“Why did Mitchell…reject Yuengling’s previous appointment of rights” in MS? That was letter’s first question.  Mitchell’s previous rejection marked “the first time an alleged independent wholesaler has rejected our appointment of distribution rights,” Dave wrote.  That hadda be a surprise, not just because it had never happened before, but “especially after years of solicitation by that Distributor of our rights. We need to have a detailed explanation in writing of the facts that caused Mitchell to reject our appointment abruptly.”  

Dave’s letter details how he met with Adam Mitchell “on multiple occasions” and Mitchell Family of Cos “eagerly completed the application and due diligence process” and “continued to solicit” appointment.  But when Yuengling appointed Mitchell, “they rejected that approval without warning or explanation. It is our belief,” adds Dave, that AB “or an affiliated company greatly influenced Mitchell’s decision to reject the grant of Yuengling’s distribution rights.”   Again, AB has “redirected the transaction” to Mitchell, and Yuengling believes the initial rejection “greatly influenced” by AB.  So that has to raise questions for Yuengling, especially since “Mitchell would directly compete with the Yuengling brands in other territories in Mississippi.” 

After AB did 11^th hour “match and redirect” of Rex Dist in MS to Mitchell late last mo, perhaps biggest outstanding question was what will happen to Yuengling brands?  While many might have assumed Yuengling would go to MC distrib, especially since Mitchell had previously rejected Yuengling in other MS territories, Mitchell did apply to get brands.  But given what’s already happened, how could Yuengling just say yes?  One could imagine a lot of hard questions would have to be answered.  Turns out Yuengling coo Dave Casinelli wrote 3-pg letter to Tom Magruder of Rex on Sep 9, copying 5 others, including Mitchell prexy Adam Mitchell, detailing situation from Yuengling’s perspective and questions he has for proposed buyer Mitchell, before Yuengling could consent.  Asked about letter, Dave had no comment but said “the parties are working through the due diligence process on the pending transaction.”

Chris Williams, “formerly the head of  our large format sales channel” now “tapped to lead our Region 4 sales team,” AB said.  Recall, ex-region 4 guy Marcelo Abud “moved on to lead Labatt in Canada.” Marcelo came from Brazil less than 2 yrs back.  Chris is one of few vets that’s been there the whole time since ABI inception in ’08 (goes back to Labatt). He was natl retail sales veep back in 2010.  “Replacing” Chris, as veep “large format and retail business development” will be Ari Kertesz “a recent hire from McKinsey” who’s got “more than 20 years of retail consulting experience” including 5 yrs on AB projects.  

Another MillerCoors ad agency switch but no new work coming on Miller High Life ‘til next yr.  Philadelphia-based Quaker City Mercantile will take on new “creative and digital strategy” for Miller High Life, replacing Publicis’ Leo Burnett, reported Ad Age.  But Burnett’s “I Am Rich” campaign will run its course til end of yr.  No new spots imminent. “We need to look at the whole gamut within economy,” said Ashley Selman, vp mkting about agency change. “Part of economy is getting back to delivering value,” she added, noting MC has been investing in consumer research to tap right approach. Quaker City, which is also handling global repositioning of Pilsner Urquell for SABMiller, acquired a piece of Narragansett brewery in 2009 and also handles its advertising, noted mag.  There will also be new ads coming for Keystone Light (by Mekanism agency) with greater focus on local mkting. “We needed to go back and take a fresh look at some of the brand positioning,” said Ashley. “This isn’t about unveiling enormous TV and big comprehensive communications plan.”  No mention in Ad Age when new Keystone approach will be ready.  

Both Constellation (natch) and ABI were highlighted in IRI report as winners of each of the 3 key summer holidays in scans.  Interestingly, ABI gained 0.3 share of foodstores volume during Memorial Day, 0.1 share during July 4 and 0.3 share during Labor Day.  As year progresses, AB’s gradually shored up total share loss in foodstores, shedding just 0.3 YTD thru Sep 11.  And MULC share loss YTD essentially cut in half during 2 wk Labor Day period.  Yet gotta note, total AB down steeper 1.8% in IRI MULC for same 2 wks, suggesting even tuffer c-store trends.  Indeed, c-stores still represent nearly 2/3 of AB’s total biz in IRI and last we saw, its volume down 3.3% for latest 4 wks thru Sep 4 vs down 2% YTD.  So, as total beer biz slows, AB’s been able to shore up share losses, even tho its overall trend hasn’t improved.               

