It is the Big Apple after all. Manhattan Beer listed at $603 mil in 2008 revs, 48th largest private co in NY metro area in Crain's NY Biz. That's a $35 mil, 6% gain, which might even be low considering continued double-digit growth on Coors portfolio in NY metro. Its competitor Phoenix (Heineken, Miller) listed at $270 mil, flat with last yr. And Clare Rose (AB, Heineken on Long Island) listed at $200 mil, up 1.5% from $197 in 07. The 3 distribs expected to total almost $1.1 bil in 2008 revs. By the way, #9 NY private co is leading wine and spirits distrib, Charmer Sunbelt, listed at $4.6 bil, also even with last yr.

Due to "common issues of fact and law," all distrib cases in Oh against MillerCoors got wrapped into single suit in US Dist Ct in Southern Dist of Oh. Claims will be limited to "whether MillerCoors is entitled to terminate distribution rights" under Oh law. All other claims and claims vs. other distribs "shall be dismissed," according to joint letter from distribs' attys. Consolidated cases include charges levied by Bev Distribs Inc, Muxie, Dayton Heidelberg, AFP, Esber and Tramonte.

Another longterm member of strategy committee, Communications and Consumer Affairs veep Francine Katz, will leave AB Dec 31. That makes 12 of 17 members of AB's strategy committee. Another longterm veep, Lisa Joley, general counsel of AB Inc, announced her departure. Here's prexy Dave Peacock on Francine: "Through television interviews and challenging situations, Francine has proven herself as an excellent spokesperson and an invaluable advocate. Her ability to quickly respond to confrontations and convey an emphathetic message that resonated with consumers and constituencies made her the ideal representative for the company." Cited appearances on 60 Minutes, Dateline NBC, Today Show, etc. Dave also said "under her guidance," AB's "social responsibility efforts have been consistently recognized as best-in-class" as Fortune mag ranked AB #1 in bevs on social resp for 5 yrs in a row.

Tom had been with Barton and Crown for over 20 yrs. He "zealously guarded Corona's position with a consistency of message unique in beer," said a source. Corona brand will be down for 2d yr in a row in 2008, for 1st time since late 80s.

Lotsa speculation about what InBev will do with AB branches, which sell about 6% of US volume, 85+ mil cases in some choice locations.  At presstime, word is that Delta Bevs in Modesto will merge with AB’s Stockton branch, one of smaller branches in AB system.  MillerCoors transaction imminent there too as DBI will purchase San Joaquin Bev.  Tho many continue to believe AB InBev will sell all or most of its branches and some think AB will buy up many more, neither appears to be on AB InBev’s plate.  At Beer Insights Seminar Nov 17, AB prexy Dave Peacock repeated long-time AB position that branches are “key strategic asset.”  They help AB understand wholesale biz so it can provide better input to system.  So “don’t look for some massive new branch strategy,” said Dave, “of divesting or over-investing…. Like in past it will be a bit of a hybrid.” 

Later same day, Credit Suisse analyst Carlos Laboy said branches wouldn’t raise the $$ InBev needs to seriously dent debt, that AB InBev has “much bigger sources of capital” available.  Rather, AB InBev will “require branches to be run more like a beer distributor runs a distributorship,” consultant Mike Mazzoni predicted, as opposed to the way they’ve been run “historically.”  If a branch underperforms, it’ll get sold, said Carlos.  Then too, Brito “will turn them into laboratories as to how to take costs out of distributorships,” Carlos suggested, adding: “And he’s going to showcase them to everyone and say ‘I can do it, why can’t you?’”    

Merger between Redhook and Widmer reported its 1st qtrly results Nov 14 and had conference call Nov 20 and they weren't pretty. Altho net sales jumped 17% to $31.5 mil, newly formed Craft Brewers' Alliance lost $1.9 mil before tax (compared to $606,000 pro forma loss in 3d qtr last yr) and $1.2 mil net. What's worse, it "was not in compliance" with both debt covenants it had to meet right outta gate, but has already renegotiated terms of its loans so that its violations waived. "We're not satisfied," ceo Terry Michaelson said during conference call, citing a number of "significant challenges" including "slowed sales trends," "major brewers successfully increasing their presence in craft," "costs escalating," "significant manpower and financial resources" associated with integrating the 2 cos. Unsurprisingly, investors not impressed. One professed himself "very, very disappointed" during call. And stock dropped by 1/3 day of conference call. It's down almost 60% in last mo alone. Now has mkt cap of $22-23 mil. AB owns about 36% of this. Got paid $1.4 mil in 3d qtr alone. As of Sep 30, CBA owes AB $5.3 mil as "net amount due to AB under all company agreements." CBA also has $30 mil in debt.

