Frank Beer has deal to buy 2.2-mil-case H&M in Madison, expected to close before yrend. Frank Beer will be 4.5 mil cases or so following completion of deal. While Frank has grown rapidly in recent yrs with hi-end and Coors portfolio, this deal ranks as a bit of a surprise. Many assumed Miller distribs would prevail in upper Midwest consolidations since Miller distribs by-and-large much larger than Coors distribs (H&M and Frank around same size). But most Coors distribs have dramatically better trends. In Milwaukee, Beer Capitol (Coors distrib) bought Miller Brands (BC owners sell Miller brands in other mkts). Suggests consolidation answers not cut-and-dry even in Miller strongholds.

Amidst all the volatility in mkts, some interesting shifts in beer stocks in last week or 2. MolsonCoors jumped several $$ this week to 45 or so after UBS's Kaumil Gajrawala named it his top bev pick. Kaumil expects synergies much greater than what's been announced so far, $1 bil over 5 yrs. AB InBev stock has climbed to 14 Euros, about a 40% surge off its lows. Not bad in this environment. And Boston Beer hit 52-week lows this week, dropping to 26.44 at one point, more than 50% below its peak. Not sure what drove further 10%+ drop this week, but it's coming back 5% or so today.

Bud American Ale sold 329,000 cases in food/drug convenience for 13 weeks thru Nov 30, according to aggregated IRI data. That's all incremental and same size as # 5 craft Fat Tire (328,000) during same period, tho Fat Tire only sold regionally. Shock Top sold another 105,000 cases, also essentially all incremental. Then too, Blue Moon sold about 1 mil cases, including seasonals and top 2 Leinie brands (seasonals and Sunset Wheat) another 240,000 cases. Those MC craft-style brands up another couple hundred thousand cases between 'em. All craft brands (IRI uses BA definition) sold 7.3 mil cases for 13 weeks and up 6%, a little more than 400,000 cases. So AB and MC's top craft brands sold equiv of about 23 share of BA's craft segment and grew 1.5x as much as craft grew. How could that not be having an effect?

Do big brewer high-end entries threaten craft segment? "It only becomes detrimental if those brands are used as pricing weapons to discourage retailers from placing craft beers and access to market," Dogfish Head prexy Sam Calagione told INSIGHTS Seminar Nov 17. "Frankly, a concern of small brewers is if an AB for example presents a portfolio to a distributor and says 'I have every kind of bullet that you need for your gun right in my holster,' then they go to retail and they own what finite amount of cold space that craft has. Then everybody as consumers suffers because that true breadth of different kinds of beers disappears."

By the way, why did it take AB so long to get going in craft segment? "We got there mainly out of necessity," brand mgt veep Keith Levy said. AB was slow to craft because "it didn't have to" sell craft-like brands since for years sales were strong. Plus, "we had other ideas of what we'd prefer to sell vs. looking at what consumers wanted and what retailers needed and what wholesalers needed to be successful in a marketplace that's ever changing." Lots more insights from high-end panel in next week's BMI.

Sometimes interesting trends occur on margins where not as much attention is focused. And so it's worth noting that amidst continued declines for FMBs overall, Mark Anthony (maker of Mike's brands) is outperforming significantly, Sparks continues to grow rapidly and a relatively new player Joose (United Brands) is tearing it up against category leader Diageo. Total flavored malt bevs down 0.9% for 13 weeks thru Nov 30 in food/drug/ convenience, according to IRI. Sharply differing trends by channel as FMBs up 3.4% in convenience, down 7.8% in supers. But Mike's is solid. Up 8.8% for last 13 weeks and 21 share of segment in those 3 channels. Why? Well, it's spending money on ads ($9 mil for 9 mos, more than double 07, according to TNS) and its avg case price reduced $1.05 for 13 weeks for starters. Combo of Sparks and Sparks Plus also still up strong; up in mid-teens for 3 mos and grabbed near 18 share. But real surprise is Joose at over 4 share of segment, almost all incremental. Getting hurt by this: both Diageo and Bacardi brands. Smirnoff Ice still #1 but down 9%, Smirnoff Green Apple down 13%, Triple Black down 21%. Those 3 brands lost 2.6 share of segment. Bacardi Mojito down 6% and Silver Raz down 19% too.

Hard to even keep up with it all. Both mktg veep Keith Levy and sales veep Evan Athanas named their teams, notable as much for continuity as anything. For example, Evan's announcement notes that each of 5 region veeps will continue in previous roles as will Natl Retail Sales veep Don Johnson, whom Evan gave his props noting that Don's "group has grown sales more than 4 percent this year" (editor's note: total AB retail sales up 1% or so). Several of Keith's team also "continue" in their roles, but notable bump for Gregg Billmeyer who "will lead the Trademark brand business" i.e. Bud, Bud Light, "value" brands, etc. Gregg was most recently sr director for the office of August Busch IV. Globally, Anheuser Busch InBev will have 250 lawyers, but only 50 from AB, said Legal Week mag. Since merger, 10 AB lawyers have left, it added. Plant manager of Fort Collins, Glenn Wilson "has been let go" reported the Coloradan, "a casualty of 1400 jobs cut this week." Then too, entire communications and consumer affairs depts were told to stay home yesterday and today as they awaited hearing from their Dept Heads "the impact on your individual position." Hadda be a nervewracking coupla days. Lotsa info about AB personnel changes at useful Lager Heads blog by St Lou Post Dispatch's Jeremiah McWilliams.

