Factoring in “weak” core beer growth and “moderate” Angry Orchard growth, Goldman Sachs’ Judy Hong still “expect[s] upcoming innovations…to add more than 5 pts to growth in 2016,” in report that upgraded SAM from sell to neutral.  That would be over 200K bbls of growth from innovations boost.  Coney Island Hard Root Beer could be over half (3pts) of that growth next yr, “already reaching 6% of total volume [7% of sales] in just the first month of launch.”  Then too, both Sam Nitro beer lineup and Rebel Grapefruit could each add 1pt to depletions growth.  And lastly, Judy highlights Angel City distribution expansion coming next yr as a growth factor.  (Editor’s Note: Angel City will fill out rest of Calif and will add Reno, NV “to compliment chain coverage with Las Vegas,” Alchemy & Science’s Alan Newman told Express.  Also keep in mind, Coney Island traditional beer portfolio just rolled out to several states in the “Atlantic region.”) Meanwhile, one “key risk” next yr will be Angry Orchard, which has “decelerated more quickly than previously anticipated,” Judy wrote.  She doesn’t expect AO “trends to accelerate meaningfully,” due to its “already high levels of distribution.”  SAM beer (excluding Root Beer) “is now down low-single digits” amid always increasing competition, tho Judy believes trends will “begin to inflect.”  All in, “we now see a recovery path emerging for depletions” starting Q4 this yr. 

Yesterday, Boston a announced that it was increasing its stock repurchase expenditures by $50 mil to $525 mil.  Other analysts including Cowen and Co and Jeffries Group upped estimates for SAM as well.  Today, SAM stock up 7% so far to $258, highest level it’s been since early Jun. 

Predictably, beer volume trend did not sustain big 4.3% volume jump reported last week for Nielsen all-outlet data for 4 wks thru Oct 3.  Latest 4-wk period showed 1.1% volume gain thru Oct 10, with $$ sales +3.9%.  Yr-to-date volume gain hangin’ in at +0.8%.  Avg prices edged up a bit ahead of yr-to-date pace as Oct price hikes just barely showin’ up.  Avg price up 61 cents/case, 2.8% for 4 wks vs + 55 cents/case +2.5% yr-to-date.  That’s still driven by trade up and $1+/case hike in avg craft prices.  Premium light prices still up just 12/cents case yr-to-date, 14 cents for last 4 weeks, about 0.6%.

Speaking of trade-up, 5-point swing between mainstream and above premium $$ share continues.  Yr-to-date thru Oct 10, above premium at 41.4 share vs 58.6 for premium/below premium.  Same figures last yr were 38.9 and 61.1.  So above premium passed 40 share of $$ in off-premise scans while mainstream brands slipped below 60 share.  And difference narrowed from 22.2 share to 17.2 share.  Total shares for mainstream/above premium still way below where Pabst ceo Eugene Kashper figures they’re goin’ (see yesterday’s Express).  But 5-point swings over 9 mos change the picture quickly.          

Pending ABI-SAB deal overshadowed NBWA convention this yr, as agreement announced smack dab in the middle of it. But even while CEOs from top 4 suppliers had their say on panel, and with big deal's distraction, small brewers got more attention on program and lotsa love. And speaking of love, brewers small and large unanimously pledged fealty to 3-tier system. NBWA prexy Craig Purser pointed to current challenges, and need to continue shoring up 3-tier. But tone at mtg attended by almost 4K industry members more like steady sailing than rocky waters.

MegaBrew and Mega Hugs for 3-Tier AB ceo João Castro Neves, MC's Gavin Hattersley, Constellation's Bill Hackett, HUSA's Ronald den Elzen and Sierra Nevada's Ken Grossman mostly stuck to familiar talking points on panel breezily led by distrib Mike Gretz. Each embraced middle tier but Ronald most enthusiastic and got big applause when he said HUSA "absolutely not!" interested in branches. João said AB still likes branch option in some mkts, but AB doesn't plan to have more than around 10% of volume in branches (see above). MC happy with its single branch, said Gavin, and no intentions to expand. And Ken noted Sierra still distributes in home town, but "viable, independent" 3-tier is "crucial" to craft (and his) success.

Mega Mystery: How to Regain Share Lost to Spirits Only one question stymied the leaders: how does beer get "share of throat" back from spirits? João suggested spirits have been "innovating better" and "pushing boundaries." But as for beer response, he (and Bill) had little more to offer than "unity." Ken talked of "bringing products that consumers want," creating value and communicating. Ronald pointed to steeper beer per cap drops elsewhere in world and advised industry focus more on US beer glass being "half-full." Three-tier system allows small players to enter mkt, he noted, and craft brings excitement. Yet beer continues to lose share of throat here despite those 2 positives.

