AB was part of technological history last week when a self-driving truck delivered 2,000 cases of Bud from Ft Collins brewery to Colorado Springs, a trip of 120 miles on Interstate 25 alongside passenger vehicles.  Technology for driverless truck was developed by Otto, which was founded less than a yr ago by Google mapping and car experts, and was purchased by Uber for $700 mil this past Aug.  “We think this technology is inching closer to commercial availability,” Lior Ron, co-founder of Otto, told NY Times.  While self-driving tech race over past few years has focused on passenger vehicles, the “idea that commercial trucking could be done by robot is a relatively new idea – and a potentially controversial one,” noted Times.  The controversy of course is that “the biggest cost savings” will come from “eliminating the driver entirely.”  For this maiden beer run, a driver was in cab of truck but only took wheel to navigate on and off ramps. “We can see a future where this type of equipment is standard on all trucks,” James Sembrot, AB’s senior dir of logistics, told Reuters.  Driver controversy aside, transportation experts told Reuters auto-driving technology is “best suited to the relative predictability of long hauls on highways.” 

Pete Coors, vice chairman of Molson Coors, voiced optimism to Wall St Jnl about prospects in US and globally.   With full control of MillerCoors “we’ve put ourselves in position to take advantage of a great opportunity,” said Pete, citing strategy of building light beer biz by aiming at Bud Light, expanding craft sales and boosting economy portfolio.  Economy brands need “care and attention,” Molson Coors ceo Mark Hunter told WSJ, pointing to new pricing, ad and packaging strategies.  History of Coors deals over the years, from Carling to Molson to Staropramen and now MC ain’t over yet, sez Pete.  “We haven’t stopped doing strategic thinking about what’s available globally,” he said.  Tho he declined to name names, Susquehanna Financial Group’s Pablo Zuanic mentioned the one on everyone’s mind.  Value of Molson Coors’ $12 bil investment in MC could grow by half in 3-4 yrs, Pablo told WSJ, and put it “in a strong position...to negotiate a merger with Heineken.”  

After announcing test of new Michelob Ultra fighter Goldwing to its distribs at Fall Distributor Meeting in Chicago last mo, MillerCoors has reversed course and will “put this test on hold based on the strength of our existing light beers, which was recently reaffirmed by feedback coming out of both our Fall Distributor Meeting and our National Distributor Council Meeting,” cmo David Kroll said in note to distribs this morn. MC “heard a range of feedback on Goldwing,” added David. “But one point that came through loud and clear is that what we’re doing with Coors Light and Miller Lite is working, so now is not the time to shift focus.” Coors Light has “regained momentum with the launch of Climb On” and Miller Lite is “strengthening its base and bringing in new drinkers.”  What’s more, “early read” on its “new approach” (challenging Bud Light) is “very encouraging.”  Goldwing “tested very well with drinkers,”  but “we’re going to hold off and redirect that planned investment behind Coors Light and Miller Lite,” according to David.   

Interesting and surprising move, especially since Goldwing already announced and many MC distribs clamoring for an Ultra fighter.  Michelob Ultra volume up 22% and it gained  0.6 share yr-to-date thru 10/15 in Nielsen all outlet.  That’s more than any other brand in industry.  On other hand, Bud Light volume down 2.9% and it lost 0.7 share.  Meanwhile, each of Coors Light and Miller Lite handily outperforming Bud Light in scan data. Coors Light volume up 0.2% and it held share, while Miller Lite down 0.8% and lost 0.1 share.  

Last week’s article where we quoted source criticizing recent supplier moves to reject “bona fide buyers,” re-direct brands, “usurp franchise laws” and deal with “consequences” on back end elicited interesting response from consultants Andy Christon, Karen Kovtun and Ted Wardell at Ippolito Christon.  Such moves “nothing new” in world of supplier-distrib disputes and “no surprise” AB and Constellation “stretching the envelope on perceived rights,” as largest and fastest-growing suppliers respectively, they said.  Such moves likely to lead to “more back room ‘quid pro quo’ discussions between preferred distributors and their brewer partners,” Andy, Karen and Ted suggest.  ABI can use match and redirect as work around of DOJ restrictions and Constellation/ Yuengling can use it to “leverage their relative strength over distributors.”  As long as there’s seller’s mkt, “it’s likely that aggressive distributors will still bid for franchise rights…. But, when distributors become confident in their quid pro quo expectations, there is certainly less incentive to get in a bidding war over a brand franchise.  This will lead to depressed deal pricing and slower deal flow and is something that brewers may want to consider next time they contemplate a match and redirect move.”  

