Every coupla yrs Beer Inst and NBWA put out Beer Serves America, an economic study that totes up the industry’s impact.  The numbers are impressive, natch, and provide both the industry’s scope (across tiers, across states, across revenue streams and business sizes) and create a “context for the policy piece to help people understand this industry,” as Beer Inst prexy Jim McGreevy told INSIGHTS.  And a hard number, like 134K directly employed in beer distribution alone, up 24% over the last decade, “gives the industry a different kind of heft,” as NBWA’s Craig Purser said.  Brewers provide more direct jobs than coal industry now, Craig noted.  Then too, brewer and beer distrib jobs tend to be high quality, living wages with solid benefits to boot, so biz has both a quantity and quality story to tell, Craig sez.  And that’s on top of beer’s great “social story,” as a bev that brings people together for good times, as Jim suggested.  Beer’s impact touches almost every community in US, whether it’s rural farmers, brewery/distrib locations, retail outlets or port cities where beer comes in, this report reminds. Another aspect of scope: beer biz has low barriers of entry, NBWA economist Lester Jones points out.  You have everything from tiny breweries starting up for modest equipment outlays, to distribs with a permit and a coupla trucks, all the way up to mega-brewers investing billions in cap ex, as we saw last week with AB InBev announcement.        

Topline: report prepared by John Dunham and Associates based on industry and govt data shows US beer biz, including suppliers, farmers, brewers, importers, distribs, retailers, etc, generate over 2.23 mil jobs, paying over $100 mil in wages/benefits and contributing over $350 bil in total economic activity, near 2% of total GDP.  That includes over $63 bil in total taxes.  Brewers and importers directly employ 64,745 Americans, about 58% of them by large/mid-sized companies.  Brewing employment, according to the study, “is growing at nine times the rate of total US employment,” thanks to 6K plus companies that produce or import malt bevs.  In addition to those 134K workers in beer distribution, there are over 900K retail jobs.  Jobs among brewers, suppliers and wholesalers up in recent yrs as new brewers/brands have gotten established and new mkts opened, noted Craig.

Heineken USA has new partnership with CBS’ THE LATE LATE SHOW with James Corden, including “an exclusive sponsorship of the show’s famous on-set bar, Heineken signage, bottle displays, barware and more [that] will be featured on-air regularly,” co announced. Partnership kicked off last night with Benicio Del Toro as guest, airing a parody of current Heineken ad.  Indeed, “we’re always looking for unique ways…to introduce new audiences to the world of Heineken,” director of sponsorships and events Pattie Falch stated via release. You can expect more “on-air and digital integrations” too. James Corden has over 10 mil YouTube subscribers, “the top three most-watched late night videos on YouTube, and has delivered the highest ratings, with any host, since the show’s inception in 1995.” And over 95% of viewers are 21+, allowing Heineken “to connect with potential beer drinkers and millennials in a fresh and creative way.”

Here they come.  Deepening craft commitment to fast-growing 15-pack package,  demonstrated by AB announcement this week that Goose Island would intro 15 packs for IPA and 312 in early Aug.  Since Goose IPA is #3 IPA and #10 craft brand overall, with AB muscle behind it, this further clinches that craft brewers will be offering more value packs down the road.  Goose prexy Ken Stout told our Beer INSIGHTS Spring Conference that consumer has spoken; they want this package.  Meanwhile, Founders All Day IPA 15-pack continues to grow explosively.  The brand is up 53% by volume and 46% by $$ in IRI multi-outlet + convenience yr-to-date thru Apr 16.  But its avg price down $1.51, 5% per case yr-to-date (6% for 4 weeks) to $28.83 per case. That’s over $4 per case lower than other big established craft brands.  Then too,  New  Belgium’s Dayblazer is top selling new item in craft.  Even Boston Beer will intro Sam Adams Light 15-packs regionally in New England.  More comin’ to be sure.

Best Damn Sweet Tea will launch at end of Jun in 25 oz can, supported by “TV, OOH [Out of Home], Digital Social and Sampling.” AB asks that it be line priced with Twisted Tea.   Best Damn family could use a little help. Best Damn Root Beer $$ down 68% in IRI MULC YTD thru Apr 16.  And Best Damn Cherry Cola down 54%.  Modest intro of Best Damn Cream earlier this yr scarcely put a dent in dropoff.

“Let the Wars Begin,” said email from distrib showing picture of $9.99 suitcases of Keystone Light in Valero ad in OH.  Average case price of Keystone Light down 68 cents, 4.5% for 4 weeks thru May 6 in Nielsen all-outlet.  Volume trend improved to up 3.9% for 4 wks compared to flat yr-to-date. But all in, MC not makin’ much headway in its subpremium strategy.  Down 0.5 share of segment yr-to-date, while AB up 0.5, according to Nielsen.  MC lost 0.7 share of subpremiums last 4 weeks.

