Beer biz getting it coming and going these days.  Not a pretty picture to start the yr.  Volume off 1.2% for 4 weeks thru Feb 11 and down 0.5% yr-to-date in Nielsen all-outlet (don’t forget we lose a day later in Feb going up against Leap Year).  AB down 1.7% and MC down 2.1%. Both are losing slightly less share so far this yr, down 0.6 and 0.4  of volume respectively YTD (off just 0.4 and 0.3 for 4 weeks).

One reason why share performance improved for Top 2: subpremiums up 0.2 share of volume last 4 weeks with volume down just 0.5%.  That’s likely because avg prices down 20 cents per case, 1.2% as 4 of top 6 subpremiums avg prices down 2% or more in last 4 weeks.  Look at some of these price changes: Busch Light and Busch prices down 31 and 37 cents respectively.  Volume of each brand up 2-3%.  Meanwhile, Keystone Light avg prices down near 3% and its volume still down 4%.  Bud Ice avg prices also down 2%, volume up 7%.  Natty Light and Miller High Life kept pricing level in latest period. High Life up 5%.  Natty Light down 2%.   

Craft down 3.4% for 4 weeks in Nielsen, with some startling drops.  Shock Top franchise fell nearly 40% for 4 weeks (down 38.9%).  Recall, last yr Shock Top got Super Bowl ad.  Sam Adams franchise fell 22.5% for 4 weeks. Down 20% yr-to-date.  Sierra Nevada down 19.5% for 4 weeks as it had to deal with recall.  Blue Moon franchise fell 3.9% for 4 weeks; it was up 1% thru Jan 28.  Only New Belgium (up 2%) and Leinie shandy (up 23%) gained among top 6 Nielsen craft families that represent about 1/3 of segment  

FMBs getting hit hard early in 2017.  Down 6.9% for 4 weeks and 4.7% yr-to-date.  And that’s even with avg prices down 1% for 4 weeks. Mike’s Harder and Twisted Tea still up double digits, but after that ain’t a lot of good news.  Soda’s slip slidin’ away.  Not only is Not Your Father’s franchise still down steeply but now Henry’s Hard Soda franchise off 38% for 4 weeks too.  

One by one, execs that conspired with ex-MillerCoors veep David Colletti to defraud MC of over $8 mil from phony events are fessin’ up.  Latest is vendor Scott Darst, who set up companies to run sham events/promotions and ended up “collecting roughly $3.8 mil in profits,” reports Law360.  His company responsible for “at least 50 false estimates and invoices” submitted to MC, which paid about 200 of ’em in all in scheme that ran 10 yrs.  Darst pled guilty to wire fraud and faces up to 20 yrs. Recall, Colletti and his “longtime secretary,” as well as another vendor, have already entered guilty pleas, and face similar sentences, per Law360.       

Like every yr, excise tax hike proposals go on and off the radar; very few ever go into effect. But a New Mexico Rep raised some eyebrows with proposal that would make that state’s alc bev taxes highest in US.  How high?  How about raising liquor tax from $1.60/liter to $7.24, beer from 41 cents/gal to $3.08 and wine tax from 45 cents/liter to $2.14, reports Sun-News.  Bill sponsor pointed out that NM leads US in “deaths by excessive drinking.  Not only would this bill reduce alcohol consumption and save lives, but it will increase revenue by a projected $160 million, which would help solve the state’s budget shortfall.”  A companion bill has been introduced in the Senate.  Earlier this yr, Ohio Gov Kasich proposed a penny/drink wine and beer tax hike in that state, Kans Gov Brownback again recommended doubling the alc bev sales tax in his state and a Wyo state legislator proposed a 10-fold increase in the beer tax there from 2 cents/gal to 20 cents/gal. 

Tho it may be a stretch to claim “back by popular demand,” Molson Coors confirmed to Crain’s that Zima is coming back “sometime this year,” the biz publication reported yesterday.  We apparently missed the “rumors of the brand’s repatriation” that “swirled last fall and through the winter,” focused as we were on other malt bev matters.  Beer Biz Daily recently reported Zima already in some distrib warehouses. And when an MC distrib in Mich posted photo from an MC presentation to Instagram, ze puzzy waz out of ze bag.  

