Beer Marketer's Insights
Global brewing consolidation game heated up lots more as PM and SAB struck deal to combine #4 worldwide brewer SAB and #7 brewer Miller and create a new #2 brewer called SABMiller. Deal valued at $5.6 bil and easily eclipsed several recent deals (Interbrew for Beck’s, Coors for Carling, Scottish & Newcastle for Hartwall) in the $1.5-2 bil range. And it’s clearly intended as only the beginning. SAB ceo Graham Mackay said deal "represents a new chapter in our development…positioning us to be a major participant in the ongoing consolidation of the global brewing industry…. We will seek to fill in gaps in our market and will look at larger transactions as they become available." Philip Morris will get 36% stake in combined entity and PM ceo Louis Camilleri said that SABMiller will be at "forefront" of consolidating brewing industry and will have "financial wherewithal" to grow thru acquisition and "potentially become" world’s leading brewer. And contrary to expectations that PM would get out of beer biz, it has option and expressed potential interest in prospect of taking bigger stake in 2.5 yrs. Can go up to 40% under present agreement. Deal expected to close in July.
What will SABMiller look like? SABMiller sold 102 mil bbls in yr thru Mar 31 2002, 5 mil bbls behind AB (including licensed volume for both). Combo had pro-forma revs of $9.3 bil and EBITDA of $1.5 bil. But both Miller and SAB pretax earnings declined in latest year (SAB’s largely because of South African currency weakness). Miller prexy John Bowlin stays on: "responsible for SABMiller’s business in the US and Central America." "I believe John will be there for quite awhile," Louis Camilleri told analysts, tho he didn’t divulge details of any agreement on that front. "We’re certainly not looking at any replacement of the management team," Graham Mackay added. "We think they’ve done a lot of good things and…results will start to show over the next few years." New co will have London hq, with US subsidiary hq in Milwaukee and John reporting to Graham.
What is structure of transaction? PM gets 430 million shares of SABMiller, a 36% stake in combined co (stock currently worth $3.6 bil), have 3 seats on board (out of 13) and voting rights just under 25%. Interestingly, while SAB said it "will acquire 100% of Miller Brewing Company," PM "announced an agreement to merge." PM said deal will be neutral to its earnings for next 2 yrs, but it will have 1-time gain in 3d qtr of a mere $3 bil pre-tax, $2 bil after-tax. Because of way transaction structured, PM minimizes taxes, and SAB minimizes cash outlay. SAB sez it expects deal to add to earnings in yr 1 and brings cost savings of $50 mil per yr starting in yr 3. PM has agreed not to sell any shares for 3 yrs and not to buy any more for at least 2.5 yrs, "subject to certain exceptions." Meanwhile, SABMiller has plans to float about 170 mil more shares (worth $1.4 bil) to fund future acquisitions.
PM ceo Louis Camilleri emphasized PM has "flexibility" to either buy more of SABMiller and "form a 3d leg" (to go with food and tobacco) if it likes where SABMiller headed in global beer game, or reduce its stake. SAB chairman Graham Mackay said talks with PM about future "had nothing to do with withdrawal [of stake], but much more with keeping their position and supporting it, in fact even improving it in the longer term." Deal "gives us scale and the benefits of a hard currency, large profit pool in which we will now operate without having to pay a high price for it," added Graham.
Intl brewer data we ran last issue raised some questions, and needs some fixing. While SABMiller cited a "pro-forma" figure of 102 mil bbls for 12 mos thru Mar 2002, included about 12 mil bbls of volume in China of which SAB has just 49% ownership. If you include that in SABMiller, gotta include all of Modelo with AB. But we prefer not to double-count or count minority stakes when we can determine them. Net-net: apples-to-apples, AB still has big lead over SABMiller, more like 20-25 mil bbls than 5 mil bbls, depending how you count. In same vein, when Carlsberg reported big jump to 57.8 mil bbls in 2001, looks like that included all of volume in Russia sold by BBH, tho Carlsberg owns just 50%. Note too: Scottish & Newcastle number/trend wrong: 2001 shipments more like 28.1 mil bbls, and it wasn’t up (don’t have actual trend for calendar year). Guaranteed: counting intl volume will get more complicated in future, not less.
font FACE="Arial" SIZE="2">Important Final Note: May was some lousy mo for beer. AB sales-to-retailers flat, while Coors off slightly and Miller down 5+%. Big brewers tryin’ to figure it all out.Sure it was an Olympics qtr, but still a surprise to see AB jumped media spending on major brands by $45 mil, nearly 50% in 1st qtr. (All data comes from CMR, which tracks spending in 10 different media. Several sources have said this data does not capture all local spending.) Coors nearly tripled its traditionally low 1st-qtr spending on Coors Light and more than doubled spending overall. Only Miller didn’t keep pace among major brewers; its spending down 20%. Meanwhile, hi-end brands over 1/3 of total.
