Wide-ranging talk from Nielsen sr veep Danny Brager at NBWA brought lotsa insights under the umbrella theme of “local consumer differences matter.”  Danny shared some more interesting details from Nielsen’s on-premise data base of bars/restaurants (no taproom figures yet), top-lined in Express last week, that really showed how local differences matter.  For example, while beer category $$ off 1.1% for 52 weeks on premise nationally thru mid-Jul, in NYC, on-premise $$ +4%, in Chi +5.3%.  Craft trend +3.5% nationally, but +10% in Chi, +15% in Denver.  And while craft about 1/3 of on-premise $$ nationally, got 41% in Boston, 42% in Chi, 26% in Houston.  Import share, 21% of $$ nationally, reaches 40% in LA, 34% in NYC.

And talk about a deep dive showing local differences.  Danny showed Nielsen data for single zip code north of downtown Chicago and trends for 3 single stores there, comparing preferences in those stores to zip code and Chicagoland in general. For example, economy beer just 13.4% of Chicago volume, but 15.8% in zip code and as high as 24.2% in 1 store there, described as most multi-culti of 3 stores, largest African American population share of the 3, with lower income and “more singles.”  That same store was 21.3% craft, 27.4% import, 7.4% FMB/cider, while avg store in that zip code was 30.5% craft, 27.1% import, 7.8% FMB/cider.  In “most Hispanic” store with more families and broad mix of incomes, imports jumped to 32.2%, crafts to 29.3%.  In “most white,” youngest and most affluent store, economy just 5 share, craft jumped to over 50 share and imports just 15 share.  That store had highest FMB/cider share at 11.6%.  Interestingly, premium share was 17.9 in zip code, and between 16.4 and 18.9 in each of the 3 stores, showing lots less variation than other segments.  

Moving out of Chi, Danny “busted some stereotypes” about craft.  Common wisdom is that older men, African Americans, Hispanics and women don’t drink craft.  And that’s true, “on average.” Only 3.3% of African American adults say they drink craft (past 30 days).  But 15%+ of black adults in Portland, OR, Albuquerque, Denver and Des Moines drink craft.  And while 4.4% of Hispanic adults drink craft nationally, 13%+ of Hispanics in Milwaukee, Grand Rapids, Little Rock, New Orleans and Honolulu do.  Over 43% adult women drink craft in Austin, Greensboro, Pittsburgh and Birmingham, 10% more than US avg.  How about us old men, age 55+?  Only 6.1% drink craft nationally, but that more than doubles in craft meccas Seattle, Portland, San Diego and Denver.  

Top Brands Holding Share Better in Wine and Spirits than Beer Another interesting table from Nielsen/ Adams Handbook compared brand fragmentation across alc bevs.  Top 25 beer brands had 77 share in 2010.  Share for same brands dropped to 68.7% in 2015, with 19 of ’em down.  In wine, top 25 brands had just below half of volume in 2010, dropping to 44% in 2015 (17 down).   In spirits, similar dropoff from 43.7 to 38% over 5 yrs for top 25, as 14 declined.  Then too, compare top 25 brands overall in both years, as some dropped out.  In beer, decline was about 7 points to 70.3, but just 2.3 pts in wine to 47.5 and only 1.5 pts in spirits to 42.2.  So, “big brands” in wine and spirits held share a bit better than in beer, tho in general, wine and spirits still significantly more fragmented than beer.

from AB regarding its matching and redirecting Mississippi distrib deal for Rex Dist to Mitchell from Adams answers a couple of Yuengling coo Dave Casinelli’s concerns about the deal (see Sep 23 Express), whether AB somehow involved financially in Mitchell deal and whether information about non-AB suppliers will be available to AB via info system. First, “to be clear, Anheuser-Busch is not providing any financing to Mitchell Distributing in this transaction.”  Second, “the mobility software platform is owned by a third-party vendor and Anheuser Busch has no access to non-AB information.”  AB also reiterated that “this was not an easy decision, but it was the right decision for our business.  Clay Adams and Philip Mullin continue to be valuable wholesalers in our network.”  AB approved three acquisitions by Adams Bevs since 2012, AB added, which more than tripled its biz, and Adams recently awarded two wet territory assignments in AL.  More shoes and statements to drop in this situation, no doubt.

