Just last week, we reported good news that teen drinking rates continue to fall in the US to all-time lows. But

progress on another key measure of problems associated with drinking, reducing drunk driving and drunk

driving deaths, “has been eroded in recent years.” That’s conclusion of Traffic Injury Research Foundation, an

AB-sponsored group that just released its 2d national survey. TIRF points out drunk driving fatalities rose in

2015, tho less than the increase in total traffic crash deaths. Beyond these numbers, TIRF’s survey found “a

significant increase in self-reported alcohol-impaired driving.” Indeed, 5.5% of those surveyed admitted to

driving impaired “often or very often” in 2016, up from 4% just a year ago. And nearly 12% said they’d driven

while they thought they were over the legal BAC limit 1 or more times over the previous 12 mos. That was up

from 8% in 2015.

Not enough history for these surveys to be definitive yet, but polls suggest “more awareness is needed about

alternatives to alcohol-impaired driving.” While designated drivers have near universal support, almost 20% of

Americans say they never use one. And just 18.7% of drivers say they’ve used ride share services. These

findings will likely be used to support the National Transportation Safety Board’s continued call for a lower

legal BACs limit (“to 0.05 percent – or even lower”), even while MADD doesn’t even support that policy

change. They also explain why AB, MillerCoors and other industry groups continue to support and fund

alternative transportation/free ride programs during the holidays and other times in partnership with Uber, Lyft

and others. Any further erosion in progress vs impaired driving, together with growing skepticism in some

(govt agency and other) circles about the health benefits of light-moderate drinking, could drive even more

advocacy for restrictions on alcohol availability/marketing, higher taxes, etc.

Coca Cola Co and

Anheuser Busch InBev “reached an agreement” for Coke to buy ABI’s 54.5% equity stake in Coca Cola Bevs

Africa for $3.15 bil “after customary adjustments.” That stake just one more piece of ABI’s acquisition of

News, Numbers, Info, and More 200+X a year published by Beer Marketer's INSIGHTS, Inc.

SABMiller that it will sell off. The 2 cos also reached an “agreement in principle” for Coke to buy ABI’s

“interest” in other African bottling operations in other countries for “an undisclosed amount. The transactions

are subject to the relevant regulatory and minority approvals and are expected to close by the end of 2017.”

Coca Cola will ultimately refranchise these territories.

ABI deal to buy SABMiller for over $100 bil consummated on Oct 10. Since then, ABI has systematically sold

off pieces worth around $28 bil so far: 58% of MillerCoors for $12 bil, Peroni, Grolsch, etc for $2.8 bil,

European brewing assets for $7.8 bil, 49% of Snow for $1.6 bil, Distell for $620 mil, and now its interest in

Coke bottler for $3.1 bil. And yet it will still have about 26 share of global beer volume and about 44 share of

global beer profits.

2016

was an epic year for beer deals. It saw the consummation of the biggest beer deal of all time, and well over 2

dozen craft transactions. But rest assured, there are plenty more deals in the works, both in craft space and

elsewhere. Next yr likely to be very busy on deal front again. And from the folks who brought you ABI, the

3G folks are “expected to be in a buying mood in 2017,” headlined the NY Times last week. Having already

cobbled together Kraft Heinz, 3G “raising up to $10 billion in new funds,” a Brazilian blog said in Nov. Their

next target could be “the $66 billion food conglomerate” Mondelez. Deal would be about $100 bil, including

assumed debt, according to NYT, but “buyers could squeeze out over $3 billion” more income, sez NYT.

“Market

concentration and scale are the core pillars of brewing returns,” reminded Redburn’s Chris Pitcher in a lucid

breakdown of how to really make money in beer. He holds up ABI as an example in that ABI “maintains its

rigorous capital allocation to leadership positions in highly concentrated markets. This sets it apart from its

multinational peers.” Chris then points to Asahi as a counterexample. Asahi just spent $11 bil to become the

#3 brewer in a fragmented Western Europe; Heineken and Carlsberg are “most at risk from the increased

competition.” Here’s Chris’s key point: “Across the whole European region the top five brewers will only

account for 50% of the market. By way of comparison in Latin America, AB InBev and Heineken accounted for

three quarters.” That leads to lots more profit.

Redburn looked at market concentration and its relationship to profitability of over 200 brewers across 127

markets. “Our work concludes there are three structural pillars for sustained operating margins in brewing:

market concentration, scale and portfolio mix.” Watch Chris break it down: “market concentration is critical as

it affords better pricing power; scale allows for better production and distribution efficiencies; while mix

determines gross margins.” And there you have it!