Also: slower deal flow and match/redirect “may leave their preferred buyers with little financial commitment to the acquired brand,” especially if little/no debt incurred to get the brands.  “Distributors will argue that that is good for the brands being transferred, but financial commitment can also be a great motivator to a distributor to improve its business and in so doing grow its market share. That’s something brewers love.”  Finally, IC folks “agree that breakup fees will become more common and used as an inexpensive tool by savvy buyers to enhance their offers that they know will ultimately be approved.”   

“What the heck just happened to Boston Beer,” began Cramer’s Mad Money on CNBC on Friday night, devoting a full 7-minute feature of his popular tv show to Boston Beer.  After delivering a “flat out disappointing quarter” that was “just plain ugly,” said Cramer, Boston Beer opened down 6%, then “pirouetted” and “executed a stunning reversal,” closing out the day as “one of the biggest gainers in the market” even tho its “numbers” were “miserable.”  Why?  Cramer theorized that short sellers were covering positions and with an absence of natural buyers, they had to buy shares to do so.  Stock also got boost from Bloomberg piece that suggested Boston could be bought by Constellation.  Editor’s note: Last we heard, Constellation not that interested because of Boston’s lack of growth.  

Cramer outlined “bull” analysis as articulated by William Blair and “bear” analysis from Credit Suisse, before siding with bears.  Tho Boston stock “one of the great growth vehicles of all time” between 2009-2015, “roaring higher year after year,” stock now down 50% from high.  This is what happens when “growth stocks lose their momentum.”  Boston is “hardly the epitome of cool anymore” and is “losing share pretty dramatically in craft…. This isn’t trendy.” What’s more, Boston currently trading at 24x next year’s earnings, about same as Constellation, “cheaper” than Bud and “more expensive” than Molson Coors. “But that’s crazy to me,” said Cramer. “Why pay up for Boston Beer, when you can get the far superior Constellation Brands for the same valuation?” And as to it being a “takeover target,” Cramer reiterated his long standing precept to “never recommend” a stock “solely on a takeover basis, if the fundamentals are in decline and that’s the case with Boston Beer.”  

Wells Fargo’s Bonnie Herzog met with Constellation’s natl accounts veeps Pat O’Dea and Jenny Odom at NACS (Natl Assn of Convenience Stores) convention last week. She came away “highly encouraged by the growth trajectory” for Constellation based on its “leadership position in high end beers,” the “20-50% incremental cooler shelf space it expects to gain in 2017 in the largest c-store chains,” and “its robust innovation pipeline.”  Constellation a “key growth driver” for c-store “with 2 of the top 3 brands that have contributed to dollar sales growth in the channel over the past year.” And apparently, they are being rewarded for that with significantly expanded space in biggest chains for biggest channel.  Augurs well because c-store consumer “generally young and multicultural,” reminds Bonnie. “We believe this has been a key strategic advantage for STZ given the strength of its brands for millennial consumer” and “over 40% of milennials shop at c-stores, according to the company.” Constellation also “sees big opportunity for single serve.” Following success of 24 oz Pacifico can this yr, next yr Constellation coming with “several new 24 oz cans” including “Modelo Tamarindo Picante Chelada and a new Corona Extra 24 oz can.”  

