Those who hung in ’til very end of Beer Insights Seminar yesterday were rewarded with truly revealing slide from consultant Bump Williams.  He surveyed brewers, distribs and retailers about their “growth strategies” goin’ forward.  Listed top 10 for each.  Most important observation: very little in common across these 3 lists.  So brewers, distribs and retailers ain’t at all aligned on how to grow beer and/or their own bizzes, and even less so in 2016 than 2015.  Among other issues, brewers lookin’ at beefin’ up share of mind for their brands, expanding their footprints, direct retail sales to consumers, flavors/innovations and “become local,” natch.  Local and flavors included among retail strategies too.  But top priorities for retailers: increasing foot traffic, space mgt, shopper loyalty, cross-category merchandising, basically improving service to customers to keep ’em in store and buyin’ more. What are distribs focused on?  Top 5: delivery efficiencies, picking up new brands, eliminating OLD beer losses, identifying profitable brands and reducing SKUs.  This lack of alignment between tiers will make growth of beer category that much more difficult in 2017, Bump believes.    

Coupla other observations, especially from distrib list.  Nothin’ about supporting/boosting efforts to build mainstream beers, still the bulk of the biz, or the category overall.  Indeed, “new brands,” hot brands, “craft spirits” and “profitable brands” are clear priorities (not that mainstream can’t be profitable), even while “cut loose” [presumably underperforming] brewers and SKUs also on list.  Note too prominence of eliminating old beer losses as #3 strategy.  We’ve noticed lotsa “dusty bottles” at retail lately and had this discussion with a few folks at seminar.  No doubt, old beer gettin’ to be a more common and more expensive proposition for distribs these days and getting increased attention, along with consumer confusion, SKU reduction, impact of resets and how expanding retail sales of craft brewers (taprooms/tasting rooms) affecting on- and off-premise beer biz. 

Modelo Especial  now 15.4 share of $$ sales in Los Angeles metro area IRI multi-outlet + convenience for last 12 weeks thru Oct 30.  That’s up 2.23 share from last yr and way ahead of Bud Light in period. Bud Light at 12.53 share of $$, down 1.22.  What’s more Modelo Especial continues up at double-digit clip, while Bud Light down at double-digit rate in nation’s largest scan mkt.  Bud Light still at 16 share of volume, 3 share ahead of Especial by cases.

AB sold $116.7 mil worth of beer in LA last 12 weeks, compared to Constellation’s $115.6 mil (including Ballast Point).  They are running neck-and-neck, with AB at 29.7 share of $$, down 1.9, while Constellation at 29.4, up 2.8.  Nearly a 5 point swing.  AB $$ sales down $9.8 mil, 7.7% in 12 week period, while Constellation up $8.8 mil, 8.2%.  Meanwhile, MillerCoors down to 17.7 share, lost 1.1 share as its $$ sales down 8% too in period.  Heineken at 10.1 share, down 0.56, with $$ sales also down 7%. So 4 players still have almost 88 share of LA mkt, but some big swings and one big winner.

But even while Constellation closing in on #1 position in LA metro, one potential chink in its armor has emerged in form of Corona in LA.  Corona $$ sales down 7% for last 12 weeks and it lost 0.5 share to 8.3.  So Modelo Especial almost 2x as large as Corona here.  Interestingly, Corona still doing just fine nationally.  $$ sales up 10% in IRI nationally during same period.  Also worth noting, Pacifico up double digits, over 2 share of $$ and a top 10 brand in LA scans. So it’s coming on, bigger than Dos Equis or Michelob Ultra there.  And while AB’s Montejo brand sales almost cut in half in LA, Estrella Jalisco at 0.7 share of $$ last 12 weeks, in top 25 brands.

Interesting chart shown by Constellation Brands Beer Division prexy Paul Hetterich at both STZ’s Investors Day and Beer INSIGHTS Seminar illustrated ongoing ascension of high end beer in major metro areas.  High- end brands are 2 of top-5 slots in IRI $$ sales in 6 top metro areas these days, sometimes the top-2 slots. For example, Corona and Heineken are #1 and #2 in NYC and in Miami, he showed.  Corona Extra and Modelo Especial are #1 and #2 in San Fran/Oakland.  Modelo Especial #1 and Corona Extra #3 in LA (all data is IRI MULC for 12 weeks thru Sep 4).  And in 2 midwestern mkts in top 10 metro areas, Modelo is #2 and Corona #4 in Chi, while Corona is #4 and Modelo Especial #5 in Dallas/Fort Worth. 

