MillerCoors started off 2015 with very similar trend to what it had in late 2014; sales-to-retailers down low single digits in Jan, MC cfo Tracy Joubert said on conference call.  And tho MC has guided volume flat to down 1% over next several yrs, given “our current run rate,” said Tracy, co looks to the “more conservative” side of that guidance.  Not only that, but MC expecting no operating margin improvement in 2015.  Why?  Increased investment in mktg and technology.  MC also provides medium term guidance of 2-4% increase in rev per bbl over next 2-5 years.  And it’s sticking to that.  But near term there is “a little more price intensity,” said ceo Tom Long; while pricing varies mkt by mkt, it’s “more aggressive” in some areas, and with decision to hold pricing on draft, “some of that flowing through,” resulting in lower rev per bbl increase in 4th qtr.

No “Ping Pong” on Next Ceo; Best Candidate; Looking “Inside & Outside” Since Tom from SABMiller side and Leo Kiely had been from Molson Coors, will next ceo again be from Molson Coors, asked Nomura’s Ed Mundy on conference call.  The parent cos “don’t wish to play ping pong,” answered Tom Long, but rather are “deeply committed” to finding the “best candidate,” while searching both inside and outside the cos.  SABMiller and Molson Coors work collaboratively on this and it’s “not been a game of ping pong at any point,” said SABMiller veep Gary Leibowitz. 

Premium Light Biz the “Cornerstone” and “Improving”  “I see our business improving on premium lights,” said Tom, aided by better employment and lower gas prices.  That would be especially good news for MC, since they are 56% of its volume, as Tom noted, and “cornerstone” of MC biz.  And light lager should “benefit disproportionately” with better economic conditions.  “I’m beginning to see it turn,” he added.  Indeed, MC has seen low-single digit improvement in volume trends for premium lights, tap handles, and velocity, said sales prexy Ed McBrien. “Underlying trends” on premium lights “are better than a year ago,” concluded Tom, but “how much remains to be seen.”

MC Got 25% of New Brand Volume With 2% of Items  Key point reiterated a couple of times on call by MC ceo Tom Long: MillerCoors got 25% of all the incremental new brand volume in beer biz in Nielsen last yr, with just 2% of the items.  That’s “scale that sticks.”  Meanwhile, it also grew above premium part of its biz high single digits for the yr.  Grew to 14.9% of revs, up 2.9 points.  Not stated, but MC likely to have tuff time recycling some of that volume. 

Bud Super Bowl Ad that poked craft drinkers continues to create controversy.  Several members of Congress, members of House Small Brewers Caucus (SBC) and otherwise pro-craft pols, joined fray via quotes to The Daily Beast yesterday.  “I think it’s insane,” declared Rep Patrick McHenry, NC Repub who co-chairs SBC and reps 25 Asheville brewers. “I don’t think it’s the right approach,” he added, calling Bud ad “like the first political attack ad on this thing, so like the politics of beer,” oddly unaware of the public and private sniping between craft brewers and global brewers that’s been going on for yrs.  Not to mention attacks on “fizzy yellow lagers” from craft folks.  McHenry’s colleague and founder of SBC, Oreg Dem Peter DeFazio piled on, claiming more consumers are “developing a taste for beer that isn’t insipid and has real taste” and so “big brewers now starting to buy” craft brewers up.  An “animated” DeFazio actually “yelled” during this conversation, sez the Beast.  And The Beast actually claims AB InBev “couldn’t have reached a quarter of international beer sales without scooping up craft brewers in the US.”  Er, no.  Bud ad “contradicts” its own buying strategy, sez DeFazio, asking consumers to “come on back and buy the schlock” while also “buying up the good beer.”  He added warning that AB “better not change the formula” of recently purchased 10 Barrel.

The Beast also outlines current BEER vs BREW battle.  BREW co-sponsor Ben Cardin is more measured than some of his colleagues, calling BREW “not even a beer issue it’s a small business issue.”  But Cardin said: “Actually I liked the ad,” calling it “pretty clever.  Beer Inst veep Chris Throne added fuel to fire.  Echoing Beer Inst theme that BEER bill allows Congress to support drinkers and not pick winners and losers in the mkt, he couldn’t resist echoing Bud ad theme that craft drinkers are elitist. “And some chucklehead who’s making $150,000 a year could put down $50 or $45 bucks for a case of beer he’s paying a much smaller tax.”  Meanwhile, BA ceo Bob Pease told The Hill he and BI ceo Jim McGreevy talk frequently and “a deal is always possible” on tax issue.  For that to happen, they’ll have to get past the rhetoric that’s flyin’ fast and thick in DC these days.  

On premise “started out 2015 with strong growth,” reported GuestMetrics; traffic up 2.6% and food and bev sales up 2.6% for 4 weeks thru Jan 25.  Total alc bev volume up 1.5%, compared to -1.8% for full yr 2014.  Spirits “led the way,” up 3.1%, wine up 0.9% and beer up 0.3% for 4 weeks, compared to down 3.4% in 2014.  Beer lost 0.2 share of alc bev $$$.   Craft gained less than 1 share in latest 4 weeks.  Up 0.9 share in Jan, compared to 1.9 share in 2014, “a clear slowdown.”  Since craft has over 30 share of beer in GuestMetrics, it “appears to be slowing with the law of large numbers” but “the number of new craft offerings continues to grow strong” even as “overall segment is slowing, raising issues about the sustainability of this growth.”  Premium lights down 1.2 share, “a clear improvement” from 1.9 share loss in 2014. Avg beer prices were up 3.2%

MillerCoors reported that underlying net income grew 2.9% for yr to $1.3 bil, but dropped 12% to $213 mil in Q4 “due to lower shipment volume, unrealized losses on commodity hedges and higher marketing investment.”  Mktg, gen and admin expenses up $8 mil, 2% in 4^th qtr, tho still down $14 mil, 1% for yr.  Total net sales up 0.6% for the yr to $7.85 bil, even tho volume down 2.5%.  But sales dropped 1.1% in 4^th qtr.  Rev per bbl up 2.9% for yr (excluding contract and company-owned distrib) but slowed to 2% growth in qtr.  Meanwhile cost of goods sold up 2.6% for yr and 3% for qtr.       

