Bill barring brewer-owned branches in Kentucky passed thru first House committee after an hour of testimony yesterday, the Lexington Herald-Leader reports. Vote ended up overwhelmingly in favor of bill, 15-4, with one abstention. But some that voted for bill here “reserved the right” to switch vote later “and begged” Speaker Greg Stumbo, bill sponsor, “for a compromise.” Like what? Grandfathering in current AB branches, rumored as possible amendment, one legislator said in support of the notion. Concern over near 200 jobs at Louisville and Owensboro branches driving that possibility, but bill passed committee without it. Snippets of testimony suggest folks stuck to talking points. Bill provides “level playing field” for beer, wine and spirits bizzes, malt bev director of state ABC Stephanie Stumbo said. Why let AB “have rights that we do not allow Kentucky brewers to have,” Country Boy Brewing co-owner Daniel Harrison echoed. But “beer distribution system in Kentucky is working fine,” AB spokesperson Damon Williams said, adding that “the notion that our ownership here stifles the craft guys is just plain wrong.”

But legislators also tiring of rhetoric ramping up there (see last issue for examples). One state rep “cautioned all witnesses to keep it respectful and chastised both sides for their rhetoric,” the paper wrote. “I regret that one side has disparaged a Kentucky business owner with misleading and false attacks. A television ad calls Kentucky businesses ‘special interests.’ I learned that social media has unjustly criticized one of our policy makers,” Rep Ruth Ann Palumbo said. “These actions are without conscience.” Further, Speaker Stumbo said folks on both sides of the debate “haven’t played well in the sandbox together,” according to report. “As far as I know they’re still kicking sand at each other,” he added.

AB Will Fight Til End Against “Terrible Bill”  “This legislation conflicts with free market principles and represents the worst kind of policymaking,” AB Louisville branch’s sales/mktg director Damon Williams wrote in tuff-worded statement following vote. That is policy “done at the behest of a handful of wealthy political contributors who want nothing more than to put a competitor out of business.” In “one of the worst votes you can take as a legislator,” KY lawmakers put “everyday Kentuckians in jeopardy of losing their jobs,” Damon wrote after reminding of AB’s long history in the state. In AB’s view, bill is “government-sanctioned elimination of competition” in middle-tier that co “will continue to fight.” Even if bill passes, not likely to be end of story as AB promises “to take any and all actions to protect our business and our workers.” Stay tuned. 

Manhattan Beer acquisition of Windmill (Phoenix/Beehive) beer brand distribution rights, will not close as expected on Mar 1.  Dept of Justice still looking into deal and has more questions.  Deal expected to close in Apr. INSIGHTS first reported Sep 2014.

This is what it’s come to already: dueling tv ads where each side calls the other names.   Distribs and craft brewers’ ad calls ABI “one greedy mega-monopoly” while AB ad calls its opposition (including its own distribs) “greedy special interests.”   So battle continues to ratchet up in Ky one month after House Speaker Greg Stumbo introduced HB 168, which would ban branches.  Separately, Stumbo also said he’s working on possible compromise earlier this week. 

KEG group, which reps local craft, distribs and retailers put together 2 ads to rally support.  “Anheuser Busch will spend one million” in Ky, “to create a monopoly,” “putting family beer companies out of business,” it tells viewers in one ad.  Ad features 3 Ky craft brewers urging support of bill including Daniel Harrison of Country Boy Brewing who says: “Don’t let one greedy mega-monopoly kill small businesses and jobs.”  In second spot, KEG tells residents AB, “will spend over one million lobbying in Kentucky,” and to find out why visit keepbeerlocal.com.  KEG also claims ABI “spent over 30 million” in one day “bashing small craft brewers,” referring to AB’s Super Bowl ad(s).  In AB ad urging folks to oppose HB168, co reminds it is “part of the community,” has “created hundreds of jobs” in Ky, “invested” in local Universities and “working families.”  AB calls its opposition “greedy special interests” that are “trying to run Anheuser Busch out of the state” by closing biz it has owned for “nearly 40 years.”  Points out that “business groups and labor organizations agree” that bill “is bad policy.”  AB ad lists its website as kybudfacts.com.  This poisonous atmosphere has to make it harder to just sell beer.

