Beer Marketer's Insights
Going into Dec, C-store beer volume up 2.1% YTD, according to ACNielsen. Dollar sales up 5.0%. Nov soft in C-stores as in other channels; thru Oct, case sales had been +2.5%, $$ sales +5.5%. Yr-to-date, AB, Modelo and Heineken built share, Coors held, Miller and Pabst lost. AB had 62.7 share of volume in C-stores nationally, up 0.6 YTD. That
Tax Talk Already On Table in Several States
Just last week: 1) Ohio’s guv proposed a doubling of alc bev taxes; 2) Nev guv proposed 89% jump in alc bev excise taxes; 3) Wash legislators intro’d bill to raise beer tax 393%; 4) a pair of Md legislators proposed a nearly 8-fold increase of beer excise tax and a tripling of wine and liquor taxes; 5) public health advocates in Ind called for a 50% hike in alc bev taxes. Most of these proposed hikes so far aimed to help close big budget gaps, but Ind proposal and most of Wash hike earmarked for health/social programs. Public is more likely to support earmarked tax proposals. Industry opposition already stirring too. Miller, distrib lobbyists in papers criticizing hike proposals as attacks on middle class, and for singling out drinkers to pay for state deficits. Other states where beer tax talk heard since Jan 1: Ga, Va, SC and SD. Shapin’ up to be long yr.
For just the second time in last 10 yrs, avg beer prices increased more than general inflation in 2002, according to US govt. Consumer price index (CPI) avg for beer increased 2.5% in 2002 while avg for all consumer items up 1.6%. Beer prices increased more than other alc bevs too. CPI for spirits went up 2% while avg wine prices up just 0.5%. With second straight yr of avg 2.5% beer price growth, beer biz in much healthier position than a lot of other bizzes. Big NY Times feature noted "lower prices are disrupting many industries." Included lengthy list of industries facing price drops: cars, clothing, computers, electronics, furniture, jewelry and toys. Mfrs in these bizzes cut prices in effort to increase sales and/or hold onto market share. On flip side, legal and prescription drugs (natch), telephone service, funeral services, gasoline, vegetable and egg prices all went up more than 2x rate of inflation in 2002. Note: comparing CPI Dec 01 to Dec 02 (not avg), beer index up 2.6% vs 2.4% increase for all items.
Mixed picture of beer industry pricing in 02 in supers: avg beer prices for AB, Modelo and Miller products up more than inflation, while avg price paid for Coors brands and several importers barely up at all. Yet most mega-brands only got 1-2% price hike in supers. Avg price per case in supers at $16.40, up 48 cents, 3.0% for 52 weeks thru Dec 29, according to IRI. Increase resulted from price hikes and trading up including malternative intros. While avg price paid for all AB products up 43 cents, 2.9% to $15.16 per case, avg prices paid for Bud and Bud Light up slightly less than 2% in 02. Rest of increase came from higher-priced Bacardi Silver and Michelob Ultra intros. Avg prices paid for all Miller brands up 53 cents, 3.9% for 52 weeks, but avg price paid for Miller Lite up only 16 cents, 1%. Much of Miller
Powered by 1.2 share of $$ for new entry Michelob Ultra, AB share of $$ spent in supers up 1.0 for 13 weeks thru Dec 29, according to IRI. For full yr, AB gained 0.4 share of $$ to 40.8, boosted by Bacardi Silver and Mich Ultra intros (0.9 share). AB bounced back after losing share of $$ in supers in 2001. Meanwhile, All Others (brewers and importers below top 4) continued to gain share; jumped 0.5 to 26.1. So growth of AB and All Others put squeeze on Miller and Coors; each lost 0.3 share of $$ to 19.5 and 10.5 respectively in 02. Meanwhile, Pabst lost 0.3 share of $$ to 3.1. Modelo and Heineken brands together got over 10 share of $$, almost as much as Coors. Modelo brands up 0.4 share to 6.7, and Heineken up 0.3 to 3.4. Two other importers got 3+ share of $$. Labatt USA unchanged at 3.2 share of $$ and Guinness Bass Import Co up 0.3 to 3.0 in supers for full yr (but in 4th qtr GBIC trend reversed to down 0.3 share of $$). Top 4 import/specialty suppliers grabbed 16.3 share of $$, up 1. Only 2 other cos had 1 share of $$: Boston Beer unchanged at 1.1 and Mark Anthony (maker of Mike
As new Miller prexy Norman Adami takes over, he and his team face uphill climb and lotsa challenges. The biggest challenge: volume trends softened further since SAB bought Miller. Miller down 3% in 2d half 02, SABMiller said, and that includes its malternative intros. Means beer brands down about 5%. In 1st half 02, Miller had been down 0.5%, including Skyy Blue intro. Miller beer brands down 3-4% in each of 2000 and 2001. Since 1999, Miller has lost 4 mil bbls and over 2 share points (including sale of Molson). Another challenge: lotsa new faces in Miller mgt, including 3 from SAB, who may be effective execs but face learning curve in US. "I need to learn much" about Miller and US, Norman told INSIGHTS. Then too, lots more change expected, which has gotta make folks at Miller uncomfortable. Back in Nov, SABMiller ceo Graham Mackay had characterized Miller as "not finely tuned or effective" and Miller way of doing things as "inadequate." Even tho SABMiller replaced several top execs with its own people, corporate culture Graham spoke of remains largely intact, as it has thru last several regimes. SABMiller has reputation for efficiency and talks often of its "performance management" style. That
INSIGHTS estimates of top-10 brands mostly show continuation of 2001 trends: all moved in same direction as in 2001, tho amounts varied. Three of top 6 brands gained: Bud Light, Coors Light and Natural Light. No rank changes among top brands in 2002 after 5 had switched places in 2001. #1 Bud Light big gainer again in 2002. Up estimated 2.75 mil bbls, 7.9%. Grabbed 17.8 share, up 1.1. Easily offset Bud
Even though AB stock pulled back from 55.00 in early Nov, it ended yr up 7% at 48.40 as Dow Jones avg dropped 17% and the S&P slipped 23.4%. AB stock had been down 1% in 01 but price more than doubled since 97 while Dow up just 5% during last 5 yrs. Coors share price up 15% to 61.25 in 02, following 33.5% drop in 01. Coors share price up 84% since 97. Boston Beer share price slipped 17% to 14.30 in 02 following 95% jump in 01. Boston price hit 17.71 in mid-Nov, but slipped over last 6 weeks of yr. Boston share price still up 76% since 97. Heineken price fell for 2nd yr in a row, down 13% to 37.20 in 02. Down 42% last 2 yrs. Miller parent-co SABMiller share price off 6% to 441.50 euros last yr. Interbrew off about 16%; its share price at 23.60 euros. Foster
Tho Labatt USA exceeded 4% growth goal anticipated in early 2002 document, Labatt USA asked a number of distribs to buy more beer in Dec, reportedly because it was missing objectives. But LUSA prexy Steve Cahillane told INSIGHTS: "Our depletions growth exceeded our shipments," countering numerous reports of loading. Meanwhile, parent co Interbrew capped another tumultuous yr by changing its ceo from Hugo Powell to soft drink exec John Brock, who starts in Feb 03 (see below). And Interbrew