Turns out Bud/Bud Light promos in NC that prompted trademark lawsuit by Lumbee tribe (see yesterday’s Express) created by AB distrib Jeffreys without AB input and immediately pulled, distrib sez.  Both companies apologized.  Here is part of R.A. Jeffreys statement, issued yesterday: “R.A. Jeffreys developed some point-of-sale advertising materials that were intended to honor the rich heritage of the Lumbee Tribe.  These materials were developed by R.A. Jeffreys without the involvement, input or knowledge of Anheuser-Busch.”  After getting Jun 9 call that tribe objected, “by June 10…Jeffreys had removed all of the materials in question.  R.A. Jeffreys regrets any offense that may have been taken to the use of the materials in which the Lumbee Tribe claims an interest, and R.A. Jeffreys will not make any further use of such materials unless specifically permitted to do so by the Lumbee Tribe.  R.A. Jeffreys values and respects the heritage of the communities in which its customers live and work.”  AB’s statement: “Our wholesalers often implement local marketing efforts on behalf of our brands. The wholesaler responsible for these signs removed them shortly after a complaint was brought to its attention, and has since expressed its regrets. Anheuser-Busch respects the Lumbee Tribe and likewise regrets that this occurred.”  No word yet on whether Lumbee tribe will rescind suit.  

Despite AB gains with big promos in some mkts, here’s more evidence that beer pricing held up fine overall.  Consumer price index for beer increased 2.1% in May vs yr ago following strong 2.3% gain in Apr.  CPI for all items was up half that rate at +1% for month of May and has grown around 1% for last 4 months running. CPI for spirits dipped 0.2% in May vs last yr while wine prices were flat for month.  YTD thru May, beer prices were up 2% compared to 1.3% gain for all items.  CPI for spirits edged up just 0.2% YTD while wine prices were flat thru May. 

Don’t wanna make too much of short-term data, but gotta note significant improvement for AB in short-term IRI data nationwide, tho big variations by mkt.  AB case share only down 0.15 in IRI multi-outlet + convenience for 2 weeks thru Jun 5, tho $$ share down 0.6.  That’s huge improvement from last yr-to-date numbers we saw, where AB down 0.8 share of volume in IRI MULC thru 5/15 and 1.3 share of $$.  On other hand, MC share performance got worse.  Down 0.84 share of volume and 1 full share of $$ for 2 weeks thru Jun 5.  That compared to losses of 0.6 share of volume and 0.75 share of $$ YTD thru 5/15 nationwide.  Meanwhile, Constellation by far biggest share gainer across US.  Up 0.7 share of cases and 1 full share of $$ to 10.8 for 2 weeks.  That’s almost exact same $$ share gain as it had YTD thru May 15.  

Big Variations By Mkt; AB Gained Big in Fla, Lost in LA; STZ Crushing It, Closing in on AB in LA  Zeroing in on 2 mkts, you can see how big the variations were.  AB crushed it in Fla, where it had big acceptance of its “Buy 2 Get 1 free,” promo.  AB gained 1.5 share of  volume to back over 50 for 2 wks but still lost 0.26 share of $$.  Meanwhile, MC lost 2 share of volume and fell under 20.  And in all-important Publix chain, AB gained over 2 share.  Meanwhile, AB still lost 1.5 share of cases in LA, nation’s largest scan mkt. 

Constellation closing in on AB fast in LA in share of $$.  For 2 weeks, it gained, 2.8 share of $$ to 29, while AB down 2.0 to 30.1.  So almost a 5 point swing for those 2 weeks. And Constellation just 1 share behind for 2 weeks.  STZ behind by 2 share for 13 weeks, source told INSIGHTS. 

“$10 Billion Tug of War” between world’s largest retailer Wal-Mart and world’s largest CPG co Proctor & Gamble subject of long, intricate front-page article in today’s Wall St Jnl.  Could be cautionary tale for brewers, who have been so enamored of nation’s largest retailer in recent yrs.  Wal-Mart revs “fell last year for the first time since it went public in 1970,” noted Jnl.  P&G revs of $70.7 bil at 4-yr low, with $10 bil in sales (almost 15% of its biz)  at Wal-Mart. The two behemoths “need each other” but “increasingly at odds.”