NAB shipments trend improved thru 2014 and into early 2015; biz went from -8.6% for first 6 mos of 2014 to -3.6% in Q3 to +0.7% in Q4 and +3.5% in Jan 2015, execs shared during opening of distrib meeting yesterday afternoon in Tampa.   Its Labatt biz up year-on-year for 4 mos thru Jan.  NAB also sequenced fall seasonal faster than in past and saw depletions grow 20%, and grew share in “very busy” FMB mkt last yr. 

NAB CEO Kris Sirchio and other top execs laid out strategic plan and direction shift for North American Breweries. NAB will transition from handful of legacy brewing companies (Genesee, Labatt USA, Magic Hat/Pyramid,) with primarily local footprint of 4 states and 100% in-house manufacturing to a “purpose-led adult beverage company” with clear purpose and values, that’s more flexible, with a multi-regional footprint.  It will also take more “hybrid approach” to manufacturing, perhaps partnering with other producers, said Kris.  That will entail new liquids and packaging, reacting to mkt more quickly (i.e. moving seasonals in and out faster) and selectively adding mkts. 

Two thirds of NAB biz still in 4 states: Mich, NY, Pennsy and Oh.  That’s “great opportunity” for growth, said Kris, noting recent expansion with new staff in Fla. Liquid innovation will come in craft biz, natch, but there’s new Labatt product coming this summer too, packaging tweaks across board.  And NAB has big plans/goals for subpremium Genesee which has been “neglected,” as Kris noted.  As part of Costa Rican FIFCO conglomerate, NAB still transitioning from private equity past to much longer-term strategy.  Like FIFCO, NAB will focus on social purpose as well as financial performance – it aims to double biz and grow profits more -- with “triple bottom line” approach that aligns financial, social and environmental goals and “aims to create and share value with all stakeholders,” including distrib partners, as FIFCO ceo Ramón Mendiola put it. 

Several analysts reduced their 2015 earnings estimates for Molson Coors, following yesterday’s tough 4^th qtr and full yr report.  Stock dropped 4%.  Morgan Stanley’s Dara Mohsenian cited “tough” Q4 and “2015 headwinds,” also noting Jan 2015 volumes “broadly weak.”  Goldman Sachs analyst Judy Hong cited Q4 “miss” and 2015 “headwinds” too. “We now estimate flattish operating profit performance” for the co in 2015, she said with Canada down nearly 12%, MillerCoors up 2.8% and Europe up 7%. 

Global Heineken increased organic revs 3% and consolidated EBIT (beia) 8.7% to $3.5 bil in 2014, results labeled “very solid” by Bernstein’s Trevor Stirling this morn.  Its operating margin increased by 90 basis points to 16.2%. Heineken exceeded analyst estimates and stock up 2%.  But it sees slower growth in 2015 and “pricing will be limited by deflationary and off-premise pressure pressure in some markets.”  Heineken will also have “slight” increase sales and mktg spending (they were almost 13% of revs in 2014).  So margin expansion will moderate and be somewhat below its “target” of 40 basis points of improvement.  

Heineken USA shipments and depletions each up around 1%, Heineken reported this morn, crediting “success of the portfolio strategy” with driving “further improved market share.”   Brand Heineken “in black last 9 months” HUSA prexy Dolf van den Brink told INSIGHTS, following tuff start to 2014, especially with weather in Northeast.  And Heineken Light trend improved markedly as yr went on, following launch of tv ads with Neil Patrick Harris.  Down mid-singles in Q4.  And Heineken franchise enjoyed its 1^st up qtr since 2008 in Q4.  That was only one of several measures that ticked up markedly in Q4, also including much accelerated Strongbow and Tecate franchise growth.

Dos Equis franchise now a very sizable 24 mil cases, with continued double digits depletions growth; lager up 15% for the yr and franchise up 14%.  Impressively, its most developed mkts are also its fastest growing, noted Dolf, pointing to Tex, where franchise still up more than 20%.  And Tecate family up almost 5% in 2014, said Dolf, including nearly 8% growth in 4^th qtr. (Had declined high single digits only 3 yrs earlier.)  The Tecate brand is approaching “stabilization,” depletions down just 2-3%. But Tecate Light is growth driver, up more than 50% for the yr and 60% in 4^th qtr.  It’s become “a big generator of incremental volume.”  Strongbow brand too took off in Q4.  Up 20% for yr, but depletions up 30% in Oct, 40% in Nov and 50% in Dec.  More than doubling in Nielsen, up 120% last 3 mos, 2x the category rate.

