A number of mid-sized (or smaller) craft brewers crowin’ about their 08 growth, far faster than segment (likely up about 5%). Magic Hat depletions jumped 26% in 2008, it said, fueled by entering new mkts like Chi, Milwaukee and Atlanta as well as double-digit growth in “mature markets.” Its flagship #9 brand up 33% in 08. Magic Hat shipped 128,000 bbls in 08 and expects 165,000 in 09. That would be another 28-29% jump. Stone jumped 20% in 08 and produced 88,000 bbls, it estimated. And smaller Saint Arnold said it too jumped 28%, 5,000 bbls to 23,000 bbls in 08.

Perhaps it’s a bit early to make this call in such a difficult macro environment, but UBS ‘s Kaumil Gajrawala  has interesting note this morning explaining his optimistic thesis for continued healthy beer pricing in 09.   “A duopoly bodes well for a rational pricing environment,” wrote Kaumil.  ABI and MillerCoors “combined have nearly 90% dollar share” of subpremiums.  That’s “a key reason why beer pricing can remain solid.”  Since top 2 “control the lowest priced offerings within the category, we expect them to narrow the price gap between the subpremium and premium segments by growing subpremium pricing faster.”  Indeed, Kaumil points to recent Nielsen data that shows each of Keystone Light, High Life and Natty Light all with avg prices up 7-9%, while megabrand premium lights avg price up 5-6% over last few mos of 08.   “Narrowing price gaps” between premium and subpremium “should result in two important changes,” according to Kaumil: 1) “Less trading down as the focal point shifts away from subpremium pricing; 2) improving margins on subpremium brands.”  One other key reason: private label beer just 0.1% $$ share and alc bevs at 0.8, “lowest private label share of any retail category….  Given its limited share, private label has little influence on beer pricing unlike many other categories.”  

Metro Bevs in South Bend -- Miller and Coors in 4+ counties – just sued MC and designated buyer North Coast.  Unlike elsewhere, Metro sent notice of sale letters to brewers back in Aug and later opened talks with North Coast.  Letters dated before MC sent letter that it would terminate Metro, that North Coast was designated buyer and that MC would not approve anyone else in territory.  But after 120 days, no deal.   After that, Monarch Bev (only other MC distrib left in Ind) negotiated deal with Metro that surpassed North Coast’s by “millions of dollars,” Metro sez.  So suit is Metro’s response to “wrongful and oppressive attempt” by MC to terminate Metro without “fair compensation and to force-sale  Metro’s” distrib rights to North Coast. Like Oh distribs, Metro argues MC simply an “intra-corporate reshuffling” of Miller and Coors to “circumvent protective statutes and contracts,” illegally terminate Metro and drive consolidation.  Metro seeks TRO/injunction to avoid mandatory arbitration.  MC has not yet responded.  Situation  also interesting because it involves 2 of better-known beer distrib personalities as potential buyers, North Coast prexy Bruce Leetz and Monarch prexy (NBWA chairman) Phil Terry.  

As state after state looks to raise funds to offset deficits, tuff precedent in Conn.  State legislature voted last week to grab unredeemed deposits from distribs.  For 30 yrs, distribs fought off attempts to grab the nickels, Hartford Courant reported, but “those days are now over, and the first payments to the state must be made by April 30.”  As in other states, distribs argue unredeemed deposits defray recycling costs, but politicians and environmentalists have long fought to get the nickels.  One big Conn distrib provided info to state that showed it collected $7.3 mil in deposits in 2008.  After returning $5.5 mil to consumers and recycling expenses, made approx $50,000.  At least 4 distribs claimed net loss on recycling.  “The public is going to pay twice for recycling for the archaic bottle bill,” Conn Beer Wholesalers Assn exec director Pat Sullivan told Hartford Courant.  Taking the recy $$ from distribs “will result in a major price increase.”      

Dialing up the heritage and tradition cues, partly to “reassure” about continuity following InBev takeover, AB will give a record 3 of its 7 ads in Super Bowl to Clydesdales.   While AB had originally purchased 5 minutes of Super Bowl time, it “repurposed” one of its 30-second slots to Golden Globes, top AB mktg execs said in conference call.  But at 4.5 minutes, AB still bought more than last yr’s 4 minutes.  As biggest buyer, AB pays about $2 mil per 30 seconds, said WSJ, compared to up to $3 mil for others.   Various reviews noted “dominance” of Clydesdales, as Ad Age called it.  “Bud to Strike Note of Pragmatism,” headlined WSJ, “Emphasize Long-held Values,” headlined St Lou Post Dispatch.  Only Chi Sun Times columnist Lewis Lazare said ads “fall flat.”   In departure from last yr’s Bud/Bud Light focus, 1 of ads will be either for Bud Light Lime or Bud American Ale.  

