Nothin' illustrates fast-changing craft landscape like recent fate of Boston Beer. Recall, Boston went from double-digit shipments growth to negative in just 1 yr. And lookin' at successive 12/13-wk scan trends in IRI MULC, Boston went from +12% for period thru 6/14/15 to -6.6% for period thru 10/2/16. That's a nearly 20-pt swing. Quick reversal evident again when Boston announced Q3 2016 shipments sunk 12%, Q3 depletions -8%. Thru Sep depletions -6%, shipments -8%. Boston lowered guidance yet again, said it expects full-yr depletions/shipments to be down -6% to -2%. But look at extreme range that implies for Q4. At -6%, that would be basically flat; at -2%, implies 18% gain. One key: Q4 this yr has extra week. That's adds 2% benefit for full yr, CFO Frank Smalla said on Boston call. But extra week adds about 8 full pts to single qtr (tho Frank didn't say that). CEO Martin Roper pointed to "a lot of timing issues relative to shipments," noting Q3 whacked by launch of Coney Island Hard Root Beer last yr. Then too, Boston has easy shipments comp of -2.5% in Q4 last yr. Thus, such a wide range for Q4 shipments possible.

Meanwhile, Boston projects 2017 volume of plus or minus low single-digits. That implies up to 100K bbls up or down. Martin and chairman Jim Koch laid out some key changes they're seeing play out at retail likely to impact shelf space for Boston. Like others, they see "confusion" among consumers. They also said off- and on-premise retailers showing signs of focusing more on "core items," "reducing the tail," "increasing the number of mandated brands... rather than allowing discretion...to pick whatever the long tail of craft they want." Retailers at "beginning of this process," said Jim, "but it will take a while to work its way through the retailer shelf space allocation" and on-premise tap handles. For Boston to return to growth next year "you have to believe" three things, Martin acknowledged: 1) Twisted Tea "maintains its health"; 2) Truly "continues on its trajectory"; 3) Angry Orchard and Sam return to "very low declines or flat" instead of current trends, which Boston believes is "reasonable" and "doable." To get there, Boston using new pkgs, new brands, new seasonals (for Sam), more "focus on retail activation and displays" (cider). It's a "highly fluid" time, reminded Martin. And, based on remarks we've heard of late from Martin and other craft execs, a time of deep faith.  

We are in a new era for craft. It's much less stellar-looking overall (tho there are still lotsa bright spots). Craft currently characterized by many wrenching changes, including M&A galore, almost no growth (in recent scan data), punishing shelf resets, layoffs, recalls and other harbingers of tuffer times seemingly ahead for many. Look how radically segment changed in short time. First, M&A. INSIGHTS tracked over 45 deals for part or all of craft brewers since Jan 2015. Deals include many of largest/fastest growing. M&A has totally changed craft's competitive structure. On top of this, craft growth nearly stalled out in last few mos. Volume up just 1% in IRI multioutlet + convenience for 12 weeks thru Oct 2. That's while segment still adding hundreds of new players this yr. There are almost 5,000 craft brewers. Much of what craft growth there is today comes at local level; frequently still explosive, but on much smaller scale and not fully visible in numbers. Yet at same time, biggest chains like Wal-Mart and Kroger's actually cut craft's space in latest round of resets.

Brooklyn deal to sell 24.5% to Kirin marks biggest deal of 2016 so far, even as Brooklyn owners (Ottaway family) stay in control and within Brewers Assn definition. Most of deals in 2016 are smaller, less landmark than last yr's Lagunitas and Ballast Point transactions. Yet Brooklyn deal did mark a tipping point: 8 of top 15 craft brewers on our list did some type of transaction. Editor's note: our list differs substantially from BA's list as we include Lagunitas, Craft Brew Alliance, Goose Island, Founders and Ballast Point; all top 15 craft brewers that did transactions which disqualify them from BA definition. Interestingly, each of brewers #11-15 did transactions for at least part of their biz: Brooklyn, Ballast Point, Founders, Firestone Walker and Dogfish Head. And of craft brewers #11-20, 8 of 10 did transactions; add SweetWater, Harpoon and Boulevard.