Despite easiest comp of the year - imports were down 14.4 % in Oct 07 - imports managed just 19,000-bbl, 0.8% increase in Oct 08, following similar gain in Sep. So for 10 mos imports still down 587,000 bbls, 2.3%. To get to even for the yr, imports need 13% gain Nov-Dec. With domestic taxpaid shipments up 1.8 mil bbls, 1.1% for 10 mos, total US shipments up 1.2 mil bbls, 0.7%.

Some familiar trends in country data: Mexican shipments continued down 2%; Canadian shipments continued down double-digits. (Expect big drop in Canadian shipments next yr too. Just as 08 shipments down sharply as Miller moved Fosters production to US, MC will bring all Blue Moon production back to US in 09, we hear.) But Belgian shipments picked up steam: +76% in Oct, +25% YTD. UK and Irish brewers scored double-digit gains, as they did in Sep. UK shipments went (slightly) positive for the yr. Irish shipments up solid 7.5% for 10 mos. After big gain in Sep, German shipments dropped 25% in Oct; down 9% YTD.

Predictably, attempt by group of private plaintiffs to stop AB InBev based on allegations deal would violate fed antitrust laws failed to win preliminary injunction. Fed judge rejected plaintiffs' arguments that InBev would be viable new competitor in US on its own, would come in and build new breweries, a new distrib system, etc. Assertions about InBev as "perceived potential or actual potential competitor" are "purely speculative and the evidence presented is insufficient to warrant" an injunction, judge ruled Nov 18 (same day closing announced). On other hand AB and InBev provided evidence InBev not poised to enter, that AB "has never believed that InBev was a threat" to do that. Such an entry "would be financially infeasible and unprofitable," analysis showed. Then too, while plaintiffs showed no proof they would be harmed, plenty of harm to AB, InBev and shareholders if deal stopped, judge noted. Judge also cited arguments made by economics expert/prof Ken Elzinga that AB InBev deal would add only tiny share to AB's current biz. Indeed, with DoJ's decision to force InBev to sell Labatt USA to 3d party, AB InBev will gain no share. Plaintiffs ain't givin' up. They're seeking reconsideration of judge's decision and want order that AB and InBev keep assets separate until case finally resolved. In fact, several documents filed since order, most of 'em sealed, as were lotsa documents before order, including declarations by Dave Peacock, Carlos Brito and others.

IRI data suggesting recent trade down in c-stores seconded by Greg Parker, prexy of Parker Oil c-store chain at INSIGHTS Seminar Nov 17. His data also showed lower-priced brands outperforming premiums in recent period. Another sign of trade-down: Parker's beer margins thinned as consumers bought more 30-packs. Example: his stores buy Busch 12-packs for $6, sell 'em for $7.19, a 16.5% margin. 30-packs cost $12.50, sell for $13.99, a 10.65% margin. Great Western Bev (liquor stores) ceo Scott Beckendorf has also seen "some shift" to larger packs/trading down in rural mkts, tho no trading down in urban areas. Josh Wesson, A&P's sr director for beer, wine & spirits, pointed to "bifurcation of purchasing" in co's specialty stores. Consumers still buying hi-end beers, but trading down in wine. Superpremiums/crafts still "affordable luxuries," said Josh, but not "conspicuous consumption" in form of high-end wines, which "is out."

Not surprisingly, these retailers mostly welcomed consolidation at brewer/distrib level. Means “less fighting about space,” fewer deliveries, fewer tickets, etc, said Greg.  Streamlined deliveries “would be a windfall for our industry.”  More efficiency “only benefits retailers,” Josh agreed, with “proviso” that consolidation shouldn’t lead to “profoundly negative impact on selection.”  At same time, Josh and Scott said consumers don’t need or want too much choice.  A 20% beer sku reduction led to beer sales increase at A&P, said Josh.  Wine sku reduction led to more dramatic sales jump. “People don’t want to be overwhelmed with choice,” said Josh.  When retailer adopts role of “taste filter”/expert, he added, becomes consumer’s “ally… which is really the critical bridge that you have to cross to get people to buy your products and come back.”  Scott dittoed, his liquor stores (some free standing, some adjacent to Costcos) limit sku’s.  “Our consumers rely on us to make quality choices for them.”  

Novel transaction will create new merged MillerCoors entity in Memphis. Deal expected to close early next yr. It was announced to employees tho agreement reportedly not finalized. As DBI (owned by David Ingram) focuses more on its Calif acquisitions, it will sell its original beer distrib investment, about 1.2 mil cases of mainly Coors and Corona, to what will become a merger between DET (MillerCoors out of Nashville) and AS Barbaro (Miller in Memphis). Merger will only be in Memphis, not DET's other mkts. Combined co will be close to 4 mil cases. Entire state of Tenn will be consolidated MillerCoors. AB at near 65 share in Tenn in 07 and recall that AB distribs in Tenn got Yuengling (over 3 share, some from AB), New Belgium.