There will be many other deals and partnerships after the “earthquake” of Anhesuer Busch InBev’s deal to buy SABMiller, as we’ve noted before.  But now Suntory is the first to publicly talk about possibilities it’s exploring.  Suntory may consider entering the US premium beer market with a strategic partner” following ABI-SAB, reported Financial Times, citing interview with Suntory’s ceo Takeshi Niinami.

“The Suntory chief said he was not alone in weighing options to adapt to” ABI-SAB. “Bankers expect consolidation to accelerate not only in beer, but also in markets for wine and whiskey.” Similarly, Mr. Niinami told Wall St Jnl that ABI’s planned takeover of SABMiller “stimulated thinking” in the industry.  Suntory is considering an IPO among other possible moves.  Recall, last yr, it bought Jim Beam for nearly $14 bil and now has “heavy debt burden,” reminded WSJ.  As far as “strategic partnership” in US beer mentioned by both FT and WSJ, “he added no talks were currently underway.”  In Japan, Suntory is #3 brewer, “with a strong position at the high end of the market.”  Looking again at ABI-SAB shakeout globally, he added: “We will be able to shake hands with premium players.  The huge market share of one player will create opportunities.” 

AB not likely to “fork over” anywhere near the $20 mil that some headlines suggest in settlement over class action lawsuit claiming AB misled consumers into thinking Beck’s made in Germany after they started makin’ it here.  As we reported back in Jun, settlement calls for AB to pay $12 per household (max) for those who claim they bought Beck’s under false pretenses between May 2011 and June 2015.  (Only off-premise purchases qualify.)  If they have receipts, they can get $50/household max. So actual range of potential max payouts prepared by Plaintiff’s “expert” was $20-$28 mil. But who keeps beer receipts, for years?  Estimates based on “expert’s” calculation that 1.7 mil households were Beck’s buyers during this period.  That’s 1.4% of total households, 2.6% of beer drinking households, even though Beck’s had just 0.2% of total shipments (including on premise volume) in 2012, tho about 1.8% of imports that yr. 

So far, plaintiffs’ atty sez 60K claims have been filed over last 3 mos or so.  That’s about $720K.  Consumers have until Nov 20, 4 short weeks away, to make their claims.  How many more will do so, even with extensive media coverage of case?  To reach $20 mil, over 1.6 mil more households will have to file claims.  For 12 bucks.  Meanwhile, Plaintiffs attys get fee of $3.5 mil, as we also reported in Jun.  That’s equal to total of what almost 300,000 households who believe they got misled would receive.  No one knows what ultimate settlement will be, natch.  But genl counsel for AB told WSJ Law Blog: “It’s certainly possible that the $3.5 million fee collected by the plaintiffs’ attorneys will outsize the benefit paid to consumers, an outcome that is increasingly more common in class action suits such as this.”  

Just when it looked like Sep shapin’ up as one of best beer mos of the yr, here comes GuestMetrics with dose of cold water and a shot of booze.  While on-premise traffic slightly outperformed 12-wk and yr-to-date trends (-1.4% vs -1.8% and -1.5% respectively), beer trend got significantly worse.  Beer volume down 5.8% for 4 wks, more than a point worse than -4.6% yr-to-date trend.  Even $$ sales down 3.7% for 4 weeks.  Spirits volume trend nothin’ to buy a round over, with volume off 0.3%.  But that was improvement vs -0.7% yr-to-date. What’s more, beer lost full share in Sep while spirits gained 1.3. For 9 mos, beer share loss at 0.8, spirits +0.8.  Why did beer soften further in latest period?  “Adverse weather in certain parts of the country,” GuestMetrics ceo Bill Pecoriello told INSIGHTS, “especially with the flooding in the Southeast” and “given the start of football” may have had more “impact” on beer.

Craft Share Gain Slows Dramatically  Within beer, imports gained 0.3 share (vs -0.2 yr-to-date).  Craft share gain down to 0.3.  That’s vs +0.9 yr-to-date and about 2-share gain in 2014.  And that’s even as “new [craft] brewer/brand introductions continue to outpace segment volume growth significantly.”  Gettin’ mighty crowded and more competitive out there.  Cider did not gain any share at all, meaning it was down several points last 4 weeks.  Premium light share loss “moderated” to -0.8 for 4 wks vs -1.2 yr-to-date.  But an 0.8 share loss in a down 5% mkt is still a steep drop.  And that’s even with lotsa new on-premise brewer-hires in the mkt.    