While craft still up slightly overall, many bigger players down substantially in recent mos. Look at some of these IRI #s. Boston Beer volume down 7% (but more on its craft beer), Sierra Nevada down 9%, Gambrinus down 9%, Craft Brew Alliance down 7% for 12 weeks thru Oct 2 in IRI multi-outlet + convenience. Sure, there are still some high-flyers. But biggest 3 case volume gainers among craft brewers in recent mos all did transactions. Lagunitas up 22%, Founders up 60% and Firestone Walker up 47% last 12 weeks. Meanwhile, each of top 6 craft brands down (as defined by IRI). Definitions are a further drag on trend as IRI includes Blue Moon, Leinie's and Shock Top, all down.

Then too, many craft brewers report soft overall numbers, beyond scan. Boston Beer shipments down 12% in Q3, now expects 2-6% STR drop for full yr (see below). Recall, Sierra Nevada said it will be down 4% or so in 2016, its first drop ever. Brooklyn will be down in US for 2d straight yr (tho up solidly overall because of export gains) and Dogfish Head presently about flat, but hopes for slight gain with intro of cans. Meanwhile, CBA projects 1-2% shipments growth, but recent scan trends suggest that's gonna be a stretch. Even Stone said its volume up single digits for first time in forever. Speaking of Stone, pressure from big brewers sitting on top of segment and all the little guys bubbling up underneath were both cited by Stone as it took unprecedented step; it laid off 5% of its workforce, about 60 employees. That announcement viewed by many as inflection point. Former hi-flyer Stone may have gotten over tips of its skis, with too many big projects. But layoffs? Stone, long a leader in revolutionary rhetoric, reined in, shortly after hiring new ceo from POM Wonderful. CBA also laid off 20 or so from its Woodinville Brewery, as contract volume from Pabst hasn't yet materialized. Then too, Dogfish Head ceo Nick Benz will leave co at end of yr; chairman Sam Calagione takes role. That marked 8 CEO changes among top 20 craft brewers in last 15 mos or so. Recently, Revolution announced major product recall; that followed another significant recall by Left Hand. The hits keep comin' fast and furious. Craft undergoing such rapid and radical evolution that it's impossible to say what's next. The times they are a changin'.  

Lotsa camaraderie at Beer Inst and NBWA mtgs this yr, and speakers at each celebrated industry "unity" over tax reform, other issues. Yet there's still plenty of tension and specific spats between players. Two of latter got lots of attention in recent wks, which we've detailed in our INSIGHTS Express. First, Yuengling raised alarm and "concerns" over AB's "match and redirect" of Mississippi distrib deal in letter to distribs involved and in extensive attack on ABI-SAB deal and ABI mktplace practices in letter to Dept of Justice. Yuengling feels it was "targeted" in MS since purchaser of redirected Rex Dist deal (Mitchell) had turned down Yuengling at last minute before it entered MS mkt earlier this yr. In letter to Rex and comments to DoJ, Yuengling charged AB interfered with deal to create "chaos" for Yuengling in mkt. Also suggested AB possibly financed Mitchell purchase directly or indirectly since Mitchell had said it couldn't take on Yuengling for financial reasons, then turned around and bought Rex mos later and even sought Yuengling rights in that mkt. ABI sez it provided no financing to Mitchell in Rex deal.

Yuengling included its side of MS story in blistering 15-page letter to DOJ objecting to ABI-SAB deal and DOJ consent decree with ABI as "inadequate." Yuengling charged ABI with long list of anti-competitive practices, i.e. controlling industry pricing and controlling wholesalers via incentives, preferential FOBs, requirement of "best efforts" and much more. Asked govt to amend that agreement by barring ABI from: 1) "match and redirect"; 2) "insisting" on any given level of promo spending by its distribs; 3) any direct or indirect financing of distribs; 4) "manipulating 'delivered price' amounts to similarly situated" distribs to reward/punish winners or losers of "match and redirect." DOJ not likely to stop ABI-SAB, but Yuengling's charges may resonate, impact DOJ's monitoring of deal and won't help mend already frayed relations between Yuengling and ABI. They will also likely inform Yuengling's future distrib choices.