3 Cheers for Craft Beers Lotsa comments from NBWA leadership about how distribs/3-tier system provide consumers with vast choice (read craft) available nowhere else and importance of "educating" policymakers with that message. Prexy Craig careful to separate exemptions from 3-tier for small brewers from NBWA's continued opposition to big brewers having branches or taprooms, and big brewer "interference" with distribs' efforts to sell competing brands (read craft). He proclaimed latter action as "anti-competitive." Panel discussion "Four Under 40" on 1st day's program focused almost entirely on craft, with beer blogger, tiny Ky brewer (very visible figure in effort to bounce branches there), craft-only distrib expressing their love of 3-tier system, plus financier/consultant on craft deals. Then too, NBWA gave each of its 3 "partner" awards to... (wait) 3 craft brewers, who thanked their distribs. With all of this public fealty to 3-tier, NBWA clearly hopes that what happened in Vegas this yr doesn't stay in Vegas.

MillerCoors MC ceo Gavin Hattersley promised to "drive MillerCoors forward" and "get MillerCoors growing" at MC distrib meeting following NBWA convention. Under Gavin's leadership, MC will demonstrate "discipline, decisiveness and accountability," he said. As one example of decisiveness, Gavin noted "$50 mil of increased media in back half of this year behind Miller Lite, Coors Light, Redd's and Blue Moon." And MC reinvesting in breweries, like "our new $17 million aluminum pint line." MC has accomplished much in growing profits, reinvigorating brands, trading up portfolio, according to Gavin, but "the one thing we haven't delivered is volume growth." Noting 10-mil-bbls of volume loss, Gavin emphasized: "That's simply not a sustainable model.... The longterm health of MillerCoors depends on our ability to profitably grow volume and share." He added: "We've seen the ramifications of what happens if we don't," pointing to "tough but necessary" Eden brewery closing. So "status quo isn't acceptable anymore," noted Gavin. "We need to shake things up." Gavin put a "stake in the ground": "We're planning to be flat by 2018 and to show total volume growth by 2019." So even with all the ABI-SAB news and noise, "now is not the time for distraction," Gavin concluded. "We will not lose focus."

Big Beers as "Wallpaper"; MC Will "Sharpen Separation"; Hard Soda "Here to Stay" Picking up on some of same themes, and adding fresh twists, MillerCoors cmo David Kroll said: "Let me give it to you straight. Drinkers today see large beer brands as interchangeable. They've become wallpaper, invisible and meaningless. And some of that is on us." So MC has to change the game and be "clear, smart, and bold." David continued: "Gone are the days of playing the same game and expecting different results.... And gone are the days where we whipsawed from campaign to campaign." MC either "had multiple brands aimed at the same space or one brand trying to be everything to everybody." But MC's new approach "sharpens the separation" between Miller Lite and Coors Light, "uncovers innovation and acquisition opportunities" and "allows us to cut ineffective brands," such as Coors Light Summer Radler, which he called "far too distracting." Not only that, but MC "non-working expenses way out-of-whack," said David. He sees oppy "to better streamline our spending," worth "tens of millions of dollars." That will free up more monies for mktg and so 2016 "marketing pressure" will be "strongest" in yrs. What's more, Miller Lite and Coors Light can "absolutely" grow at same time, insisted David, pointing to recent trends in Carolinas where Miller Lite up 8% and Coors Light up 6% last 13 weeks. Miller Lite has had 8-point trend improvement since return of original can. "With our renewed focus on consistency and authenticity, we have turned the corner." Coors Light had 2-point swing with its new packaging. And with "competitive grit" and quality messaging coming in new campaign for Coors Light, MC "will reignite the pride behind Rocky Mountain Cold Refreshment." For 1st time, "we're within reach of seeing consistent growth on both of our light lagers," said David.

Brewers have long fixated on 21-27 yr old guys who put away 6+ beers per week, but those guys represent only 4% of volume, said David. Meanwhile, women are 25% of beer consumption, nearly the same as millennials (26%). MC will be "smarter about dual gender marketing." Redd's already at 18 mil cases, "larger than all of the Ritas" with lotsa news for 2016. MC won't be first in hard sodas, but "will do it bigger and better" with Henry's. Orange and Ginger Ale flavors are 3x bigger than Root Beers in CSDs. These brands "will be backed with the largest spend in the business.... You may even see us show up on some football games in early 2016," David hinted. "We believe the category is here to stay."