Dos Equis Lager (not entire franchise as we originally reported in last week’s issue) is up 8% YTD and is the “fastest growing brand in draught in the US” in latest periods.  

Looks like Sep a good mo across alc bevs.  Spirits volume up 7.5% in control states in Sep, and that was going against a near 6% gain same mo last year.  Sep increase kicked yr-to-date trend to +2.8% and running 12-mo trend now +3%, double what it was same time last yr.  

Looks like Sep a good mo across alc bevs.  Spirits volume up 7.5% in control states in Sep, and that was going against a near 6% gain same mo last year.  Sep increase kicked yr-to-date trend to +2.8% and running 12-mo trend now +3%, double what it was same time last yr.  

Congress ain’t exactly accomplishing much on critical issues facing the country these days.  But members want the public to know they have craft brewers’ and beer drinkers’ backs.  Proposed AB InBev-SABMiller deal has got their attention and continues to cause “concern” even tho no final agreement yet.  Indeed, Senators Mike Lee (UT) and Amy Klobuchar (MN), chairman and ranking member of Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, vowed yesterday to hold a hearing on the deal to “examine” how it “would impact competition and consumers across the country.”  According to Klobuchar “it is critical that we examine this deal closely to see how it will affect the price of a pint, and if it will harm the craft brewers that are serving up world class beer and jobs across the country.  We must ensure competition in the beer industry remains on tap.” 

Elsewhere, Maine Sen Angus King told Maine Public Broadcasting that he’s “concerned…that the merger of two of the world’s largest brewers could threaten” craft success “by stymieing the growth of small brewers and crowding out their products in Maine and elsewhere.”  He has asked the Justice Dept to take a close look at the deal.  So has his Maine colleague in the House, Rep Chellie Pingree, who is a member of the Small Brewers Caucus.  The Caucus, she suggested, should send Justice a letter “asking them to look into” the deal. “This shouldn’t be allowed to happen without a lot of scrutiny.”  Joining the bandwagon, Sen Tammy Baldwin (WI) told Congressional Quarterly that she thinks deal “is probably too big” and ABI-SAB will have to “spin off some of their brands.  What I care most deeply about is that we are still brewing a lot of beer in the state of Wisconsin – that Miller remains, that Leinenkugel remains.”  Alas, some politicians, professors and media members still seem to think ABI-SAB won’t sell off the MillerCoors stake!

Reyes Holdings’ Great Lakes Coca-Cola Distribution has signed letter of intent with Coca-Cola to expand its distribution territory in a big way.  Earlier this yr, Great Lakes was awarded exclusive rights for “greater Chicago area.”  Now, agreement expands to entire state of Mich, “majority” of Wisc, including Milwaukee, as well as “southern Minnesota, including Minneapolis,” and “portions of northeast Iowa and northern Illinois,” said co.  Great Lakes will also “take over 34 distribution centers or depots” throughout its expanded territory.

“It’s an honor for Reyes Holdings to represent The Coca-Cola Company’s world-class brands and to be a meaningful contributor to its 21^st century beverage partnership model,” said Chris Reyes, founder, co-chmn.  “This is truly a synergistic partnership,” added Jude Reyes, co-chmn, noting, “our distribution expertise and deep local knowledge compliment” Coke’s “industry-leading and innovative portfolio.”  Coke also expanded territories of Tampa, Fl-based Coca-Cola Bevs Florida and Atlantic Coca-Cola Bottling Co in Atlanta.  With these 3 new deals, Coke has now awarded 30% of its volume to independent bottlers towards goal of refranchising half its volume by end of 2017.  