Dallas/Fort Worth is the only mkt of these 6 metro areas where premium light beers still held the top 3 positions. It’s also the only one of these where the #1 national brand Bud Light is still #1 brand (it’s #2 in just LA), tho it’s in top 5 in all 6 cities.  Budweiser is #5 in LA, San Fran/Oak and Miami, #4 in NYC.  In general, the high end keeps getting more powerful position in these top cities, and will spread from there, Paul maintained, part of what gives him confidence of continued high-end growth. 

Top execs gotta be guarded about what they say in forums like Beer INSIGHTS Seminar.  But AB InBev ceo Brito provided combination of strategy insights, frank answers to some tuff questions and quirky personal notes (regarding chocolate, toothpaste and shampoo -- really) in wide-ranging discussion at our meeting yesterday.  Here are some highlights:

ABI Turned Around Big Brands in UK and Brazil; Position vs Composition in US  On key question about AB’s “share stabilization” goals in US, Brito claimed “very good progress,” and that US team making “right calls.”  Pointed to reduction in share loss of Bud, gains from Michelob Ultra, High End and craft.  Still “some fixing to do” on Bud Light, Brito acknowledged.  Efforts so far have “moved some indicators,” but not translated to sales gains.  ABI has turned big brands before, Brito reminded.  Pointed to Stella Artois slump in UK that ABI reversed by adopting more premium image.  Also, ABI got Brahma brand “back to growth” in Brazil by making “new connections” with consumers.  Ain’t easy, Brito acknowledged, and past doesn’t predict future, but it’s possible and “we’re committed to do it” on Bud Light.  He also linked share stabilization to distrib partners and ABI attempts to “get the relationship to a better level.” While volume down, AB gross profits (and distribs’) marched upward, he noted.  “From day one” in US, ABI “liked AB’s market share position” in US, “but not the composition.”  Too much volume in value brands (30%), ABI execs thought, not enough in premium and above.  That gap needed to be “diminished,” and that’s where the margins are.  ABI “not in business to sell cheap beer,” but to “build brands that are premium” and charge a premium for ’em. 

Fillin’ the Gaps, Finding “Shelf Ready” Solutions  While tons of attention paid to “innovation” these days, Brito makes no bones about ABI strategy to “identify gaps” in its own and other bizzes, discover how others “do it better than we do,” learn those cultures and “copy what they do.”  It’s “foolish to waste energy reinventing things that are shelf ready,” Brito added.  He pointed to specific learnings from other brewers when he ran #2 brewer in Brazil.  One of those (perhaps ironically): AB’s Ambassador of Excellence distrib program.  Brito got copy of that program from AB, “took the book” back to Brazil and “never looked back,” he said.   ABI also picked up valuable insights from mtg with Starbucks folks, Brito noted, and now in biz with them on Teavana. 

How Does ABI Get to 20% of Its Biz in Low-Alc, No-Alc Products?  0.0 Beer  As part of responsibility commitments, ABI adopted ambitious goal of having 20% of its volume in low and no-alcohol products by 2025.  It’s 6% globally now and tiny share in big US mkt.  How does it get there?  Not by including any soft drink biz, Brito said.  Goal involves just malt-bev products.  He noted no-alc Bud Prohibition “doing quite well” in Canada and biggest beer segment growth in Germany now 0.0 products.  They’re positioned there as “energy products” (i.e. “like Gatorade”) but “not chemistry,” or with “artificial colors,” rather as natural products with known ingredients.  In Brazil, 0.0 got to 1% quickly and up to 7-8% in some mkts.

