Well it had to happen sometime. And according to IRI, it happened in 99: Bud Light passed Bud in supers for 52 weeks. Bud Light gained 1.2 share to 12.5 as volume jumped 13%. Bud actually up 0.8% for full yr, but share dropped 0.2 to 12.4. Next biggest share gainer among AB brands: Tequiza, which gained 0.5 share for yr. But in latest 4 weeks it dropped back to 0.3. Busch volume down 2.6%, but Busch Light up 1%. Meanwhile, Michelob and Michelob Light each up, 3% and 8% respectively. Natural Light gained 5%, Natural Ice up 9%. The 2 gained 0.3 share of volume to 6.3 But Nat Ice up only slightly at end of yr. Many smaller AB brands didn’t fare so well: Bud Ice brand down double-digits, Red Wolf down 37%, Michelob specialty brands down big except Amber Bock, which was up.

Miller's top brands did fine, but many smaller brands dragged Miller down. Miller Lite got solid 4.8% gain in supers, gained 0.2 share to 7.5. And even Gen Draft up 1% for full yr. High Life up 8%. Miller’s acquired brands got clobbered: Henry’s, Olde English and Hamm’s each down over 25% in supers; lost 0.5 share (apples-to-apples for full yr). Lowenbrau, which Miller relinquished to Labatt in 4th qtr, down 36%. Some other Miller brands hurt too: Mil Best down 8%, Gen Draft Light down 13%, Red Dog down 7%. Those brands lost another 1/2 share or so. Another Miller trouble-spot: Molson family down 12%.

Coors had a lot of pluses: Coors Light up 6%, gained 0.2 share to 7.0. Keystone Light up 2%. Zima up 21% and Killian’s Red up 9%. Original Coors off 3% for full yr, including gain in 2d half. Other smaller brands down including Keystone and Killian’s line extensions. On other hand, Pabst had a lot of minuses: Old Mil family off 13%. Pabst and Schlitz family off 16%. Those 3 groups were half of Pabst biz in supers; most other brands declined at steeper pace. Only bright spot: Lone Star up 2.7%.

Corona and Heineken got over 40 share of imports, up 1.2 share, as each up 16%. Corona Light up 26%, climbed to #5 import. Tecate and Labatt were #3 and #4 import, up 5% and 11% respectively. Each lost share of segment. The top 2 specialty brands had strong 99: Sam Adams Lager up 10% and Sierra Nevada Pale Ale up 34%.

Beer growth in supers accelerated in 4th qtr, even while avg prices grew more than earlier in yr. For 13 weeks ended 01/02/00, avg price paid for case of beer up 67 cents, 4.7% and cases up 4.5%. Recall that price war ended in 4th qtr 98 when avg prices up 3%+. So avg beer prices up more than $1 in supers from 4th qtr 97. AB and Coors each grew $$ sales at double-digit rate for last 13 weeks (volume up 8-9%). Miller $$ sales on Miller Lite and Gen Draft up double-digits. And imports kept right on rolling in this data; $$ up 19% for 13 weeks, share of $$ at 15.3. At same time, micros heated up. $$ sales up strong 16.6% in 4th qtr. Share up 0.3 to 5. So the 2 segments over 20 share in period.

The extraordinary rise of high-priced beers in supers continued in 99, even with major price increases on some brands. Import share of $$ sales jumped 1.4 to 14.9 for 52 weeks ended Jan 2, 2000, according to IRI. In last 4 yrs, imports gained 5.4 share of $$. Import volume up 12.5% ($$ sales up 17%) tho avg price paid for a case of imports jumped 93 cents, 4.2% to $22.90. In latest 13 weeks, avg Corona prices up $1.63, 7% to $24.26 but it still gained at double-digit pace. In 99, micros bounced back with 7% volume gain and slight growth in share of $$ to 4.6. So imports/micros at 19.5 share of $$ sales. AB also gained 1 share of $$ in supers to 41.5 as its volume up 5% and avg prices paid per case up 3.6% for 9% gain in $$$ sales. Spurred by such strong growth for high-priced beers and AB, beer volume and prices had very healthy 99 in supers. Total beer volume up 2.1%. But avg price paid for a case of beer up 61 cents, 4.3%. So $$ sales of all beers up 6.6% for yr. While Coors had a good yr in supers with $$ sales up 6.6%, its share stayed even at 11. Miller and Pabst each lost 1 share of $$ or more in 99. Miller share of $$ down 1.4 to 23, including Molson USA. Miller $$ sales just about even, with avg prices paid up 2.4%. Pabst share of $$$ dropped 1 to 4.8 as $$ sales down 13%. (IRI treats all brands that changed hands in Stroh/Pabst/Miller deal as if owned by present owner for all of 98-9).

