AB and MC each lost “just” 5 share in these heartland states 2008-2018, despite being down 20% and 23% respectively.  The top 2 lost 5.9 mil bbls in this region over the last 10 yrs, while total shipments down 11%.  AB remained slightly above its national share, MC significantly higher.  AB passed MC in Illinois during the decade, grabbing the #1 position. MC held onto the top spot in Wisconsin. Constellation has a double-digit share in Illinois, more modest share in the other 4 states.  All Others more than doubled share in this region, neared 20 share in Michigan and hit 23 share in Wisconsin.  New Glarus alone has 5 share in Wisconsin and is the #3 player there.  (East North Central states: IL, IN, MI, OH, WI)

Dig deeper into volume and share changes from 2008 to 2018, region-by-region and state-by-state, with Ten Years After, the new Beer Insights Special Report, coming August 9. In addition to region-level data, Ten Years After includes shipments, share and 10-yr trends for the top-5 US beer suppliers and All Others in 42 reporting states over the last decade with broad trends and notable shifts highlighted by quick-hitting text. Packed with data and exclusive analysis by the experienced editors at Beer Marketer’s INSIGHTS, Ten Years After: The Aftermath of 3 Huge Beer Biz Deals tracks a decade of big change in the US beer industry. Look out for more sneak peeks at this in-depth report and reserve your copy today for just $200.

While some industry members and media made much of alleged momentum of “Dry January” – when folks take a pause from, or reduce drinking – timing issues actually resulted in very strong Jan sales.  But wha’ happened in June, when folks should be greeting summer, drinks in hand?  Recall, off-premise scan data (Nielsen all outlet) showed Jun beer volume -1.3%.  Now comes report from Natl Alc Bev Control Assn that control state spirits volume -0.8% in Jun, despite easy -5.4% comp in Jun ’18.  But just as calendar issues impacted Jan volume, same thing in Jun.  In control states, Sundays are big issue and throw off numbers.  Adjusted for selling days (raw data had 6 fewer days), control state volume +0.9%.  That’s not as strong as run-up to summer season, but positive.  Meanwhile, for 12 mos, by dropping that weak Jun ’18, spirits pace actually picked up in control states.  For 12 mos thru Jun ’19 control state spirits volume +3.4%, with $$ sales up 6.4%.  Oh, for those trends in beer!  One positive sign, July 4 week was strong across the board: beer $$ +4.9%, spirits +8.6% and wine +1.3%, Nielsen reports.

Brewers keepin’ the heat on aluminum tariff /price-gouging issue, and at least gettin’ their story told.  Molson Coors chairman Pete Coors scored his second op-ed within 14 mos in Wall St Jnl on this topic today.  “Aluminum Suppliers Kick Our Cans” makes familiar points, but adds some new facts and strong language. Key point: even though almost 80% of imported aluminum is from “countries free from tariffs” and over 70% of aluminum in a can of MC beer is from scrap not subject to tariffs, and both base price of aluminum and scrap prices have fallen, MC “pays almost 20% more for the aluminum in our cans than it did a year ago.”  Alcoa and “handful of companies” that dominate the biz are using “anticompetitive antics” to jack prices across the board and keep ’em there, Pete points out.  Even after Pres Trump lifted tariffs on Canadian and Mexican aluminum in May, MC “fully expects Alcoa will continue to charge us as if the tariffs remained in place.  That takes some gumption,” he adds.  Tariff exemption “has boosted earnings at the Canadian operations of companies such as Rio Tinto and Alcoa,” Reuters reports today, “but has not cut costs for US consumers.”    

Other antics: “archaic and opaque pricing mechanisms” (Midwest Premium); hoarding supply; moving production overseas then shipping it back tariff-free but at tariffed prices; keeping prices high even as shipping prices decline.  Net-net: “American companies have had to pay an additional $2 billion in higher aluminum costs since the tariffs went into effect,” according to analysts at Harbor Aluminum Intelligence.  Then too, aluminum suppliers “will pocket an extra $700 million a year in profit,” according to same analysts.  Pete makes case that Trump admin should “investigate the aluminum industry and the conduct of its biggest actors.  We ask for the same regulatory and legislative oversight that is applied to other commodities.”

Meanwhile, some US alc bev exports got whacked after retaliatory tariffs adopted by other countries.  For example, American whiskey exports to EU alone down 19% since retaliatory tariffs imposed last year, sez DISCUS.  But DISCUS just scored another $400K from USDA’s Agricultural Trade Program, set up to “assist those agricultural groups that are being adversely impacted by retaliatory tariffs.”  Since Jan, DISCUS got $1.125 mil in such relief.  Money will be used to promote US exports, provide mkt research, media and in-mkt promos in “key export markets,” DISCUS sez.

Above premium brands gained 3.1 share of $$ last 4 weeks to a whopping 54.6 share of all $$ sales in Nielsen all outlet scans thru July 13.  That compared to 51 share yr-to-date. 2019 will almost certainly mark the first yr that full yr $$ sales of above premium brands are above 50 share in Nielsen (at 48.6 in 2018).  Above premium brand $$ sales grew double digits (10.1%) in last 4 weeks.  Total industry did better in latest period too.  Volume up 1.1% last 4 weeks thru July 13 and $$ sales up a healthy 4.4%. 

