BMI Archives Entry

BMI Archives Entry

MillerCoors natl sales convention took new approach, summed up by ceo Gavin Hattersley as “take more risks, move faster and connect better with consumers.” It also featured several new faces, including more prominent female execs, such as cmo Michelle St Jacques and innovations veep Sofia Colucci.  Both brought fresh perspectives, spearheading significant shifts in direction. New MC will innovate far more, move more quickly into adjacencies, place bigger emphasis on premiumization, Gavin/others pledged. 

 

But biggest early example of MillerCoors moving faster, cited multiple times by Gavin: MC’s response to Bud Light Super Bowl ads. AB gave MC “huge opening” and “galvanized” distribs, as Miller Lite “quickly released new digital, out of home and point of sale creative” (plus tv ads and a lawsuit—see above) all while “growing segment share.” Coors Light “moved fast” to “embrace the very ingredients criticized by Bud Light.” Special guest at MC convention: National Corn Growers Assn prexy Kevin Ross, who reprised his YouTube move (900K views) of pouring Bud Light down drain, and expressed solidarity with MC.  Coors Light ads back to “cold refreshment” theme, as ad account under review and MC’s “#1 priority,” sez Michelle, is to “get Coors Light back on track.” 

 

At same time, MC, like AB at SAMCOM, placed far more emphasis on innovation this yr, and far less on its subpremium brands. Biggest new bet: launch of sparkling cocktail Cape Line.  It will get $26 mil in mktg, “more than any other FMB,” said Sofia, launching next mo with natl tv right away, across 20 different networks and 100 shows, including every episode of “The Bachelorette.” Orders are 2.5x projections. There’s “a lot more coming,” added Sofia, promising 4 more innovations in next 6 mos “in record time.” 

 

MC pushing further, faster into adjacencies, including rolling out Clearly Kombucha (acquired last yr) across West, testing Movo wine spritzer in Ann Arbor and Vancouver, WA (first foray into wine). Plus MC will test hard coffee in partnership with La Colombe in Boston, Denver and Tampa this summer. Above premium only about 10% of MillerCoors volume and MC has lost share of above premium segment. Down 0.7 share yr-to-date thru Mar 9 in Nielsen all outlet. But it’s trying hard to reverse that. MC also promised to innovate more (and more quickly) around core. “You’ll see innovation on Coors, Miller, Leinie’s and Blue Moon,” Sofia added. “And I’m not talking seasonals.” Based on feedback from distribs, MC “changed our innovation strategy to help us get better scale, push more into white spaces and test and learn, all while moving a lot quicker,” added Sofia.     

 

Meanwhile, Tenth & Blake a bright spot for MC (tho still small % of volume).  It grew 15% in 2018, said prexy Pete Marino, and its craft partners (plus AC Golden) grew 22%. Peroni up 14% last yr.  Off to quick start, including 20-50% growth in many of its largest mkts in early 2019.  First tv ads and natl Peroni campaign breaking soon.  Saint Archer Gold is a craft light lager taking Michelob Ultra “head on” with 95 calories and 2.6 carbs. In 4 test mkts: Austin, Charlotte, Indianapolis and state of AZ. Media weight in test mkts will be as if it were $30-mil natl launch. Blue Moon looks to rebound after tuff 2018 by doubling media investment. New campaign slogan: “Reaching for the Moon.” Blue Moon will sponsor Kentucky Derby and pursue ultimate goal to become #1 US beer tap handle. Judging by distrib reaction, Blue Moon messaging may still need work. 


Considering MC’s tuff 2018-early 2019, MC convention exceeded distrib expectations and its new direction pleased other key folks. Molson Coors ceo Mark Hunter praised “energy and pace at which you are driving the business,” adding “you’ve got to keep it going. That’s an instruction.” And chairman Pete Coors also “impressed” by “how quick at the trigger” MC moved to respond to Bud Light and “positive reaction.”  Later, he said: “Our board of directors is completely behind the leadership and direction” of Molson Coors. “We’re thrilled with the team.”  Yet MC “absolutely” has work to do, noted Gavin, including ongoing (if lesser) supply chain issues. Plus “not a chance” war with ABI over. “I’m confident,” Gavin said in closing, “it’s going to be a better year for MillerCoors.”

