Dear Client:
…That’s what Pete said about Molson Coors’s deal to purchase the rest of MillerCoors at yesterday’s MillerCoors convention. He said he spoke to his Uncle Bill Coors, 99 years old, who asked him how much it was going to cost. Pete responded, just $12 billion.
Back in the 1980s Pete flew to New York to meet with the folks at Philip Morris who owned Miller Brewing Co. at the time. They asked him, “Are you for sale?” He said, “Of course not, I was hoping you were.” So it’s been a long time coming, “but this has been a dream to me. I am unbelievably excited. I hope ABI and SABMiller will get a deal done tomorrow” so we can get on with it.
Molson chief Mark Hunter echoed his views and said that: 1. MillerCoors expects to keep all of its brand post-closing; 2. Expect a single ordering tool (it’s only been eight years). The U.S. will be the biggest contributor of profits for Molson, so this business is “critical to our success.”
So opened day two of MillerCoors’s big spring show. Of course, there was much, much more:
IT’S THE ECONOMY… Later in the day, Ashley Selman spelled out the economy brand opportunity. Without them, MillerCoors can’t get reach that 2019 volume goal.
Stabilizing their losses in economy by 2019 is “worth 28 million cases of beer and nearly $100 million in profits back in your pockets,” she told her audience. They also provide scale and efficiency.
The segment is becoming something of an endangered species. What will they do about it? Stay tuned: They have some “competitively sensitive” solutions that they’ll reveal closer to rollout time. Meantime, they’ll seek to deliver “value” to the economy drinker through things like experience and focus on small packs and samplings to drive trial.
Certainly there are also some learnings from Miller High Life, the third largest brand in the portfolio. Its two-year-old repositioning to make it more relevant and edgy “has increased our penetration with younger Millennial consumers by over 30%,” said Ashley. “We have been very focused on driving badge value, and elevating our quality perceptions with this consumer.”
A key part of the recent rebrand, their hipster “I Am Rich” campaign, is getting four new TV spots. They’ll bring back the heritage bottle for the brand, too.
CIDER. Ashley also presented the other embattled segment: cider. Still, it’s not dead: If cider were a craft style, it would be the third largest — after wheat and of course, no 1, IPA.
So they’ll double down with Smith & Forge and Crispin. Each has enviable positions with key consumers. Crispin resonates with female drinkers, a larger focus for the company (more on that in coming coverage).
But there is a “huge opportunity ahead of Smith & Forge,” which “has the youngest legal drinking age consumer index of any major beer or cider brand.” Despite it only launching in cans, “Smith & Forge’s velocity is stronger than Strongbow, and the second highest in the category.” So now they’ll introduce 6-pack bottles with some new TV spots in April, following up on “some of the highest scoring work that MillerCoors has ever produced…”
HENRY’S HARD-HITTING SPOTS, PLUS CHERRY COLA. Speaking of resonant spots — Henry’s Hard, which we already reported has shot to the top of the FMB category overnight, having gained almost 9 share of the FMB category over an 8-week period, is expanding its Gen X-facing TV campaign and demoing a Cherry Cola flavor.
New TV ads roll next week. That should help drum up interest for the third flavor, Cherry Cola. It will launch in 6 pack 16 oz. cans this summer. And because they believe the have the superior flavor among competing products, they’ll offer an 8 ounce Cherry Cola trial pack “that costs consumers just $1 out the door,” said brand manager Bryan Ferschinger.
TENTH AND BLAKE … At MillerCoors distributor meeting last fall, Tenth and Blake chief Scott Whitley told the crowd that his objective was to grow the craft division “each and every year to at least the equivalent size of a top craft brewery.”
So Scott was pleased to announce that he made good on his promise when he took the stage yesterday at MillerCoors distributor meeting in New Orleans. Last year, Tenth and Blake’s “portfolio growth alone was equivalent to the annual volume of a top 20 craft brewer.” Speaking of top craft brewers.
WHAT’S THE NEXT MOVE FOR SAINT ARCHER? As you know, the Tenth and Blake team bought a craft brewer, Saint Archer, last October and they’ve been “incredibly busy” with it ever since. In December, they fully aligned the San Diego-based brewer with their distribution network. Now, the MillerCoors and Tenth and Blake sales teams are working with Saint Archer “to drive distribution leverage to support growth in California.” They’re also in the midst of an expansion project to keep up with current demand, and hashing out ways to expand their reach beyond Cali.
LEINENKUGEL’S GRAPEFRUIT SHANDY NOW YEAR-ROUND. Leinie’s Summer Shandy, the “highest velocity national craft in America,” just keeps on growing, up 11% last year. And it’s found “a wingman,” Scott said, in Grapefruit Shandy.
