While total beer biz soft, Constellation Brands Beer Division trends still strong in 1^st qtr 2015, tho up at a little slower pace than last yr’s 9% depletions growth so far.  “YTD volume growth is over 8%,” exec veep Bruce Jacobson wrote distribs today, while avg total distribution only up 6.2%, “which means we are falling 2 points short of distribution vs volume.”  Recall, major objective of Constellation for distribs to grow distribution at least at same rate as sales.  “Is your distribution leading or trailing your volume trend?” That’s what Bruce asked at Gold Network Summit about 1 month ago.  Constellation’s strong growth rate still not spread evenly thruout US; in last day or so INSIGHTS has talked to Calif and Fla distribs up more like mid-teens on a big base.  Means many other parts of US not doing anywhere near as well. 

The 2015 Beer INSIGHTS Spring Conference, focused on the exciting high end of the beer biz,  will take place May 11-12 at the Ritz Carlton in Chicago.  Don’t miss interviews, panel discussions and presentations including top high end execs: Constellation’s Bill Hackett, Boston Beer’s Jim Koch, Heineken USA’s Dolf van den Brink, AB’s Felipe Szpigel, Tenth and Blake’s Scott Whitley, Mikes’ Hard Lemonade’s Anthony von Mandl, Firestone Walker’s David Walker, Revolution’s Josh Deth.  The conference program will feature the industry’s leading high-end players, keen quantitative analysis, actionable insights and much more.  Get up-to-date with the latest high-end trends and network with your peers at the Beer INSIGHTS Spring Conference. Space is limited. Click here for more information and click here to reserve your spot.

To surprise of no one, distillers also want Congress to reduce their fed excise taxes.  Distilled Spirits Council (DISCUS) and American Craft Sprits Assn (ACSA) announced joint effort “to pursue tax legislation that sets a small producer tax rate for $2.70 per proof gallon on the first 100,000 gallons and a top rate of $9 on all spirits above the 100,000 gallon threshold.”  Current tax rate is $13.50 per proof gallon, so this is a 33% cut on most spirits, 80% for the small players.  DISCUS figures current fed tax is about $2.14/bottle and all in, taxes represent over 50% of typical spirits cost.  The two assns play up unity angle, without explicitly alluding to BI/BA spat over dueling beer bills.  “Importantly,” they point out, “the two trade groups agreed that these rates should apply to all distillers regardless of size, and to imported spirits as well as domestic products.”  That ain’t all.  Capitol Hill will “welcome” distiller “unity,” claims DISCUS prexy Peter Cressy, since in DC “all too often, partisanship and infighting seem to dominate the discussion of important issues.” ACSA prexy Tom Mooney sez tax effort “one of many ways small and large distillers are working together to ensure fairer treatment for the entire spirits industry.”  Language is being developed and sponsors being wooed as we write.  Can wine be far behind?           

Battle over Ky branch ban bill was short, sharp and expensive.  During just first 2 mos when Ky general assembly in session, AB spent $290,908 in lobbying expenses including $261K on ads, reports Legislative Ethics Comm, reported by Courier Journal.  That was most spending by far for any single group lobbying Ky pols/public.  And combined spending of Kentuckians for Entrepreneurship & Growth (coalition of brewers, distribs and retailers) plus Kentucky Beer Wholesalers (non-AB distribs) hit $192,922, with KEG spending of $117K and distribs assn ponying up $76K.  So beer battle, prompted by purchase of 800K-case Owensboro distribs, cost almost half-mil dollars in declared expenses in Ky Jan-Feb 2015.  There was lots more last yr in runup to branch battle plus plenty more time/$$ spent outta St Lou/elsewhere.  And may not be over yet, depending on whether AB goes to court.   

