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Beer Marketer's INSIGHTS

 

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AB had some good news at Lehman Brothers back-to-school conference Sep 6 in Boston and stock ticked up 2%+ that day.  Main new nugget: AB sales-to-retailers up 2.4% in 3d qtr to date, AB ceo August Busch IV said.  That included 0.8% gain on core brands.  While a significant improvement from 1.5% drop in 1st half, still down yr-to date.  AB 2d half rev per bbl also expected to “significantly exceed” 2.7% growth in 1st half, said August.  Earnings will accelerate in 2d half “especially” in 4th qtr, going against inventory reduction last yr, said cfo Randy Baker.  AB reiterated expectation that it will exceed longterm growth target of 7-10% EPS in 2007.  AB has made “great progress,” according to August in coming thru “significant period of transition.”  AB confident in its new model and “dust is now settling,” he added.  AB has “modified what we sell and changed how we sell it.”  It now has over 7 share of imports and added over 2 mil bbls in segment thru its recent acquisitions and alliances.  August noted “encouraging” Jul-Aug on InBev brands, which are “starting to get some traction.”  Meanwhile, Bud Light up over 1% thru Jul, August said and…

Publishing Info

  • Year 2007
  • Volume 38
  • Issue # 16
Boston shipments up another 15% in 2d qtr, +18.5% for 6 mos.  STRs runnin’ +17%.  And Boston now expects 15% shipments gain for 9 mos.  That’s on top of 17% gain in 06.  Revs and profits solid too.  Boston rev per bbl up 2.4% yr-to-date.  Tho cost of goods/bbl increased sharply (+8%) and gross margin squeezed, Boston managed to reduce ad/selling/ promo and admin expenses/bbl.  Sooperating income up almost $2/bbl, 10% to $21.11.  Oper income at $19.1 mil for 6 mos, up $4.4 mil, even with $3.4 mil write-off of costs for Mass brewery project.  Importantly, looks like Boston will avoid building pricey ($170-$200 mil) new brewery in New Eng.  Instead, it plans to purchase eastern PA plant from Diageo for $55 mil, then spend additional $30-75 mil in upgrades for expected late-08 start-up if due diligence goes smoothly.  Net-net, Boston will spend about half or less for double the capacity (1.6 mil bbls+) of original project.  Meanwhile, Boston already having product made at ex-Rolling Rock brewery in Latrobe, PA, will spend $3-7 mil on upgrades there and may yet acquire ownership stake in that plant. One glitch: “some issues” at Boston’s Cinnci brewery after runnin’ it 24/7 this summer. …

Publishing Info

  • Year 2007
  • Volume 38
  • Issue # 14
This is a sea change for AB distribs and for Yuengling.  As many now know, Yuengling will expand to Tennessee with exclusive AB network of distribs this fall.  About a dozen of ‘em appointed and all but one are currently exclusive.  Can’t make St Lou happy.  Yuengling’s announcement just before Tenn state assn meeting, where AB guys reportedly had tense meeting with AB state mgr. Fascinating experiment will include other significant firsts.  It will be first time Yuengling has entered any state with seamless distribution network, first time it is coming in at higher price (at Michelob levels) and initially there will be no draft.  That’s because of cooperage shortages, and probably won’t last more than a few mos. But it’s also interesting because Yuengling does about 40% of its biz in draft.  AB has 63 share of 4-mil-bbl mkt in Tenn, even higher share than that on draft.  AB sells over 2.6 mil bbls in Tenn.  In last 5 yrs, AB lost 2 share there, even tho it grew slightly.  Big 3 brewers collectively lost almost 5 share last 5 yrs, as imports and craft jumped from 5 to 11 share and grew more than total volume in state. …

Publishing Info

  • Year 2007
  • Volume 38
  • Issue # 13
Tho 155 beer deals done since late 04, only 1 over $1 bil, SABMiller’s Bavaria buy in 05. “We anticipate step-up,” Dresdner Kleinwort analysts recently wrote, adding: “We expect the endgame scenario to emerge by way of mega-deals,” and to play out by end of decade. Why? Several new “M&A catalysts” identified by DK. One is lower debt levels, especially at InBev and Heineken, which gives “increased scope for acquisitions.” At same time, #5 global player “Carlsberg has completely transformed its prospects” by changing rules of foundation that owns biz, allowing it to double equity base and do a big deal. Indeed, Carlsberg’s chairman recently said: “A major deal is likely. Carlsberg has the strength to become bigger.” Similarly, #4 Heineken has also altered its ownership structure in way that will make it easier to raise debt for acquisition, and “scotched any speculation that it may be a seller…rather than a buyer.” Another factor: US domestic beer has gone “ex-growth,” i.e., flattish volume and “limited pricing.” Those factors suggest AB, SABMiller and Molson Coors “will be forced to do deals to improve their growth rate.” Most likely combos in DK’s view: Carlsberg purchase of Scottish & Newcastle to get 100%…

Publishing Info

  • Year 2007
  • Volume 38
  • Issue # 12
First key summer holiday period -- 2 wks around Memorial Day -- went to the little guys, at least in supermkt channel.  While total beer biz off 1.4%, Coors hit trifecta: volume +0.6%, share +0.2 and avg prices +3.6%, noted Morgan Stanley’s Bill Pecoriello reporting IRI data.  Meanwhile, AB volume down 1.7%, share -0.1, avg prices +1.5%.  Miller volume  -2.4%, share off 0.2, but prices +3.4%.  Interestingly, import share just flat, with each of HUSA and Crown volume down slightly, but aggressive import pricing +4.6%.  Crafts continued to roll, up a half-share even with 4.8% avg price increase.     

Publishing Info

  • Year 2007
  • Volume 38
  • Issue # 11
Heineken USA sales-to-retailers up 8% thru Apr, “a very solid start,” prexy Andy Thomas noted at 2-day global investor conference that focused in great detail on HUSA.  But HUSA had been up 14% Jan-Apr 06.  HUSA down 1% in Mar 07 (going against HPL launch last yr) and up 3% in Apr.  So it’s slowed considerably last couple of mos.  Not just lapping HPL launch, but implementation of “biggest price increase ever,” said Andy, about 2.5% nationwide, has slowed results, at least for now.  HUSA up double-digits in each of Jan-Feb, last 2 mos when Heineken Premium Light volume all incremental.  All-in, Heineken brands up near 5% thru Apr, said Heineken.  Heineken/HPL grew despite lousy weather, and HPL “on track” to hit 07 volume goal of over 850K bbls.  Heineken brand up so far in 07, said Andy, but he didn’t say how much. On Amstel Light “we haven’t seen turnaround,” Andy acknowledged, but HUSA named new agency, and he had not expected to reenergize brand yet. Even with HPL, import/specialty lights still only 3.6% of light beer segment, updated Andy, while up to 37% of regular beer.  Closing gap is the “sizable opportunity” represented by “Luxury Light.”  HUSA brands…

Publishing Info

  • Year 2007
  • Volume 38
  • Issue # 10
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