Lesya Lysyj returns to the beer biz.  Boston Beer named her as chief marketing officer yesterday, filling a slot vacant since last July when Jonathan Potter left.  She is only the 2d cmo that Boston ever had.  Recall, Lesya had an effective 3-yr run as HUSA’s cmo under Dolf van den Brink.  She left to become prexy of Weight Watchers North America.  She played “massive role in the turnaround of” HUSA, Dolf said at time, and also “huge role” in “reinvention of beer marketing.” Most recently, Lesya prexy of Welch’s Foods US.  Boston Beer ceo Dave Burwick also spent time at Weight Watchers, points out Ad Age. Interestingly, Boston now has 3 top execs (Jim Koch, Dave and Lesya) who all have run companies.   

Boston returned to (double digit) growth in 2018, after 2 down years.  And it’s up 10.6% yr-to-date thru Mar 16 in Nielsen.  Boston is shipping extra Truly in 1^st qtr to make sure it can meet demand in peak-selling season.  This morning, Macquarie’s Caroline Levy estimated that Boston shipments will be up 18% in Q1 as a result of extra shipments.  But Boston’s beer biz still declining and Angry Orchard also off in recent periods as co unable to cycle Rosé and Sam 76 launch numbers so far. 

Are Sr Ranks of Beer Cos Finally Becoming More Female Friendly?  Hiring of Lesya furthers a mini-boomlet in past year of females entering ranks of top brewing industry execs.  First, Heineken appointed Maggie Timoney as HUSA ceo. Earlier this year, MillerCoors named Michelle St Jacques as its cmo. And now Lesya.  What’s more, this was 3d female-friendly move by Boston in 1 week. First, it named Uber GM Meghan Joyce to its board of directors.  Then it launched beer to honor Supreme Court Justice Ruth Bader Ginsburg.  And finally it hired Lesya.  Elsewhere, ABI board will go from 3 to 5 female board members.  And over at the oldest brewer in America, Yuengling, the 6^th generation of family executives, four sisters, Jennifer, Wendy, Debbie and Sheryl, more prominent these days, including as creators of Golden Pilsner. Is this the beginning of a trend? 

Stone Brewing “demonstrated that it has a moderately strong infringement claim against Miller,” fed ct judge just ruled, “but not that it would suffer irreparable harm” without a preliminary injunction.  So, he refused to give Stone an injunction.  Lack of irreparable harm alone enough to withhold injunction, judge pointed out.  But even considering other arguments, Stone would come up short “because Stone merely reiterates its largely unfounded consumer and non-consumer confusion allegations.” 

Recall, Stone sued MC last yr, claiming that the rebrand of Keystone Light, with labeling that increased focus on word STONE, violated Stone Brewing’s trademark. Judge did multi-factor analysis and found some weighed in Stone’s favor, some in MC’s favor, some neutral.  Taking those factors into account, judge found “Stone’s trademark infringement claim against Miller is moderately strong.”  But, again, you gotta show irreparable harm and Stone didn’t.  Importantly too, judge rejected Stone’s arguments that marks were highly similar and that consumers would be confused.  MC wanted retailers to display Keystone brand so they see the word STONE, but not KEY, judge said.  But, “what Stone conveniently fails to mention is that a consumer picking up, or even just looking at a Keystone can see the full name KEYSTONE LIGHT (twice), as well as the bright-yellow house mark of Coors.”  Perhaps even more damaging, MC found a tweet from Stone that read: “[The] pictures we show aren’t important….  We know anyone, including a judge, is plenty able to turn a can & see the entirety of it for themselves.”  Oops.  Stone and MC each provided surveys from experts purporting to show an “extraordinary level of confusion” among consumers (Stone’s expert) or “no likelihood of consumer confusion at all” (MC expert).  These were a wash, “if not slightly for Miller,” judge figured.  Net-net: MC has “not been found liable of trademark infringement,” so no injunction. 

Then too, MC filed counterclaims vs Stone, seeking declarations that it can continue to use STONE and STONES to advertise Key Light, and more.  Analysis here a bit confusing, but in the end, judge refused to dismiss MC counterclaims, another defeat for Stone.  Looks like case goes on, tho probably room to settle and end dispute.

TTB just got $350K offer in compromise from Brewers Distrib Co in Peoria, IL (AB, HUSA, craft) for allegedly selling products to retailers with right of return.  BDC also “required retailers to purchase their products, which is a violation of the exclusive outlet provisions of the FAA Act.”  Recall, TTB started joint investigations with IL Liq Control Comm back in Sep 2017.  Just last week, ex-chief of ILCC suggested at legal symposium that “a lot more coming” from those investigations which, he said, found widespread violations, including tap purchases, credit card swipes and more (see current edition of Beer Marketer’s INSIGHTS).  A week later, another shoe already dropped.

