Dos Heineken lager up, but Heineken franchise down ever so slightly for 9 mos, said HUSA prexy Ronald den Elzen at its natl distrib conference.  “We can do better…  We are healthy, have momentum, and we will make it happen.”  Indeed, brand Heineken up 1% in Nielsen, said Ronald, while Dos franchise up 3% (with Lager up 6% YTD) and Tecate franchise up 6%, including Tecate Light up 30%.  And Strongbow up double digits, 30 points ahead of cider trend.  Those are HUSA’s 4 priority brands, and they are all performing better than the category.  But its Mexican brands are up mid-to-high single digits, and once again, “we need to do better,” since its larger competitor (Constellation) up double digits. “We should outgrow” the Mexican import segment “and we can.” Tecate Light will provide 2 mil cases of incremental volume this yr and become 40% of franchise.  It is “our future” and “will become the growth engine,” said Tecate veep Felix Palau. Meanwhile, Most Interesting Man “reboot is complete” and “brought a ton of momentum back to the brand,” according to veep Andrew Katz.  Dos Equis cans are up 30%.  HUSA’s new campaign for Strongbow emphasize ciders’ “natural colors and flavors,” pitched as competitive advantage compared to hard sodas and FMBs.   More on HUSA brands, plans and programs in Beer Marketer’s INSIGHTS. 

 

Changes and churn within craftland continue apace.  After 13 yrs at Dogfish Head, current ceo Nick Benz will leave at yr-end. Taking over Nick’s spot: founder, thought leader and chairman Sam Calagione. Decision to step away was “100% Nick’s,” Sam told our sister pub Craft Brew News and “founded” on his desire to spend more time with family and in Europe. Sam envisions his time as ceo will be “for the long haul,” but search to fill prexy position to “go live” in wks. Dogfish Head currently trending flat, but launch of cans in Mid-Atlantic next wk and holiday IPAs suggest to Sam a “good chance” to end yr “a little bit up.” Sam and distribs optimistic about next yr too, with oppys provided by: 1) cans for 3 key brands; 2) tripling of sales force in chains; 3) opening handful of new mkts. Recent round of distrib mtgs found expectations for 2017 to be in range of 9-17% gains for Dogfish portfolio. Elsewhere, leader behind brewing ops at 2d largest Minnesota brewer, Surly, resigned this week. Todd Haug helped build Surly for past ten years with founder/prexy Omar Ansari, “often with his own two hands; brewing, welding, making connections and forming collaborations to establish the irreverent brand it is today,” Omar said. Todd moving on “to pursue other opportunities and challenges in the industry that he has worked in for 25 years,” Surly sez. Recall, Surly expanded into much larger Minneapolis facility, with capacity to brew up to 100K bbls, a couple years ago. Surly volume +85% in IRI multi-outlet + convenience data yr-to-date thru Aug 14 (though note that a lot of craft sold thru indie accounts not captured in IRI in Minn).

Kinda hard to believe, but 60% of American adults “now say that marijuana should be legal,” Gallup reports based on its most recent poll.  Hard to believe speed with which that sentiment has grown.  Support doubled since 2000 when 31% of adults agreed “the use of marijuana should be made legal.”  And it’s up from just 12% in 1969, which many view as a time of peak pot popularity. Over 3/4 of 18-34 yr olds now favor legalization, over 60% of 35-54 yr-olds.  Two-thirds or more of independents and Dems support; even 42% of Repubs have come aboard.  The kicker: support for pot legalization only 4 points lower than the 64% of American adults who tell Gallup they “have occasion” to drink alcohol, exact same % as in 1969, by the way.  Support for legalization and use very different matters, of course. (Only 8.3% of Americans age 12+ say they are current users of pot, partook in past month; 20% of 18-25 yr-olds are current users.)  But still.  

Votes Comin’ Up in 5 States; Legal Pot for A Qtr of US Population?  Legalization of recreational pot use on ballot in 5 states next mo: CA, AZ, NV, MA and ME.  So possible that percentage of US population living in legalized states could expand from 5% to as much as 25%, as Gallup points out.  Report concludes, predictably, that if CA goes legal for recreational, “the question of whether the drug should be legal may become when it will be legal.” 

                                                     

Meanwhile, Boston Globe reports that Beer Distribs of Massachusetts and their wine/spirits counterparts have contributed $75K to anti-legalization effort in that state, but have been radio silent on why.  (We’ve asked too.)  That $75K is over 10% of $600K total contributed to Campaign for a Safe and Healthy Mass, sez Globe.       