As Boston Beer tries to persuade fed judge in Ohio not to give distrib Southern Glazer’s same temporary restraining order he gave SG to stop Great Lakes Brewing termination, Boston adds countercharge that SG tryin’ to squeeze more $$ out of settlement talks.  Boston’s basic arguments echo Great Lakes’: under their contract and OH law, SG required to get Boston’s consent to Southern/Glazer’s deal earlier this year.  SG did not seek consent, thus violated both, so termination legit.  In any case, no irreparable harm here, since SG can be compensated with money.  Same day judge granted TRO to SG on Great Lakes, put Boston-SG on “standstill” to continue settlement talks, as Boston wanted to move brands to Superior.  Not surprisingly, settlement didn’t happen.  Now, Boston argues that SG’s “settlement demands have increased significantly since the Court entered the standstill order.”  This shows bad faith on SG’s part, sez Boston, and proves money can fix any damages.  Rather than seek compromise, SG “substantially increased its demand and settlement negotiations stalled,” said Boston chairman Jim Koch in affidavit.  (Boston did not disclose actual amount demanded by SG to move the 475K cases to Superior.)  SG’s actions, Boston charges, “reveal its true motive for seeking this injunction: to manipulate the judicial system to extort more money from Boston Beer.” 

Separately, Boston also filed countercharges vs SG, as Great Lakes did: violation of contract and OH law, fraudulent inducement, conspiracy (with Southern Wine & Spirits) and tortious interference.  Great Lakes and Boston also trying to speed up schedule, if judge issues TRO to SG on Boston and refuses to reverse TRO on Great Lakes.  Filed proposed scheduling order last week that seeks trial for March 2017. 

Don’t miss the 23d annual Beer Insights Seminar, at the Waldorf Astoria in New York City, with a reception Sunday eve November 13th and a jam-packed day Monday November 14th.  This is one of our widest-ranging programs ever.  The exceptional lineup includes the top exec at the world’s largest brewer, ABI ceo Carlos Brito, plus the top beer execs at the #2 US brewer MillerCoors ceo Gavin Hattersley and #3 US supplier Constellation Brands Beer Division president Paul Hetterich.  We will also feature global thought-leader FIFCO ceo Ramón Mendiola Sánchez, plus two generations of leaders at independent craft Bell’s Brewery, founder Larry Bell and his daughter and vp Laura Bell.  Consultant Bump Williams will discuss the fast-changing retail landscape, with his trademark high energy style and hard-won knowledge.  An expert panel of 3 top-notch alc bev attys will probe provocative 3-tier, trade practice and other legal issues: Marc Sorini, Mike Moses and Michael Halfacre.   Beer Marketer’s INSIGHTS president Benj Steinman will provide an industry overview.  Sign up now . Seating is limited.   Click here for more info.  Click here to register.  Discounted room block available until Oct 28.

NAB Depletions Up for Fiscal Yr; Challenge for +2% in 2017 Thru Continued Momentum on Seagrams, Labatt, Genny and Shoring Up Craft  North American Breweries’ depletions finished positive in its fiscal yr thru Sep 30, co shared at annual distrib mtg held in Pittsburgh yesterday.  That’s first time in several years NAB finished positive in the US, noted prexy Kris Sirchio.  Seagrams Escape drove growth; FMB brands up for 7^th-straight year, while Labatt trend stabilized and Genesee depletions up solid 4.4%, ultimately offsetting declines from NAB craft portfolio (primarily from Magic Hat). 

Parent co FIFCO finished with profits up double digits for 2d straight year, shared ceo Ramón Mendiola Sánchez.  Co sold 92 mil cases across all operations, up 7.6% vs last year.  And NAB has become “a very strong contributor” to its overall biz.  About 65% of total revs came from FIFCO’s top 10 brands, including Labatt and Seagrams, now the 2d and 3d largest, and Genesee and Magic Hat at #8 and #10 respectively.  FIFCO’s embrace of the triple bottom line philosophy (accounting for social, environmental, and financial aspects of biz) helped give NAB “a purpose,” said Ramón. FIFCO managed to double profitability since 2008 and growth rate “has even accelerated for us” while utilizing this philosophy.  So vision for 2020 is to take social and environmental aspects of its biz even further.  Goal is for its brands to become net positive in both water and carbon usage, all while doubling profits again by 2020.  “We want to give back to society more than what we use to produce our products,” Ramón explained.  Likely a first within the beer biz.  Over the last six years, over 6% of net profit went into social initiatives such as water, nutrition, employees, etc.  In fact, when FIFCO found it had 3.6% of its Costa Rican employees living below the poverty line, it developed new goal to eradicate poverty within its co in the next 3 yrs.  It plans to expand initiative outside Costa Rica.

