Fun situation with baseball All-Star game in Milwaukee.  AB is official league sponsor but shut out of Miller Park.  AB brands served at “Bud World” in stadium parking lot for 3 days leading up to tonight’s game.  AB also held “official” block party but Miller secured better venue for its party that has “roughly twice as many restaurants and taverns,” wrote Milwaukee Jnl.  “Miller’s just running scared… They’re dropping absurd amounts of money to keep what they have,” AB distrib told the Jnl.  Miller countered: “This is our town…Do you think they’d give us an inch in St. Louis?  I can tell you the answer is ‘no’.”    

YTD thru Apr, Gambrinus (4.3 share in 3d-biggest US mkt) up 10%, Heineken (4 share) +20%, Guinness (2.2 share) +43%. Meanwhile, AB +1%, Miller and Coors each eked out 0.4% gains.

Union drivers walked out Jul 1 at AB?s sole distrib in RI over new contract. Retail accounts well stocked for the holiday weekend and much of July as strike was anticipated. Deliveries still goin? out but Teamsters vow to picket retailers who accept beer from non-union drivers. Could be long fight. Local union rep told The Providence Journal he had "open checkbook" for prolonged dispute. But mktg veep from McLaughlin & Moran dist told INSIGHTS he was "hopeful" they could resume talks with union later this week. Said AB had "terrific June" in RI. AB has 49 share, sold 363,000 bbls in RI in 2001.

Diageo updated 12-mo volume thru June 30. Smirnoff Ice doubled (worldwide). Since May launch, Captain Morgan Gold sales "good, although volumes so far have not met" Diageo?s "high expectations." That squares with anecdotal reports we?ve heard. Reuters wrote Captain sales "poor" and Fin Times wrote "there remains a nagging doubt over the sustainability of the ?malternative? category." Tho growth of Diageo?s 8 "global priority brands" slowed last 6 mos, Guinness back on upswing in 2d half after 1st-half drop.

AB filed short answer to lawsuit by ex-Corpus Christi distribs Williams/Durrill who charged AB illegally disapproved their deal to sell for $57 mil. AB denies all allegations it violated Tex law, breached contract and/or "tortiously interfered" with contract. (Recall distrib subsequently sold for $51.5 mil, plus $5.5 mil to be paid if buyer met certain revenue targets. Williams/Durrill sued for $57 mil plus damages.) AB sez too: Williams/ Durrill have "no standing to assert claims," they?d waived claims, they have "no damages or greatly reduced damages" because of potential to get the $5.5 mil down road, and punitive damages claim is unconstitutional. AB filed to dismiss tortious interference claim. Argued: 1) original agreement was not "valid existing contract subject to interference" by AB; 2) AB had "power to approve or disapprove a change in ownership," so was "legally justified" to disapprove. Why did AB nix 1st proposal? It believed "low return on investment would jeopardize" buyer?s "ability and incentive to provide the financial support necessary for the successful operation of the business and to comply with the terms" of equity agreement.

"We believe the pricing environment in the beer category continues quite positive. Our proprietary retailer surveys showed very little promotional activity during key holidays?Memorial Day and July 4." (Bill Pecoriello, Morgan Stanley)?.. "According to Investec, SAB may not even need growth" in the US, "claiming that if it can maintain Miller?s market share at 20% it could add $1 bil to the value of the business." (The Independent, UK)?.. Coors is being "disproportionately hurt by poor weather" in Northeast, Miller "hurt by rainy conditions in the Central US," while "extremely dry conditions in the West are likely helping" Barton. Weather a wash for AB, helped in Sunbelt, hurt in Midwest. (Caroline Levy, UBS Warburg).

Interbrew just bought a stake in 5th-largest Chinese brewer Zhujiang, which sold 6.4 mil bbls in 2001, 3.3 share of Chinese beer mkt. Also, more speculation in UK press this week that Scottish & Newcastle in hunt for another deal. Meanwhile, ink was barely dry making SABMiller a done deal this week when it announced plans to place another 120 mil shares to "maintain financial flexibility? to maximize shareholder value through its strategy, which includes seeking opportunities to enhance its position as a global brewer." "Basically, we have a pipeline of deals," said SABMiller spokesman, tho he didn?t name names. But said today: "In light of prevailing market conditions, SABMiller has decided in the best interests of its shareholders and the company not to proceed with the proposed placing of ordinary shares."

Interesting twist, and one that supports wholesaler independence, in long-running legal fight between S&P/Pabst and one-time master distrib in southeast Barry Kanner.  Tho US Dist Ct had ruled Barry’s co Southland had violated agreement with Pabst, which called for “full time commitment to the sales and marketing of Pabst/S&P brands,” by selling tiny volumes of other brands, US Ct of Appeals reversed that part of decision.  Instead, agreed with Southland’s argument that selling of non-Pabst brands (none competed directly with Pabst) “was done for the purpose of creating good will that would advance” sales/mktg of Pabst brands as well.  Ruled too that how Southland “chose” to “devote its full time commitment” was at its discretion, wasn’t detailed in agreement and wasn’t necessarily “exclusive ‘sale’” of Pabst brands.  Here’s key: “it is not the time…devoted to the non-Pabst brands that controls, but the purpose of that activity to increase the sales of Pabst products.” 

Other than Hawaii’s recent adoption of deposits, no state had passed a bottle bill in nearly 20 yrs.  It’s been a mostly dormant issue in DC for at least a decade.  But Sen Jim Jeffords (Ind-Vt) “called the hearings to build momentum behind a national bottle bill,” NY Times wrote.  Under proposed bill, consumers looking at a dime deposit at least, and industry forfeits unredeemed deposits until 80% recycling rate achieved.  Prognosis: “We don’t believe this is a serious threat.  We still believe curbside recycling has proven the best way to go,” Beer Inst prexy Jeff Becker told INSIGHTS.

SABMiller’s first comments about Miller trends: Apr-May “characterized by disappointing sales volume due to cooler springtime weather conditions…particularly in the Midwest and Northeast.”  But declines “offset by…better pricing trends…lower raw materials costs and higher contract brewing volumes.”  Miller results “broadly in line with expectations, ” and SABMiller expects Q2 financials “in line with that of the comparable period in 2001.”  In Q2 2001, Miller’s operating rev was $1.2 bil (-0.7% adjusted to exclude discontinued brands), oper income was $168 mil (-11.6%).  But in Q2 2002, Miller’s hi-priced malternative volume and $$$ all incremental.