Molson Coors today named Geoff Molson chairman of the board in a “planned transition” and Pete Coors will become vice chairman.  They alternate roles on a “rotating two-year term.”  

Interesting analysis from consultant Bump Williams in latest missive to clients shows that “while the breadth and frequency of promotions may have increased since 2010” in IRI all outlet data, “the one metric that has shown a consistent decline is the depth of discount.”  In other words, beer shoppers are seeing more promotions and they’re lasting longer, but they’re not as deep as they used to be.  In 2010, discounts averaged 50 cents/case on avg case price of $20.10 or 2.5%.  But by Q1 2015, that drifted steadily down to 35 cents/case or just 1.5%.  Net-net: avg discounts didn’t “keep up” with avg price increases which rose as result of both price hikes and trade-up.  This combo “allowed the beer category to maintain strong dollar growth each year that is consistently outpacing the trend of volume sales.”  But it likely hurt mainstream and especially below-premium volume, Bump suggests.  He kicked off analysis by showing that $$ growth during this period driven by base sales (without any promotion).  But “incremental sales (promoted volume)” declined in toto and as share of total sales, again mostly in premium/subpremium segments.  Yet there have also been incremental sales declines across “almost all segments.  These decreases can be directly attributed to a declining trend in sales lift across all promo tactics, particularly Feature Only and Feature and Display.” 

So, are the “old ways” just not working any more, or are the discounts just not deep enough to build volume?  Smaller discounts have “mitigated the dollar loss in recent years” in premium segment, Bump sez.  But big brewers’ attempts to trade up subpremium buyers, the hardest hit consumers by economic downturn, with “unusually high price increases” just “did NOT happen.”  In fact, “we priced ourselves out of this shopper’s ability to pay more,” Bump believes, “and probably lost them to low priced 1.75 ml Spirits category.”

Tecate franchise saw big pop in week immediately following its $6 mil sponsorship of Mayweather-Pacquiao fight, HUSA cmo Nuno Teles told INSIGHTS.  Tecate & Tecate Light up 14.5% in Nielsen foodstores for 1 week thru May 9, up 45.6% in Wal-Mart same week, significantly outpacing Corona and Mexican imports.  Total Tecate depletions up 25% for that week.  Recall, Tecate franchise up 8% in Q1 and 20% in Apr, prexy Dolf van den Brink told our Spring Conference. 

Looking at strong results leading up to fight, Nuno credited combo of ads (“good air cover”), social media, distrib execution, retail display and the event itself with generating big results. So Tecate had “multiple touch points” with consumers, including 6.8 mil views on social media in 3 weeks leading up to fight, 550,000 visitors at MGM Grand in Las Vegas in week leading up to fight, sampling 70,000 consumers, displays and increased presence in 6,000 stores.  Tecate Light “continues to stay on fire,” up near 50% in 4 week period leading up to fight.  As big as pop was in week(s) leading up to fight, gotta note that with very soft beer sales in Calif and Tex in May, Tecate also took hit, according to numerous sources.  While Nuno didn’t provide numbers for May, he did acknowledge effect of “unexpected amount of rain” in Calif and disastrous flooding and weather in Tex. 

Strong Strongbow, Dialing Up Diablo  Strongbow up 117% in Nielsen yr-to-date, Nuno told INSIGHTS, citing “big lift” as soon as HUSA started showing ads with Patrick Stewart.  “Rate of sale increased significantly.”  Also Strongbow variety pack is 2d largest after just 2 mos.   Even with recent cider slowdown, HUSA sticking by statements that cider will triple to 3 share of US beer.  This is about the “long run” and “will not be an overnight” development, but given that “we know sources of volume,” (i.e. largely outside beer), HUSA betting big that cider growth is sustainable and that Strongbow’s position within cider will strengthen. HUSA has also recently intro’d Diablo Chelada, which Nuno called a “very important initiative” that is “above our initial target” and HUSA has “huge plan” to grow in this space, another adjacency to beer. 