In OH, land of perpetual distrib-brewer legal disputes, a nasty new one broke out between craft brewer Great Lakes and largest liquor distrib in world, Southern Glazer's (SG). When Southern Wine & Spirits and Glazer's merged earlier this year, vast majority of Glazer's beer biz stayed independent with Glazer's Beer and Bev. But Southern Glazer's kept non-MillerCoors beer biz in some mkts, including OH. Great Lakes, and later Boston Beer, insisted SG needed their consent to deal, a consent they would not provide since they felt new co would lack beer focus. SG insisted it did not need their consent. Fed judge agreed with SG, at least for now, granting TRO to stop Great Lakes termination and freezing Boston termination pending settlement talks. So now, Great Lakes and Boston in potentially extended litigation with huge, well-funded distrib that has no incentive to settle or move with dispatch. Read details of Yuengling issues online here, OH case here.  

Retail rights for big and small brewers took center stage as key "disruption" to 3-tier system at this yr's NBWA convention. In opening comments, NBWA prexy Craig Purser said "largest suppliers continue to aggressively purchase smaller brewers. In short, the establishment is scooping up the disrupters. But most of these craft brewers in the U.S. come with retail licenses." Such exceptions to 3-tier, Craig claimed, "intended to help generate MORE competition and HELP start-ups and entrepreneurs - NOT to reduce market access or help global brewers sell outside of the system," as in, not thru wholesalers. (Editor's Note: big producers have obtained their own exceptions to 3-tier over the yrs.)

NBWA economist Lester Jones pointed to "a new and vibrant direct-to-consumer segment": taprooms. These are "rapidly growing within the industry and creating a retail channel" that's tuff to track and "not typically part of the three-tier system." At same time, "as new channels of retail emerge, traditional on-premise channels such as neighborhood bars are disappearing," Lester and Nielsen's Danny Brager showed in recent presentations. Elsewhere, Lester and BA economist Bart Watson cite data from TTB showing large increase in "tax determined beer" sold direct to consumers over last 2 yrs. Bart estimates "we could be looking at...900,000 barrels in incremental growth directly at breweries" this yr (our emphasis). That would be: 1) big chunk of craft growth this yr, probably over half; 2) a big hit to "traditional" on-premise beer/craft growth; 3) a net 2 mil+ bbls or so on-site not sold by distribs.

Craig brought up this issue in chat with BA prexy Bob Pease, asking Bob to comment on taproom sales "at the expense of brand-building bars." Bob countered that "tasting rooms are the quintessential brand builders" and add "excitement and vitality" that brings "new people" into beer. Ultimately "it's what the drinkers want" and "can really benefit our distributor partners in the long run." Now that AB has taproom sales thru new partners, "can't say that we love that," said Bob, "but it's difficult for us to argue." It will be a "state-by-state issue." Bob didn't say so, but BA here in same position as it is on branches/self-distribution. Where do you draw the line? Craig responded: "we need to be thinking long game, long term," about what it looks like when "those privileges are sought to be expanded or perhaps for a purpose that they weren't created."

Ain't just distribs concerned about expanding brewers' retail rights. "I think taprooms need to stay taprooms," Chi retailer Pat Brophy (Binny's) said on separate panel. Distrib Michael Shilleci noted taprooms "operating full bar [with] food trucks coming in, bands coming to play," that's competing with retail bars. These issues "are going to come to the forefront more through the retailer associations," brewer Larry Bell offered, tho he agreed with Bob that "having taprooms and promoting beer in general is a good thing." They provide more options for consumers, "encouraging people to make beer their choice."

Retail Rights: "Training Wheels" or Death of 3-Tier "By a Thousand Cuts?" Initially, "retail privileges for producers were deemed to be training wheels," general counsel for Kentucky ABC, Stephen Humphress, explained during recent CLE legal conference. Beyond certain production caps, "you were a big boy yourself and you didn't need those training wheels anymore." But now, "retail privileges are a way to expand businesses," boost "tourism and entertainment." Of course, "distillers were the big change in Kentucky law," he noted, and "they'll have their own bars there." But similarly, with beer, "rather than the training wheels coming off, they increased the caps." Same for small farm wineries.

Move towards amending laws as an economic development tool also got attention from Calif ABC general counsel Matt Botting, at recent mtgs. In Calif, producers can distribute and retail beer via 3-tier exceptions, "but you can't do it in a way that allows you to take over the market," he reminded at Calif Craft Beer Summit. But as "there are more and more exceptions" and "bigger exceptions," they "really bring the whole system into question," he said. So "are we getting into 'death by a thousand cuts,'" Stephen wondered at CLE. Question was posed to panel of regulators: can they foresee a "complete abolition" of 3-tier? "Yes," said Matt. Whoa! Stephen noted potential for "a judicial opinion" that affirms there are "so many exceptions that it's not reasonable anymore."