Beer mktg going a little haywire so far this yr.  Big, big spend on new, new, new and big old brands spending many mil attacking each other on airwaves, in bars and even in court. In one corner, we have new FMBs, new no-alc beers and a multitude of unproven others getting major league support going after barely emerging consumer niches. But in center of the ring are biggest brands in biz, Bud Light, Coors Light and Miller Lite, aiming squarely at each other in an increasingly nasty battle.  These 3 brands are almost 30% of biz, they are all in long-term decline and their mktg support got cut last yr. Read on.

 

Dizzying amount of $$$ will be spent in 2019 on truly tiny % of biz. Following seltzer, FMBs now very hot.  Several cos taking flyer on more flavorful, lower calorie space as potential next iteration.  For example, MC’s sparkling cocktail Cape Line will get $25 mil in mktg support, while Corona Refresca gets $15 mil.  And Crook and Marker from Bai founder Ben Weiss also seeks to make big splash (unknown support) in similar space. Then too, Heineken 0.0 will get $50 massive mil in support.  Rebranded Bon & Viv Spiked Seltzer will get $19 mil.  Corona Premier will get $40 mil in support in yr 2. Kona $20 mil in campaign launching on NCAA.  Peroni its first natl ad campaign.  Collectively, these 8 brands may amount to 1% of biz.  They will receive in neighborhood of $200 mil in support, well over $100 mil incremental. With such big boosts in some areas, what will get cut?  Beer cos feel compelled to experiment, innovate and reallocate spending big time. 

 

But top 2 ain’t increasing spending on their biggest brands.  Indeed, AB and MC cut nearly $90 mil in spending in Q4, according to Kantar data reported by CITI (Kantar reports spending in 12 media but “incomplete” and “does not capture the majority of digital ad spend,” wrote CITI).  Light beer spending alone down $60 mil in Q4, even with presumed increases on Ultra and some incremental Premier spend.  And the biggest light beers almost gotta cut amidst big declines.  The big 3 light brands collectively declined 3.7 mil bbls last yr: Bud Light down 7%, Coors Light down 6%, Miller Lite -3%. 

 

And then there’s Corngate. Gotta view Corngate against this backdrop of declining sales, decreased spending and a million alternatives (many aimed squarely at domestic premium light beer). No wonder it quickly descended into nastiness. Tweak after tweak. And ultimately a lawsuit. MC filed suit against AB in US Dist Court in Milwaukee on 3/21, charging that Bud Light ads “misleading, deceptive and disparaging,” trying to confuse consumers and prey on their fears of high fructose corn syrup. It asked court to enjoin current ads or any like them. “Unless enjoined,” wrote MC, “AB’s false claims are also likely to result in a significant loss of sales by MillerCoors.” AB said its ads are “truthful,” MC claims are “baseless” and it has no intention of backing off. And away we go.

 

Corngate has gotten big brewers more mainstream attention for their biggest brands than INSIGHTS has seen in some time. But how could such internecine bickering build sales when so many consumers are already headed in different directions?  Indeed, for last 4 weeks thru Mar 9, Bud Light down 9%, Coors Light down 7% and Miller Lite down 3%. Slightly worse trends than last yr.

Mike’s depletions are up 50% thru most of 1st qtr, Mike’s prexy Phil Rosse revealed to INSIGHTS, fueled by the power of White Claw.  White Claw depletions up a whopping 325%.  Even excluding White Claw, Mike’s up high single digits. If Mike’s sustains near this pace, it could blow thru total company goal of 50 mil cases in 5 yrsIn just 2 yrs. Mike’s needs 40% growth for full yr to hit 50 mil cases in 2019. If Mike’s gets to 50 mil cases, it will grow over 1 mil bbls in 2019. As hard seltzers continue their explosive growth, Mike’s is gaining share of seltzers. It’s over 50 share. At 56 share yr-to-date thru Mar 9 in Nielsen all outlet, with new Mango flavor off to very fast start, and Pure still to come.   

