In largest scan mkt, SoCal, beer biz declined 4% for 13 wks thru Apr 8 in Nielsen all outlet data.  (That’s even softer than Q1 statewide shipments decline – see above.)  Several of largest AB and MC brands continue to see steep declines, including Bud Light (-9%), Coors Light (-5.5%), Budweiser (-8%) and Miller Lite (-4%). All while Constellation keeps climbing to new heights, largely behind strength of Modelo Especial. Indeed, Modelo Especial $$ sales grew 17.5%, snagging additional 1.8 share to a whopping 10 share on its own. That’s just 0.5 behind Bud Light, as Modelo closes in on #1 brand title in SoCal all outlet data (recall, it’s also closing in on #1 spot in total Calif foodstores – see Apr 3 issue). Not all good news for Constellation: Corona Extra sales slipped 3.6% and Corona Light down 8.5%.  But big gains from Pacifico (+15%) and Negra Modelo (+36%) more than make up for dips. In fact, Pacifico now a top-10 brand in SoCal scans, at #10. So collectively, total Constellation biz gained 2.6 share of $$ to 22.6 in SoCal. Now more than 3 pts ahead of MC (-0.3 to 19) and about 5 pts behind AB (-1.6 to 28). Keep in mind, nationally Constellation has just over 10 share of $$ in Nielsen scans.

Total import segment ballooned 1.9 share to nearly 37 share of $$ in SoCal, 15 pts ahead of next largest segment, premium lights (-0.8). But import growth virtually all Constellation too. While Constellation’s Mexican imports on fire, HUSA’s Mexican imports struggling in SoCal. Tecate $$ down 13%, Dos Equis down 9% and Tecate Light up just 2% for 13 wks.  Heineken brand also down 4%.  Other top imports, Stella (+3.5%) and Guinness (+7%), able to grow. Then too, Mich Ultra sales jumped 21% to become #11 brand in SoCal scans. And 3 top craft brands – Firestone Walker 805 (+19%), Lagunitas IPA (+22%) and Stone IPA (+29%) – all grew double-digits for 13 wks. Yet craft segment gained just 0.1 share of (declining) total beer to 19.1.

Numbers not gettin’ any better for Q1, 2017.  State beer shipments tracked near 3% overall shipments decline, Beer Inst economist Michael Uhrich reports.  Only 8 states posted gains Jan-Mar, he estimates.  Fla’s 1.2% pop and NY’s 2.4% gain by far best news.  Other gains in small mkts: ID, KA, ME, MT, UT and VT (most of these are strong craft states).  Elsewhere, negative across the board.  That includes -2.9% in Calif where lousy weather definitely a factor.  Other big mkts smacked too, including: -3.4% in Tex, 1-3% drops in big East North Central states, nasty knocks in several big Southeast states (NC, GA, VA, TN) and a 6% hit in Pennsy.  All in, Michael estimates states shed 1.3 mil bbls, 2.8% Jan-Mar.

Meanwhile, MillerPulse survey of restaurant biz found “the first quarter was the worst quarter in seven years,” reports Nation’s Restaurant News (NRN).  Same-store sales -0.4% in Mar, following -2.6% in Feb, -1.3% in Jan.  And that measure negative in 9 of last 10 mos.  Restaurant traffic even slower: -2.5% in Mar, best trend since Nov ’16, and down for 13th straight mo, 23 of last 26, MillerPulse data shows. Lotsa reasons for same store softness, sez NRN: competition from off-premise prepared food, low supermkt prices, new licensees (article doesn’t specify taprooms but that’s gotta be factor hittin’ traditional on-premise outlets) and “general economic malaise.”

