As advertisements with active pro athletes get set to take flight this year, AB already plans to have “at least one Budweiser ambassador in every baseball market,” where it has an existing deal with the team, reported Philadelphia Daily News. “Fans are first and foremost connected to currently active players,” noted cmo Marcel Marcondes. “That is what drives the conversation” and “influences culture,” he added. AB has deals so far with Houston Astros’ George Springer and NBA star Kevin Durant while Yuengling has lined up Phillies ace Aaron Nola, who has already promoted brewer on his Instagram acct. 

Report notes that opportunity for active athletes to endorse beer brands “was driven by professional athletes’ growing interest in controlling their individual brands,” and the players’ associations in baseball and NBA “wanted a larger share and more control of beer ads that were using their sports and occasionally their images as backdrops,” noted News. So far, NFL still prohibits alcohol ads for active players.  All beer ads with baseball players “will promote responsible drinking,” and may use game footage or the player talking directly to audience, but they will not be seen drinking a beer, said Tim Slavin, chmn of business affairs for Major League Baseball Players Assoc.  He added that MLPA is open to similar deals with wine and spirits co’s as well.   

Dispute over whether Bell’s Brewery unreasonably failed to approve transfer of its brands to Premium of VA (Reyes operation) when Premium purchased Loveland in late 2018 will go to arbitration, as Bell’s sought.  Recall the history: Bell’s refused to transfer its brands, claiming Loveland/Premium did not provide all the documents it requested.  Bell’s then filed intent to terminate Loveland.  Distribs filed complaint with VA Alc Bev Comm, Bell’s sought a hearing, Loveland threatened further charges when Bell’s refused to fill orders and Bell’s finally pulled brands from the entire state.  Bell’s also filed motion to dismiss Loveland/Premium charges and compel arbitration. 

VA ABC ruled in Bell’s favor ordering arbitration, tho “subject to ABC review,” which could postpone a final resolution.  In lengthy analysis, VA ABC officials weighed federal concerns, Commerce Clause, 21^st Amendment, VA franchise law, the contract, you name it.  Agreed with some of Bell’s arguments, tossed others. Mostly tossed distribs’ arguments, rejecting their insistence that ABC had sole authority under VA franchise law to resolve this dispute and that arbitration clause in VA franchise law restricted to valuation issues.  Rather, ABC concluded that the franchise law “contemplates arbitration,” that the legislative goals behind it “require arbitration” and that the contract between the parties “requires arbitration.”  (In footnote, ABC points out “Loveland agreed to arbitrate all disputes but now resists doing so.”)  Along the way, ABC officials deem some of Bell’s positions “untenable” and Loveland’s positions “misguided” and they’re careful to point out that “other facts” could result in different outcome.  But this dispute going to arbitration process, where “a single arbitrator can address the primary issue – reasonableness in a straightforward disclosure context – in a simple, more expeditious, and cost-effective manner.”  But, again, “subject to ABC review.”

AB cmo Marcel Marcondes gave window into how AB views biz these days, with some fresh takes on data (some shown in ABI’s results) in call with INSIGHTS.   Looking at all light beers combined at various price tiers, turns out AB has 61 share of light beer volume and MC 35.7 share last 12 weeks thru 4/21 in IRI multi-outlet + convenience.  That’s 3.4 points more than it had in calendar 2017 (57.6), accompanying AB deck shows. And MC has 1.4 points less than it had then (37.1).  Of course, much of AB gain from Ultra, but Natty Light sales also popping these days.  Looking at this broader picture of all light beers, said Marcel, is a way to “go with the flow of consumers.” 

AB Gaining Share of Mainstream (Core and Value) in 2019 ABI’s share of mainstream (core & value) volume much improved and now growing yr-to-date.  AB lost 0.6 share of those segments in 2017, 0.35 in 2018, but it’s gaining slight share in 2019, mostly on back of big Natty Light gains.  Natty Light gained 0.86 share of these segments.  Even Bud Light share trends improving in these segments.  It lost 0.73 in 2017, 0.64 in 2018 and 0.60 of those segments so far in 2019. 

