Coors CEO Resigns

Taking job outside industry.

Frits van Paasschen, the CEO of Coors Brewing Company, is leaving the brewer to take a job outside of the beer industry, according to news reports citing an internal memo.

From the Wall Street Journal Online:

"Leo Kiely, the CEO of Molson Coors, said in a message to employees that he will assume Mr. van Paasschen's duties until a successor is named. Mr. van Paasschen has helped Molson Coors boost profits and sales, including re-igniting growth for Coors Light, the company's best-selling beer. Mr. Kiely did not disclose Mr. van Paasschen's new job."

Beer Business Daily also reported on the departure and quoted from the memo:

"Over the past two years, Frits and his team have made a real difference in growing our brands, improving productivity, building strong relationships with each of you, and strengthening the great tradition of a values-driven culture at Coors. It is a Winning Formula that we will continue to build on going forward.

"Effective immediately, I will join the team and assume the duties of chief executive of the Coors Brewing Company team along with my Molson Coors corporate responsibilities until a successor is named. Pete Coors will continue his role as executive chairman of Coors Brewing Company. Pete will remain very close to the organization and be available on a day-to-day basis to consult with us on any issues or opportunities. We have an exceptionally talented leadership team and Pete and I are confident in our ability to keep the positive momentum going as we round out one of our most successful peak selling seasons ever."

The Wall Street Journal story can be seen here.

The Beer Business Daily home page is here.

Leinie’s Branching Out

Craft brewer has expanded geographic reach, portfolio.

The Jacob Leinenkugel Brewing Company has been well known in the Upper Midwest for decades.

Over the past year it’s started making a name for itself in markets across the country. It started this move with the broad launch of Leinie’s Sunset Wheat last year and is now eyeing wider distribution of its popular Honey Weiss and Berry Weiss brands.

Leinie’s had a hit on its hands this summer in its core markets with its Summer Shandy.

The latest issue of Brew, which looks at the rise of the craft beer segment, includes an interview with Dick Leinenkugel, Leinie’s vice president of marketing.

From the issue:

If the designation “craft brewer” demands you be under family management for 140 years, operate an actual brewery, and introduce one of the top-selling craft brands in 2006, the leading craft brewer is the Jacob Leinenkugel Brewing Company.

The Chippewa Falls, Wis., brewery’s heritage and connection to the North Woods is a story that grabs consumers, says Dick Leinenkugel, the vice president of marketing for the brewery. He’s the great-great-grandson of the brewery founder Jacob Leinenkugel.

“Once people hear the story, they are intrigued,” Leinenkugel says. “What that then leads to is a bigger conversation that makes them feel that they’re part of the family.”

Popular in the Upper Midwest for decades, Leinie’s – as its known to its enthusiasts – is now trying to win over consumers across the country. In response to distributor demand, Leinie’s rolled out its new Sunset Wheat to markets across the country. It’s now available in 42 states.

Despite a limited time in market, it was the third-fastest growing craft brand in volume and per-volume distribution last year in supermarkets.

Leinie’s is now in the midst of extending its Berry Weiss and Honey Weiss brands into new markets.

(The brewer’s ability to tap the Miller distribution network is one of the advantages of being owned by Miller Brewing Company. Miller bought Leinie’s in 1988. It’s operated as a separate company.)

These wheat varieties play in the fastest growing part of the craft category. But Leinie’s also makes its original lager and a variety of darker beers (Creamy Dark, Leinie’s Red and the seasonal Big Butt doppelbock).

Leinie’s also is experimenting with bold “big beers.” It recently rolled out its Big Eddy Imperial IPA (named after the spring that feeds the Chippewa Falls brewer, it has 71.41 bitterness units and 8.9 percent alcohol by volume) on draft in Milwaukee and Madison.

This new direction highlights Leinenkugel’s conviction that craft will continue to evolve – and become a bigger part of the overall beer category.

“People now more than ever want to try something that’s unique and more personal to them,” he says.

Indeed, this embrace of different styles of beer underlies Dick Leinenkugel’s thumbnail definition of a craft brewer.

“What defines craft is having a variety of interesting styles of beer,” he says.

To see the latest issue of Brew, click here.

To receive a free subscription to Brew, drop a line with your name and mailing address here.

Sam Adams Growth Leads Craft Pack

Boston dominating segment growth in supermarkets, BMI says.

The August 27 orange sheet edition of Beer Marketer’s Insights had an interesting story exploring how much of the growth in craft has been driven by Boston Beer.

BMI noted that Boston Beer accounted for 35 percent of craft segment growth as defined by the Brewers Association (this definition excludes Leinenkugel’s and Blue Moon Belgian White Ale, among others) during the first half of the year. But it only represented 24 percent of the segment.