Pabst’s first qtr a “mixed bag,” according to  Pabst sr director of category development Chip Rovello, who gave detailed review of results, with an update on Small Town Brewery from veep Gleb Lifshits.  While total Pabst depletions were down 6% in qtr, there were some “big bright spots,” like fact that lead brand Pabst Blue Ribbon returned to growth in Q1. PBR STRs up 1%, for best result in 3 yrs.  That’s viewed by Pabst as especially big plus in face of escalated discounting by AB and MC in segment, while PBR prices remained same compared to a yr ago.  Pabst “able to weather storm on pricing front,” said Chip.  

Meanwhile, Pabst’s Local Legends platform also bearing some fruit.  Rainier up 11%, Lone Star up 7.6%, Stroh up 8.9% and Old Style up 4%.  All Local Legends up 3%.  So with all these plus signs in over half its volume, how did Pabst get to -6 in STRs?  Not Your Father’s platform continued to drag down total sales, with franchise down 62% yr-to-date thru Apr 8 in Nielsen all-outlet.  Some other subpremiums and malt liquors also under pressure.  But even with NYF franchise, Pabst sees some firming as it’s back to 41 share of (smaller) hard soda segment that is now at 0.6 share (had peaked over 1 share). Velocity picking up lately (seasonality?).  And new innovations performing ahead of expectations, noted Gleb, principally new Not Your Mom’s line, including Apple Pie, Strawberry Rhubarb and Tea.  Apple Pie in particular sold “double” what Pabst planned in Q1.  All 3 rolled nationally in Q1.  Innovation remains “key pillar” for Small Town, which is “always out to try new things” and Gleb promises more to come.    

“In the US, volume declined low single digit, with growth in Heineken, offset by lower Tecate and Dos Equis volumes,” Heineken’s global 1st qtr trading update said in usual bare bones statement on US results.  Tuff qtr here in US for many.  Indeed, HUSA down 2.2% in Nielsen all-outlet yr-to-date thru Apr 8, but Heineken brand up 2.7% yr-to-date.  Tho down in all channel, Dos Equis Lager up 0.5% in Nielsen.   Strongbow switched from minus to plus with 29% gain last 4 weeks (new flavor?) catapulting it to 2% growth yr-to-date.  

Globally, Heineken organic volumes up 0.6%, with Heineken brand up 2.5% and profits up 11%.  “A good result against a tough comp,” wrote Jeffries Intl analyst Edward Mundy.  Consensus expectations were for volume down 0.5%.   Asia Pacific “continued to outperform,” noted ceo Jean Francois van Boxmeer in statement.  “In Americas, whilst Mexican volume was good this was more than offset by weaker volume in Brazil.”  Volume down 0.5% in Americas region. Stock up 1% this morn.   

“It’s time to clean house from regulators not spending money wisely.  This is a good start.”  That’s how Tex Gov Abbott responded to resignation/retirement of Tex Alc Bev Comm exec director Sherry Cook yesterday.  Recall, Texas Tribune has run series of scathing articles about Cook and colleagues “jet-setting” around US to attend mtgs of National Conference of State Liquor Administrators (NCSLA).  That’s assn of state alc bev regulators which holds natl and regional conferences “largely funded by the alcohol industry,” as Tribune always reminds.  So Cook and crew nailed for spending “thousands of dollars in taxpayer money” to attend (and fund) mtgs and for networking with industry attys/govt affairs execs in “swanky resorts.”  There were also issues of record keeping, vehicle use and a humorous “internal flyer” created by TABC picturing Cook and colleagues in a plane flying off to a Calif meeting hoisting Lone Star beer bottles.  Cook testified at “brutal grilling” before House Committee and there were calls to shut off all out-of- state travel for TABC, Tex Trib reports.  All this occurring while TABC regs and Tex laws under sharp legal attack from suppliers, distribs and retailers.  