Tenth and Blake's "Smart" M&A; Simplifying Sales This yr, Tenth and Blake up "across all 5 of our priority brands," said prexy Scott Whitley. Leinie's Grapefruit Shandy is #1 new craft brand and Blue Moon White IPA #3, he added. With Saint Archer acquisition, MC is in craft M&A game now, and will continue to "carefully look for partnerships that fill a strategic need in our portfolio and are complementary" to existing craft franchises. MC sales prexy Kevin Doyle intent on "simplifying" the biz. To that end, he made distrib-friendly moves like reducing number of monthly biz objectives by 40% to 16 and reducing amount of info MC asked for from distribs. "Simplifying means not asking you for information that we don't do anything with," Kevin said to applause. Chains are 44% of volume and growing and so they remain key priority, Kevin noted. MC has "also shown it can win here." In all, MC changing up approach to emphasize speed, decisiveness, simplicity and accountability. In that spirit, this meeting brief, blunt and ended on time.

AB will have its "highest investment level ever," sales veep David Almeida told distribs at AB's meeting. Total industry performing a bit better in recent mos, but AB trends "a little bit off" from where it wants to be because AB still losing about a half point of share. So "we're doubling down," said David, to "try to change the game" and "get back to growth in the US." AB will "go big and invest," he said, adding there will be another "major, major increase in investment" next yr. AB aims to "fix the things that aren't working," "accelerate the things that are working well," while continuing to "initiate" and innovate. AB will make huge incremental investments in aluminum bottles. That package will be used on additional brands such as Michelob Ultra in Tex, Fla, Ariz and La. Ultra is the "fastest growing brand in the country," David said, up 15%+, gaining 0.5-0.6 share in IRI in recent periods. Could get close to 6 mil bbls next yr and grow 1 mil bbls, especially with boost from more than $100 mil in sales and marketing.

AB also has other high-end initiatives, including to "accelerate" Stella and "make Goose Island IPA the number one IPA." Goose IPA more than doubling, up 150% in Q2 alone. AB's entire craft portfolio grew at 40% clip in recent mos. AB now has almost 200 sales reps in its high end unit and they are making a difference, said high-end veep Felipe Szpigel. AB multiplied investment on-premise 5x, said David. As a result, AB share in on-premise is up for the last 7 mos (among top 12 suppliers in Beer Inst data). And AB will increase its hi-end mktg by another 25% in 2016. What's holding AB back in above premium? FMBs down double digits, especially the Ritas. AB will invest more on Ritas too and new lower alc version. AB will also "go big in the Hard Soda space" with its Best Damned initiative, including root beer. And AB will bring in another brand from Mexico, Estrella.

Bud Light "performance is not where we need it to be," said mktg veep Jorn Soquet. "Your message is coming through loud and clear. We wandered off the track of the trail." So AB did "deep dive" into "what worked and what didn't" historically for Bud Light and "got back to basics." New campaign coming early next yr. And Bud Light will get $50 mil increase in mktg budget too. Bud Light recently "wrested sponsorships" of all 3 pro sports teams in DC, said Jorn. Its NBA "deal is already done." New Bud Light spots will feature a "hall of fame" of comedic talent and will be a "creative reset" of "what Bud Light will stand for." Meanwhile, Bud brand getting best performance in 15 yrs, with 25% of AB distribs growing on Bud this yr. The "Brewed the Hard Way" campaign has definitely helped.

 In US, AB has spent "a lot of time trying to understand where we are from a relationship standpoint," said AB ceo João Castro Neves to distribs at AB meeting at NBWA. "The relationship is not where it needs to be," so "we are spending more time with you to fix our problems," because the "only way to win is to win together. We want to grow the top line and reverse the share situation," continued João. But question of how to get back to growth is "complex…. We have a very good share in [segments] that are not growing" which "we need to defend" and "low share in areas that are growing." AB already made "step up in our investments" and "trying to act more local." It will "ramp up resources" again next yr. But "where we have low share...we have to do something different." AB looking at solutions, including partnerships, "trying to find the right way to play with local."

