This just in.  In 50-pg document, Dept of Justice looks at the one dozen comments it received in response to its initial “proposed Final Judgment” and concludes: “After careful consideration of the public comments, the Department continues to believe that the proposed Final Judgment, as drafted, provides an effective and appropriate remedy for the antitrust violations alleged in the complaint and is therefore in the public interest.”  So no changes.  DOJ “will move” that the Court “enter the proposed Final Judgment” as is, “after the comments and the response are published.”  

Recall, only Yuengling’s extensive comments objecting to deal previously revealed.  Who else commented? Many of the usual suspects.  Brewers Assn, NBWA, American Bev Licensees, WBAE (assn of state assn execs), i.e. associations representing brewers, wholesalers and retailers.  A couple of other state distrib assns, OK and VA, also commented.  Only 1 other brewer besides Yuengling commented: Ninkasi.  Commenters didn’t think DOJ went far enough in its remedies.  Teamsters of course weighed in with arguments against closing of Eden, plus Consumer Watchdog (a consumer advocacy org), a prof and more.  But none of their arguments swayed DOJ to change their report one iota.  This is the usual case, from what INSIGHTS understands.  Those comments not yet available at presstime.

DOJ details its own process. Proposed Final Judgment “is the culmination of a thorough nine month investigation conducted” by Antitrust Division of DOJ.  It “collected more than 1.4 million documents from the Defendants and third parties, conducted over 70 interviews of beer industry participants, took numerous party depositions and coordinated with both state and foreign competition agencies reviewing the transaction.”  Dept “carefully analyzed the information it obtained from these sources, and thoroughly considered all of the competitive issues presented.”  

DOJ pats itself on the back for making ABI divest of SABMiller’s equity interest in MillerCoors,  which ABI had to know from day one would be an absolute precondition of the deal’s approval.  So no surprise at all there.  More interestingly, recall that other restrictions far reaching and multi-faceted and a big disappointment to AB.  Those include limiting branch ownership to 10%, not allowing AB to go forward with its VAIP program or other attempts to limit AB distrib sale of 3d party brands and much more.   DOJ said that “to further help preserve and promote competition” in US beer, proposed Final Judgment also “imposes certain restrictions on ABI distribution practices and ownership of distributors.”  It also “requires ABI to provide” US govt “with notice of future acquisitions of beer distributors and craft brewers prior to their consummation.”  One-by-one over course of 50 pages, DOJ deals with each objection, before finally concluding that its own original “proposed Final Judgment” is correct as is.  More details next week.  

“Though baseball is more often associated with beer, hard liquor is increasingly finding a home in major league ballparks,” wrote Chi Trib.  Beam Suntory signed 10+ yr deal “in the ballpark of seven figures” with world champion Cubs as official spirits sponsor, replacing Jack Daniels. This is “by far the largest” sports mktg deal for Beam, co told Trib, including “new Beam branded private club for fans” “new signs along the third base wall, behind home plate and on the video board among a slew of other marketing efforts.” Sports stadiums used to be totally dominated by beer sponsors, but spirits cos stepping up.  

Ain’t just Pennsy where state pols starting to float bills for consideration this yr.  Kansas Gov Brownback just “proposed doubling a tax on liquor from 8 percent to 16 percent,” KC Star reported this morn, aimed to raise $100 mil over 2 yrs.  State has big budget shortfall.  Retailers near MO border already howlin’.  Paper reminds that Gov proposed to increase “liquor enforcement tax” to 12% in 2015.  Didn’t happen……  In Utah, state Rep Norman Thurston said he will propose bill to lower legal BAC limit for driving to .05.  “Impairment starts with the first drink,” he told media, “and we want to establish this state as one where you just simply do not drink and drive.”  That’s just latest in expanding list of comments we’re seeing from govt officials, and others, endorsing zero tolerance in one form or another.   