So far, narrative hasn’t been picked up in other states that send regulators to NCSLA, which hosts all-day panel discussions and legal presentations in addition to networking oppys.  But it may only be a matter of time.  And NCSLA’s exec director Pamela Frantz put out statement to defuse queries.  NCSLA founded in 1934 she wrote, and has “proudly afforded state alcohol regulators the forum and opportunity to discuss alcohol industry trends …to learn about best practices, and to meet face-to-face with officials from numerous states as well as the industry they regulate. The focus of NCSLA conferences is squarely on educating and informing attendees, with a robust business agenda.… While these conferences also include opportunities for after-hours social activities, those are secondary to the educational seminars presented each day.”  Alc bev biz is “complex and diverse,” Pam added, and “state alcohol regulators are charged with implementing and enforcing an increasingly complex web of laws and regulations.”  So “staying current with national trends, and learning from both contemporaries and the industry itself, is an important tool in the oversight of this industry and in advising state policy-makers to assist them in making the best decisions for their state.”  NCSLA’s next mtg coming up in Jun in Denver.  Be interesting to see how many regulators attend and background chat likely to be lively.       

State data shows cans at 55.8 share of shipments last yr, up nearly a full share from 2015 and 7+ share over last decade, according to Beer Inst data.  Meanwhile, bottles slipped to 1/3 of the biz, down 9 share over last decade.  Draft holding at 10 share, up a point since 2006, but not budging much over last 5 yrs. Gotta figure boom in taproom/craft sales this period offset by draft decline suffered by mainstream beers.  

State-by-state package shares vary significantly.  Draft has near 20 share in craft mecca Colo and over 20 in DC.  But it’s only 7.4 share in Tex, 4.6 in Louisiana and mid-single digits in several other southern mkts.  Cans are king in much of South and Midwest where 60+ can shares common.  Big bottle mkts, over 40 share, are combo of tourist destinations (HI and NV), plus some northeast mkts: CT, MA, NJ and RI.  Plastic bottles still not getting traction, sitting at just 0.5 share.  

Here are a few talking points from Beer Inst economist Michael Uhrich: 1) 2/3 of all beer consumed in US still in 12-oz packages or less; 2) glass still dominates in imports and craft (bottles near 2/3 of import volume);

3) glass losing share, Michael sez, due to “volume shifting from on-premise to large format off-premise channels”; 4) draft gained share on-premise last yr, up over 1 pt to 60 share.  Much of that gain comin’ from brewpubs/taprooms, natch, plus “quarter and sixth barrels as bars and restaurants move toward carrying wider selections.”  

Just before an Easter boost, total beer biz still down 1% yr-to-date thru Apr 8 in Nielsen all-outlet.  Tho the 4 week numbers improved slightly, beer biz down 2% for 4 weeks.  In next couple of weeks of data, biz should begin to tick up.  INSIGHTS hears Apr better as one would expect, but not enuf to make trends back-to-normal.  AB and MC still down 2.4% each YTD, softer than last yr; Constellation and Mike’s are still growth leaders, each up double digits.     

ABI’s North American veep of corporate affairs and legal John Blood just got big promotion to general counsel and corporate secretary of ABI globally. He will sit on ABI’s exec board of mgt, that elite group which runs the co and now comprised of 21 execs.  He will take place of ABI’s longtime general counsel Sabine Chalmers, who will work with John on transition for next several mos and move on Aug 1.  Sabine brought John over from Diageo, where they used to work together.   John worked with AB ceo João Castro Neves on AB’s “working together, winning together” platform with distribs, craft acquisitions, and DOJ consent decree, among many other challenges in recent yrs.  João said it would be “tough to lose him” but cited John’s promotion as an example of ABI’s “meritocracy” culture at work.  Meanwhile, Sabine will be moving on “to pursue other dreams,” João noted.  Those include board work, teaching on both sides of Atlantic and “a foundation to support the education and work of women and girls in India.”   Brito “took a big bet on me,” Sabine said, when she joined “wide eyed” in early 2005, but they then did “amazing things” together as she worked closely with Brito on big deals to buy AB, Modelo and SABMiller.  After SABMiller, this was the “right time” for “next stage,” said Sabine.  

