Boston Beer “the standout winner” in most recent IRI data thru Jun 2, wrote Macquarie’s Caroline Levy, at least regarding cos she covers.  Why?  Total sales grew 22.5% in last 4 weeks and that’s an “acceleration” from 19.5% gain for 12 weeks, even as it lapped tuff 28% growth last yr.  Tho beer continues to decline and cider down 4 mos in a row (lapping Angry Orchard Rosé120 launch), Twisted Tea “remained robust” (up 17%) and Truly up 180%.  Twisted (1/3) and Truly (15%) nearly half of Boston biz.  Boston Beer all-channel volume should be up 15% in 2d qtr, estimated Consumer Edge’s Brett Cooper, looking at same IRI data and “lifting our 2Q volume forecast” from +12% to +15%. 

Cheyenne Bev bought Metz Bev in Gillette in May, announced Ippolito Christon, who worked with Cheyenne.  Both are MillerCoors distribs.  Cheyenne “almost doubling in size.”  Only 411K bbls sold in Wyoming last yr and MC sold 109K, or about 1.5 mil cases.  MC got 26.5 share (AB at 50).  Cheyenne also sells Constellation (5 share) and lotsa craft.  Cheyenne Bev is 4^th generation family biz (Lewis family) in biz since 1926.   

In case you thought MC and AB would simply each declare victory in corngate lawsuit − they did − settle and move on, they didn’t.  In fact, another fat pile of paper dropped in court recently, as AB responded to original complaint, MC filed request to have court enjoin Bud Light’s secondary packaging and AB fired back with arguments why that shouldn’t happen.  Meanwhile, each side preparing for trial.

Packaging “Highly Influential” in Purchase Decision, Sez MC; Court Should Enjoin  MC claims that since Bud Light packaging “asserts that Bud Light contains ‘No Corn Syrup’” along with phrase “Find out what’s in your beer,” that “falsely suggests that other beers like Miller Lite and Coors Light actually contain corn syrup,” when they don’t.  Packaging is “highly influential” in the consumer purchase decision, MC claims, since “consumers encounter it right before purchase.”  Net-net: “the Packaging is inherently comparative and there is no question what beers are the target of the comparison.”  Therefore, court should enjoin the packaging since, like the ads the court stopped, it “crosses the line to encourage a reasonable consumer to believe that corn syrup is actually contained in the final product,” quoting the judge’s May 24 opinion.  MC also asked court to halt packaging of Bud Light extensions (Orange, Lime, Lemon Tea) which also have “no corn syrup” phrase, plus any POS material that makes same assertion.

AB “Would Have to Scrap Tens of Millions” of $$ in Packaging,  AB Sez; Packaging One of “Least Important Factors” in Purchase AB fires back with “multiple reasons” why MC request should be rejected.  First, AB did survey to determine whether consumers confused and “it establishes that the packaging is not misleading.”  That MC claim is “based on pure speculation and conjecture,” sez AB.  Then too, while MC never argued it was harmed by packaging in original complaint, an injunction now would “cause immediate and irreparable harm to AB.”  Tho MC said it would agree to allow AB to sell current inventory, AB “would have to scrap tens of millions of dollars in unfilled packaging materials” and “likely need to halt its US brewery operations for Bud Light for several weeks.”  That would “cause a pervasive cascade of negative effects among wholesalers, retailers and the public.”  Besides, “no corn syrup” phrase is truthful and packaging “does not involve comparative advertising,” AB argues.  Finally, AB asserts secondary packaging one of “least important” factors in purchase decisions.  

While judge ponders a packaging pull, AB and MC prepared to launch discovery before end of June, limiting themselves to 15 depositions and 35 interrogatories per side.  Then too, while Constellation and its consumers gear up for Cinco de Mayo next year, AB and MC foresee 8-day trial to begin May 4.  See you in Madison!

Miller Lite is latest cpg brand to target videogamers with new marketing initiative, a limited edition “Cantroller” beer can that doubles as “a fully functioning [video game] controller equipped with USB charging, Bluetooth, haptic feedback,” reported Adweek. Coinciding with bigtime videogame conference, E3, MC developed 200 limited edition Miller Lite cantrollers that can be won by playing comedian Eric Andre in Street Fighter V at the conference starting today, Adweek detailed. Eric Andre also narrates the 15-second digital ad (see in above link). And MC will livestream footage of the contest on its newly formed Twitch (Amazon-owned streaming platform).