Another key to making progress will be working more constructively with distribs. To that end, for first time, AB and its wholesaler panel jointly worked on AB's 3-yr plan. In fact, AB met with panel 12x in 6 mos and worked together on "tough" and "complex problems" like branches, technology, e-commerce and partnership economics. One key development came out of those meetings: AB will limit branches "to around 10% of volume," right around where it is now. That "can vary from time to time," but AB "wants to maintain" level of around 10%, because it "really diminishes the noise," added João, so "we can focus on our business." Going forward, there will be both "acquisitions and divestitures," but AB will "pretty much" stay "where we are" in terms of % of volume sold through branches, concentrating on "urban centers."

That's a new position and a striking departure from what most distribs think AB desires. Could pave way for AB to genuinely improve its relations with distribs. But many distribs remained skeptical, with comments like "'around 10%'...20% is around 10%." And "urban centers...that's only where all the people are." Editor's note: Why did AB make this change? Perhaps distribs should more willingly accept at face value that reducing system anxiety and noise is one key. Also new regime may feel differently than old regime did about tradeoffs offsetting benefits to AB of buying branches. Another reason could be that DoJ investigating AB in Calif and global ABI needs to work with DoJ on divesting 58% of SABMiller in coming yr. So adding branches now might create extra regulatory pressures. Don't forget 10 states have already banned branches since ABI arrived here in 2008. So why continue to fight losing battle? Whatever the reasons, presuming AB sticks to what it says, this should be positive development for AB's relations with distribs.

 Deal for Anheuser Busch InBev to buy SABMiller for $106 bil will create a dominant global player in beer, with 30% of global beer sales and 50% of profits (before disposals; could be several). ABI had said it will be $64 bil in revs and $24 bil in EBITDA post a combination (ABI subtracted some of SABMiller's partial stakes, since it reported $26 bil in revs and ABI $47 bil). And it will have more than $100 bil in debt. With such a behemoth stalking the globe, is it any wonder that so many other players in beer and bevs seemed to be wondering where they fit in the firmament?

On Oct 12, ABI and SABMiller announced "agreement in principle." SABMiller's board "would be prepared to unanimously recommend" offer of 44 pounds per share and ABI's board "fully supports the terms of this possible offer." Now ABI has 2-week extension until Oct 28 to make a formal offer. Presuming that happens, that's when the real fun starts. Could take a yr to get deal done. First, there are the disposals. For sure, SABMiller's 58% of MillerCoors will be sold, most likely to Molson Coors. After that, many other question marks. Twenty percent of SABMiller volume comes from selling Coke. How will Coke react to prospect of inviting ABI into its tent? Especially with ongoing speculation that Coke would be ABI's next target, some years from now. Lots of other moving pieces, depending how regulators react, ABI may have to sell off pieces of itself in several other mkts.

This deal will also shake up global beer. "We see continued pressure on most brewers... to achieve further critical mass in order to ensure a place at the end of consolidation," wrote Nomura's Edward Mundy. Heineken will be a distant #2. It alone has announced 3 smaller deals in last mo or so, spending about $1.5 bil to acquire 50% of Lagunitas, trade assets in Africa, Caribbean, etc with Guinness (including getting Red Stripe in US). But bigger possibilities loom in consolidation endgame, including a potential combination with Molson Coors down the road. In fact, the US could become a hotbed of consolidation in yrs ahead, not just in craft where an M&A fever already underway, but several other players may end up with different owners. All of this could happen or none of it.

Diageo recently sold off near $2 bil in assets, leading Bernstein's Trevor Stirling and others to speculate anew it could sell off beer biz entirely for about $11 bil, including US unit DGUSA. Mike's Hard Lemonade on block earlier this yr, reportedly seeking $1 bil. MC took a look. But it's off mkt for now, sez source. Boston Beer founder Jim Koch's self-proclaimed succession plan is "don't die." That's fine when you're growing great guns and 65. But what if growth more difficult in a few yrs? His stance could change. Some on Wall St recognize this. "After the price paid by Heineken for a 50% stake in Lagunitas (which would value SAM at $320-350)" per share, wrote Susquehanna's Pablo Zuanic, "it just comes down to when controlling shareholder Jim Koch decides to sell the company or a sizable stake." After nearly 25 yrs of steady growth, Yuengling will likely be down for 2d yr in 3 in 2015. What does owner Dick Yuengling (in his 70s) do next? He discussed partnerships a decade ago, but didn't go there. These are just for starters. Between all the craft deals and imminence of MegaBrew, nearly everyone has to consider options. Wild.

