Announcement today that AB InBev, SABMiller, Heineken and Carlsberg will provide nutritional info about their brands in Europe – via website and/or labels – combined with Diageo’s plan to use a “Serving Facts” label for its spirits and beers in the US, raises some interesting questions.  Recall that TTB allowed a voluntary “Serving Facts” label back in May 2013.  That label allows producers to include not only nutritional info about calories, carbs, protein and fat, but also alc content by volume, alcohol per serving and more.  Diageo has long supported such labels.  US brewers (owned by the same global brewers now acting in Europe) have long balked, arguing that Serving Facts are not true facts, but play into notion of “standard serving” (which they don’t believe exists in the real world) and thus “a drink is a drink” and tax equivalency. 

And so, the questions.  Why these announcements now, from Diageo and the global brewers?    Diageo sez consumers are “increasingly discerning about what’s in their glass” and Diageo is “committed to ensuring consumers have the best possible information on labels.”  The Brewers of Europe (BoE) say they want to give consumers more info, reports the Wall St Journal.  Analysts suggest the brewers want to “get ahead of European regulators after recent crackdowns on high sugar drinks and fatty foods.”  It’s up to individual brewers how much info they’ll put on labels and/or websites, reports WSJ, tho many brands “will display labels with full nutritional information on their packaging,” a BoE official told the paper.  Will that “full nutritional information” include alcohol content info?  If so, will it track the similar “alcohol per serving” data Diageo will disclose in the US?  And how does this resonate with the Beer Institute’s “Know Your Drink” efforts to counter Diageo’s standard drink” endorsement?  Stay tuned.  

Molehills can quickly look like mountains under the kind of scrutiny currently paid to small brewers, particularly in thorny trademark dispute dept. But everything is not always what it seems, even in govt trademark filings.  For example, there’s no real dispute between Fort George Brewing in Oreg and Sierra Nevada, despite lengthy report in Law 360 and elsewhere.  In fact, Fort George and Sierra Nevada working on finalizing “coexistence agreement” to live and let live. “We’re working on a coexistence situation, mutually beneficial to both,” Fort George co-owner Chris Nemlowill told INSIGHTS. “Sierra Nevada is great to work with.  There are no issues whatsoever.”  And Sierra Nevada spokesman Ryan Arnold said: “Here’s the gist: there isn’t a dispute and goodwill prevails.” 

Here’s what generated the buzz: over weekend, small Oreg brewer Fort George filed an opposition to Sierra Nevada’s application to trademark “4-WAY IPA,” as Law360 reported. But behind scenes, the two co’s have been working together for months to figure out how Fort George’s 3-WAY IPA and Sierra’s 4-WAY variety pk can co-exist. The 2 applied for respective trademarks within months of each other; Sierra’s was approved first in late Sept. So Fort George had 30 days to either file an opposition for an extension of time to oppose, in order to keep its own application alive. It got first 90-day extension just within that 30-day limit, then filed for another, final 60-day extension.  That’s what lapsed over the weekend. Fort George filed “opposition” as a “federal formality since we didn’t finalize the agreement within a certain time frame,” said Sierra’s Ryan Arnold.  So seems like everything is gonna work out fine. 

Lotsa folks speculating anew on what KraftHeinz deal means for beer M&A with sharply divided opinions. Yesterday we featured Nomura saying deal “rules out a bid for SABMiller,” but Evercore ISI’s Robert Ottenstein had much different view also worth noting (recall Robert was formerly ABI veep of investor relations).  “ABI and 3G are separate corporate entities,” he reminds.  “We see no impact on the odds of a potential ABI acquisition of SABMiller.”  Tho UK press had reports last mo that 3G “raising funds” to “participate” in SAB acquisition “we never viewed this as a credible scenario.” And 3G doesn’t “own or control ABI” tho its founders are biggest shareholders with 26% of shares outstanding.  Who’s right? Those who know ain’t sayin’, so we’ll see.  