There have been about a dozen craft transactions for part or all of a company since Jan 2014.  But latest twist is new to us.  Fast-growing Oskar Blues of Longmont Colo is both a buyer and a seller at the same time.  Oskar Blues bought Mich craft brewer Perrin in conjunction with Fireman Capital Partners and ex-Mich beer wholesaler Keith Klopcic.  At same time, Oskar revealed that it had sold undisclosed stake to Fireman Capital, which already owns a majority of 2 other craft brewers, Wasatch and Squatters.  Oskar looking to make other acquisitions.  Question of whether Oskar or Fireman is driving the bus may be material to some potential sellers, but no details revealed.  Oskar put up some big growth numbers over last 5 yrs, up 120,000 bbls to 149,000 bbls last yr.  It already built a 2d brewery in Brevard, NC.  But now it’s taking the next step in its evolution.  Also interesting to note that Keith Klopcic will be at least 4^th ex-AB distrib who has taken interest in a craft brewer after selling his interest in AB distrib.  

Dolf’s big step up has to be seen in context of sweeping global changes announced overnight. And those changes follow “slowest revenue growth in seven years,” wrote Financial Times. Chief mktg officer Alexis Nasard (also prexy of Western Europe) will leave “to meet his ambitions outside of the company,” sez Heineken. Heineken will combine mktg and sales roles in 1 exec, Jan Derck van Karnebeek, formerly global chief sales officer and head of Eastern Europe. Heineken will go from 5 regions to 4 globally, combining Western and Eastern Europe.  Stefan Orlowski, President Americas “will lead this region.”  Marc Busain, previously managing director of Heineken in Mexico becomes President Americas.  Their promotions created opening for Dolf. 

Meanwhile, Chief strategy officer Chris Barrow will leave in July as now “strategy development will be embedded in the organization.”  Current prexy of Africa Middle East “will retire as planned in August 2015” and Africa will be combined with Russia/Belarus.  There are several other exec musical chairs. Remember, cfo Renee Hooft Graafland had earlier announced his departure to be replaced by Laurence Debroux.  That means 4 of Heineken’s 12 exec committee will have changed and several others gotten new roles by this summer. Changes announced today “will allow the business to better focus on growth opportunities to be more agile in responding to consumer needs in the marketplace and be more cost-effective in doing so,” sez Heineken. 

Frontpage Wall St Jnl business section feature this morn doesn’t exactly strike an upbeat tone.  “MillerCoors has a problem: It hasn’t named a new CEO. It’s the latest sign of trouble” at MC, article begins.  Search for Tom Long’s successor began last September, WSJ reveals.  And “process has been slow.”  In the 7 yrs of its existence, MC JV “able to wring about $1 billion out of costs, driving profit increases for six years straight.”  But now “much needed investments in marketing and IT are undermining those cost savings…. Even after seven years the joint venture hasn’t been able to integrate the companies ordering systems….  Mr. Long concedes the companies ‘underinvested’ in IT for years and tried to ‘Band-Aid’ the systems together before approving a new system that will be available next year.” 

SABMiller gets just 12% of earnings from MC, while MolsonCoors relies on MC for 44% of EBITDA.  That “led to different views of running the business.” SABMiller’s 5 board members “favored a plan to balance the maximizing of profit with reinvestment in the business.” But Molson Coors’ five members “wanted higher profits. Ultimately the board approved a balanced plan,” according to WSJ, citing “a person familiar with the board’s thinking.”  That means it approved plan that only calls for level earnings in 2015, INSIGHTS understands as it ups mktg and IT investments.  Meanwhile, co has “shortlist of candidates” for ceo, sr veep Pete Marino told WSJ and the board as “harmonious” as ever, he added, amidst record profits.  

Hadda happen sooner or later, especially considering some of rave comments that Heineken’s global ceo Jean Francois van Boxmeer gave Dolf at natl distrib conventions. Heineken USA prexy Dolf van den Brink ran US since Sep 2009.  He took co from some big declines prior to his arrival to stabilization and even some growth.  Now he’s movin’ on up.  Dolf will become ceo of Cuauhtemoc Moctezuma/Heineken in July.  Mexico has become global Heineken’s biggest operating unit with 16,000 employees (following purchase of FEMSA beer assets). So this is big promotion for Dolf, who is just in his early 40s.  

