AB sure spent big bucks on media in 3d qtr, including typically major Olympic commitment, but not sure it got the bang it bargained for as summer games fizzled in ratings. AB jumped spending on major brands $34.5 mil, 70% in 3d qtr, according to Competitive Media Reporting, which tracks spending in 11 media. (Note: some industry execs say these figures underreport local media spending.) Miller and Coors also increased spending vs 3d qtr 99, but their increases much smaller than AB hikes. Heineken continued big spending increases; Corona cut back. For 9 mos, each of top 3 jumped media spending double-digits. Total top-brand spending by big 3 brewers up $81 mil, 19% thru Sep.

As in usual "Olympic qtr," AB really poured on spending for Bud/Bud Light in 3d qtr compared to non-Olympics 99. Jumped amounts by 50%, 67% respectively. That put AB spending on major brands up $35 mil, 17% Jan-Sep, but up just 3% compared to Jan-Sep 98. Recall too that AB’s spending in 1st half had been flat compared to 99. YTD spending for Bud up $26 mil, 28%, but Bud Light spending up less than $1 mil, 1%. Busch support up $4.9 mil, 82% YTD and Michelob spending up $4.1 mil, 14%. But AB wiped out $3 mil of O’Doul’s support. Miller media spending uneven in 2000. Following huge 1st qtr hike, 2d qtr cut, Miller increased spending about $2 mil, 6% in 3d qtr. All in all, Miller raised spending on major brands $13.5 mil, 13.7% YTD, but that was still $58 mil, 34% less than Miller had spent Jan-Sep 98. In 3d qtr, Miller kept Lite support at about $17 mil, but slashed MGD spending nearly 70%. Jumped spending on Icehouse, Molson brands, Mil’s Best and High Life tho in 3d qtr. YTD spending on Miller Lite up $7 mil, 12% and MGD spending still up $4 mil, 23%. Only High Life spending down for 9 mos. Following Coors’ 35-40% media spending hikes in 1st and 2d qtr, it "slowed" increase to $6 mil, 12% in 3d qtr, as it cut spending on Original Coors, Keystone and Killian’s. For 9 mos, spending on Coors Light up $15.6 mil, 21%. Coors spent $12 mil more on Coors Light than AB spent on Bud Light, $25 mil more than Miller spent on Lite Jan-Sep. Spending on Original Coors still up big 62%; Keystone, Killian support down. Zima support zoomed. Coors spent $32 mil more on major brands Jan-Sep, up 26%.

Heineken jumped media support 50% in 2d and 3d qtrs after spending about same in 1st qtr 99 and 2000. While Heineken jumped ad spending nearly $10 mil, 33% Jan-Sep, spending on Modelo brands up $2.3 mil, 9%. Boston hiked spending nearly 50% YTD, but Guinness reduced spending 4% and Labatt cut its media by nearly 25%, according to CMR data.

Avg price paid for Miller beers in supers up 45 cents, 3.6% to $13.02 in supers in 2000. That’s quite a bit more than avg prices increased for AB or Coors brands. But Miller brands on avg still sell for over $1 less as bigger % of its biz subpremium. Avg prices paid for AB brands up 30 cents, 2.2% to $14.23 and avg prices paid for Coors brands up 34 cents, 2.3% to $14.90. Interestingly, avg prices for AB brands up less in 4th qtr, 26 cents, and avg prices paid for Coors brands up 24 cents, but avg price paid for Miller brands still up 42 cents. For full yr, avg prices paid for Barton/Gambrinus brands up 66 cents, 2.8% to $24.07, but down 2 cents in 4th qtr. And Heineken prices up 42 cents, 1.6% to $26.38, but up just 1% in 4th qtr. Avg prices for Bud Light and Bud up 30 and 24 cents respectively to $15.25 and $15.19. Avg price paid for Miller Lite up 44 cents to $14.87. Avg price paid for Coors Light up 31 cents to $15.21.