AB pumped up this spending on all major brands in 1st qtr. Bud got $17 mil, 44% hike
and Bud Light up $7 mil, 20%. But total Bud family spending not that different from 1st
qtr 98. Meanwhile, Michelob spending jacked up to major brand levels. Up $10 mil, 73%
to $24 mil, mostly Michelob Light. And AB added another $8 mil on Bacardi Silver
intro and $2 mil on Doc Otis. So AB spent $34 mil or 25% of its qtr total on its
hi-end brands that account for 5-6% of volume. Miller cut back to 2000 levels in 1st
qtr of 2002; it reduced spending on each major Miller brand. Chopped Gen Draft spending
$9.4 mil, 80%. And High Life spending down $2.4 mil,44%. Even Miller Lite spending
down modestly, $2.6 mil, 8%. But Miller put $2.4 mil into its 1st malternative
entry, SKYY Blue, and nearly doubled Foster’s spending to $2.4 mil. Even tho new
campaign hadn't begun, Coors spent an additional $15 mil on Coors Light in 1st qtr. Cut
Coors Original spending in half. But spent $3 mil on Killian’s, way up.
Guinness #1 spender among import/ specialty players in 1st qtr. Jumped spending $6
mil, 62% to pass Heineken (at least for one qtr) which cut spending $3.3 mil, 20%.
Meanwhile, importers spent almost nothing on Corona brands as they've traditionally done
in 1st qtr. Boston Beer spent $4 mil compared to zilch last yr and Labatt $7.7 mil up from
just $1 mil last yr. These suppliers below top 3 spent $41 mil, up 50%. Spent more than
Miller. They were about 18% of spending in 1st qtr; add big brewers’
above-premium spending (over $40 mil), and total hi-end spending over 1/3 of $$.
Is 3-Tier System "Flexible" Enough to Handle Consolidation? Industry Vets Express Concern
Pressures put on 3-tier system by "steady consolidation" of distribs, "alarming" rate of supplier consolidation and rapid growth of "power retailers" sparked insightful discussion among expert attys/consultants at recent mtg of state liquor admins (NCSLA). Adding note of urgency: Diageo's goal to consolidate its spirits/wine biz with one distrib per state. That's widely expected to start taking shape over next 30 days or so. Atty Bill Schreiber pointed to "unprecedented demands" suppliers now make on distribs to "invest up front" or in "marketing dollars," and "behemoth" retailers pressuring distribs to cut prices. Both reduce margins, weaken 2d tier. He asked: if purpose of 3-tier system was to "insure the maintenance of competition" in alc bev industry, is current system "adequate or are new legislative and/or administrative initiatives needed?"
Atty Mort Siegel picked up Bill's line. Asked bluntly: do current distrib agreements "violate the stated purpose of the 3-tier system" because of the "enormous amount of control" and "revenue expectation" suppliers build into them? Another "major problem" in Mort's view: inability of small suppliers to get distribution. Small vintners have especially tuff time getting distribution, insisted David Sloane, prexy of American Vinters Assn (many small brewers say same). In 1975 when there were 579 vintners, Wine & Spirits Wholesalers Assn (WSWA) had 450 members, David pointed out. Now there are over 2100 vinters, but WSWA down to 170 members. Distrib consolidation "may invite scrutiny" of DC regulators, David suggested. He also called on state regulators and industry to reach "negotiated settlement" of direct shipping cases now in courts. Back to Mort, who also asked: does consolidation hurt service at retail, especially small accounts?
