Remarkably, after decades of decline, teen drinking rates continue to drop in the US. Latest results from annual

Monitoring the Future (MTF) surveys showed every measure of lifetime, past year and past month use of

alcohol among 8 th , 10 th and 12 th graders declined in 2016. Binge drinking rates (5+ drinks in a row in last 2 wks)

fell to just 3.4% among 8 th graders, lowest rate since 1991 when question first asked and down by almost 75%

from peak in 1996. Among high school seniors, binge drinking rate also at all-time low of 15.5%, half the rate

it was in peak yr 1998. Gotta note this amazing progress happened while more and more products hit the mkt,

alc bevs got more available, mktg/promotion increased and alc bevs got more affordable.

Public health advocates rarely, if ever, even acknowledge this remarkable progress and certainly don’t attribute

it to extensive industry/govt education/awareness efforts. But some academics do notice, beyond those doing

the surveys. Drinking trends are “gigantic good fortune, and I really don’t think we as a field or society more

generally have spent as much time as we should have celebrating and reflecting on why today’s kids are so

great in this regard,” drug policy researcher Jonathan Caulkins (Carnegie Mellon) told USA Today. Nora

Volkow, director of fed Natl Inst on Drug Abuse, like others, speculates that increased use of social media and

gaming may be factor in deterring drinking and drugging (most illicit drug use has dropped too). “There may

be a protective effect brought about by the fact that [young people] don’t have so many occasions to get

together where the use of drugs would be facilitated,” she told USA Today, tho no data yet to support that

theory. We’ll have lots more on MTF results in our December Alcohol Issues INSIGHTS.

Total IPA volume up

26% for 52 weeks thru Nov 27 in IRI multi-outlet + convenience, but closer look at top 10 IPA brands shows

very mixed bag of trends in what remains craft’s biggest growth segment. Four top 10 IPAs are declining, with

3 down double digits. Four are flying, up 40% or more. Still on top, Lagunitas IPA is steady as she goes at 2.2

mil cases, up 19%.

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

Torpedo is still #2 at 1.6 mil cases, but down 5%. The 2 fastest gainers are #3 and #4, Founders All Day IPA

and Goose Island IPA, up 88% and 91% respectively. Each sold a little over 1 mil cases in IRI MULC last 52

weeks. Meanwhile, Sam Adams Rebel dropped to #5, down 15%. It still sold over 1 mil cases too. Comin’ up

fast behind it is L’il Sumpin’ Sumpin’, up 51% to 825K. Then Bell’s Two Hearted Ale, also up 41%, to

734,000 cases for 52 weeks. Both L’il Sumpin and Two Hearted could pass Rebel next yr if present trends

continue. Below that, New Belgium Ranger (recently renamed) and Redhook Long Hammer, are both down

double digits. Stone IPA is #10, up 11%.

ABI has already announced sale of over $24 bil in

assets out of its over $100 bil deal to buy SABMiller, following this morning’s announcement that ABI will

indeed sell its Eastern Europe biz to Asahi for $7.8 bil. That includes $12 bil buy of SABMiller’s 58% stake of

MillerCoors by Molson Coors, $2.8 bil for European brands including Peroni and Grolsch (also Asahi) and 49%

stake in China Resources to Chinese govt for $1.6 bil. Still to come: sale of SABMiller’s Coke biz in South

Africa that some have estimated worth $3-4 bil. So over ¼ of biggest beer deal of all time will be resold.

Meanwhile, purchase price of Eastern European assets higher than most analysts estimated, at 14-15x approx

$525 mil in EBITDA in year thru Mar 2016. Japanese mkt reacted negatively, with Asahi stock dropping over

4.6% in 1 hour before mkt closed, following announcement, according to WSJ. Asahi has now invested over

$10 bil and will become #4 global beer player (according to FT) with 24% of its biz outside home mkt. Asahi

will now have about a 9 share in Europe, Bernstein’s Trevor Stirling told Reuters, behind Heineken with 20 and

Carlsberg with 12 (ABI under 9?). Deal expected to close next spring.

ABI Strengthens Tie with C&C; Largest Vietnamese Brewery On the Block In other global news, AB InBev

and Ireland’s C&C Group expanded and extended their distribution/contract brewing relationships in UK. Key

elements: 1) ABI will distribute C&C’s cider portfolio in England, Wales, Channel Islands and Isle of Man; 2)

C&C will continue to contract brew “certain” ABI brands in Glasgow and continue to distribute them in Ireland,

Northern Ireland and Scotland. No money changed hands, but C&C expects growth from both sides of “long

term, multi-year contracts” and agreements to be “earnings neutral” in year one, “accretive thereafter.” That’s

especially from expanded cider sales, now part of “a wider portfolio of strong beer brands and from the greater

distribution reach and capability that AB InBev can bring,” C&C said. Analyst Andrew Holland speculated that

deal may mean ABI will reduce support for Stella Cidre there (one of few top ciders still growin’ here in US),

but called “unlikely” speculation that ABI wants to eventually buy C&C’s Magners cider, reports just-drinks.

