A-B U.S. Depletions Down 1.9% in Q1, An Improvement

Dear Client:

A-B’s U.S. depletions were down 1.9% (vs. an estimated -1.6% industry-wide trend) and shipments were down 0.9% in Q1 2019. That’s a noticeable improvement from their Q4 depletions trends, which saw depletions down 2.8% (and shipments down 0.1%).

They grew top-line by 1.6% in the quarter.  Revenue per hectoliter was up 2.6%, driven by portfolio premiumization and “revenue management initiatives.”

In fact, the company estimates only roughly 0.1% of total market share decline for the quarter, which is actually their best quarterly market share trend performance since Q4 2012. That improvement is driven, naturally, by their growing high-end, and the ongoing effort to stabilize core. “Nine of our brands were among the top fifteen market share gainers in the country in 1Q19 according to IRI,” the company says.

Their “core, core light and value brands” saw about 1% share losses in Q1. But they say their portfolio had a slight share gain in the mainstream segment, compared to a 0.35% share of segment loss in FY18, “driven by the improved performance of our value brands led by the Natural family, while Budweiser and Bud Light share trends remain unchanged.” Despite the unchanged Bud Light share trend, they nodded to their Super Bowl campaign “highlighting Bud Light’s commitment to quality and transparency,” after which they have been seeing “initial positive signs in the key brand health metrics which are near three-year highs as of 1Q19.”

Meanwhile, A-B’s “above core” portfolio delivered better-than-industry results, up 9% in share, led, naturally, by “top share gainer in the U.S.,” Mich Ultra; their craft portfolio; Bon & Viv hard seltzer; and innovations. “Our regional craft portfolio grew double digits in 1Q19, further enhancing our premiumization efforts,” the company noted.

Globally, revenue grew by 5.9%, driven by volume growth of 1.3%. “The top-line result was driven by healthy performances in several of our key markets, including Brazil, China, the US, Europe, Colombia and Nigeria,” the company said.  

MICH ULTRA NOW A TOP THREE BEER BRAND IN THE OFF-PREMISE; WON’T BE LONG BEFORE IT’S TOP TWO

In October of last year, we pored over the latest IRI scan data available and submitted the following [see BBD 10-22-2018]:

It appears to be a forgone conclusion that Mich Ultra will pass Miller Lite to become the third best-selling beer brand (in the off-premise) in the not-so-distant future.

Fast-forward six months and some change, and it has happened. Michelob Ultra is now racking up more dollars than Miller Lite in the off-premise, per latest IRI multi-outlet and convenience data to April 21.

In this new batch of data Mich Ultra has amassed just under $569 million for the year. Miller Lite, meanwhile, has done a little over $562.5 million.

For some perspective on just how fast Mich Ultra is climbing up the ranks consider this: A month ago, Miller Lite had the lead on Mich Ultra by about $4 million in the channel ($411,290,184 versus $407,626,843).

Now a month later, Mich Ultra has the advantage over Miller Lite by nearly $7 million.

Getting knocked off a spot stings, we’re sure, but hey it’s not all bad news for Miller Lite. The brand is actually growing dollars and volume YTD – the only premium light that is, and has been able to say that in some time. Miller Lite is up 1.3% in dollars and up 0.5% in volume through April 21. Some of that positive showing can be attributed to an impressive performance in the latest four weeks too, with dollars and volume up 2.8% and 2.3%, respectively. Indeed, the brand made the cut for Nielsen’s Top 10 Growth Brands in the latest four weeks, which we’ll cover in more detail tomorrow.

MICH ULTRA NOW COMING FOR COORS LIGHT. The next brand to get passed by Mich Ultra? Coors Light. We’re not picking on anyone here, it’s simply inevitable.

Coors Light currently sits on about a $45 million cushion lead above Mich Ultra currently.

Mich Ultra has already grown a little over $76 million in dollar sales through the first four months of the year, while Coors Light has shed a little over $11.5 million in dollar sales YTD.

That said, there’s a chance that this shift could very well happen before the end of 2019.

Stay tuned.