Lots happenin’ across the country and beyond in cannabis this week, tho not all signaling toward progress. Despite majority of NJ residents supporting legalization in polls, recreational legalization effort in NJ “collapse[d],” NY Times reported among several others. Bill was positioned as “an urgent civil rights issue” by gov Phil Murphy, aiming to wipe criminal records “for hundreds of thousands of people convicted of minor drug offenses” and look to ensure members of minority groups and women “have equal access to licenses to sell or cultivate cannabis.” Yet “among the most vocal opponents were a handful of African-American Democratic lawmakers who split with their party over legalization, arguing that it would be a public health menace to their communities,” wrote paper. Concerns regarding health risks, impaired driving, underage access were chief among arguments against legalization. Plus, “dozens of communities had already voted to ban retail and growing operations in their towns,” and “some communities” believed the proposed 3% local tax for retail stores “was too low.” Legalization efforts in neighboring NY have “also been sputtering,” noted paper. With two large left-leaning states failing to pass legislation so far, legalization efforts havin’ a bit of a buzzkill in early ’19.

CERIA First Batch Sold Out in 4 Hrs; 16 Dispensaries in CO; Head Start vs Big Beer & Canada Even with legalization running into roadblocks in US, infused cannabis bevs here have big head start vs big beer cos invested in Canadian cannabis, noted CERIA Brewing founder and ex-Blue Moon brewmaster Keith Villa in recent Yahoo Finance article. CERIA sold out of its first batch brewed within 4 hrs last Dec, Keith  shared. “It turns out a lot of cannabis products are popular for Christmas gifts,” he noted. “You don’t taste cannabis, you taste great tasting beer with the effects of cannabis and that’s really critical because we found that the taste of cannabis is really polarizing.” Then too, cannabis bevs don’t become legal ’til this Oct in Canada, and “part of the ruling in Canada is you cannot use any existing logos,” Keith added. CERIA is currently available in 16 dispensaries thruout CO and expects to add CA and NV within next few mos.

MedMen Secures $250 Mil Investment from Gotham Green Partners Mutli-state, publicly traded cannabis retailer, MedMen secured $250 mil investment from PE firm focused on global cannabis, Gotham Green Partners, calling it “the largest investment to date by a single investor in a publicly traded cannabis company with US operations,” co announced. MedMen currently operates 20 stores under MedMen including 9 in CA (flagship store in L.A), 4 in NY, 3 in NV and AZ and one in IL, as well as recently acquired PharmaCann stores (4 in IL and NY, 1 in MD and MA). Yet co is already licensed for another 78 stores in total between the two branded stores. Co will use significant portion of investment from Gotham Green Partners to help fund its 30-store expansion in FL, plus “accelerate geographic expansion” in existing mkts, “integrate assets acquired through pending transactions, including those related to PharmaCann,” expand in-house brands, enhance tech and supply chain capabilities.

Constellation hired Matt Stanton as sr veep of govt affairs, it announced today. That’s first time it hired govt affairs top gun based in DC. Matt “fully understands DC” and “ways of working there,”  Constellation sr veep of communications Mike McGrew told INSIGHTS and “he will help us take our game to the next level.”   Matt will lead  Constellation’s “government relations team, overseeing the company’s relationships with key policy influencers across the country” on topics like “beverage alcohol laws and regulations, international trade policy, and emerging markets such as cannabis,” said Constellation release.  He comes to Constellation from Under Armour and will report to exec veep and gen counsel Jim Bourdeau. He also worked for Beam Suntory for yrs, including period when current Constellation ceo Bill Newlands was prexy North America at Beam.

Just as Bloomberg looked back after 1 year of metal tariffs to conclude “more losers than winners” in US (see yesterday’s Express), Beer Inst prexy Jim McGreevy revisited CNBC’s “The Exchange” on anniversary.  Jim pointed out that the $347-mil price tag BI and others attached to tariffs last yr turned out to be “exactly true.”  Tariffs “really hurting us,” he added.  And while President Trump touts tariffs as “victory for America,” they’re “not a victory for beer.” Or soda makers, or auto makers, or any other downstream users.  In addition to $40 mil MC put on tariff cost, small Summit Brewing in Minn figures it took $160K hit so far.  Some brewers have passed on additional costs, Jim said, but many are “basically eating the cost.”  And many not improving their plants or hiring the people they expected to.   

In addition, Beer Inst had study done by Harbor Aluminum, which found US bev biz paid equivalent of $250 mil in tariffs for cansheet between Mar and Dec 2018.  But US govt got just $50 mil.  Smelters pocketed “roughly $27 million” and rolling mills rolled bev makers for $173 mil, “by charging end-users a tariff-paid price as if the entire product of aluminum cansheet consisted of imported primary aluminum.”  But only 30% of cansheet is imported aluminum.  Lion’s share is domestic aluminum scrap, recycled in US, exempt from tariffs.  So, as feared, bev makers paying tariffs “even on domestic aluminum,” Jim points out.  Did someone say “profiteering?”  Yes.  Commerce Secretary Wilbur Ross acknowledged at Jun hearing last yr that “there are people who illegitimately are profiteering out of the tariffs.”  There’s just no one doing anything about it.

On separate topic, Jim inevitably asked by CNBC’s Kelly Evans “how serious a spat” is AB-MC battle over corn syrup.  “I’m sorta Switzerland” on that, Jim demurred, noting “we want to see the beer category grow” and that spat is “example of how fierce competition is in beer.”  But Jim stayed on point, concluding “tariffs have affected the bottom line for brewers of all sizes.”    