Need for Geographic and Mix Balance; Seagrams Big Ask; Imperial OppyOne key finding in process of establishing NAB’s strategic plan thru 2020 is the need for “balance,” Kris shared.  Over half of NAB’s biz is in just 4 states and 1/3 in just 4 metro areas.  And price mix is “not strong enough.”  So co has “very intentional strategy…to balance our business better”thru more localized approach.  Then too, NAB saw 30% increase in sales people over the last 2 yrs and expects another 20% bump this yr, shared vp of sales Doug Smith.  It’ll add a southern sales division where it looks to take advantage of demographics and already strong growth trends for its brands (off smaller base).

Largest oppy and biggest ask was forSeagrams Escapeportfolio.  “Bucket list” goal is to increase distribution from current 40% to 85% or higher, essentially gaining natl reach and becoming a top-3 PAB/FMB brand (progressive adult beverage/flavored malt beverage).  Its “Fab-5” of brands -- Jamaican Me Happy, Strawberry, Peach Fuzzy Navel, Pina Colada and variety pk -- make up 80% of Seagrams biz, so NAB asking for extra focus on these flavors.  “Retailers are already buying in,” including 4500 PODs in Walmart, all Fab-5 brands, and others such as Kroger “on board.”   It’ll also launch new Ruby Red Crush in mkts that already have strong distribution on Fab-5.  And Seagrams acknowledged that it will eventually need to develop different products at varied higher ABVs, since all products are currently just 3.2% ABV.  

Labattclosed out the year strong and ultimately stabilized trends for fiscal yr after getting big boost from new football program with Zubaz-themed cans.  With 6 different colored cansin 8 weeksthru 18 states, Labatt Blue and Blue Light got a huge 16% depletions lift thru the program.  That’s hundreds of thousands of cases more this Aug and Sep vs last year.  So NAB already planning to expand program for next season, including 4 new cans, planned “Zubazpalooza” parties and more.  It’s also expanding NHL team cans (will include Detroit Red Wings this yr) and hockey-themed cans program thruout the hockey season and will have natl TV ads, focused media buys and geo-targeted digital ads for added support.  And gotta note, after managing to fly relatively under the radar in its intro year, Labatt plans to ramp up its Mich Ultra fighter, Labatt Premiere Extra Light, with focus on sampling in its 2d year. In 2017 there’ll be more feet on the street, more localization, and an on-premise focus.

Geneseedelivered on all 3 asks from last year’s meeting: protect and defend flagship brands, maximize displays and increase craft distribution.  Flagship brands were up 3.4% on depletions and were “highest they’ve beenin 3 years” last qtr.  Volume sold on display was up 10%, depletions up 6%.  And co increased craft line distribution 239%.  All leading to 4.4% depletions growth for total Genny family.  Impressively, Genny depletions were up even stronger in some of its most developed mkts, including +10% in Rochester, +10% thruout PA and +5.9% in OH.  And off smaller base, Genny was flyin’ in several Southeast states.  Its pilot brewhouse and craft lineup is gradually becoming a key part of the biz, getting extra pull in Wegmans stores and thruout local community (see more on Genny craft lineup in Craft Brew News).  So NAB’s going to “amp up” investments in 2017 again. 

Can Imperial Become Next Big LatAm Import Brand? Tom Cardella and Co Working to Find OutWhen beer vet Tom Cardella initially retired he was “just going to kick back,” play in his rock band, continue to sit on  board of Green Bay Packers and enjoy his house in Costa Rica.   He eventually met with Ramón.  After a 4-hr dinner, Tom “so, so impressed with Ramón and the way FIFCO thinks about business” that when Ramón asked for Tom to join the board, he couldn’t resist, Tom told crowd.  Then, in midst of NAB Board’s long term planning, Tom “fixated” on Imperial oppys in US.  Imperial is FIFCO’s largest brand and has about 95% of Costa Rican beer mkt.  Since it potentially runs parallel to Mexican import trends and “embodies the Costa Rican experience” and “values,” Tom’s fixation led to convincing board that Imperial in US should be “one of their critical strategic imperatives within their long range plan.”  So Tom intro’d FIFCO to Winnetka Park agency (it worked on several MC brands during his tenure with Tenth & Blake) to help tell Imperial’s story.  “We have not told the story,” and Tom and co believe brand has potential to expand thruout US.  They’ve been working on project for just 2 mos, so plans still in initial stages.  NAB will kick off new brand platform in San Diego and Denver, also testing new silver bottle and looking to remodel pricing structure in line with Corona.

