Yet another strategy committee member, veep controller John Kelly (had that title since 1996), "will continue in the employment of the Company to assist in the integration of its financial systems," according to SEC filing. Robert Haire is now veep controller. That makes 13 of 17 of AB's most sr execs on strategy committee who will be leaving or have vacated position. Kinda amazing. Amounts to huge overhaul of top mgt, which has to be disruptive. And lots more changes coming, some soon.

But there's continuity too, as AB's recently announced executive team, in addition to prexy Dave Peacock, included lotsa AB vets like Tony Short veep wholesaler development, Marie Carroll veep planning, Keith Levy veep mktg, Evan Athanas veep sales, plus chief commercial officer and strategy committee member Bob Lachky also “assisting…with the transition” and veep gen mgr of non-alc efforts David English. There’s also continuity in corp affairs and communications, even as strategy committee member Francine Katz departing.  Several veeps named to “leadership team” under James Villeneuve. Include corporate social responsibility veep Carol Clark, community affairs veep Johnny Furr, govt affairs veep Mike Roche, communications veep Terri Vogt, etc.   

Calif Beer and Bev Distribs recently notified MillerCoors that state AG had contacted assn and would be contacting MillerCoors regarding its contract and state regs. Then too, Mich assn has asked liquor control commission for declaratory ruling that some provisions of contract violate state law. More details when we get 'em.

This increasingly popular option among distribs could soon happen in at least 2 unconsolidated major metro areas, including one surprise where MillerCoors pushed for it, sources say. Taken in conjunction with AB's coming deal to merge its Stockton branch with distrib Delta, plus Gulf Dist Holdings and Allstate Bev Co announced Ala merger, and this is starting to look like a trend. These 4 follow big NW merger earlier this yr between Mt Hood and Columbia. Most of these deals ain't 50/50, but they are a way to get benefits of consolidation without adding as much (or ideally any) debt. Hey, deals are expensive and credit mkts tight.

Then too, even those who buy outright sometimes take on new partners to help get desired deals done. Former NBWA chairman Aldo Madrigrano recently closed on Beer Capitol's acquisition of Miller Brands in Milwaukee. Aldo now owns majority, as he bought out other family members, but he also added Calif/Colo distrib Ron Fowler as very significant minority partner (INSIGHTS hears Ron's stake near 40%). Ron again in center of action makin' deals in 08: sold Mesa in San Diego to Reyes Holdings, but bought stake in Milwaukee and has stake (sits on board) of merged Columbia too. INSIGHTS even heard of an AB equity manager given 25% stake by estate of deceased owners, who was able to buy rest in part by borrowing from estate. In this environment, whatever it takes to get deals done.

We've gotten several recent reports of very weak beer sales in latter part of Nov. And no wonder. Total retail sales (not just for beer) down 2.7% in Nov, across 37 large retailers tracked by Goldman Sachs, with Wal-Mart doing well (up 3.4%) but several large chains (Target, Kohl's, JC Penney, Macy's, Nordstrom's) experiencing double-digit drops in same store sales. Even Costco's same store sales were down 5%. It was worst mo for retailers since at least 1969. Also 533,000 people lost jobs in Nov, pushing unemployment to 6.7%. Under such economic conditions, it ain't getting any easier. Beer, while holding up better than a lot of bizzes, is certainly not immune.

Craft brewers hurt by shortage in hops gotta be happy to hear crunch will ease somewhat in 2009.  Harvested acres of hops will increase from 118,000 to 127,000 worldwide, thanks to 9,000 new acres planted in 07 in Washington, Oregon and Idaho, reported Supermarket News.  “It (hops acreage) is coming back up fast,” said Ralph Olson, gm of Hopunion, a Yakima hops supplier.  More supply should help bring hops prices lower for brewers and drinkers as well.  Hopunion is currently selling some types of hops for $17 per pound, down from $22 just a few months ago.  Still, that’s a huge jump from $3.40 per pound Hopunion was charging for same hops 2 ½ yrs ago.

Recall earlier this yr, Boston Beer held a lottery to share some of its supply with smaller craft brewers.  About 212 craft brewers submitted requests for up to 40,000 lbs of hops, though Boston Beer only had 20,000 lbs available.  Boston will be releasing another 20,000 lbs and “those who didn’t win the first lottery will get priority,” noted SN.   

DBI (Ingram) closed on Stockton and Sacramento (about 7 mil cases between 'em) and has deal to purchase 750,000-case Angell Dist in Ukiah, Calif. More deals expected in Calif before yrend.

Is beer biz "awash" with ads that have little impact? AB prexy Dave Peacock disagreed with that suggestion at recent Beer INSIGHTS Seminar. Bud Light Lime ads "directly impacted" AB's ability to get brand placed at retail, he said. Key is whether beer ads "convey attributes of the brand, speak to consumers in a relevant way" and properly placed. That's how you build brands, Dave insisted. Noted soft drink biz where price of 2-liter Coke has been 99 cents for 10 yrs. And soft drink sales declining. In contrast, beer biz has 2 positives: "a little bit of growth and pricing power." Pricing power "comes from image," said Dave, and image comes from mktg. So he'd "debate anybody who says we are over-investing in advertising. I think it is what makes our industry great and arguably why we have the most profitable beer industry in the world."