Another Exec Board of Mgt Change in Dec  This is 2d significant move on exec board of mgt in last few mos. In Dec, ABI brought on David Kamenetsky as chief strategy and external affairs officer.  David is first EBM member from outside in yrs.  He’s a Swiss citizen who worked at Mars for 10 yrs.  ABI chairman Olivier Goudet is also on Mars board and got his start there in 90s. Notable too, and perhaps a precursor to today’s announcement: David got responsibility for corporate affairs.  That was previously part of Sabine’s purview. Of 21 on exec board, fourteen are Brazilian and/or Portuguese citizens educated in Brazil. Three others, including Sabine, are decade-plus ABI vets. Two more came from cos ABI acquired, and 1 joined ABI back in 2009.  Are winds of change blowing on ABI’s exec board?

Beer Still Soft in Scan  Just before an Easter boost, total beer biz still down 1% yr-to-date thru Apr 8 in Nielsen all-outlet.  Tho the 4 week numbers improved slightly, beer biz down 2% for 4 weeks.  In next couple of weeks of data, biz should begin to tick up.  INSIGHTS hears Apr better as one would expect, but not enuf to make trends back-to-normal.  AB and MC still down 2.4% each YTD, softer than last yr; Constellation and Mike’s are still growth leaders, each up double digits.     

As expected, Q1 shipments shapin’ up very soft.  Domestic taxpaid shipments down another 432K bbls, 2.8% in Mar, estimates Beer Inst economist Michael Uhrich.  That followed modest gain in Jan, big drop in Feb.  For 3 mos, taxpaids down 1.4 mil bbls, 3.4%, thanks mostly to lost Leap Day, higher distrib inventories at end of 2016 and Easter timing.  Recall too, imports up just 205K bbls Jan-Feb.  So before Mar import # reported, US biz down 1.2 mil bbls, 2.6% in available data.  Recall Nielsen all outlet scans showed 1.2% decline thru Apr 1.  Most recent period showed a little improvement in scans (see below) but a slow start to the year all around.   

Recall that when Nevada voters passed initiative last yr backed by group called the Coalition to Regulate Marijuana Like Alcohol, alc bev distribs in the state not only donated nearly $90K in early stages, but language specified that alc bev distribs had first crack at distributing recreational pot if it became legal.  But after initiative passed, some distribs backed off, especially in wake of tuff talk about pot enforcement from Trump Admin and fact that wholesalers have licenses granted by TTB.  Many speculated those licenses could be threatened if same bizzes sold a drug still barred by feds.  But a group of smaller alc bev distribs formed  Independent Alcohol Distributors of Nevada and they want to get into the game, The Nevada Independent reported last week.  Turns out tax dept had option to open up licensing to others, like medical marijuana shops, if it determined there were not enough alc bev distribs interested to serve the market.  And that’s what they determined.  But indie distribs point out that over a dozen expressed interest and are crying foul over tax dept’s determination.  Time’s getting tight for state to start up system and distribs may sue to keep their preferred position.  “The alcoholic beverage industry has more experience in the legal business than the marijuana industry has in the legal business,” Kurt Brown of Capital Bevs in Carson City told the Independent.  Also, middle tier serves a link in supply chain to insure tax collection, spokesman for indie distribs said.  Finally, distribs say they can get around the TTB/license issue by having permits in name of different biz entity.

Meanwhile, govt wants to get going, and some pot advocates say a vertically integrated system now being discussed, where distributors (or growers) hold retail license as well is more effective for quality control and will result in lower prices.  And despite name of the ballot initiative to regulate pot like alc bevs, some of these folks question validity of 3-tier.  They say no other industry mandates middle tier.  Plus, ballot initiative spokesman told Independent 3-tier system has broken down in recent years via craft brewer and vintner tasting rooms.  Here’s by-now familiar kicker, from same guy: “It’s a dinosaur.  Microbreweries and craft vineyards with tasting rooms are the proof that the three-tier system is a relic of the past.”