“Everything else pales in comparison to Costco,” Wash assn prexy Phil Wayt told 4-state distrib meeting Monday (Wash, Oreg, Ida and Mont). “The most important issue to hit in our lifetime,” echoed Kristi Blazer, Montana exec. Phil noted that his assn has 3 law firms and a pr firm to help in Costco defense. No wonder it needs financial help. NBWA committed more funds that same morning. Costco initially took the "offense” on pr front, Phil pointed out, but Wash distribs fighting back. They’ve developed talking points such as: 3-tier system works, provides choice and prevents unregulated sales, Costco’s suit is about mkt share for Costco, not lower prices, and that “if Costco prevails, Wal-Mart wins.” (Apparently, Wal-Mart has higher unfavorables with consumers than Costco.) Even assn’s website, www.wbwwa.org is dedicated to providing info for reporters, consumers about case. This is the whole ball of wax, folks. Another theme that ran through meeting: consolidation. Kristy said when she came on board in 97, there were 40 distribs in Mont. Now her assn is down to 23 distribs. That’s over 40% reduction in 7 yrs. Similarly, state of Wash had about 125 distribs 20 yrs ago; now it has about 30.

Talk about a changing world: now a distrib has its own natl accounts team, focused on-premise. Southern Wine and Spirits, the $5-bil liquor distrib, announced creation of 32-person team for its 11-state biz. Natl accounts are about 35% of Southern’s “total restaurant, bar, club and hotel sales” across US. And chain biz expected to grow faster than total on-premise biz. “In many cases, we are the single-largest provider of beverages to this critical and fast-growing ... trade channel,” said Southern exec.  

This time story ain’t about boosting wine/liquor biz. It’s beer, and it’s Pennsylvania, where most beer sold thru 4th tier home Ds which aren’t now open on Sundays, gotta sell by case-only, etc. With beer sales eroding in PA and wine/liquor sold and surging in state-owned stores, signs of long-stymied modernization of beer biz beginning to appear. Today, PA papers report state pol will intro bill to allow home Ds to sell beer on Sundays. That followed decision a few weeks back to allow Sheetz c-store chain to sell beer in one of its stores, but with provisos that may/may not limit others from seeking same right. (Depends who you talk to.) Lotsa angles to this story as distribs, home Ds, bars/restaurants and brewers (national and local) each have different interests, perspectives. Supermkts and big box stores lookin’ on too.

Miller sees growth opportunities in light segment of sub-premium category. High Life Light just 10% of mother brand volume, but “growing at phenomenal rates,” said Miller’s exec veep Bob Mikulay. Miller decided to “balance” mktg spend 50-50 for the 2 brands. Mil’s Best Light also growing, added Bob. Mil Best spending will also be rejiggered accordingly. New Best campaign has slogan “brewed for a man’s taste” and print/billboard campaign will break in 17 cities, sez Adweek. Miller “will apply the same discipline and focus” to Mil’s Best it gave trademark brands in last 18 mos, Adweek wrote.  

Miller Lite “expected to be flat over the next 6 months,” wrote UK analyst Matthew Jordan of Dresdner Kleinwort Wasserstein, following Miller meeting Monday. That wasn’t part of Miller’s official presentation, but Matthew continued that Lite “was down in August… but is up so far in September.” That was reportedly part of Q& A. Miller total “volume and market shares will fall in” fiscal 2d half, that is Sep 04-Mar 05, he predicted. (Recall Miller going up against big unexplained shipment gain Oct-Dec 03.) Miller’s financial presentation a “disappointment,” Matt said: tho there are more savings to be had from Miller, these will be “reinvested” and “won’t boost profits for several years.” Plus “short-term costs are rising.” Tho sales softening and costs rising, Matthew still characterized meeting as “upbeat” because of improved brand health, corporate culture and planning.

AB really, really didn’t like expanded trade regs recently issued by NJ Alc Bev Control. Tried to get ‘em changed, but rules scheduled to go into effect tomorrow. So AB sued NJ in state court. Seeks injunction stopping regs. Complaint unavailable at presstime. State has agreed to put hold on reg preventing free draft-line cleaning (until Jan 1). State ABC letter references discussions with Beer Inst, Miller and distribs, and litigation by AB. Draft-line cleaning one of AB’s big bones of contention. Regs also include limit of $500 per licensee in “offers of services, facilities or equipment” like “sporting event tickets, vacation packages” etc, limit of $300 in displays, etc per account, product rotation 2x a yr and expanded rules on “pack-out.” Not often AB sues a state over regs. Interesting since ABC in midst of investigating AB (including extensive distrib depositions). Meanwhile, several distribs not so upset about regs. These expanded trade regs mainly aimed at abuses going on at a large retailer in wine and spirits, INSIGHTS understands.

Assuming SEC reviews and clears Sep 17 prelim proxy circular for Molson Coors deal in 1st half of Nov, 2 brewers plan to file final proxy with SEC Nov 8-19, Molson said today. Final proxy would go to Quebec Sup Ct for hearing, also sought between Nov 8-19. SEC clearance and Quebec hearing dates "key" in determining final schedule, sez Molson. If court gave interim order by Nov 19, final proxy mailed to Molson shareholders in time for special shareholders mtg week of Dec 13. If holders approved merger, court's final order expected week of Dec 20 and merger would close week of Dec 27.

Interesting article in Ad Age today profiles Miller

In favor of states’ rights to regulate alc bevs. For first time in long-running, multi-state legal battles over direct shipments to consumers, Beer Inst filed an amicus brief. Did it in US Sup Ct in support of NY law that requires in-state “physical presence” if out-of-state vintners want to ship direct to NY consumers. Beer Inst argues bluntly that “21st Amendment’s plain language is conclusive,” that small vintners challenging law are “wrong,” and “as a matter of strict constitutional interpretation, that law is immune from challenge under the dormant Commerce Clause. That should be the end of the analysis in this case.” BI brief also notes that legislative history and long series of US Sup Ct decisions support NY law.

Miller “doing very well” on-premise, sr veep Doug Brodman said in “interview” SABMiller provided following series of analyst presentations, “particularly… Miller Lite.” When was last time you remember a beer supplier saying that? A slide even said Miller “delivered double-digit on-premise growth” in 04, tho unclear what time frame or if that’s just Miller Lite. Doug also pointed out 30% of sales force replaced. More details in upcoming issues.