Citing unnamed "investment bankers and industry analysts," Reuters said they "see plenty of scope for" deals in Europe, as 5 brewing groups, Interbrew, Heineken, Carlsberg, SAB and Scottish & Newcastle control about half of European mkt. (Editor’s note: those bankers’ and analysts’ cos stand to profit handsomely if these deals occur, natch.) But 3 largest European brewers, Interbrew, Heineken and Carlsberg "have majority shareholders that are families or foundations," so "are not seen as takeover targets," pointed out Reuters. "Crucial name in any future equation" is SAB, because analysts "expect SAB will want a partner" to "counter its dependence" on South Africa. S&N might want to "merge to gain exposure to fast-growing emerging markets," Reuters added. "Analysts say" noted Reuters, that S&N and SAB "would benefit substantially from a link-up and there is a potential for a three way merger with Miller," a proposition that just keeps poppin' up. Biz Week mentioned Miller as possible target for Heineken too. It pointed out that "for years Heineken has had to limit acquisitions and rule out mergers in order to leave Freddy Heineken in control." Heineken sez nothing will change and Freddy’s son-in-law told Biz Week: "We won’t deviate from the old man’s principle." And yet, Biz Week said: "Trouble is, the old man’s principle looks increasingly out of date." Tho Heineken has done a number of smaller deals, "in big deals it is getting outflanked by its chief rival... Interbrew." In future, "to thrive the brewer could be forced to try big acquisitions." "For now," added Biz Week, "the family control protects Heineken from a takeover." If family loses control, Biz Week mentioned AB and Coke as companies that could "consume" Heineken. "More likely" it concluded, "Heineken will look to bulk up, financing acquisitions at least for the next year or two—with bank loans."

At this rate, won’t be long before every top spirits brand has its own malternative/ready-to-drink version. In last 2 weeks alone, announcements of at least 3 more new spirits spinoffs. Number 2 spirits co Allied Domecq allied with number 2 brewer Miller, promising spring intros of Stoli and Sauza branded malternatives. This new "commercial partnership" will invest $50 mil in those 2 brands, including development, launch and mktg. That’s on top of $40 mil in total mktg spend for SKYY Blue. But as high as those $$s are, that’s less support than Smirnoff Ice, Bacardi Silver or even Mike’s will reportedly receive. Raising stakes even further, here comes Captain Morgan Gold from Diageo, which brought you Smirnoff Ice. And GBIC is adding a single-serve 24-oz package for Smirnoff Ice that "represents literally millions of incremental cases," Guinness Bass Import Co sales veep Ron Neugold pumped to distribs. He also promised "priority number one" on Smirnoff Ice is to avoid "last year’s supply constraints," and to avoid similar supply problems on Captain Morgan Gold. Interestingly, Allied will produce a concentrate then ship it to Miller breweries for "mixing and distribution," reported Asian Wall St Jnl. And over next 12 mos, "as many as six additional Allied Domecq" malternative brands coming, Journal added. But Allied Domecq "has come late to the party," wrote Lex, columnist in Financial Times. Allied ceo Philip Bowman told Jnl it weighed if it was "simply responding to a fad, or to changing social issues that impact our core brands," and concluded these products "are here to stay and there are spinoff benefits for our mother brands."

Barton Taking Big Price Increases This Spring; Gambrinus

Corona’s importer in west raising prices aggressively this spring. Barton suggested price to retail will go up $1.25-1.35 on many Modelo brands in its largest mkt Calif on Mar 4. That’s 1st increase there since a similar-sized increase in 99. Going up even more on Pacifico brand, suggested $1.90 to retail, which is more than a 10% increase. On key Corona packages in Illinois, suggested price to retailers up $1.50 on 12-packs on Mar 1 and $1.50 on six-packs on Apr 1. Distribs getting slightly better split in Ill. It’s 2/3 to 1/3 there, rather than typical 70-30 split that Calif distribs will get on most Barton brands. Recall that last time Corona prices went up in 99, Corona growth seriously slowed for some mos. Barton's parent co Constellation looking for single-digit beer growth in 2002, maybe even a "flat" yr for Corona, ceo Richard Sands told analysts in early Jan. Gambrinus (Corona importer in east) taking somewhat different approach. As 1st word of its price increases coming in, Gambrinus sales director Don Lake told INSIGHTS that Modelo prices to Gambrinus going up on Mar 1, that it will implement price "strategies" on "market-by-market basis in relation to import segment" and "major competition" within segment. He said there are "pricing opportunities" thru much of Gambrinus territory, but in Northeast (read NY and NJ where Heineken especially strong) "closer analysis" needed before Gambrinus takes any pricing action.