With potential deal putting Heineken and Molson Coors together in the air again, analysts continue to weigh in.  “We don’t think that Heineken is interested in using capital to gain increased access to the US,” opined Consumer Edge’s Brett Cooper.  But.  “We do…believe that they could find value in a deal that swaps/sells (or some other mechanism) by which they exit Heineken USA and potentially pick up international ownership distribution for Molson Coors’ brands in other markets.”  Brett sees Heineken focused more on investing in “growing markets” (a recent review of Heineken’s moves in Vietnam supports this), and “aren’t bothered by entering markets with limited scale and building their presence over time.”  At same time, Brett thinks US is neither a growth, scale, profit nor free cash flow mkt for Heineken.  Thus, “selling/striking a deal for Heineken USA to be sold/traded to Molson Coors would be entertained.”  Both sides could “extract” value (perhaps similar to deal Heineken struck with China Resources).  Then too, Brett sees “rationale” for Molson Coors to improve intl distribution of its brands via an expanded Heineken partnership. (They already work together in several mkts.)  “Weak performance at Molson Coors and debt paydown could make that deal sooner rather than later,” but Brett predicts no specific timeframe. 

At Jefferies, Kevin Grundy thinking along similar lines.  He wrote yesterday that US JV between Heineken and TAP is “unlikely given [Heineken’s] focus on a standalone turnaround” in its US biz following 2018 mgmt change.  But, also: while a full-blown merger “lacks strategic merit, in our view…a US JV would be a more sensible path to realize a portion of latent value (i.e. cost synergies).”  Asked if Heineken would consider different model in US, CFO Laurence Debroux said it’s “not in a rush and could afford the turnaround to take time,” Kevin notes.  Last yr’s HUSA mgt change “should lead to” more regional approach to its portfolio strategy, efforts to incent distribs, new mktg and innovation, points made by new prexy Maggie Timoney.  Then too, not a lotta cost synergies to be had with Molson Coors-Heineken tie up in US, nor big revenue synergies, despite a stronger resulting portfolio. Add to that: “a broader combination w/TAP would serve to slow [Heineken’s] top-line growth w/#2 position in shrinking markets (US, Canada), as well as likely antitrust issues in Europe.”  And yet, again, Kevin does not “altogether dismiss the possibility of a US JV” between the two.

No shortage of issues bein’ managed by Beer Inst these days.  Prexy Jim McGreevy, his staff and brewer/ supplier lobbyists workin’ to: 1) continue protracted aluminum tariff/Midwest Premium battles; 2) work with allies across alc bevs to make fed excise tax break permanent (or at least extend it); 3) gear up for next round of Dietary Guideline revisions; 4) publicize latest version of Beer Serves America  (beer’s vast economic contribution); 5) kickstart a pro-beer category health initiative, even while key BI members refuse or reluctant to pitch in (see yesterday’s Express).  And, oh yeah, there’s an election next year. 

Interestingly, BI passed on having political speakers at annual mtg in St Lou this yr.  And there’s wasn’t really that much talk about the beer biz.  Instead, BI agenda took very broad perspective, with discussions around issues as varied as macroeconomics, retail landscape, climate change, tariffs (natch), demographic challenges and repeatedly, cannabis.  Sometimes links to beer explicit, sometimes not so much.  And just like results of attendees’ attempts to pitch and hit at Busch Stadium at (great) Monday night social event, some of the pitches right down the middle and some of the hits were hard, others missed wildly. 

Watch Your Water, Climate Scientist Advises  Scientist Eric Snodgrass presented remarkable, provocative info about climate change, noting that just as retail biz can’t ignore Amazon, no biz can ignore climate change and impacts that will have.  No question Earth experiencing higher avg temps, more severe highs, lows (temps) and weather events.  This will impact growing seasons, crops, consumption patterns and especially water.  Water use should be key concern for brewers goin’ forward, Eric believes.  (ABI, MillerCoors and others already very focused on reducing water use in production and making progress.  Plus, ABI has significant clean water/ sustainability program.)  Another theme from Eric: be prepared to respond to climate change disruptions just like biz disruptions.