Correction:   AB InBev mkt cap currently at about $23 bil, not $15 bil reported in current Beer Marketer's INSIGHTS. [Correction in Vol 10 #102, 12/2/08]

Sure, craft brewers volume still growin' 5% last 4 and 13 weeks thru Nov 1 in supers, according to IRI. That's pretty healthy. And up 5.7% yr-to-date, with $$ up 11%. But some significant changes suggest increasing concerns about slowing top brands, increasing shift to seasonals and domestic brewer competition that is honing in on craft turf. Top 3 craft brands in supers (by BA definition), Sam Boston Lager, Sierra Nevada Pale Ale and Shiner Bock, each down 2% yr-to-date. In comparison, Blue Moon Belgian White up 16.5%. It sold 1.571 mil cases in supers , compared to 1.34 mil for each of Sam and Sierra.

Sam Seasonals still up 22% yr-to-date and much larger than Lager in 4 and 13-week periods. Sierra Seasonals up 63% YTD. Those 2 are biggest share gainers in craft segment yr-to-date. Meanwhile, Blue Moon Seasonals up 128% and nearly 2x as big as Sierra Seasonals. Several other top 10 craft brands also sluggish: Fat Tire up 3%, Widmer Hefe up 1%, Sam Light down 9% and Pyramid Hefe down 3% yr-to-date. Several of these brands weakened over last 3 mos: Sam Boston Lager down 8%, Fat Tire up 0.6%, Widmer Hefe down 5%, Sam Light down 15% for 13 weeks. Interestingly, Sierra Pale Ale improved to +2% last 13 weeks.

In fact, total Sierra biz up 7.7% for 13 weeks, compared to 4.4% yr-to-date. Total Boston up 4.4% for 13 weeks, 6.5% YTD and total New Belgium up 7.7% for 13 weeks, 9.4% YTD. Deschutes and Craft Brand Alliance each up double-digits yr-to-date in supers.

“Needing a Rush Job on Holiday Ads, Brewer Bypasses Agency of Record,” headlined Ad Age late Friday.  So here’s unusual situation: Draft FCB (longtime Coors Light agency) got Miller Lite assignment to come up with something fast.   These new ads “result of unhappiness in its wholesaler network” about MillerCoors’ plan to roll out  new campaign next Mar, spokesman told Ad Age.  “Wholesalers made it clear to management that the brand needed a boost well before March…. With no time to develop an entire campaign,” Draft FCB and (Lite agency) Bartle Bogle Hegerty pitched for “one off assignment to produce holiday-themed Lite ads.”  And Draft FCB won with series of 6 15- second ads that will begin airing on Thanksgiving. “The speed of the turnaround,” spokesman told Ad Age, “shows that we are hearing our wholesalers loud and clear.”

Draft FCB will also do all MillerCoors’ media buying in conjunction with another Interpublic agency, Initiative as well as Kinetic.  They will form MC Media expressly for this purpose. BBH still AOR (Agency of Record) on Miller Lite as current short-term campaign from FCB “driven entirely by our desire to get something on the air as soon as possible,” said a source.  But it does raise interesting prospect: could it be that it’s easier to come up with 2 effectively differentiated light campaigns if they’re done by same agency?

That's a bit better than expected given 5% increase in Sep in build-up prior to price increase, and tuff comp of +6% last Oct. Still, brings down yr-to-date taxpaid gain by US brewers to +1.8 mil bbls, +1.1%. Toss in Jan-Sep import dropoff of 606,000 bbls, and US shipments up 1.2 mil bbls, 0.7% YTD.

Anheuser Busch InBev is going thru with its rights offering, selling about 1 bil new shares at 6.45 Euros apiece, almost 70% below Friday's closing price. Controlling shareholders are buying up over 40% of rights offering for 2.8 bil Euros, more than 2x what they planned to spend a month ago. So they're steppin' up big time "to keep their majority," sez Bloomberg, and to make rights issue happen. Existing shareholders can get 8 new shares for every 5 they own. Meanwhile, ABI stock fell another 16% to 20.6 Euros on Friday and down again today. Hit 5-yr low at under 20 Euros. It's dropped by almost 1/3 since deal closed last Tuesday and over 2/3 this yr. Big Friday drop "can only be explained by speculation about a rights offering," Petercam SA analyst Kris Kippers told Reuters. Its stock market capitalization now down to $16 bil. Considering InBev just paid $52 bil for AB, that's gotta be daunting. This is "first stage in paying down the debt mountain," wrote Collins Stewart analyst Rob Mann. "The contribution from the families should facilitate the equity issue. This situation remains relatively high-risk."

Shortterm overhang not just rights issue, but disposal of assets, which will be "very challenging," UBS analyst Melissa Earlam reiterated following in-depth investigation, "exacerbated by the fact that many possible industry buyers are currently very balance sheet constrained." Then too, ABI needs to raise $7 bil, net of capital gains tax. Most likely sales, according to Melissa, are Busch Entertainment, Korean beer biz and German domestic beer biz. But those 3 bizzes in "base case" scenario, estimated at combined $800 mil in 08 EBITDA, should sell for $6 bil before capital gains. That's not enuf. Packaging "will be more challenging to sell at the moment" because "it is relatively integrated into the US beer business," "all possible industry buyers are balance sheet constrained," and "the disposal could incur significant capital gains tax." Packaging estimated at $250 mil EBITDA in 08.