Just as scans suggested, Boston Beer’s volume trend softened significantly in Q3, and it doesn’t expect much improvement for rest of 2016.  Depletions -8% in Q3 and off 6% yr-to-date; also down 6% YTD thru Oct 8.  (Depletions were -5% in Q2 and 1^st half.)  Shipments took big Q3 hit, -12% going against natl launch last yr of Coney Island Hard Root Beer.  For 9 mos, Boston shipments -250K bbls, nearly 8%.  With tuff Q3, Boston revised its full yr 2016 projections down once again.  Now expects depletions/shipments dropoffs of -2% to -6% (had been -4% to flat after Q2).  Keep in mind, Boston has easy comp in Q4 (-2.5% last yr), and will report extra week for 2016.  For next yr, Boston projected wide range of volume possibilities, from “minus low single digits to plus low single digits.”  Boston attributed Q3 volume drop to declines in Sam Adams, Angry Orchard, Coney Island and Traveler brands, “only partially offset” by Twisted Tea, Truly Spiked gains.  Net revs whacked 14% in Q3.  And Boston slashed ad, promo and selling expenses another $14.4 mil, 18%.  Even so, operating income took another $10 mil hit.  For 9 mos, revs down $58 mil, -8%.  Operating income off $26.5 mil, 20%. 

Despite tuff numbers and “further slowdown in growth across Craft segment,” chairman/founder Jim Koch sez he’s “energized” about plans to return Sam Adams to growth via new pkgs, draft launch of Sam Rebel Juiced and new seasonals.  CEO Martin Roper “happy” about Truly Spiked’s “category leadership,” but “disappointed” by cider trends and looking for oppys to “increase visibility and disruption at retail” in that category.  Boston’s 3 priorities, according to Martin: 1) return Sam and Angry Orchard to growth; 2) focus on cost savings/ efficiency projects and thus higher gross margins; 3) “long term innovation,” with current focus on Truly Spiked.        

“Legal pot may outsell beer” is headline many Canadian citizens woke up to this morn. Turns out analysts at CIBC World Markets project Canadians “could be buying as much as $10 billion worth” of pot products per year under full legalization, reports Calgary Sun and others. Meanwhile, retail sales of beer are $9 bil/yr there, sez Statistics Canada. Flurry of other press coverage of pot north of the border plumbs various regulatory and biz issues with plenty of parallels to alc bevs. They include: provincial vs local control, big biz vs small entrepreneur vs state sales, whether localities can be “dry” for pot and where users will be able to legally partake. Coverage also includes some sales advice, noting importance of matching “a customer’s desired experience with the right product.” Indeed, right “mix” for sales people “might best be described as a cross between a pharmacist,” who knows about the drug and the dose, and a “sommelier recommending wine pairings,” offers one consultant. Turns out too, pot entrepreneurs will need to be as creative as craft brewers in coming up with brand names. Star Phoenix in Saskatoon reeled off a few: Laughing Buddha, Blueberry Dream, Lime Haze and one that TTB might not approve a COLA for: Alaskan Thunder F--k. Gotta note that as Canadian press and citizens weigh pot legalization issues with due deliberation, biggest beer story out of Canada in recent weeks nuthin’ but ugly when a jackass fan threw beer can at an outfielder in Toronto-Baltimore playoff game.

Coverage also includes some sales advice, noting importance of matching “a customer’s desired experience with the right product.”  Indeed, right “mix” for sales people “might best be described as a cross between a pharmacist,” who knows about the drug and the dose, and a “sommelier recommending wine pairings,” offers one consultant.  Turns out too, pot entrepreneurs will need to be as creative as craft brewers in coming up with brand names.  Star Phoenix in Saskatoon reeled off a few: Laughing Buddha, Blueberry Dream, Lime Haze and one that TTB might not approve a COLA for: Alaskan Thunder F--k.  Gotta note that as Canadian press and citizens weigh pot legalization issues with due deliberation, biggest beer story out of Canada in recent weeks nuthin’ but ugly when a jackass fan threw beer can at an outfielder in Toronto-Baltimore playoff game.  

MillerCoors and Atlanta Braves already have a “multiyear partnership” in place, so following Terrapin acquisition, natural step for GA-based Terrapin to “immediately. . .become the flagship craft brewery for the ballpark,” co announced.  A Terrapin taproom and brewery will be built “adjacent” to the Braves’ new SunTrust ballpark, expected to be finished in time for opening day next season and open year-round.  MC won’t own taproom but will own brewery.  Restaurant will be operated by separate co, Delaware North, featuring a rotating tap list and “world-famous” bbq joint, Fox Bros Bar-B-Q.  The microbrewery will be used as a pilot system for exclusive Terrapin brews and collaborations, “including some special baseball-themed brands.” 

Gotta note, this is another example of large brewers utilizing clout to get their craft brands more prominently involved in sports stadiums.  AB’s Breckenridge also recently partnered with the Denver Broncos, where AB already has partnership to be “predominant” supplier within the stadium, to create an exclusive beer called United In Orange (see Aug 26 issue).  MC getting more active in retail too, along with recently opened Blue Moon pilot brewery and taprooms and/or brewpubs thru each of its new craft breweries (tho GA law prevents Terrapin’s current taproom from sellin’ much).  Up to this point, AB has been far more active on the retail side thru its craft arms, but it seems both are keen on expanding retail branding oppys of their craft biz.  

