Pernod Gets Absolut

Swedish distiller fetches $9 billion.

French distiller Pernod Ricard SA announced on Monday that it's buying Vin & Sprit, the Swedish maker of Absolut, for about $9 billion.

Pernod, the marketer of Seagram’s gin, Chivas Regal Scotch Whisky and Jameson Irish Whiskey, said the iconic vodka brand fills a hole in its portfolio.

From the Wall Street Journal:

Pernod Chief Financial officer Emmanuel Babeau said that Absolut was the "best asset" to fill the gap in Pernod Ricard's premium vodka-product line. He said the acquisition will significantly strengthen the company's growth profile.

Pernod beat out other bidders, including Fortune Brands (the marketer of Jim Beam), Bacardi and a Swedish private-equity firm.

Many observers had pegged Fortune as the bidder to beat because it already distributed Absolut in the U.S. But the Wall Street Journal -- which broke the story -- suggests that Fortune’s ability to bid may have been hurt by weakness in the housing market. Fortune, a conglomerate, makes construction equipment including faucets.

Fortune said the price was too steep:

Fortune Brands Chief Executive Bruce Carbonari said he had hoped the company could buy Absolut "at the right price" but that shareholder interests came first.

"We didn't see the appropriate return for our shareholders at the announced price, so we preserved our financial flexibility to create significant value in other ways," he said in a statement.

Fortune is now buying back shares as well as an equity stake in its spirits business that's held by V&S.

Fortune also said it will continue to distribute Absolut in the U.S. until 2012, under terms of its current joint venture.

The Wall Street Journal story can be seen here.

CNNMoney's coverage of Fortune can be seen here.

Corona Challenges Continue

Can’t top soft comp in supermarkets.

Corona Extra continues to face challenges in supermarkets.

Corona lost 0.3 points of share during the four weeks ended March 15, according to beer sales statistics from Nielsen.

That’s despite a fairly soft comp -- flat -- from one year ago. And despite weighted average prices being up just 1.6 percent.

Overall, weighted average beer prices were up 2.6 percent during the period.

Heineken, meanwhile, posted flat share performance. The average weighted case price was up 0.5 points.

Land Grab and Shakeout in Craft Beer?

Craft is growing but some struggle.

A “land grab” is taking place in craft beer as some brewers struggle with higher input prices and others -- at least for now -- manage robust growth.

That’s the observation of some leading leading beer industry trade magazines as they look at the impact of the rising costs of hops and other inputs on craft brewers and gauge what's happening on the ground. The growth of craft has been one of the hottest beer industry trends. Everyone’s trying to figure out what’s next.

An article in the latest orange sheet edition of Beer Marketer’s Insights recounts the great two year run by Boston Beer Company, which has led the growth of craft beer. And it points out that a “number of midsized regional craft brewers (between 50-100,000 bbls) report continued robust growth rates in early 08, several up 20% or more before price increases have fully kicked in.” This includes Bell’s Brewery Inc., Magic Hat Brewing Company, Long Trail Brewing Company and Brooklyn Brewery Company.

Says BMI:

To varying degrees, some growth comes from comes from mkt expansion. A land grab is definitely on. But exhilaration about expanded consumer taste for craft brews now also mixed with worry about costs, economy and intensified competition. Craft remains in sweet spot, but these challenges loom increasingly large.

Many Michelobs

Dunkel Weisse, others on tap.

Anheuser-Busch – which has stated previously it plans to slow down on new product introductions – appears poised to roll out no fewer than four new styles of Michelob

The brewer has received label approvals for four new Michelob line extensions: Michelob Brown Ale, Michelob Red Ale, Michelob Dunkel Weiss and Michelob Bohemian Pilsner.

The approvals were for kegs. It’s not clear whether A-B plans to roll out bottle versions of the brews.

The new brands appear to fit in with A-B’s effort to position Michelob as a craft-style brand (ad tagline: “Crafting a better beer”).

More Bud/Bud Light Extensions on Tap?

A-B “trying to reset the portfolio.”

Back in January, Anheuser-Busch told Brandweek that it planned to tone down its new product push and focus on its core brands.

From Brandweek:

"We've got the resources to make anything, but sometimes we've done that without a purpose," said Bob Lachky, evp-global industry and development and chief creative officer at A-B, St. Louis. "We've become smarter marketers."

Since then, of course, A-B has announced plans to introduce Bud Light Lime -- its biggest new product launch since Bud Select. And Budweiser American Ale is on tap for the fall.