Diageo Guinness USA strategy goin’ forward, supported by talks with distribs, is to “focus on our premium core,” primarily Guinness family and Smirnoff Ice brands, new prexy Tom Day told Express.  Recent deal to sell Red Stripe rights to Heineken knocks about 6% off of DGUSA’s estimated volume of about 2.3 mil bbls in 2014.  That leaves about 80% of volume in Guinness and Smirnoff brands, we figure.  And that’s where DGUSA makin’ a “huge bet” on just-intro’d Guinness Nitro IPA and new approach to Smirnoff spin-offs.  So far, Nitro “far exceeding” expectations and challenge is meeting demand, Tom said.  DGUSA has just started lapping successful intro last yr of Guinness Blonde.  And in early 2016, two new Guinness porters, Dublin Porter and West Indies Porter, part of the Brewers Project, will be in variety pack.  Coming next month: high-high end “1798,” a limited edition double extra stout.  DGUSA aims to reframe notion that Guinness stands for a specific beer/brand to representing a “brewer.”  “That’s how we can cut through,” said Tom. Even with Guinness focus, there’s been “not enough talk” about Smithwick’s and Harp, Tom acknowledged.  Going forward there will be “more focus on them” as well.  

On Smirnoff Ice side, DGUSA moving from steady stream of flavor additions (i.e. “flavor of the month”) to “flavor of the season,” and more “cocktail-oriented” offerings, like Moscow Mule, Screwdriver, etc.  Cocktail spin-offs now about 1/3 of Smirnoff Ice biz.  With plethora of SI flavors, DGUSA was “not prioritizing.”  In attempt to “fix the mix,” current strategy will be to ensure that the right brands are in any given facing and that Smirnoff Ice is “haloed and heroed.”  Key Smirnoff Ice targets are millennials, multi-cultural consumers and female shoppers, all seeking variety and a point of difference.  DGUSA’s brand extensions have so far paid off.  Twelve-week scans thru Sep 12 show Guinness family dollar sales +19.4% and Smirnoff Ice family (excluding pouches) +5.7%, said Tom.  Smirnoff Ice Original and flavors have been up each mo yr-to-date in Nielsens, and “this return of both to growth is the first time in 10 years.” 

Another transition in works: DGUSA is “de-seasonalizing,” from focus on having to win from Halloween thru St Patrick’s Day (and “really having to win St Patrick’s Day”) to a “12-month” focus.   Then too, DGUSA ramping up sales force, especially in the on-premise. Latter force, called SEALS (Sales Execution Activation Leadership Squadron) expanded on-premise team from 5 to 55.  And DGUSA has added 20 people to its chain team.  Finally, we asked about Diageo’s “total beverage alcohol approach” (TBA) and whether that’s changed at all given Diageo now almost totally out of wine.  TBA remains “top of mind,” for the company, said Tom; “beer is core,” he added, and that’s where he’s focused.  Interestingly, while Constellation execs have talked up notion of cross-merchandising their beer and spirits brands, especially with tequila, Tom pointed to challenges in chains, where there can be different buyers, not to mention different distribs, competing for shelf/floor space.  Easier to do on-premise and in independent stores, he added, and if you’re working with single distrib.

The merger announced this morn between Wirtz Bev Group and Charmer Sunbelt Group will create 2d largest wine and spirits distrib, which will be called Breakthru Bev headquartered in NYC, with 7,000 employees and $6 bil in revs. That’s behind only Southern Wine and Spirits reportedly at $11 bil in 2014. Compare with largest beer distrib, Reyes Bev Group, at about $2 bil (tho total Reyes Holdings sales well over $20 bil). Wirtz is no slouch in beer either. It has significant operations in Las Vegas and Minnesota, plus some strong craft brands in several states (including Ballast Point in several). But Charmer Sunbelt just made deal to sell off its beer assets in Ariz, where it has JV with Glazer’s called Alliance. And it has some beer in Colo co too, tho far less than it did yrs ago. Charmer Sunbelt’s website lists no other states where Charmer entities sell beer. Will this merger trigger greater involvement in beer biz by this giant co? Or could it perhaps look to divest more beer assets? Or keep status quo? While, two family-owned bizzes are not publicly disclosing the ownership stakes in Breakthru, new co will have hq in NYC and ceo Greg Baird comes from Charmer Sunbelt, tho Rocky Wirtz will be a co-chairman of the board with Charmer’s Charles Merinoff. And 2 other Wirtzes will either be on board or become key execs. Meanwhile, Wirtz’s sizable beer distribs in Las Vegas and Minnesota remain 2 of the largest unconsolidated MC mkts. Charles Merinoff told Chi Trib that company would continue to grow and change the biz. “There’s no next deal out there,” he said. “But I wasn’t willing to sell to Rocky. And Rocky wasn’t willing to sell to me. I believe there will be some like-minded people who want to come with us,” suggesting future additions.