“In the spirit of provocation rather than prediction,” and probably over a coupla beers, Evercore ISI analysts Robert Ottenstein and Eric Serotta went “outside the box” to suggest ways AB InBev could achieve its “big dream” of hitting $100 bil in revs by 2020-2022.  Barring big soft drink buy, Robert and Eric suggest combo of these possibilities would be necessary to hit rev goal.  Here’s their list, re-ranked by us from most US-centric to least, with a few details for each, some from them, some from us:

• “US volumes and share flatten out.”  “ABI has significantly improved its portfolio and management believes it now has the right brand position for all its brands, with the exception of Bud Light.”  That’s big exception and still 38 share of AB biz, but AB has shored up high end with Mich Ultra, Stella and craft acquisitions and reduced reliance on mainstream.  “Reasons to believe” and “variables that could turn in ABI’s favor” so that AB could stabilize volume/share, according to ISI, include: craft slowdown, SKU reduction, resurgence of premium light due to health/wellness considerations, more money in Trump voters’ pockets, Bud gets “cool” again, better Bud Light ads, economy beers getting biz back from spirits after more support from AB.

• “ABI buys STZ’s beer business.” This would require “a new DOJ” that would view US beer biz “differently than the old one,” which required ABI to divest this very biz and drop call option.  Sands family seems more like buyers than sellers these days, but ABI could offer “a very big number” and this would indeed be “home run.”  Still, Robert and Eric concede this is “a low probability event.”

• “ABI becomes a US company.”  Pulling up stakes from Belgium and moving to what’s already ABI’s “functional” hq in NYC has numerous tax and valuation implications and rev implications unclear.  But “maybe just maybe” being a US company will help Bud franchise “bring back their mojo.”   

• “ABI buys Guinness.”  An oldie but a goodie.  Analysts have speculated for yrs that Diageo should and will sell off Guinness to focus on spirits, despite Diageo’s insistence that Guinness is core to its biz.  Guinness would give ABI bigger African, US and UK footprints, help on-premise too.           

• Zero alcohol becomes meaningful.  ABI has goal of 20% of its beer volume in low and no-alc products down road.  Such brands haven’t gotten traction in US, but have elsewhere.  Volume and margins would help if they take off more broadly, assuming ABI gets its share.  

• “Zx Ventures hits a home run.”  ABI’s chief disruptive growth officer Pedro Earp told INSIGHTS Zx lookin’ to find biz that “can be massive in the future.”  Can one of its alt-bev, home-based products, media or other investments, and/or future projects, go massive?

• “Asia becomes an important growth driver.”  ABI already has strong position in China, Korea and Australia.  Plenty of oppy too in Vietnam, India, Thailand, elsewhere.

• “Brazil becomes a rational market, based on brand building and a level playing field.”  This is actually listed first in ISI report, and happens if Heineken picks up another competitor there and market structure looks more like duopoly.  That would be “positive” for both.

Finally, Robert and Eric point to “strong consensus” that ABI will eventually buy Coke or Pepsi.  But they also suggest buy of brewer Castel “may come first, and push back the more transformational deal by 1-2 years.”     

Once in a while, speakers at annual conference of state liquor regulators (NCSLA) use stage to settle scores.  That happened big time when KY Rep Wesley Morgan spoke on panel about “the other 3 tier system of legislators, lobbyists and laws.”  Panel aimed to explore “mystical world of how laws become laws,” specifically alc bev laws.  Morgan, who owns handful of liquor stores in KY, took oppy to take off on wholesale tier.  Used to be competition in that tier in KY, he said, but now controlled by “big distributors” who have “done away” with competition and retailers “have no say-so” and “dictated to at every level.”  Morgan ran for legislature and won but immediately got bad press when he intro’d liquor reform bills some viewed as “self-serving.”  He insists they weren’t.  One called for end of exclusive territories for liquor brands, so all wholesalers could sell all products.  Only tier in KY that’s competitive is retail, he claimed, and Jack Daniels vs Makers Mark “is not competition.”  When asked later about who has most influence in legislature, Morgan fingered distillers: “whatever they want, they get.”  Wholesalers are second, because they “have the biggest purse and contribute the most.”  Meanwhile, retailers “forgotten.”  That ain’t all. Morgan claimed wholesalers “continuously keep retailers battling each other” and “beer companies do it best.”  How?  They come in and tell retailers they’re charging $19.25 for a case of Bud Light and expect retailer to price it at $19.99.  If retailer charges $20.99, “they go to closest competitor and hang banners” for the lower price and “force your price down.”  And that “drives mistrust” between retailers, he sez.  

On same panel, MD legislator Charles Barkley – head of alc bev subcommittee ‒ said retailers have influence in MD legislature.  But like several other MD pols, including Gov and Comptroller, he blasted compromise bill passed this yr.  That bill raised cap for craft brewer on-site sales and allowed Diageo pilot brewery project to go forward.  But it placed some new restrictions that stymie new players and requires brewers to buy their own beer back from distribs if they go over retail cap.  “Many of us think it’s a stupid idea,” Barkley said, but Speaker in Senate, he said, “took over the bill.”