HUSA also improving in its natl accounts capabilities, chief sales officer Ray Faust detailed.  Volume up 15% in Wal-Mart, HUSA’s largest account, including 12% growth on brand Heineken.  And in Kroger’s, HUSA volume up 5%, with brand Heineken up 3%. In all-important c-store channel, HUSA grew 6% last yr, including 1% gain on brand Heineken.   

This year is “all about consistency,” said Dolf, and putting “additional resources” against its “top priorities,” which are Heineken, Dos Equis and Tecate franchises plus Strongbow. In 2015, HUSA coming with “way more ammunition” on brand Heineken, according to Dolf, including “launching” Major League Soccer and a new Bond movie.  Recruiting Mexican Hispanics remains “the big opportunity” for brand Heineken.  There will be new Neil Patrick Harris ads for Heineken Light.  The Dos Equis equity scores are still going up and HUSA doesn’t “see any wear out” on Most Interesting Man campaign.  There will be “less massive innovation” in 2015 as HUSA will be “leaning into” these top priorities.  

BMI’s annual Spring Conference May 11-12 in Chicago will be another unparalleled deep dive into the High End of the US beer biz, the engine of growth and opportunity for the last many yrs.  The conference will feature an all-star panel including key leaders of the high-end; Constellation prexy Bill Hackett, HUSA prexy Dolf van den Brink and Boston Beer chairman Jim Koch.  The panel will be moderated by BMI’s Benj Steinman.  Mike’s founder Anthony von Mandl, a leading innovator in flavored malt bevs, will also present at the conference.  We’ll feature Firestone Walker’s David Walker, one of the fastest growing craft brewers and Scott Whitley, who just took the reins of Tenth & Blake at MillerCoors.  We’ve just added AB’s prexy of its new hi-end unit Felipe Szpigel to our program.  Dan Wandel and Bill Pecoriello will dig into the off- and on-premise trends, probing the extensive IRI and GuestMetrics databases.  BMI publisher Benj Steinman will provide his annual detailed review of the segment.  More speakers will be added.  Once again, we’re returning to the centrally located and appropriately high-end Ritz-Carlton in Chicago for a full day of thought-provoking presentations, Q&A and plenty of networking time, including two receptions.  Click here for more info.  Click here to register.    

Long-standing tensions in Indiana alc bev distrib world ratcheted up again as Indy Bev Alliance, which represents AB distribs in state, filed complaint before state Election Commission vs giant Monarch Bev (MC and much more) for allegedly “illegally funneling nearly $1.5 million in campaign cash” to state politicians via a limited liability company (LLC), reports Indy Star.  Monarch denies any wrongdoing.

Ind limits corporation contributions to $22K per yr to state/local campaigns and no one allowed to contribute $$ “in the name of another.”  But LLCs can make unlimited donations.  Vision Concepts, a company that sells beer promo items to Monarch and others, and has same address and chief exec, contributed at least $1.47 mil to Indy candidates/committees since 2002, way over the $22K limit, paper reports.  Indy Bev Alliance (IBA) charges Monarch purchased products at inflated prices to provide campaign cash.  Evidence will show, IBA’s Marc Carmichael told paper, that Monarch “has been making unlimited campaign contributions in the name of Vision Concepts, LLC.”  Turns out other beer distribs in state, “including members of the Beverage Alliance, have affiliated LLCs that have contributed more than would be allowed under the corporate caps,” Indy Star points out.  Monarch/Vision Concepts ceo Phil Terry acknowledged that Monarch is VC’s biggest customer but sez Monarch pays same prices as others.  Phil also said VC has stake in alc policy issues, as well as Monarch, that come before legislators, since it services alc bev industry.  VC’s annual sales, he said between $800K and $3.1 mil. Recall, Indy wine and spirits distribs assn also at odds with Monarch over latter’s ongoing attempt to become liquor distrib in state. 

A new owner has 90 days to terminate in OH and Pabst pulled trigger with several distribs yesterday, just about 90 days after deal closed.  Pabst sells about 3 mil cases in OH and this may affect as much as 20% of volume, according to 1 source.  This provision in Oh law has been litigated repeatedly over the years, with distribs winning some, suppliers winning others.