Dave also challenged on effectiveness of Bud Light "drinkability" ads, but pointed out campaign in mkt for just 5 wks. "Consumers told us drinkability matters, and they say Bud Light has it." AB's "going to remind everybody of that. If the consumer doesn't follow us, then we'll adjust. We'll know a lot more a year from now." New "Drinkability" executions broke on Thanksgiving too. They "dial up humor" and "visual entertainment," mktg veep Keith Levy said, while continuing to "bang the drum loudly" on drinkability. They are "second leg" of AB's $48 mil commitment for 4th qtr. "Whole new bank" will break in Feb.

What's volume expectation for Bud Light Lime in 2009? So far, BLL "doubled expectations, said Dave. Don't know if brand is "near the top or there's more to come" in mkt share. "Through-puts, consumer turns and cycle time on packages indicates there is longevity," Dave added. Another new "megabrand" extension, Bud American Ale ain't been out long, but AB already ran ad in Supermkt News that said BAA "grabbed 0.3 case share and 0.4 dollar share within 2 weeks" in supers, citing IRI data. Bud Ale to get $23 mil mktg, with natl tv, print and outdoor, sez ad. That's a lotta dough for an ale.

Diageo North America Prexy Ivan Menezes and svp Jim Moseley acknowledged this beer comeback ("due to the economy") at Redburn Partners luncheon yesterday, according to analyst Chris Pitcher. But Diageo still "cautiously optimistic" and expects its North American biz to be up 2% this yr and next, suggesting it will take share as total category growth slower than that, according to Chris. Diageo also sees 2-3% rev gain from mix/price, but "high" risk of excise tax increases, either state or fed, next yr. Spirits "better positioned" than in 91, when volume fell 8% after Fed tax hike.

“Premium spirits in the US is holding up… benefiting from trading down from super and ultra premium,” said Chris.  “At the same time, there is a pick up in growth of the value brands,” he added.   Chris rates Diageo “sell” because of “real risk of trading down.”  Credit Suisse team also suggested that beer best positioned in recessionary environment in note yesterday.  Nielsen (food and drug) scanner data still shows 2.5% growth for spirits for 12 weeks thru early Nov.  But price mix only up 0.5%.  Credit Suisse team “skeptical” that this data captures true trends because it doesn’t report “heavy” on-premise action as well as “untracked, smaller-format stores,” both under big pressure in this tuff environment.    

MillerCoors just rolled out its "single equitable business model" to "deliver cost neutrality" on freight and fuel in 2009 and beyond, in words of recent "distributor communication" deck. MillerCoors makin' extra sure that it gets out in front, communicating this change effectively to minimize disruption and controversies. Spent 2.5 mos working with subcommittee of distrib council, sent deck out to distribs, met with 'em, talked to INSIGHTS and others. So far, seems to be working. INSIGHTS has heard nada to-date in way of complaints, tho there could be some disgruntled distribs closer to breweries. A larger distrib close to a brewery tho said it's "fairly designed." The Miller system used to be real sore spot for folks further from breweries. "New" model much more like Coors and other cpg cos.

Going forward, freight will be included in billing price for entire portfolio and increases in freight will be absorbed by MC. They won't be passed on. But natl fuel surcharge will be on invoices (charged as cents per case, not miles from brewery), going up or down monthly based on fluctuations in fuel prices from "baseline". For Jan 1, baseline fuel price pegged at $2.95, said Miller veep Brad Schwartz. Current diesel prices at $2.61. So distribs could easily get slight credit in Jan, unless there's big Dec spike. New system will "reduce the number of transactions," saving MC money too. The way it has handled freight/fuel model latest of several steps by MC attempting to be more proactive about addressing distrib concerns. Follows changes to contract and quick response to create new 15-second Lite ads that started runnin' Thanksgiving Day.

A biting and humorous piece in Slate chronicles "The Long, Slow, Torturous Death of ZIMA," while at least giving brand credit for lasting almost 15 yrs since its promising debut in 1994 to its quiet departure on Oct 10. "Rarely has such a famously maligned product enjoyed such a lengthy run - a testament to its brewers' Madonna-like knack for reinvention," wrote Brendan Koerner. Zima sold "an astounding" 1.3 mil bbls in 94 but quickly dropped by almost 70% to 403,000 bbls just 2 yrs later. In 94, "Coors estimated" 70% of beer drinkers sampled Zima. "Unfortunately for Coors, most of those drinkers tried it only once, since straight Zima tasted like tinfoil soaked in Fresca," sez Koerner. By end of that yr, "Zima had become a favorite whipping boy of David Letterman," he recalled. To "Coors' horror, Zima proved most popular among young women," and despite altering formula, line extensions like Zima Gold and Zima XXX, it could never win enough male drinkers back to survive. "For a brand that was selling tens of thousands of barrels per year up to bitter end, Zima's demise has inspired surprisingly little anguish among its fans," he noted. That's why he started a petition to send 1 mil signatures to MillerCoors hq to restart Zima. "As of this writing, it's just 999,947 names short of that ambitious goal."

Have a Happy Thanksgiving!