While Bud lost 14.3 mil bbls, nearly 30% of its volume in the 90s, (Bud peaked in 1988 at 50.45 mil bbls) Bud Light more than made up for Bud loss. Gained over 18 mil bbls in 90s, as it jumped from 10.8 mil bbls to 29 mil. So Bud/Bud Light combo up 3.9 mil bbls, 6.3% 89-99, and their share edged up just 0.3 to 31.8. Yet AB took lotsa share from 2d-tier brewers with subpremium light beers. AB gained 10.4 mil bbls on Busch Light and Nat Light in 90s, over 5 mil bbls on each brand. And AB also grabbed another almost 2 mil bbls on Natural Ice. Meanwhile, Miller Lite off 3.3 mil bbls, 17% in 10 yrs, even as premium light beer biz up about 22 mil bbls, 50%. Lite had peaked in 90, just under 20 mil bbls. Means Lite lost 2 share of total beer biz since 89 and its share of premium light segment dropped from about 44 to about 25. Coors Light grew with segment: up 5.5 mil bbls, over 50% since 89. So its share of premium light biz was about same 24 in 89 and 99. Miller Gen Draft had grabbed #10 slot in 89; up 1.1 mil bbls in 90s and now #7. But MGD had peaked at 7.5 mil bbls in 93, when it was #6. Tho High Life had a couple of up years at end of decade, its volume shrunk by 2 mil bbls in 90s. Recall that 20 years ago, High Life sold almost 24 mil bbls at premium price. It dropped from #2 brand in 79 to #6 brand in 89 to #8 in 99 at subpremium price. Corona had joined top-10 in 98. Up about 3.7 mil bbls in 90s, nearly quadrupled its volume. Top-10 brands in 89 that dropped off list: #7 Old Milwaukee fell from 6.95 mil bbls to under 2.6 mil; Milwaukee’s Best dropped from 6.7 mil to 3.3 mil; Coors down from 5.15 mil bbls to about 1.8 mil.

Redhook shipments up 6% and Pyramid up 4% in 4th qtr 99. That was 2d up qtr in a row for both cos. For Redhook, being 2 up qtrs in a row "has not occurred in almost 3 years" said ceo Paul Shipman. On top of it, he told analysts that Redhook shipments up 10% in Jan 2000. Paul sez "fragmented craft beer’s fundamental’s have changed." Redhook now spending big on mktg in 3 mkts: Seattle and SF areas plus Northeast. Paul also told INSIGHTS: "We’re detecting a shift from imports to craft" and that Redhook doing especially well with exclusive AB houses. But because of big mktg budget Redhook losing more money: had operating loss of $800,000 in 4th qtr, compared to $147,000 loss in 4th qtr 98. Pyramid had $4 mil loss in 4th qtr as it wrote down 1 of it breweries to tune of $3 mil and had almost $0.5 mil severance charge as new mgt team (led by ex-Miller execs) did reorg. In supers, Redhook ESB up 2.6% and Pyramid Hefeweizen up 12.9% in 99; each got over 20% growth in last 4 wks, according to IRI. For full yr, Redhook shipments down 2% to 198,000 bbls, and Pyramid up 2% to 108,000 bbls. At presstime, two other money-losing micros, Saxer and Portland, agreed to merge.

In battle for political strength in Washington, distillers and wineries lay out far more money compared to beer cos on their respective assns. Spread between revs of distilled spirits assn and beer assns has widened in the last 5 years. In fact, recent survey of 1998 assn revs and top-exec pay by beltway mag National Jnl shows that DISCUS (distilled spirits guys) revs are almost 5X revs of Beer Institute. DISCUS execs worked with $12.1 mil, up from $9.9 mil in 93; but Beer Inst worked with $2.5 mil, down from $3.5 mil in 93. So gap widened by almost $4 mil as DISCUS jump bigger than Beer Inst budget. Meanwhile, NBWA revs jumped slightly, from $4.5 mil to $4.9 mil, but WSWA nearly tripled budget to $3.3 mil. Wine Institute revs almost as much as DISCUS’, but way down, cut almost in half from 5 years earlier. Add up revs of distilled spirits and wine assns, including wholesaler orgs WSWA and NBWA, beer outspent by $26 mil to $7.4 mil in 98. OUCH!

Distilled spirits and wine companies also pay their assn execs far more than beer guys do. Top execs in beer assns, while they were paid well, made about 70% of what competitive alc bev assn execs made. Ron Sarasin, for example, in last full yr as head of NBWA, was paid $265,000 in 98, while Fred Meister, in his last yr as head of DISCUS, got $453,000. And at Beer Inst, also-departed Ray McGrath got $277,000 pay, while John DeLuca, prexy Wine Inst, got $400,000. These men all received lots less than the real biggie assn execs in DC. Gene Upshaw of NFL was #1 at $1.8 mil. Frank Zarb of Security dealers got $1.5 mil. Two other salaries of note: Ron Sarasin’s wife Leslie recently became top exec at Frozen Food Assn where predecessor as top exec got $286,000 salary. And former Beer Inst prexy Don Shea, now prexy of Rubber Mfrs Assn, got $244,000 salary there in 98.

