Much buzz recently about more promos from Crown.   Constellation ceo Robert Sands discussed it in recent statement, distribs increasingly talking about it, etc.   This new reality certainly borne out in scanner data, especially on hot Modelo Especial.  Avg prices for Modelo Especial down 92 cents in food/drug/convenience for 4 weeks thru Mar 22, according to IRI.  That’s down 3-4%.  Price per case down 65 cents yr-to-date.  Meanwhile, its volume flying; up 26% yr-to-date (24% for 4 weeks).   Some are asking why Crown aggressively discounting its hottest brand.  Crown is “lowering Modelo, going after Tecate,” said 1 unhappy distrib, noting Crown is “repositioning that brand at the expense of distributors,” i.e  lower profitability.  Avg Tecate prices are up 55 cents to $19.66 for 4 weeks.  But that’s still almost $7 per case lower than Modelo Especial.  Gap was $8.50 during same 4 weeks a yr ago.  Avg Tecate case price very close to avg Bud price.  Tecate volume up 15% yr-to-date, but only 5% for 4 weeks. 

Avg Corona price down 1% per case, about 30 cents this yr and avg Corona Light prices down a little more than that.   Can more Heineken promos be far behind?  Following its price hike, avg Heineken prices are up 3.5% in latest 4 weeks and its volume down almost 15%.   Gap between it and Corona widened by $1.30 for 4 weeks compared to 1 yr ago, and about $1 differential yr-to-date.  Corona down 9% latest 4 weeks and 6.5% YTD.  Avg Heineken and Corona prices even last yr thru Mar 22.  No wonder HUSA also discussing different pricing moves.  

The Widmer-Redhook etc combo is called Craft Brewers Alliance, not Craft Brands.

Like everything else about Molson Coors numbers, exec compensation is complex, with lotsa moving parts, especially as JV took effect in middle of 08.  But sure looks like top execs fared far better than co’s $5.2 mil, 1% increase in after-tax income from continuing operations (excluding slew of special items), and 22% decline in reported after-tax income from operations.  Peter Swinburn, promoted from ceo of US biz to Molson Coors CEO, got salary bump of 8% to $747K, bonus bump of almost $150K, 22% to $824K, and stock awards/options valued at $1.9 mil, up 50%.  Peter also picked up $927K in pension value.  Toss in “other” compensation of $1.6 mil (insurance, financial planning, car, sports tickets, relocation, etc) and Peter’s package popped over $6 mil, up 125% over the $2.7 mil he made in 07.  Chairman Pete Coors got total of $6.8 mil, up almost 1/3.  Most of that increase was in stock/options and pension.  Pete’s bonus was lower and salary up just 3%.  Molson Coors proxy points out that as chairman of Molson Coors and exec chair of MillerCoors and Coors Brewing Co, Pete has “broader range of executive responsibility than any other executive officer, except the CEO.”   Tho MC does not determine Pete’s salary/bonus, JV “reimburses” Molson Coors for full cost of both.  Kevin Boyce, ceo of Canadian biz, got total increase of $723K, 31% to $3.1 mil.  Kevin took a 54% bonus hit, but that was offset by stocks/options.  New global cfo Stewart Glendinning got just over $1 mil.  Mark Hunter, ceo of UK biz, got $2.3 mil. 

Leo Kiely and Tim Wolf moved to JV in Jul, and JV doesn’t disclose its compensation.  But Leo’s salary thru Jun at Molson Coors was $608K, 24% higher than ½ of his 07 salary.   Leo’s total compensation from Molson Coors was $5.2 mil for the yr, down from $8 mil in 07.  Tim’s salary Jan-Jun 08 was 15% higher than half-yr 07.  And Tim got big $1.5mil bump in “other” compensation.  So his total from Molson Coors increased by $659K, 23%.  Molson Coors proxy also includes interesting chart detailing payouts to top execs under various “termination scenarios.”  For example, if Peter Swinburn terminated “without cause/good reason” (undefined) he gets $2.67 mil, plus any vested benefits accrued thru the end of 08.  If there’s change in control of Molson Coors, Peter gets nearly $11 mil.  Not likely Pete Coors will quit, but if he does, gets $5.4 mil payout.  If terminated without cause/good reason, he gets $12.5 mil.  And if there’s control change, Pete paid $17 mil.  Then again that would be peanuts compared to whatever acquirer would pay for Coors family’s ownership interest.  

