For 2d time in less than a yr, Pabst undergoing major mgt/employee changes.  Last Sep, Pabst let go dozens of people, mostly in mktg and sales, amidst a big restructuring as sales went sharply into reverse.  Now several in its core sr mgt suddenly out and perhaps for same reason. Sales continue down sharply, tho some local Legends doing very well and PBR depletions up 1% in 1st qtr (see Express, vol 19 issue 73).  

These changes involve around 10 people, sez source.  Chief sales officer (field) Bruce Muenter, chief growth officer Rich Pascucci and region veep Tim McGettigan  have left.  Rich and Bruce were often the face of the co to distribs/media.  Also gone: cfo Cordell Sweeney, tho that’s separate from this restructuring.  He reportedly left for “personal reasons,” i.e. another job closer to his home.  But Pabst still needs new cfo too.  Meanwhile, Pabst chief strategy officer Chris Barrow stepped down from his role and is discussing future options.  These are many of key execs on team that new owner Eugene Kashper inherited and/or hired.  Another region veep, Kevin Ellsborne, takes different role as Fla sales director.

New ceo Simon Thorpe, who joined Pabst in Dec, is remaking company.  Pabst simplifying structure of its sales force from 8 regions down to 5.  In a change, director of operations and cmo Dan McHugh will now report directly to Simon.  Meanwhile, chief oper officer Brian Bousley will continue to have purview over sales and HR; now he gets IT and biz insight too.  Brian Smith, who previously headed up natl accounts, will become chief sales officer of both chains and field sales.  The position of chief growth officer will not be replaced.  These changes are all aimed at speeding up company decision making for “better accountability and focus,” according to source.   Recall, Pabst jumped employees from 250 to 440 in 18 months after Eugene bought co.  Then came big layoffs last Sep. And Pabst had a lot of sr mgt, even when its sales were growing rapidly.

They’re not growing now.  Recall, Pabst STRs down 6% in Q1, execs told INSIGHTS last week.  Pabst volume down 8.5% in Nielsen all outlet thru Apr 8.  But Pabst revs still down 16% yr-to-date in Nielsen as Not Your Father’s franchise still sinking fast.  Down over 60% YTD.  Chairman Eugene Kashper used to say “We’re swinging for the fences,” not trying to hit singles, but wanted “home runs.”  But what happens when you miss? Sales are down, much of sr mgt out, debt levels are high.  Morale can’t be great.  Plus Pabst picked a fight by terminating 3 of its longtime distribs in Northwest, which created broader mistrust in network.  Pabst sees “big bright spots,” as INSIGHTS reported, but Pabst’s star burned brightly in 2015; ain’t shining for now.

Tho Pennsy Gov Wolf wants state to swallow reforms already passed to loosen regs on where/how beer, wine and spirits sold in state before moving forward, Repub House members pushin’ for more.  Latest is a “wholesale divestment proposal” passed by House yesterday and sent to Senate.  Bill would allow: 1) more grocery stores to sell wine (dropping requirement for in-house café seating); 2) retailers to buy wine from private brokers, not just the state; 3) restaurant/hotel licensees to sell 3 bottles of liquor for off-premise consumption; 4) privately owned liquor stores.  Bill also divests state liquor control board of its wholesale wine and spirits biz, opening door to private distribs.  Supporters, like one Repub Rep told AP, say “every day that passes that we’re not able to continue to update our antiquated liquor systems is another day of missed opportunities.”  Detractors, like a Dem Rep, point to prospect that new system won’t provide same rev to state as old system and potential of 5K lost state jobs and say: “If ever there was a template on how to crash a business and hurt taxpayers, this is it.”  Welcome to the world of liquor law reform.

After MillerCoors filed suit seeking $100 mil+ from HCL Technologies (see Mar 22 Express) over what MC said was severely flawed integration software, they agreed to “pursue alternative dispute resolution,” according to fed ct filing.  Mediation scheduled for May 31.  So any answer to charges from HCL postponed.    

Total advertising spend on all alcoholic beverages jumped $193 mil, 10% to $2.145 bil last yr, according to Kantar Media data reported yesterday by Citi’s Wendy Nicholson.   Beer got over 76% of alc bev advertising $$ and represented all of increase.  Beer advertising spend jumped same $193 mil, 13% to $1.649 bil.  So top brewers and importers stepped up spending big time. That’s even as category sales remained flattish, including continued declines from top 2, AB and MC.

