Good news continues on shipments. Mar taxpaid shipments by domestic brewers up another 58K bbls, 0.4%, estimates Beer Inst economist Michael Uhrich. For 3 mos, taxpaids +421K bbls, 1%. Tack on half-mil-bbl Jan-Mar import gain reported yesterday and US shipments up 931K bbls, 1.9% in Q1. Comp was easy and data/buzz for Apr is very soft so far, but that’s a good start to the yr.

There are 13,000 people attending Craft Brewers Conference in Philly, said BA prexy Bob Pease, kicking things off this morn. Ten yrs ago, CBC had just 2000 overall attendees in Seattle. Today, there are over 4400 brewers in US and “by any measure, the state of the union is very strong,” said Bob. “But we cannot, we must not rest on our laurels,” he urged. There are “many challenges” and “storm clouds” ahead, he added, noting that ABI-SABMiller could “severely limit” craft brewers’ “access to market” and that ABI is buying up craft brewers “thereby disrupting the original disruptors.” What’s BA going to do about these developments? “We’re going to fight anticompetitive behavior,” proclaimed Bob, and “fight for fairness.” In past, craft’s “enemy was ignorance and inertia,” noted Bob, and big brewers “hardly noticed us. That sure has changed.” He continued: “Now our challenge is to confront and call out” those who are “blurring the lines.” Bob closed with a rallying cry as he threw down the gauntlet: “There is a battle today between small independent brewers and large global brewers. We are right in the middle of that battle and must not cede an inch of ground in that fight.” He challenged attendees to “keep the fire of the craft brewing revolution burning bright.”

Imports continued to contribute to better US shipments trends in Q1. Following 123K-bbl, 4.4% gain in Mar, 1st qtr import shipments up 510,000 bbls, 6.8%, reports BI economist Michael Uhrich, based on Commerce Dept data. Per usual, Mexican shipments driving the gain big time. Mexican shipments up whopping 782K bbls, 17% in Q1. That more than offset modest decline in Dutch shipments (-1.2%) and big hits to shipments from Belgium (-196K bbls, 36%), Canada (-134K bbls, 30%) and UK (-17%). Irish and German shipments healthy tho, up 18% and 11% respectively in Q1. Meanwhile, cider imports, which really rocked in 2015, took a14K-bbl, 22% hit in Q1. Then too, beer exports also reversed direction. Following 18% gain last yr, beer exports down 3% in Q1.

AB InBev ceo Carlos Brito got two questions on US pricing and AB rev/bbl gain on this morn’s conference call. “Despite some noise” AB pricing strategy “remains unchanged,” he assured and discounts “in line with historical levels.” Then too, he called AB’s 1.3% rev/bbl increase “in line” with previous qtrs. He did point out that Stella Artois STRs ahead of shipments in Q1, as ABI shipped earlier to avoid frozen beer from shipping over winter mos. (Big decline in reported Belgian import data in Q1– see below – vs huge Dec 2015 #s supports that statement.) But “nothing more than that.” Given strength of AB’s above premium biz, one analyst asked whether AB’s “big brands” had “negative price realization.” But Brito said “no,” repeated point about Stella impact and pricing strategy while adding AB “always looks for smarter ways” to spend same promotional dollars.

Alt-alc-bev aisle gettin’ mighty crowded as suppliers see big oppy in hard sodas and spiked seltzers, even as many established FMB flavors fade and ciders sag. Comin’ at ya: White Claw Hard Seltzer from Mike’s Hard, aimed to scratch at “incremental white-space opportunity for all of beer.” Seltzer sippers are current spirits and wine consumers not drinkin’ beer, those “walking away from ciders” (that was quick) and “the 30% of beer consumers that do not shop the FMB segment,” according to letter from Mike’s to its distribs. They’re also “more affluent, interested in ingredients and better-for-you products,” and not current FMB or hard soda drinkers. That means seltzers should not be placed near or priced like FMBs, but rather “between ciders and craft.” Suggested pricing: “at parity to the leading premium cider,” tho no more than $9.99 per 6-pk. Putting seltzers near FMBs and within their pricing points would be “strategic mistake,” “limit the potential audience” and “simply swap cases in an already powerful, hardworking section of the cooler, one that is up double-digits again in 2016.” Mike’s really does not want to see White Claw next to its other hard stuff on store shelves. White Claw’s key product attributes: all natural, gluten free and low carb/low sugar, plus lower calories (110 per 12 oz) than FMBs. Tho there’s some question about whether Not Your Father’s Root Beer, other hard sodas are craft beer or not, no question that seltzers barely a distant cousin to beer, not to mention craft beer. No malt and no hops in White Claw. Alcohol base is fermented sugar with yeast. Filtration removes “any flavors and aromas” from fermentation. Then carbonated natural well water, 100% natural flavors and cane sugar added (for those interested in ingredients) and you have a 5% ABV seltzer, a new category that can be “as big as today’s sodas and cider combined.” Next thing you know, they’ll take the carbonation out too and turn it blue. Oh wait, that’s already plugged into the mkt…