But better trends spearheaded by a few superhot brands.  Indeed, the top 4 growth brands gobbled up fully 3 share in last 4 weeks thru July 13 in Nielsen all-outlet, capturing virtually all of the above premium growth.  Two are usual suspects, Modelo Especial and Michelob Ultra, up 0.8 and 0.7 share respectively.  But they were #2 and #3 growth brands.  It is now White Claw Variety pack that is the #1 growth brand.  And it gained 0.9 share of $$ last 4 weeks to 1.6, while Truly variety pack gained 0.7 share to 1.1. Gained roughly same share as Michelob Ultra.  Entire White Claw franchise at 2.4 share, while Truly at 1.3. “I’ve never seen anything like this,” yet another large wholesaler exec said to us yesterday re explosive growth of seltzers.  Total Mike’s Hard Lemonade up 60% YTD; White Claw up 259% (as reported in BMI).  Meanwhile, Boston Beer, which reports Q2 later this week, seemingly still picking up steam.  Morgan Stanley’s Dara Mohsenian published weekly run rate (from slightly different Nielsen data set):  Boston up 34% in Nielsen in latest week thru 7/13, 27.5% week before that, 23% week before that and 22% week before that.   Sam Adams dropoff improved to -8.4% in most recent period vs -13.9% YTD. 

Some new twists on a familiar theme from NY Post Culture Club contributor Scott Johnston.  “It’s time to lower the drinking age,” he declares in a column published yesterday.  Cites all the familiar arguments about young people drinking anyway, but now in secret, and fairness, noting all the other things 18-yr-olds can legally do (drive, sign contracts, marry, “take a bullet” for the country etc), as well as progress in reducing drunk driving since minimum age was raised. 

But Johnston, a budding novelist with a background that includes owning night clubs and running a hedge fund, adds two tweaks.  First, he argues that as beer’s popularity has “faded away” among college age-drinkers, “hard liquor is the new poison” and “this has made alcohol a bigger problem on campuses than ever,” since it’s easier to abuse.  Indeed, minimum age should be lowered for “beer and wine,” Johnston suggests, “to steer teens towards safer forms of consumption.”  To a certain extent this is already happening.  Johnston didn’t mention it, but the North American Interfraternity Council adopted a new Standard last year, to go into effect Sep 1, 2019, that bars liquor from fraternity events and houses, covering 6,100 chapters on 800 campuses.

The second tweak: “Republicans – you should lead the charge,” Johnston advises.  Since they view Repubs as “old people and stiffs,” he sez, “most 18-yr-olds won’t be caught dead registering” as Repubs.  So, advocacy to lower the minimum drinking age would help fix a “branding problem almost beyond repair.”  Then too, Dems would probably “come around quickly.  Hey, bipartisanship!”  Returning the drinking age to 18 surfaces from time to time in state legislatures around the US, but never gets traction.  Have the times changed?

Looking ahead at very busy week with multiple cos reporting and Jun taxpaids coming, Consumer Edge’s Brett Cooper said his “base case” estimate for Jun with 1 less shipping day and “lapping a weak” Jun 2018, would be down 4%, meaning AB and Molson would be down about same “in aggregate.”  But Brett expects “upward revision” to Boston Beer’s top line “based on the strength of the business in the first half,” tho “we don’t think that the bottom line flows through to the same extent.” 

Mkts reacted very positively to ABI’s sale of its Australian biz to Asahi on Friday as ABI stock jumped near 6%.  Macquarie analyst Caroline Levy called it a “surprise win” for ABI “and a very positive development,” she added. “What a difference a week makes,” wrote Bernstein’s Euan Macleish as ABI “managed to flush out a control premium” and “leave themselves with a suite of options.”  Very different story for Asahi, which is “already getting a headache from its $11 billion foray,” headlined Bloomberg today.  Japanese investors pounded Asahi. Stock dropped 9% in its biggest loss since 2011 (earthquake and tsunami).  Asahi stock lost more than $2 bil in value today.  What’s more, Moody’s Japan placed Asahi’s ratings on review for downgrade.  “This large, mostly debt-financed acquisition will significantly raise Asahi’s financial leverage,” said Moody’s Japan veep Motoki Yanasi, as quoted in Financial Times.  Asahi’s debt will essentially double to over $20 bil.  Interestingly, this deal, should it “complete,” is one of the 10 biggest ever in Australia, noted Australian Financial Review, tho neither buyer nor seller is Australian-based co.

