Despite widespread expectation that Miller/SAB deal would be announced today, “there’s no certainty that those discussions will lead to any agreement,” Philip Morris ceo-to-be Louis Camilleri said in conference call. Miller distribs had hoped for some communication at NBWA spring leg conference in DC this week, but Miller said not one word about deal in its Monday afternoon session.  Instead talked only about its responsibility initiatives.  Miller’s distrib council currently meeting there; that should be a really interesting session.  Tho Miller volume better for 2d qtr in row (see below), uncertainty mounts and Miller continues to take media lumps, like Sunday Chi Trib article (front-page biz section) which several distribs pointed to as particularly harsh, tho it said nothing new. Chi is 1 of few mkts where Miller still #1.  The whole situation has gotta create psychological wear-and-tear on Miller and its distribs.  

 

Or one reason, anyway.  Aide to Rep Tauzin (who heads key Commerce committee) told Natl Assn of Broadcasters group that at proposed hearing Tauzin “intended to have witnesses address fact that, in Tauzin’s mind anyway, there was no distinction between liquor and beer or wine,” wrote Television Digest. TD reported too that “several legislators and their staffs expressed disappointment” that NBC caved. 

Hot topic at this year's Institute of Brewing Studies (craft brewer) conference in Cleveland. Some small brewers say they're gettin' hit hard by malternatives in supers, where category mgrs slash and burn to make shelf space for malternatives. Demand for malternatives has put strain on glass bottle suppliers, too, several craft folks told INSIGHTS, makin' packaging a tuffer and more expensive proposition.

Imports jumped 239,000 bbls, 16% in Feb, recovering quickly from an uncharacteristic flat mo in Jan.  Up 230,000 bbls, 8% for 2 mos, led by 314,000-bbl, 29% Mexican shipment growth thru Feb in advance of Corona price hike.  Dutch shipments came back strong in Feb; up 67,000 bbls, 8.6% yr-to-date.   Those 2 countries shipped 70% of all imports for 2 mos.  All other imports down double digits so far.  Canadian shipments down 126,000 bbls, 22.5%, probably because some Smirnoff Ice shifted to Diageo’s US plants.  German shipments down 8% and UK  down 19%.    

They’ll try ‘em but they don’t really care for ‘em much, sez very interesting new research from  Morgan Stanley’s Bill Pecoriello.  Morgan Stanley conducted focus groups of NYC guys 21-25 who drank imports or drank light beers and a 3d group of guys who tended bar in NYC. “The perception that malternatives are inferior to real spirits, [their] feminine image, low ‘drinkability, ‘flash in the pan’ stigma… all are factors that undermine repeats among the guys we talked to,” wrote Bill.  Tho “strength of the spirits' brands, distinctive packaging and media investment” will generate trial, even trial getting dicier now because of  “the ‘me-too’ halo, the lack of real spirits, feminine image and bartenders’ ‘not-at-my-bar’ attitude.”  In an earlier survey of 1300 consumers, 5% of beer users were “adopters” of malternatives (meaning they would use 'em at least occasionally) and  60% of those were female.  To meet very aggressive growth targets, sez Bill, malternatives will need more young male adopters. 

 

Outsized 6.8% volume gain continued thru Mar 31 in this channel (about 1/5 of all beer), according to IRI. Since total US beer biz up about 2%, some other channels getting hit. Who?s gaining share of $$ in supers? AB up 0.2 to 41.6 as Bacardi Silver already at 0.4 share yr-to-date. And Guinness Bass Import Co up 1 share to 3.4 YTD with Smirnoff Ice half its total and all of gain. Smirnoff at 1.7 share of $$, up 1.0. That's slightly below its peak share last summer. Meanwhile, GBIC passed Heineken, which also gained 0.2 share to 3.3 of $$ sales. Modelo Brands at 5.7, up 0.4 YTD. Broadly speaking, trading up continues. Interestingly, while avg price paid for all beers up 3%, many high-end brands either reduced avg price or nearly even. Avg Smirnoff Ice price per case equivalent down 3% (as lotsa its biz now in 12-packs), Heineken price about even and Corona price up 1.5% yr-to-date (its price hikes just starting in Mar). Notably, avg Bass price down almost 7%, $2 per case. At same time, avg AB price up 3%, avg Miller price up 2% (including 1% lower Miller Lite price last 4 weeks) and avg Coors price up 2.5%.

Here's novel idea: Japanese brewer Suntory inked deal with Fast Retailing to run clothing ads on cans of Suntory's low-malt "happoshu" beer. Happoshu, priced lower than reg beer, has ex-ploded from nothing to over 1/3 of Japanese beer mkt in just few yrs, and grabbed about 9-share in last year alone. In midst of stiff price war, deal will enable Suntory to cut price of happoshu about 12%.

Or Diageo's attempt to make ‘em legal there, at any rate.  Diageo floated amendment that would have created special exemption allowing it to give away to retailers machines that make slushy drinks, but that's a circumvention of tied-house laws, said beer folks.  So coalition of beer interests (brewers and 2 distrib assns) blocked ‘em from finding right bill to which they could attach their amendment.  At least, this time.  Diageo had hired several lobbyists in Tallahassee this spring, purportedly for other defensive reasons. Then Diageo went on offensive with slushy machine move, without notifying its beer distribs in Fla.  This also became yet another example of mounting “differences” between AB and Diageo.

An emerging theme: more folks are sayin’ there’s opportunity for smaller all-other distribs because big consolidated distrib can’t effectively handle all suppliers’ brands.  “We are beginning to see a re-energizing of the ‘all other’ third wholesaler in the market,” Calif consultant Roger Hanney recently wrote. “Without question,” he added, “it is difficult (if not impossible) for a mega-brand wholesaler to devote time and attention to brands—good brands—that don’t generate significant sales.  They are lost in the shuffle.”  So all-others guys with “vision and…acumen are now licking their chops at the prospects of snagging some of the good brands that will inevitably become available.”  In fact, some big  guys “smartly set up an ‘all other’ house as a competitive hedge against the loss of key brands years ago.”  Finally, “at least one forward-thinking mega wholesaler is now considering the same.”  Who dat? 

Imports up 11% in supers thru Mar 31st, according to IRI. But Corona and Heineken growth continue to outpace segment; up 14% and 17% respectively. What?s more, Corona Light up 25% and Amstel Light up 28% as imported light beers continue hot, hot, hot! (Labatt Blue Light up 25% too.) In fact, Corona Light passed Labatt Blue to become #4 import in supers, Amstel Light now #7. Labatt Blue up 7%, but Labatt USA?s Tecate up 15% in supers. Beck?s and Foster?s also up mid-single digits in supers, a better trend than they have overall.