Diageo Beer Co. Jumps FIFCO USA in Latest Top Brewer List

Dear Client:

Yesterday the Brewers Association put out its latest tally of top breweries by beer volume.

The real action is often in the BA-defined craft-only list; these brands are on smaller bases, which of course means more rank movement from year to year.

The list of top brewers overall is a lot more static. But we’re seeing some movement among the top 15 players in this years list.

DIAGEO, WITH A ONE-TWO PUNCH, JUMPS FIFCO. Last year, Diageo Beer Co. jumped NAB [now FIFCO USA] to assume the spot of no. 7 largest brewer. We’ve been reporting about DBC’s traction in beer since last year, when we marveled how DBC achieved double-digit growth last year in scandata, thanks to simultaneous growth in their core beer business and FMBs.

The new brewery in Baltimore is just priming that pump. That brewery doesn’t make original Guinness, which only comes from Ireland, but it’s certainly providing a halo effect: DBC dollars are up 15% YTD in IRI multi-outlet and convenience. And Guinness Draught has been up high-singles for the last year or so, even.

Although these rankings don’t account for FMBs, we’ll note that DBC’s marquee FMB, Smirnoff Ice was up low-singles for the 52-week period, although it’s dragging into negatives the more recent period to Feb. 24, likely due to all the competition. But the franchise has some smaller growth brands — like Smirnoff Spiked Seltzer Variety Pack — that’s up triple digits in food, and may help allay the main event’s slowing. And of course, the Smirnoff SMASH product is the company’s most successful play in the convenience channel to date.

But while DBC has been on the upswing, FIFCO has struggled. In multi-outlet and convenience, its dollars are down about 8% for the 52-week period to February 24. They’ve cut that trend to only -2.6% YTD, however.

Their top brand, Labatt Blue, is down mid-single digits in IRI for both YTD and 52-week periods. But they’re trying to create some excitement with new brands like Pura Still. More to come on this particular brand.

OTHER MOVERS: FOUNDERS JUMPS GAMBRINUS… In other movers and shakers, Founders Brewing Co. jumped Gambrinus (parent company of Shiner) in last year’s rankings: They are now 14 and 15 largest, respectively.

AND SAPPORO PLUMMETS. CANADA? And Sapporo USA dropped 10 spots last year, 17 last year to 27. That one’s a little confusing, but BA economist Bart Watson told us “a lot of that is a drop in their production at their brewery in Wisconsin,” albeit, that’s an estimate based on Wisconsin state numbers. Perhaps they shifted some of their US production to Canada.

ANOTHER SNEAKY WAY TO GET BOOZE IN THE A-B SYSTEM: 10 BARREL CRAFT COCKTAILS

On the heels of A-B’s announcement to buy Cutwater Spirits, comes a new way the brewer is getting more non-beer products into its A-B wholesaler network.

Ok: Maybe that’s not THE reason for A-B-owned 10 Barrel’s announcement of new craft cocktails, which will actually utilize spirits from local distilleries. (But yes, at least one Pac Northwest A-B distrib will carry it, in the privatized state of Washington, they told BBD. But since Oregon is a control state all spirit products are warehoused and sold through state agency stores.)

Either way, lauded IPA-and-sours brewer 10 Barrel is playing to consumer tastes with its promise of a Bloody Mary; Classic, Mango and Pineapple Serrano Margarita; Grey Hound; and Moscow Mule drinks in a RTD can format. The margarita utilizes tequila from Jalisco, Mexico’s 3 Amigos (so they’re on our A-B acquisitee watchlist), and the other offerings use vodka from Oregon Spirit Distillers (who only started national distributing a couple of years ago, so they’re still quite small).

GUESS WHAT A-B’S FORMER CHIEF CREATIVE OFFICER, BOB LACHKY, THINKS ABOUT THOSE CORNGATE ADS

Well this couldn’t have better timing for MillerCoors, which started its big distributor meeting in Tampa this week. Yesterday, Ad Age published a piece with former A-B creative chief Bob Lachky panning A-B’s Super Bowl ads. You know, the mudslinger Bud Light Kingdom pieces, needling Miller Lite and Coors Light for using corn syrup.

But beer is “a commodity industry and the last thing you need to be doing is further commoditizing it with discussions about ingredients that nobody cares about,” Bob said on an Ad Age podcast. “It’s just real disappointing. It’s a total miss.”

Indeed, as we started covering after last week’s Nielsen results [see BBD 03-08-2019], the new campaign certainly isn’t helping Bud Light trends, while Miller Lite is actually growing.

Bob knows a thing or two about beer marketing, having been behind some of A-B’s most iconic ads, including the super popular ’90s spots, “Whassup” and “Budweiser Frogs.”

But he admits to having strayed from that winning approach in the last big beer war, when still-independent A-B attacked Miller for having foreign ownership, after SABMiller bought the brewer.

“It was the worst mistake we could have made,” Bob said. But history seems to repeat itself.

Now, instead of “spitting at each other” and ignoring the consumer, Bob says, they should take a page from current car insurance marketing campaigns, of all places.

“They’re pretty much going with their own characters and developing their own icons in their own very unique voice,” he said. “And that is what Bud Light needs desperately.”

WHAT’S DRAGGING BEER DOWN? WHAT ISN’T?

The latest round of Nielsen numbers are in and they’re ugly – scratch that – uglier.

Total beer volumes in Nielsen all outlet scans fell 2.3% for the four weeks to March 2, a little worse than the previous four weeks (ending February 23), which saw volumes drop 2.1%.

That’s par for the course in February.

Since the four weeks to Feb 2, total beer volumes have only gotten further into the red in Nielsen scan data – falling from down 0.6% in that four-week reading to where we find them today, down 2.3%.
Despite the gradual sink into negative territory for the entire stretch of February, total beer volume is somehow only down 0.1% YTD.

What’s dragging beer down? The better question is what’s not dragging beer down? Out of the ten segments tracked by Nielsen in this set, only three are in the black: FMBs lead the way, up 17.3%; super premiums follow, up 10.9%, but falling a little behind their YTD trend, up 14.7%. Then we have imports, up a modest 1.6%, though recall the segment was only up 0.9% in the prior four weeks.

Elsewhere premium regular and premium lights are withering, down 7.5% and 7.1%, respectively. Cider’s rose run looks to be coming to a close, down 4.5%, though still up 0.5% YTD. And craft is carving itself out a nice little hole, down 2.6% for the four weeks and down 0.6% YTD.

When it comes to brewers, there’s only four in this set that are growing.

Mike’s leads the way, up 40.4% in the four weeks, and is the only company outpacing its YTD trend. Diageo Beer Company posted the next best percent change in volume, up 11.8%. Boston Beer followed up 7.5%. And last but not least is Constellation, up 6%.

While Constellation’s percent change in volume is not what it once was, the brewer still outpaces all major brewers in category case share, up 0.7 points. But Mike’s is hot on its heels, up 0.6 points, and Boston is gaining share too, up 0.2 points.

Until tomorrow,

Harry, Jenn, and Jordan

“Behold the turtle. He makes progress only when he sticks his neck out.” – James Bryant Conant
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