MillerCoors chief mktg officer David Kroll returned to work this week after several mo hiatus, following open heart surgery.  He is ready and rarin’ to go, just in time for peak selling season.

Molson Coors top mgt, including ceo Mark Hunter and cfo Tracey Joubert, met with investors in Montreal for a half day yesterday and “overarching message” was that “cost savings and integration remain on plan,” wrote Evercore ISI’s Robert Ottenstein.  Molson Coors is “confident in plans for balance of year.” First qtr results hit by “tough volume and COGS comps in the U.S. and Canada and U.S. distributor inventory reduction following soft end to 2016,” noted Robert.  Mgt “acknowledged firm could have done a better job highlighting this to investors,” Robert said, and “will do a better job simplifying/sharpening its messaging and increasing transparency.”  Molson Coors “broke ground” on its new British Columbia brewery, which could “potentially serve U.S. market,” TAP not “making decision until further clarity on import tax situation.”  Molson Coors also “committed to close addressable gaps with ABI in North America,” Robert wrote.  

Mark Hunter “is taking personal responsibility for driving improved top line growth” but also “reiterated his belief that they are not underinvesting in the brands, just need smarter investment,” according to Robert. “This is not about significant incremental investment,” he added. Volume targets of flat in 18, up in 19 “are about changing the business’s mindset ‒ to plan for driving growth, as opposed to planning for further declines.”  Recall, MC shipments down 4% in Q1, STRs down 2%. Apr not a great mo for MC, INSIGHTS hears.  And MC volume down 2.1%  yr-to-date thru May 6 in Nielsen all-outlet.  So far this yr, MC not making much progress towards getting back to even.

Beer’s ongoing struggles in measured on-premise channel featured during Nielsen presentation at Beer INSIGHTS Spring Conference.  Total beer volume remains down 1.9% for 52 weeks thru Feb 22, said Nielsen CGA sr veep Scott Elliot, while $$ down 0.1%.  Compare to spirits and wine volume up 1.4% and 1.2% respectively, with $$ up 3% and 2%.  Some of beer losses likely to taprooms and other unmeasured accounts.  But beer’s high end at 58 share of on-premise $$ and still up 3.4%, sr vp Danny Brager showed. It’s mainstream and low end beers that are especially taking it on chin;  $$ down 6% for 52 weeks, Danny showed.  Even with migration to taprooms, craft  at 29 share of volume, and up 0.8% (volume), while imports at 18 share of volume and still up 4%.  But big established craft struggling. Top 10 craft brands collectively down 3.4%, while all other craft brands up 2.5%. Compare to imports, where top 10 brands outperforming, up 4.6%.  Rest of imports up 2.9%.  This struggle for mainstream big beer brands as well as most established craft signaled by one astonishing stat: 75% of drinkers on-premise and 72% off-premise “don’t know what beer brand they’ll buy before entering” establishment.   Scott sez that’s big oppy for marketers to step up.  We’ll see.   

Ouch. Even as hard soda sales fizzled out in US during back half of 2016, C&C Group declines steepened in US.  Net revs declined 33.4% to $25.6 mil and volume dropped 33.6% to about 150K bbls in North America for C&C’s full fiscal yr thru Feb 2017, co reported.  Tho operating profit was “broadly flat” since “Pabst sharing in the downsides from reduced activity.” Sales declined each year since co’s $305 mil acquisition of VT Cider Co closed in Feb 2013, now just a shell of its former self.  Indeed, co cites transition into Pabst distribution system and overall cider category softness as primary reasons for accelerated declines. “Near term volatility in the category pushes out the prospects of Pabst being able to deliver a meaningful recovery in the short to medium term,” per release. So C&C “prudently decided to review the carrying values of our US business” and ultimately took hefty impairment charge of ~$143.7 mil on “tangible and intangible assets in the US,” bringing intrinsic value of VT biz down to just $50 mil.

Yet management maintains long term optimism for cider in US, with “no loss of belief or enthusiasm.” Cider category was down 17.6% in North America over calendar year 2016 and “more recent data suggests the negative run-rate has moderated to 10-11% and cider is maintaining its share of the overall beer category at 1.3%.” And “it is not unreasonable to believe that once the category is through these short term cyclical challenges, it will resume its long-term growth trend,” in its view. “Past experiences in both the UK and the US suggests that the ‘sweet’ fads will run their course and the attributes that draw consumers to cider – natural, authentic, fruit based, craft – will ensure a return to positive territory.”

All of Yuengling’s crossclaims vs AB in Mississippi for violating consent decree with DOJ, tortious interference, attempt to monopolize, group boycott, conspiracy and more (see Apr 17 Express) should be tossed out of Miss ct, AB argues in latest salvo.  To extent Yuengling alleges violation of consent decree with DOJ on ABI-SAB deal, “exclusive jurisdiction” over that decree is with US Dist Ct in DC (where Yuengling filed simultaneous request to oppose the settlement, recall).  So nuthin’ for Miss ct to even review there, AB insists.  Besides, fact that DOJ monitor has so far ignored Yuengling’s complaints “serves only to demonstrate that its complaints are groundless.”  So, “Yuengling’s attempt to air its complaints in this Court is completely improper and Yuengling’s crossclaims should be summarily dismissed for this reason alone.”  

