Beer Marketer's Insights
Coors beefing up its sales force by more than 50% to be "more competitive at street level," do a better job of calling on distribs and "step up" natl accounts efforts, execs said. All this in response to distrib feedback, they noted. Coors is adding 150 retail sales representatives as a new "selling army on the streets
While Coors "Better Positioned" Than Last Yr, Beer Biz "Toughest" In Ages, Said Prexy Leo
Citing revamped US mktg/sales efforts, including 200 additional sales folks (see details below) and big UK deal, prexy/ceo Leo Kiely told natl sales conference: "We're a much stronger, better-positioned beer company than we were a year ago
Breaking the $1 Bil Barrier: Malt Bev Media $$ Soared 19% in 02; Nearly $200 Mil for FMBs
Brewers, importers (and distribs) spent $1.17 bil on 10 major media in 2002, up $184 mil, 19%, according to CMR. Included over $100 mil incremental on malternatives alone. AB, Miller, Labatt USA, Guinness-Bass Import Co and Boston each increased spending double-digits. But spending flat or down for Coors, Heineken USA and Modelo brands. As expected, malternatives got media galore: $193 mil for top brands, about $40 per bbl, $3 per case. That's 16% of spending for less than 3% of volume. Unsustainable, but lots of that funded by distribs. Another big investment for so-far relatively small volume: AB poured nearly $18 mil into fast-starting Michelob Ultra, which rolled in 4th qtr.
AB really turned up total spending in 02, even more than usual in Olympics yr: up $91 mil, 28%. Gained share of voice for 1st time in several yrs. Bud spending increase was modest (5%), but AB increased Bud Light support $19 mil, 21% to $112 mil. AB nearly doubled spending on Michelob family to $83 mil, and spent $45 mil on malternatives. So 30% of AB spending on hi-end (6% of volume). With these increases AB spending per bbl jumped to $4.16, following 4 straight years in $3.35-$3.65 range. Miller moved media spending up $36 mil, 15%. That added a buck per bbl to just over $7, following a buck-and-half bump in 2001. Miller per bbl spending up 54% last 2 yrs. Miller Lite $$ up double-digits, but Genuine Draft spending cut in half. Miller also cut spending on High Life and Foster's. It invested nearly $60 mil on 4 malternatives that sold less than 1 mil bbls. Means Miller spending on beer brands down about 10%. Coors total media spending hovered around $200-mil mark for 3d straight year. Coors Light support up $10 mil, 8.3% and Coors Original continued to get over $20 per bbl. Coors reduced spending on Zima (tho still spent nearly $40 per bbl) and sliced Killian's support in half. Coors was only top-3 brewer that spent less per bbl in 02
AB Has Different Numbers
than those stated by competitive execs in last issue of INSIGHTS. AB sharply differs with Heineken's view that it's mkt leader in Manhattan. Bud has over 2x the share of Heineken in Manhattan, said AB source. AB data on Hispanic and African-American consumption also vastly different from Coors'. Hispanics and African-Americans were 22% of population, AB sez, but just 19% of consumption in 2002. Expects jump to 25% of population and 22% of consumption by 2012. Coors had projected 40% of consumption from those groups by 2012. That's a big difference. Finally, Coors Light ad awareness spiked in late 02, but has since dipped, according to AB's internal tracking.
While many of largest wine and liquor distribs sell some beer, a number have long coveted getting bigger in malt bevs. Some significant steps in that direction early in 2003. Glazer
When Labatt USA takes over US rights from Guinness to 7.5-mil-case Bass brand, LUSA will jump to just about 5 mil bbls on annual basis. That
Latest fed court decision in long-running challenge to state bans of direct shipments came up mixed for distribs, 3-tier defenders. US Appeals Ct in 4th Circuit ruled that because NC laws ban out-of-state vintners from shipping direct but at same time allow in-state vintners to do so, there
When story broke that 7-Eleven will sell private label beer called Santiago, created lotsa controversy surrounding SABMiller involvement and questions of how it will be distributed. Priced at $5.99, Santiago is an import, brewed by La Constancia in El Salvador, imported by Latin Brews (a wholly-owned US subsidiary of La Constancia). Latin Brews already sells private label beers to several leading chains. Two elements of confusion in early reports revolved around whether this brand would be sold thru 3-tiers and whether SABMiller part-owned it. The answers appear to be yes and no, tho private label import still raises potentially troubling questions.
The largest convenience chain, 7-Eleven, initially said that Santiago would be distributed by Miller wholesalers and its own delivery network. Turns out it will be thru Miller distribs only. "We have explored a number of different distribution options," 7-Eleven bev category mgr told INSIGHTS. "At this time we are going through the Miller network." Not exactly an iron-clad commitment. In addition, the words "joint venture," erroneously used in early reports, implied SABMiller partly-owned venture. But both Miller and 7-Eleven say it's a straight contract brew agreement. Joint venture is between La Constancia and SABMiller. "Getting 7-Eleven a proprietary beer has been a pet project" of 7-Eleven ceo Jim Keyes, reported Dallas Morning News. Why? To "differentiate," 7-Eleven bev mgr said. Project in development for 2 yrs; talks with Latin Brews preceded SABMiller deal, she added. Beer and wine are 11% of 7-Eleven's sales (beer sold in 80% of stores). While total convenience store beer sales down slightly in 1st qtr, 7-Eleven beer sales up mid-single digits. Santiago will appear in 7-Eleven stores this spring, but will receive only in-store merchandising.
7-Eleven has previously shown a tendency to test limits of 3-tier. Recall that in 96-97, AB and 7-Eleven engaged in modified cross-docking test in Utah and Fla. But experiment didn't really work and was dropped. Here, Miller apparently didn't know about Santiago until 11th hour, and then went to some lengths to reassure distribs that it wouldn
Beer biz in convenience stores down 0.6% thru March 22, according to ACNielsen, as $$ sales up 1.7%. Implies avg price paid for a case up more than 2%. Each of top 3 brewers
Strong pricing, moderate cost hikes led AB to 12% earnings gain, despite just 1% shipments gain. AB rev per bbl up 2.8% in 1st qtr, its 18th qtr in a row of over 2% pricing, cfo Randy Baker told analysts. This was "especially strong" given "difficult" comparison. In 1st qtr 02, AB rev per bbl had been up 3.8%, with almost 1 full point coming from Bacardi Silver intro. AB nudged its full yr guidance on rev per bbl up to 2.2-2.5%. That