BMI went on to say:

Boston Beer would undoubtedly dispute notion that it’s sucking oxygen out of segment. In fact, Boston Beer ad spending could be fueling category growth in less developed craft (markets), bringing new users in. But in supers, Boston dominates craft growth.

BMI then cites IRI figures showing Boston Beer was up 17 percent in supermarkets for the 13 weeks ended Aug. 12, while Sierra Nevada and New Belgium both were flat.

The BMI home page can be seen here.

HPL Won’t Hit Goals

Heineken says it was a “little too bullish.”

Heineken Premium Light will miss its ambitious volume targets and won’t turn a profit in 2007, Heineken NV said today.

The disclosure came as Heineken reported earnings for the first half of the year.

From the Financial Times:

"One blemish on the performance was Heineken premium light, a low calorie and low carbohydrate beer, that will not turn a profit in 2007 in the US, where it was launched last year.

"While volumes rose 30 per cent in the first half, Heineken admitted it had been 'a little too bullish' in setting a goal of selling 1m hectolitres, blaming the weather and higher prices."

Heineken has said previously it’s spending about $70 million marketing HPL this year, up from $55 million last year.

Heineken also said the HPL launch has hurt sales of Amstel Light, which has seen a 10 percent slide in sales. It is now working to revitalize the brand.

The Financial Times story can be seen here.

Heineken’s earnings release can be seen here.

Coors Planning More High-End Brands, Report Says

Creating a “brand incubation company.”

Coors Brewing Company is creating AC Golden Brewery a “brand incubation company” that will “introduce above-premium beers to the marketplace using a new approach,” Beer Marketer’s Insights Express reported yesterday.

The report says the incubator will roll out brands through a slow build -- i.e. similar to Coors’ experience with Blue Moon Belgian White Ale.

The move represents somewhat of a departure for Coors, which in recent years has been focused almost exclusively on three brands: Coors Light, Keystone Light and Blue Moon.

The report didn’t mention any specific brands Coors plans to bring to market through AC Golden.

But recall Brew Blog previously reported that Coors had filed a trademark application for Henry Joseph’s, a higher end beer Coors has introduced -- and yanked -- twice before.

Also, Brew Blog has reported that Coors filed trademark application for Pale Moon Light, speculating it may be light extensions of Blue Moon.

Herman Joseph’s coverage can be seen here.

Pale Moon Light coverage can be seen here.

The Beer Marketer's Insights home page is here.

Craft Beer: What's Different from the Bubble?

Stronger craft industry means repeat of 90s shakeout unlikely.

(NOTE: Due to a technical problem, a previously published installment of Brew Blog was mistakenly sent out earlier this afternoon. Brew Blog apologizes for the inconvenience. Now, onto the latest installment of our look at craft beer...)

The fast growth of craft beer calls to mind the segment’s rapid rise in the early 1990s.

Which begs the question: Could craft’s growth flatline the way it did in the mid-90s?

Most industry observers say no. While craft’s rate of growth likely will cool off in the years ahead -- a function of a bigger base, if nothing else -- history is unlikely to repeat itself for a variety of reasons. The players are different. The consumer is different.

The latest issue of Brew Magazine, which focuses on craft beer, examines this topic.

From the issue:

A specter is haunting craft brewers -- the specter of the late-1990s.

That’s when the craft beer category’s growth flatlined after years of eye-popping growth. The category was undermined by quality issues at some brewers, discounting activity that undermined its image and a sense of faddishness.

“Craft beer fad has faded,” said a typical Dow Jones headline from September 1996.

Sam Calagione, the president of Dogfish Head Craft Brewery, opened a production brewery separate from the brew pub in 1997 – “probably the absolute worst time to do that,” he says. Fortunately for him, profits from the Dogfish Head brewpub kept the business afloat.

“We would have gone bankrupt except my brewpub did well,” he says.

Could it happen again?

No one can predict the future. But plenty of indicators suggest craft beer’s run is more sustainable this time around. Here’s why:

1. Craft beers are generally of higher consistency and quality than they were in the 1990s.

2. The trading-up and customization trends are more broad-based now than it was then.

3. The operators are better. During the last runup, a lot of amateurs and speculators got into the business in hopes of making a quick fortune. That’s not the case this time – at least for now. They’ve also learned from the lessons of the 1990s.

“The companies that are here today are better than they were in the 1990s,” says Gary Fish, president of Deschutes Brewery.

Moreover, the growth this time is different. Back then, a lot of it was driven by hype. Now it’s more grassroots-based -- and more sustainable.

“It appears to be healthy growth this time,” says Maureen Ogle, author of “Ambitious Brew,” a history of the U.S. beer business.

To see the latest issue of Brew Magazine, click here.