Outgoing NBWA chairman Travis Markstein and ongoing prexy Craig Purser reminded distribs at annual NBWA convention of historic announcement during last yr’s meeting that AB InBev aimed to buy SABMiller. “Switchboard lit up” with concerns, Travis recalled, about potential for terminations, layoffs, impact on craft and more.   But NBWA didn’t publicly object or “sit and negotiate specific remedies.”  Rather, ABI-SAB provided “platform” for NBWA to join others (i.e. small brewers) to advocate and tell story of need for independent 3-tier system.  “That voice was heard,” said Travis, and Dept of Justice “got the message,” said Craig.  Settlement with AB InBev helped preserve independent middle tier and “quality, competitive access to market” for craft brewers.  Notably, neither Craig nor Travis took victory lap on stage, nor detailed the various restrictions placed on AB going forward regarding branch share, distrib incentives and more. Indeed, their reticence to publicly high five, or even celebrate what was significant victory for independent middle tier, stood in contrast to past bold statements from NBWA stage about threats posed by self-distribution, branches, etc. Rather than celebrating a “win” for distrib side, Craig cited “strong endorsement of our system” represented by DoJ settlement that “maintains the strength and integrity of the open and independent three-tier system.”  And that was in context of little AB presence at NBWA.  AB did not meet with distribs during convention and held its party off site; top brass at Presidential debate we understand. MC did have mtg and reception at convention hotel.  On other hand, AB holding its party on 2d day, keeping its distribs in town for duration.     

In same talk, Craig noted how NBWA worked with partners among brewers and others in industry to ensure TTB clarified Category Management limits when big “retailer” (Kroger) proposed new scheme earlier this year.  Craig also cited collaboration with Beer Inst, Brewers Assn as they reached unity on tax bill.  And Travis pointed to ongoing efforts working with brewers to defeat distillers’ equalization efforts.  Meanwhile, disruption continues in beer biz, Craig suggested, as AB and MC “aggressively purchase smaller players.” And “three tier exceptions like retail privileges are intended to help generate more competition and help startups and entrepreneurs, not to reduce market access or help global brewers sell outside the system.”  On separate panel, Larry Bell, founder of Bell’s Brewery, acknowledged that issues around retail rights “will come to the forefront” going forward.   

Distrib Southern Glazer’s got good news from US Dist Ct judge in Ohio following Friday hearing on attempts by Great Lakes Brewing and Boston to terminate its central Oh biz with those brands, approx 156K cases of Great Lakes, 475K cases of Boston (see last week’s Expresses).  Sales of those brands represented 75% of SG’s Columbus branches’ beers revs, 12% of its total revs.  Judge granted temporary restraining order halting Great Lakes from 1) terminating SG; 2) withholding delivery; 3) changing SG’s territory; 4) appointing replacement distrib (Great Lakes apparently intended to have Superior take over).  Separately, judge ordered “standstill” of SG-Boston Beer relationship until Oct 7, as those parties agreed to continue settlement talks.  Report on “status” of those talks, tho not “substance,” due no later than Oct 7.  If settlement not reached, court will schedule hearing.  Meanwhile it’s status quo between Boston and Southern Glazer’s.   

On Great Lakes, Judge agreed pretty much down the line with Southern Glazer’s, at least for purposes of TRO/injunction. (“Any factual or legal conclusions made at this stage are not binding at a trial on the merits,” he footnoted.)  Most important, he agreed that SG had “raised serious questions going to the merits of its claims as to whether Great Lakes’ attempted termination violates the Ohio Franchise Act, which justify the issuance of a preliminary injunction.”  Then too, judge agreed SG might suffer irreparable harm from termination.  He seemed persuaded by SG that “no other available brands could replace” Great Lakes, which are “unique and comprise a significant part of” SG’s sales.  (Judge also seemed to buy SG argument it should isolate Columbus branch biz, not consider all of SG‘s OH biz.)  Judge also cited potential “damage to [SG’s] goodwill by impairing [its] relationships with its retailers, negatively impact the sales of its other products, and erode its customer base.” Third, judge did not agree that Great Lakes would be harmed by injunction.  He disagreed that window closing under OH franchise law that would force Great Lakes into new agreement with SG.  Rather, they simply continue under current agreement, he ruled.  Finally, any public interest issue was “neutral.”  So, Southern Glazer’s prevailed on 3 of 4 key issues to obtain injunction.  And got it.

Previous Kendall Jackson Case “Persuasive”; Sale of Biz is Not Sale of “Franchise”  Southern Glazer’s relied on earlier fed ct case in different district in OH that involved vintner Kendall Jackson.  It attempted to terminate distrib after it sold biz to another distrib (but they did not liquidate biz, rather “consolidated” the two distribs).  KJ made same argument that Great Lakes makes here: distrib failed to get KJ’s consent to sell.  But court rejected termination.  Great Lakes said facts and issues different here, but judge found case “persuasive.”  Briefly, court in that case ruled that distrib can sell it “business” without consent of manufacturer, but can’t sell its “franchise” without consent.  KJ consent not required for distrib to sell its stock, since “franchise” stayed in hands of original distrib.  Similar situation here, judge found, following SG’s argument.  Southern Glazer’s did not sell assets or transfer franchise, so no just cause for termination.  (Extent to which this previous case applies likely to be aired out at trial, if one occurs.  Regardless, precedent strong enough for judge to grant TRO.)