Key measure trends all over the lot for Molson Coors in Q1, tho most important one, profit, best of all. Global volume up modestly, 1.2% with 1.3% gain in US, solid 5.2% increase in Europe. Canadian volume continued soft tho, off 1.6% excluding loss of Miller brands there, and it ceded half a point in mkt share, it figures. Intl volume dipped 0.7%. Net sales/bbl increased just 0.1% in constant currency, and took an 8% hit on reported basis due to foreign currency and negative mix affects in Canada and Europe, just modest rev/bbl gains in US (+1.5%) and big gain in intl (+9.7%) . Yet combo of volume growth, and lower costs of goods sold boosted underlying after tax earnings by 28% and jumped underlying EBITDA 15% to $263.4 mil. Coors Light flat in US, but up 3.5% worldwide, including double digit gains in UK and Ireland, high singles in Latin America.

Top MC execs added some color on Q1 conference call yesterday. MC’s STR trend slowed to start Q2, from down 1.3% thru Mar (selling day adjusted) to down mid-single-digits thru Apr 23, said CFO Tracey Joubert. CEO Gavin Hattersley reminded it’s “just one month,” cited Easter timing, weather, launches, other one-offs and advised to “wait and see” how full Q2 plays out. MC’s 1.5% rev/bbl increase in Q1 was 0.8% pricing, 0.7% mix, said Tracey. Price bump a bit higher than Q4 last yr, said Gavin. Asked about discounting, MC has seen promotions in CA,TX, FL and WI, said Gavin, but also continued positive pricing and mix. Still, industry is “pretty competitive right now” and current level of discounting is a “watch out.” MC doesn’t believe 5% reduction in cost of goods sold/bbl, which boosted Q1 earnings, will last for full yr, said Tracey. Big Q1 breaks in diesel/aluminum not likely to continue. In fact, MC expects COGs/bbl to be “in line” for full yr. Asked about M&A, Gavin stressed that to get back to volume growth focus will be on Coors Light/Miller Lite, building current above premium biz and reducing economy brands’ decline to match segment trend, if not actually growing economy volume. Other execs supported that strategy. Tenth & Blake’s Scott Whitley said MC doesn’t think further “fragmentation” in craft is “the right place for us” now. CMO David Kroll enthused that FMBs remain “massive opportunity,” much bigger than craft tail.