To subscribe to Brew Magazine, drop a line with your name and mailing address here.

How Big Can Craft Beer Get?

Opportunities, challenges for growing segment.

How big can craft beer get?

It's one of the biggest questions in the beer business.

Flat for years, craft has been on a roll since 2002. And it appears it has a good run ahead.

That said, craft will bump into some challenges as it grows bigger.

The latest issue of Brew Magazine takes an in-depth look at the opportunities and challenges facing craft.

From the issue:

Craft’s share of the overall beer market was flat at around three percent from the mid-1990s until 2002 when it started inching up again, according to figures from Beer Marketer's Insights. It was at 3.8 percent last year.

And it’s likely to keep growing for a variety of reasons including:

1. The strength of craft brewers. After four decades, a number of strong national, near-national and regional players have established themselves. Operators are experienced and have learned from the mistakes of the past. And they make high-quality, consistent beers.

2. Consumer trends. People are willing to pay a premium for products that are different and perceived to be of value -- the so-called “trading up” trend. Indeed, some consumers actively seek out higher-priced products.

People also increasingly want to buy products that fit in with their personal tastes – and are more attuned to their sense of individuality. So people seek stronger flavors and customization (think Starbucks coffee). Or they want to buy local.

“I don’t think what’s happening in craft is unique to it,” says Jay Brooks, a beer writer who publishes a blog called Brookston Beer Bulletin. “It’s part of a larger movement.”

3. A new generation of legal-drinking-age consumers are embracing crafts. Craft beers once skewed older. But now more 21-to-27-year olds -- for whom crafts have always been a part of the landscape -- are picking them up.

Proprietary research by Miller Brewing Company demonstrates that since last year crafts have increased share with this group.

Distributors see this playing out at the street level.

“I think the craft growth is being driven by the younger consumer, 21-to-35-year-old, who has a different taste profile than the older beer consumer,” says Kevin Burke, President of Burke Beverage Inc.

That said, there are limits to how high crafts can go. Among the constraints:

1. Capacity. If consumers demand more craft beer, craft brewers will have to expand to meet demand. And that’s an expensive proposition.

2. Palate. While a growing number of people want stronger flavors, the vast majority of consumers prefer light American lagers. Light domestic brews represent half the beer sold in the U.S.

The craft brewers recognize this. Boston Beer Company and New Belgium Brewing Company, among others, have introduced light beers. Also, more craft brewers are creating pilsners or wheat-style beers with crossover appeal to mainstream beer drinkers.

3. Shelf space. Retailers and distributors can handle only so many brands. And retailers can get cold-blooded about slow-moving SKUs -- as seen in the massive rationalization of craft beers after their big run-up in the 1990s.

“The number of SKUs is an issue,” Burke says. “We just watch the performance of them and eliminate the slower moving ones twice a year to make room for newer ones.”

4. Size costs. As brands pass certain size thresholds they acquire added costs – distribution complexity, additional marketing channels and SKU proliferation. Craft beers also likely will encounter increased competition from leading domestic brewers intent on protecting their market share -- even as they seek to participate in craft’s growth.

Still, all observers expect that craft beer has a long run ahead.

Skeptics would do well to remember that as recently as 1989 experts were writing off imports, which then represented 5 percent of the business. At that time, one industry expert went so far as to say that “Corona was, from beginning to end, a fad.”

Oops.

Imports now represent more than 12 percent of the business and Corona Extra is the sixth biggest brand in the country, according to BMI.

“In the near term, 10 percent isn’t realistic,” says Benj Steinman, publisher of Beer Marketer’s Insights. “But it’s a vision.”

The rest of the issue can be seen here.

If you would like to receive a free subscription to Brew Magazine, please drop a line with your name and mailing address here.

Miller “Outperforms Strongly” in Supers, Analysts Say

Could set stage for strong second half

Miller Brewing Company’s strong performance in supermarkets was called out by the London-based analysts of Dresdner Kleinwort.

“Miller outperforms strongly” was the call out in a report that looks at Nielsen supermarket data for the four weeks ended Aug. 11.

While industry dollar sales rose 2.8 percent, Miller’s increased 8.5 percent, the report noted. Anheuser-Busch, meanwhile, saw dollar sales slip by 0.1 percent.

The report attributed Miller’s performance to price increases, strong performance by the worthmore segment, and improved trends on “main brands” Miller Lite and Miller Genuine Draft.

“If Miller can sustain this price/mix performance, the company is likely to achieve a particular strong performance in the (second half of the year), given the low margin in the same period of last year,” the report said.

Craft Crazy

Craft beer sales are taking off. How high can they go?

The numbers don’t lie. Craft beer is hot.

Once written off as a fad, craft’s on track for its third straight year of double-digit growth.