Years-long effort to get NJ beer distribs same basic protections as wine & spirits distribs--primarily that suppliers need ‘good cause’ to terminate--went down drain early this mo. NJ guv vetoed beer franchise bill passed overwhelmingly by NJ Senate and Assembly. Under old law, a supplier had to be 20% of beer distribs’ biz for distrib to be protected by NJ’s general franchise law. That meant smaller suppliers could (and in many cases did) terminate at will. Proposed bill required "good cause" regardless of how much volume the supplier represented. Big brewers did not oppose bill; small brewers and some importers did. In an odd twist, distillers put up biggest fuss against this beer bill. Why? Last fall, bill amended to include a requirement that any "newly acquired" spirits brand had to stay with existing distrib. That angered big distillers who are doing lotsa brand buying/swapping. But that amendment dropped before it went to guv. Besides, current wine/spirits franchise law had traditionally been interpreted to protect existing wine/spirits distribs anyway, sez NJ Beer Wholesalers Assn exec Bob Pinard. Yet distillers pressed for veto; acting guv complied, even tho he had voted for bill when he was state Senator. Distillers’ natl assn DISCUS immediately celebrated victory over "further monopoly protection for NJ wholesalers." Gotta note: largest DISCUS member is Diageo, with big liquor and beer interests, and its beer arm Guinness opposed the bill all along. DISCUS prexy Peter Cressy blasted bill as "anti-competitive, anti-consumer, anti-small business and would have led to higher prices and fewer choices for retailers and beverage alcohol consumers." He promised: "We will continue our efforts to aggressively fight these monopoly protection bills wherever and whenever they occur." Does that mean DISCUS will start to challenge existing beer franchise bills? DISCUS spokesperson Lisa Hawkins told INSIGHTS: "DISCUS represents the distillers and their interests, and we have no interest in taking on beer and wine issues unless they negatively impact the distillers. We will do whatever is necessary to insure that our distiller members have the right to choose their own wholesalers." Given that DISCUS members include Diageo and Constellation (Barton’s parent) and the increased "blurring of the lines" between malt bevs and spirits, it will be increasingly difficult to separate beer, wine and liquor "interests."

Chart below shows average price paid for a case of beer in supers increased about 60 cents, 4.3% each of last 3 yrs as consumers shifted to higher-priced brands and imports, according to IRI. Followed a 24-cent, 1.7% avg price increase in 98, just an 0.6% bump in 97. That’s real progress. While avg supermkt beer price up nearly $2 per case since 98, prices for big domestic brands up more like $1.20-1.30 per case. Higher priced brands— specialty, micro and imports—gained 7 share of $$ sales in 3 yrs. Up from 19.7% of supermkt $$ sales in 98 to 26.6% last yr. Pricing trends for top-3 domestic brands remarkably similar. Miller Lite priced up slightly more aggressively 98-01 than Bud Light and Coors Light, but still cost consumer slightly less than its key competing brands. Price increases for Corona and Heineken smaller in 2000 and 2001 than in 99. Look at some gaps. In 98, Corona avg price was $7.84 more than Bud Light; by 2001 gap widened to $8.58. Gap between Heineken and key Canadian brands and Tecate stayed at about $9 per case. Smirnoff Ice priced a full buck per case more than Heineken. Mike’s priced right at Heineken level in 2001. Only 1 price drop for any of these brands last 3 yrs: Tecate in 2000.

Biggest share gainer in supers was #1 brand, Bud Light up 8%, according to IRI. Climbed another 0.8 share to 14.5, a couple points less than its mkt share of total beer biz. Widened lead over Bud another 1.2 share as Bud down 1.8% and dropped 0.4 share to 11.7. So Bud Light almost 3 share ahead of Bud in supers. Other biggest gainer: Smirnoff Ice, which grabbed 0.8 of volume, 1.5 of $$$, and virtually all of GBIC gain. Next biggest share gain, Busch Light up 0.3 as it jumped 12% (much better trend than it had in all channels). Corona and Heineken each up 9%. That compares to 7% gain for all imports. Corona gained 0.2 share of volume, Heineken 0.1. Other big brand trends mixed: Miller Lite and Coors Light each at 7.5 share in supers. But Miller Lite flat, Coors Light up 3.8%. Nat Light off 3%, dropped to 4.8 share. Worst trend among top 10 brands: Miller Gen Draft down 3.6%. Lost 0.2 share to 3. Miller High Life up 4% in supers, Busch flat.