Wal-Mart “spending billions on e-commerce and higher store employee wages,” but at same time “pressuring suppliers to reduce the price of bestsellers” to keep pace with Amazon and “discount chains.”  Such “turmoil has led Wal-Mart to close stores, shrink inventory and push suppliers, including P&G, for concessions.”  But P&G wants Wal-Mart to “accelerate sales of its products, preserve higher prices on some items and provide more space on shelves.”   Meanwhile, Wal-Mart “upset some suppliers by cutting back on promotional display areas in stores and adding more of its own store brands.”  Hmm.  Can’t help but mention here Wal-Mart’s recent private label craft beer entry Red Flag Amber Ale from Trouble Brewing (see Craft Brew News,  Vol 7, #44 ‒ you can’t make this stuff up).  Wal-Mart also “managed to get many of its thousands of suppliers to sign a new contract that includes more fees to move products through Wal-Mart warehouses and earn shelf space in new stores” but P&G “got a pass,” a source told WSJ.  Brewers can’t (legally) pay slotting fees, but quite possible that brewers too facing more pressure in their relationship with Wal-Mart.  Stay tuned. 

Here’s an issue likely to emerge much more often as more states legalize pot. It’s sitting in the US Appeals Ct for the 2d Circuit and involves one of biggest US beer distribs: Manhattan Beer, which serves metro NYC.  Case flagged by Bloomberg’s Daily Labor Report.  Three yrs ago, a guy “showed up for work with bloodshot and glassy eyes and reeking from the smell of marijuana,” Manhattan sez in legal brief.  Two managers observed this, formed “reasonable suspicion” he was under the influence of pot.  Under collective bargaining agreement, they gave him oppy to “overcome” that suspicion by taking drug test.  One mgr said at time: “After you pass you can come back and stick your nose up at us and tell us that we messed up.”   Employee said he would not take a drug test without a shop steward present.  But guy knew, Manhattan sez, he didn’t have right to union rep at test “from two previous drug tests.”  Nor did he have right to union rep under Dept of Transportation guidelines or Manhattan’s collective bargaining agreement.  He could not locate a shop steward, refused the test and Manhattan fired him based on knowledge/observations of the mgrs and his refusal. 

Administrative Law Judge supported Manhattan’s action.  But 2 of 3 members of Natl Labor Relations Board later held that Manhattan illegally deprived worker of union rep and ordered reinstatement and back pay.  Manhattan appealed that decision to US Appeals Ct, arguing NLRB majority misinterpreted the law and the facts.  Lotsa discussion about difference between an “investigatory procedure”  or “investigatory tool” and key Supreme Ct case establishing right to request union rep.  Point is, there’s been lotsa commentary around pot legalization issue aimed directly at challenges it will create in employee relations, given how long pot stays in the body, difficulties of determining impairment and interplay of fed laws, state laws and labor agreements.  Manhattan not dealing with legal pot here, but these disputes could be coming soon to a warehouse near you.      

May be just fine (legally) to temporarily re-name your brand “America” and use iconic American themes on bottles and cans.  But Lumbee Tribe of North Carolina called foul on AB and NC distrib RA Jeffreys in fed ct for trademark infringement, unfair competition and more, over a seprate, local promotion.  Lumbee Tribe, largest in NC, largest east of Mississippi River and 9^th largest in US, it sez, owns 2 trademarks.  One is for a symbol: a circle cut into four parts representing a “balanced life,” surrounded by a “pine cone patchwork.”  Second is a slogan: “Heritage, Pride and Strength.”  These marks “prominently displayed,” the tribe points out, on its website, in its offices, on its Constitution, etc. 