 

While many expected hard seltzers to be another boom-splat phenom like hard soda, that ain’t happening; $$ sales up 240% in Nielsen all outlet yr-to-date thru Mar 9. In yr 4.  How high is up? Recall, Phil and Boston’s Jim Koch both said segment could double this yr, which would mean an additional 2 mil bbls.  So far, it’s growing faster than that.

 

Hard seltzers growing in all channels, across all demos and age groups, sez Phil. Yet household penetration still really low. Seltzers are a “transformational opportunity,” Phil reiterated, “not a one hit wonder.” Questions Phil has asked before sound less like puffery and more like prophecy as time goes on. Could hard seltzers be the next light beer? Could White Claw be a 100-mil case brand, he asks? Still way too soon to make that call, but extraordinary growth continues.   

 

Already, Mike’s $$ sales growing more than Constellation in most recent periods in scan data.  And it’s gaining the most share of high end YTD.  Up 1.2 share of above premium volume, compared to Constellation up 0.8 and AB up 0.7 in Nielsen all outlet thru Mar 9. All this while traditional beer gets softer still. Volume down nearly 3% for 4 weeks thru Mar 9 in Nielsen. And AB and MC throwing more and more punches at each other, while light beers slip further (see below). But for all AB and MC’s flailing, the hottest action not even in beer per se. It’s in hard seltzer.  Seltzers are soaring. Especially White Claw.

One look at table below tells the big story of US beer biz in recent years: a ceaseless migration to the high end.  Relentless bbls and share shift to above premium explains AB and MC woes and current strategies, Constellation’s success (and Mike’s) and so much more.  It also drives virtually every player’s plans, across all tiers.  Only question for now: if and where high end tops out.  So far, no sign of that in spirits, where premiumization far more advanced.  But, as we noted last issue, low end of spirits hung in better than budget beer.  Second question then: just how much does mainstream shrink?

 

Since 2013, mainstream segments shed over 23 mil bbls, a 17% decline, and nearly 11 share of US beer biz.  Meanwhile, high-end segments gained almost 22 mil bbls. Up by one-third, grabbing that 11 share and hitting 43.2 in 2018.  In dollars, share shift even more dramatic.  Scan data suggests high end just below 50 share in off-premise (IRI) or just above (Nielsen), and well above that on-premise (about 2/3 in Nielsen CGA). 

 

Text Box: BEER SALES BY SEGMENT IN THE US
	   Bbls - 000	       Chg	Bbls	chg
	2018 	2017 	bbls	%	2013 	%
Imports	35,820	34,575	1,245	3.6	27,660	24.2
Craft	25,575	24,600	975	4.0	16,210	75.5
Superpremium	16,300	15,700	600	3.8	14,350	14.2
FMBs	9,300	8,650	650	7.5	7,770	41.9
Cider	1,875	1,730	145	8.4	1,200	142.0
     High End	88,870	85,255	3,615	4.2	67,190	36.6
Premium Regular	15,815	17,100	-1,285	-7.5	20,230	-20.5
Premium Light	58,085	61,375	-3,290	-5.4	70,255	-16.5
     Premium	73,900	78,475	-4,575	-5.8	90,485	-17.4
Subpremium Regular	20,500	21,350	-850	-4.0	23,790	-13.4
Subpremium Light	17,400	17,550	-150	-0.9	19,945	-16.6
Malt Liquor	4,425	4,675	-250	-5.3	5,410	-18.0
     Subpremium	42,325	43,575	-1,250	-2.9	49,145	-15.2
No Alcohol	760	775	-15	-1.9	825	-12.1
Total	205,855	208,080	-2,225	-1.1	207,645	-0.8
	     Market Share		
	2018 	2017 	chg		2013 	chg
Imports	17.4	16.6	0.8		13.3	4.1
Craft	12.4	11.8	0.6		7.8	4.6
Superpremium	7.9	7.5	0.4		6.9	1.0
FMBs	4.5	4.2	0.4		3.7	0.8
Cider	0.9	0.8	0.1		0.6	0.3
     High End	43.2	41.0	2.2		32.4	10.8
Premium Regular	7.7	8.2	-0.5		9.7	-2.1
Premium Light	28.2	29.5	-1.3		33.8	-5.6
     Premium	35.9	37.7	-1.8		43.6	-7.7
Subpremium Regular	10.0	10.3	-0.3		11.5	-1.5
Subpremium Light	8.5	8.4	0.0		9.6	-1.2
Malt Liquor	2.1	2.2	-0.1		2.6	-0.5
     Subpremium	20.6	20.9	-0.4		23.7	-3.1
No Alcohol	0.4	0.4	0.0		0.4	0.0