Atty Vince O'Brien honed in on how franchise laws affect brand-switching after supplier deals like Diageo/Seagram. Suppliers and distribs each have "very, very strong equities," he said. As suppliers seek to improve distrib network and reward faithful distribs with new brands, other 2d- and 3d-generation distribs stand to lose brands after investing time and $$$ to build 'em. What's fair? Best way to recognize equities, in Vince's view, are laws like Delaware's which provide for compensation to prior distrib, either thru payment by supplier, or new distrib, or brand swaps. But "fairness is in the eyes of the advocate," responded consultant Mark Rodman, who criticized Del law for providing just 1-yr's gross profit as payment. In contrast, NY law that Mark instrumental in developing for NY beer distribs allows suppliers to consolidate/move brands, but requires distribs who lose brands receive "fair market value." In Mark's view, globalization of alc bev industry by Europe-based suppliers (and retailers) more used to 2-tier system, together with growing power of huge retailers, are key differences between now and when 3-tier system created. State borders are "meaningless" to mass merchandisers, sez Mark, and this "major component" of retail tier "more aligned with suppliers than ever before." While 3-tier laws generally ban suppliers from owning distribs, "in reality, suppliers have been able to integrate by contract" and effectively control distribs' day-to-day operations and "essential economics." In recent years, added Mark, regulators have given "2d shrift" to goal of keeping "buffer" between suppliers and retailers/ consumers, and focused instead on "other policy goals": regulating "time, place and manner" of sales. That may be all they regulate down road, Mark believes, not 3-tier structure.
Meanwhile, state alc bev commissions gotta regulate fast-moving industry with outdated laws and unresponsive legislators, said atty for Ill Liq Control Commission. "What the heck are we supposed to do?" he asked. Another state regulator said it's up to industry to convince legislators that alc bev regulation/enforcement/3-tier issues should be budget priorities. (Virtually every state ABC faces budget crunch.) Final reminder from Bill: alc bev issues, whether competition, 3-tier structure or temperance matters--are "public interest" issues. If public interest not being served, sez Bill, up to public policy makers to resolve these issues. To get legislators' attention may take concerted effort by both industry and regulators. In any case, each speaker endorsed a renewed debate among industry, regulators and legislators to re-examine 3-tier viability.
In 40 states where data available, striking share shift to hi-end, including malternatives, accelerated in 2001. (Data not available in Conn, NY, NJ, Pennsy, Del, Md, DC, Va, NC, plus Ky and Alas. In some states, where data available, All Others share skewed slightly because Molson now included in All-Others rather than Miller). Just like in 2000, All Others (brewers and importers below top 4) gained share in 36 of these 40 states. But gained bigger chunks of it in 2001 (as Smirnoff Ice intro'd). Up 2 or more share in 10 states (compared to 6 in 2000) and 1 or more in another 12 (7 in 2000). All-Others now have over 20 share in 9 states, including 25 share in biggest state Calif (up 1.6 share) and 29 in Mass (up 2 share). Of the 9 states where All Others over 20 share, AB lost share in 7 in 2001. All Others had 20 or more in every state in New England. Reached 1/3 of tiny Vt. AB lost share in every New Eng state in 01. AB still managed to gain share in 24 states, but that compares to 37 in 2000. It also gained far less share in most states. AB up 1 or more share in 11 states; had gained 1 or more in 23 states in 2000. Most of AB?s sizable share gains in western half of US, including 1.5 share gain in big Tex. Also gained 1 or more in Ia, Kans, Neb, Minn and Okla. AB on roll in each of those states for a number of yrs. But AB trends softened in East North Central: down 0.7 share in Ill, down 0.5 in Ind and flat in Mich, but continued gains in Oh and Wisc. AB share also down 0.4 in Calif and didn?t gain share in Fla. AB had over 65 share in 5 states and gained share in each. Those states: Miss, SC, Tenn, WV and home state Mo. Had over 60 in another 6 states, mostly in midwest including Ia, Neb, Ark Okla. Gained share in each of those too. AB also over 55 in another 9 states. AB under 35 share in only 3 of these 40 states: Wisc at 31.5, Ill 33.8 and Oreg at 34.2.