AB gain seems particularly outsized given results. Its ad spending jumped an astounding $120 mil, 20% to $714 mil, according to Kantar Media. That’s a 43 “share of voice” in beer ad $$, up from 40.8.  And yet its sales-to-retailers declined 2%, slightly steeper dropoff than the yr before.   Meanwhile, MC also increased ad $$, tho not anywhere near as sharply. Its ad spending up 6%, $27 mil to $479 mil.  And its STRs down 2.5%, same is in 2014-15.  Then too, MC light beer spending down 1%, reports Citi (and it gained share of premium lights), while it more than doubled other spending.  MC was 29 share of beer ad spend.  

Biggest % jump of course went to Constellation, which also got outsized growth.  STZ beer spend up $47 mil, 26% to $225 mil and almost 14% of beer ad $$.  It only spent $20 mil advertising its wine and spirits brands.  And that was down slightly.   Meanwhile, Heineken USA increased spending 6%, same rate as MillerCoors.  Up $9 mil to $161 mil.  Interestingly, Boston Beer decreased ad spend $10 mil, 16% to $50 mil.  And its sales softened lots.  So AB pumped up spending and did worse on Bud Light; MC spent slightly less on premium lights and gained share of segment.  And Constellation boosted ad spending big time and got improved results.  Does increased advertising work?  It depends.  

Continued weakness in Sam Adams brands, especially spring seasonals, and cider took tuff toll on Boston Beer volume and especially earnings in Q1.  Depletions down 14%, barely better than the -15% that Boston flagged thru Feb 11.  Shipments declined 15% for the qtr.  And Q2 only a bit better so far; depletions still ruinnin’ down 13% yr-to-date thru Apr 15, Boston reported.  Didn’t change full yr guidance tho; still expects volume trend between -7% and +1% for calendar 2017.  Chairman Jim Koch and ceo Martin Roper attributed decline to soft Sam Adams trends and Angry Orchard, “only partially offset by increases in our Twisted Tea and Truly Spiked and Sparkling brands.”  Spring seasonals accounted for most of decline.  “Weakness…seems to have resulted from a combination of drinker confusion at retail, acceptability of these seasonal beer styles and the timing of our seasonal transitions compared to last year,” Martin said.  While volume and revs took 14-15% hits, costs not down as much.  So gross and operating income whacked.  Operating income tumbled $7.2 mil, 64% to $4 mil. Operating margin slimmed from 6% to 2.5%.  Lookin’ forward, Martin cited “several investments” in Q2, increased media for Angry Orchard, Sam Summer Ale media and “significant media investment” for Spiked and Sparkling. And a possibly ominous note; also coming in Q2 is “tactical pricing in key markets to address competitor initiatives and secure key holiday activation.”        

Tho Pennsy Gov Wolf wants state to swallow reforms already passed to loosen regs on where/how beer, wine and spirits sold in state before moving forward, Repub House members pushin’ for more.  Latest is a “wholesale divestment proposal” passed by House yesterday and sent to Senate.  Bill would allow: 1) more grocery stores to sell wine (dropping requirement for in-house café seating); 2) retailers to buy wine from private brokers, not just the state; 3) restaurant/hotel licensees to sell 3 bottles of liquor for off-premise consumption; 4) privately owned liquor stores.  Bill also divests state liquor control board of its wholesale wine and spirits biz, opening door to private distribs.  Supporters, like one Repub Rep told AP, say “every day that passes that we’re not able to continue to update our antiquated liquor systems is another day of missed opportunities.”  Detractors, like a Dem Rep, point to prospect that new system won’t provide same rev to state as old system and potential of 5K lost state jobs and say: “If ever there was a template on how to crash a business and hurt taxpayers, this is it.”  Welcome to the world of liquor law reform.

After MillerCoors filed suit seeking $100 mil+ from HCL Technologies (see Mar 22 Express) over what MC said was severely flawed integration software, they agreed to “pursue alternative dispute resolution,” according to fed ct filing.  Mediation scheduled for May 31.  So any answer to charges from HCL postponed.    

Total advertising spend on all alcoholic beverages jumped $193 mil, 10% to $2.145 bil last yr, according to Kantar Media data reported yesterday by Citi’s Wendy Nicholson.   Beer got over 76% of alc bev advertising $$ and represented all of increase.  Beer advertising spend jumped same $193 mil, 13% to $1.649 bil.  So top brewers and importers stepped up spending big time. That’s even as category sales remained flattish, including continued declines from top 2, AB and MC.