Meanwhile, pictures of two retail outlets in NC show coolers with advertising above them: familiar Budweiser and Bud Light text, next to the circle symbol and “Heritage, Pride & Strength” slogan, as well as the text “Lumbee Tribe of North Carolina.”  These ads, the tribe claims “create a false impression that there is an affiliation between the Lumbee Tribe” and AB/Jeffreys and the Bud and Bud Light brands.  There is no affiliation.  And AB/Jeffreys “do not have the permission to use” the marks, the tribe points out. Complaint also refers to “the reasonableness of the Lumbee Tribe’s out-of-court efforts to resolve this matter,” but does not detail them.  Given those efforts however, and the “strength” of the tribe’s “litigating position,” tribe believes “this case stands out from other cases making it an exceptional case and creating the need to advance considerations of compensation and deterrence,” in the form of treble damages.  Tribe seeks judgment that AB/Jeffrey’s infringed the marks, a permanent injunction from continuing to do so, treble damages (no amount suggested) and attys fees. 

On Jun 10, tribal chairman Harvey Godwin posted on Facebook that AB/Jeffreys wasn’t authorized to use the symbol, slogan or “an image of a tribal dancer” in recent beer ads seen at area c-stores, reports News Observer.  Given past associations between Native Americans and alcohol/drug issues, use of these symbols/ images “is viewed as particularly offensive to Lumbee People.”  He pointed out that he had contacted AB to resolve issue and vowed “to make sure those responsible for this offensive ad will be held accountable.”

Familiar foes of ABI-SAB continue to voice their concerns to Dept of Justice and anyone who will listen.  The Hill, widely read among politicos in DC, obtained June 6 letter from Teamsters to DoJ that voices the union’s concerns and ran article today.  Teamsters focus on pending closing of MC’s Eden plant, natch.  Closure will “translate directly into higher prices for consumers,” letter charges.  Also, shifting production to other MC breweries will actually “lower their capacity,” given complexity of brewing/packaging, and “drive down barrelage output” at those breweries, Teamsters say.  Letter also points to timing of Eden closure announcement so close to ABI-SAB deal news breaking last fall and evidence (from Pabst lawsuit vs MC) that MC didn’t want Eden “to end up in the hands of a competitor.” AB InBev, SABMiller and Molson Coors interests in expediting deal “cannot take precedence over the need to ‘get it right’ for consumers and working families,” letter urges.  Last Friday, The Hill had run yet another opinion piece from ex-DoJ lawyer Andre Barlow calling for “appropriate remedies” and “behavioral conditions” before clearing ABI-SAB. 

With his trademark enthusiasm, AB global high end mktg veep Andy Goeler laid out ABI ethos on craft and its US High End unit in speech to North Carolina beer distribs.  This is “amazing time for beer,” he began, with “new vibrancy” based on beer’s “unmatched flavor potential,” that is both “more versatile than wine” and “complex as liquor.”  There are “threats,” acknowledged Andy, including continued share loss to wine and spirits and an “amazing amount of wasted time... trying to define what craft is.”   Now the focus is on independence.  But “what we need independence from is definitions. Who cares?  What a lot of wasted time,” reiterated Andy.  “As long as it’s amazing beer,” added Andy, “98% of consumers” don’t care.  

AB-owned craft brewers “absolutely maintain independence” and “we love independent,” claimed Andy.  “There is no way in hell we bought these breweries to turn them into AB subsidiaries.”  AB “paid a lot of money for the culture and soul of those companies,” continued Andy, “for who they are.”   AB gives them “access to ingredients... to new markets... and the most amazing wholesaler network in the world,” plus additional “personnel” as needed.  But these craft brewers retain “independence to operate” and “independence to innovate.”  Andy views his (and AB’s role): to “protect the culture, focus on longterm health and growth vs private equity,” and “get more craft beer to more people.”   

After months of continuances, the Massachusetts Alcoholic Beverages Control Commission (ABCC) finally heard second half of Boston pay-to-play cases today, tho new revelations or resolutions. This hearing focused on retailers. In a room packed with lawyers, representing some of city's biggest bar and restaurant groups, ABCC investigators made their case that distrib Craft Brewers Guild (CBG) and its on-premise partners engaged in a "scheme" to violate state laws prohibiting licensees from giving or receiving "money or any other thing of substantial value" in the inducement of purchasing a particular brand. Hearing focused on three of five cases filed so far, with investigators detailing payment of tens of thousands of dollars from CBG to retailers and their reps to secure draft lines for distrib's brands.