In Vietnam, govt continues to explore sale of partial stake in largest brewer there, Saigon Beer Alcohol Bev Co

(Sabeco), tho still in no hurry, Wall St Jnl reported yesterday. Sabeco is #1 brewer in Vietnam with over 40

share, one of biggest listed firms in Vietnam, with mkt cap of $4.6 bil. Govt “could sell at least 40%,” sources

tell WSJ. Sale process now slated for next Apr, but govt has delayed before. Recall, Vietnamese govt also

looking to sell part of its stake in #3 brewer in Vietnam, Habeco.

Total beer biz

avg price increases dipped to just 30 cents, 1.3% per case last 4 weeks thru Dec 3 in Nielsen all outlet data.

MillerCoors avg price increase per case dipped to 8 cents, 0.4% last 4 weeks thru Dec 3 in Nielsen all outlet

data, while AB avg price increase at 17 cents, 0.8%. Each showed slightly improved volume trends, but MC

lost same 0.7 share of $$ as YTD, while AB lost 0.8 share of $$, compared to 1.1 YTD. Meanwhile,

Constellation still crankin’ ($$ up 21% for 4 weeks) and its avg prices up 67 cents, 2.2%. It gained 1.5 share of

$$ last 4 weeks. But Boston Beer avg prices down 13 cents, 0.4% per case. Gotta note too, Coors Light showed

markedly improved short term volume trend. Up 2.6% for 4 weeks and it actually gained 0.1 share of volume.

But avg prices per case up only 6 cents, while Miller Lite up 7 cents per case. Bud Light avg prices up 23 cents

per case, and Bud up 19 cents, while volume down 2-3%.

Following decision to ground

Goldwing test before liftoff, MC took tuff look at its Easy Tea intro and decided it ain’t so easy after all. “Just

as it’s important that we go hard after new product opportunities,” said cmo David Kroll, “it’s equally important

we acknowledge that sometimes a proposition won’t stick the way we hoped. To that end, the Easy Tea test is

concluding, effective immediately.” The volume won’t be missed. It sold a whopping 2,838 cases yr-to- date

thru Nov 27 in IRI multioutlet + convenience. Twisted Tea Original is at nearly 4.2 mil cases, up 20% YTD.

Asked whether Molson Coors’ debt to pay off SABMiller’s stake in MC would limit future craft deals, MC ceo

Gavin told Chicago Tribune: “It won’t be a constraint on us if the right deal came along. We’ve got a very clear

idea of who we’d like to be partners with.” Gavin didn’t name names, natch, but noted MC’s craft strategy

involved filling holes in portfolio (hoppy, local, full-flavored) and partners had to “get through those few filters.

Was this a gap in our portfolio? Definitely a regional play? Did it have potential to grow beyond that? How

did it look in our distribution network?” Not a “necessity” that craft acquisitions go national, Gavin added, but

“it would be nice if one of them did one day become a national play like a Goose Island or a New Belgium.”

On MC’s oft-stated goal to get volume even in 2018 and up in 2019, Gavin said that “rallying cry” was a “big

deal for the employees. Because quite frankly, this organization had just become accustomed to and accepting

of somewhere between 2 and 3 percent decline every year.” MC made money and that viewed as success, but

not a “complete picture of success, which is frankly what had to change. We were losing relevance with our

distributors because, as some of these faster-moving (craft) brands grew in the distributors’ houses, our share of

the house was shrinking.”

Saving Extra Gold Gavin also talked portfolio a bit, noting Hamm’s among “real jewels” in economy portfolio,

that “millennials love the old heritage, skipping a generation and going back to what their grandfathers drank

maybe.” Asked about discontinuing poor performers, Gavin said “we’ve killed some brands, but not a lot.”

One “difficulty” in killing brands: “there is a distributor somewhere in America where one of our smaller

brands is really important to them.” He gave example of Extra Gold, which still sells a mil cases for one Philly

distrib: “You can’t go to that distributor and say I’m going to discontinue a million cases. It’s small relative to

our overall business, but it’s money to him and it’s really important to him.”