Miller over 35 share in only 2 states, Wisc and Ill; it lost 0.6 share in each. For 2d straight yr, Miller lost share in almost every state. Down in 34 states, including drops of 1 or more in 15. In a number of states where Miller lost most share (often 2 or more), sale of Molson brand accounted for significant part of share loss, especially New Eng, Mich and Fla. But Miller lost significant share in most of biggest states, including 1.3 share in Tex, 0.5 in Calif, 1.7 in Ga, 3.2 in Fla, etc. The few states where Miller gained share were mostly smaller states: Miss, ND, HI and 0.2 in mid-sized La. Miller over 25 share in just 5 states, over 20 in 18. Miller now under 15 share in 13 states, including just 11 share in Mass and Colo. In fact, Miller share under 15 in each New Eng state and in half of Mountain states. Down to 16 in big Calif. Coors over 15 share in just 7 mostly Western states and it lost share in 6 of them. In fact, Coors lost share in 20 of 40 states in 2001. Had lost share in only 9 in 2001. Coors off 0.2 in Calif, down 0.5 in Tex, but gained 0.2 in Fla. Coors lost share in 7 of 8 Mtn states. Lost over 0.5 share in Oreg (where it had gained for many yrs), Wyo, Mt and ND. Gained 0.5 share or more in 7 states, including 0.9 gain in Ind, 0.5 in La, 0.5 in Mass. Coors still has under 4 share in Mich, Ill and Wisc, but gained share in each. Didn?t hit 10 share in any southeastern state either. Meanwhile, Pabst didn?t have 10 share in any state for 1st time. Had high of 9 in Mont and 8.6 in Ill. Pabst lost share in 34 of 40 states, including drops of 1 or more in 10.
Miller?s action of "simply changing its FOB price in close conformity with" distrib?s price to retailer "is lawful and neither fixes nor maintains the price" when distrib resells beer. So concluded fed ct judge in Tex recently as he dismissed most charges brought by Lubbock Bev vs Miller. In effect that means that what lotsa distribs call "reachback" by brewers ain?t a price-fixing violation, at least not to this fed judge. Recall that Lubbock Bev had charged Miller unreasonably withheld approval of deal in 2000. Charged too that Miller practice of raising FOBs when distrib adopted higher-than-suggested price-to-retail violated state and fed laws. But judge disagreed. In addition, fed judge ruled Miller did not violate Tex Fair Dealing Law when it disapproved deal. Miller?s refusal to approve was reasonable, he wrote, "because Miller enumerated several legitimate business reasons" for disapproval, "any one of which was sufficient." Lubbock added price discrimination claims that judge refused to dismiss. It will appeal judge's order. Meanwhile, Miller countersued Lubbock charging fraud related to "overpaid FOB reimbursements." Miller seeks right to terminate immediately, plus damages and atty fees. Trial slated to start Jul 8. More on judge?s reachback logic next issue.
Ex-Tex AB Distrib Sued AB in Fed Court for Rejecting Deal Price Tho It Sold for $51.5 Mil
Wow! This one's wild. Remember that AB deal in South Tex last yr where longtime Corpus Christi AB distrib Williams Dist sold its 3.3-mil-case AB distrib to L&F Dist for unusually high price? Actual price was $51.5 mil, over $15 per case, including trucks, land, warehouse. Turns out former owners recently sued AB in US Dist Court. Why? They originally had deal with L&F for $57 mil. And AB, they allege, "unreasonably" rejected that deal, violating Tex law and AB equity agreement. But here?s kicker: plaintiffs argue that under Tex law they are entitled to full "fair market value" or $57 mil. Not just $5.5 mil differential between original deal and purchase price. But an additional $57 mil, plus attorneys fees and damages. And their co-counsel is another high profile plaintiffs atty. Sound familiar? Trial scheduled for next Feb.
Owners Bill Durrill and Derrest Williams are 2 guys in their 70s who had owned Williams Dist since 1960. As distrib, they "exceeded every performance standard applicable," according to their complaint. On Oct 19, 2000, they entered into agreement with L&F to sell for $57 mil, contingent on AB approval (L&F territory is contiguous). L&F "obtained a $123 million line of credit from the Bank of America" to "complete the purchase." In Jan 2001, AB began to suggest orally and in writing that parties "alter their agreement?to provide for a lower purchase price and a contingent payment structure." On Jan 30, Williams asked AB to "formally approve or reject" deal for $57 mil. AB rejected 2 days later, giving "only one reason?that L&F would receive a low return on its investment." On Feb 6, parties entered into a 2d deal for $51.5 mil up front with the other $5.5 mil paid out over 13 years "if and only if, L&F meets revenue targets dictated by Anheuser Busch." On Feb 8, AB approved deal.
