Latest available state shipments data provides more detail on just what a difference Smirnoff Ice has made for Guinness Bass Import Co (GBIC) this yr. In 16 states with latest available data—mostly thru Jun or Jul 2001-- GBIC’s total shipments doubled, up 294,000 bbls. These states accounted for just over 1/3 of total GBIC US volume in 2000. Look at these share gains Jan-Jun for GBIC: Mass, 2.6 to 3.9; Fla, 1.1 to 2.0; Ga, 1.3 to 2.0; Oh, 0.6 to 1.1. In Tex, GBIC went from 0.3 share to 1.4 thru Jul with 118,500-bbl, 326% jump. Smirnoff Ice shipped 126,000 bbls in Tex alone thru Jul, so other GBIC brands off slightly there. Other share gains for GBIC thru Jul: RI, 2.3 to 3.7; NH, 1.5 to 2.2; Me, 1.2 to 1.8; Ia, 0.3 to 0.8. What happened in AB’s backyard? In Mo, GBIC up from 0.3 to 1.3 share with 29,000-bbl, 253% gain thru Aug. Jumped from #9 supplier to #5, leapfrogging Heineken, Barton, Seagram and Boulevard. In fact, Guinness gained 14,000 bbls more than AB in Mo YTD, tho AB at 65.6 share and climbing. At presstime, AB officially informed distribs of oft-rumored deal with Bacardi to intro "a new unique product in the growing flavored alcohol beverage segment."

Like many other bizzes, beer sales dropped immediately following Sep 11 terrorist attacks. And still hasn’t come all the way back. Many urban areas heavily dependent on travel, tourism and conventions such as DC, NY, Vegas, Orlando etc are way off, especially on-premise. But off-premise trends look ok. Biz in supers nationwide actually up slightly (0.8%) in week that ended Sep 16, according to IRI. And convenience store volume up 0.5% for 2 weeks thru 9/22 according to ACNielsen data as provided by Miller. While catastrophic events of Sep 11 definitely hurt total sales right afterwards, biz gradually improving since, and it’s difficult to quantify how lasting or large any effect will be. That’s word among many that INSIGHTS talked to recently. Even before Sep 11, total US biz up just 0.5% or so in 2001.

Miller "Improving," Sez Bowlin, Tho Volume, Share Trends "Not Where They Should Be"

"We’re starting to see the kinds of business results that indicate real progress," Miller sr veep mktg Bob Mikulay told Miller distribs in videotape of remarks prepared for NBWA but not delivered there because of Sep 11 attacks. Prexy John Bowlin, Bob and sr veep sales Jim Mortensen detailed some "summer successes" with core brands and display activity, but also noted lingering problems. "We have work to do" in Calif and Tex, John acknowledged, and convenience store and on-premise channels remain "opportunities." First the good news. Off-premise distribution increased Jan-Aug for each of Miller’s core brands (Miller Lite, MGD, Foster’s and High Life/Light) by 4-5 pts, Jim said. For example, Lite increased from 79.7% to 84.2%. On-premise distribution jumped 1-3 pts for each core brand. Core brand sales trends improving at retail too, according to Nielsen figures. Up 0.5 share in summer compared to 0.2 share gain YTD, and compared to share losses last year. Miller and its distribs boosted "display penetration" and "feature ad penetration" over key summer holidays, closing gap between Miller and AB. Miller Lite has "momentum," said Bob. Volume up 2.9% YTD in supers, up 4.5% over summer, and Lite "beat all premium brands" in gains during summer holidays, according to Nielsen. Miller Genuine Draft had "difficult" 1st qtr, but up 0.9% in 2d qtr. Up 3% in summer supermkt sales volume; up 1.6% in that channel YTD. Held share while Bud lost 0.3 share. High Life brands up 8.5% in supers, +0.7% in c-stores and "gained on Busch." In all channels, High Life/Light up 2.6% YTD. Foster’s trend picked up after "slow" start: down 2.4% in 1st qtr, but up 7.4% in 2d qtr and trend better than import category in supers over summer. The not-so good news. Decline of Miller’s non-core brands continues to bring down its overall trends. Miller total share off 0.4 in supers YTD (held even in summer), down 1.5 in convenience stores. Meanwhile, AB continues to score share gains (2-3 share) in c-stores. Foster’s continues to lag way behind Corona and Heineken in display penetration. MGD has improved trend in c-stores, but still down.

