Unreleased Natl Academy of Sciences report on underage drinking has been media magnet in last week:  Wall St Jnl, CNN, Knight Ridder newspapers and Wash Post all ran stories speculating about what NAS will recommend (many say higher excise tax, tuffer mktg restrictions and/or anti-underage drinking media campaign).  And lotsa ink spilt over lobbying by alc bev biz (especially NBWA) to criticize NAS for running a biased process. After front-page Wall St Jnl article and Wash Post op-ed (which slammed NBWA’s “campaign of intimidation”), NBWA sent 3-page letter to House members.  Called op-ed “factually inaccurate,” pointed out long-term reductions in underage drinking, called NAS panel “biased and unbalanced,” and suggested Congress can contact NAS with pointed request for more info.     

Thank God it's over and sun is shinin' in much of US.  Beer volume down 1.1% in supers in 2d qtr, according to IRI data reported by analyst Marc Cohen.  AB picked up 1.2 share in qtr, Miller down 1.2, Coors down 0.2.  Avg prices up 2.3%, but Marc noted some “tactical pricing action” by Miller, Heineken and Coors.  Last week of Jun a real stinker in supers: volume down 7% for week thru Jun 29.

AB goin’ up 30 cents/case to distribs in Fla on most Bud, Bud Light packages, 30 cents on Busch/Light and Nat Light/Ice Sep 29. Also raisin’ price on malt liquors and malternatives (40-45 cents). But holding Michelob prices. Recall that Fla an Ultra test mkt and AB had taken big Mich price hike there last yr with longer term objective of narrowing price gap with imports.

Import shipments were lousy in May too; down another 140,000 bbls, 6.1%.  Off 467,000 bbls, 4.8% for 5 mos.  And 12-mo trend now just +200,000 bbls, 0.9%.  Nuthin’ even remotely like that slowdown has happened to imports since 91 excise tax hike.  May import shipments were actually lower than April shipments, Matt Hein of Beer Inst notes.  Not exactly a sign of building steam.  Mexican shipments off 337,000 bbls, 7.8% for 5 mos (but Constellation has said that its Modelo shipments should be up double-digits Jun-Aug).  Dutch shipments outperformed, but still off 16,000 bbls, 0.7% yr-to-date.  Canadian imports off 42,000 bbls, 3%.  And German shipments down 29,000 bbls, 7%.  

“Brew Wars” proclaims today’s front page of NY Daily News as debate heats up in NYC about why police crack down on beer drinkers but not wine drinkers. On July 4, police raided 9-11 fundraiser on public beach (attended by victims’ families) and issued summonses for drinking beer in public and confiscated up to 20 coolers. But yesterday, after defending police actions, Mayor Bloomberg is pictured sitting among wine drinkers at concert in public park! Another big photo shows Brooklyn Sup Ct judge enjoying some vino. News notes “hundreds” were drinking wine and “zero” summonses were issued. Talk about profiling!

SABMiller chief exec Graham Mackay made approx $970K salary, $670K bonus in yr ending Mar 31, 03, according to annual report. Salary up 20%+, bonus jumped 50%+.

Efforts to allow direct shipments of wine to consumers gained steam lately as Jul 3 FTC Staff Report touted “significant benefits” to consumers of online sales/direct shipments.  Detailed report (139 pages) didn’t analyze constitutional issues (i.e. 21^st Amendment) or take a legal position, but concluded direct shipments provide consumers with lower prices, more choice and convenience.  What’s more, states that allow direct shipments report no “major problems” with underage purchase or collecting taxes, claims FTC.  Staff studied availability/prices in near-to-DC McLean, Va (a control state) that showed area stores didn’t carry 15% of sample of popular wines, that consumers could save 8-21% by buying online.  FTC staff report followed on heels of scorching US Appeals Ct decision that: 1) tossed Tex law that banned direct shipments; 2) harshly criticized Tex ABC Administrator’s efforts to save ban; and 3) dismissed argument than ban was legit under 21^st Amendment.  (Details in Jul 7 BMI.)

Here are three quick reactions from industry experts. “The FTC report evaporates large parts of what factual foundation remains for perpetuating the 3 tier system….  [It] is the gravest threat the beer wholesale industry has yet encountered,” warned consultant Mark H Rodman.    But Wine & Spirits Wholesalers Assn genl counsel Craig Wolf dismissed FTC report as “political, not scientific document” and insists its “evidence does not support its conclusions.”  Re Tex decision, Craig said: “We’ve heard tough language before.”  Described court attacks on Tex ABC as “unnecessary and disrespectful of legal prerogatives of the state” which passed laws.  Atty Richard Blau focused on “lack of respect for the uniqueness of alcohol” shown by both Tex decision and FTC report.  Richard referred back to reminder from US Appeals Ct upholding Indiana ban of direct shipments: “alcohol is not cheese.”   One powerful commentator that heartily agrees with FTC: Wall St Jnl, which ran yet another pro-direct shipping editorial the day FTC report appeared.  Said purpose of Commerce Clause is to “protect free trade among the states and not the monopolies of middlemen.”  Clearly, this battle ain’t over. 

Expects Smirnoff Ice volume (including Triple Black) to be down 12% in North America for 12 mos thru Jun 30, 03.  Added tho that SI back to 37 share of FMB category in recent mos. Diageo noted overall spirits biz showin’ “robust growth despite a weak economy” in US.  Diageo's premium liquor brands -- Smirnoff, Baileys, Johnny Walker, etc -- are doin' fine.  (Why are slow economy, Iraq, on-premise softness, lousy weather hittin’ beer harder than spirits?)  Diageo Chairman Paul Walsh said “trading environment remains tough” around world, and Diageo noted SARS and Iraq war “compounded” challenges. Indeed, Diageo ain’t makin’ big promises: expects organic volume growth of 1% for 12 mos thru Jun 30, net sales gain of 4% (both about same as Jul-Dec 02), and operating profit gain” marginally better” than the 6% it posted Jul-Dec 02.

A recent survey of Ohio State students found that a substantial number of heavy drinkers on campus either stop heavy drinking, moderate their consumption or seriously consider cutting down before they graduate. Among the 60% of the students who researchers classified as "episodic heavy drinkers"

The Center on Alcohol Marketing and Youth