import gain offsets almost a half-mil bbls of that loss.  But looks like total US shipments running down about 1% yr-to-date, even while scans suggest off-premise volume even to up slightly thru Jul.

Here’s another sign that hard seltzers ain’t puttin’ much of a dent in spirits’ momentum.  Control state liquor volume +6.6% in Jul (vs “robust” +4.6% comp) after adjusting for selling-day variations, NABCA reports.  Dollar sales up 9%.  These trends indicate too that record-hot weather surely doesn’t deter liquor sales.  For 12 mos, spirits volume trend now +3.7%, $$ +6.7%.  Meanwhile, handful of control states that are primary wine wholesalers as well show same softness as natl scans (see yesterday’s Express).  Jul wine volume -5.4% in those states, and 12-mo trend at -1.9%.        

Constellation Brands spent $97 mil on Hispanic media in 2018, according to Ad Age’s Hispanic Fact Pack 2019.  That was enuf to make it 10^th leading advertiser overall in Hispanic media.  (P&G #1 at near $300 mil.)  AB spent $70.2 mil and #17, while Molson Coors #19 at $66.5 mil.   Surprisingly, all 3 bigger than Coca Cola at $60 mil.  And Heineken USA #30 at $42 mil.