AB Gained Share of Premium Lights in Many Focus Mkts  Dialing in further, AB showed that it gained share of premium light volume in 8 of 15 focus mkts.  This is all about “having a more local strategy,” according to Marcel.  Data far from entirely positive.  In fact, AB lost 1 share of premium lights in these 15 mkts collectively last 12 weeks, compared to 0.7 for 52 weeks.  But it gained 5.55 share of premium lights in Denver (probably because beer now sold in grocery stores in CO), by far biggest swing in any mkt.  It also gained 0.23 share of premium lights last 12 weeks in Philly (Dilly Dilly), 0.68 in Cleveland, 0.58 in Tampa/St Pete and 0.97 in Boston.   Lost over 1 share of premium lights last 12 weeks in LA, Atlanta, Dallas/Fort Worth and Houston, several of top 10 metro areas.

Bud Light Drops Increasingly Go to Ultra, Not Competitive Brands  What AB calls “core” segment “is being compressed as volume trades-up to Core+ and trades-down to value,” sez AB. In that context, “Bud Light losses to Ultra are accelerating” while BL “losses to Miller Lite and Coors Light are declining.” At same time, Bud Light is growing “brand health KPIs,” AB sez, tho volume still down 5.6% thru Apr 21 in IRI MULC.

Connect to Consumer Trends; Ultra Pure Gold “First Mover” With “Scale”; Cans, Draft As AB seeks to  become more “connected to consumer trends,” it talks to 6,000 consumers online every day.  AB apparently views this as more robust interaction than the old focus groups.  “Organic” is big across a variety of CPG categories, “almost stupid” that it hadn’t previously happened in beer.  So, to get Michelob Ultra Pure Gold off to rapid start and certified organic is point of pride for Marcel, especially that it was “first mover” and is growing so rapidly “with scale.”  Up next: Ultra Pure Gold will be coming in cans and draft in CA and AZ.  Another sign of Ultra Pure Gold’s success: it’s #40 brand in IRI $$, nearly as big as Sierra Nevada Pale Ale.

Hard seltzers continue to reach new heights, keeping up 250% growth pace and gobbling share in Nielsen All Outlet channels this yr. In fact, hard seltzers surpassed 2 share of total beer/FMB/cider category $$ in latest 4 wks thru Apr 20, according to another Nielsen report. Sheesh! White Claw and Truly continue to lead the pack, tho White Claw pulling away as #1. Its $$ accelerated, up 331% for 4 wks, with 47 share of segment $$ nationally. Truly up 241% for 4 wks with 26 share. Other hard seltzers, including AB Bon & Viv, MC’s Henry’s Hard & Sparkling, Diageo’s Smirnoff Sparkling, and slew of newer launches all makin’ headway too.  All this hard seltzer growth is just lookin’ at off-premise, coming even before summer season really kicks off.

Truly Draft Aims at Light Beer; $1065 “Potential Profit per Keg” Indeed, draft and on-premise sales of hard seltzers are just getting started, and an increasing focus for several cos. And Truly seemingly takin’ aim at light beer on-premise in the process. Truly Pure draft sell sheet claims that “roughly 1 in 5 drinkers would order Hard Seltzer instead of light beer.” It also sez just over half (52%) of 21-34 yr-olds “would be willing to pay more for hard seltzer at a bar or restaurant” and “more than half” of ’em “believe Hard Seltzer is a better light alcohol beverage option than light beer.” Truly Pure 1/2 bbl kegs have “potential profit” of $1,065 per keg, Boston estimates. “Potential garnishes” listed include lime or lemon wedge, fresh squeezed citrus juice, floating blueberries or raspberries, muddled mint & raspberries, and grenadine.