With UK takeover panel deadline days away, ABI and SABMiller each engaged in high stakes brinksmanship and even some name-calling following ABI proposed offer for about $100 bil, one of biggest deals of all time that would create dominant global player in beer. SABMiller rejected ABI offer for "substantially undervaluing" its shares. SABMiller said ABI's offer "highly conditional" and "opportunistic." So far it's unwilling to even meet ABI. ABI said SABMiller's objections "lack credibility" and urged shareholders to pressure SABMiller board to accept ABI's offer that is 44% premium to price before ABI's pending proposal became public. At presstime, SABMiller offered its own plan for accelerated costs savings of an incremental $550 mil as a stand-alone company (shades of AB's project Blue Ocean in 2008). By Oct 14, ABI has to make a formal bid, or back off for 6 mos, or SABMiller can ask for an extension. Is this just a game where SABMiller trying to extract a higher price (as most analysts seem to believe)? Or is SABMiller trying to fight ABI off and could ABI even ultimately walk away? Situation complicated by key factors. First: price. Some analysts suggest deal would create value for ABI at 42 pounds, but would destroy value at 45 pounds ($110 bil). That leaves fairly narrow range where it's good deal. But ABI needs this deal, some say, as its 2 biggest mkts, US and Brazil, under pressure. Second: structure. With the split between cash and shares, ABI creates 2 unequal classes of shareholders. And SABMiller board is divided. Its 27% shareholder Altria, with 3 board seats, favors deal. But 14% shareholder Santo Domingo family, with 2 board seats, is playing hard to get. ABI designed "partial share alternative" with/for Altria and Santo Domingo family, and "there is no deal without them." How much more play is there in the price and will a deal get done?

It's fall price hike time. In not-so-distant past, AB was clear price leader. It sent notices to distribs of coming price hikes, usually modest amounts across the board, tho always with geographic tweaks. MC generally followed, give or take a tactical mkt or two. Constellation waited for AB to move, always "mindful of the gaps," between Modelo portfolio and domestic premiums, as prexy Bill Hackett has said. But that's changing. Net-net: while AB seems less willing to lead, Constellation appears to be more willing to lead and MC seems less willing to follow.

Importantly, Constellation led in 2 biggest US mkts this fall: Calif and Tex. AB pricing has been all over the lot, up significantly here, holding there and promoting more (i.e. deep discounts on craft-competitive draft) in many mkts. Meanwhile, MC less willing to play follow the leader, with a strategy of holding prices down on 6 and 12 packs in some key mkts. Lotsa moving pieces. On conference call with analysts, Constellation ceo Rob Sands was explicitly asked whether Constellation's beer pricing strategy changed. He eventually said "yes," Constellation now "less concerned about" gap between domestic premiums and its brands "than we were several years ago." Rob repeated current guidance of 1-2% expected price hike this yr (going on right now) and still making mkt-by-mkt, brand-by-brand decisions. Yet, given momentum and with beer biz "definitely premiumizing," that gives Constellation oppy to be less focused on competition and "more focused on what we think is good for our brands and what will work or won't work."

As part of premiumization in US beer, Rob also pointed to success of craft getting to 10 share of volume "at very high prices." Could it be that craft now creating a price umbrella for Constellation? While Constellation reports rev/bbl up a bit less than 1% for 9 mos, IRI data shows its brands posted slightly higher avg price gain in scans for similar period, +1.4%. That's a little over 42 cents/case equivalent, far ahead of 11-cent avg premium price increase. But that's still way below the $1.23/case that avg craft has tacked on this yr. So while gap between CBBD brands and domestic premiums is widening, gap to craft widening much more. Does that put CBBD in even sweeter spot vis a vis value?

MC's pricing approach going forward echoes Tom Long's comments last yr that beer pricing had outpaced wine/spirits and beer had lost "weekly drinkers," share of mind and per capita consumption. To try to get back to volume growth, MC has new (old?) philosophy under sales prexy Kevin Doyle of not playing follow-the-leader quite so much on AB price increases. This fall, in more mkts around the country than usual, MC delayed, didn't follow or sometimes even reduced prices on select packages, sources say. It sought to widen gaps between premium lights and above premium brands, especially on 12-packs. MC also still looking to hold draft where it can. In recent periods, MC trends about 1 point less good than ABI's. Will these pricing tactics help? In past such moves are quickly matched, leading to no competitive advantage. Hints of all this started dropping last yr when then-MC ceo Tom Long noted at BMI's fall conference that yrs of "significant" price hikes by ABI and MC had created a "price umbrella for smaller entrants to emerge," an oppy exploited by craft and led to "fragmentation" of beer biz. This foreshadowed the less aggressive pricing strategy going forward by MC, including holding on draft last yr and more selective following this yr. Both AB and MC realized smaller avg rev/bbl increases over last 12-24 mos than they had previously.