One of the reasons Coors "no longer a major member" of Beer Institute was because AB and Miller unwilling to fight .08 initiatives in Wash DC, Pete Coors, vice chairman and ceo of Coors told retailers at NLBA convention. "I personally contacted my two major competitors and they weren’t willing to fight the issue when .08 came up," Pete said. "We’re just one little company, and the industry just didn’t want to spend their political chips on that particular issue." Pete added, "I just got tired of fighting with those guys all the time." That line got big applause from retailers, who are also strongly opposed to .08 initiatives. Pete noted tho: "Beer Institute still does some good work. We need them and we’re a member but I just got frustrated." (Another source suggests Coors pulled back in Beer Inst before .08 issue on front-burner.)

Pete slammed many promotions popular with campus crowds, such as "Beat the Clock" specials which according to Pete "provide groups with persuasive arguments against our industry." He urged retailers not to sponsor any promotions that "even appear to be irresponsible." (This is a persistent theme in recent speeches by Pete.) Said industry must build a "consistent track record of responsibility." "We won’t get credit for all the good things that we’re doing if we’re still doing some of the bad things. Great programs, fabulous PR, the best lobbyists can’t undue negative impacts on an industry even appearing to promote or condone underage or irresponsible drinking," said Pete. Asked if he thinks alcohol next target of trial lawyers, Pete responded, "We’re quite concerned about it.... I suspect somebody sometime is going to file a class action lawsuit against our industry." This issue is "one of the things we do work with our competitors on," Pete said. Added that alcohol is in much better position than tobacco co’s, and added "tobacco made some classic mistakes and caved in way too early."

Several deals closed in last mo or so, and at least a dozen+ in works (that INSIGHTS knows of). So pace picking up again. Much-sought after Wisconsin Dist distrib in Madison, Wisc sold to neighboring McCarville Dist (owned by Pierre McCormick) with WEDCO financing. Pierre’s distrib will now sell between 3.5-4 mil cases (it was under 1 mil before). There are now 8 WEDCO (Wholesaler Equity Development Corp, successor to ABICC) operations, where AB finances distrib purchase and owns majority of it for many yrs. AB at 29 share last 12 mos thru Nov 99 in Wisc, up 7% for 11 mos; up 9% in 98, 6% in 97, 12% in 96. Pierre’s relatives, who owns AB’s Erie, Pa distrib, also in on deal. Only other recent AB done deal which INSIGHTS knows of: Westmoreland Dist in Greensburg, Pa (800,000 cases) bought 800,000-case Tito Bev in Homer City. Several other western Pa AB deals coming.

In a wild twist, a small Coors distrib sold to Coors in 1 county, but bought Miller there. So it’s competing against Coors branch with Miller, while it still sells Coors in next county over. Coors bought about 250,000 cases of Coors brands in Summit County, Colo from George F. Rutkey Inc. But Rutkey bought about 100,000 cases of Miller volume in Summit County from Zulanas Bev Dist and still in biz with Coors in next county. Meanwhile, yet another Miller/Coors deal just closed in NC as Caffey Dist (mostly Miller) bought out 800,000-case Alpine Dist (Coors/Stroh, etc) in Winston Salem. That makes about 1/2 dozen Miller/Coors deals in NC in last yr, with more coming. Interestingly, Corona split off in deal. Went to wine/liquor house American Premium, which beat out Bud distrib Barringer for brand. While in/mkt consolidations are most frequent these days, occasionally Miller contiguous deals still happenin’ too. A couple of mos back, 500,000-case OK Dist (owned by Greg O'Niel) in Dowagiac, Mich, bought out 1/2 mil case L&L distrib in Benton Harbor.

Pile of data about a dozen deals, done by Independent Beverage Group in last 2 years (without revealing names of parties) and provided by IBG prexy Joe Thompson, gives proof, if any needed, that there's no set rule about value of a case of beer in any deal. Would you believe that in deals Joe gave us data about, blue sky price per case varied from a low $1.74 (guess which brands) to a high of $25 (guess which brands)? What’s more, blue sky price per case of each supplier’s brands varied tremendously from deal to deal. For example, in these deals Miller brands varied from $3.96 to $8.00 per case, with some right in middle. For Coors brands too, a big difference: a low of $4.02 per case, a high of $10.50. Average price paid for rights to brands of different suppliers all over the lot (tho average may not be representative since a dozen deals is small sample size). While avg price paid for Pabst brands was $2.36, avg price paid for Corona in these deals was $20.49, for Heineken $11.86. And distribs paid more for Coors brands than for Miller brands: $5.17 on avg compared to $4.18 for Miller. Joe sees prices increasing from a weighted avg multiple of gross profits of 1.73 in 98-99 to 2.44 in early 2000 as "wholesaler margins are increasing." (While Joe worked on AB deals too, none included here.)