Recall, that very argument noted in ruling that sent Retail Digital case back to lower court in Calif. Retail Digital all about abilities of unlicensed 3d-party providers and whether they can take money from suppliers/distribs to promote products in or around retail accounts. Final ruling could impact activity of onslaught of 3d-party cos catering to consumers who want to buy alc bevs on digital devices and have them delivered, attys at CLE suggested. That means apps like Drizly could sell ad-space back to suppliers, promoting their products to drive sales at retail accounts they partner with to deliver 'em. Some no doubt view that as a "thing of value," currently barred under most tied-house laws. In any case, all of these disruptions are examples of consumer "pull," which both NBWA's Craig and BA's Bob say should drive the biz.  

MillerCoors will take "a more assertive stance" to "lead beer marketing for the next generation," said cmo David Kroll at fall sales meeting with distribs. MC mktg will "ultimately" lead beer category back to growth, according to David, since ABI abdicated, i.e. "became more banker than marketer." MC mktg has 3 priorities: "rejuvenating American lager," "investing to scale new growth segments" and "engaging the economy drinker." MC launched Miller Lite ads that claim taste superiority over Bud Light. "Bud Light says raise one to right now, so why not raise the right one," first ad sez. "Miller Lite has more taste and half the carbs." Lite ads talk about the beer while Bud Light" has intensified its old approach of hiding behind sophomoric humor," David said. "We do not accept that premium light beers are permanently challenged.... The beer isn't the problem. The issue has been the marketing."

MillerCoors also announced launch of Michelob Ultra fighter called Goldwing, a pilot into mkts in TX and LA (state) in Feb. Goldwing will have "modern badge value" as "a brand that speaks directly to women and Latinos" and "it's designed to be even less beery" than Ultra, with slightly fewer calories/carbs. One consistent MC growth story: Coors Banquet in its 10th yr of growth and it will get 40% media bump in Q4. Meanwhile, Miller High Life will also return to its roots (like Lite and Banquet) with historic High Life themes and tag "If you've got the time, we've got the beer." High Life will get 70% more spending next yr. MC's new economy strategy "elevates value across our economy portfolio." MC will "deliver value" thru price, alcohol content, packaging, etc. For example, MC "fully revamping" Keystone Light with "new packaging and marketing" that will hit in Jan. MC will replace 12-packs with 15 packs, "three more stones for the same price." Keystone Ice, Mil Best Ice and Icehouse will shift to higher ABV (6.9%). And MC will increase size of PETs from 40 oz to 42 oz on some brands, "5% more beer for the same value price."

MillerCoors will also double down on FMBs, including "readying" Redd's "for its next wave of growth," according to David. Tho parts of Redd's "have begun to soften," brand "easily one of the most successful category launches in the past 10 years." Redd's moved "over 46 million cases" since 2012. MC aims to make Redd's the "outright leader in fruit beer. Beer + Fruit. It's that simple." Next yr, MC will also launch Henry's Hard Sparkling line (to play in hard seltzer), plus Zumbida (based on Aguas Frescas), Easy Tea tests, new Henry's Grape flavor and more. Henry's sodas will sell almost 5 mil cases this yr. Plus MC will launch new creative on Blue Moon, which will also get 40% media bump in Q4. Leinies will get "highest spend in its 150-year history" next summer with "first packaging refresh" in 10 yrs. And MC has acquired majority of 4 craft brewers in last 9 mos. MC going thru lotsa changes and already has a ton on its plate for next yr. 