Tom Long, 56, has decided to retire from his position as MillerCoors ceo as of Jun 30, SABMiller and Molson Coors announced this morn.  “The MillerCoors Board of Directors has accepted Tom’s decision and is conducting a search to identify a successor to lead MillerCoors through its next phase of growth and development.”  Tom said he is “leaving a company and a team both of which are stronger than they ever have been.”  Tom joined Miller 10 yrs ago, became prexy of MillerCoors at its inception in 2008, and became ceo in 2011.  On Tom’s watch, MillerCoors grew earnings dramatically, tho volume declined. Tom had discussed his departure with the board last yr, prior to coming to agreement just recently, INSIGHTS understands.  Seemingly, he desired a different kind of life.  Last yr, recall Peter Swinburn resigned as ceo of Molson Coors with a similar lead time of several months as had the late Graham Mackay at SABMiller the year before with even more advance notice.  But in each case, their successors were announced simultaneously.  What’s unusual here is the absence of a known successor.  Now SABMiller and Molson Coors, which haven’t always seen eye-to-eye, but are reportedly getting along better lately, will conduct an extensive search, presumably including outside candidates.  

Join us for BMI’s annual Spring Conference May 11-12 in Chicago, another deep dive into the High End of the US beer biz, the engine of growth and opportunity for the last many yrs.  Just added: AB’s prexy of its new hi-end unit Felipe Szpigel.  The conference will also feature an all-star panel including other 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.  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.    

Craft Brew Alliance net sales up 12% on shipments growth of 10%, compared to 4% shipments growth in yr prior, CBA reported in preliminary results late yesterday.  While shipments growth accelerated, depletions trend slowed from 11% to 7%, largely as result of 25% reduction in SKUs.  But sales-to-retailers up just 2% in 4th qtr “which primarily reflects the SKU rationalization of seasonals across the portfolio.”  Anyway you slice it, CBA one of a number of craft brewers that experienced slower growth in latter stages of ‘14.  More positive news on earnings side: earnings per share jumped 60% to 16 cents per share, CBA said; gross margin expanded 130 basis points to 29.4%.  Gross margin really jumped (280 basis points) in Q4, “reflecting the benefit of the first full quarter of brewing” at Memphis.  Craft Brew Alliance expects its own shipments volume to grow 6-8% in 2015 with avg prices up 1-2%.  

New yr starting off very much same way old yr ended, tho at margins, AB losing a little less share and MillerCoors a little more .  AB down 1.3 share and MC lost 0.8 share of $$ yr-to-date thru Jan 25 in IRI multi-outlet + convenience.  MC share of $$ under 25 now in this data.  Constellation gained 0.6 share last 4 weeks, Boston Beer gained 0.3 and craft segment gained 1.1 share in all.  Craft still trucking along at 16% clip in early 2015 scan data, $$ sales up 20%.  As in 4^th qtr, pricing starting to get tuffer to come by.  Each of AB and MC avg price per case only up about 1.5%.  The premium light megabrands each got avg price increases of less than 1%.  Coors Light avg prices essentially flat, Miller Lite avg prices up 0.5% and Bud Light up 0.8%.  Even Constellation avg price per case up just 1.7% per case and HUSA’s up about 1.5%.  

We goofed in recent broad update on Balance Water strategy: it was Kristen Vahsen, dir of finance & operations, who's moved on from co in recent months, not Bruce Trent, who continues to run sales. Our apologies.  

Cott Corp, which under ceo Jerry Fowden has sought to be island of clarity and stability despite headwinds buffeting private-label sector, drew adverse reaction from investors after underwriters co-led by CIBC and Barclay agreed to buy 14.1 mil common shares at $9.25. Timing of sale forced COT to abruptly cancel investor day at its newly acquired DS Services unit in Atlanta, where analysts and investors who were already heading down were told they were welcome to continue on planned tours but would not hear from top brass. That event has been rescheduled for Jun 18. COT has been avidly defending DS acquisition, mainly home and office delivery biz that some have viewed as offering little synergy with core private-label biz . . . First Beverage Group has made another investment, this one in alc-bev services space: it's joined Polaris Partners in $13 mil Series A financing of Drizly, on-demand e-commerce platform for beer/wine that's expanded to 15 US cities. On NA side First Bev is involved with Purity Organic, Project Juice and Health Ade Kombucha . . . Unfolding scandal engulfing soccer governing body FIFA has put Coca-Cola, Budweiser and other brand sponsors in delicate spot, balancing unseemly corruption stain against increasingly avid execution vs world's most popular sport. Just a week after expressing concern about worker rights abuses in Qatar during preparations for that country's hosting of World Cup, KO issued statement yesterday on "lengthy controversy" that refrained from any threats of departure, instead expressing optimism that FIFA "will continue to cooperate fully with the authorities."