While still relatively small, craft’s playing an increasingly important part in the beer business. And a wide range of people in the business – from brewers to retailers to distributors – expect it to become more important.

Craft’s now roughly 4 percent of the business. Some predict it will hit 10 percent in the not-too-distant future.

Can it get there? The latest issue of Brew Magazine takes an in-depth look at the opportunities and challenges that lie ahead for craft.

From the issue:

Ken Grossman sold 950 barrels of beer when he started his craft brewery 26 years ago.

Now Sierra Nevada Brewing Company is the country’s second biggest craft brewer with 2006 shipments of 637,000 barrels, according to Beer Marketer’s Insights (BMI). And the brewery now has capacity to produce 1 million barrels – a thousand times its initial run.

Include Grossman among the people who are surprised at how far craft beer has come in a quarter century.

The vision back then was very different than it was today,” he says. “If you listened back then to the analysts, most of them thought what we were doing was crazy.”

That was then. Now the craft segment is the fastest-growing part of the American beer business. And while it’s still small – about 4 percent of U.S. beer shipments in 2006, according to figures from BMI – many say it’s poised to play a bigger role.

“I think 10 percent is inevitable,” says Sam Calagione, president of Delaware’s Dogfish Head Craft Brewery, who now is working on a book about beer and food pairings. “Do I think it’s going to happen by 2010? No. 2020? I can’t think it won’t happen by then.”

There’s reason for his optimism. Craft beer grew at a 14 percent clip last year, following double-digit growth in 2005, according to BMI (this includes Leinenkugel’s and Blue Moon). The craft beer segment is well established with a diverse range of players that make quality beers. Consumer trends favor the growth of craft. A new generation of legal-drinking-age consumers is hoisting crafts.

Importantly, distributors and retailers like crafts for their growth and their high margins.

We can all see the numbers,” said a category manager at a major retailer. “It continues to be a pretty strong subcategory. There’s significant potential.”

"Of course, extrapolating future growth from current trends is always dangerous. And craft will encounter some challenges. Retailers and distributors can carry only so many brands and stock-keeping units. The American consumer’s palate tends toward lighter beers. Capacity can be an issue. And as craft brewers grow, growth becomes more expensive.

Still, most industry executives predict craft has a good run ahead.

“I think craft’s going to continue to grow naturally,” says Gregg Christiansen, president and CEO of Columbia Distributing Company. The distributor serves two of the country’s biggest craft markets – Portland, Ore., and Seattle.

The rest of this story, and the issue, can be seen here.

If you would like to receive a free subscription to Brew Magazine, please drop a line with your name and mailing address here.

What Next in Miami?

A-B buys distributor.

Anheuser-Busch ended a dispute with its Miami distributor on Tuesday by buying it.

Earlier this year, Eagle Brands had sought to sell out to Gold Coast, an “all-other” distributor. But A-B opposed the sale. A legal fight ensued.

Beer industry observers were unsurprised by the end game. Said Beer Marketer’s Insights:

"As for De La Cruz family (owners of Eagle Brands), all it really wanted was to sell its business to highest bidder anyway. A protracted legal fight also expensive, risky and stressful for them."

While the issue is settled for now, it begs the question of what happens next. That’s because A-B can only own a branch for six months under state law.

From Beer Business Daily:

"The big question is what A-B is going to do with the company. Wise men often counsel us to be careful what we wish for…..we might actually get it. Eagle Brands is a low share A-B distributorship – it’s not a knock against the de la Cruz family, but more of a macro-trend in the area spurred along by Gold Coast (like riding a wild horse and spurring it wildly while also guiding, somewhat. Or something … In these situations A-B sometimes puts a family member, former executive, or friend in those types of spots. We’ll see, so stay tuned."

The Beer Marketer's Insights home page is here.

The Beer Business Daily home page is here.

What’s Going on with A-B Pricing?

Soft in supers, rumors of discounts.

Ever since Anheuser-Busch slashed prices two years ago to fend of Miller Lite, one of the biggest questions in the beer business has been whether A-B would again take pricing actions to hold share.

It’s an important question to keep in mind in view of weak pricing in supermarkets and reports by beer industry trade magazines of aggressive promotion plans by A-B.

In supermarkets, A-B’s dollar share of beer sales slid by 0.2 points during the four weeks ended August 11, according to beer sales statistics from Nielsen. For the 52 week period, it’s slid by 0.4 points.

The reason: While Bud Light is growing, it’s not growing fast enough -- or at a high enough price -- to make up for ongoing volume declines by Budweiser and Bud Select.

Bud’s case volume dropped by 6.1 percent and Bud Select plummeted by 21 percent during the four week period.