Will MillerCoors change following TAP takeover next week (TAP is stock symbol for Molson Coors)? The "go-to-market strategy isn't going to change at all," maintained MillerCoors ceo Gavin Hattersley at its fall meeting with distribs. But having one owner will "make life less complicated," and "reduce complexity," added Gavin. MillerCoors will now be "fully independent" Molson Coors ceo Mark Hunter said, as Molson Coors "will no longer be joined at the hip with one of our major competitors." Gavin pointed to "encouraging progress" and improved volume trends at MC, with "strengthened" marketing leading to "flat" Miller Lite and Coors Light in 1st half. That's "impressive performance, especially given the aggressive discounting tactics ABI has launched around Bud Light and Michelob Ultra," said Gavin. But "resolving the softness we've seen recently with Blue Moon and Redd's is a priority." MillerCoors has evolved from "a team that was playing not to lose to a team that's playing to win." MC "targets are going to get increasingly more aggressive." And as part of achieving those targets, "we must quickly and diligently shore up our supply chain and customer service," Gavin noted. "There are still far too many issues for your, or my, comfort," he acknowledged. Various initiatives aimed at improvement, including addressing shortages of 16- and 24-oz cans, ramping up capacity on aluminum pints, and adjusting production in some breweries. "We've successfully transitioned more than 13 million barrels across our system" since Eden closing. MC also ramping up FMB production in Ft Worth. But all these moves ain't cheap. In total, MC will "invest more than $300 million in brewery upgrades this year and plans to invest another $300 million next year."  

Constellation's blistering gains for 6 mos thru Aug, shipments up 1.3 mil bbls, 15%, and guidance for 16-17% net beer sales gains for fiscal yr, suggest it's on pace to grow over 2 mil bbls in yr ending Feb 2017. Indeed, it's up 2.06 mil bbls for 12 mos thru Aug. Guidance implies slowdown in 2d half. Presuming it gains 2+ mil bbls, Constellation would total over 18 mil bbls (including about 400,000 bbls from Ballast Point). So it's likely to gain close to 1 share of US beer this yr to near 8.5. Gotta go back to 70s to get a brewer of similar size growing at as fast a pace as Constellation. Even absolute size of volume gain has only 1 historical comparison in last 30 yrs. That's AB. AB gained 2.3 mil bbls in 2007, but that was 2% gain. And just before it got bought. AB gained 2.6 mil bbls in 1999, 2.9 mil bbls in '98 back at end of its go-go yrs. Of course, AB was 5-6x the size of STZ when it did that.

And then there's the money Constellation's now making on beer. Constellation now expects beer oper income growth in high teens, which means it should make $1.5 bil or so in fiscal yr ($1.264 bil in latest yr). It is now easily #2 profit player in US beer and widening gap with MillerCoors ($1.239 bil in 2015 and down slightly thru Jun this yr). Constellation beer operating income up a whopping $95 mil, 27% in Q2. Up $168 mil, 24% to $860 mil in 1st half. Constellation operating margin jumped 1.3 points for 6 mos (2 points in Q2) to 36.2. Constellation now makes over $6 per case in oper income ($6.10 in latest qtr). $6 per case. Compare to MC: $1.65 per case in 2015.

Constellation Brands Beer Division revs at $2.374 bil for 6 mos. That's up nearly $400 mil, 20%, including $88 mil of all-incremental Ballast Point revs. That's over 4% of beer revs. Beer represented about 61% of all Constellation revs, but almost 3/4 of its oper income. So Constellation clearly beer-centric, but it's also on buying spree of high-end beer, wine and spirits assets, including just-announced High West Distillery, about $25 mil in revs, 70,000 cases. Constellation paid $160 mil (over 6.5x revs, bought Ballast Point for 8.7x revs). Also bought high-end vintners Prisoner and Meomi, plus hi-end tequila Casa Noble (up 45%) in last couple of yrs or so, and Ballast Point. Still, its debt-to-EBITDA ratio at 3.4x, noted cfo David Klein on conference call. Very manageable. It has $7.9 bil in total debt. And don't forget it may sell or go public with its Canadian wine biz, reportedly valued at over $1 bil. Bottom line: expect more deals.

In addition to strength of its Mexican beer portfolio, Constellation also still sees all kinda "very good white space" in beer biz "that we don't participate in," as Rob Sands noted on call. He pointed again to FMBs as "very good category" with "premium positioning, margins and growth.... Clearly...we'll be looking at" FMBs "in terms of developing our portfolio." Meanwhile, Ballast Point continues up 40% for 6 mos, even amidst craft slowdown. Ballast slowed to 20% or so in latest qtr. Even where beer biz is tuffest and "condition of the on-premise" is "fairly poor," noted Rob, "our on premise is very strong." For example, Constellation draft biz up 30% in qtr thru Aug, Rob noted. Then too, Pacifico could be next brand coming on. STRs up 20% in qtr, following 17% gain last qtr. Corona can depletions also grew in high teens. STZ stock up by more than 8x in 4 yrs and mkt cap now $34 bil, but it still gets headlines from analysts like: "Growth So Good You're Left Seeing Starz," (Cowen Insight) and "Firing on All Cylinders" (CLSA).  