Here Comes Another Local Launch; Bold Rock Hard Seltzer This Jun in VA, NC; 6pks and Draft Another smaller supplier is lookin’ to get in on all the hard seltzer action at local level. Red hot regional cider co, Bold Rock, will launch Bold Rock Hard Seltzer statewide in VA and thruout western NC this Jun, co shared with INSIGHTS. (Editor’s note: INSIGHTS has seen over 20 new hard seltzer launches from smaller suppliers since last yr, and this marks 3rd such launch from a hard cider co.) Bold Rock hard seltzers come in two flavors, Grapefruit and Cucumber Melon, clocking in at 4% ABV, 82 calories and 1g of sugar per 12oz serving while touting “all-natural ingredients,” available in 6pk cans and draft. Co lookin’ to leverage strength in home mkts to become “leader in the quickly emerging regional craft hard seltzer space and are pretty bullish about our expected position,” director of new biz development Lindsay Dorrier III told INSIGHTS. Bold Rock plans to roll out draft “strategically throughout our distribution footprint prior to package launch to develop trial and enthusiasm.” And co will use VA and western NC “as a proving ground and then hope to expand distribution heading into 2020.”

Meanwhile, Bold Rock Hard Cider is up 11% YTD, while lapping tuff comps on last yr’s sizable Rosé launch. And “we are on pace to exceed our projections in 2019,” Lindsay noted.   “We will continue to innovate and nurture the hard cider business in tandem with our other ongoing projects,” promising “a number” of new cider initiatives coming soon.

Beer volume up 2.4% in latest 4 weeks thru Apr 27 in Nielsen all outlet.  Best 4-week trend in months.  In this period, FMB $$ up 25%, driven by hard seltzers, which are still accelerating (see below).  FMBs gained 1.6 share of $$ to 8.9.  Far outstripped imports and superpremiums as largest growth segment in period.  In fact, #1 FMB and seltzer co, Mike’s, $$ up 56% and gained 1 full share for 4 weeks.  That was even more than a still very healthy Constellation, which grew $$ 12% and gained 0.9 share.  AB and MC still losing about 1 share of $$ each.  But good news for AB is that its volume up 0.5% nationwide for last 4 weeks.  And MC down just 0.5%. Both much better trends than yr-to-date (AB -1.4%, MC -3.2%).  What’s more, Miller Lite up 4% and actually 1 of top 10 growth brands in period.  Meanwhile, each of Modelo Especial and Michelob Ultra accelerated and gained more share too.

Two notable exchanges on ABI’s conference call this morn. First, Redburn’s Chris Pitcher asked ceo Brito basically (we’re paraphrasing) if growing emphasis on premiumization and innovation meant less focus on Bud and Bud Light.  ABI has already made several statements, indicating this shift in wind, but Brito went a bit further.  It’s “a portfolio game as opposed to 1 or 2 brands,” said Brito.  While Bud and Bud Light are the “most important brands,” Ultra “already 10% of our portfolio and growing.”  Brito pointed to AB’s regional craft (growing double digits), Stella, new line extensions like Ultra Pure Gold, Bud Reserve series.  “All those things are getting consumers to trade up. It’s true that there is some cannibalization” but “at a much better margin” and so in that sense such cannibalization is “accretive.”  In future “some brands will be smaller, some brands will be bigger.”  As AB aims to “lead future growth,” it’s increasingly clear that it will focus more resources and attention on new brands that address consumer needs, than brands that drove the bus 20-30-40 yrs ago.

The 2d notable exchange was about capacity.  HSBC’s Carlos Laboy asked if AB would make moves in Mexico or US regarding capacity.  Two very different stories. In Mexico, ABI just opened new brewery.  Since ABI “still imports a sizable amount of volume” from US to Mexico, brewery coming on-line there can fill that gap and Mexico biz now “more self-contained.” (US will lose that volume.) “In Mexico, we’re adding capacity.  In the US, we have enough capacity,” Brito said but “we continue to invest.”  Brewery footprints are “very dynamic” with wide assortment of new brands, packages and growing focus on regionalization.  Note Brito said “enough,” not too much, despite loss of 20 mil US bbls in a decade.  But sure didn’t sound like AB would be closing brewery anytime soon.

Bud and Bud Light available for $16.40 per 30-pack, including redeeming $3 instant coupon at Piggly Wiggly chain in WI, in screenshot INSIGHTS saw.  Same chain reportedly had even lower price on Miller Lite and Coors Light last week. At $15.60 per 30 pack. In both deals, consumers pays slightly more than $3 per 6 pack.