						

In 2018, high end picked up 3.6 mil bbls, a little over 2 share.  Imports grabbed almost 1 share, craft +0.6 even while slowing and superpremiums/FMBs 0.4 each.  Meanwhile, premium biz down estimated 4.6 mil bbls, -6%, lost 1.8 share.  Subpremiums off 1.3 mil bbls, -3% and gave up 0.4 share.  Note tho with Natty Light up, Keystone Light even and Busch Light down just slightly, subpremium light segment held share in 2018. 

  

                                                                                                Best Wishes, 

 

Worth takin’ a look at how off-premise retail biz shaped up thru Feb 23 in Nielsen all-outlet data (can’t conclude too much on 8 weeks of scans).  Recall, beer got off to solid start in scans as they included extra New Year’s weekend day.  That buy-in boosted Jan numbers, but mostly gone by late-Feb, as yr-to-date volume thru Feb 23 up just 0.1%, and down 2.1% for 4 wks.  Dollar sales healthier, +2.3% for 8 wks, tho -0.2% for most recent period.  So, latest data suggests retreat to 2017-2018 trends, while early signs suggest spirits growth continues apace.  Other notable points in early days:

 

Migration to Above Premium Accelerates  Above premium segments picked up 2.8 share of $$ thru Feb 23, 2.5 share of cases.  That’s more in both measures than in 2018.  Key to that: Michelob Ultra maintaining momentum/share gain, Modelo Especial too, plus...

 

Hard Seltzer’s Ain’t Flaggin’, So FMBs Still Rollin’  Seltzer-driven FMB segment $$ +18% YTD, adding 1.1 share of $$.  Three seltzer brands remain among top-10 growers: White Claw Assorted and Black Cherry, plus Truly Assorted.  Then too, segment leaders Mike’s Harder and Twisted Tea still strong, volume +10% and +7.6% respectively.

 

Imports and Cider Slow, Craft Stays Soft  Import trend shows signs of weakening.  Volume still +5.2% yr-to-date, but just +0.9% for 4 wks thru Feb 23.  Meanwhile, craft still sluggish, -0.3% yr-to-date, down 2% for 4 weeks.  Segment weighed down by Nielsen’s inclusion of Blue Moon, Leinenkugel and Shock Top brands.  But Sam Adams franchise, Sierra Nevada remain down YTD, -13% and -6% respectively. And big bucket of smaller craft players up just 1% YTD, flat for 4 wks.  Cider up modestly YTD, but back to negative for 4 wks.  Softer recent import trends reflect...

 

Possible Signs of Cooling Constellation, Plus Heineken, Stella Drops  Constellation share gains still solid, +0.9 of cases, +1 of $$ YTD.  But gain trends for 4 wks about half of YTD trends.  And Constellation gained less share of $$ than Mike’s.  This could reflect tuff, tuff Feb, especially in key Calif mkt (supported by anecdotal reports).  But when was last time Constellation up mid-singles for 4 wks?  Then too, HUSA trends still stuck in minus mid-single mode, and Stella now in the red.   

 

Mainstream Still Suffers, and May Be Getting Even Worse  Premium segment down 4-5% YTD, but slipped to -7% for 4 wks.  That’s a 2-pt deceleration vs 2018.  So far at least, mktg “corntroversy” hasn’t moved needle, at least in numbers, in way AB hoped.  Indeed, for 4 wks thru Feb 23 (including 3 wks after Super Bowl), MC share gain in premium light up a tick.  Bud Light -8.5%, Coors Light -6.6%, Lite -1.7%.  Meanwhile, economy segment sagging too, down 2% YTD.  Every major brand down, except Natty Light (Natty Daddy and Key Ice hot on small volume).  And economy drinker remains price sensitive, for sure: Pabst’s attempt to raise price on Blue Ribbon getting no traction so far.  Its volume -13.4% YTD.