In memo to Pennsy Senate colleagues, state Sen Daylin Leach announced intention to intro a bill to “legalize the consumption of marijuana for adults over the age of 21, without regard to the purpose of that consumption.”  Leach, key to getting medical marijuana bill passed last yr in PA, focused on failed “war on drugs” that cost PA billions and criminalized millions of citizens over yrs “who have hurt nobody, damaged no property, breached no peace. Their only ‘crime’ was smoking a plant which made them feel a bit giddy.”  State not only spends heavily on arrests but “we leave several hundred million dollars on the table in taxes” uncollected since pot illegal, “rather than regulated and taxed.”  And here’s kicker: PA law has “destroyed” lives of those who used product “less dangerous than beer, less risky than children’s cough syrup and less addictive than chocolate.”  Another kicker: Leach intends to regulate pot like alcohol, to be sold by either state stores that now sell wine and liquor or beer distributors, home Ds that still sell bulk of beer in PA and who just got the right to sell 6-packs.  Talk about adapting to new biz models!  Gotta note, no state legislatures have yet been vehicle for recreational pot legalization.  And PA still very conservative in vast area between Philly and Pittsburgh.  But who knows where this train’s going next?   

“By reason of the following facts, there is cause for suspension or revocation of the license(s) in accordance” with Calif law, Calif ABC charged Straub Dist (an independent AB distrib in SoCal) in extensive “Accusation Under Alcoholic Beverage Control Act and State Constitution.”  So begins Calif ABC “accusation” against Straub Dist (most often such matters are resolved by fines).  This accusation includes 20 counts, mostly having to do with providing fridges, coolers and a draft system to various retail accounts all the way back to Jan 2014.  In most cases, the ABC accuses “respondent licensee by and through its officer(s), agents(s), or employee(s) did directly or indirectly, furnish, give, or lend a thing of value.”  A couple of counts use language like “directly or indirectly gave or received a premium, gift, free goods or thing of value in connection with the sale, distribution or sale and distribution of alcoholic beverages.”  Eleven counts involve one retailer. Separately, ABC also filed accusation against Skosh Monahans, an account serviced by Straub (and subject of Count 18 in Straub accusation).  Retailer “did solicit or accept or permitted to be accepted on its behalf, a prohibited thing of value, one Budweiser Long Draw BSD (beer draft system).”   No comment from Straub at presstime.  

But there are reportedly other accusations pending against other entities.  This is result of long-running Calif ABC investigation into trade practices.  Distrib showed Calif ABC evidence of a couple hundred fridge placements back in Oct 2015, asserting they were violations.  Trade practice issues rose to forefront in beer biz in 2016; this Calif salvo suggests trade practice will be front-and-center this yr too.    

Despite ongoing declines of youth drinking rates in many developed markets, falling to all-time lows in some countries, public health officials just launched an effort calling for a “comprehensive ban on alcohol advertising, promotion and sponsorship” globally, to protect youth from being exposed to such messaging.  Acknowledging inevitable commercial speech challenges, the ban should be “in accordance with each country’s constitution or constitutional principles.”  So advised a quartet of prominent public health advocates in a set of conclusions they wrote for a special supplement to the journal Addiction, published this week.  The supplement also includes a number of studies that purport to strengthen ties between advertising and youth drinking, the alleged failure of industry self-regulation and more.  Neither the introduction nor the conclusion of the supplement acknowledges the well-documented decline of teen drinking in the US, UK and Australia, despite rising levels of ads/promotion.

In addition to a ban, the conclusory remarks, co-authored by the editor of another well-respected publication (the Journal of Studies on Alcohol and Drugs), advise additional measures to: 1) limit any messaging about alcohol to “characteristics of the product,” barring any “lifestyle images, celebrities,” etc; 2) regulate via statute, with enforcement handled by public health agencies/govts; 3) bar any industry involvement in “formulating information or policy relating to the safe use” of alc bevs; 4) forge a global agreement on alcohol mktg; 5) collaborate with efforts to similarly restrict mktg of other potentially harmful products, including tobacco (natch), “ultra-processed food, sugary beverages…and breast milk substitutes.”  Industry organizations in the UK and Australia have already pushed back against this call, citing the teen drinking declines, and it has not yet gotten much attention in the US.  But that’s coming, no doubt.  We’ll provide much more detailed coverage of this latest shot across the industry’s bow in our Alcohol Issues INSIGHTS letter later this month.