Lachky’s comments and the new introductions aren’t mutually exclusive. But recent comments from top A-B marketer Dave Peacock suggest that A-B might be open to introducing more line extensions of Bud and Bud Light in the future.

Peacock told the St. Louis Post-Dispatch that it has redefined its core brands. Under that rethinking, Budweiser is no longer a single brand family. Instead Budweiser and Bud Light are each considered “mega brands”:

From the article:

That partly explains A-B’s willingness to create new beers associated with the image of either Budweiser or Bud Light. Budweiser gets its American Ale cousin, which will try to trade on the image of quality and craftsmanship cultivated by craft beers. Bud Light, meanwhile, gets Bud Light Lime, geared towards the image of refreshment, sociability and summer fun enjoyed by Bud Light and imports such as Corona.

“We’re kind of trying to reset the portfolio,” said Peacock. A-B needs to have “the ability to leverage off the core brand nameplate and also…be willing to trim what you need to trim.”

Leinie’s Expanding Summer Shandy Distribution

Hits store shelves next month.

The Jacob Leinenkugel Brewing Company is expanding distribution of its popular seasonal Summer Shandy.

Leinie's will be marketing Summer Shandy in 40 states this summer. Leinie's stuck mostly to its core Midwestern states for the brand's debut last summer.

Leinie's is expanding distribution due to Summer Shandy's success in its first year. It vastly exceeded sales expectations; established itself as one of the fastest growing brands in supermarkets despite its regional distribution; and helped drive share gains for the total Leinie’s portfolio.

Commenting last summer on the brand’s success, Dick Leinenkugel, vice president of marketing and sales for Leinie’s, said: “Crafts are hot … People are looking for differentiated styles of beers. We have been able to deliver that from Leinenkugel’s. Leinenkugel’s Summer Shandy is a unique flavor offering and incredibly refreshing during warm weather months.”

Summer Shandy goes into retail accounts next month.

Previous Brew Blog coverage on Summer Shandy can be seen here and here.

Bud Ale Coming in Fall

Will retail at higher price point.

Budweiser American Ale will hit retail this fall, according to a report in Beer Business Daily.

The new line extension from Anheuser-Busch -- which was first reported by Brew Blog -- will be available in draft and six packs, top A-B marketing exec Dave Peacock told BBD in an interview.

It will sell at a higher price point than regular Budweiser, according to BBD.

From the report:

A-B vp marketing Dave Peacock told BBD that they just finished an extensive research process which suggests that the concept is "very appealing" to consumers and it "improves the Budweiser image and validates our Great American Lager positioning for the mother brand."

New Budweiser Line Extension on Tap?

Receives label approval for Budweiser American Ale.

Anheuser-Busch appears poised to roll out a craft-style line extension of its Budweiser brand.

The brewer has received label approval from the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau for Budweiser American Ale.

Bud American Ale has 5.1 percent alcohol by volume, according to label filings. A-B received approvals for 12-ounce bottles and three sizes of barrels (half, quarter and 1/6).

It's worth noting that A-B appears ready to extend the Bud brand into the craft space on the heels of Miller Brewing Company introducing the Miller Lite Brewers Collection, a trio of craft-style light beers.

Is Corona Getting Aggressive on Price?

Not getting volume lift.

Corona Extra’s sales decline last year – the first in 16 years – has been blamed in large part on big price increases.

But Corona is continuing to struggle even as it’s showing signs of aggressive pricing in supermarkets.

Corona’s volume share in supermarkets slipped by 0.2 points during the four weeks ended March 8, according to beer market analysis from Nielsen.

Relatively higher prices aren’t the issue, according to Nielsen’s beer sales statistics. The average weighted case price for Corona was up only 1.6 percent during the period.

In A Twist, A-B Advertising Natural Light

Faces competition in economy aisle.

Anheuser-Busch is ratcheting up marketing support for Natural Light -- a brand that traditionally gets little, if any, media support -- as competition heats up in the economy aisle.

According to Brandweek, A-B in April will break TV ads in 30 markets that focus on humorous “Nattyisms.” An ad demonstrating the “Nat-a-pult” shows a guy tossing a beer to a buddy who doesn’t want to lose his spot on the couch.

A-B is running the ads in face of the Natural Light showing slight slippage in grocery stores, according to beer sales statistics from Nielsen. The brand lost 0.1 points of share during the four weeks ended March 8.

Natural Light is doing better in convenience stores, according to beer market analysis by Nielsen. It was up 0.3 points for the four weeks ended February 23. But overall A-B lost 0.8 points of share during the period.