Bud Light grew during the period -- case volume increased by 1.8 percent -- but on relatively soft pricing. While Bud Light picked up 0.4 points of case share in supermarkets, it only gained 0.1 points of dollar share. Overall the Bud franchise lost 0.7 points of dollar share.

Meanwhile, beer industry trade magazines in the past weeks have been reporting buzz of A-B discount activity. After previously reporting A-B discounting activity in Michigan, the e-newsletter Beer Marketer’s Insights Express followed up on Friday with a report that led off like this:

"Something is going on out there. But we don't have our arms around scope of it yet and haven't gotten AB's perspective on these changes.  Ain't just Mich tho.  Not by a long shot.  Word came in today that with ink barely dry on AB's 35 cent frontline price hike in Fla, it will simultaneously offer $2.15 quantity discount on 25 cases of 12-pack cans and bottles.  Price goes back to $15.20 a case." 

Beer Business Daily, which also has been reporting on discounting, quoted a Miller-Coors distributor on the Florida action:

“That’s cheaper than I’ve seen it in years,” said one blue-silver distributor to BBD, adding “Miller caught a lot of heat for this two years ago, and now A-B’s doing it. It’s really disappointing.”

The Beer Marketer's Insights home page is here.

Beer Business Daily is here.

A-B Preparing Yet Another Liquor

Files trademark application for “Luzia.”

When August Busch IV was named CEO of Anheuser-Busch last year, industry observers suggested the brewer would deepen its involvement in spirits.

That prediction appears to be playing out.

In its latest move in the spirits front, A-B earlier this month filed a trademark application for "Luzia" with the U.S. Patent and Trademark Office. Luzia is described in the application as a Cachaca.

Cachaca is a rum-like spirit from Brazil.

A-B has been picking up the pace in spirits initiatives in the more than two years since it launched the liqueurs Jekyll & Hyde -- under the Long Tail Libations LLC imprint -- to test the waters in the spirits category.

Last year it expanded its portfolio by striking a distribution deal with a Korean maker of soju.

This year it has struck a regional distribution alliance with Vermont Spirits to handle some upscale vodkas. And it has filed trademark and label applications for Pomacai, a pomegranate-acai berry flavored vodka.

If there’s any common denominator among the more recent moves, it’s that A-B appears to be focusing on more niche categories within spirits.

The trademark application can be seen here.

A wikipedia entry about cachaca can be seen here.

Previous Brew Blog coverage of A-B’s spirits initiatives can be seen here.

Craft Ramping up at Retail

Crafts gaining shelf space at supermarkets and other outlets.

The double-digit growth of craft beers, in volume and dollar sales, shouldn’t surprise anyone who’s paid attention to store shelves.

Craft has been gaining space for some time, and that trend is likely to continue.

The number of craft items carried by the average supermarket is up 33.5 percent from 2005 to 23.4 items, according to beer sales statistics from Nielsen.

But it’s not only supermarkets. Crafts are picking up shelf space at other retailers.

Convenience stores carry an average of 2.4 craft items, according to Nielsen (year-to-date through May 19). That may not sound like a lot, but it’s a 35 percent increase from two years ago.

Liquor stores stock 52 craft beer items, according to Nielsen (26 weeks ended May 19). That’s a 24 percent increase from 2005.

Retailers are paying more attention to crafts, which can enhance the image of a beer section and provide higher margins.

While they’re carrying more items, retailers and distributors also are monitoring stock keeping units to see which ones move. And which ones don’t.

Says Kevin Burke, president of Burke Beverage: “Shelf space is scarce and we need to get the most velocity as possible for each SKU.”

That said, craft beer is still dwarfed by premium beer. Craft beer’s penetration of households has jumped to 8 percent in 2007 from 5 percent in 1998, according to Nielsen. The total beer category’s penetration is around 45 percent.

To see the Brewers Association press release about craft beer’s performance during the first half of 2007, go here.

Beer Business Daily had an interesting discussion of craft’s growth on Friday. That can be seen here (subscription only).

Crafts Post Double-Digit Growth

Exceeds 5 percent of beer dollar share.

Craft beer volume increased by 11 percent during the first half of 2007 and dollar sales jumped even higher, according to figures released Wednesday by the Brewers Association.

Craft volume increased by 400,000 barrels during the period, to 3.8 million barrels, according to the trade association, which represents 1,400 craft brewers, ranging from brewpubs to bigger players such as Boston Beer Company. (The BA numbers do not include Coors Brewing Company's Blue Moon Belgian White Ale or the Jacob Leinenkugel Brewing Company, which is owned by Miller Brewing Company.)

Dollar growth increased by 14 percent during the period, BA reported. For the first time ever, craft's dollar share of total beer sales exceeded 5 percent.

"The 1,400 small, independent and traditional craft brewers in the U.S. have hit their stride," said Paul Gatza, director of the Brewer's Association. "United States craft brewers are making many of the world's best beers, and the marketplace is responding."