In highly unusual development, MC megadistrib Andrews has decided to walk away from 1.5-mil-case Red Bull biz, as first reported yesterday by our sister pub Beverage Business INSIGHTS.  Apparently, last week Andrews gave Red Bull North America 30-day notice that it plans to drop energy brand in its mkts, including Dallas/Fort Worth to focus exclusively on beer.  RNBA looks to self-distribute in mkt by early Feb.  Move was 100% Andrews decision, said source.  Oftentimes, in Red Bull transitions, that’s not the case.  “After careful consideration,” wrote Andrews prexy Mike McGuire, “we made the decision to no longer distribute the Red Bull portfolio…. This was a tough and thorough decision-making process, but the decision allows us to move forward with a 100% focus on our core beer business.”  Andrews reportedly grew its beer biz over 4% in 2016.  Perhaps Red Bull was asking for more (in investment) than Andrews willing to give and Andrews clearly still sees abundant oppys in beer.

Tho Pabst shipments off near 6% in 2016 as we reported yesterday, depletions down comparatively more modest 2.7%, new Pabst ceo Simon Thorpe told INSIGHTS.  In 2015, depletions up 2.3%.  So 2016 depletions “nearly flat” over last 2 yrs.  But Pabst has also “grown $ by over 16% and gross margins by over 30% in this 2 year period,” continued Simon. Pabst depletions also up 3.9% from 5 yrs ago, so “in our view, it’s not our lowest year since the 1990s.”    

Following completion of this deal, there will only be 2 AB distribs in NH, down from 5 as of last yr (tho 4 owners).  Clarke family owns Clarke Dist of Keene, New Hampshire Dist and also owns the much smaller White Mountain Dist in Berlin.  The 2 together are about 2.5 mil cases.  Now Clarke has deal to sell Clarke Dist to Bellavance Bev Co and White Mountain to New Hampshire Dist, expecting to close in early Mar.  “As you know, NHD, Bellevance and Clarke have a long standing and close working relationship,” Jeff, Rich and Jay Clarke wrote their suppliers. “As such, we expect… shift to be relatively seamless and that our teams will continue to work hard building your brands across New Hampshire.”  Recall, New Hampshire Dist bought Great State last yr.  A couple of yrs ago, Clarke sold its AB/others distrib in VT, G Housen, to Farrell.  Lots of smaller AB distribs selling out in recent yrs, with ranks really thinning in New Eng.  

AB still at 48 share in NH in 2015. But it lost 86,000 bbls, 11% of its volume 2010-2015 and slipped from 55 to 48.  Meanwhile, MC down 44,000 bbls, 15.5% last 5 yrs and share slipped from 20 to just 17.  In that time, craft took off in the state.  Total beer biz up 1% last 5 yrs.  So All Others (mostly craft) jumped 139,000 bbls, 64% in 5 yrs and gained 10 share to 25.4.  Five yrs ago, All Others smaller than MC in NH, but now 1.5x as big.  

NBWA economist Lester Jones picked up on clip from Natl Restaurant News, based on data from research firm NPD  Group detailing difficulties facing restaurant biz and predicting “Restaurant traffic won’t improve in 2017.”  Lotsa parallels here with beer, Lester pointed out.  For example, ongoing shift in eating out from “dine in brands” to “quick service,” reminds him of shift from mainstream/macro brands to craft brands (in so far as “quick service” is source of newness or innovation in dining). Then too, as NPD consultant sez, “more restaurants than visitors,” and new forms of competition (i.e. prepared food at grocery stores) means “very fragmented market and consumers have many options.”  (Sound familiar?)  And even while options grow, “Americans are not increasing their dining out at a corresponding rate,” just as we’re not increasing per capita beer consumption, Lester notes.  Indeed, per caps still falling.  “That’s putting pressure on restaurants to fight for their share of the pie.”  Tell us about it: 5K brewers, including handful spending tons of money in mktg, now seeking bigger piece of beer pie that may have been up a couple hundred thousand bbls last yr.   

Millennials not just looking for “new experiences” with beer, but also in dining out options, experts say.  Innovation, technology, new direct delivery platforms will be necessary to “build traffic,” they add.  Then too, there are cost and pricing issues that may ring a bell regarding on- and off-premise beer trends. Grocers are cutting prices, restaurants raising ’em, which ain’t helping traffic to latter. And even while options already expansive, “restaurants that want to stay relevant should focus on giving consumers more choices,” NPD advises.  Given all this, and noting brewers’ announcements of 2017 brand plans even amidst reports that retailers cutting brands, looks like fragmentation, consumer overload far from over.