AB sales-to-retailers very close to flat on a selling-day adjusted basis in Q1, compared to MC down 1.3%. But its shipments-to-wholesalers declined 1.2%, compared to MC’s up 1.3% because of AB”s “planned adjustments to wholesaler inventories in the normal course of business.” So AB reduced inventories in 1st qtr, the reverse pattern to MC this time. Total US beer biz “returned to growth,” said ABI, with STRs up 0.7% in 1st qtr. And that’s after adjusting for 1 extra sell day. So AB continued to lose share, but down estimated 0.45 points, about 20 basis points better than last yr. Mich Ultra Up 20%+, Bud Light Down 1% in Q1 AB’s “strongest performance” came from Michelob Ultra, which grew volume more than 20% in qtr. If that rate of growth continues, Ultra would gain 1 mil bbls or so in 2016. A long time since AB had a growing big brand that could put up those kind of #s. Bud Light “volume trends improved” in qtr, as STRs “declined by just over 1%.” AB cited “initial benefits” from its new ads, adding “refreshed visual identity” in Apr “should provide further momentum.” Bud still down low single-digits, “in line with FY15 trends.” Bud Light and Bud lost 0.6 share, ABI estimates. But its above premium portfolio gained 0.5 share. Not a word about subpremiums in ABI’s release. “We are also working more closely than ever with our wholesalers,” said ABI, which “continues to be one of our major priorities.” US Earnings Up Slightly; Rev Per Bbl Up 1.3% After a couple of yrs when US EBITDA declined slightly, AB started yr off here on better foot. US EBITDA up 2.1% to $1.29 bil in Q1, “despite the timing of sales and marketing investments” which are “weighted” towards 1st half. But recall MC profits up 21%, before special charge for Eden closing. ABI had 15% jump in North American sales and mktg expenses in Q1, offsetting nearly 5% reduction in cost of goods sold. Meanwhile, AB rev per bbl up 1.3% in US “driven primarily by our revenue management initiatives.” Big Global Earnings Miss; “Exceptionally Weak” Qtr; Stock Down 3% AB earnings missed consensus as global beer volumes came in down 1.4% organically for qtr, including 10% drop in Brazil. Recall, Heineken grew volume 7% in qtr and SABMiller lager biz up 3%. So ABI underperformed on volume, even tho its US biz better, Mexico up double digits. But earnings far tuffer, as normalized profit dropped by more than 2/3 to $844 mil from $2.3 bil, due to numerous financial adjustments, including hedging and currency translation. But Q1 earnings performance deemed “exceptionally weak,” by Bernstein’s Trevor Stirling, noting this is “first quarter of negative EBIT growth (-0.6%) that we can remember since 2008.” That’s quite a contrast to what one analyst deemed Heineken’s “blowout performance.” Yet neither ABI nor Heineken changed their guidance for the yr. ABI making “good progress” towards closing SABMiller deal, which it still expects to close in 2d half. Stock down 3% so far today.

Some truly awful on-premise trends for last 4 weeks thru 4/17 in GuestMetrics data. Beer volume down 6.8%, again affected by the timing of Easter. Beer now down 5.5% yr-to-date. Beer is still losing over 1 share, while spirits up 0.8 and wine up 0.2. Wine and spirits down 2.5-3% last 4 weeks. But spirits down just 1% and wine down 2.6% YTD. Within beer, craft still gaining share, but not nearly as much. Up 0.3 share, compared to 0.6 for 52 weeks. Not long ago that craft gaining 2 share in GuestMetrics universe. And premium lights continued to shed share. Down 0.6 share. But that’s an improvement from 0.9 loss for 52 weeks. Still nothing to write home about as premium lights continue to lose share in a down 5 environment. Imports up 0.1 share, premium plus up 0.2 and cider down 0.1.

Imagine that! An unsurprising development that’s still resonating as big news. Kroger dropped its untenable plan to set up Southern Wine and Spirits as category captain across beer, wine and spirits, while brewers and distributors paid for the privilege. Why was it untenable? Because the government said so, that’s why. Recall, TTB recently clarified that any type of category mgt effort beyond simple shelf schematics constituted illegal inducement (to favor one product over a competitor) by giving a retailer something of value. Both Kroger’s home state OH and neighboring Pennsy ruled the plan illegal too. Once these rulings came out, Kroger’s abandonment of its plan was practically a foregone conclusion. And so Kroger put out a 2-page letter yesterday explaining plan and why its now history. Plan intro’d in Oct to “better serve our customers and more quickly bring new, innovative adult beverages to market.” Plan “triggered broad industry discussion and awareness around what have become standard industry practices.” (Editor’s note: That’s putting it in best possible light.) TTB ruling “provided certainty around the issues of who can be involved and to what extent they can be involved in the production and execution of adult beverage shelf schematics to retailers.” TTB’s “rulings provide clarity to previously confusing guidance.” Meaning Kroger could not proceed as planned. So “as a result,” Kroger making 2 key changes to its plan. It will “hire a non-licensed 3d party planogram provider from outside the adult beverage industry,” called Private Label Marketing and Kroger “will pay for it ourselves.” PLM already provides planograms “for the rest of [Kroger’s] center store categories.” Kroger maintains it still has same goals “to improve the overall shopping experience” and “to establish a completely unbiased independent analytics team” (doesn’t mention that it’s dropped the goal of having others pay for these) and to “improve speed to market, especially for innovative and new products.” Instead of adjusting sets 1 or 2x a year, “we plan to reset them regularly or seasonally, where legally permitted.” Interestingly, Kroger notes that “our store reset process will be the same as past practices. Regional wines and local craft beer will be the biggest beneficiary of this because they are the hottest product in most markets.” This yr’s spring reset especially tuff on some of most established craft brands in Kroger, INSIGHTS has heard and this Kroger comment kind of supports that.