And our source sees a pattern with consequences which “really changes the scope of deal flow.”  Recall, AB did “match and redirect” of Adams deal to buy Rex to Mitchell in MS.  Then Constellation rejected Lakeshore Bev after it bought Losch Bev, even tho it is Constellation distrib elsewhere in Chi metro and in Tenn.  Then Yuengling rejected Mitchell as Mitchell had previously rejected Yuengling.  That’s “three times in a row,” sez source, where 3 different suppliers rejected “bona fide buyers under law,” thereby “usurping franchise law” in this source’s view.  Any “consequences” can be dealt with on “backend.”  Result of this will be that bigger distribs will “stay on the sidelines,” sez our source, if they thought there is chance of “match and redirect” in AB system.  Also “breakup fees will become the new norm” in negotiating deals.   Agree? Disagree? Send comments to This email address is being protected from spambots. You need JavaScript enabled to view it.  

Earlier this yr, Kentucky passed law that included new regs which allow brewers and distribs to provide free refrigerators to retailers.  Provision added at last minute to House version of Senate bill that did not include anything about refrigerators, reports wfpl.org.  Late provision added at behest of AB lobbyist, we’re told.  Previously, refrigerators could be leased to KY retailers.  But new reg had no clarification about size and number of units that could be given away.  State ABC offered to clarify reg, we understand, and an “emergency” reg in force now limits refrigerators to 25 sq-ft and one per store. 

At hearing last week to review these new regs, 2 distribs criticized refrigerator reg, according to wfpl.org.  “This is a giveaway,” said AB distrib Jennifer Doering of Seligman Dist.  “It is a violation of the checks and balances that have guided our system of alcohol distribution.  This erosion introduces into Kentucky a pay-to-play relationship between the distributors, the brewers and the retailers.”  George Clark of (MC/others) Clark Dist made same point: change “will only lead to commercial bribery or pay-to-play.”  But Mark Meisenheimer, prexy of AB distrib Golden Eagle in Paducah, said that AB distrib assn (KY Malt Bev Council, Mark is prexy) “met when this came up” earlier this yr.  “Our group was unanimous in support and did not see a big issue in terms of pay-to- play.”  Mark believes “there are enough safeguards in the measure to prevent that.  Besides, the option is available for anyone who wants to participate.”

AB supports reg “because it will benefit the entire beer industry in Kentucky by enhancing the position of beer in an increasingly competitive retail landscape,” according to statement.  “More cooler space helps provide more consumer choice and improves the customer experience,” sez AB.  KY legislator acknowledged that “we were told that [refrigerator provision] was put in at last minute and that if we took it out that would kill the bill.” Bill passed “because there are so many good provisions” that sponsor worked on for a long time, he added.  Legislature may revisit bill next yr; last week’s hearing set up opposition to at least this part of it.

Earlier this yr, Kentucky passed law that included new regs which allow brewers and distribs to provide free refrigerators to retailers.  Provision added at last minute to House version of Senate bill that did not include anything about refrigerators, reports wfpl.org.  Late provision added at behest of AB lobbyist, we’re told.  Previously, refrigerators could be leased to KY retailers.  But new reg had no clarification about size and number of units that could be given away.  State ABC offered to clarify reg, we understand, and an “emergency” reg in force now limits refrigerators to 25 sq-ft and one per store. 

At hearing last week to review these new regs, 2 distribs criticized refrigerator reg, according to wfpl.org.  “This is a giveaway,” said AB distrib Jennifer Doering of Seligman Dist.  “It is a violation of the checks and balances that have guided our system of alcohol distribution.  This erosion introduces into Kentucky a pay-to-play relationship between the distributors, the brewers and the retailers.”  George Clark of (MC/others) Clark Dist made same point: change “will only lead to commercial bribery or pay-to-play.”  But Mark Meisenheimer, prexy of AB distrib Golden Eagle in Paducah, said that AB distrib assn (KY Malt Bev Council, Mark is prexy) “met when this came up” earlier this yr.  “Our group was unanimous in support and did not see a big issue in terms of pay-to- play.”  Mark believes “there are enough safeguards in the measure to prevent that.  Besides, the option is available for anyone who wants to participate.”

AB supports reg “because it will benefit the entire beer industry in Kentucky by enhancing the position of beer in an increasingly competitive retail landscape,” according to statement.  “More cooler space helps provide more consumer choice and improves the customer experience,” sez AB.  KY legislator acknowledged that “we were told that [refrigerator provision] was put in at last minute and that if we took it out that would kill the bill.” Bill passed “because there are so many good provisions” that sponsor worked on for a long time, he added.  Legislature may revisit bill next yr; last week’s hearing set up opposition to at least this part of it.

Sure it’s just short-term but significantly better brand Heineken and Dos Equis Lager four week trends worth noting, just as HUSA heads to its Natl Distrib Convention in Chi this week, especially since beer biz softer overall.  Heineken up 5% last 4 weeks thru Oct 8 in Nielsen all-outlet, while Dos Equis Lager up 9.2%, compared to 1.4% and 6.2% gains yr-to-date respectively. But total HUSA up 2.3% for 4 weeks, 0.3% YTD.  Not much other brand visibility in cut of Nielsen data we see, tho Strongbow down slightly.  Total beer biz down 0.1% last 4 weeks, up 0.6% YTD.