So said Dick Yuengling to Patriot News in lengthy article Sunday.  “No more building, no more brewery acquisitions and no new states after West Virginia is added to Yuengling’s lineup this spring, he said,” paper wrote.  “I don’t see it,” said Dick.  “I’m 66, and I am not going through that again.  I appreciate all the growth, but I don’t want to open another brewery in my lifetime.” Yuengling still has plenty of room to grow:  it can produce up to 4.5 mil bbls, more than double current sales, “with enhancements and upgrades to its existing plants,” co sez.  Going national would be up to Dick’s successor, but no succession plan in place right now, he said.  “It’s not a race.  We’re just trying to stay alive and pass this thing on to someone else to manage.  I still have to look at [succession].  Who’s going to put the effort into it?  Who’s going to fit in?  Are they going to appreciate the current people who work here?  We’ll see.  There’s a lot of factors to take into account.  I want to see who’s ready to go with it when I am ready to get out of it.”  And that day clearly hasn’t come. 

Three decisions by Dick after he bought brewery from his dad back in 1985 propelled it from about 85,000 bbls then to near 2 mil currently, Patriot News wrote.  First was creating Black and Tan brand, a blend of Yuengling Porter and Premium.  Then came intro of Yuengling Traditional Amber Lager, current flagship.  Third was hiring “marketing guru” Dave Casinelli in 1990, now coo. Dave “offered three pieces of advice: spruce up the beer labels, raise the price to match other premium domestic brands and don’t mess with the beer.”  And the rest is history.  

Hadda be mighty crowded at meeting with Calif ABC yesterday concerning 7-11’s proposed central warehouse test, slated for Southern Calif later this yr. Distribs argue that 7-11 test not legal. But nothing resolved at meeting, we hear. Recall, 7-11 ceo Joe DePinto had dropped this idea of “central warehouse” in speech at Bev Mktg conference in May 08. But it didn’t even get off ground last yr. He has since stumped for it on various other occasions, including at last week’s IRI confab. At yesterday’s meeting, various wholesalers, brewers, state assn and their attys, along with 7-11 and its atty, leading direct-shipping advocate John Hinman, all went before ABC. More details on meeting when we get ‘em.

MillerCoors offering “in-store feature” for both Miller and Coors “premium” 30-pack cans for $19.99 (with $9.00 mail-in) in major Calif chain, Ralph’s.  Started yesterday and lasts thru May 5.  In “chain alert,” MC exec lauds this as “major volume opportunity,” adding: “We all need this volume in a big way…. Please go the extra mile to overachieve on this program.”  

Incidentally, big pack sizes in beer seemingly even more the rage in down economy.   Feature in this week’s Supermarket News about “value conscious consumers” buying more of big packs “to save money on a per-unit basis.”  Subpremium 30-packs jumped 14% in IRI supermkt data last yr, premium 36-packs jumped 14% and premium 30-packs up 6.5%.  This is a long way from image-driven trading up that fueled category growth earlier this decade.   

Sheffer, a 2-mil-case Miller distrib in York, Pa has agreed to sell its biz to local Coors distrib Ace and also All Star in nearby Reading.  Deal expected to close by Jun, already announced to employees.  Pennsy a difficult mkt for MillerCoors to advance its consolidation agenda, since it has strong franchise law and low costs.  This is 1^st MC deal there since JV, but won’t be last.  Then too, AB has under 30 share in Pa, MC near 40.  So any MillerCoors combo likely to have dominant share of local mkt.   