The release can be seen here.

Low-Cal Blue Moon?

AP asks brewer a question.

Brew Blog recently asked whether Coors Brewing Company planned to introduce a light version of its popular craft-style Blue Moon Belgian White Ale.

The question was sparked by the fact Coors recently filed trademark applications for Pale Moon and Pale Moon Light. The similarity of the names to Blue Moon suggests they could be low-calorie versions of the brew. A light version would fit in with Coors’ desire to expand the franchise -- it’s already rolled out seasonal varieties -- and the growth of the worthmore light beer category.

The Associated Press recently conducted a question and answer with Coors brewmaster Keith Villa and asked whether the brewer planned develop a light version of Blue Moon.

He didn’t directly answer the question. Here’s his response:

“A: I always like to experiment and try to make new beers. One that we've won a medal with last year at the Great American Beer Festival was a nice light, drinkable beer I designed to taste like champagne. It was made with wheat and chardonnay grapes. The net result was this really nice beer that didn't smell or taste at all like beer.”

The beer he was describing, by the way, would be Blue Moon Chardonnay Blonde. It won a silver medal in the Fruit and Vegetable Category at the GABF.

While it remains unclear whether Coors will roll out a low-calorie version Blue Moon -- trademark applications don’t always mean a product will come out --- it bears watching.

The AP story can be seen here.

Previous Brew Blog coverage can be seen here.

Bud Pricing Lags in Supers

Increases little more than a third of category average.

Budweiser is not the king of pricing.

The national weighted average case price increase for the Bud franchise in supermarkets was a little more than a third of the category average during the four weeks ended August 4, according to beer sales statistics from Nielsen.

The Bud franchise was up 1.3 percent vs. the category average of 3.5 percent, according to beer market analysis by Nielsen.

Bud was up 1.3 percent. Bud Light and Bud Select each were up 1.1 percent.

Of the three, Bud Light was the only brand to gain case share, up 0.6 points. Bud lost 0.4 points and Bud Select lost 0.3 points, according to Nielsen.

The 3.5 percent increase was driven primarily by increases in import and craft pricing. Import pricing was up 4.7 percent and craft pricing was up 4.3 percent. Also boosting the average category price: The growing size of craft, which picked up 0.7 points of case share during the period.

Miller Lite’s average weighted case price was up 1.7 percent and the brand picked up 0.2 points of case share, according to Nielsen. Coors Light’s case price was up 2.5 percent as the brand gained 0.1 points of case share.

Will Coors Revive – Again – Herman Joseph’s?

Potential effort to tap popularity of craft?

Could Coors Brewing Company be bringing back a beer that’s been launched and discontinued twice before?

The brewer has filed a trademark application for Herman Joseph’s, described in the application as a beer.

Beer industry vets with good memories may recall that Coors launched Herman Joseph’s – named in honor of Coors co-founder Adolph Herman Joseph Coors –as a superpremium ale back in 1980. It was discontinued due to weak sales in 1989.

Coors relaunched the brew in 1995 as craft beers took off.

From a Coors press release issued in November 1995:

"Herman Joseph's -- or HJ -- was a great beer, but was in market ahead of its time. In the 80s, popular-priced and light beers were the rage. Now, the market has come full circle with consumer demand for above-premium beers soaring," said Jon Runge, director, New Product Development. "This has created a new and viable market for HJ. Our distributors, retailers and consumers have been saying we never should have stopped making HJ. Coors is excited to be reintroducing Herman Joseph's."

Coors pulled the beer out of the market after a few years. Coors CEO Leo Kiely in September in 1999 told Modern Brewery Age:

“We pulled that back out of the market. It's a great beer, but it was hard to figure out how to market it. Today that business is largely imports, and import look-alikes and craft beers. I'm not sure where we'll participate, but we will participate. It may be an off-shoot of some of the stuff we do around the world, it may be a continuation for the Killian's work we've done. We've got a wonderful product in Blue Moon, and the Belgian White is growing very nicely in a hugely cluttered category. It will take a couple of years for that clutter to dissipate. It takes brands a long time to die.”

Kiely has been proven prescient on Blue Moon. And it’s worth noting that now, as in the mid-1990s, craft and higher-priced beers are booming.

The trademark application begs the question whether Coors thinks it might be able to replicate its success with Blue Moon with a new brand – and whether three time’s a charm for Herman Joseph’s.

The trademark application can be seen here.

The Modern Brewery Age homepage is here.

NFL Coach Blowup to be in Coors Ad?

Coors using Dennis Green footage, report says.