As far as charges that AB violated Miss franchise law, AB points out that law doesn’t allow brewers to sue other brewers. “Plain language” of law “authorizes only civil actions between wholesalers and their suppliers.”  Two other technical legal issues doom other Yuengling claims, in AB’s view.  First, “group boycotts” statute bars 2 or more co-conspirators from encouraging 3d party to stop doing biz with sellers.  So any alleged agreement between AB and Mitchell to reject Yuengling doesn’t apply.  Then too, no way AB could interfere with Yuengling’s relationships with retailers (another crossclaim) since Yuengling can’t contract with retailers and “cannot even sell its products to retailers.”   

Yuengling “Better Off” without Mitchell? No Disruption to Yuengling’s Biz  Beyond this, AB argues further that Yuengling’s antitrust claims “are a study in contradictions.”  Like what?  Like Yuengling arguing on one hand it was harmed by Mitchell refusing to take on brands in Dec 2015, but then refusing to consent to Mitchell taking on brands 10 mos later.  To extent Yuengling nixed Mitchell later due to concerns about Mitchell’s ability to promote and distribute its brands, “Mitchell’s decision only helped make Yuengling a stronger competitor” and “Yuengling was better off as a result of Mitchell’s decision not to sell Yuengling products” in the first place.  Speaking of competition, no harm to that in Miss, AB argues, since: 1) Yuengling available throughout the state; 2) “all but one of the AB wholesalers” took on the brands despite the alleged “pressure” brought to bear by AB on them (which AB denies); and 3) Yuengling contracted with FEB the day after it terminated Rex (so it had to be doing due diligence with FEB all along, AB suggests).  “There is no allegation that retailers ran out of beer or that service was otherwise compromised during the weekend between Yuengling’s termination of Rex and its appointment of FEB.”  So, no “disruption” or “delay” to Yuengling’s biz in Miss, according to AB.  

Another contradiction: “Yuengling complains about AB’s ‘significant market share’ in Mississippi, but then admits that it perceived a ‘strategic advantage’ to utilizing AB wholesalers to sell its products” there, “precisely because of AB’s market share.” Fact that Yuengling successfully entered Miss and is sold throughout state, again mostly by AB distribs, also “makes clear that AB has no ‘dangerous possibility of success in monopolizing’ the market for beer in Mississippi.” That knocks out another crossclaim, in AB’s view.

AB reminds that it simply exercised its contractual right to match and redirect the deal.  Also points out that if Yuengling had “worked with Rex to sell the Yuengling rights to FEB rather than terminate its agreement with Rex, Rex would have received the $3.1 million from FEB and Yuengling would have had the distributor of its choice.”  Only because Yuengling terminated Rex did Rex not get its $3.1 mil, AB repeats, echoing its original response that Yuengling is the “culprit” in this situation.           

Trading up to high end is particularly dramatic, and constitutes a sea change, in SF/Oakland, as we discussed at INSIGHTS Spring Conference.  Constellation became #1 in SF/Oakland IRI MULC. Its $$ sales up 7.8% YTD and it gained 2 share to 25 share of the biz.  Tradeup still happenin’ at rapid rate in this big metro area.  Collectively, above premium segments near 72 share in SF/Oakland IRI multi-outlet + convenience data yr-to-date thru April 29 and up over 1.5 share points.  Total beer $$ down 1% (volume down 3.6%), but imports up 1.4% and craft up 3.4%.  Imports gained 0.9 share to 37.6 and craft gained 1.2 share to 27.1.  Superpremiums, FMBs and cider constituted another 7 share.  

Total AB $$ sales down 7.2% (volume down 9%) and it lost 1.44 share to 22.2.  Meanwhile, MC $$ sales off 5.4% and lost 0.7 share to 16.1.  So imports alone are about as big as AB and MC combined.  HUSA is #4 player, but its Bay Area biz down double digits; $$ sales off 14% and it lost 0.9 share to 6.4.  That’s  not much bigger than its fellow Heineken subsidiary, Lagunitas.  Lagunitas $$ sales up 9% and it gained 0.5 share to 5.7.  So global Heineken a 12 share in Bay Area, only a few share behind MC.  Meanwhile, Sierra Nevada holding fairly steady in Bay Area, with $$ sales down 1% and share even at 4.4.  Diageo is #7 and $$ up 2.8. But each of suppliers #8-10, Boston Beer, Pabst and Craft Brew Alliance down at double digit pace, while #11 Firestone Walker up 43%.