Losing share to wine and especially spirits far from only factor that makes it hard for beer to grow. Other pressures on mainstream beer volume are perhaps underrated, such as continued economic sluggishness and the lack of visibility of some key chunks of volume in taprooms/tasting rooms of small craft brewers. Some of economic headwinds forcefully articulated by Dr. Douglas Holtz Eakin, speaking at Beer Institute earlier this mo. First, slow growth. Economy averaging 2% growth during this recovery (since 2009). That's slowest since 40s. And only up 1% so far this yr. Under such slow growth, "capacity to reach the American dream is diminished" for avg citizen. Then too, there's "declining labor force participation." Only 83%, down from 100% in prior eras. And "productivity growth has stalled in last decade, declining last 2 yrs. Then too, median household income below where it was in 2007, adjusted for inflation. That's gotta have effect on beer. About 76 mil Americans say they are barely surviving financially, 46% say they couldn't cover an unexpected $400 expense, noted NY Post in article called "The Permanent Underclass," citing fed stats. Add all this up, flat to slightly up doesn't look so bad.

Meanwhile, doesn't help that some of fastest growing beer channels are not fully captured or understood in reported data (TTB has added 400K bbls to last yr totals already). Tap rooms and tasting rooms have become significant factors in some key mkts. They accounted for 1.1 mil cases of volume in 25 mil case San Diego mkt, or 4%, in San Diego last yr, a MillerCoors study figured. They're about 5% in Minneapolis-St Paul, INSIGHTS has heard, several points in Chicago. Distribs and any out-of-town brewers get absolutely nothing in this portion of mkt and so are competing for 95-97% of pie. How much volume are we talking about in all? About 1.75 mil bbls, near 1% of biz in toto, Brewers Assn's Bart Watson estimates. That's up more than 1 mil bbls in last 5 yrs, while total US shipments flat. And it really matters in some mkts. Economic sluggishness and these new channels make it harder for mainstream to grow, in addition to competitive pressures from wine/spirits.  

Deep dive by Citi Research into alc bev ad spending trends shows that even while brewers upped share of voice over last 4 years (at least in qtr leading into summer), beer continued to lose ground to liquor. Keep in mind, this data from Kantar Media does not pick up all spending. And most of this analysis based on Q2 data only; spirits spend much heavier in Q4. Key insight remains: brewers have not backed off ad support. Quite the contrary in recent years. That's not why beer losing to spirits. Could this be issue of quality vs quantity and/or mean that beer's competitive woes due to numerous factors?

Total alc bev ad spending in 12 major media -- from tv to "internet display" -- up $70 mil, 13% in Q2 2016 to $615 mil, Citi analysts found. That was $191 mil, 45% higher than Q2 2012. Beer accounted for almost all of both increases. Indeed, beer spend jumped $67 mil, 16.5% in Q2 2016; up a striking $188 mil, 66% vs Q2 2012. What's more, beer grabbed 77 "share of voice" in alc bevs in Q2 this yr vs 67 share in Q2 four yrs ago.

Q2 Snapshots: ABI Nearly Doubled Ad $$, STZ Nearly Tripled vs Q2 2012; MC +50% Lookin' at top players in alc bevs, Kantar data shows AB spent whoppin' $175 mil in Q2 this yr. That's almost double the $94 mil AB spent same qtr in 2012 and a 29% pop this yr alone. AB was 28% of all alc bev spend in Q2 this yr, a little over 1/3 of beer spend. MC not that far behind, at $146 mil in Q2 this yr. That's +18% vs last yr and +52% vs Q2 2012. MC about 31 share of beer voice in Q2, about 6 pts more than its share of volume. Constellation really cranked up ad $$ too. Spent $83 mil on beer ads in Q2, +16% and almost 3X what it spent same qtr in 2012. That was 18 share of total beer $$ in Q2 this yr, double Constellation's share of volume. Heineken USA also a big spender for its size. Spent $42 mil in Q2 this yr. That was down 14% vs Q2 2015, about 10% more than Q2 2012. Still, Heineken's Q2 spend this yr more than 2X what Diageo spent (including spirits) and more than 3X what Brown Forman spent in that qtr. So #4 beer player spent 2X #1 spirits player.