A-B’S ZX PUTTING LESS-SWEET HARD TEA IN TWO BEACHY EAST COAST MARKETS

BBD has learned that A-B’s disruptor arm, ZX Ventures, is putting a new alcoholic brewed tea brand in Portland, Maine and Providence, Rhode Island, starting in a few weeks. It’s called Wandering Whistler.

“Unlike a lot of the teas in the market right now it’s not sweet and is meant to taste closer to what you would find in a hot tea,” per a spokesperson. The brand is 4.5% ABV, and tea-based, made from fermented sugar. More later this week.

SAGE CAPITAL TRANSFERS CONTROLLING INTEREST BACK TO SCHLAFLY FAMILY

Yesterday the St. Louis Brewery — more commonly known as Schlafly — announced that David Schlafly and “a group of local investors” have acquired the controlling interest in the brewery.

David is a cousin of brewery co-founder Tom Schlafly, so “the new ownership structure allows the Schlafly family to continue the Schlafly Beer legacy into the future,” per announcement.

The “group of investors” have been described to CBD as “a small group of individuals, some of whom are cousins of Tom and David.”

Recall that PE firm Sage Capital has been involved in the brewery since late 2011/early 2012, when Tom and co-founder Dan Kopman transferred a 60% ownership interest in the business to that group, which included David Schlafly. In 2012, employees purchased roughly a 5% stake in the brewery, but another 15% was marked for employee purchase in the future.

But Sage, which previously had a controlling interest in the company, and “several current and former employees” have now sold some units, shifting majority ownership to David Schlafly “and the group of investors.”

Co-founder Tom and Sage Capital will maintain some representation on the Board of Directors, and are minority stakeholders.

We asked the company: Why now?

“David has been an investor since 2012. Over the years, his investment has gradually increased,” a spokesperson told CBD. “But David and Tom have been having ongoing conversation about returning control of the business to the Schlafly family.  David and Tom are in total agreement with respect to the mission of building the brand and in building the community that has been so good to their family for several generations.”

Recall that former Schlafly CEO James Pendegraft left the brewery late last year amid rumors that he’d written an incendiary newsletter about a competitor [see CBD 12-10-2018]. We have not heard any news on his replacement.

Earlier this year, the company appointed Fran Caradonna to be CFO and chief administrative officer at the brewery. Fran had previously co-founded and been general manager of another local craft brewer, O’Fallon; she also co-founded the Signature Beer Company, one of Schlafly’s first wholesalers.

Asked if a new CEO has yet been named, we were told that David will be “actively involved … and as soon as our new leadership team gets settled, the team will discuss the overall organization of the brewery. Right now, our team is strong, especially with the recent hire of industry veteran Fran Caradonna as CFO and CAO.”

EDITOR’S NOTE:  UPDATE ON OUR READER APP

Good news. Our SchuPub 5.0 reader app for iPhone and Android has been fixed and updated to now include imbedded links and images, just like the email and web versions. Download the app for free and start reading BBD and all our publications in one easy place on your phone or tablet.  Search app store for SchuPub.  

Now we have three ways to read our publications:

  1. Email — while the most popular way to read, the delivery to your inbox can be unreliable, particularly as security firewalls have recently tightened to exclude most mass broadcast emails.
  2. Our Websites — This is a great alternative to email. Now all of our articles are posted at the same time as the email broadcast, and it’s a nice clean easy read with no clutter (and we keep the fonts big for the old folks), particularly on a computer or tablet.  However, loading a website onto a mobile device can be cumbersome. So….
  3. SchuPub App 5.0 — For mobile viewing, the free app is ideal.  Not only are articles now posted to the app at the same time the emails are sent, but the app now supports imbedded links and images, just like the email version.  And once you’re logged in, you can stay logged in.

If you have any questions, contact our expert trouble-shooter  jessica@beernet.com.

Until tomorrow,

Harry, Jenn, and Jordan

“I don’t generally feel anything until noon; then it’s time for my nap.”

– Bob Hope

———- Sell Day Calendar ———-

Today’s Sell Day: 5

Sell days this month: 23

Sell days this month last year: 23

This month ends on a: Fri.

This month last year ended on a: Thurs.

YTD sell days Over/Under:  0