The story notes that Natural Light is seeing increased competition from other brewers -- including Miller Brewing Company -- in the economy section.

The story can be seen here.

Tabasco Tequila?

Spicy brand latest example of cobranding.

Tequila’s a hot category. Heaven Hill Distilleries Inc. is trying to make it hotter.

The distiller has received label approval from the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau for Tabasco Premium Gold, described on the label as a “spicy tequila.”

The label, emblazoned with the Tabasco logo, calls it a “premium tequila with Tabasco brand pepper sauce & other natural flavors.” Tabasco sauce is the property of the privately held McIlhenny Company.

Tabasco sauce already is used as an ingredient in some tequila cocktails.

The new product seems reminiscent of Anheuser-Busch using Clamato, from Cadbury Schweppes, as a branded element of its Bud Chelada and Bud Light Chelada.

The label can be seen here.

The label application can be seen here.

Changing of the Guard in Imports?

Is a “generational change” taking place?

Are Corona Extra and Heineken now “my father’s beer?”

That’s the provocative question raised by industry consultant Mike Mazzoni last week in an investor meeting covered by Beer Marketer’s Insights. From Friday’s BMI Express:

[Mazzoni] Notes imports up 1%, Corona down slightly, Heineken up slightly, while Heineken Premium Light, Stella, Modelo Especial, Corona Light and Dos Equis each up double digits. Wonders if this is "simply a changing of the guard." Calls Corona and Heineken (over 45% of segment) "mega-imports" and wonders if this is "generational change" where they have become "my father's beer." Notes that many other formerly top 10 imports continued down in 07, including Beck's, Foster's, St Pauli Girl, Amstel Light.

Brew Blog would not be surprised if Corona and Heineken wind up posting stronger numbers this year, given last year’s relatively soft performance was at least partly driven by price increases.

That said, there are plenty of signs that a new generation of imports is emerging. The latest issue of Brew Magazine looked at some of these rising brands, including Modelo Especial, Tecate, Dos Equis, Stella Artois and Peroni Nastro Azzurro.

To subscribe to the print version of Brew, please shoot an email with your name and mailing address here.

From the issue:

A-B Energizing 180

Testing draft version.

Anheuser-Busch is trying to energize its 180 lineup with new products and innovation.

A-B disclosed in its latest 10-K filing with the Securities and Exchange Commission that it is testing a draft version of the energy drink. That’s on top of rolling out three new low-calorie flavors in 2007.

From the report:

The Company has energy drinks, “180”, “180 Orange”, “180 Blue”, “180 Red” (introduced in 2007), “180 Blue Low Calorie” (introduced in 2007) and “180 Orange Low Calorie” (introduced in 2007) in the energy drink category. 180, 180 Orange and 180 Blue are sold on a nationwide basis, 180 Red is sold in 49 states, and 180 Blue Low Calorie and 180 Orange Low Calorie in 40 states. All 180 brands are available in packaged form only with the exception of 180 which is in test in draught form.

A-B hopes to tap into the growing energy drink area as it diversifies from beer in search of new sources of growth. Its major initiative is a distribution deal with Hansen Natural, marketer of Monster. But it is stepping up support of its small 180 line.

Craft Beers Hot … Everywhere

Jacksonville, Houston and Miami supermarkets stocking up.

The growth of craft beer is one of the hottest beer industry trends going. And one of the most striking things about it is how it’s truly a national, as opposed to regional, trend.

Supermarkets in 93 percent of all measured markets reported higher craft beer sales so far this year, according to beer industry analysis by Nielsen.

Indeed, even non-traditional markets such as Jackonville, Fla., Houston and Miami have seen big increases in the number of craft beer items on store shelves.

For example, the average Jacksonville supermarkets carries 18.6 craft beer items – 6.2 more items than a year ago, according to Nielsen’s beer market analysis. Houston supermarkets carry 26.8 items, an increase of 7.8 items. Miami stores carry 16.6 items, up 6.6 items.

As for what crafts sold the best: in Jacksonville the two top sellers were Blue Moon Belgian White Ale and Sam Adams Boston Lager; in Miami it was Sam Adams and Blue Moon; and in Houston it was Shiner Bock and Shiner Blond.

Jay Brookston, of the Brookston Beer Bulletin, recently noted the Southeast showed the greatest craft growth of any region. Read it here.

Miller Wins 4 “Hot Brand” Awards

Miller Chill, Sunset Wheat, Peroni and Sparks Plus recognized.