Hot Pizza and Cold Beer, A Winning Combo!  Marianne Radley, chief brand officer for Pizza Hut (background includes AB, Monster), wowed crowd with dynamic presentation about chain’s expansion of delivering beer with pizza. At end of 2018, delivery available in 4 states and 300 stores, and 200 added so far this yr.  But Marianne hopes to ramp that up to 60% of Pizza Hut’s 6500+ stores by end of 2020.  Project involves scrupulous attention to state laws and lotsa training of drivers to ensure delivery only to legal age consumers.  Neither of those slices is inexpensive, but they’re same points always expressed by Drizly folks.  Already in friendly company, Marianne got even warmer reception from comments that cold beer and hot pizza a “social, natural marriage” and while Pizza Hut may consider adding canned wine, no intentions for now of adding spirits (or cannabis) to delivery options.  On separate retail panel, Hudson Riehle of Natl Restaurant Assn delivered similar message that millennials demand delivery and beer’s gotta get after that.  (Already 63% of restaurant traffic is delivery, take out, drive-thru, etc.) Food and beer pairings too, plus all things tech, including AI (artificial intelligence) which can “suggest” sales and “direct” dollars. 

Ain’t Just Bev Suppliers in Tizzy Over Tariffs  Metal tariffs imposed by US and broader retaliatory tariffs imposed by trading partners hurting vast swath of Americans, pointed out Angela Marshall Hoffman, deputy director of Farmers for Free Trade.  That’s youngish grassroots org that’s trying to spread word about impacts on farmers, ranchers, brewers and more stung by tariffs.  Like BI, Angela stresses that tariffs are taxes, there are “better ways to negotiate” with partners and farmers need not only relief, but clarity, predictability to plan.  Three specific trade goals looking ahead: 1) get some deals done, i.e. US-Mexico-Canada deal to replace NAFTA; 2) get a deal with China, especially on protecting intellectual property; 3) get back to TTP (with other Asian trade partners). 

Missed Oppys  As noted, not everything on target.  Separate tariff talk with journalist Andrea Hotter somehow managed to make already-complex issue of aluminum/steel tariffs even more opaque, and offered up some misinformation, according to one in-the-know attendee. Retail panel a bit too general and needed more beer focus.  Nutritionist-expert Dr. Catherine Adams Hutt echoed importance of delivery/ convenience to millennials/upcoming Gen Z, but she tried to do way too much describing those cohorts and then attempted cannabis overview that got lost in the weeds (sorry).  Indeed, tons of talk about cannabis (including comments from the chief, August Busch III, see yesterday’s Express) at mtg.  But not much more insight than familiar points that there’s tons of oppy, no one really knows what impact on beer will be and still lotsa questions surrounding safety, THC vs CBD products and so much more.

Beer biz not going into key summer selling season with much momentum.  Yr-to-date volume dipped 0.3% thru Jun 1 in Nielsen all-outlet scans, after sagging 2.2% in May.  And while $$ sales still up near 2% yr-to-date, up just 0.4% for 4 wks.  You know the drill: above premium growth unable to offset mainstream drag (in volume), but keeping $$ sales in the black.  As noted above, seltzers, Michelob Ultra family and Modelo Especial driving most of the above-premium growth, while Corona family chipping in too (+4.4% yr-to-date).  

Lookin’ at segment share trends thru Jun 1, Miller Lite and Coors Light grabbed 1.2 share of premium lights from Bud Light, while segment -5.4%, (if that’s natl trend for premium lights, suggests another 1+ mil-bbl dropoff already this yr).  AB got that back in economy, up 1.1 share at expense of MC (-0.4) and Pabst (-0.7), as PBR down double digits yr-to-date.  In above premium, lotsa moving pieces.  MC shed 0.9 share yr-to-date, Heineken USA gave up 1.1 share, FIFCO -0.3 and “remaining domestic brewers” (smaller craft) -0.8, according to Nielsen.  Mike’s led gainers, pickin’ up +1.4 share (+1.7 in last 4 wks), Constellation and AB each up 0.5, Boston +0.4 and Diageo Beer +0.1.  Michelob Ultra and Modelo Especial grabbed additional 2.5 share of above premium between ’em.  Brand Heineken dipped 0.3 share of segment even while volume off just 0.4%.  Blue Moon, Leiny’s and Redd’s families combined for 0.8 share loss in segment.