 

Innovation Reigns (Mostly)  Hottest brands still mostly above premium innovation plays, including 3 seltzers, Corona Premier, Bud Reserve and Michelob Ultra Pure Gold.  Indeed, while total $$ sales up $105 mil YTD in Nielsen scans, those 6 brands, still mostly incremental, sold $74 mil between ’em.  Meanwhile, Michelob Ultra Light and Modelo Especial still goin’ good and Nattys grabbin’ extra volume. 

 

Mixed Bag for Smaller Players; Mike’s Afire  Not just big brewers hurtin’ in mainstream.  Yuengling Lager and Light down 2.5% and 11% respectively.  FIFCO, with brands spread across segments, -3% yr-to-date, about same as 2018 trend.  But Boston and Diageo Beer Co, which sell only above premium, maintained double digit growth in early going.  And Mike’s still hittin’ it outta the park.  Volume and $$ jumped 40%+, Jan-Feb, and Mike’s was lead share gainer in high end for most recent 4 wks (+1.3) and YTD (+1.2).  Outperformed both AB (+0.8, 0.9) and Constellation (+0.2, +0.7).

AB volume dropped 19.825 mil bbls, 18% in the decade since Anheuser Busch InBev formed in 2008It lost 8 share points, falling to 41 in 2018, INSIGHTS estimates.  Bud and Bud Light losses in US over 20 mil bbls in same period.  AB’s top 5 brands in 2008 dropped 26 mil bbls in last 10 yrs.  Yet despite these staggering stats, many distribs, AB employees and several industry observers believe AB has pivoted towards a better place.  AB does have some big things going right.  Number one: Michelob Ultra gained over 1 mil bbls in 2018 alone and continued to be #1 growth brand in industry.  Then too, AB captured half of innovation $$ in industry last yr in IRI, it said.  Also, AB bought 10 craft brewers in recent yrs, which collectively became #1 craft in scan data and outperform the segment.  And it’s moving rapidly to get beyond beer, with acquisitions in hard seltzer, spirits, wine, hard Kombucha, hard cider, energy drinks, tea too.

 

But in 2018, total AB trends scarcely better than they had been.  Sales-to-retailers finished the yr down 2.7%, compared to down 3.0% in 2017. And shipments down 2.35 mil bbls, 2.6% in 2018 alone.  Bud and Bud Light accounted for more than all of that drop.  Bud Light (down 2.2 mil bbls) and Bud (down 850K bbls) fell over 3 mil bbls between them.  They were half of AB volume.  Bud Light and Bud lost 1.15 share between ’em, AB figures, compared to 1.25 in 2017.  Means AB grew 700K bbls, 1.6% on other half of its biz, including Ultra, Natty and innovations all up. 

 

AB rev down slightly, -0.7%, in 2018 even as rev per bbl up 1.8%.  EBITDA down 2%, weighed down by “commodity headwinds and higher distribution expenses related to a tighter US freight market.”  ABI global revs up 4.8% for yr and EBITDA jumped 7.9% to $22 bil.  ABI expects to “deliver strong revenue and EBITDA growth” in 2019.  But globally own beer volumes up just 0.5% in 2018, compared to 4% growth at Heineken and Carlsberg up 5%.   

 

Investors rallied around ABI stock after better-than-expected results and strong 2019 guidance. Stock jumped 5% that day and 5% day after in “relief rally.” ABI initially tarred by Kraft Heinz problems (stock sank 28% in 1 day), since it was built by same Brazilian investors among lead investors in ABI. But at ABI, “efficiency was never an end in itself. It was a means to an end,” ceo Brito told Bloomberg.  Beer “has its challenges,” Brito said, “but compared to food and beverage, beer’s an amazing category.” Evercore ISI analyst Robert Ottenstein noted ABI’s “four points of contrast with KHC”: “ABI generates only 25% of EBITDA in US vs 75% for KHC 2) AB has invested heavily in sales and marketing and capex including in the US... as part of its pivot towards organic growth 3) Beer has a more attractive industry structure than private food... 4) ABI’s senior leadership has long tenure and deep understanding of beer category.” But questions persisted.  RBC’s James Edwardes Jones downgraded ABI and said he saw “little prospect of margin growth,” as ABI only grew margins because of M&A and synergies, according to him.         