Dolf’s replacement here in US will be Ronald den Elzen, a 20+ yr Heineken vet, most recently managing director of Portugal.  His aim at HUSA is “to ignite future growth.”  That growth hasn’t always been easy for Heineken USA.   Total HUSA up about 350,000 bbls, 4% since 2011, but still down nearly 850,000 bbls from peak in 2008 (yr prior to Dolf’s arrival). 

HUSA’s biggest brand successes under Dolf’s watch were clearly with its Mexican portfolio.  FEMSA brands grew 725,000 bbls, 27.5% in just last 3 yrs, even as total HUSA volume up 350,000 bbls.  Dutch brands have mostly declined for about a decade, but Heineken back in “black” last 9 mos of 2014 and Heineken Light trends vastly improved following launch of ads with Neil Patrick Harris.  Total HUSA grew 1% in 2014, and HUSA natl distrib convention included ambitious growth goals.  So Dolf leaving on an up note.

Dolf also a change agent for HUSA.  He radically altered mgt team and pushed portfolio approach.  “Together, we have transformed the business,” Dolf wrote distribs this morn. “Thanks to your continued partnership and dedication,” Dolf continued.  HUSA “has experienced an impressive business turnaround, restoring top line growth and consistent market share gains. We’ve become a true portfolio company.”  Dolf and Ron will work together over next 3 mos.  (See below for our writeup, regarding global changes coinciding with Dolf’s move.)

Interestingly, with announcement of Dolf’s departure, 4 of top 5 US brewers/importers will have new top execs in 2015.  Joao Castro Neves started at AB in Jan, MC still looking for a replacement for Tom Long, expected to retire Jun 30 and Eugene Kashper took over as Pabst ceo last Nov.  Only Constellation Brands Beer Division prexy Bill Hackett still running the show for the Modelo brands in US as he has for many yrs. 

The 2015 Beer INSIGHTS Spring Conference, focused on the exciting high end of the beer biz,  will take place May 11-12 at the Ritz Carlton in Chicago.  Don’t miss interviews, panel discussions and presentations including top high end execs: Constellation’s Bill Hackett, Boston Beer’s Jim Koch, Heineken USA’s Dolf van den Brink, AB’s Felipe Szpigel, Tenth and Blake’s Scott Whitley, Mikes’ Hard Lemonade’s Anthony von Mandl, Firestone Walker’s David Walker, Revolution’s Josh Deth.  The conference program will feature the industry’s leading high-end players, keen quantitative analysis, actionable insights and much more.  Get up-to-date with the latest high-end trends and network with your peers at the Beer INSIGHTS Spring Conference. Space is limited. Click here for more information and click here to reserve your spot.

Attempts to raise taxes on beer and other alc bevs haven’t been too popular, or successful, in recent years.  But desperate times call for desperate measures and Kans is facing especially severe fiscal pressures.  So Gov Brownback backed proposal to raise tax on alc bevs by 50%, from 8% to 12%.  Industry is pushing back, natch.  Kans Beer Wholesalers Assn part of alc bev coalition across tiers to fight tax, reports The Hutchinson News.  Avg cost of “a beer at the bar” would jump about a quarter, mixed drink price would jump 50 cents, KBWA’s exec director Jason Watkins told paper.  Lotsa jobs at stake too, KBWA and others warn.  Distribs are providing “Ax the Tax” coasters to retailers that point out already-hefty current costs of taxation in state (49% of retail cost).  When buyers trade down to lower-priced brands, distrib Bob Bush (City Bev) suggested, raising sales tax % won’t raise revs. Not surprisingly, not a lotta support for tax hike, paper reports.  “We remain optimistic and hopeful that [the tax hike] doesn’t go anywhere,” Jason said.