Grapefruit Shandy is coming off a monster year, where it was the number one craft launch in the Off Trade with a single SKU. Due to its massive success, Scott said “Grapefruit will be available year round, serving as an anchor for the Shandy portfolio.” Plus, they’re giving Grapefruit “more packs to fully optimize the potential of the brand.”
DON’T MISS OUT ON THESE TWO OFFERINGS. Scott “strongly encouraged” the distributors in the audience to get behind two things in the Leinenkugel portfolio: the Shandy Sampler pack and Harvest Patch Shandy.
Only 60% of MillerCoors wholesalers carry the Shandy Sampler pack, and it grew 32% in 2015. Plus, the pack is the only way consumers can get their hands on Leinie’s new Watermelon Shandy.
As for Harvest Patch Shandy, “we all left money on the table last fall” by not taking advantage of it, Scott said. “Last year, we lost 50% of Shandy points of distribution in the transition from Summer, and yet, Harvest Patch was still the #2 craft seasonal velocity brand in the industry.” The offering will be back this fall and Scott’s asking “for 75% transition in the off-premise, and 50% in the on-premise.”
Leinie’s will also release some heritage seasonals to help elevate their shandy portfolio. They’ve put their own spin on a Berliner Weisse with BeerGarden Tart. And they’ll bring back Oktoberfest in the fall and launch a new beer this winter with Bavarian Dunkel.
BLUE MOON’S DENVER BREWERY OPENING IN JULY. To kick things off for Blue Moon, Scott informed the crowd that announced that the brand’s new brewery in Denver will be open for business in July.
Despite a late entry into the uber-competitive IPA sub-segment, Blue Moon White IPA was the fourth most successful new craft entry in 2015. The offering “continues to deliver velocity, and a positive halo to Belgian White, specifically in the off-premise,” said Scott. However, their “display activity lags most IPA competitors.” So he asks distributors “to put White IPA on shelf and display with Belgian White… and to leverage the launch of White IPA in 12pk bottles to grow shelf and display presence.”
DIALING BACK VARIETY PACKS. The Blue Moon variety pack may have took a big hit in the back half of last year, but Scott said they have no intention of letting their variety packs “drift away.”
After commissioned research, Scott and his team learned that consumers are now buying variety packs for social occasions more so than for experimentation or for the seasonals included in them.
Consumers buy them “to offer something for everyone in their group,” he said. So starting this winter, Blue Moon will “downshift from four to three variety packs per year, de-coupling from seasons to better address consumer occasions and preferences.”
FIXING THE SEASONAL LINEUP. Peach is back in the spring. Belgian Table Pils, which has been met with “rave reviews,” will be this summer’s offering. And in the winter, they’re bringing back the variety pack favourite Cappucino Oatmeal Stout. Notably absent is the fall offering, Scott said Harvest Pumpkin “slowed to a point” last year where they “considered taking a completely new direction… but we didn’t.”
That’s because Blue Moon Harvest Pumpkin holds a 63% share of the pumpkin beer segment. “Despite a flood of new offerings, and a pumpkin beer industry slump in 2015,” said Scott. So they’ve “re-tooled Harvest with more real pumpkin creating the most sessionable pumpkin beer Blue Moon has ever made.”
Scott also noted that they’re working on fixing their “clunky” seasonal transitions. “David Reny’s team is working with our ISC partners on a test in Ohio, with Superior Beverage, to drive process improvements,” he said. Scott and company plan to share the findings and recommendations in the coming months.
THE STAR OF THE TENTH & BLAKE SHOW. Blue Moon Belgian White is now old enough to drink itself, and somehow its trends continue to accelerate.
“Sustained effort and investment on Belgian White is a top priority for MillerCoors, and in 2016, we’ll build on our consumer efforts,” said Scott.
The on-premise is still the priority, but they’re cognizant of the fact that there’s a “big opportunity to grow with consumers in social gatherings at home.”
Last week we went over Blue Moon’s big rebranding effort, which includes new pack designs and a new ad campaign “Something’s Brewing.”
Scott believes the new design “will pop on increasingly crowded retail shelves, and look even better on display, drawing in a new generation of consumers to this great brand.” And we’ll be seeing more spots from the new campaign in the coming months, with “each one building on the creativity inherent in Blue Moon Belgian White.”
Until Monday, happy Easter, Harry
“I float like gravity, never had a cavity/got more rhymes than the Winans got family.” – Phife Dawg
———- Sell Day Calendar ———-
Today’s Sell Day: 18
Sell days this month: 23
Sell days this month last year: 22
This month ends on a: Thurs.
This month last year ended on a: Tues.
YTD sell days Over/Under: +1
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