With 2.5 mos of data in, trends starting to settle (tho softer in recent periods).  Total beer down slightly (-0.4%) in Nielsen all outlet yr-to-date.  But same cos that killed it last yr are doing well again this yr.  Constellation Brands Beer Division volume up 10% and $$ up 11% yr-to-date.  But its growth 8% for 4 weeks and avg prices up only about half a %, 14 cents per case to $32.16 during same 4 week period.    

Boston Beer volume still up 10.6% yr-to-date and $$ sales up 10.1%.  Its avg prices down 29 cents, 0.8% to $33.83 for 4 weeks.  And volume growth slowed to 6% last 4 weeks, including 12% drop in Angry Orchard franchise volume and 20% drop in Sam Adams franchise.   Even Twisted Tea slowed to mid-single digit growth. But growth fueled by still explosive growth of Truly Spiked and Sparkling.  Similarly, Mike’s still hitting it outta park with White Claw.  Total co volume up 40.8% yr-to-date, $$ up 42.5%.  And prices up about 1% last 4 weeks.  Finally, Diageo Beer Co USA volume and $$ up 11% YTD, suggesting avg prices just about even.  For last 4 weeks, DBCo growth slowed to 5% as Smirnoff Ice franchise dropped 8%.  

The two brands gaining the most share in the industry, Michelob Ultra and Modelo Especial, also ain’t achieving much incremental pricing these days. Avg Michelob Ultra prices actually down  a nickel to $26.81 per case last 4 weeks.  And avg Modelo Especial prices up 30 cents, 1% to $30.55. But growth rates still strong: Michelob Ultra up 16% YTD and Modelo Especial up 14% YTD. 

 Steel and aluminum tariffs imposed one year ago are helping some US steelmakers, Bloomberg reports today, but metal users and even US aluminum producers “are struggling.”  “Chinese exports of aluminum products have risen to record highs, pressuring prices.”  In fact, two big US aluminum producers, Century and Alcoa, each reported losses in Q4.  Meanwhile, Caterpillar, “the world’s biggest machinery producer, said it may have lost more than $100 million” last yr due to tariffs, Bloomberg reports.  Added that MillerCoors “has said the aluminum tariffs probably added more than $40 million in costs to its operation.”  Bloomberg’s conclusion: “So far, trade wars don’t seem to be as ‘good and easy to win’ as US President Donald Trump promised a year ago.”  Those seeking end of metal tariffs are hoping that’s part of any China trade deal.   

Meanwhile, Distilled Spirits Council put out report last week that showed in last 6 mos of 2018, after imposition of retaliatory tariffs, whiskey exports by US distillers declined $593 mil, 11% Jul thru Dec.  That was after fast start of +$595 mil, +28% in first half, without retaliatory tariffs.  Sharp dropoff in whiskey exports to EU drove 2d half decline.  All in, total spirits exports up 9.5% last yr, with Jan-Jun exports +26%, 2d half -3%, Q4 -13%.  Small distillers “particularly hit hard,” reports Council, especially since many had invested heavily to build overseas biz when it was on a roll.

While beer sagged in Feb, no slowdown for spirits, at least not in control states.  Feb volume up 4.7%, reports control state assn NABCA.  Dollar sales up 7.7%.  That followed big Jan gain boosted by extra weekend day in run-up to New Years.  So, spirits off to really fast start in 2019 in control states: volume up near 8%, $$ up double digits.  For rolling 12 mos thru Feb ’19, control state volume +3.7%, $$ +6.7%.

Amid vast coverage of MC suit vs AB over corn syrup ads, some interesting analysis from Law360.  Legal service quotes a coupla advertising law experts who make some key points.  First, AB ads “literally” true in stating MC “uses” or “brews with” corn syrup.  And they don’t use phrase “high fructose corn syrup.”  Even so, law is “complicated.”   Lanham Act, under which MC is suing, bars not only false statements, but “courts have said the law also prohibits ‘literally true’ statements that nonetheless mislead or deceive consumers,” Law360 points out.  “Other courts have ruled that less direct statements can be proven false by ‘necessary implication’ based on assessment of broader context.”  For MC to prove AB statements mislead consumers, it’s gotta show evidence to that effect.  MC “could use a survey showing that consumers believed that the product ‘contained’ corn syrup, even though the ad used the term ‘brewed with,’” said advertising atty David Kluft, who expects “surveys will be the focus of this case if it goes the distance.”  

Then too, judge has tuff burden in early stages to decide whether to give MC a preliminary injunction to shut down the ads, as MC claims its reputation already being irreparably harmed.  Judge has choice of shutting down the ads to restore status quo “or letting the ads continue and risking that the damage is not fixable,” Kluft opined.  “That’s a serious burden for a judge to carry, and as a result you sometimes see judges in close cases erring on the side of enjoining a negative ad.”  That means too that “negative ads are often treated with far more urgency” due to potential impact on both consumers and the target.  Stay tuned.