Interesting AB InBev move that will give it new “functional management” office with about 110 people in NYC, including offices for ceo Brito and cfo Felipe Dutra, who will split time between NYC and Leuven, Belgium.  Belgium will remain Global HQ, according to release where Board and Executive Board will mostly meet.  But Belgium office will cut as many as 89 jobs, and still have about 70 people, ABI told Bloomberg.  North American HQ will remain St. Lou.  Another new move:  AB InBev will change its payment terms from 30 to 120 days for its top 500 suppliers, Lager Heads blog at St Lou Post Dispatch reported last week.  New terms go into effect Feb 1. 

Heineken broke its first new ad campaign in yrs yesterday on NFC championship game, a 30-second spot featuring actor John Turturro.  New slogan “Give Yourself a Good Name” is “umbrella” campaign and will appear in both Heineken and HPL ads.  Clarification:  While HUSA earlier wrote distribs “we are bringing Heineken and Heineken Light together under the same platform” and “no longer will we splinter our communications to the consumer with different messages,” it turns out Heineken and HPL will have separate executions with same slogan, cmo Christian McMahon told INSIGHTS.   Won’t appear in same ad.  HPL’s “Share the Good,” which broke in mid-08, apparently shelved. 

Heineken USA gave INSIGHTS sneak preview of 2 ads. Christian explained purpose: to “reestablish” Heineken as “a quality premium brand.”  HUSA will have 12 new executions by time of its Feb sales conference.  Christian called platform “aspirational” and a “values campaign” aimed at “core Heineken consumer” that shows Heineken “worth paying more for.”  Judging by ads, “core Heineken consumer” is male, older (Turturro is 51), urban and idiosyncratic.  (Yrs ago, stats showed Heineken consumption almost 50% African American and Hispanic.)  In 1 ad, Turturro holds bottle of Heineken and sez “This is not a beer.  This is a compass so navigate wisely.  Don‘t get lost.”  In another, he sez: “This is not a beer.  This is a sword.  Wield it with honor or cut yourself off.”  

Combo of solid mid-single digit gain scored by Coors Light and Miller Lite’s low-singles decline meant that Coors Light grabbed #3 spot back in total shipments in 2008. (Excluding Puerto Rico, Lite still #3 in US-only, we figure.) Coors Light had #3 spot 2000-2003 before Lite surged in 04. But Coors Light jumped about a half-mil bbls ahead in 08, we estimate. Top 10 brand details in next BMI.

Correction: Coors Light/Miller Lite Gap Narrower than ½-Mil Bbls Turns out Coors Light total shipments trend in 08 not quite as strong as we originally thought, as softer exports knocked it back a point or so.  Coors Light did outship Miller Lite in 08, but gap not the ½ mil bbls we suggested in Express #7. (And, as noted, Miller Lite still ahead in US-only shipments, excluding Puerto Rico) .  Stay tuned.  [Correction printed in vol 11 #9, Jan 23, 2009]

Tho MillerCoors didn’t list it among 4 states where it would make consolidation push, Ky also had successor clause that enabled MC to move brands. And so tiny Manis Dist in Hazard (about 200,000 cases of Miller) got notice (similar to those in Oh and Calif) and ultimately sold to Clark Dist, which covers most of state. Indeed, Clark was already in Hazard as Coors/Others distrib there. But here’s where it gets really interesting. Clark is Crown’s distrib in most of state, reportedly about 300,000 cases. Manis sold under 10,000 cases of Crown volume in Hazard. And yet as Manis sold, Crown elected to go with AB house, Perry Dist instead of Clark.

Could it be state antitrust watchdogs beat feds to punch in reviewing distrib consolidation?  Recall that economist/prof Ken Elzinga told INSIGHTS Seminar back in Nov that “next round in antitrust activity in beer will involve issues at the distributor level,” specifically concentration taking place as deals result in big, big shares, fewer competitors in some mkts.  Not long before Ken spoke, we had reported AB-Coors distrib Fuhrer Wholesale in western PA struck deal to purchase all-others distrib Lutheran, giving Fuhrer well over 70 share in parts of Pittsburgh area.  That deal closed in Dec.  Turns out state AG’s office subsequently told Pitt reporter it’s “reviewing” the deal.  AG’s office hasn’t responded to two INSIGHTS requests to confirm investigation, but PA atty Cris Hoel has acknowledged several local distribs he represents were interviewed by attys from AGs office in Dec to talk about deal and its competitive consequences.  Stay tuned.