Exports shipments from #2 Mexican brewer FEMSA (most of it shipped to US) slowed to 1.4% gain in 3d qtr, but it reported US depletions up healthy 8.1% same period. For 9 mos, FEMSA exports still up nearly 200,000 bbls, 15% to 1.5 mil bbls. US depletions up 11.4% YTD.

In yet another example of the big getting bigger, Monarch Bev Co of Indianapolis (Miller/Coors) recently acquired 3-mil-case Terre Haute Miller/Coors distrib Brentlinger. Deal closed Oct 1. Monarch had already been in that mkt with some wine and smaller beer brands. About 2/3 of Brentlinger

Not a big surprise given previous statements, but that wasn’t only soft number in AB release. Domestic shipments up just 0.1% Jul-Sep; YTD gain slipped below 1% to 0.9%. Then too, AB said it expects full-yr shipments to be up just 0.5%. That implies near-1% dropoff in 4th qtr, going against soft 4th qtr last yr (+0.5%). AB domestic beer income before income taxes up just 3.6% in 3d qtr. Last, but far from least, AB now expects 2005 earnings per share growth “in the 7 to 10% range.” Could end long streak of double-digit EPS gains. Expect plenty of talk about all this in conference call later today and/or in analysts’ follow-up reports. Already in advance of release, CSFB put out extensive report on AB entitled “A Grind in 05” which detailed why it will be tuffer for AB to grow profits at same rates as in last half dozen yrs. One silver lining: pricing still healthy as AB rev per bbl up 2.1% in 3d qtr, still up 2.5% YTD. Lots more in BMI.

Hard to believe it could really happen, but AP reports tough-talking Mayor of Boston is considering banning alcohol sales in city during the World Series after a college student was killed by a police projectile meant to disburse a rowdy mob of fans celebrating near Fenway Park. “Since people won’t accept responsibility, I, as mayor will take it into my own hands,” said Mayor Thomas Menino. He planned to meet with bar and nightclub owners today to discuss the matter. That'll be some "discussion." Menino claimed a state law gives him right to ban alcohol sales “in cases of riot or great public excitement.”  

National sales of Pabst Blue Ribbon were up 5% in 02, 15% in 03 and “are on track to be up 15% again in 04,” brand mgr told Boston Globe in yet another profile of PBR “winning back a following,” this time in Beantown. One retailer told Globe that “we didn’t even carry it a year ago. Now every week, I’m ordering 75 to 100 cases and we sell more kegs of PBR than Bud.” Pabst Blue Ribbon up 17% in supers yr-to-date nationwide even as total subpremium sales are down 5%.  

Yet another lawsuit vs state alc bev comm. This time it's Diageo vs Oreg Liq Control Comm (OLCC) over FMBs, but also takes aim at Bud. Oreg ready to run FMBs out of grocery stores/c-stores come Jan 1, 05 unless less than 0.5% of alc content comes from spirits flavors, per state definition of “malt beverage.” (That’s similar to proposed TTB rule, but feds haven’t formally adopted it yet.) Smirnoff FMBs, like most, derive almost all alcohol from spirits flavors. Diageo argues state’s directive to toss brands will “reduce consumer choice and access” and/or jump prices if suppliers gotta reformulate. Diageo also argues “alcohol is alcohol,” flavors used in FMBs for yrs and unfair to toss brands without formal “notice and comment rulemaking” procedure. OLCC has posted list of current FMBs that meet 0.5% standard. Only ones on it now: AB brands. That helps explain kicker at close of Diageo exec’s affidavit. Points out Oreg statute that defines malt bevs specifically excludes alc bevs “obtained by the fermentation of rice.” Then sez several “traditional beers” sold in state use rice, including Budweiser. Sounds like an interesting battle brewin’.  

Beer consumer price index up 3.7% yr-to-date thru Sep, compared to 2.5% for all items. But Sep prices up 4.4% over Sep 03, while all items up 2.5%. So “gap between beer CPI and the broader CPI widened again in September,” wrote Christine Farkas of Merrill Lynch. She continues to see this as a cause for concern, especially since spirits CPI up 1.4% YTD and wine CPI up 0.1%.

While US beer biz has toughened up, evidence keeps comin’ that these are good times indeed for largest distilled spirits cos in North America. Allied Domecq, #2 spirits co, said its North American volume up 5%, revs up 9% for full yr thru Aug 31. And at annual Diageo meeting, ceo Paul Walsh said: “Every year in the US for the next 10 years there will be half a million more consumers coming into the legal drinking age, and they will be adopting spirits earlier in their life cycle.” Hey, weren't these folks supposed to drink beer? Diageo, #1 player, had reported 3% volume growth in North America in yr ended Jun 30.

Stepped-up pace of action has apparently already begun in subpremium segment. Avg prices for Mil Best suddenly dipped 3.2% for 4 weeks thru Oct 3 in supers, according to analysis of IRI by Morgan Stanley’s Bill Pecoriello. Had been up about 2-3% in every 4-week period prior. Total Miller prices remained up 2.4% for 4 weeks. But price cuts on Mil Best during latest period cut rate of volume drop from double-digits in most 4-week periods to 5% in latest 4 weeks. “Aggressive Miller pricing on Milwaukee’s Best drove Miller share gains in both the subpremium regular and light categories.” Bill said these Miller “moves… create new risk” for AB. In Q&A session with distribs in Chi, AB prexy August Busch IV told distribs: “We will not give an inch of share even in the subpremium category.”

Direct shipping and Costco cases have made 3-tier protection a hot topic.  And a sensitive one.  Turns out AB was indeed sole brewer-sponsor of Beer Inst’s Sup Ct amicus brief in direct shipping cases, as AB prexy August Busch IV told distribs in letter and we reported last issue.  But all BI brewer members involved in brewers’ modest efforts so far in Costco.  BI statement noted individual members occasionally fund separate efforts, but added “all of BI’s members support the [Sup Ct] brief and will remain in full support of the critically needed 3-tier system.”  Meanwhile, Miller prexy Norman Adami noted in recent speech to IL distribs his “surprise” that his 3-tier remarks at NBWA (plus those by August Busch III) sent “ominous signals” to distribs.  “I haven’t spoken with August about it,” Norman said, “but I’m sure he feels just as strongly as I do that the 3-tier system is the very best system for our industry.”