AB had good Apr at least in parts of midwest and south, with a number of distribs up high singles with extra day and Easter timing, according to several anecdotal reports, some data.  For some, it put AB close to even or slightly up yr-to-date.  Recall, AB did better in parts of midwest last yr too, including slight gain in WI and near even in MN too.

You could see this coming late last yr, but now big change is here.  Michelob Ultra passed Miller Lite in yr-to-date $$ sales in IRI MULC, after passing Bud last yr.  Yup, Ultra now #3 brand YTD thru Apr 21 in IRI multi outlet + convenience.   Its $$ sales are up $76.2 mil, 15.5% YTD to $569 mil in IRI MULC.  For 4 weeks, it is only $3 mil behind #2 brand Coors Light.  And the 2 brands headed in opposite directions. But #1 growth brand is Modelo Especial.  Up $84 mil, 19.9% to $508 mil.  It is closing in on Bud for #5 slot yr-to-date ($524 mil).  And Modelo Especial already almost $10 mil in sales larger than Bud for 4 weeks.  Hard to imagine more potent illustrations of high end’s continued ascent than Ultra and Modelo Especial each in top 5 scan brands.  And each still growing double digits.

Other 3 top 5 growth brands hit those high end hot buttons hard, including innovation, beyond beer, low ABV, organic and premiumization.  All 3 more than doubling.  White Claw variety pack is #3 growth brand.  Up $40 mil, 352%.  Corona Premier, combining trends of top #2 growth brands, is #4 and up $28.6 mil, 186% (tho “only” 50% for 4 weeks).  And Michelob Ultra Pure Gold is #5, up $25 mil, 517%.  Top 5 growth brands gained 2.2 share of $$ and those 3 smaller new brands gained 0.92 share of $$.

AB sales-to-retailers down 1.9% in Q1, reported ABI this morn. That’s almost a point better than last yr and 2 points better than MC in Q1 (-3.8%).  Like MC, shipments a full point ahead of depletions, down 0.9%.  And with robust 2.6% rev per bbl increase, AB revs up 1.6% in qtr.  Following slight drop in 2018, EBITDA started out 2019 up 2.5% in Q1, with “margin expansion” of 34 basis points to 39.6%.

“Our market share performance [in US] continues to improve,” said ABI. AB lost only 10 basis points of share in first qtr, it figures, as total beer mkt STRs down an estimated 1.6%.  That was AB’s “best quarterly market share performance since 4Q 2012,” the company said.  Yet AB down 1.1 share of $$ yr-to-date thru Apr 21 in IRI multioutlet + convenience, and 0.8 share of volume. That’s almost identical to last yr’s share loss in IRI. And a much larger share loss than what ABI reports.

Nevertheless, AB has 9 of top 15 mkt share gainers in Q1, according to IRI (as cmo Marcel Marcondes shared last week at Bev Forum).  And its “above core portfolio” gained 90 basis points of share, “led by Michelob Ultra, our regional craft portfolio, Bon & Viv Spiked Seltzer and our innovations in the segment.”  Ultra “continues to shine,” regional craft portfolio “grew double digits in” qtr and innovations “maintained their strong performance and gained share, led by Michelob Ultra Pure Gold Organic, Bud Light Orange and the Budweiser Reserve Series.”  Still, mainstream “remains under pressure” as Bud and Bud Light “trends remain unchanged.” Those top brands + AB’s value portfolio (where it’s gaining ground) lost 1 share.

ABI global volume up 1% in 1^st qtr, compared to Heineken up 4%, Carlsberg up 6% and Molson Coors down 5%.  But its global revs up 5.9%.  “Growth continues to be driven by price whilst volume growth remains lackluster,” said RBC Capital Markets analyst James Edwardes Jones.   ABI also said that it is indeed exploring an Asian IPO to further reduce its debt and set up potential M&A in region.  Revs and earnings slightly below consensus, stock down slightly at presstime. But ABI stock still up 35% yr-to-date, following big drop last yr.