 

Still, AB is losing less share in US.  Brito said “we are pleased to see our market share improving” in US.  AB mkt share declined 40 basis points in 2018, it figures, but only 20 bps in 4th qtr and Dec “better than that.”  ABI based share number on its depletions estimate of -1.8% for total industry (a steeper decline than other data sources).  AB down 0.7 share in IRI yr-to-date thru Feb 24, compared to 0.9 share drop in calendar 2018.     

 

led by Modelo Especial which jumped 12 mil cases, 13% to 110 mil cases (just 2 mil cases behind Corona Extra, will pass it this year). Modelo family grew double digits in 42 of 50 states and already has #2 share of voice on Hispanic tv.  In 2019, English language spending will be up 17%; brand will get 48% jump in investment on live sports.  And it is already top 5 NFL advertiser.  Digital will be up 30% too.  Modelo Negra climbed 8.8% to 5.9 mil cases.  Pacifico up 6% to 9.8 mil cases.  And Victoria up 8.3% to 3.4 mil cases. 

Constellation’s continued strong growth occurred amidst considerable organizational change.  Several symbols of that change on display at GNS. First, Constellation’s Rob Sands didn’t attend GNS for first time in yrs (Sands family controls voting stock of Constellation).  Rob just moved up to become exec chair of board.  New ceo Bill Newlands kicked off meeting, assuring distribs that beer remains “top priority” but also talking up big-time its Canopy cannabis investment. His chief growth officer Malika Monteiro spoke about Constellation’s increased emphasis on innovation, including adjacent products such as FMBs, tea, seltzer, canned cocktails.  Meanwhile, Constellation backed off from its TBA (total bev alc) initiative as retailers “did not find the value” in it, said cco Bruce Jacobson, instead finding Constellation missing selling oppys and “more complicated” (just what distribs said at outset).  But Constellation also still pushing “Shopper First Shelf Set” hard, tho it has “slower adoption rate than I expected,” said Paul.  At end of meeting, Bill Hackett got a rousing farewell standing “O” from entire crowd, in brief appearance with current prexy Paul Hetterich. Constellation cmo Jim Sabia spoke far more briefly, now that he is also mktg wine and spirits too (Jim still very much has his hand in beer).  Next yr, Gold Network Summit will be combined into one meeting.

“We have nothing but good news,” Constellation Brands Beer Division’s chief sales officer Bill Renspie declared at outset of this yr’s Gold Network Summit in Dallas.  Difficult to disagree in terms of their business performance in recent yrs.  Constellation Brands Beer Division grew about 10% in an industry that was down slightly. It captured 35% of total beverage alcohol growth in IRI, by far #1 gainer, almost 3x as much as #2, Fifth Generation (Tito’s), noted ceo Bill Newlands.  And it is #1 in high end, poised for even more growth. “The wave of high-end growth is even larger than we thought it would be,” said Bill Renspie, gaining 7.5% last yr, while low end (cases below $25 per case) down 3.9%. 

 

Constellation has a “growing and thriving core business” plus “consumer-led proven innovation” and will be “investing even more against both aspects of our business,” said Bill Renspie. That’s on top of fact that Constellation Brands Beer Division marketing budget doubled in last 4 yrs, said Beer Division prexy Paul Hetterich. There is “no higher priority” than beer for Constellation, said Bill Newlands and Constellation will “invest more aggressively than ever before” to “continue the momentum.”  Here are a few more “milestones” from prexy Paul: Modelo Especial now #1 in LA, #1 beer marketIt’s also #1 at 7-11, #1 brand in #1 chain in #1 channel on 52-week basis.  And 7-11’s top 3 SKUs are all Constellation.  In scans, Corona is “on the heels” of Coors to become #2 brand family. On avg, Constellation portfolio gained 1.2 share of $$ per yr for last 4 yrs. “We haven’t seen this in the industry for a very long time,” said Paul.  Only “AB grew faster.”  Note: Constellation grew 8.5 mil bbls, 67% last 5 yrs. Gained 4 share.