Turns out that 2016 shaping up a lot like 2015 vis a vis beer vs spirits trends, two data sources show again

today. Control state liquor volume bounced back from soft Oct with volume up 5.1% in Nov, reports NABCA.

Dollar sales jumped 7.4% in Nov in control states. Recall, beer had better Nov too, but not that good. Off-

premise volume up 2.7% in IRI MULC for Nov and dollars up 4.1%. Meanwhile, for 52 weeks thru Nov,

control state volume up 2.8% and $$ up 5.2%. Beer volume +0.8%, $$ up 3.2% same period in IRI MULC.

But while beer gained off-premise, it continued to dip on-premise, according to Nielsen. Indeed, Nielsen

comparison of 12-mo running trends thru Oct 8 show spirits up in both channels, volume +1.8% on-premise,

+3.1% off premise. That’s while Nielsen reports beer volume -3.1% on-premise same period, up just 0.6% off-

premise, (very close to IRI MULC for 12 mos thru Nov). Beer $$ sales also down on-premise (-1.5%) for 12

mos thru early Oct, Nielsen showed, while spirits $$ up 3.4%. Wine trends not as strong as spirits, but also

outperforming beer in both channels. Net-net: beer lost share to spirits and wine again in 2016.

Nielsen Takeaways for 2017 Analysts at Nielsen provide these insights for what on- and off-premise trends

mean for next yr. First, even more intense competiton in both channels. Second, on-premise will “remain a

tough market for many and successes will be hard earned” via “clear channel strategy.” Third, each tier will

“continue to be challenged by assortment” and getting “right” products in “right” stores. Fourth, e-commerce

will still be “relatively small” piece of alc bev biz, but will expand as more and more consumers ready to buy

but not necessarily “visit a store to do so.”

Actually, Bloomberg headline called

him as “cheap liquor billionaire” but that cheapens Bill’s many achievements. Lengthy profile of major liquor

brand owner (300 brands) and also a partner in 2 big beer distribs, estimated Bill Goldring’s personal fortune at

$3.9 bil. That puts him among world’s 500 wealthiest in Bloomberg’s Billionaires Index, “the first time he’s

landed in an international wealth ranking.” Since he’s amassed that fortune over decades, what took ‘em so

long? (Bill is a very private guy.) Bill “built his empire on a simple model: acquire cheap brands, hype them

and then stack them on the bottom shelves of liquor stores across America,” according to Bloomberg. But this

seems oversimplified description of multifaceted success Bill has enjoyed, in spirits distribution (Republic

National, he sold his interest some years ago), in beer distribution (he’s half owner of 30+-mil case Crescent

Crown and 1/4 owner of Gulf Dist, 16.5 mil cases), and in brand building. Sazerac, his liquor co, has more

expensive brands like Buffalo Trace, as well as biggest selling liquer Fireball Cinnamon Whisky, and many

bargain brands. Bill also bought Southern Comfort brand from Brown Forman for $544 mil in early 2016.

Now Bill is goin’ global, as 37% of Southern Comfort sales are abroad, plus he bought other internationally

focused spirits brands and an Australian importer this fall, according to Bloomberg.

MillerCoors

bought billboards in Milwaukee area that simply said “Milwaukee’s Best Ice Now 6.9% Alc/Vol.” Mil Best Ice

used to be 5.9%. Billboard showed picture of 3 variants of Mil’s Best. This is very rare, perhaps unprecedented

example of brewer flat-out stating its ABV as an ostensible reason for purchase. This billboard got extensive

coverage in today’s Mil Jnl Sentinel, including a number of critical comments. “I haven’t seen anything like

this before,” said longtime alcohol critic and economist Frank Chaloupka, adding it “seems like they’re aiming

for drinkers who are looking to get more for their money.” U. Minn prof Traci Toomey agreed: “Clearly, they

are promoting this beverage based on its higher alcohol content.” A priest, Father Michael Pfleger, piled on that

MC “made a conscious choice” to play on higher ABV. MillerCoors said it is “committed to leading the

industry in transparency so our consumers can make informed choices.” Billboards will be down by end of mo,

spokesman said, and MC will transition to different message for MB Ice.

