ABI could be selling a piece of itself in US, buying a big biz in Asia, and considering all kinds of possibilities, according to several recent reports, all while supposedly hamstrung by near $100 bil in debt (before sale of Australian biz).  First, ABI hired Deutsche Bank “to explore a sale of a minority stake or a joint venture” for ABI’s North American “bottling and canning activities,” reported Reuters last week.  That could be worth $5-6 bil, but ABI “not aiming for an outright sale,” added Reuters. In response to Reuters and other reports, AB spokesperson said: “We regularly conduct business reviews as part of our normal operating procedures. Any speculation regarding the potential outcome of a standard operations review is not something we would respond to.”

Thai Bev IPO for Beer or ABI Deal?  On the other side of the world, Thai Bev “confirmed it is considering an IPO for $10 billion, which has implications for global beer,” as Jeffries analyst Edward Mundy put it, following weekend reports.  Bud APAC is “well positioned to buy the business” but “asking price is high,” Edward noted.  Some think Thai Bev is trying to “maneuver” ABI into buying Thai Bev.  Indeed, there is “limited commercial rationale” for Asian IPO, Bernstein’s Euan McLeish told just-drinks.  Thai Bev “could be maneuvering for a sale of its Vietnamese brewing assets to AB InBev’s Asia Pacific unit.”  Thai Bev is “most likely target for ABI,” agreed Consumer Edge’s Brett Cooper, as “leading player in Vietnam and the number 2 player in Thailand.”  Brett believes that continues to believe proceeds from various deals “aren’t targeted for deleveraging but for acquisitions,” he reiterated this morn.

Would ABI Consider Partial IPO in US?  If ABI does sell piece of its packaging unit for $5-6 bil, plus Australian biz for $11 bil and piece of its Asian biz to fund IPO (about $6 bil), then AB would have sold off over $20 bil in assets and still have $80+ bil in debt.  What else might ABI have up its sleeve?  “We believe that ABI might be interested in a partial IPO of its US operations to de-emphasize the importance of that business within the corporate total,” wrote Consumer Edge’s Brett Cooper.  “However,” continued Brett, “the depressed value of the nearest comp, Molson Coors, likely makes a partial IPO at this point less attractive.” ABI “clearly reviewing all assets,” notes Brett. And ABI might think of partial IPO in US as ABI “has extracted significant value out of the US market and is now faced with limited growth potential.”  That’s certainly contrary to AB’s “lead future growth” mantra here with wholesalers and in public forums, but indeed AB revs flat and earnings down from peak after ABI bought it.    

Lotsa selling day differentials across control states in Oct.  But “after equivalizing for selling day variations” vs Oct ’18, spirits volume eked out just a 0.2% gain for the month, with $$ sales +2.4%.  That’s off trend for the year, but for 12 mos volume still +3.6% and $$ +6.3%.  Lotsa talk about seltzers bringing consumers back to the beer aisle.  But they don’t seem to be drifting from liquor, or vodka-soda specifically, at least not in control states.  Vodka volume +3.2% for 12 mos.  And pre-mixed RTD cocktails kickin’ along at +10.1% for 12 mos.

We hope that everyone enjoys a fantastic Thanksgiving Day and extended holiday weekend! We’ll be back on Monday. 

“Seltzers look more like light beers” than other industry “flashes we’ve seen” such as Ice/Dry/Hard Soda, you name it, opined a recent e-mail from astute longtime observer. Many have made same point, but this correspondent took comparison further, noting that first “Light beer was Lite, then Coors Light, Michelob Light, Natural Light, Budweiser Light and 30 other brands.”  (Probably more.) Eventually “Bud Light, Coors Light and Miller Lite emerged as the clear winners and everyone else was either playing the margin for scraps or dropping price.”  Subpremium lights did also eventually become a quite sizable biz, but he does have a point; they are playing price card. “Why didn’t the light beer wave help… Schlitz, Pabst, Hamm’s High Life, Heineken, Beck’s” and all the others that tried?  (Editor’s Note: Unstated, but Michelob Ultra came along with new wrinkle a generation later, in early 2000s.)   “Saying seltzer looks like light beer is true but does that also mean there will be a dominant brand with two runners up and everyone else will have a half a share point?” 

Interesting questions that breed other questions.  While no one can predict the future, if seltzer does evolve with 2 or 3 “clear winners” and everyone else either playing for “scraps” or on “price,” who else might emerge besides White Claw and Truly?  Do all the craft entries remain regional bit players?  If so, would there be a parallel to regional brewers in 80s? And will those 2 big brands so far, White Claw and Truly, be able to retain or enhance their segment leading positions?   