Coors intro’d Zima in 1993 as a pioneer FMB, 7 yrs before Smirnoff Ice.  It peaked in natl rollout yr (1994) at impressive 1.4 mil bbls (that would make it #2 to Mike’s entire portfolio last yr).  Zima went thru numerous tweaks (who can forget Zima Gold – no one who ever tasted it), but faded fairly quickly and was pulled from US in 2008.  Apparently, popularity of hard zodaz (okay, we’ll stop) has caused Molson Coors to reconsider.  Then too, Zima is “still a popular drink among the night-club crowd in Japan,” sez Crain’s.  As far as Miller Clear, an ill-fated early 90s experiment by Coors’ future JV partner, we’re totally making that up.  We hope. 

Their ambition knows no bounds.  The never-satisified Brazilian investors who founded 3G Capital, and initiated series of deals that led to ABI dominating global beer landscape, are at it again. Their food co vehicle, Kraft Heinz, of which 3G and Warren Buffett’s Berkshire Hathaway jointly own 50.8%, has made ginormous $143 bil offer for “consumer products giant” Unilever.  Offer for $50 per share represents an 18% premium, but Unilever rejected deal and “does not see any basis for further discussions.”  ABI stock mkt capitalization at $175 bil, Kraft Heinz at $115 bil (with big jump this morn), Unilever at $143 bil (up 10% this morn).  The 3 behind 3G (Lehmann, Telles, Sicupira) have created enormous amount of shareholder value and personal wealth over time.  As to Unilever’s protestations, we’ve seen this movie before.  Stay tuned. 

Blockbuster southeast merger between 3 AB distribs in GA, SC and NC had everyone buzzin’ at SAMCOM and beyond.  Recall the 3 distribs are Southern Eagle in GA and SC (14 mil cases), R.A. Jeffreys in North Carolina (approx 18 mil cases), and Crown Bevs in Florence, SC (2.5 mil cases). They will total about 35 mil cases and become a major force in region, pending supplier approval. 

Consultant Andy Christon, who is not involved in deal, knows a hot topic and put out piece called “Power Play on the Coastal Plain,” earlier this week, right when AB distribs at SAMCOM.  “Even under the best of circumstances, mergers are challenging,” noted Andy.  “Few economic benefits are initially apparent” and “a modest reduction in General and Administrative expense is the most that could be expected.”  So “a strategy other than bottom line profit is likely driving this proposed alliance,” he continued.  Distribs did this to improve prospects for long term growth, INSIGHTS understands, not for synergistic savings.    

Other distribs may have to rethink their game plan, according to Andy.  “Contiguous distributors will be forced to reconsider their business succession plan” if combo “proceeds,” he added.  Amidst rumblings of some supplier dissatisfaction with becoming smaller pieces of a much bigger biz, Andy also said deal could “give rise to a behemoth beholden to no one. Over time, suppliers could lose share of mind and alternatives.  For this reason, we believe that AB, Yuengling, Constellation and other suppliers will take a hard look before tying the knot of approval in this big marriage.”  Laws favorable to distribs in those states, and these distribs reportedly looking to close deal in near future. Tho mergers often done without money changing hands, this merger “seeking external financing,” Andy told INSIGHTS, either “a line of credit to make offers to other distribs” or to “realign ownership stakes.”  Maybe so, but no detail available.  Then too, some misinformation floating around about this very significant deal.  Stay tuned. 

AB’s SAMCOM meeting in Nashville earlier this week brought more and often better plans across much of its portfolio, including everything from the High End to Busch.  “Expect more firepower” on Michelob Ultra, said AB prexy João Castro Neves.  Ultra already fastest growing brand in industry last 7 qtrs, said João. But its distribution only about 65%, compared to Coors Light at 85%.  Then too, AB expects to grow its total High End biz 10% in 2017, including 20% growth on Stella, 20+ on each of its craft acquisitions and leveling Shock Top biz.  