Coors Brewing Company will use old press conference footage of former National Football League coach Dennis Green in advertising this fall, according to a report in Advertising Age

The big question is whether the brewer will use shots from Green’s fiery press conference last year after his Arizona Cardinals gave up a big lead to lose to the Chicago Bears.

Two ads have been created featuring footage from other, more mild press conferences. But so far no word on whether the big blowup will show up in an ad.

From Ad Age:

"The problem, according to people familiar with the matter, is that Mr. Green's anger after the Monday night meltdown was so pyrotechnic that Coors and longtime agency DraftFCB are having a hard time crafting it into an ad that will pass the collective muster of Coors Chief Marketing Officer Andrew England, the NFL (which has veto power over ads as part of Coors' sponsorship agreement), and Mr. Green himself."

The Ad Age story can be seen here.

A-B Continues on Pomegranate Bandwagon

Preparing a pomegranate FMB.

First came a pomegranate-flavored beer. Then a pomegranate vodka.

Now it appears Anheuser-Busch appears poised to introduce a pomegranate flavored malt beverage.

A-B recently filed a certificate of label approval application with the Treasury Departments Alcohol and Tobacco Tax and Trade Bureau for a pomegranate variety of its Bacardi Silver Mojito.

The label calls it a “premium malt beverage with the natural flavors of pomegranate and mojito.”

A-B introduced Bacardi Silver Mojito earlier this year. It has recently filed a label applications for a 12-ounce slim-can package.

To see coverage of A-B’s pomegranate beer, click here. To see coverage of Pomacai, a pomegranate-flavored vodka it appears to be preparing, click here.

To see the Bacardi Silver Pomegranate Mojito label application click here.

To see the Bacardi Silver Mojito slim can application, click here.

Craft Beer Grows, Imports Fall on Rising Prices

Inverse relationship?

Rising prices appear to be hurting sales of imported beers in supermarkets.

But higher prices can’t slow down sales of craft beer.

What’s going on?

Imported beers suffered their worst share performance in at least three years in supermarkets during the four weeks ended July 28, according to beer sale statistics from Nielsen.

Import share slid by half a point during the period, according to Nielsen. The losses are directly attributable to No. 1 import Corona Extra -- which has an average weighted case price 5.9 percent higher than in 2006.

Crafts, meanwhile, gained seven-tenths of a point of share during the period, according to beer market analysis by Nielsen. This is despite prices being 4.1 percent higher than a year ago.

Why the difference?

Jim Koch, the chairman of Boston Beer, offered a possible explanation during comments about the Sam Adams brewer’s strong second-quarter performance.

From Beer Business Daily:

Jim also points out that imports and crafts have been through several 10 year inverse relationship cycles. Remember when imports (Corona mainly) crashed in 1987, which coincided with the birth of the craft renaissance which ran through 1998, then softened as imports again took off until 2006. Today imports are soft and crafts are on fire. Obviously, it has a lot to do about pricing, but Jim says he’s “cautiously optimistic that we have growth ahead of us, but not sure if it will be double digits.”

To see Boston Beer’s earnings release, go here.

To see Beer Business Daily, go here (subscription required).

Coors Posts Robust Quarter

Shipments, STRs up.

Molson Coors Brewing Company reported solid second quarter earnings marked by growth in shipments and sales to retailers in the U.S.

Shipments to wholesalers in the U.S. grew at a 3.1 percent clip during the quarter. STRs grew by 2 percent (1.6 percent including Puerto Rico).

Morgan Stanley analyst William Pecoriello noted shipment growth exceeded his forecast of a 2 percent increase. STRs lagged his 3 percent estimate.

Coors’ U.S. results were driven by low-single digit growth by Coors Light, double-digit growth by Blue Moon and mid-single-digit growth by Keystone Light.

U.S. pretax income grew 39.1 percent to $98.1 million, excluding special charges a year ago. Sales volume growth, higher net pricing, and cost savings, including merger-related synergies, accounted for the increase.

In Canada, Molson Coors’ STRs were up 1.1 percent and shipments grew by 4 percent.

Earnings from continuing operations increased to 1.94 per share from 1.40 per share, beating Wall Street estimates.

The stock was up 0.31 percent, or by 29 cents, at 11:50 a.m. EST.

See the Molson Coors earnings release here.

Miller, Coors Gain Share in C-Stores

Bud Light slips.

Miller Brewing Company continued its winning streak in C-stores through mid-July as it increased share by 0.3 points, according to beer sales statistics from Nielsen.

Miller’s gain was driven by Miller High Life’s continued growth in the channel.

Miller High Life increased its share by 0.3 share points during the four weeks ended July 14, according to Nielsen.

Miller Chill also helped boost Miller’s share. With only 53 percent national distribution in the channel, Miller Chill secured 0.2 percent share.

Miller Lite was flat during the period.