 

In all, Constellation Brands Beer Division hit 283 mil cases last yr, up 25 mil cases, 9.6% (near 2 mil bbls) in calendar yr depletions, said co. Health of Constellation’s portfolio broad-based: Corona family gained 8%, 11 mil cases to about 147 mil cases, said Bill Renspie, spurred by Corona Familiar climbing to 12.8 mil cases and Corona Premier rocketing to 7.8 mil cases (550K bbls) in its intro yr.  Corona Extra down 2% and Corona Light down 10% as Constellation did “disrupt our business intentionally,” said Bill.  Those 2 brands dropped 4 mil cases. But can “return to growth,” according to veep Ann Legan. Constellation “significantly increasing our investment” on Corona and will have #1 share of voice on NBA.  Corona Premier an “absolute home run,” said ceo Bill Newlands. “We’re just getting started,” said Beer Division prexy Paul Hetterich.  Spending on Corona Premier will be up to $40 mil in 2019 from $35 mil in launch yr. FMB Corona Refresca going natl and will get $15 mil in support.  (Editor’s note: Constellation brand depletions #s reported here differ slightly from shipments #s INSIGHTS reported last issue.) 

 

 

With spirits getting such strong growth and taking share from beer, many figured only a matter of time before AB got into game.  That happened this week as AB will buy fast-growing San Diego-based Cutwater Spirits, started by the folks who founded Ballast Point. “As an innovator and disruptor in the spirits space led by executives with a rich history in beer, we couldn’t think of a better partner for AB’s first big step into spirits,” chief sales officer Brendan Whitworth wrote distribs.  Cutwater only founded in 2016 as Ballast founders abruptly left shortly after Constellation bought it for $1 bil, founders still owning spirits brands.  In short time, Cutwater built another intriguing biz, with canned cocktails “the majority of the business,” said Cutwater’s Earl Kight. That’s the “rationale for the transaction,” opined Jefferies analyst Edward Mundy.  Tho Cutwater also sells hi-end bottled spirits (and NA mixers), “we do not see an immediate focus on driving spirits sales,” he added.  It is “an opportunity to continue to learn about the spirits category.”

 

See enclosed flyer to reserve your seat at our 2019 Beer Insights Spring Conference, May 15-16 in Chicago.                             

                                       Best Wishes,      

 

Among factors cited by David: brand authenticity/heritage; unique experiences; millennials attracted to luxury; improved access; growth of craft distillers (over 2800 now); diversity provided by categories/cocktails.  Sharp growth in high-end spirits volume and sales last yr (top two tiers up 7-8% in volume, 9-11% in $$) “screams millennial buying habits,” David commented.  While millennials may be trading up in beer too, they sure ain’t driving category growth, at least not yet.


States Dropping Sunday Sales Bans, But Some Colleges Ban Liquor  Finally, distillers continue to score policy victories.  In 2018, tax proposals defeated in 19 states, saving the industry $540.4 mil, Council claims.  Sunday sales bans disappeared in IN and TN.  Already this yr, WV’s Senate voted to drop Sunday sales ban and VA gov signed law that makes entire state wet (impacting 31 counties), tho localities can opt-out.  Less publicly tho, spirits losing some ground on equivalence battle as more colleges ban liquor, believing it is the source of most alcohol-related problems.  The latest: fraternities at Montana State University adopted voluntary ban, “joining a national trend fueled by hard alcohol’s links with sexual assaults and hazing deaths,” as Bozeman Daily Chronicle reported.  Note too: The North American Interfraternity Council passed a resolution that by Sep 2019 its members must bar drinks with ABV over 15% at events unless served by licensed 3d parties, according to Chronicle of Higher Education.