Miller national media spending up 78% last 2 yrs and this type of "spending will continue into 2002," Bob promised. John said Miller has reduced SKUs 10% this yr on top of 20% reduction last year. After reducing inventories by 4 days last year, Miller committed to shave additional day per year for next 5 yrs. Workin’ with distribs to make target date for controlled temp warehouses (June 2002) a "reality." Summing up, John said Miller and its distribs are "focusing and executing better," that Miller advertising has "significantly improved" and that Miller’s relations with distributors "continue to improve," but that "volume and share performance are not yet where they should be."

Another big deal just closed. Magnolia Mktg, Coors/import distrib in New Orleans (owned by $1 bil+ alc bev distrib, the Goldring family) sold its Corona biz statewide in Louisiana for about $22 per case to 8 different Bud distribs. Magnolia and Miller distrib Delta (which at 1 time was part of a public co) worked out deal to merge awhile back, but Gambrinus withheld approval. In fact, Gambrinus so intent on moving brands to Bud distribs that it provided financial assistance to at least 1 Bud distrib. Simultaneously with Corona deal, Magnolia and Delta Bevs merged into new 7-mil-case Miller/Coors distrib. About 20+ Bud distribs acquired Corona so far in 2001, all in Gambrinus territory.

Blockbuster deal appears to be win-win. Coors gets a lot of cash for underperforming asset. Harbor (owned by Reyes family) gets a lot more mkt share, efficiencies and key brands, grows to about 20 mil cases. That's about half of Reyes family beer volume in US. Harbor paid about $40 mil for assets and inventory, but is leasing warehouse. Harbor acquires over 5 mil cases of Coors volume, 1.5 mil+ cases of Labatt (that Coors branch sold) to add to its 4 mil cases of Modelo brands and 6-7 mil cases of Miller products. But this behemoth also significant distrib of lotsa leading import and specialty brands.

Heineken USA resolved its tangled metro NYC distribution and legal battles. It had tried to go from 8 distribs down to 1 as part of "regional consolidation" plan. Recall: when Heineken terminated a buncha distribs under its interpretation of NY law (NY law since changed), distribs sued. As these disputes settled, HUSA lands up with 2 distribs for entire NYC metro area: Phoenix/Beehive almost 8 mil cases, Clare Rose around 2 mil cases. The 2 sell almost 16% of Heineken’s nationwide volume. The 5 distribs who sold their Heineken volume got $71.5 mil, $16 per case for about 4.5 mil cases.

Since Boening family had vast majority of this Heineken volume in 2 metro NYC distribs, Oak and Boening Bros, it got $62 mil. Both those distribs continue in biz, selling about 4 mil cases, mostly at Boening Bros on Long Island, which still has Miller. Both sell many import and specialty brands. The Boenings "ended up selling just their distribution rights in the Heineken brands back to Heineken for more than Heineken offered for their entire businesses one year prior," said atty Gary Ettelman of Ettelman & Hochheiser, which represented distribs in case. Transaction "structured as an acquisition of the wholesalers’ distribution rights," added atty Keith Hochheiser. So deal "acknowledges that wholesalers own a very valuable intangible asset." Heineken statement lauded this "completion of its metropolitan New York distributor consolidation" to "establish a consistent and effective distribution network." While Heineken statement talks of distribs who acquired its brands, settlement sez Heineken itself paid selling distribs. Don’t know what acquiring distribs paid Heineken.

