Wirtz Beverage Group and Young's Market "tentatively agreed to a joint venture," wrote Chi Tribune. Each co will have equal voting, tho equity stakes not yet finalized, Rocky Wirtz told Trib. He'll be prexy of JV, which will have over $3 bil in annual sales, and would be 4th largest wine and spirits distrib.

Another predictable event, but yet another challenge for Miller Legacy brand. MillerCoors followed AB lead back in Jun to decaffeinate alcohol energy brands and remove the taurine, guarana and ginseng too. MC reached agreement with 13 state attorneys general and SF city atty to reformulate Sparks/Sparks Plus. (Brewer had earlier put Sparks Red intro on hold.) MC will also change ads/website content and "make a $550,000 payment" to cover AGs' investigation costs. Recall, AGs hit AB up for $200,000, but Sparks a much bigger brand than AB entries. Sold approx 400,000 bbls in 07 and up double-digits in 08 at high margin. Tho MC sayin' it's "committed to the Sparks franchise" and "confident" it'll continue to grow, gotta anticipate (at least) a Chill-like sales hit. That's probably gonna hurt.

Adding insult to injury, AGs continued to attack brand/mktg even as they cut the deal. One called Sparks "an insidious and insane drink that deservedly is now down the drain." Tho MC pointed out "no finding" in agreement that MC violated laws or improperly marketed brand to underage, AGs continued to claim it did the latter. Net-net - alcohol energy biz now purview of marginal malt bev suppliers and consumers who will continue to mix Red Bull/Monster and other energy drinks with liquor at their will. And so, another public health "threat" is "solved."

Not a big surprise, but not good news either. Nov taxpaid shipments down 475,000, 3.5%, estimates Beer Inst's Lester Jones. That follows 1% decline in Oct and together with that dropoff wiped out 1/3 of Jan-Sep gain. Also pulled yr-to-date taxpaid increase down below 1%. Jan-Nov taxpaids up 1.3 mil bbls, 0.8%. With imports off nearly 600,000 bbls Jan-Oct, means YTD gain for total US shipments only 725,000 bbls, 0.4%. Not much better than flat.

AB InBev deal made Ad Age's yrend top 10 as #6 story of yr, and ceo Brito is #1 person to watch in 2009: "How he proceeds with the Anheuser-Busch's iconic marketing machine will have a profound impact," wrote Ad Age. How AB InBev might shift gears on mkt spending a subject of keen speculation in sports world too. Interesting article in Chi Trib titled: "Sports, too, hard hit by the economy." Noted job cuts at NFL, NBA, "corporate sponsors deserting NASCAR," Arena Football League shutting down for 2009 season etc. And hi-up among concerns, along with declines in automotive and financial industries, according to Marc Ganis of Sportscorp: "You have Anheuser Busch, probably No.1 in the world in sports advertising and sponsorship, taken over by InBev. Is InBev going to be as committed? Everyone in the sports world is waiting to see how that shakes out." Click here to read Tribune article.

Folks in mktg and sales have been hearing about job cuts in those depts, with unconfirmed reports placing total number in 160-180 range. Sales dept changes last week included departure of some sr sales execs closely tied to previous sales honcho Mike Owens. Tho InBev "took pains to congratulate and compliment AB's marketers before it took ownership," wrote St Lou Post Dispatch's Jeremiah McWilliams, "overriding sense we get is that if you are looking for stability, look somewhere besides AB, at least for awhile." AB already changed plant mgrs at 3 breweries at least: Williamsburg and Houston as well as Fort Collins. Even many survivors still don't know what's next. Another recent visitor to St Lou described AB as in a "state of shock."

Lately a lotta noise again about soft Legacy Miller brand trends, especially in Midwest where those brands are bigger % of even a consolidated distribs' volume. "MC is lost on how to handle Miller legacy brands," said one. "Distribs are in an uproar about lack of leadership from mktg function of MC" on those brands, he added, especially Lite. That was certainly INSIGHTS' sense back at Oct regional meetings. Since then MillerCoors responded with new ads, communications with distribs and asked for patience until Mar meeting. Tho MGD franchise rebounding w/MGD 64 and High Life ok, Lite trends especially weak, down 5.6% for 13 weeks thru Nov 30 in 3 channels, according to IRI. And some distribs hurting. "We want to get [Miller Lite advertising] right" as opposed to "another bandaid," said MillerCoors spokesman Pete Marino. MC "testing a number of campaigns and will come out guns blazin' in March."

Meanwhile, "Miller brands are declining steeper every day," said another. He faulted that Miller "has always tried to manage and control your bottom line," citing policies on paying for POS, local media, paying for coupons, etc. That's a kind of "socialism" where Miller's "constant desire to manage the net income of a distributor" leads to stagnation and "minimal desire to grow the business." Contrasted that with Legacy Coors where (especially with policies implemented "under Frits' tenure") there was more "risk and reward." If a distrib spent more on a brand (risk), that was factored in margins (reward). Focus on Coors side "growing overall share and volume."