Well that settles it. Following DoJ’s

promise to carefully scrutinize any further AB craft acquisitions, and just a little over 1 mo after deal

announced, ABI “received federal antitrust approval to close our transaction with Karbach Brewing Co., which

we anticipate will occur in the next several weeks,” co announced today. Recall, this is first time AB’s done a

deal in a state where it still has over 50 share of shipments (52.3 in 2015). DOJ AOK anyway.

Review of 3d qtr alc bev media spending in

Kantar data showed beer responsible for “majority of the spending increase” in alc bevs, up 4% in all. Leading

the charge, light beer spend up $12 mil, 6% and regular beer up $8 mil, 4%, said CITI. A few brand #s given

too: Bud Light spending up 18%, Coors Light up 10% and Michelob Ultra up 52%. Suggests some others

likely down. In regular beer, Heineken spending nearly doubled in Q3 (+95%) and Corona Extra up double

digits (+16%). Meawhile, Boston Beer cut spending 29%, according to CITI, with cuts across board.

AB down nearly 2% YTD thru Nov in one of its top-10 states, OH,

INSIGHTS understands.  That’s right in line with natl STRs thru Q3 (see Oct 28 issue). AB’s lost 5 share in 5

yrs in OH, shedding 670K bbls of shipments from 2010 to 2015. It still had dominant 52 share of shipments,

but looks like that’ll dwindle again in 2016. This yr, Bud Light and Bud each down close to 1%, subpremium

brands down more and Ritas collectively down in the teens, while Mich Ultra flyin’ up 20%+ and High End

(including Stella) collectively up high-singles.

Each of 3 financial

analysts on panel at this morning’s Beverage Digest Future Smarts conference took very seriously the notion

that ABI may buy Pepsi or Coke next, once it pays down debt.  Look at ABI’s “cash generation power,” said

Rabobank’s managing director Ross Colbert, “and its ability to delever.”  When ABI gets back down to its

targeted 2x debt to EBITDA, “they’ll have the ability to do a $200 billion transaction,” said Ross.  Yep, you

read that right.  $200 Billion.  That would give ABI “the ability to buy any big brand,” including Coke or Pepsi,

said Ross. Their “appetite doesn’t stop in the beer aisle,” he added, noting recent comment from ABI ceo Brito

that ABI reaches 100,000 more accounts than Pepsi.  

There’s “nothing left in the beer aisle that is meaningful” to buy and M&A is a “core competency” of ABI, said

Consumer Edge veep Brett Cooper.  ABI will continue to grow likely through “verticals within the CPG world

that they’re looking to dominate over time,” Brett continued.  He also pointed out that ABI is “opportunistic” so

look for a “stumble, market related or otherwise,” like the beer price war in 2005 or the emerging market

currency problems that emerged in recent years.  Even tho Pepsi could be easier to digest in some ways (ABI

would sell off snacks and it still own most of its distribution),  Coca Cola “is sort of their dream in soft drinks,”

concluded CSLA’s Caroline Levy, as “they like to buy leading brands.”  

Separately, Brett said in his introductory comments that with “beer struggling for volume growth” and AB, MC

and Pabst all down, “it would not surprise us to see” brewers “get more active in non-alcoholic beverages.”  If

this happens, it will be “in order to gain favor with distributors as well as retailers.”  That was certainly one of

the motivations behind AB’s deal with Starbucks for AB and its distribs to sell Teavana brand.

Coca-Cola’s New CEO a Dealmaker Too? James Quincey, is “the right person to lead KO into the future,”

wrote Bonnie Herzog, senior analyst at Wells Fargo Securities following announcement that Quincey, current

prexy/coo will takeover ceo role May 1, while Muhtar Kent will remain in chmn position. Besides bringing a

“refreshing approach,” one reason Bonnie positive on move is that “given James’ background and significant

deal experience, he could accelerate KO’s growth even further through stepped-up acquisitions over the next

several years.”

Focus on Buffett Board Move While media and mkts focused on major managerial shift at KO, “we think the

focus should be more on the Buffets relinquishing their Board seat (held by Howard, Warrens son), as that may

pave the way for Berkshire Hathaway to divest its $16.6Bn stake in KO,” wrote Pablo Zuanic of Susquehanna.

Why is that key? Because “those counting on an eventual bid some day from 3G/BUD for KO, may think BH

being out of the picture would make it less awkward for that group to buy KO,” noted Pablo. That way,

“Buffett’s ultimate legacy would not be having handed over the keys of the most iconic American brand to a

group of foreigners.” However, Pablo notes Susquenhanna take differs and that Buffett board move “may point

to, some day, BH helping 3G/BUD buy another soft drinks company.”