While shipments picture improving and lotsa folks in financial community and elsewhere continue crowin’ about supposedly improved US beer macro-environment, some stubborn facts keep rearing their ugly heads and reminding that beer biz still has ways to go to get to growth in 2015, unfortunately.  Tex and especially Calif had horrific May trends as INSIGHTS reported. Now here comes more evidence of persistent, indeed worsening weakness on-premise.  Beer volume down 5.7% for 4 weeks thru May 17, reported GuestMetrics. Now down 5.3% for 12 weeks.  That’s a pretty awful trend, and almost 2 points worse than 3.4% drop last yr.  Why?  “Consumers continued to hold back spending in this channel,” said GuestMetrics ceo Bill Pecoriello. Traffic in restaurants/bars down almost 3% for 4 weeks, so “question is whether higher wage rates and an improved economy will bolster on-premise sales over the next few months,” said Bill.

Premium lights share losses have moderated compared to last yr.  Down 1.3 share latest 4 weeks, compared to 1.9 share drop last yr. But to lose over 1 share in a -6% environment suggests trends for premium lights still very soft indeed.  Craft share gains have moderated to 1.1 for last 4 weeks, compared to 1.8 gain in 2014.  Craft not up much if at all in GuestMetrics now either.  But recall, tasting rooms are key source of growth for craft brewers on-premise and GM data doesn’t track many of those.  So craft gains likely better than this data would indicate.  On other hand, big brewers non-existent in many craft-centric accounts, so their share losses likely to be steeper overall than GM data indicates.  Cider also slowed to 0.2 share gain in GuestMetrics data.

Another solid gain for imports in Apr reduced yr-to-date total US beer decline to less than 1%.  Imports up 196K bbls, 7% in Apr, reports NBWA’s Lester Jones based on Commerce Dept data.  That pushed 4-mo gain to 1.1 mil bbls, 11.3%, offsetting about 2/3 of 1.5-mil-bbl drop in domestic shipments.  So total 4-mo US beer dropoff now just 470K bbls, 0.7%.

Mexican trend cooled a bit in Apr, up just 4%.  But Mexican shipments still up nearly 700K bbls, 12% for 4 mos.  Dutch biz continued up mid-singles in Apr and up 87K bbls, 6% yr-to-date.  Belgian shipments jumped 43% in Apr; gained 113K bbls, 17% for 4 mos.  Canadian shipments +10% YTD and even German shipments +15%.  All in, imports remain healthy, have passed 15 share of US beer and on track for another strong year.      

Cider category continues to grow and gain share in scans, however most recent batch of data pinned category growth far slower than it’s been in recent mos and dramatically lower compared to last coupla yrs.  Tho growth still strong, raises questions about just how high is up for cider.  Cider $$ up “just” 23% in latest 4 weeks compared to +40% YTD and +51% for 52 wks in IRI multi-outlet + convenience data thru May 17.  Recall, cider was up 73% in 2014 and 100% in 2013 IRI MULC data. 

Boston Beer’s Angry Orchard remains dominant player, representing roughly 60 share of category $$, tho its trends have slowed markedly as well; flagship Crisp Apple trend has gradually slowed all yr to $$ up 35% YTD (30% for 4 weeks) vs +55% for 52 weeks.  Recall, Crisp Apple was up 86% in 2014. But cider category’s big slowdown in latest 4 weeks largely attributable to a coupla AB & MC entries that’re startin’ to cycle last yr’s launches. AB’s Johnny Appleseed and MC’s Smith & Forge quickly became among top cider brands last yr, and this year they’re still up 200%+ and 100%+ respectively YTD.  But in latest 4 wks Smith & Forge trend just +3% and Johnny Appleseed actually declined 19%.  Then too, AB’s Stella Cidre $$ only up 2% YTD and declined 16% in latest 4 weeks.  Everything else has stayed relatively constant in cider category at the top.  C&C Group has consistently been down 15% YTD, Crispin’s up low double-digits all yr, still a fair amount smaller than other top cider brand families and Heineken’s Strongbow brands have been flyin’ this yr, tho we didn’t see latest 4 weeks on Strongbow.  Stay tuned.   

Two deals in works for a long, long time finally closed.  Manhattan Beer acquired assets of Windmill including beer brand distribution rights for Heineken USA, Miller brands, DGUSA, Brooklyn, Anchor and others, distributed thru Phoenix Beehive entities.  Deal closed last night.  INSIGHTS first reported deal back in Sep; it was officially announced in Dec.  Went thru 3 mos of intensive US Justice Dept review.  There were many twists and turns, even a near collapse.  But finally it’s done, creating a much bigger, more powerful beer distribution entity in metro NYC area.  Manhattan Beer will now be 45+-mil-case beer distrib with unified MillerCoors, Constellation, HUSA portfolios throughout metro area as well as many other suppliers.   Recall, Windmill had been partly owned by Heineken (15%) and MC (5%), but mostly by Brayman family.  While Heineken and MC exited their ownership stakes, Brayman family retains shares in a new Manhattan Beer. 