As a prospective buyer, L&F "met all reasonable standards imposed by Anheuser Busch on other distributors of the same general class," they wrote. Deal "would not have left L&F undercapitalized, led to a low return?or otherwise rendered L&F?unable to fulfill the terms of any agreement with" AB, Williams argues. So rejection of deal "unlawful, unreasonable, and without good cause" as defined by Tex Law. "Fair market value was at least the value of" 1st deal "and may during the course of this action be established to have been higher." Violation of Tex law entitles plaintiffs to "fair market value as of the date" AB "violated the law." Charge too that AB violated its own equity agreement by "unreasonably withholding approval" and tortiously interfered with contract. This case potentially has broad implications: a number of distrib deals in recent yrs rejected by AB and other suppliers on basis of price. No AB response at presstime.
Both Interbrew and FEMSA filed lengthy appeal briefs that underscore unhappy and sometimes nasty nature of the 2 companies? fractious partnership in Labatt USA (70% owned by Interbrew and 30% by FEMSA). Whichever side prevails in lawsuit over attempted integration of Beck?s (recall that so far FEMSA got injunction to stop it), gotta wonder how well they can live together going forward. In appeal briefs, each side questioned the other?s motives and actions with some scathing language. FEMSA?s "real motivation for bringing suit," in Labatt?s view, "was not any imminent danger to its brands," but FEMSA?s "desire to withdraw entirely from the deal it made a few years ago," a 99-year agreement to distribute its brands through LUSA. FEMSA, Labatt charges, suffers from "Corona envy" and "will not be satisfied until LUSA produces growth rates for FEMSA?s Cerveza brands of 20-25% per year." Those, Labatt sez, "are not realistic" and in any case have nothing to do with whether LUSA adds Beck?s to its portfolio. But while Interbrew suggested it didn?t see lawsuit coming, FEMSA replies with details. Lists its execs? many communications with Interbrew about its rights to negotiate concerning integration of Beck?s. It also alleged a key LUSA exec?s statements in testimony "established a complete lack of credibility." So this is not exactly a harmonious situation for these 2 partners. In meantime, appeal will be heard in August and Beck?s stays separate. Interbrew now sez it?s "not necessary" to integrate Beck?s if it loses.
"There was no breach of contract here," Interbrew insists to US Court of Appeals in attempt to reverse US Dist Court judge?s decision that stopped Labatt USA from adding Beck?s to its portfolio. Tho judge figured there "had to be" an agreement between LUSA and Beck?s to add brands "the undisputed evidence is that no such agreement is proposed, contemplated or required," Interbrew insisted. FEMSA/LUSA agreement requires a "super majority" of LUSA?s board approve agreement on a "fundamental" matter, but addition of Beck?s to existing agreement does not trigger this clause, Interbrew argues. Other brands already added in same manner without complaint. But FEMSA argues that previous brands added were much smaller. "Labatt Distribution Agreement itself expressly contemplates a new agreement any time a major brand like Beck?s is to be added?. Beck?s brands cannot be distributed by LUSA without negotiations and, ultimately, an agreement." FEMSA also liberally quoted district court judge?s ruling: "When you have two companies, one of which is going to take over the entire operation of the other, and one is going to disappear, that is usually not the result of a genie going poof, it?s the result of an agreement between two parties." FEMSA added: "Defendants cannot bypass Wisdom?s [FEMSA?s] minority rights simply by failing to memorialize their agreement and then claiming not to have made one." FEMSA cited statements by several LUSA execs that indicated there had to be negotiations and ultimately agreements about many aspects of integrating.
When John Murphy took over as Miller prexy in 1971, Miller was in 8th place, facing many bigger, stronger competitors (mostly long since gone), like Schlitz, Falstaff, Schaefer & Carling. But John had vision, leadership ability and Philip Morris bucks behind him. The numbers tell the tale: Miller sold 5.2 mil bbls in 1972; that jumped to 6.9 mil bbls in 73, 9.07 in 74, 12.86 in 75, 18.4 in 76 and 40.3 in 81. In that decade Miller grew 35 mil bbls, even more than AB?s 28-mil-bbl gain. John led Miller all thru its explosive growth. He was driving force behind Miller Time, "getting Miller High Life out of the champagne bucket and into the lunch bucket" as he said. He also had foresight to buy Meisterbrau brewery with a little brand called Lite and to see its potential. "He was one of the great marketing geniuses," legendary adman Carl Spielvogel, whose agency created Miller Lite campaigns, told Ad Age: "He understood the beer drinker and consumer without reading the research," Carl added. John went on to bigger titles, became vice-chairman of Philip Morris, but his 13 yrs running Miller "were probably the best of his life," his son John Jr told Mil Jnl Sentinel. Miller has gone sideways since 1981 and it was never the same after his departure. Several of John?s cadre of key execs were at his funeral, including 3 who became Miller prexies: Lennie Goldstein, Bill Howell and Warren Dunn, plus former mktg honcho Larry Williams. But no current sr execs were at funeral, tho prexy John Bowlin at wake day before. And only 1 beer distrib attended, Hap Boening. It is ironic that John, the single individual most responsible for building Miller from an also-ran into #2 brewer, passed away as Miller about to pass from PM control.