AB will go national with Space Dust IPA from Elysian, Spiked Seltzer and more.  Many of its craft brands will receive significant geographic expansions too. “We truly have it all,” said High End prexy Felipe Szpigel of unit’s now “comprehensive” portfolio. High End brands have “higher potential and more resources than any other brewer out there.”   Editor’s Note: Interestingly, no mention of AB’s Mexican imports during meeting, a focus area for last couple of yrs.  Growth potential of AB’s acquired brands makes expensive, mostly failed intros like Mixxtails, less necessary.  

AB also will advertise Busch for 37 weeks as “we’re going to take the value segment to a better place,” said João.  AB debuted lotsa new work for Bud Light, better received than last yr.   America cans comin’ back for Bud, enthusiastically received by distribs.  AB “consistently improved”  share trend thruout 2016, said João, but still lost share.  AB characterized 2016 as “good year,” but expects to be “great” in 2017. More in BMI.

“Mr. Pruitt’s record of attacking clean water protections shows that he is the wrong choice to lead the agency.”  So conclude a group of 31 craft brewers in letter to Senators asking them to “vote against the confirmation of Scott Pruitt” to run Environmental Protection Agency. Pruitt’s confirmation vote on tap for late today or tomorrow.  Breweries cannot run without clean water, brewers write, and they need EPA head “who will adopt and enforce policies that protect the water sources we use to make our great-tasting beer.”  Pruitt ain’t that guy, they insist, given his “history of attacking and undermining the protections on which we depend.”  Indeed, he “can’t be trusted to protect America’s water resources,” these brewers believe.  Co-signers include mix of veteran, relatively large craft brewers (i.e. Brooklyn’s Steve Hindy and New Belgium’s Jenn Vervier) and lotsa smaller, newer brewers.  Also notable: BA chairman Rob Tod (Allagash) and asst brewery mgr for Goose Island in Chi.  Sen Collins from Tod’s home state Maine has already announced she’ll vote nay.  Interesting political move for AB-owned company Goose Island, especially as AB has big branch biz in Oklahoma where Pruitt is current state AG.        

Hard seltzers currently just 0.13 share of total beer category $$ for month thru Jan 15 2017, Consumer Edge’s Brett Cooper showed as part of deep dive on Boston Beer leading into Q4 report next week.  Seltzer share peaked at 0.18 thru Aug before slippin’ to 0.13 by Oct, where it  more or less stayed since.  Boston Beer’s Truly Spiked and Sparkling clearly depicted as category leader early on, yet that lead gradually diminished following launch of Mike’s Hard Lemonade Co’s White Claw.  As of last mo, Truly had 47% of segment share vs 42% for White Claw, while AB’s SpikedSeltzer shrank to just 10% after holding 32% as recently as Jun 2016.  But keep in mind, AB’s about to launch SpikedSeltzer nationally and co-founder Nick Shields expects to grow ~400% to over 200K bbls on its own this yr (see Feb 1 issue). And MC comin’ with Henry’s Hard Selzter.  So share split could look a lot different again in just a few mos.  All in, while some remain bullish on Hard Seltzer category, it’s clearly still a tiny portion of overall biz.        

Hard seltzers currently just 0.13 share of total beer category $$ for month thru Jan 15 2017, Consumer Edge’s Brett Cooper showed as part of deep dive on Boston Beer leading into Q4 report next week.  Seltzer share peaked at 0.18 thru Aug before slippin’ to 0.13 by Oct, where it  more or less stayed since.  Boston Beer’s Truly Spiked and Sparkling clearly depicted as category leader early on, yet that lead gradually diminished following launch of Mike’s Hard Lemonade Co’s White Claw.  As of last mo, Truly had 47% of segment share vs 42% for White Claw, while AB’s SpikedSeltzer shrank to just 10% after holding 32% as recently as Jun 2016.  But keep in mind, AB’s about to launch SpikedSeltzer nationally and co-founder Nick Shields expects to grow ~400% to over 200K bbls on its own this yr (see Feb 1 issue). And MC comin’ with Henry’s Hard Selzter.  So share split could look a lot different again in just a few mos.  All in, while some remain bullish on Hard Seltzer category, it’s clearly still a tiny portion of overall biz.