In very brief suit filed in state ct, MillerCoors asks for declaratory judgment to terminate Larry’s Distrib of Sheboygan and Bill’s Distrib of Menomonie, AB distribs that also have Coors, other brands.  MC has no agreement with distribs, it said, and “only supplies Coors products to Larry’s and Bill’s pursuant to a course of dealing” since Jul 1, 08.  MC believes it can terminate distribs without cause, with 90 days notice, “is not obliged to pay any compensation” and “may appoint a distributor of its choosing” to sell Coors in those mkts.  Miller distrib in those mkts is MC’s “preferred consolidator.” They’ve had talks, but no deal so far.  Distribs’ response expected next week. 

Total beer volume down 0.5% for 4 weeks thru Mar 22 in IRI food/drug/convenience data. A marked slowdown. Now this data that tracks most of off-premise biz up just 0.6% YTD. AB up 1.9%, gained 0.7 share, while MillerCoors down 1.5%, lost 0.6 share YTD. Imports down 2% overall, with Crown down 0.2% and Heineken USA off 5.2%. Subpremium volume up 2.7% YTD, +0.6 share. Drivers: Keystone Light +15.2%; Natty Light, Busch, Busch Light each up 4.1-5.5%; High Life +2.8%. Lotsa big brands struggling. Bud Light just flat yr-to-date. Bud brand down 7%, Miller Lite down 6.8%. Those 3 brands lost 1.6 share of cases and $$ thru Mar 22. Corona down 5.5% and Heineken brand is really hard hit, down 12%. Those 2 brands lost 0.4 share of volume and 0.8 share of $$. At least Coors Light still up 3% and craft still outperforming. Volume up 3.9%, but gained just 0.1 share of volume and 0.2 share of $$. Boston Beer volume down 5.5%. Still hot so far in these channels in 09: Yuengling up 23% and only supplier besides AB to gain share. Up 0.1. Each of New Belgium, Independent Brewers (Magic Hat/Pyramid) and Deschutes up double-digits in IRI on smaller bases.

Per usual, NBWA and Beer Inst put together key issues briefings and consensus bullet points that showed united front for talks with Congress at this yr’s legislative conference.  But behind scenes, discussion dominated by increased frustration among distrib leadership about how agenda set.  In fact, NBWA Board passed resolution during mtg that said “current joint legislative process has created barriers to addressing core beer distributor issues.”  Also, Board resolved to “conduct future” leg mtgs “in a manner which will advance legislative solutions that strengthen the 3-tier system of state-based regulation and other core distributor issues.” Finally, NBWA will “advocate federal legislation to strengthen state-based 3-tier systems of alcohol regulation.” 

What are the distribs’ beefs?  First they want more aggressive position/advocacy of states rights to regulate than brewers so-far prepared to support.  As noted in resolution, this may include separate federal legislation down road.  Second, many distribs wanted more aggressive stance on “card check” legislation.  Third, distribs don’t like process for deciding agenda.  Tho distribs provide overwhelming majority of participants at mtg (and huge PAC $$), they believe Beer Inst board members have too much influence over agenda. 

Brewers consistently say they support three tier and are willing to work with NBWA on crafting some federal language.  But they’re concerned that push for more aggressive state regulation could affect key issues of labeling, advertising and more that provide consistency, efficiency.  And they’re not keen on having state AGs getting more involved in these and other issues. Amidst undercurrents of discord, BI members and NBWA leadership met for short mtg this morning to air out issues.  Nothing resolved, but Beer Inst prexy Jeff Becker told INSIGHTS that “we had a very productive and positive meeting.  We’ve agreed to continue our discussions.”  NBWA prexy Craig Purser told INSIGHTS: “We had a productive meeting with the leadership of the BI.  We were encouraged by their interest in addressing our concerns and in continuing to work together.”