You know who were biggest winners in beer biz over Memorial Day: seltzers once again. Now that data in for period including weeks both before and after Memorial Day, one can get a cleaner look at holiday period.  And surprise, surprise, White Claw and Truly are still killin’ it.  White Claw franchise jumped 1.1 share of $$ to 1.6 for 4 weeks thru Jun 2 in Nielsen all outlet, while Truly jumped 0.6 share to 0.9 share.  The two together grabbed 2.5 share of $$. Since they’re consistently over 80 share of hard seltzers means segment about 3 share.  Incidentally, Constellation also had a strong holiday period as it gained 1.1 share of $$ for 4 weeks, ahead of 1.0 it gained yr-to-date.  And Michelob Ultra again had 3 of top 10 growth brands, gained 1 share of $$ collectively. 

Holy Moly! White Claw and Truly $$ Share Bigger Than Bud in Grocery for 4 Weeks  More amazing stats re seltzers: in grocery, White Claw at 2.2 share for 4 weeks and Truly at 1.5 share.  Or 3.7 share combined, up 2.3 share. That’s bigger than Bud franchise, which got 3.3 share, down 0.2 in grocery.  “The million-dollar questions are how big are seltzers going to get and when will they slow down,” said an industry exec.

Decision by Virginia Alc Bev Commission to order arbitration in dispute between Bell’s Brewing and Loveland/Premium (Reyes) distribs (see May 8 Express), causes “great concern” to VA Beer Wholesalers Assn.  It filed motion before ABC asking it to reverse decision that dispute be arbitrated and have it heard instead before ABC board itself, as assn believes is prescribed under VA’s Beer Franchise Act (BFA).  Only aspect of brewer-distrib relations subject to arbitration under BFA, assn argues, is specific valuation remedies.  All other matters (i.e. “reasonableness” of a brewer’s or distrib’s actions) should be subject to ABC review and specific resolution procedures laid out in franchise law, as they have been for years, assn argues.  Handing dispute over to arbitrator erodes “core powers” of state to regulate alc bevs, assn notes, and eliminates “special competency” of ABC Board to resolve such matters.  Although the ABC said that its decision here applies solely to this case, VBWA believes that others will inevitably use it as precedent to subject all manner of disputes to arbitration vs ABC review.  It was clear intent of state legislature, VBWA further argues, to adopt this procedure and it should be up to legislature to change it and compel arbitration, not the ABC, simply by deciding that it has “inherent authority” to manage cases it sees fit, as Board suggested here.   

It was certainly a moment, when longtime AB ceo August Busch III got the Jeff Becker Beer Industry Service Award yesterday from the Beer Institute at its annual meeting in Saint Louis.  At 82, August looked great and sounded inimitably like himself.  If you’ve been around the beer biz for decades, this was a true throwback.  It was almost eerie to see the man who ruled his company and even the industry for so long (often with an iron fist), commanding from the podium one more time.  But his message too seemed somewhat like a time warp.  According to August, marijuana “will reduce the consumption of alcohol” and is “a bad influence in the marketplace” that will “get many people in trouble.”  And despite all the share of stomach that beer has lost to wine and spirits, “they’re not the people I’m worried about,” said August.  It’s marijuana.  He implored those in the business to “work hard against marijuana.  I don’t think it does anybody any good in the industry.”  Meanwhile, each of the top 4 BI board members has already gone a different route, either investing in or partnering with cannabis cos or even coming out with THC-infused bevs. And there is little quantitative data that shows any definitive deleterious effect of cannabis on alcohol consumption.  Yet August came across as extremely passionate and committed in his belief.  On more traditional turf, August praised the “drinkability” of beer and its qualities of “low alcohol” refreshment, which one can “drink all evening” and “be damned proud” to “hold your presence.”