Other sellers of Heineken brands were 3 AB distribs who split $10 mil. But 1, Clare Rose, a large AB distrib which Heineken had earlier terminated in 1 part of NYC, will now sell about 2 mil cases of Heineken. It will keep its Heineken volume in part of Long Island and acquire Boening Bros approx 1.5 mil cases of Heineken in rest. Amazingly, Clare Rose and Boening Bros had each received 90-day termination notices from Heineken back in Jun. Terminations were scheduled to go into effect Sep 17. But at 11th hour and just after gov signed strong franchise law, distribs and Heineken settled. Next step: most likely, long-contemplated "consortium" where Heineken will own unspecified piece of Phoenix/Beehive, its largest distrib, which also sells Miller, Guinness. Miller has option to loan up to $5 mil to new entity and could eventually convert that into equity.

Quickening pace of consolidation keenly illustrated by rapid-fire deals, some just for brand rights, in last 2 weeks. First, in metro NYC Heineken settled all legal disputes with distribs and completed consolidation of its network there. About 4.5 mil cases of Heineken brands (7% of its US volume) changed hands for $71.5 million. Settlement stipulated that these payments were for "distribution rights." Then in Anaheim, Coors sold its 7-mil-case branch to Reyes family for around $40 mil. Already largest US beer distrib, Reyes family will sell almost 40 mil cases in 4 distribs. And in Louisiana, Corona went to Bud guys, this time in entire state. Almost 600,000 cases changed hands for $22 or so per case. That’s another $12-13 mil. Once Corona sold, Miller/Coors merger finally consummated in New Orleans too. That ain’t all. At presstime, Gold Coast distrib in South Fla announced that it had deal to buy J.J Taylor Corp in Miami. Taylor sells about 4.5 mil cases of Miller and imports there. It had made several acquisitions elsewhere in Fla earlier in yr and will still sell around 25 mil cases in Fla, Mass & Minn after deal closes. Presuming deal happens, Gold Coast will sell over 18 mil cases and $300 mil of beer. These deals show Miller/Coors distribs poppin’ up in more and more major metro areas; there’s new Miller/Coors distribs in Southern Calif, New Orleans and 1 coming up in Miami. (See below for more detail on these big deals).

About 37% of beer $$ are imports in Bennigan’s restaurants, vp mktg John Beck told a panel sponsored by NABI (National Assn of Bev Importers) at NBWA convention last mo. It’s just about same at Marriott restaurants, said Brian Yost veep of bevs for hotel chain. Imports no longer growing at rapid rates in these important on-premise chains (up 2% in Bennigan's thru Aug, said John). Beer biz in Bennigan’s is 72% draft. In avg Bennigan’s there are 20+ tap handles and 11-12 are imports. There are 23 brands mandated and 17 of them are high-end. Marriott’s mandates 10 imports, and 4 more are optional chainwide, including such left-field brands as Lindeman’s Framboise and Sam Smith’s Oatmeal Stout.

In 7-11, the avg store has about 100 beer SKUs, said Tariq Khan, head of assn of 7-11 franchisees, more if store in urban area. The #1 beer SKU is Bud 16-oz can and the #2 SKU is Heineken 24-oz bottle, according to Tariq. After Corona and Heineken, the #3 import package in 7-11 "pretty much across the country" is Smirnoff Ice. At N Calif supermkt chain Raley's, avg store also has about 300 SKUs and "every item has to pay for itself," said Bob Jennings bev mgr. In a world of category mgt, makes it "extremely difficult" for smaller import brands, especially if they don’t have promo $$$ and success behind them. The 300 SKUs is more than 5 yrs ago, because Raley’s is "overspaced" on craft beers and is "cutting back."

.........A Few Seats Remain: Beer Insights Seminar in NYC on Nov 4 only 2 weeks away -- now includes panel on malternatives/ready-to-drink beverages with execs from Guinness Bass Import Co, Mike's Hard Lemonade and Anheuser-Busch. Call to reserve your seat.