Beer had exceptionally strong 2015 Labor Day period in scans, which proved a tuff act to follow.  Total beer volume down 1% and $$ up about 1% for 2 wks ending Sep 11, 2016 in IRI multi-outlet + convenience data, compared to up 9% and 11% for comparable weeks in 2015.  Every segment underperformed vs last year.  But biggest swing was in Premium segment.  After gaining additional 2 mil cases last yr (+7.4%), Premium down 1 mil cases, -3% for 2 wks.  Nearly 2/3 of decline was from Bud Light alone, down 5%.  Subpremium was only segment that didn’t grow in 2015 and trends worsened yet this Labor Day, down 2%, 290K cases.  Cider continued down 13% for period.  FMBs down 0.5% compared to up 19% in 2015 with NYFRB declines particularly weighing segment down.   Meanwhile, Imports (+5%) and Superpremium (+7%) segments were largest gainers for holiday period, tho trends slowed 10-15 pts vs last year.  And craft segment could only eke out 0.45% gain this Labor Day period after jumping 21% in 2015.  In fact, eight of top-19 IRI defined craft vendors down during holiday period this yr, including six down double-digits. 

“From August 31, 2015 to August 31, 2016, the portion of Southern Glazer’s business that was formerly Southern distributed approximately 8.3 million cases of beer and other malt beverages,” said affidavit from Southern Glazer’s Wine and Spirits prexy Sol Stein (previously prexy/CEO of Glazer’s).  “During that same time, the portion of Southern Glazer’s business that was formerly Glazer’s distributed approximately 1.2 mil cases of beer and other malt beverages.”  That 1.2 mil cases obviously excludes big MillerCoors and other brands’ biz split off at creation of Southern Glazer’s and being run separately as Glazer’s Beer and Bev.  Even tho it’s only 1% of so of total revs ($16+ bil), Southern Glazer’s has pretty big beer biz.   

 Affidavits filed by each side reveal some interesting numbers.  Recall that Great Lakes said it had “performance issues” with Glazer’s.  CEO Bill Boor detailed them in affidavit.  Compared Great Lakes’ 2015 distribution in Cleveland (by Superior Bevs) of 77% in off premise and 72% in on premise with Glazer’s 29% in Columbus off premise, 17% on premise.  And while Superior had “much lower” number of accounts, Superior sold 780K cases of Great Lakes compared to Glazer’s 156K cases.  Even smaller Heidelberg of Lorain sold 130K cases of Great Lakes in mkt with just 1800 on and off premise accounts compared to 8,800 accounts in Columbus.  Glazer’s sez “fact that Great Lakes never previously communicated these alleged performance concerns suggests they are pretextual.”   Those 3 distribs totaled near 1.1 mil cases.  That’s over half of Great Lakes biz, which totaled 2 mil cases last yr.

Fed ct judge in Ohio ordered last licks before deciding whether to grant distrib Southern Glazer’s request for TRO/injunction to halt Great Lakes Brewing termination of it for Columbus mkt (see Sep 20 Express).  Not surprisingly, final briefs from each side diametrically opposed on every key issue.  Glazer’s claims termination “foreclosed” by state law that supersedes contract provisions.  Great Lakes claims terminations legit under contract and state law.  Glazer’s insists there was no transfer of franchise rights when Southern Glazer’s created by merger of Southern Wine & Spirits and Glazer’s, just a change in ownership.  Great Lakes insists “Great Lakes franchise was transferred to a new business as part of the merger.”  Glazer’s sez loss of Great Lakes biz would be irreparable injury, including “systemic damage to the operations of the Columbus Branch, damage to its goodwill and reputation, and damage to its customer relationships.”  Great Lakes sez Glazer’s “has not identified a single way in which it will suffer irreparable harm.”  It’s not likely to lay anyone off given size of its liquor biz (1600 brands after adding Southern’s book) and small size of its Great Lakes biz (4% of Columbus branch biz, 25% of its beer, but Great Lakes sez you gotta use SG’s entire Oh biz as base line “as that is what the merger created”).  Besides, Great Lakes is “rounding error” to natl Southern Glazer’s biz.  Glazer’s claims “same legal entity” sells Great Lakes now as before merger.  Great Lakes claims “the entities are not the same business.”  Glazer’s relies heavily on earlier case resolved in fed ct in Ohio that Great Lakes distinguishes from current situation.  There’s more, including disagreement over who’s harmed by status quo, natch.  It will be interesting to see what and how judge decides.

Domestic brewers’ taxpaid shipments gained 521K bbls, 3.3% in Aug, estimates Beer Inst economist Michael Uhrich, as 2016 up-and-down shipments trend continued.   Followed big Jun-Jul loss.  So far this yr, 4 mos up and 4 mos down.  Yr-to-date, taxpaids -428K bbls, 0.4%.  Import gain thru Jul puts beer biz in the black, +934K bbls, 0.7%.  Cider decline knocks that back by 0.1 or so.