Meanwhile, Anheuser-Busch continued to lose share in a channel it has long dominated. The brewer’s share slipped by 0.9 points. That was driven largely by a 0.9 share point loss by the Budweiser franchise as all three lead brands – including Bud Light – lost share.

Bud Light lost 0.1 share points.

Coors Brewing Company’s share increased 0.4 share points, as Coors Light, Keystone Light and Blue Moon all grew.

A-B Set to Launch Vodka

Files label application for Pomacai.

Anheuser-Busch, which has stepped up its involvement in spirits over the past 12 months, now appears poised to roll out a vodka.

On June 29 a label application was filed with the federal government for Pomacai, described on a colorful label as “pomegranate & acai berry flavored vodka.”

The vodka has 35 percent alcohol by volume, according to the label. It appears the brand will be available in 1 liter, 1.75 liter, 375 milliliter and 750 milliliter bottles.

Brew Blog reported in April that A-B had filed a trademark application for Pomacai. This appears to be the next step.

This marks the latest effort by A-B to establish a presence in the spirits space. It started a couple years ago by rolling out the Jekyll & Hyde liqueurs. Within the past year it has inked a distribution deal for a Korean soju brand. And in June it announced a distribution deal in the Northeast for Vermont Spirits’ vodkas.

When that deal was announced, Dave Peacock, vice president of business operations for A-B, said: “Products like these distinctive, high-quality Vermont Spirits vodkas allow us to compete in this growing category in a limited way, while gaining a deeper understanding of distributing a liquor-based product through our wholesaler system.”

The label application for Pomacai was filed by U.S. Distilled Products Co. in Minnesota, which already makes Jekyll & Hyde for A-B. The label says “Produced and bottled by Jekyll & Hyde spirits.”

To see the label application, click here.

To see previous Brew Blog coverage about Pomacai, click here.

To see A-B's press release about Vermont Spirits, click here.

Adami Retiring

Cites “compelling family circumstances.”

SABMiller plc, the parent of Miller Brewing Company, today announced that top Americas executive Norman Adami will be retiring on November 30.

A release issued by SABMiller says “Norman has expressed a desire to retire and return to South Africa, at an appropriate juncture, due to compelling family circumstances.”

As CEO of SABMiller Americas he handpicked Miller’s current leadership team and integrated SABMiller's Latin American businesses. He will not be replaced.

Adami is best known in the U.S. beer business for his leadership of Miller from 2003 until last year. Miller CEO Tom Long described his accomplishments in a memo to staff this morning:

“Under Norman’s leadership, we rejuvenated Miller Lite, forged a new relationship with our distributors and seized the mantle of the Able Challenger to disrupt the status quo in the American beer business. We also built important new management capability throughout the company.”

Commenting on Adami’s retirement, SABMiller CEO Graham Mackay said:

“Norman has made an enduring contribution to the SABMiller Group and we will greatly miss his wisdom, passion and commitment. One of Norman’s legacies is the strong management team that he has built up in the Americas.

“I respect Norman’s decision to move back to South Africa to support his family and we wish them all success and happiness in this new phase of their lives.”

Long will report directly to Mackay.

SABMiller also announced the retirement of Andre Parker, Managing Director of SABMiller Africa and Asia.

The SABMiller release can be seen here.

Crafts Creating Excitement in New Markets

Using brand ambassadors, direct mail as they expand, Ad Age says.

Craft brewers are employing a range of stealthy marketing strategies to gin up excitement as they enter new markets, a story in this week’s Advertising Age reports.

The article highlights how New Belgium Brewing Company relied on brand ambassadors, sponsorships, newsletters and other tactics in its Minnesota launch.

The results were successful. From the story:

"At 6 a.m. on June 21, a two-block line of consumers waiting to buy New Belgium Brewery's Fat Tire beer on its first day of availability in Minnesota in 13 years formed outside Surdyk's liquor store in Minneapolis.

"Not only did the spectacle compare to the unveiling of Apple's iPhone, sales were strong too: Surdyk's sold more than 600 $40 cases of Fat Tire in the first hour, roughly equivalent to 0.14% of the fast-growing craft brand's entire 2006 national shipment volume."

The story details how Spoetzel Brewery used direct marketing to alert Texas expatriates in Chicago that it was introducing Shiner Bock in the Windy City.

While not mentioned in the story, the Jacob Leinenkugel Brewing Company also relied on so-called “below-the-line” marketing strategies as it entered dozens of new markets with Sunset Wheat.

For instance, it targeted members of their loyalist group the “Leinie Lodge” in these markets to let them know the beer was coming. And the Leinenkugel brothers visited accounts, inviting fans of the beer to generate excitement around the launch. Expansion news was also on their website and within their newsletter mailing.

The Ad Age story can be seen here.