No Change in Day-to-Day Biz; No Fraud on SG’s Part  Then too, transaction creating Southern Glazer’s did not affect day-to-day biz at Columbus branch, judge added.  Great Lake’s arguments that SG uses new website to process orders and decisions made in Fla by biz that’s does not include Glazer’s other (separate) big beer biz, “not well taken” either.  No “authority” to support website theory, he wrote, and similar arguments made by Kendall Jackson didn’t help its case.  And while Great Lakes alleged fraud on part of SG, for signing franchise agreement that required Great Lakes consent for any sale and now arguing that same provision is “void and unenforceable,” judge “disagrees.”  Ohio law clearly voids any contract provision that fails to comply with it, law anticipated that parties may agree to provisions that violate it and that law prevails anyway.  Besides, Great Lakes drafted the contract. 

Add it all up and “present record does not persuade this Court that the Transaction [creating Southern Glazer’s] constituted just cause for Great Lakes to terminate the Franchise Agreement.”  Same record “sufficient to establish a risk of irreparable harm” to SG if it does not get injunction.  And, “while Great Lakes may be unhappy with Plaintiff as its distributor, Great Lakes’ belief that another distributor is preferable does not demonstrate substantial harm.” TRO/injunction granted.               

With Senators from Iowa (Joni Ernst) and North Dakota (Heidi Heitkamp) aboard, Craft Beverage Modernization and Tax Reform Act now has majority support in Senate, reports Beer Inst and Brewers Assn.  “Now is the time for change,” said BA prexy Bob Pease, noting it’s been 40 years since fed excise tax has been reformed for brewers.  With Senate and House majorities (283 co-sponsors in House) backing reform, “beer is beyond partisanship,” BI prexy Jim McGreevy said, as he thanked members for supporting “common sense legislation that will provide much-needed relief to America’s brewers and beer importers.”       

Premium light beers have declined steadily for years and years.  The 3 leading premium light brands dropped estimated 10.6 mil bbls since 2008.  And they will be down over 1 mil bbls again in 2016.  But they are still over 30% of the biz

“We are proud that Bud Light continues to be the most popular beer in America. However, we are never complacent and we continue to work hard to give our consumers the crisp, refreshing taste they prefer, and maintain our #1 spot. We just launched our new NFL team cans and are excited for the NFL season."

MillerCoors cmo David Kroll will talk about its new/old approach this afternoon in meeting with distribs.  "We are taking a more assertive stance," he will say, according to Ad Age which saw excerpt of speech in advance.  David will say that Lite ads talk about the beer while Bud Light has "has intensified its old approach of hiding behind sophomoric humor."  Continuing with the jabs:  “First, they hid their beer behind a frat-boy lifestyle in the 'Up for Whatever' campaign. Then they hid behind celebrities with the 'Bud Light Party.' And now they're hiding behind logos … actually admitting that Bud Light is nothing more than 'A Beer with a Team on It.' " 

The Beer Wars are back as new Miller Lite ads directly take on Bud Light on taste and carbs, as first reported in both WSJ and Ad Age last night.  The 15 second ads will debut on NFL games next weekend.  "Bud Light says raise one to right now, so why not raise the right one," the first ad says, and then:  "Miller Lite has more taste and half the carbs."   Three more ads will be coming, notes Ad Age.  Here’s copy from another: "Apparently Bud Light is inviting everyone to join their party. Thanks for the invite, we'll bring Miller Lite." MC also took ad in today’s Chi Tribune repeating the taste, carb and calorie claims. 

The Beer Wars are back as new Miller Lite ads directly take on Bud Light on taste and carbs, as first reported in both WSJ and Ad Age last night.  The 15 second ads will debut on NFL games next weekend.  "Bud Light says raise one to right now, so why not raise the right one," the first ad says, and then:  "Miller Lite has more taste and half the carbs."   Three more ads will be coming, notes Ad Age.  Here’s copy from another: "Apparently Bud Light is inviting everyone to join their party. Thanks for the invite, we'll bring Miller Lite." MC also took ad in today’s Chi Tribune repeating the taste, carb and calorie claims.