Another smaller distrib deal features several interesting components.  First, it will be yet one more Miller and Coors consolidation, this time in AB’s highest share state, MS.  This is the 15^th MillerCoors consolidation INSIGHTS has reported this yr, an above average number.  In this deal, Better Brands in West Point, MS (Miller, Yuengling, Constellation, HUSA, Boston, Diageo etc) will sell its approx. 1-mil-case operation, splitting brands between Clark (Coors) and Mitchell (AB).  Neither will buy warehouse; this is just a transfer of brand rights and inventory.  Clark will get Yuengling, Miller.  Mitchell has deal to buy other brands, tho unclear at presstime if all brands will ultimately end up there.  “I’m one of the last of the Mohicans,” Better Brands prexy Henry Pilkinton told INSIGHTS.  He came on as 2d generation in 1985 and stayed on for 35 yrs even tho he “never had 20 share or better.”  A good run.  Recall, Mitchell’s last purchase: it bought AB distrib Magruder in MS on match and redirect from AB, and then Yuengling went to MC distrib FEB (tho it’s with AB network elsewhere in state). But no one paid Magruder for Yuengling brands; that’s still subject of a lawsuit several yrs on.   Better Brands deal expected to close in early Jan, pending supplier approval. 

Molson Coors’ plan to close corporate offices in Denver and consolidate support functions will bring benefits to Miller hometown Milwaukee, in form of hundreds of jobs in tech, finance, human resources and more, report Milwaukee Biz Journal, Milwaukee Independent, others. At press conference yesterday, ceo Gavin Hattersley, Wisc Gov, Milwaukee Mayor and head of WI Economic Develop Corp (WEDC) shared plans.  New hires, set to be in place by early summer 2020, will work at currently underutilized corporate offices, so no new infrastructure needed.  City’s kickin’ in proposed $2 mil in tax incentives, “contingent on Molson Coors adding new jobs and keeping existing workers in the city.”  And WEDC “in the process of creating an enterprise zone and offering tax credits” too.  “There are a lot of high paying jobs coming to Milwaukee,” Gavin said. “I’m pleased to say Milwaukee will play a large part in our future, a future where we are innovating and leading our industry forward.”          

Language at Beer Insights Seminar this yr a bit saltier than in past.  Ex-top brewery sales execs Ed McBrien and Evan Athanas provided especially candid moments and vivid comments (also plenty of insights as featured extensively in latest Beer Marketer’s INSIGHTS).  Asked if Manhattan Beer Dist, where Ed is now coo, is still a distrib for Cutwater (a spirits-cocktail maker now partnered with AB) and if so, how it’s doing, Ed quipped: “We’re not and I don’t care.  F-’em.... It was a great brand while we had it.  Now it’s not.”  Asked what he’s learned since leaving brewery side, Evan, now ceo of Chesapeake Bev said: “When I was at AB, I really thought I knew a lot about wholesaling, and I had the branches under my purview, so I really thought I knew a lot about wholesaling.  And man, I got in there and I didn’t know s*!%.”

Comin’ in just behind Evan: AB cmo Marcel Marcondes and Boston Beer chairman Jim Koch.  After running thru AB’s positive numbers in various segments, he got to beyond beer: “Here is where we felt like s*!%.  We could have had an amazing year; we could be here saying ‘look at what Anheuser Busch is doing!’  But thanks to our friends here at Mark Anthony, this is not happening.  Because this is where we had a big issue this year,” i.e. mostly missing seltzer wave. Jim Koch did a double.  Expressing some frustration about whether Boston is truly a craft brewer, he said Boston Beer has “got s*!% from everyone” about that over the years, which he views as an “annoying, ignorant kind of buzz.”  Is Boston too big to be craft?  Still dwarfed by AB/MC, he said, adding: “Sorry we’re successful, but tough s*!%.”

Volume trend in Nielsen all-outlet scans continues to soften from strong Sep-Oct numbers, but remains up.  Volume +1.3% for 4 wks thru Nov 16, $$ +3.5%. Volume hanging in at +0.7% yr-to-date, $$ +3.6%.  Above premium, driven by seltzers, continues to gobble share.  Notable change in most recent period was slowing of Miller Lite and Coors Light.  Miller Lite, which had been in the black for mos, dipped 0.5% for 4 wks thru mid-Nov.  And Coors Light, which had reduced decline rate to just -0.9% in Sep, back to -3% in most recent period.  All in, MC -3.3% for 4 wks, a bit steeper than YTD dropoff of -3.1%.  AB down 1.8% for 4 wks, still a bit better than -2% YTD decline.  Bud Light down 6.8% for 4 wks, 7.4% YTD.  Gainers continue to roll: Mike’s +110%, Boston +25%, Diageo +14%, Constellation +9% for 4 wks.  HUSA softened a point, -5.4%.  Pabst still -10%.  Neither Michelob Ultra nor Modelo Especial losing momentum; each within a point of YTD trend for 4 wks.  Mainstream woes continue. No top-10 premium up YTD.  Just one top economy brand up: Busch Light. 