Miller Brewing Company won four “Hot Brand” awards from industry newsletter Impact – more than any other brewer.

The “Hot Brand” awards go to the industry’s most dynamic products, the newsletter said. The Miller brands recognized by Impact were:

-- Miller Chill and Leinenkugel Sunset Wheat in the domestic beer category

-- Peroni Nastro Azzurro in the imported beer category

-- Sparks Plus in the ready-to-drink category

A-B Drops More Brands

Peels line appears gone.

Innovation is hard work -- even for a dominant industry leader like Anheuser-Busch.

The brewer has rolled out dozens of new products in recent years in an effort to mine new sources of growth in the beer industry. None of them have been runaway hits. Bud Select, its biggest success, has been declining since the year it was launched despite receiving tens of millions in marketing support.

A-B disclosed in its 10-k filing with the Securities and Exchange Commission that it’s giving up on some new brands.

Particularly of note: The Peels line of alcohol fruit juices appears to be history, or close ot it. Marketed in department stores and spas, the product represented a new effort by A-B to market to women. But sales never took off.

The filing lists every single brand in the lineup – save the last entrant Nectarine Citrus – as being discontinued. Nor does the label appear on a page of A-B’s Web site that lists brands. Peels Pear Lemon was discontinued last year.

Budweiser Losing Distribution in Supermarkets

Follows long-running share decline.

In recent years, Budweiser has shown an uncanny ability to gain shelf space in supermarkets and convenience stores even as its sales decline.

But performance finally appears to be catching up with Budweiser, at least in supermarkets.

Budweiser saw the number of items carried in supermarkets (a proxy for shelf space) slip by 0.1 points, according to beer sales statistics from Nielsen.

That may seem modest – but Bud has now suffered this same 0.1 point loss for 12 consecutive rolling four-week periods.

Simply put, that’s the first such distribution loss detected for Bud on record. And it comes as Bud is posting one of the biggest velocity declines in the business. According to Nielsen, case sales are down 8.1 percent per total distribution points – a proxy Nielsen uses to measure breadth of distribution.

Given that performance, perhaps it’s not surprising that A-B is ratcheting up spending for Budweiser – and rolling out a major line extension, Bud Light Lime, that could take up some of that lost shelf space.

Imports Increase Presence in Supermarkets

Distribution driving volume gains for some items.

The latest issue of Brew Magazine explores the growing importance of imports in the beer industry -- and explains why they’re going to be more important.

Indeed, recent beer market analysis by Nielsen shows that imports are literally taking up more space in supermarkets’ beer aisles.

The average U.S. supermarket stocks 47 import items, two more import items than it did just 10 months ago.

This is happening despite recent pricing-related softness with imports. The reason: The image of imports as being high end lines up nicely with many retailers who wish to present an upscale image.

The top 20 growth import items over the last 13 weeks all have used distribution to build their volume gains. Three of the top five items are from Heineken. The top growth item: Heineken’s draught keg.

Not surprisingly, Heineken’s case share has increased by 2.2 points during the 13 weeks ended February 23.

The latest issue of Brew can be seen here. If you'd like a free subscription to the print version of Brew, please drop a line with your name and mailing address here.

Why Do People Drink Imports?

A matter of personal taste and occasion.

Imports have grown to become an important part of the beer business.

Which begs the question: Why are people buying them?

Given that literally hundreds of imports are available, no single answer exists to that question.

Miller Brewing Company recently conducted research to understand why people pick up the imports they choose. The latest issue of Brew Magazine takes a look.

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

From the issue:

For some people it’s a matter of sophistication.

For others it’s a question of discernment and picking out the best.

And for a lot of people, it’s a matter of picking up something special for a big occasion – from parties to vacations.

Bud TV in Limbo

“Not totally dead yet,” says A-B media exec.

Bud TV, which was launched last year with great fanfare but fell far short of viewership expectations, now faces an uncertain future.

From an Adweek report:

Speaking at the Association of National Advertisers TV conference in New York yesterday, Tony Ponturo, president and CEO of the Busch Media Group, was less than enthusiastic about the service's prospects.

He described the online content offering as, "Not totally dead yet," and insisted that the company wouldn't kill the service altogether because, if nothing else, it provides, "a valuable link to the creative community." And it's creatives, after all, who produce ads.

But how Bud.TV evolves "is an open question," he said.

That said, Ponturo noted that the service was "flawed," in that it tried to be too "hip and cool" for its own good. The feedback from consumers, said Ponturo, was, "We really like your ads," but the other site content wasn't especially popular.

The whole report can be seen here.