Where Are the Americans in Global ABI Top Mgt?  Brito tackled tuff question about why there are no Americans in top mgt in AB InBev head on. Sometimes, he said, “you go for the people you know when you implement change,” people who have “been through the battle” with you. Interestingly, in other parts of world, ABI has “much better mix of nationals and ex-pats” than in US and ABI taking more people from SAB than in previous deals, Brito said. (He did not mention it, but Peter Kraemer, AB’s head brewmaster and supply veep since 2008, is now direct report to Brito as chief of global brewing ops.)  

We’ll get to lots more in beer marketer’s INSIGHTS, including Brito’s comments on learnings from spirits, “pain points” and more on Bud Light.      

Florida is one of a number of states where there’s more than one distrib assn, going back to late 80s when Fla passed franchise law AB didn’t like and all AB distribs, except a few left the assn en masse (3 of those later got into big legal battles with AB).  Earlier this mo, the 2 assns held their meetings together for the first time in decades, openly discussing legislative issues common to all distribs.  Maybe there’s hope yet for split assns. Beer Industry of Florida is home to all the MC distribs, and Florida Beer Wholesalers Assn is assn for AB distribs.  Reyes Bev Group belongs to both. 

Following legalization of recreational marijuana in 4 more states, Constellation “is considering a new approach to livening up its beverages: marijuana,” according to a Bloomberg article. “We’re looking at it,” Constellation ceo Rob Sands told Bloomberg. “There are going to be alcoholic beverages that will also contain cannabis.” Many have viewed marijuana as a threat to alcohol, “Sands sees it as an opportunity,” added Bloomberg.  Marijuana could grow into $50 billion industry over next decade, according to research from Cowen & Co. “Why wouldn’t big business so to speak, be acutely interested in a category of that magnitude,” noted Rob. “If there’s a lot of money involved, it’s not going to be left to small mom-and-pops.”  To those who fear marijuana will cannibalize alcohol, Rob took different view. “People who are using cannabis may be disinclined to drink as much as they might have otherwise, but maybe they weren’t going to drink in the first place and then they drink something,” Rob said. “Maybe the whole thing will work out synergistically.”  

Following legalization of recreational marijuana in 4 more states, Constellation “is considering a new approach to livening up its beverages: marijuana,” according to a Bloomberg article. “We’re looking at it,” Constellation ceo Rob Sands told Bloomberg. “There are going to be alcoholic beverages that will also contain cannabis.” Many have viewed marijuana as a threat to alcohol, “Sands sees it as an opportunity,” added Bloomberg.  Marijuana could grow into $50 billion industry over next decade, according to research from Cowen & Co. “Why wouldn’t big business so to speak, be acutely interested in a category of that magnitude,” noted Rob. “If there’s a lot of money involved, it’s not going to be left to small mom-and-pops.”  To those who fear marijuana will cannibalize alcohol, Rob took different view. “People who are using cannabis may be disinclined to drink as much as they might have otherwise, but maybe they weren’t going to drink in the first place and then they drink something,” Rob said. “Maybe the whole thing will work out synergistically.”  

Total beer biz down 0.2% (volume) last 12 weeks thru Oct 30 in IRI multi-outlet + convenience, supporting other reports that suggested tuffer trends in recent mos.  That compared to up 0.6% yr-to-date.  But imports continued to grow at 7% clip, led by Mexican imports up 10%.  And Mexican imports reached a new milestone.  At 69.6 share of import volume and 69.7 share of $$, rounding up to 70.  They captured all the growth in the import segment.  Gained 3.2 mil cases, 10.2% last 12 weeks in IRI MULC, compared to craft up 355,000 cases, 1.4% and FMBs actually down 0.5%.   Only other segment showing robust growth now is superpremiums, up 1.4 mil cases, 7% last 12 weeks.  But Ultra is all of that growth and then some.  Ultra up 2.4 mil cases all by its lonesome and captured 63% of segment sales.  All other brands IRI defines as superpremiums collectively down double digits.   