More Distribs Join 1 Mil + Cases ClubNAB listed Wright Bev, Try-It Dist, Tri County Bev, Superior Bev Group and Onondaga Bev/AL George as members of the 1 mil cases (plus) club for NAB.  And this list is growing, since it used to be just 2 wholesalers, acknowledged vp of sales Doug Smith.

All in, NAB gaining momentum in several key aspects of its biz as plans in place to shore up Magic Hat and Pyramid brands have only just started to settle in.  Craft portfolio remains most challenged aspect of NAB’s portfolio, dragging down total depletions these past handful of yrs.  But NAB “committed to investing for growth in all of our brands” and committed “to restore our craft business” (see more in CBN).

NAB Depletions Up for Fiscal Yr; Challenge for +2% in 2017 Thru Continued Momentum on Seagrams, Labatt, Genny and Shoring Up Craft  North American Breweries’ depletions finished positive in its fiscal yr thru Sep 30, co shared at annual distrib mtg held in Pittsburgh yesterday.  That’s first time in several years NAB finished positive in the US, noted prexy Kris Sirchio.  Seagrams Escape drove growth; FMB brands up for 7^th-straight year, while Labatt trend stabilized and Genesee depletions up solid 4.4%, ultimately offsetting declines from NAB craft portfolio (primarily from Magic Hat). 

Parent co FIFCO finished with profits up double digits for 2d straight year, shared ceo Ramón Mendiola Sánchez.  Co sold 92 mil cases across all operations, up 7.6% vs last year.  And NAB has become “a very strong contributor” to its overall biz.  About 65% of total revs came from FIFCO’s top 10 brands, including Labatt and Seagrams, now the 2d and 3d largest, and Genesee and Magic Hat at #8 and #10 respectively.  FIFCO’s embrace of the triple bottom line philosophy (accounting for social, environmental, and financial aspects of biz) helped give NAB “a purpose,” said Ramón. FIFCO managed to double profitability since 2008 and growth rate “has even accelerated for us” while utilizing this philosophy.  So vision for 2020 is to take social and environmental aspects of its biz even further.  Goal is for its brands to become net positive in both water and carbon usage, all while doubling profits again by 2020.  “We want to give back to society more than what we use to produce our products,” Ramón explained.  Likely a first within the beer biz.  Over the last six years, over 6% of net profit went into social initiatives such as water, nutrition, employees, etc.  In fact, when FIFCO found it had 3.6% of its Costa Rican employees living below the poverty line, it developed new goal to eradicate poverty within its co in the next 3 yrs.  It plans to expand initiative outside Costa Rica.

Need for Geographic and Mix Balance; Seagrams Big Ask; Imperial OppyOne key finding in process of establishing NAB’s strategic plan thru 2020 is the need for “balance,” Kris shared.  Over half of NAB’s biz is in just 4 states and 1/3 in just 4 metro areas.  And price mix is “not strong enough.”  So co has “very intentional strategy…to balance our business better”thru more localized approach.  Then too, NAB saw 30% increase in sales people over the last 2 yrs and expects another 20% bump this yr, shared vp of sales Doug Smith.  It’ll add a southern sales division where it looks to take advantage of demographics and already strong growth trends for its brands (off smaller base).

Largest oppy and biggest ask was forSeagrams Escapeportfolio.  “Bucket list” goal is to increase distribution from current 40% to 85% or higher, essentially gaining natl reach and becoming a top-3 PAB/FMB brand (progressive adult beverage/flavored malt beverage).  Its “Fab-5” of brands -- Jamaican Me Happy, Strawberry, Peach Fuzzy Navel, Pina Colada and variety pk -- make up 80% of Seagrams biz, so NAB asking for extra focus on these flavors.  “Retailers are already buying in,” including 4500 PODs in Walmart, all Fab-5 brands, and others such as Kroger “on board.”   It’ll also launch new Ruby Red Crush in mkts that already have strong distribution on Fab-5.  And Seagrams acknowledged that it will eventually need to develop different products at varied higher ABVs, since all products are currently just 3.2% ABV.  