Bud Light widened its lead as #1 brand in supers in 2000. Gained 1 share of consumer spending to 13.9, according to IRI, while Bud lost 0.5 share to 12.3. So Bud/Bud Light netted a half-share gain. Interestingly, that net gain dropped to 0.2 in 4th qtr as Bud share loss steepened. For 4 weeks, Bud/Bud Light actually lost 0.1 share of $$ as Bud Light still up 0.9, but Bud down 1 share. Compare to 99: then Bud/Bud Light gained 0.8 share of spending in supers. In 2000, no other brand gained or lost 0.5 share of $$. In fact, 2d biggest gainer in share of $$ went to new kid on block: Mike’s Hard Lemonade. It gained 0.4 share of $$ to 0.4. Heineken gained 0.3 share of $$ to 2.5 and Corona gained 0.2 share to 4.4. So Heineken, Corona and Mike’s gained 0.9 share of $$ in supers. Miller Lite share of $$ unchanged in supers at 7.5 and Coors Light up 0.1 to 7.3. Every other top 20 brand had trend in range of +/- 0.1 share for full year 2000. Top 10 brands got 59.6 share of $$$ in supers, up 0.9 share. Note: while it's tuff for established brand to move share needle much in mature biz like beer, a new brand can get an initial pop. Recall Tequiza grabbed 0.8 share of $$ in 99, but gave half that back in 2000.

Consumers spent 7.7% more in supers in 2000, with avg prices paid for a case of beer up 59 cents, 3.9% to $15.13, according to IRI. That meant industry volume up 3.5% in these big supers, much more than in all channels. But in 4th qtr, volume only up 0.7% in supers and down 0.8 in Dec. So industry softness showed up in this key channel too. Biggest winners for full yr in supers: imports, natch. Imports got 16.4 share of $$$ in 2000, up 1.6. IRI includes Mike’s Hard Lemonade in imports, and it gained 0.4 share of $$$, same as Barton/Gambrinus. Heineken gained 0.3. (Mike’s started from scratch outside of New England.) Compare to AB: AB gained only 0.1 share of $$$ to 41.5, even tho it gained 0.9 share of volume. Meanwhile, Miller lost 1.2 share of $$$ to 20.3, tho it lost less $$ share for 4 and 13-week periods. Coors eked out 0.2 share gain of $$ to 11.1, despite its strong volume trends. Pabst fell 0.6 to just 4 share of $$ in supers. Micros held even at 4.7 share of $$. So imports and micros at fully 21 share of consumer spending for full yr, 1 share bigger than Miller. Gained 8 share of $$ last 5 yrs.

Not just shipments softened late last yr. Convenience store beer volume down 3.8% in period just after Labor Day to Christmas Eve, according to ACNielsen data. Thru Sep 10, beer volume had been up 3.3% in convenience stores. Volume up at least 1.4% each mo Jan thru Aug; up 3%+ in 5 of 8 mos. But look at steady erosion in 4-week trends after Labor Day. Sep -1.9%, Oct -1.5%, Nov -5.8%, Dec –6%. Ouch. Even $$ sales were down during same 16-wk period in convenience stores: -0.4%, following 5.3% gain in $$ sales in this key channel thru Sep 10. Again, look at 4-wk $$$ sales trends Sep-Dec: +0.1%, +0.9%, -3.4%, -4%. About 20% of all beer is sold in convenience stores.

Judge Didn?t Stop Terminations; 5 NY Distribs Lose Heineken; 9-Mil Case Heineken Distrib?

Momentous changes in NYC. Judge refused to grant preliminary injunction to Oak and other distribs trying to stop termination by Heineken. So 3.6 mil cases (in 99) of Heineken changed hands overnight. Judge apparently accepted Heineken?s rationale that terminations were part of a regional consolidation plan, and therefore valid under NY law. So contiguous distribs Phoenix and Lobo (owned by same family) already delivering in all those NYC metro counties where distribs were terminated as of Jan 13. Phoenix/Beehive, Heineken?s largest distrib, sold just over 5 mil cases of Heineken brands in 2000 in NYC metro. With a little bit of growth, Phoenix/Beehive could sell 9 mil cases of Heineken brands in 2001. Even in metro NY that should bring a little profit and reduce transshipping.

Judge ruled in terse 2-page decision that the "injunctive relief" that distribs sought in order to stop termination "is not available" under NY law. Called NY law "unequivocal." NY law limits "the substantive remedy to damages" in cases "involving the implementation of a national or regional consolidation." So "the Court is without authority to grant a preliminary injunction in this action." Interestingly, judge first issued an extension of temporary restraining order and scheduled a hearing on the preliminary injunction. But before he held hearing, he issued this order that upheld Heineken. Recall that Oak and AB distribs had argued, as did 2 state Senators who helped pass the law, that consolidation had to be across state lines to qualify as "regional" under NY law and that Heineken?s terminations were pretext to get Oak?s biz. But judge didn?t buy. "This ruling upholds the state's beer franchise law," sez Heineken's Dan Tearno. Heineken implementing regional "consolidation in what is our largest local market" in US. "We're pleased that the court has applied the unambiguous language of the statute."