Manhattan Beer selling 120K cases of Presidente to Anheuser Busch, which will then sell to many of surrounding AB distribs, tho perhaps a couple of exceptions.  Manhattan will also sell small amount of Spaten, Franziskaner, St Pauli to AB, INSIGHTS understands.

Meanwhile, another deal announced over a yr ago, Reyes Holdings deal to become a major Coke bottler in Chi metro, also closed.  Reyes Holdings has formed Great Lakes Coca Cola Distribution, a wholly owned subsidiary, which has “formally transitioned territories” in greater Chi and NW Ind and will now sell Coke, Fanta, Sprite, Zero, Dasani, Powerade, VitaminWater, Monster, etc brands.  This is “new line” for Reyes, which between beer and food, already “delivers” over 800 mil cases across several continents.

Been getting some crazy reports of big declines in Calif in May that are partly related to weather and 1 less selling day, but still don’t explain size of some of drops we’re hearing about, including double digits down on premium lights.  Recall, AB stepped up pricing activity in Calif in May, including 20-pack pricing of Bud and Bud Light below 2012 levels.  But at least last mo, discounting didn’t provide a lift; trends got worse. 

Long and winding road to moving brands in OH continues for Pabst.  It just filed answer to lawsuit brought by half-dozen distribs in March who argued Pabst’s current owner Blue Ribbon LLC not a “manufacturer,” not a “successor manufacturer” that can terminate distribs without good cause and didn’t give proper notice in any case.  In May 26 answer, Pabst mostly denies all allegations brought by distribs but also argues it is a “manufacturer” and a “successor manufacturer” after deal closed Nov 14 last yr and that it did give proper notice (within 90 days of closing).  Pabst also insists it sought to “negotiate in good faith” over what Oh law calls “diminished value” of those distribs’ bizzes after losing brands, but distribs “refused to negotiate in good faith.” So Pabst seeks “judicial determination of the diminished value to which each of the Plaintiffs is entitled.”  Ohio courts have looked at successor manufacturer issue many times, including with same distribs and earlier Pabst owners (distribs won).  But “diminished value” hasn’t been litigated much.  In most recent case, recall, Fed Ct determined value of NAB brands was less than what NAB had actually paid distrib Bobby Fisher.  In that case, court determined NAB brands worth approx 2.5X GP, tho Fisher sought much higher multiple. 

Then too, distribs on two tracks here.  They not only filed Mar 2015 complaint, but they’re also continuing earlier case they had won vs previous Pabst owners when court determined Pabst didn’t give proper notice.  So they’re seeking “further relief” based on what they view are “virtually identical” disputes.  Current owners of Pabst, natch, insist current terminations “have nothing to do” with previous ones.  Meanwhile, brands have not moved.    

The alcohol-pot debate continues to take its own twists and turns.  As we reported earlier this week in our Alcohol Issues INSIGHTS publication, a pro-pot advocate in South Dakota is proposing a ballot initiative there to ban sale of alcohol.  His view: if state willing to jail people for smoking a “benign herb,” people should “face the same penalty” for buying, selling and/or consuming a “deadly drug” like alcohol, according to Argus Leader.  (An anti-tobacco advocate is also proposing to ban tobacco in the state.)  Meanwhile, at a city council hearing in Boston yesterday over whether the city should levy a new sales tax on alc bevs, “the most vocal opponents”  to the tax “suggested waiting for the likely legalization of recreational marijuana to see what kind of tax yields pot sales could have,” reports on-line news site Bostinno.   Exec director of Mass Package Store Assn said: “I would think that if, and when” recreational use made legal, “there’s an opportune time to take a look at how that product is taxed.”  Gotta note too that alc tax being pushed as way to pay for prevention/treatment of broader drug problems, tho proponents also discussed alcohol abuse stats in the state.  This tax debate looks like new spin on “pay to play,” with policymakers and at least some in the biz wanting consumers to pony up.