Best % growth for imports: imported light beers, just like in 2000. Corona Light, Amstel Light and Labatt Blue Light each up over 20%. Corona Light climbed to #4 import in supers and closing in on #3 Tecate, which dropped slightly. Hottest micro brand in supers: Fat Tire, far and away. Up 86% for yr. Climbed to #5 micro. Sierra Nevada up 17% while Sam Adams down for yr. Mike’s Hard Lemonade doubled. Softest brand trends among top 20: Mil’s Best down 10%, Icehouse down 7% and Old Mil down 10%. Other brands whacked in supers: Michelob down 13%, Red Dog down 18%, Zima off 18%, Molson Ice down 25%.

Trends in supers were healthier than overall beer sales, up 1.8% for full yr, according to IRI. So big supers (about 1/5 of biz) takin’ biz from other channels. Got better trends even while avg price paid for a case of beer up 68 cents, 4.5% to $15.85. Solid pricing continued in 4th qtr, as avg price paid up 63 cents, 4% to $16.00. Who won, who lost? Well, AB volume up 1.8%, same as its overall retail trend. But AB didn’t gain share of volume and lost 0.5 share of $$ to 40.9. Miller volume down 1.6%, a better trend than it had in all channels. But it lost 0.8 share of volume, 0.9 of $$ to 19.9. Coors up 0.9% in supers, also better than it did in other channels. But it too lost share. Bottom line: each of top 3 brewers lost share of $$, none gained share of volume. When was last time that happened? Biggest share gainer: Guinness Bass Import Co, which more than doubled volume, gained 0.9 share of cases and 1.4 of $$$. While top 3 brewers had 79 share of volume, dropped to 72 share of $$ in supers. That was down 1.6. Pabst volume off 10%, it lost 0.5 share of $$ to just 3.5, much less than Modelo at 6.1, only slightly more than several other big import cos. Imports at 16.7 share of $$, up 0.3, micros unchanged at 4.5 share of $$ and specialty (IRI includes lemon brews) grabbed 5.4 share of $$, up 1.6. Those 3 segments climbed to 26.6 share of $$ in supers in 2001.

No top-5 brand improved its trend in 2001 compared to previous yr, as 2 of the top 5 lost volume, Coors Light, Bud Light and Natural Light up but slowed. But each brand #6-10 bettered its 2001 trend, as 3 of 5 gained, Busch and MGD reduced dropoff pace. Meanwhile, INSIGHTS’ preliminary estimates suggest half of the top-10 brands changed ranks in 2001. At the top, a new #1 for 1st time in 40+ yrs: Bud Light passed Bud some time mid-year. So a light beer now #1 industry brand, only about 30 years after PM started pushin’ Lite, just 20 yrs after AB intro’d Bud Light. Bud Light ended 2001 up 2.6 mil bbls, 8%, we estimate. (All estimates include exports and other tax-free shipments, just 2% of total shipments.) That’s after 9 straight yrs of double-digit growth for Bud Light, a near impossible trend to continue as Bud Light closed on 35 mil bbls. Meanwhile, Bud down in same 2.5% range as in 2000. Despite continued Bud dropoff, Bud/Bud Light scored net gain of 1.7 mil bbls, 2.5%, not bad considering domestic beer shipments (excluding malternatives) down slightly in 2001. Bud/Bud Light had about 1/3 of total shipments last yr, up 0.7 share. Gained 3 share since 91. Long-term, Bud down 13 straight yrs. Lost 1/3 of its volume since peaking in 88. But Bud Light more than tripled its volume same period and gained far more bbls than Bud lost. Coors Light posted its smallest volume and % gain since mid-90s. Up estimated 175,000 bbls, 1%. Eked out 0.1 share growth tho to 8.2. Coors Light up nearly 40% last 10 yrs, gained 2 share. Miller Lite off slightly for 2d straight yr. Since 91, Lite off 3 mil bbls, 16% and 2 share. Nat Light up 150,000 bbls, 2%. Up or even every yr since becoming a mil-bbl brand in early 80s without ads.