Mad Ave is “suffering through its biggest collective crisis in more than half a century,” wrote WSJ in big front-page feature.  TV ads down 11% in 2001, radio down 6%, newspapers down 7%, it noted.  Didn’t point this out, but amazingly, alc bev cos are spending more, more, more.  There’s tens of  mil $$ in new Smirnoff’s and Mike’s ads in 2001.  Plus Miller spending up another $50 mil or so just thru Jun.  And spirits cos just dying to spend their hard-earned dough on tube if only the networks will let ‘em.

Richard Sands, chairman of Constellation brands, reminded malternatives are not new category but “really a part of the low-alcohol refresher market.”  Is Constellation getting into the act?  “We are always considering malternatives,” Richard told UBS Warburg mtg.  Already in process of introducing brand in UK called French Connection-UK with eye-catching call letters FCUK.  Not sure yet if Constellation will bring it to US.  Richard not wild about malternatives just yet even as Smirnoff Ice “definitely showing some great promise.”  Problem: “Every brand that has come out, if you stop advertising at very high levels the brand dissipates far too fast.”  Said that was problem with Zima, Bacardi Breezers, wine coolers etc.

“We let the brand die.  We did lousy advertising, lousy on-premise,” said Molson prexy Daniel O’Neill in blunt assessment of his co’s woes in US at UBS Warburg mtg.  Molson’s US biz down 23% thru May, Dan said.  Called this yr’s ads  “quite embarrassing” and debuted much too late.  New ads coming Nov 4 will be “significantly superior,” according to Dan.  He’s also confident new mgmt team and the newly hired 53 “Molson specific” salespeople will help turn things around.  Over last 4 weeks Molson had “less than double-digit declines.”  Still working out kinks moving biz to Coors; distribution and logistics problems still being dealt with, said Dan, and not Coors fault.  At one point in Aug Molson was 130 orders behind: “That just can’t happen anymore.”   As for recent import slowdown in US, Dan said “for the first time in a long time the imports won’t see double-digit growth by the end of this year.  It might be half that.”

Had been up 9% thru Aug, said David Hazelwood, Heineken’s CFO to UBS Warburg conference yesterday. Sep 11 “hit on-premise business hard,” he added.  Barring further serious events, Heineken expects calendar yr depletions to be up 7%, tho Heineken will post about 5% shipments increase as it reduces distrib inventories.  Lookin’ at malternatives, chairman-in-waiting Anthony Ruys said: “The non-beer products are back again….   We’re slightly concerned about them because we feel that the consumer groups they are attracting are young, if not too young.  You have to be careful.  We don’t want to be too much involved in it if at all.  But it is something we are watching very closely.”   On another topic, brewer acquisition prices have “gone up to levels I hadn’t believed possible,” said Anthony.  Heineken’s Cruzcampo purchase was “roughly” $175 per bbl, he said, and deal had “lots of synergies.”  But Interbrew paid close to double that for Beck’s, “without synergies in my eyes so easy to achieve.”  Heineken brings its international brand to any deal, unlike SAB, others.  AB only other brewer with intl brand, he noted, and “they do tend to look at many, many things, but so far they haven’t had a particularly spectacular track record in acquisitions.” 

“Beer consumption around the world is declining by 1-2% a year,” wrote Economist, but “premium wines” (defined as over $6 a bottle) “rising steadily over the last decade,” and by over 5% a yr in Britain and America.  So brewers, especially Foster’s, buying up vintners, according to mag. Wine is now 40% of Foster’s profits, wrote Economist.  Noted #2 distiller spirits co, Allied Domecq, active in buying up vintners too. 

Supermkt News recently ran 10-page “beverage” supplement.  First article focused on liquor/wine sales in supers.  Noted slowdown (even pre-Sep 11) especially of high-priced wines, but focused on how supers build sales.  Used puffy language like “wine is well-suited for solution selling techniques and many retailers take advantage of the association between fine wine and fine dining.”  No such sell message in beer article that followed, tho beer one of most profitable items sold in supers.  Indeed, beer article led off with criticisms of distribs/brewers’ responsible drinking efforts as inadequate, including shot from retailer that brewers, like tobacco producers, “never brought up what they were doing for the public, until the government mandated it.”  Rest of article more positive as it detailed several brewer programs, but opening salvo  showed industry still has perception problems and seemed downright odd back-to-back with heavy sell message for wine. By the way, section had 3 full-page beer ads, not inch one from wine or spirits co. 

Tho total imports slowing in recent mos, imports from these countries continue to gain disproportionately off very small base.   Belgian beers (led by Interbrew’s Stella Artois) up 40,000 bbls, 116% thru Aug and  Czech beers (led by SAB’s Pilsner Urquell) up 22,000 bbls, 39%.  Imports from those 2 countries were only about 1% of import shipments, but 5-7% of growth so far in 2001.

Tho volume and sales both up about 2% in 3d qtr (to 57,000 bbls and $9.6 mil), oper loss was $606,000, up from $157,000 in same period 2000. In qtr, Redhook shipments mix shifted towards higher-cost packaged beer sales, while draft "particularly hard hit" after Sep at-tacks, ceo Paul Shipman told conference call. SG&A expenses up big, too. But Paul said too that "picture a little brighter than what the numbers say... in all regions except one, business was up in the quarter." And Red-hook expects Oct shipments to jump 8%.

Check out top AB exec stock moves so far in 2001: prexy Pat Stokes bought 195,000 shares in Mar at option price of $12.43 per, got paper gain of $6.1 mil. At same time, Pat sold approx same number of shares at $44 for $8.6 mil. Don?t know what price he paid for ?em. In May, chairman August Busch III sold 22,750 shares for $1 mil. Group veep August IV acquired 110,000 shares at option prices $20-$22, for paper gain of $2.5 mil. Sold 86,000 shares at same time for $3.8 mil (don?t know what they paid ei-ther). Also ?surrendered? 21,000 shares worth $895K. Finally, group veep Steve Lambright made some moves while monitoring Maris trial in Gainesville in late Jul. Sold 29,000 shares for $1.2 mil, surrendered 40,000 shares worth $1.7 mil, bought 70,000 shares at $16 for paper gain of $1.9 mil.

Smirnoff Ice “skews young” and “skews female,”  AB cfo Randy Baker told Wall St. It has more success off-premise than on, Randy said, but is gaining on.  Smirnoff also sourcing some volume from premium lights, because of similarity of demographics, Randy added.  It shows “a little bit of seasonality,” but “not as much as might have been expected.”  Malternatives “impacting young end of young adult,” Coors prexy Leo Kiely told analysts.  He expects it will be “very crowded category next year.”