Beer Marketer's Insights - Throwback Thursday

This week in 1999, at AB's shareholders meeting there was a lengthy dialogue between Teamster reps and August Busch III. Teamsters claimed AB contract offer only did better on 2d vote in 1998 because August went to Merrimack, NH and Fairfield, CA breweries and "threatened" to close them both if votes not changed. August acknowledged that those 2 breweries - AB's oldest - would be first to close if a strike and/or boycott hurt volume and mkt share. Yet, he corrected Teamsters, he "guaranteed" to keep both breweries open for life of contract if Teamsters "reconsidered" rejection of contract. But Teamsters still turned down offer tho they eventually settled without a strike. This week in 2004, there was a celebratory mood at AB shareholders meeting as co's earnings grew double-digits for 22d qtr in a row. But AB prexy August Busch IV at same time cautioned shareholders that AB now faced "aggressive competition" from "domestic companies with international partners" as well as wine and spirits cos. AB "now must measure" itself vs them, he said. Aug IV noted AB held 30 share of US alcohol biz. But chairman August Busch III answered question about whether AB plans to get into wine or spirits biz with a curt "no." ROIC too small, he noted.This week in 2005, in an expected move, Coors promoted veep Ed McBrien to chief revenue officer, replacing Carl Barnhill, who was retiring. Ed was a bright spot at that yr's natl sales meeting. Coors Brewing ceo Frits van Paasschen wrote distribs that "as a result of" Ed's leadership as veep of natl accounts, "Coors is growing share and Key Accounts is outpacing the balance of our business." Ed started with Coors in 1994. Coors also filled another key slot from within: Chat Chatterjee was named cfo of Coors US as David Barnes left to become cfo of Radio Shack. Ed rose to sales prexy of MC but left in 2015 and joined Manhattan Beer as coo shortly after.This week in 2006, Miller was having fun calling out AB "Fib" after August Busch III and brewmaster "admitted to having made several changes" to Bud/Bud Light "after vehemently denying it for months," Miller release said. Miller tagged AB statements among "Americas Most Famous Fibs," ranking it with President GHW Bush's pledge not to raise taxes and Pres Clinton's denial of sexual relations "with that woman." Miller had print ads about AB "admission" ready to run "as soon as tomorrow," reported Ad Age. Elsewhere, Robert Wood Johnson's website grabbed other remarks from August about drinkability and having 3-4 beers at a sitting and ran 'em under headline that charged AB changed Bud formula to "encourage greater consumption." Question about article popped at AB shareholder mtg. August III said Bud Light's taste profile hadn't changed, but AB varied ingredients because of crop variations, St Lou Post Dispatch reported. AB ceo Pat Stokes commented that AB had no plans to steadily increase Bud Light bitterness.This week in 2007, Heineken USA and FEMSA officially announced their 10-yr extension agreement for HUSA to be FEMSA's exclusive US importer for Dos Equis, Tecate, Tecate Light, Sol, Bohemia and Carta Blanca. Their partnership had gone exceedingly well (each up mid-teens in '06) and that was underscored by early signing of extension, since their first agreement lasted until end of '07. "Think about it: this new 10-yr agreement starts in Jan '08 and will end 1 yr after Constellation's 10-yr agreement with Modelo for Crown. Hard to imagine how different the beer world will look by then," wrote INSIGHTS. Indeed, that was before AB InBev megadeal and MillerCoors JV. Heineken bought FEMSA breweries in 2010. And ABI hadda sell its stake in Grupo Modelo's US biz to Constellation in 2013.This week in 2010, INSIGHTS shared widely publicized example of kinda turf that craft just owned over big suppliers: Dark Lord Day, celebrated on Apr 24th. Dark Lord (15% ABV Imperial Stout), made by Three Floyds Brewing in Munster, IN was avail just 1 day a year. To get into "Dark Lord Day" at industrial park in IN, you had to purchase admission ticket online. Thousands of tickets sold out in 1 hour and website crashed. Once there you could buy up to 4 22 oz bombers at $15 per. Total take for Three Floyds was estimated to be close to half mil bucks in 1 day. Brewers Assn listed Three Floyds at just 7,500 bbls in 2008. Meant that Dark Lord Day was likely significant chunk of Three Floyd's yearly revs.This week in 2011, as expected, Tom Long was named next MillerCoors ceo effective Jun 1. It had been setting up that way since beginning, when JV documents named Leo Kiely as ceo of MillerCoors and Tom Long coo and said something to the effect that Tom was next in line. Then that fall, they began to share the president and ceo's office. And a Crain's Chicago Biz article quoted Leo as saying Tom's up to the job and a "heckuva leader." And so, as expected by most, Leo was passing the baton to Tom in what was viewed as a very orderly transition. Joint SABMiller and Molson Coors announcement said: "Long's succession as CEO and Kiely's retirement are consistent with plans made in late 2007, when Molson Coors and SABMiller originally struck the deal." Tom joined Miller back in 2005, following 17 yrs with Coke. Leo led MC for the last 3 yrs (having led Coors since 1993). At MillerCoors, Leo, Tom and team captured over $650 mil in synergies and savings and zoomed oper income to over $1 bil in 2010 but had yet to grow volume, noted INSIGHTS. Tom retired from MC in Jun 2015.This week in 2014, "Wholesalers are the ones that will make or break you," Dick Yuengling told group of college students, per local Pottsville Republican & Herald. Product output and issues with wholesalers affect his company the most, Dick said. While distribs' job is to get product into mkt, once brewer picks distribs, "state laws say that the company must stay with them, even if the wholesaler isn't doing the best job," as paper interpreted Dick's comments. So even while Dick bought/built out Fla brewery to expand biz in 1999, Yuengling remained "under the thumb of the wholesaler," he added, in typically blunt fashion. Yet not all distribs bad at promoting brands, Dick allowed, per report. Plus, he credited his Pittsburgh area distrib for prompting purchase of Tampa brewery. That distrib wanted more product than Yuengling could provide at time and told Dick: "If you're made out of what I think you are, you'll do something about it." Dick told students: "That man alone really was the reason I built that brewery in 1999. There's a guy that builds brands, and there's not many out there." Finally, Dick added: "Everybody gives me credit for growing this company, but it's not me, it's the people."This week in 2016, ABI continued to make progress towards closing its transaction to buy SABMiller. ABI announced that Asahi was buying Peroni, Grolsch and Meantime (UK craft brewer purchased by SAB in 2015) brands, reportedly for $2.9 bil. ABI "pleased to confirm that it has accepted the binding offer" from Asahi for "certain of" SABMiller's European brands, including Grolsch, Peroni and Meantime ("excluding certain US rights") "conditional on the successful closing" of ABI-SAB deal, per ABI release. "Why haven't large Japanese brewers bought any US craft brewers yet?" wondered INSIGHTS. "They've certainly shopped and aren't shy about spending money elsewhere. So they must not be seeing value, or perhaps there are other issues." Kirin spent almost $4 bil in Brazil on Schincariol deal that turned out to be challenging from the start; Kirin reported first-ever annual loss in 2015 due to losses in Brazil. But it and other Japanese brewers have certainly become more active in US M&A in recent years.

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