Labattclosed out the year strong and ultimately stabilized trends for fiscal yr after getting big boost from new football program with Zubaz-themed cans.  With 6 different colored cansin 8 weeksthru 18 states, Labatt Blue and Blue Light got a huge 16% depletions lift thru the program.  That’s hundreds of thousands of cases more this Aug and Sep vs last year.  So NAB already planning to expand program for next season, including 4 new cans, planned “Zubazpalooza” parties and more.  It’s also expanding NHL team cans (will include Detroit Red Wings this yr) and hockey-themed cans program thruout the hockey season and will have natl TV ads, focused media buys and geo-targeted digital ads for added support.  And gotta note, after managing to fly relatively under the radar in its intro year, Labatt plans to ramp up its Mich Ultra fighter, Labatt Premiere Extra Light, with focus on sampling in its 2d year. In 2017 there’ll be more feet on the street, more localization, and an on-premise focus.

Geneseedelivered on all 3 asks from last year’s meeting: protect and defend flagship brands, maximize displays and increase craft distribution.  Flagship brands were up 3.4% on depletions and were “highest they’ve beenin 3 years” last qtr.  Volume sold on display was up 10%, depletions up 6%.  And co increased craft line distribution 239%.  All leading to 4.4% depletions growth for total Genny family.  Impressively, Genny depletions were up even stronger in some of its most developed mkts, including +10% in Rochester, +10% thruout PA and +5.9% in OH.  And off smaller base, Genny was flyin’ in several Southeast states.  Its pilot brewhouse and craft lineup is gradually becoming a key part of the biz, getting extra pull in Wegmans stores and thruout local community (see more on Genny craft lineup in Craft Brew News).  So NAB’s going to “amp up” investments in 2017 again. 

Can Imperial Become Next Big LatAm Import Brand? Tom Cardella and Co Working to Find OutWhen beer vet Tom Cardella initially retired he was “just going to kick back,” play in his rock band, continue to sit on  board of Green Bay Packers and enjoy his house in Costa Rica.   He eventually met with Ramón.  After a 4-hr dinner, Tom “so, so impressed with Ramón and the way FIFCO thinks about business” that when Ramón asked for Tom to join the board, he couldn’t resist, Tom told crowd.  Then, in midst of NAB Board’s long term planning, Tom “fixated” on Imperial oppys in US.  Imperial is FIFCO’s largest brand and has about 95% of Costa Rican beer mkt.  Since it potentially runs parallel to Mexican import trends and “embodies the Costa Rican experience” and “values,” Tom’s fixation led to convincing board that Imperial in US should be “one of their critical strategic imperatives within their long range plan.”  So Tom intro’d FIFCO to Winnetka Park agency (it worked on several MC brands during his tenure with Tenth & Blake) to help tell Imperial’s story.  “We have not told the story,” and Tom and co believe brand has potential to expand thruout US.  They’ve been working on project for just 2 mos, so plans still in initial stages.  NAB will kick off new brand platform in San Diego and Denver, also testing new silver bottle and looking to remodel pricing structure in line with Corona.

More Distribs Join 1 Mil + Cases ClubNAB listed Wright Bev, Try-It Dist, Tri County Bev, Superior Bev Group and Onondaga Bev/AL George as members of the 1 mil cases (plus) club for NAB.  And this list is growing, since it used to be just 2 wholesalers, acknowledged vp of sales Doug Smith.

All in, NAB gaining momentum in several key aspects of its biz as plans in place to shore up Magic Hat and Pyramid brands have only just started to settle in.  Craft portfolio remains most challenged aspect of NAB’s portfolio, dragging down total depletions these past handful of yrs.  But NAB “committed to investing for growth in all of our brands” and committed “to restore our craft business” (see more in CBN).