As promised, here?s Tex fed judge?s rationale for throwin? out distrib charge that Miller?s reachback was illegal. Lubbock Bev had charged Miller?s practice of raising FOB when it charged higher-than-recommended PTR "is coercive and both ?fixes?" distrib?s "PTR and ?controls?" his profit margin. Such reachback goes "beyond the boundaries" of both Tex law and fed antitrust law, claimed distrib. But fed ct judge "unpersuaded." Why? First, "Lubbock has offered no evidence that a combination, conspiracy or agreement existed between or among Miller" and anyone else to further a price-fixing scheme. Gotta have conspiracy to fix prices, and Miller "cannot be guilty" of conspiracy "merely because it indicates a suggested PTR and then independently and unilaterally adjusts its FOB price in response to Lubbock?s equally independent and unilateral choice whether to deviate or not" from Miller?s suggested PTR. (Suppliers could not have asked for a friendlier analysis of reachback. Judge devoted 9 pages of 40-page decision to explain why practice legal.) Those words "unilateral" and "independent" are key because that means no "coercion" by Miller to "suggest an implied combination or agreement to unlawfully induce avoidance of price competition." No evidence either, judge wrote, that Miller threatened to terminate or "otherwise threatened," Lubbock if it didn?t follow Miller?s suggested PTR. Without conspiracy or coercion, no violation under fed law.
Turns out Tex law doesn?t require conspiracy. And Tex Alc Bev Commission had in past ruled reachback illegal. But judge ruled Miller didn?t violate Tex law either. Tex law "promotes fair efficient and competitive distribution of beer by assuring?that a beer distributor is free to manage its business enterprise, including the right to independently establish its selling prices." Lubbock?s "profit margin might fluctuate in proportion to the FOB price" by Miller vis-?-vis Lubbock?s PTR, judge acknowledged, but "this Court is unconvinced" that Lubbock?s "varying profit margin had any illegal effect on the competitive distribution of beer" in Tex. Lubbock "continued to be free" to set its own PTR, judge wrote. Miller?s FOB "did not motivate Lubbock?s choice of PTR because Lubbock remained vulnerable to the efforts of interbrand competitors." Tho Lubbock?s "dissatisfaction" with Miller?s reachback was "clear," judge reminded that "antitrust laws were enacted for ?the protection of competition, not competitors.?" He kept going: "While Miller?s policy of increasing and decreasing the FOB price might be classified as arbitrary," he wrote "Miller?s conduct is not itself violative of the antitrust laws." Here?s another comment distribs won?t like, but suppliers will: "Even were this Court to entertain Lubbock?s argument that Miller?s motive in increasing and decreasing its FOB price was to put Lubbock out of business, the Supreme Court has warned ?that decisions to put a victim out of business are not always the stuff of antitrust liability.?" Ouch!
Interestingly, judge declined to toss Lubbock?s separate price discrimination claims. Lubbock claimed Miller discriminated against it by charging lower prices to one of Lubbock?s competitors. Turns out no other distrib sells same Miller brands as Lubbock in its territory, but another distrib sells brands Miller acquired from Stroh. Lubbock charged too that Miller gave that competitor "margin enhancements on proportionally unequal terms." Not enough info to rule on "merits" of that claim, judge wrote, but enough there to stop him from dismissing it. Obviously, distribs can?t be happy with this ruling. In fact, Tex distrib assn memo disagreed with judge?s analysis and stated his decision has no "precedent-setting effect." Tex ABC?s earlier rulings are still proper interpretation of Tex law, according to Tex distrib assn.