For their part, attys for retailers employed a joint defense strategy, asking that their arguments be applied to all five charged licensees. Factual allegations against the retailers are diverse, with some willfully acknowledging having either solicited or received money for draft lines, while others claim their actions were less obviously classified as pay-to-play. Attys for retailers largely conceded facts as found by ABCC's investigators, while also trying to argue their actions were not clearly illegal as regulations and regulatory environment far from plain. In addition to walking this semantic tight rope, atty for retailers also raised several technical challenges to ABCC's governing rules, claiming they were not properly promulgated and that the hospitality groups receiving the checks were not licensees and therefore not prohibited from taking payments. The retailers also argued that the law only prohibits wholesalers and suppliers from making pay-to-play payments but that it is not illegal for retailers to receive such payments.

Counsel for one retailer, Glynn Hospitality Group, said that the payments it received were provided by CBG to assist with marketing services since the distrib's breweries, including Lagunitas, Brooklyn, Oskar Blues, and Magic Hat, were small brands with little name recognition and needed help promoting themselves to the public. (No other brewers not previously named in investigation and no other distribs named at today’s hearing.)  Atty further observed that alc bev industry is the only trade where pay-to-play actions are illegal. Citing soft drink and cereal markets as other examples where suppliers pay retailers directly for product placements, he said pay-to-play "is not per se an evil practice."

ABCC took all matters under advisement and expects to have a decision in cases within a few months. Two remaining cases not yet scheduled for a hearing. Appeal of the ABCC's decision in the CBG matter remains pending in superior court.  This report provided by Boston atty and beer scribe Andy Crouch.

Holiday timing continues to wreak havoc with 4-wk beer trends this yr.  But this time in a very good way.  In fact, with full week of Memorial Day sales included, and dropping early (presumably slow) May week, Nielsen all outlet + convenience scans thru June 4 jumped back to positive territory, +1.3% for 4 wks, adding 5 pts to 4-wk trend thru May 28, which had included only half of Memorial Day weekend.  Then too, 4-wk $$ trend jumped from -1.4% to +3.6%, another 5-pt swing.  Yr-to-date volume trend picked up too, natch.  Volume +0.8% thru Jun 4 and $$ +3.4%.  All in, biz back to modest gain yr-to-date thru first key holiday period and going into crunch time. 

Yesterday, we reported AB said it gained share in May.  Sales veep Alex Medicis told distribs “we gained one full share point in the grocery channel during Memorial Day week,” citing IRI data.  Also, in same channel, Bud Light grew 1 share, Ultra +1.3 share, and Budweiser “improved to flat.”  AB’s “promoted 12 packs combined grew +2.0 share points,” Alex said.  Nielsen scans thru Jun 4 also show big AB improvement, tho not a share gain in all outlets + convenience.  AB volume off just 0.1% for 4 wks, but share loss about same as yr-to-date, -0.7.  AB $$ up slightly for 4 wks, (+0.9%); AB $$ share loss same -1.2 as for yr-to-date.  AB grocery trends better, but still modest share losses there for 4 wks and yr-to-date in Nielsen.  Another key supplier trend in latest period: Constellation gobbled up 1 full share of volume, 1.4 share of $$ in all outlets with 16.5% and 19.1% gains respectively.  HUSA, Pabst and Mike’s each picked up modest share in most recent period too.  Bud Light and Coors Light each posted better 4-wk trends than YTD; Lite a bit softer in most recent period.  And Bud down just 0.7% for 4 wks, vs -1.9% yr-to-date; Bud $$ up 0.5% for 4 wks.  Corona Extra, which showed some signs of slowing in previous report, back on track and both 4-wk and YTD trends near +8%; Modelo Especial actually kicked it up a notch in latest 4 wks. 

Finally, no signs of deep discounts across board in this natl data.  Avg prices overall up 50-60 cents/case for 4 wks and yr-to-date.  Premium light prices up 26-27 cents/case both periods.  But, in continuing trend, economy prices off a dime/case in most recent period vs slight increase yr-to-date.