Mil Best, Mil Best Light Down 61% Since 2007 Higher ABV for Mil Best Ice brand is part of MC’s economy

strategy. Mil Best Ice about level at 1.4 mil bbls in last 8 yrs, but now bigger than Mil Best and Best Light

combined. Mil Best and Mil Best Light are down 2.3 mil bbls, 61% since 2007. The 2 brands were estimated

3.4 mil bbls then and 1.3 mil bbls in 2015. Tho only about 6% of MC volume in 2007, they accounted for

almost 20% of its dropoff in last 8 yrs. Best and Best Light continue down double digits in Nielsen all-channel

yr-to- date thru Dec 10, while Mil Best Ice down 5.1%.

MillerCoors

bought billboards in Milwaukee area that simply said “Milwaukee’s Best Ice Now 6.9% Alc/Vol.” Mil Best Ice

used to be 5.9%. Billboard showed picture of 3 variants of Mil’s Best. This is very rare, perhaps unprecedented

example of brewer flat-out stating its ABV as an ostensible reason for purchase. This billboard got extensive

coverage in today’s Mil Jnl Sentinel, including a number of critical comments. “I haven’t seen anything like

this before,” said longtime alcohol critic and economist Frank Chaloupka, adding it “seems like they’re aiming

for drinkers who are looking to get more for their money.” U. Minn prof Traci Toomey agreed: “Clearly, they

are promoting this beverage based on its higher alcohol content.” A priest, Father Michael Pfleger, piled on that

MC “made a conscious choice” to play on higher ABV. MillerCoors said it is “committed to leading the

industry in transparency so our consumers can make informed choices.” Billboards will be down by end of mo,

spokesman said, and MC will transition to different message for MB Ice.

Mil Best, Mil Best Light Down 61% Since 2007 Higher ABV for Mil Best Ice brand is part of MC’s economy

strategy. Mil Best Ice about level at 1.4 mil bbls in last 8 yrs, but now bigger than Mil Best and Best Light

combined. Mil Best and Mil Best Light are down 2.3 mil bbls, 61% since 2007. The 2 brands were estimated

3.4 mil bbls then and 1.3 mil bbls in 2015. Tho only about 6% of MC volume in 2007, they accounted for

almost 20% of its dropoff in last 8 yrs. Best and Best Light continue down double digits in Nielsen all-channel

yr-to- date thru Dec 10, while Mil Best Ice down 5.1%.

Following

4-straight 4-wk periods when beer volume up 2-3% in Nielsen all-outlet + convenience scans, from Nov 12 thru

Dec 3, volume flat for 4 wks thru Dec 10. And 0.1 shaved off yr-to- date pace to +0.6%. Import and

superpremium segments maintained 7-8% gain paces in most recent period. But craft trend slipped back below

+1%, FMBs down 1% and premium trends really softened. AB and MC trends softer for 4 wks than YTD. So

were Boston, HUSA and Diageo Beer (each down). Pabst and NAB did better for 4 wks than YTD (both up).

Constellation truckin’ along at +15% and Mike’s up double-digits in most recent period. “Remaining domestic

brewer” trend, pretty good proxy for craft ex-Boston, up just 1.8% for 4 wks, +7.5% YTD. No major brand

trend shifts, tho each of top 4 brands softer for 4 wks than YTD and Coors Light still only gainer among ’em so

far, eking out 0.5% gain thru Dec 10. Interestingly, 5 of next 6 brands up for 4 wks: Corona, Busch Light,

Modelo Especial, Michelob Ultra and Busch; and each of those except Busch up yr-to- date. Natty Light down

for 4 wks and YTD. These sluggish near-term numbers fit with anecdotal reports that Dec kinda tuff so far.

Neat post by Ad Age allows you to take a trip down memory lane with

Super Bowl ads over past 50 years. Obviously beer commercials a big part of that history, and you can see in

early years, other brewers besides AB were running Super Bowl spots, before AB locked up exclusivity.

There’s a Schlitz spot from 1969, with tagline “When you’re out of Schlitz, you’re out of beer.” Also Miller

Lite spot in 79 with famous QB’s, and actually a Lowenbrau spot that year too. There is series of Miller High

Life and Lite spots in 81, 83-85, and then AB begins to takeover Super Bowl with “Give me a light” for Bud

Light in 95, Spuds McKenzie in 88, Bud Bowl in 89-90, debut of frogs in 95 and Bud Light’s “I Love you man

in 96 and “Wassup” spot in 2000.