In intriguing and thought-provoking speech at Beer Insights Seminar, AB cmo Marcel Marcondes included many compliments for competitors, especially Mike’s, and also shared candid assessments of where AB fell short. These were unusual for exec from any co, but especially for an AB exec.   To help explain current situation, Marcel showed chart with AB’s “portfolio rebalance” into 5 segments as AB now sees them.  Chart included % of biz they each represent, share AB has in each, whether segment is up or down and whether AB growing or losing share within segment. “Our whole plan is anchored on the new segmentation,” Marcel said.  And he added: “It’s tough to wake up losing share every day.”  Why losing?  Because AB has its highest share in biggest segments that are declining and which “will continue to decline.” What AB calls mainstream (combo of “core” and “value”) is fully 62% of biz (in IRI) and declining. AB has 58 share here. Its objective is to “stabilize” share here and “we are flat,” he added.  But consumers are moving away from these segments.  “In a nutshell, consumers are trading up or out.”  What “we really need to do is win from those consumers who are trading up or out…. We need to connect to where the growth is” because “this is where we are below our fair share.” That’s why “we now play a portfolio game. We are not the Bud and Bud Light company. We are Anheuser Busch and we need to win by having a portfolio of winning brands.”  

In most other AB-defined segments besides “mainstream,” AB gaining ground.  For example, in “core plus,” which is basically Michelob Ultra, AB has 95 share of segment that is 8% of biz.  Core plus is still growing and AB still gaining share within core plus.  AB’s new definition of Premium is basically the 150 price index, i.e. Corona.  And Constellation presently “dominating” segment.   In all, that’s 15% of biz, still growing.  AB only has 4 share here, but it’s growing rapidly, led by Michelob Ultra Pure Gold.  In an even higher price tier, the new “super premium,” AB leads with Stella, which is growing again, sez Marcel. AB seeks to get it back to double digit growth, he added.  Also here, AB is growing 20%+ with its craft brands.  AB’s new “super premium” segment is 6% of biz and AB has 20 share in segment.  Marcel looked at these first 4 segments and said with seeming approval: “We are on track on the first four missions.”

But then he turned to “Beyond Beer,” again acknowledging “this is where we have a big issue this year,” having mostly missed out on seltzers.  (See below for some saltier language on this from Marcel). “The big gap is here in Beyond Beer,” Marcel again emphasized.   Beyond Beer as AB defines it, is 9% of total, but growing like mad.  AB has 14 share of segment, but that’s declining.  “Seltzers are addressing consumer needs” and it’s “amazing” what’s going on.  “This is the growth of the industry,” so AB “will embrace it.  This is why we are going to play as a portfolio…. We can catch up. We weren’t the first ones to invent light beer either.  We’re going to catch up here, by addressing different consumers in different ways.”  

AB sez Bud Light Seltzer will not get 100% of Bud Light family ad spend early in 2020; it will advertise Bud Light then, contrary to what Southeastern Grocers wrote.  Recall, SEG wrote “100% of Bud Light Family paid media support will go to Bud Light Seltzer Jan-Apr.”  Then too, Bud Light Seltzer will not get majority of Bud Light spend either.  Tho it will get heavy spend indeed, over $55 mil in 2020.

Three yrs after Constellation replaced AB as “preeminent sponsor” at Brooklyn, NY’s Barclays Center for the Nets (see Vol 18, #201), AB is back in Barclays with “wide-ranging, multi-year” sponsorship, reported SportsBusiness and Sports Pro Media among others.  AB will get branded bars and “newly designed Suite Level lounge” inside the arena.  AB and the Nets will also collaborate on digital and social content and community initiatives focused on “military and sustainability efforts.”  AB becomes “official domestic beer sponsor” of NetsGC, the NBA 2K League e-sports affiliate of the Brooklyn Nets. So AB will get “widespread branding during games” where the Nets wear new “City Edition uniforms,” and “a special Budweiser logo” that “will appear on signage around Barclay’s Center during City Edition games this season, “pay[ing] homage to…Brooklyn-born rapper” Biggie Smalls.  Recall, Constellation became top tier sponsor at Barclays in Nov 2016 including multiple branded bars inside the arena and added brand support, marking its “first major arena sponsorship in North America,” Sports Biz Journal then wrote. And Constellation continues to lean heavily on NBA for advertising. But AB remains official beer sponsor of NBA, leveraging sponsorship in new ways with Budweiser brand in particular.

Bud Light “Crispmas” Ad; Mich Ultra & Stella Holiday Campaigns AB is gearing up for upcoming holidays with new marketing campaigns for several of its top brands. Tho Dilly Dilly’s a thing of the past, Bud Light keeps stickin’ to medieval realm for new ads, as the king invents a new holiday called “Crispmas,” to “celebrate the crisp taste of Bud Light” in latest spot. Then too, Mich Ultra became official beer sponsor of “Turkey Trotters,” sponsoring local races across the country, partnering with SNL comedian Beck Bennett and “encouraging consumers to share how they #WillTrotForBeer” on social media. And Stella Artois released a docufilm as part of its “Moments Worth Making” campaign, looking to bring “neighborhoods together, one Stella at a time.”