Without new items, craft is down 2.5%. Without “local” it’s down almost 2%. Most craft brands are down in scans. Yet big, strong ones keep picking up share in home markets, and “indie” still plays with a growing group of craft consumers. Craft continues to confound. Some bizzes work hard to correct quick tailspins and others fly ever higher. That constant flux easily visible in deep dive into new data on the segment, detailed in latest issue of sibling-pub Craft Brew News and summarized here. Brewers Assn-defined indie craft grew $$ sales 2.4% in Nielsen off-premise data for 52 wks thru June 15 on volume growth of 0.9%. That’s according to expansive Power Hour presentation by folks at Nielsen, hosted by BA. Nielsen poll results also reveal uptick in craft-drinking population: 43% of 21+ adults say they drink craft at least several times a yr, +3 pts in 1 yr and up from 35% in 2015. Plus, survey of these “regular craft drinkers” suggests that almost half of them have seen the BA’s Independent Craft seal and that 56-57% of those who’ve seen it have also purchased beer that uses the seal on its packaging. 

Analyzing separate IRI off-premise data, BA-defined craft volume +1.7% YTD thru June 30, BA economist Bart Watson shared in members-only post last wk. As in Nielsen, that’s a little better than IRI-defined craft (and also similar/slightly better than this time last yr). Yet plenty of sobering stats ID’d by Bart too. For example, all of the growth in BA craft is coming from new brands. Existing brands (with sales in both 2018 and YTD in 2019) collectively down 2.5% in IRI MULC YTD thru 6/30, Bart shared. New brands for this yr already 4.5 share of BA craft cases. Staggeringly, most craft brands are down: a remarkable 38.3% of craft brands declined by 50% or more YTD and over 50% of brands down by 10% or more. Then too, 11% of craft brands are up by 10-50% and another near 18% up by 50+%. 

While Bart showed that small brands by and large faring far better in scans than larger ones, Nielsen looked to local. Defined as brands with 85% or more of sales in one state or retailer, local craft collectively +5% for 52 wks thru 6/22 in Nielsen all outlet data. Gained near 1 share of segment $$ to just over 10. Rest of the segment

-1.7%.  (This data does not include taproom sales.)  That local strength also shows up in extensive report on IRI state data from Consumer Edge analyst Brett Cooper. Some of biggest gainers in state-level beer states are local players digging deeper at home. Georgetown, Switchback, Bell’s and Creature Comforts each gained 0.4-0.6 share of total beer $$ for 52 wks and/or in Q2 in their home states (WA, VT, MI, GA, respectively), among top share-gainers in IRI MULC scans, Brett showed. Notably, all 4 of those co’s driven by large/new IPA brands. Then too, New Glarus now 7.4 share of beer $$ in WI for 52 wks, +0.1 (bigger than faster-growing Mike’s, Constellation). Lots more detail in latest CBN. Head to beerinsights.com for a sample and start a subscription.

Molson Coors upped its dividend 39% from 41 cents to 57 cents per share.  Wall St has long hoped for dividend increase from Molson Coors.  But this was “below expectations,” said Morgan Stanley’s Dara Mohsenian.  Recall earlier this week, Bank of America’s Bryan Spillane dropped TAP’s rating from outperform to “sell.” Stock initially slipped, but hanging around at $53-55 all week.  Next potential catalyst would seem to be Q2 results Jul 31^st.  TAP board meeting this week. 

“If residency requirements are problematic, what about simple physical presence laws?”  Recall, Sup Ct Justice Gorsuch asked that question in his dissent a coupla weeks ago when majority tossed Tenn residency law for liquor retailers.  Another way to put question: can states require in-state bricks and mortar for retailers to ship to consumers?  So far, fed courts split on that issue.  But retailers ready to force the issue. 

Celebrating this “historic win for both free trade and wine consumers across the country,” Natl Assn of Wine Retailers exec director Tom Wark said on Jun 26: “With this decision, the effort to modernize and bring fairness to the distribution and wine shipping laws of the states begins in earnest.... Today, the NAWR begins the work of persuading states to change their retailer shipping laws so they come into compliance with the non-discrimination and anti-protectionist principles laid out in today’s important decision.”  And within days, new suits filed in KY, NJ, TX and IN challenging laws that allow in-state retailers to ship to consumers but bar out-of-state retailers from doing so.  Attys also already filed request in Mich to open up shipping by out-of-state stores, reports wine-searcher.com.  Recall, US Dist Ct judge tossed Mich law barring interstate shipments, but put decision on hold until Tenn case decided.  Meanwhile, NAWR has identified 20 states where it believes laws “rendered unconstitutional” by Tenn decision.  Tom told wine-searcher: “It is our belief that these states need to change their laws.  There are two ways to do that.  You can sue, or you can lobby legislatures.”

But litigation and lobbying both take money.  “We’ll pick our battles right now,” said Tom. “There are some states where we want to see shipping opened up as soon as possible: New York, Illinois, Missouri.  But we don’t have unlimited resources.  We’ll have to keep our eyes out for states that are trying to shut down all shipping.  We’ll try to respond to those.”  While Tom reads Tenn decision as clear win for his side, distrib advocates have different view, natch.  “It is a stretch to say the court went beyond residency,” one told us, pointing to Justice Alito’s focus on Tenn residency requirement and comment “such a requirement is not an essential feature of a three-tiered scheme.”  Lotsa folks, including other retailers, distribs and regulators will argue that bricks and mortar presence is essential.  While Gorsuch brought it up, majority decision did not address retail shipping issue. But it’s out there and it surely ain’t goin’ away.