AB gain seems particularly outsized given results. Its ad spending jumped an astounding $120 mil, 20% to $714 mil, according to Kantar Media. That’s a 43 “share of voice” in beer ad $$, up from 40.8.  And yet its sales-to-retailers declined 2%, slightly steeper dropoff than the yr before.   Meanwhile, MC also increased ad $$, tho not anywhere near as sharply. Its ad spending up 6%, $27 mil to $479 mil.  And its STRs down 2.5%, same is in 2014-15.  Then too, MC light beer spending down 1%, reports Citi (and it gained share of premium lights), while it more than doubled other spending.  MC was 29 share of beer ad spend.  

Biggest % jump of course went to Constellation, which also got outsized growth.  STZ beer spend up $47 mil, 26% to $225 mil and almost 14% of beer ad $$.  It only spent $20 mil advertising its wine and spirits brands.  And that was down slightly.   Meanwhile, Heineken USA increased spending 6%, same rate as MillerCoors.  Up $9 mil to $161 mil.  Interestingly, Boston Beer decreased ad spend $10 mil, 16% to $50 mil.  And its sales softened lots.  So AB pumped up spending and did worse on Bud Light; MC spent slightly less on premium lights and gained share of segment.  And Constellation boosted ad spending big time and got improved results.  Does increased advertising work?  It depends.  

Continued weakness in Sam Adams brands, especially spring seasonals, and cider took tuff toll on Boston Beer volume and especially earnings in Q1.  Depletions down 14%, barely better than the -15% that Boston flagged thru Feb 11.  Shipments declined 15% for the qtr.  And Q2 only a bit better so far; depletions still ruinnin’ down 13% yr-to-date thru Apr 15, Boston reported.  Didn’t change full yr guidance tho; still expects volume trend between -7% and +1% for calendar 2017.  Chairman Jim Koch and ceo Martin Roper attributed decline to soft Sam Adams trends and Angry Orchard, “only partially offset by increases in our Twisted Tea and Truly Spiked and Sparkling brands.”  Spring seasonals accounted for most of decline.  “Weakness…seems to have resulted from a combination of drinker confusion at retail, acceptability of these seasonal beer styles and the timing of our seasonal transitions compared to last year,” Martin said.  While volume and revs took 14-15% hits, costs not down as much.  So gross and operating income whacked.  Operating income tumbled $7.2 mil, 64% to $4 mil. Operating margin slimmed from 6% to 2.5%.  Lookin’ forward, Martin cited “several investments” in Q2, increased media for Angry Orchard, Sam Summer Ale media and “significant media investment” for Spiked and Sparkling. And a possibly ominous note; also coming in Q2 is “tactical pricing in key markets to address competitor initiatives and secure key holiday activation.”    

Finally!  Beer got back into positive territory for 4 weeks thru 4/15 in Nielsen all-outlet for the first time since Jan 28.  Still down 0.5% yr-to-date.  But it’s good to see some rays of sunshine slipping thru cracks at last.  Mich Ultra especially on fire in latest period, with $$ sales up 27.5% for 4 weeks, up 0.9 share.  Ultra up 25% and gained 0.8 share YTD.  Total imports up 6.1-6.2% for 4 weeks and yr-to-date, led by Constellation.  STZ still up 12.6% YTD (slightly less for 4 weeks) and gaining 1.2 share of $$ for 4 weeks and YTD.   But craft still slowing.  Volume dipped into negative territory in recent 4-week periods, but slightly better in latest period;  down just 0.1% for 4 weeks thru 4/15.  Up 0.3% YTD.  Meanwhile, $$ sales up 1.9% for 4 weeks.  Craft didn’t gain share of $$ for 4 weeks; up 0.2 YTD.  Yet Yuengling took off last 4 weeks with Indiana intro and other factors having outsized effect; $$ sales up 11.5% for 4 weeks and 8.2% YTD.  Gained 0.1 share and became one of top 10 growth brands in period. Another top co showing notable improvements in recent periods: Diageo Beer Co USA.  $$ sales up 8% for 4 weeks and gained  0.1 share; up 3.5% YTD.  Mike’s Hard $$ sales up 15% and it gained 0.2 share YTD.