Widening gap between subpremiums and premiums leading to increased trading down in New Eng, suggested 1 AB distrib. Last spring, Busch 30-pack price reduced from $12.99 to $11.99, in at least part of region. This fall, Bud 30-pack raised from 18.99 to 19.99 (price-to-retailer). So gap went from $6 to $8, increasing by $2. That's incentive to trade down in tuff economic times. Then too, pricing on biggest hi-end beers getting more aggressive, sez another source. In NH, $10.99 12-packs for Corona, Sam and Heineken in key chains thru end of yr. That's down a couple of price points, he added. In Nov in NH, there were $10.99 12-packs for hot Stella brand, with a $2 IRC and $9.99 Beck's and Bass with $2 mail-in rebates. Why go there? Meanwhile, more discounts on Corona in Chi metro, tho details unavailable at presstime. A Southeast distrib, asked about trading down, responded simply: "Big Time." These developments collectively create disconcerting picture at end of 08. Got more details? Send us your comments at This email address is being protected from spambots. You need JavaScript enabled to view it.

Between proposed excise tax/license fee hikes, brewer synergy goals and increasing signs of trade down, potential pressures on distribs' profit line comin' from lotsa directions. As states face massive budget shortfalls -- a collective $100 bil, one source told INSIGHTS -- they're lookin' everywhere for $$. Just yesterday, NY gov proposed more than doubling excise tax on beer (and wine, tho spirits skated in his proposal). But even as tax hikes likely to be on lotsa state legislators' tables next year, consumers, pols and industry members pushin' back. Calif legislature yesterday rejected gov/Democrat proposal to levy nickel-a-drink tax, Bloomberg reports. ME voters reversed an adopted beer tax hike there in Nov. And Repubs in NY (and elsewhere) vow no new taxes. Meanwhile, industry lobbyists gearin' to fight inevitable battles. In another route to raise $$ from alc bev biz, state ABC in Ark proposed sweeping fee hikes, including increasing highest fee for wholesaler beer license quintupling from $1,000 to $5,000, reports The Morning News. Liquor distribs got hit even harder in ABC proposal with their fee jumpin' from $1K to $12.5K.

That's general conclusion after lookin' at 13-wk data (thru Nov 30) in IRI's new combined food/drug/c-store database. MillerCoors eked out 0.2% volume gain this period, lost 0.5 share. Differences in legacy trends pretty stark. Each of top 4 Legacy Coors brands/families up: Coors Light (+1.5 mil cases, 6.8%), Keystone (+1.4 mil, +20%!, with Keystone Light up 1.2 mil cases on its own), Banquet (+121K) and Blue Moon (+190K) for collective gain of over 3.2 mil cases.

But only 2 of top 4 Legacy Miller brands/families up, and neither up much: High Life +260K cases, 3.2%, and MGD/MGD 64 +100K cases, 2.9%, based on strong 64 rollout. MGD down 472K cases. And Miller Lite down 1.4 mil cases, 5.6%; Mil Best Family lost 824K cases, 9.6% for 13 wks. That's net loss of about 1.9 mil cases. Then too, Chill shed half-mil cases and Icehouse down 210K cases. Olde English and Mickeys up modestly, but Steel Reserve down sharply. So MC's malt liquor biz down 175,000 cases. Also down: Foster's and Red Dog. Miller had a few other winners: Sparks/Sparks Plus up 143K cases in these channels and Leiny family picked up about 50K cases. Not all wins for Coors: Molson family down 30K cases and Killian's lost 60 K cases.

Interesting note from Credit Suisse’s Carlos LaBoy this morn following last week’s meeting with SABMiller cfo Malcolm Wyman.  Carlos detected an “improving tone” from Malcolm as “commodity costs have continued to ease and more importantly fuel costs, which account for less than 10% of COGS, have been cut significantly.”  Lower fuel “relieves pressures on consumer disposable income” so “global beer volumes…holding up relatively well in many emerging mkts.”  What about MC JV in US?  Synergies “remain ahead of schedule” and also “easing commodity costs plus the defensive nature of the beer sector in” US “bodes very well for the MillerCoors JV.”  Then too, with AB “shedding one third” of work force, “clearly any disruptions are now more prevalent on the     A-B side than on MillerCoors, which is coming into the new year with its staff integration complete.” 

Why are Coors brands doing so much better than Miller brands?   “US distributors make slightly more per case selling Coors than Miller,” noted Carlos.  “With Miller sales people no longer dissuading distributors from selling the previous rival Coors brand, we are not surprised to see the surge in Coors volumes.”  There could be more synergies than anticipated from these trends, because Coors brands “will have to travel less distance” once “fully-brewed” in Miller facilities.  “Moreover, there is an opportunity ahead to reduce the distributor’s incremental profit from selling Coors and to equalize the economics of Coors Light with those of Miller Lite for distributors,” according to Carlos.  Carlos “not sure how much of this is in the synergy numbers.” 

SABMiller “stands out as the premier long-term growth story with exceptional management depth against a time that global beverage investors are worried about how ABI will pay down a huge debt load, how high-end spirits will fare in the macro downturn , or if Coke will finally fix its domestic market,” Carlos sez.  But also: “SABMiller’s mix of geographies and M&A opportunities is compelling.  At a time that ABI is debt-strapped and selling off assets, SABMiller seems to be in good shape to use its equity to clean up the consequences of ABI’s encroachment on a number of brewing families, whether they be in Canada, the US or Latin America.”