While AB has not grown this yr in US, AB has not stood still. In fact, AB is moving at even more frenetic pace than usual. On many fronts at once. Beyond just new brands and mktg campaigns, in 2015 AB has embarked on a wide ranging series of acquisitions, initiatives, and far-reaching changes in an effort to mold a better future for itself here. Some of these moves remain deeply disconcerting to distribs. These AB actions raise further questions for many about AB's commitment to 3-tier (which AB sez is unchanged) and where they may be headed with their distributors here. Even as AB increased its focus on organic growth, AB also bought 3 West Coast craft brewers, which own at least 9 retailers in 4 states in last 12 mos. AB now owns craft brewers, distribs and retailers up and down Pacific Coast. It owns a craft brewer in each of 3 top metro areas: NY, LA and Chi. This summer AB also made deals to buy 5 distribs, including 2 in N. Calif.

Has there been a change in its stance to owning across tiers? "No, we have not changed our stand, we remain fully committed to the three-tier system," AB veep Bob Tallett told INSIGHTS. "All of our acquisitions have been in full compliance with state law, and we have made no effort to change laws that address the three-tier system." Recent branch deals include a "territory swap, plus ongoing discussions with wholesalers who wanted to sell" which "were accelerated by the 1031 like-kind exchange window." (After AB got close to $200 mil for Constellation brands terminated in branches that sold them.) On craft buys: "We are committed to our High End strategy and providing our wholesalers with a broad based portfolio." Editor's note: with so many tasting rooms and craft brewers circumventing traditional 3-tier, AB's gotta figure, "why not us too?"

At same time as AB increasingly plays in all 3 tiers, AB wants its independent distribs to become more exclusive again. The old AB built % of its distribs volume sold by exclusive AB distribs from 40 to over 70 over a decade or so. Since 2008, that's completely reversed. Reportedly, under 10% of AB volume exclusive (main driver is shift in consumer preferences to craft). So AB has worked and reworked a voluntary incentive that will encourage distribs to become more exclusive again. In latest version (still not finalized, last we heard), many more distribs could find incentives attractive, sources say. Those incentives kick in at 90%, but benefits go up at 95% and 98% exclusivity. AB will debut revised exclusivity incentive to distribs this fall. Program became more smartly designed over time, INSIGHTS understands, and less likely to create as much antagonism. But the whole issue of non-aligned brands remains highly charged and problematic. As AB pushing exclusivity again, many distribs asking this question: If global ABI can pursue better growth/earnings opportunities in Africa and elsewhere with a $100+ billion deal to buy SABMiller, why shouldn't its independent distributors do the same thing with other suppliers here? (Especially since in some cases, state laws prevent distribs from getting brands AB acquires, shutting AB distrib out from oppy to capitalize on growth.)

Earlier this yr, AB ratcheted up pressure on some Calif distribs that sell Constellation Brands. It reportedly backed off, perhaps after increased interest from regulators. Still, given intense competitive battle between ABI and Constellation, friction between AB and its distribs that sell Constellation is not going away. It's likely to intensify. And distribs who carry both will face difficult juggling act. That will become more acute after June 2016, when Constellation brands are no longer "aligned." Meanwhile, more friction also arose with some distribs following AB's fall equity agreement assessment. Field sales now assesses wholesalers 2x a yr (used to be just once). And the WEA assessment consists of an incredibly detailed 251-pg deck. Probably not a super pleasant experience on the best of days. This fall, many distribs were asked questions about non-AB brands (how sales folks compensated, margins, etc). Still only a very small % of distribs ruled out of compliance, INSIGHTS understands. AB adamant that standards same as they've been for almost 20 yrs. But key clause on compensation for competitive above premium brands previously hasn't been enforced. That's now creating another situation for some.

AB also pushing on cutting edge areas still largely invisible to distribs. In fact, AB has a whole "disruption" team, basically looking for the next "UBER" as it applies to beer biz. It wants to be in front of any such change. To that end, AB is intently exploring e-commerce, whether Fresh Direct, Saucey/Drizly, Amazon, Peapod. What will winning model be? How big will it be? What will distribs' role be? This nascent arena could be yet another in the "swiss cheese" of exceptions to 3-tier that will continue to challenge traditional way of doing biz.