Now distribs which have lost brands are just arguing about how much Heineken owes them. Recall distribs’ lawsuit demands $200 mil in damages. Heineken also has ongoing legal action seeking declaratory judgment on value of brands. In meantime, Heineken achieved its objective of moving brands. The 4 AB distribs now send out trucks with fewer boxes and Oak now sells too little Miller, Guinness, etc to be profitable and/or competitive. What’s next? Two of distribs that lost brands still have Heineken in other locations. Heineken has about 20 distribs in state of NY, 8 or so sell AB brands too. It said that its regional consolidation in NYC metro sought to reduce 8 distribs to 1. So more Heineken terminations in NY might follow. Then too, now that Heineken has successfully triggered this unique clause in NY law, what will other suppliers do?

Not talkin? tankin? tech stocks, but 4th qtr was very soft for US beer biz too. And Dec sure was lousy. Taxpaid shipments down even worse than expected: dropped 1.2 mil bbls, 9.1%, according to current estimate by Beer Inst?s Matt Hein. US beer biz had been up a solid 1.7% for 9 mos, but 4th qtr US shipments dropped estimated 2% even while imports continued growth. Domestic brewers? US shipments down over 1 mil bbls for the qtr, and their tax-free shipments down another 200,000 bbls or so. So what happened? For starters: 2 less selling days in Dec, Miller inventory reductions, lousy weather, pre-millennium buy-in in 99, slower economy. We'll see how it all plays out, but question now is: was 4th qtr 2000 a temporary blip or is that 1%+ annual gain that everyone expects for next decade "irrational exuberance?" Final figures for 2000 ain?t in yet, but looks like some of our estimates last issue might have been a bit optimistic. (When we last went to press, Beer Inst hadn?t yet made Dec estimate of taxpaid shipments.) AB reported its shipments up about 1% in 4th qtr; had been up 3% thru Sep. Coors about even in 4th qtr; had been up 4.7% thru Sep. And Miller dropped about 1 mil bbls, 10% in 4th qtr, about half of that from reduced distrib inventories. Thru 9 mos, Miller had been down 2.5%. Pabst dropoff steepened too. This weak 4th qtr implies that US brewers? taxpaid shipments were actually down slightly in 2000, including hard lemonade volume which was up more than half-mil bbls. If Nov-Dec import shipments were soft too, US biz might not have even gotten 1% gain in 2000. (See below for more evidence of 4th-qtr slowdown from retail trends.) We?ll rerun final chart after top brewers announce shipments and total shipments picture firms up.

Didn’t take long. Following enactment of new fed law that withholds highway funds from states that don’t have .08 blood alcohol content (BAC) limit while driving, a dozen or so states already lookin’ at .08 bills, according to American Bev Inst (ABI). Tags at least 10 states as "high risk" for passage this yr. One of those states is AB’s home state Mo, where .08 "has significant press support and aggressive proponents," according to ABI. One recent development that will make .08 passage even more likely in Mo and elsewhere: AB dropped opposition to .08 state laws. Local Mo press garbled AB position, but AB veep/sr govt affairs officer Rich Keating told INSIGHTS that fed mandate that passed last fall "changed the debate" by withholding highway funds. "We can’t ask state governments to give up needed highway funds," he added. AB continues to believe .08 a "step in the wrong direction," Rich adds, and would support repeal of mandate. But AB won’t lobby against state laws. Instead, AB will continue to try to shift focus of prevention/legislation to high-BAC drivers and repeat offenders responsible for vast majority of alcohol-related crash deaths. Subsequently Beer Inst issued statement that echoes AB position. Tho beer industry has opposed .08 and fed mandates in past, sez Beer Inst, "since Congress has enacted such a mandate, the Beer Institute and its members will not ask states to forego needed highway funds and will not oppose adoption of .08 legislation at the state level." What about NBWA, which was very active in battle against fed mandate, tho not much of a player in past state .08 battles? NBWA prexy Dave Rehr told INSIGHTS: "We’re disappointed with the Beer Institute statement and think this makes the battles in the states more difficult." Gotta wonder too how soon MADD and others will be pushin’ for .05 BAC limit. Across Atlantic, 10 of 15 European Union nations already have .05 and Euro Commn just recommended remaining 5 lower limit.