“Since we rolled out the Climb On campaign, Coors Light has regained momentum and is now growing with women, millennials and Latinos.”  That was silver bullet point from MillerCoors cmo David Kroll in talk to Calif distribs yesterday.  David made familiar jabs at last 20 yrs of premium light beer mktg, by both AB and MC, and touted MC’s new approach to celebrate “intrinsic advantages of our beers,” rebuilding respect for them and being “more consistent and inclusive in our marketing,” especially to women.  “We actually sell less beer to women today than we did a few years ago,” David acknowledged.  What’s more, he said 35% of light beer decline over the past 4 years “driven by women.”  Coors Light “Climb On” campaign gets additional platform starting in Jan, David added: sustainability.  Few causes “resonate more deeply with young people,” he said, especially in Calif.  Two-thirds of drinkers “willing to pay more for sustainable brands,” and Coors has long history of environmental commitment. Meanwhile, response to new Miller Lite’s messaging of pride in beer and “difference” also paying off. “The response to this work has been the best we’ve seen in 10 years,” said David, with trends improving with core drinkers and “now also attracting both millennials and Latinos.” 

All in, since new mktg model adopted “we have gained share each and every quarter.” That’s share gain of premium light.  Recall, MC reported Coors Light STRs flat in Q1, up low singles Q2, down low-singles in Q3.  Miller Lite STRs flat in Q1 and Q2, down mid singles in Q3.  In latest IRI multi-outlet + convenience scans, Coors Light and Miller Lite each off just 0.1% yr-to-date thru Oct 30.  For last 12 wks, Coors Light -0.6%, Miller Lite -1.2%.  But each had solid Oct: Coors Light +0.3%, Miller Lite +0.8%.  “This is a fascinating moment in the American beer industry,” David concluded.  Top 2 brewers attempting to “rebuild interest” in American light lagers, but “taking two very different marketing paths.”  (David dinged AB’s Bud Light ads for not talkin’ about the beer and staying “overly focused on young male drinkers.”)  But rebuilding light beer “essential” to “healthy growing American beer industry,” David believes.  Does MC have the messaging to make it happen?  “Only time will tell,” he said.  In any case, it will be quite a challenege: premium light beer down every year since 2008 and lost about 12 mil bbls in that period.   

“Since we rolled out the Climb On campaign, Coors Light has regained momentum and is now growing with women, millennials and Latinos.”  That was silver bullet point from MillerCoors cmo David Kroll in talk to Calif distribs yesterday.  David made familiar jabs at last 20 yrs of premium light beer mktg, by both AB and MC, and touted MC’s new approach to celebrate “intrinsic advantages of our beers,” rebuilding respect for them and being “more consistent and inclusive in our marketing,” especially to women.  “We actually sell less beer to women today than we did a few years ago,” David acknowledged.  What’s more, he said 35% of light beer decline over the past 4 years “driven by women.”  Coors Light “Climb On” campaign gets additional platform starting in Jan, David added: sustainability.  Few causes “resonate more deeply with young people,” he said, especially in Calif.  Two-thirds of drinkers “willing to pay more for sustainable brands,” and Coors has long history of environmental commitment. Meanwhile, response to new Miller Lite’s messaging of pride in beer and “difference” also paying off. “The response to this work has been the best we’ve seen in 10 years,” said David, with trends improving with core drinkers and “now also attracting both millennials and Latinos.” 

All in, since new mktg model adopted “we have gained share each and every quarter.” That’s share gain of premium light.  Recall, MC reported Coors Light STRs flat in Q1, up low singles Q2, down low-singles in Q3.  Miller Lite STRs flat in Q1 and Q2, down mid singles in Q3.  In latest IRI multi-outlet + convenience scans, Coors Light and Miller Lite each off just 0.1% yr-to-date thru Oct 30.  For last 12 wks, Coors Light -0.6%, Miller Lite -1.2%.  But each had solid Oct: Coors Light +0.3%, Miller Lite +0.8%.  “This is a fascinating moment in the American beer industry,” David concluded.  Top 2 brewers attempting to “rebuild interest” in American light lagers, but “taking two very different marketing paths.”  (David dinged AB’s Bud Light ads for not talkin’ about the beer and staying “overly focused on young male drinkers.”)  But rebuilding light beer “essential” to “healthy growing American beer industry,” David believes.  Does MC have the messaging to make it happen?  “Only time will tell,” he said.  In any case, it will be quite a challenege: premium light beer down every year since 2008 and lost about 12 mil bbls in that period.