Domestic brewers have deep shipments hole to dig out of after first 2 mos of 2015.  Good thing they have 10 mos to do it.  Domestic brewers’ taxpaid shipments down another 950K bbls, 7.1% in Feb, estimates Beer Inst, following 920K-bbl, 6.7% decline in Jan.  That’s right.  Before any possible March madness came the Jan-Feb flop, a -1.9-mil-bbl, -6.9% stinkeroo.  Jan import gain offset that by just 300K bbls.  Oddly, that’s not a record early stumble.  Indeed, as recently as Jan-Feb 2010 shipments tumbled 2.1 mil bbls, 7.3%, going against easy comp of -2%.  This yr, comp was tuffer +500K bbls, +2% as AB built inventories in Q1 last yr. 

Recall, AB said it would be down mid-single digits in Q1 this yr.  That’s well over 1 mil bbls and probably a sizeable chunk of the Jan-Feb dropoff.  But no matter how you look at it, -7% is a bummer of a beginning, especially with ostensibly improving economy for beer drinkers, lower gas prices, etc.  For 12 mos, taxpaids are off 3.5 mil bbls, 2%.  The import and cider gains during that period slice industry falloff to about 600K bbls, 0.3%.  But note that running 12-mo trend went from plus to minus very quickly with this very soft Jan-Feb.  

Kentucky just passed a law that mandates ignition interlocks – which prevent drivers at specific BACs from starting their cars – for repeat drunk drivers.  MADD and others say they should be put on cars of all offenders, including first-timers.  But a group of researchers is now suggesting interlocks be put on all new vehicles.  Their new study claims such a measure would save 59,000 lives and more than 1.25 mil injuries (84-88% reductions in these measures) over 15 years, plus save $342 billion in injury-related costs “attributed to drinking drivers.”  What’s more, “cost savings outweighed installation costs after 3 years,” they say.  These are massive reductions and are likely to increase pressure to mandate interlocks in all vehicles.  That’s especially true if the technology improves to where systems are passive and cost is as low as the $400 per vehicle that researchers claim. 

Civil libertarians and some in alc bev biz (primarily American Bev Inst) have long viewed interlocks as faulty and a slippery slope.  New research can be challenged on several grounds, but the numbers are huge and the authors insist they “reinforce the need to expand current interlock programs and consider primary prevention applications.”  Such a policy still years down the road, and cost remains issue, but authors point to “high acceptability” of interlocks in US and suggest some interim steps, like broader/longer mandates for drunk drivers, putting interlocks on cars driven by young people with graduated licenses (tho they’d likely go on parents’ cars) and possible “trial program” for govt vehicles.  Expect these findings to create more debate/action on interlocks, plus more advocacy for zero tolerance for any drinking and driving.  Details on this study, plus other zero tolerance issues and latest developments on pot legalization in current edition of our Alcohol Issues INSIGHTS letter.  E-mail us at This email address is being protected from spambots. You need JavaScript enabled to view it. for sample issue and more info.       

KraftHeinz will be the name of public co with $28 bil in annual revs, after complicated deal merging the 2 cos, announced this morn. Warren Buffett’s Berkshire Hathaway and 3G Capital will invest $10 bil and there will be special dividend of about $16.50 per share to existing Kraft shareholders.  Heinz will own 51% and Heinz ceo will run merged co. 

Recall, the principals of 3G are the largest shareholders of ABI.   Of course, some are already writing that this deal makes ABI-SAB much less likely.  SABMiller stock down over 1% today. “This move supports our thesis that the Brazilians are focusing on expansion outside beer and will use ABI as a cash machine… we think this rules out a bid for SABMiller,” said Nomura’s Ian Shackleton. “We see some risk to SABMiller’s share price as bid speculation is likely to unravel.” 

In interview on CNBC, legendary investor Warren Buffett detailed how his firm had invested $4.25 bil in Heinz and now $5.2 bil in this deal.  That will leave Berkshire with 320 mil shares, or 26% of merged co.  “We will be in this stock forever,” said Warren.  CNBC started asking Warren about other potential future deals for Campbell’s and General Mills, but Warren deflected questions.  Deal came together in just last mo or so, Warren said, and is expected to close in 2d half. 