Handful of Brands Got Most of Q2 Bump Of $67-mil pop in beer spend in Q2, over 3/4 went to just 5 brands. Bud spend up $10 mil, 46%; includes boost for America campaign. Corona Extra and Heineken each got additional $9 mil, to $49 mil (+23%) and $20 mil (+79%) respectively. (Given overall cuts at HUSA, indicates other brands took big hits.) Coors Light ad spend climbed $16 mil, 42% in Q2, Kantar reported. Redd's got additional $8 mil too, tho ad $$ for Miller Lite dipped $2 mil in qtr. Modelo Especial got nice pop: +13% to $24 mil. Boston Beer reduced Q2 ad spend to $14 mil, adding $$ to flagship Sam but slashing cider/tea support. That was 40% higher than Q2 2012, but off from $19 mil Q2 2014.

Other points: ad spending trends really fluctuate qtr-to-qtr. Total alc bev ad $$ up in each of last 5 qtrs, Citi analysis shows, including huge 26% boost in Q1 this yr. But that followed 4 straight quarterly declines thru Q1 2015, big boosts in many qtrs in 2012 and 2013. In toto, alc bev ad spending rose 7% each in 2012 and 2013, but was flattish in both 2014 and 2015, according to Kantar. Revved up again earlier this yr. Finally, Kantar data suggests that with all of the talk about digital, tv remains king in terms of ad spend. Television still just below 90% of total alc bev ad spend in Q2, with internet registering just a coupla points. (Kantar may not be capturing all internet spend.)  

Strong support for indie distrib tier, and curbs on AB activity there -- branch volume limit, vanished VAIP and more -- in Dept of Justice settlement with AB InBev a much welcome signal for distrib tier from feds this summer. That's likely to be justly celebrated in Chi at annual NBWA mtg. At same time, court cases and biz developments around US suggest 3-tier system, traditional trade practice and state regulatory approaches under increased stress these days. As Beer Inst economist Michael Uhrich reminded at BI mtg, big seismic shifts in beer biz tend to happen slowly (even as specific trends can turn on a dime - see above). So do major legal/regulatory changes, especially in industry governed by 80-yr-old laws. But some sure feel the earth moving (at least a bit) under their feet.

Last month, mega-retailer Total Wine took on Connecticut's minimum price/price posting laws in fed court. They allow distribs and retailers to "coordinate" pricing, and result in consumers being "ripped off," Total claims. And Conn Gov appears to side with Total here. Could be another epic court battle -- Total fought similar MD scheme for over a decade, and won -- with its own fallout. In neighboring Mass, retailers challenged charges by Alc Bev Control Comm that they illegally accepted payments to place beer brands. They say soliciting/receiving payments to retailers ain't illegal in MA, that regs ABCC relying on never properly promulgated or enforced. Distrib Craft Brewers Guild, which paid $2.6-mil fine to avoid suspension but is now challenging ABCC in court, has made similar arguments. In also-neighboring NY, huge legal fracas broke out over alleged bootlegging scheme to move liquor from MD to NYC. Beer not involved, but tons of money at stake, very ugly charges being levied and could be unintended consequences, not to mention multiple black eyes, for alc bev biz more broadly. Meanwhile, mega-retailers Wal-Mart and Oxxo and mega-distrib co McLane all in lengthy legal battles challenging 3-tier laws in TX that attempt to separate tiers. Texas also in private label litigation where state sees blurring of supplier and retail tiers. And TX craft brewers seek broader retail rights and ability to sell distribution rights.

"Eviscerating" Tied House in CA In Calif, distribs and craft brewers especially alarmed about potential explosion of pay-to-play if: 1) Retail Digital case resolved by fed court in way that allows suppliers/distribs to pay for ads broadcast in retail outlets, a practice now banned under tied house laws; 2) currently dormant "celebrity" bill rises anew. That bill would create another exception to CA tied house laws that would allow suppliers to pay virtually anyone for appearances at retail outlets. In tandem, these exceptions could mean "complete evisceration of tied house essentially," CA Alc Bev Comm's genl counsel Matt Botting warned small brewers this mo.