Once again, Warren had high praise for his partners in 3G for their “ability” and “integrity,” calling them a “perfect partner.”  KraftHeinz will undoubtedly go thru same rigorous cost-cutting steps as other 3G entities.   Indeed, “significant synergy potential” includes estimated $1.5 bil in “annual cost savings” by the end of 2017, the cos said. “Synergies will come from the increased scale” of new org, “sharing of best practices and cost reductions.” Sound familiar?  

Tuff 4-week period for beer biz and especially top 2 brewers in latest scan data (and in all channels, INSIGHTS hears).  Beer down 1.3% for 4 weeks thru Mar 15 in IRI multi-outlet + convenience, reported Morgan Stanley.  AB volume down 3.3%, MillerCoors down 3.2%.  Looks like some of that optimism that each liberally doled out at their recent natl conventions not based on most current trends.  Indeed, INSIGHTS hears that Feb a brutal mo in beer biz overall, tho at least Mar improving somewhat.  AB and MC volume down 1% and 1.4% respectively for 12 weeks in IRI MULC.

Making matters more challenging: top 2 struggling to realize much in way of price as per CPI. Prices for each of top 2 up less than 1% for 4 weeks.  AB avg prices up just 0.7% for 4 weeks in IRI MULC data.  And that includes trade up.  MillerCoors up just 1%.  For 12 weeks, AB avg prices up 1.2% and MC’s up 1.3%.   And so top 2 are still losing over 2 share of $$ in IRI.  AB down 1.36 share of $$ and MC down 0.76 for 12 weeks. 

Biggest gainer is Constellation; up 0.6 share for 4 and 12 weeks.  But even Constellation slowed in latest 4 week period. Volume up 7.3%, tho still up 10.7% for 12 weeks.  And its avg prices, while up 2.6% for 52 weeks, up just 1.2% for last 4 weeks. Heineken USA also got less than 1% pricing last 4 weeks (up 0.9%).  HUSA volume up 3.3% for 12 weeks, but just 1.6% for 4 weeks.  Boston Beer “slowed” to 11% volume growth last 4 weeks, but up 15% for 12 weeks.  Angry Orchard up 42% for 12 weeks. 

Beer prices were down 0.1% in Feb compared to Feb 2014, according to Consumer Price Index.  That’s the first monthly decline for industry in 110 months, since Dec 2005, per latest gov’t stats.  That was bad old days of last beer industry price war and we certainly hope not a sign of things to come.  Send comments to This email address is being protected from spambots. You need JavaScript enabled to view it.

Consumer price index for all items increased 0.2 % in Feb vs yr ago and all food items were flat.  Spirits prices were up 1% and CPI for wine gained 0.8%.  So both spirits and wine handily outpaced beer prices last month.  A big switch. Over last 12 mos, CPI for beer was up 1% vs 1.4% gain for all food items.  Spirits prices were up 0.6% while wine was off 0.1%.    

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Last week, in our haste reporting on Tenn bill prohibiting branches, but allowing exceptions for 5 yrs, we quoted a summary of original bill and not amended language.  Our apologies.  Both original bill and amended bill that passed allow manufacturers to hold temporary stake in wholesaler for up to 5 yrs in essentially the same situations. But following language tweaks key in negotiations before final bill passed. 

Temporary stakes described simply as “financial interest” in original bill, and replaced by “financial or ownership interest,” in amended version. Only two occasions when temporary stakes allowed: either when distribs voluntarily selling brand rights or when distrib agreement “not renewed” or “terminated.” Amendment requires that temporary stake is “noncontrolling” during voluntary sales. Major addition is clause stating that interest can come “in the form of a loan” at same time as sale, “secured by the inventory and assets” of buyer, but not “corporate stock.” Finally, original bill separately allowed for temporary stakes when distrib can’t service its territory, which amendment eliminates. But language elsewhere in code says that can be grounds for termination of distrib agreement, which is covered by bill.