HUSA Closes out 2018 Down High Single Digits

Dear Client:

Yesterday, Heineken reported its full year results for 2018. There were some global achievements to celebrate in Amsterdam, with total company volume up 4.2% and brand Heineken posting its best performance in over a decade, growing 7.7% over the year. But there wasn’t much to cheer about at the Heineken USA headquarters in White Plains, New York.

Out of the 19 countries detailed in the release, the U.S. was one of five that saw volume declines, joining the likes of Nigeria, Ivory Coast, the Democratic Republic of the Congo (DRC), and Spain. The only country to experience a drop in volume as steep as the U.S. was the DRC, with both posting high-single digit declines.

Heineken offered some reasoning for the declines in most of the countries above, or at least softened the blow with some type of improvement happening in the market. But in the U.S. it was short and (not so) sweet:

In the US, HEINEKEN USA’s beer volume declined high-single digit in a declining beer market. Lagunitas volumes declined low-single digit in the US, still outperforming the overall craft category.

That’s all the detail they had to offer on the States in the release.

“A LOT OF LOSERS IN 2018” Heineken CEO Jean-Francois van Boxmeer was pressed for more color on what’s happenings in the states during the call. Here’s what he had to say:

“It is true that the market is suffering and you have very little winners and a lot of losers in 2018,” he said. “We are a small player and we are also rather at the side of the losers… I have to admit that.”

“We are not satisfied with it,” Jean-Francois continued. “We have to work hard to put ourselves in the camp of the winners, obviously. But again we are a very small player. And it’s perhaps disproportionately a bit harder for us seeing our size in the U.S., but we have always good plans in the drawer and we hope to do better.”

The performance of Heineken USA is “at least tasked for an improvement” he said, and “our performance of Heineken USA should improve.”

So what’s going on? “High-single digit declines” over a year is the worst showing we can remember for HUSA. And it’s kind of curious, as brand Heineken and Dos Equis volumes are only down about 2% in 2018 IRI multi-outlet and convenience. Tecate was down double digits, on a much smaller base.

HOPE FOR MEXICAN BRANDS? The U.S. trends are particularly head-scratching, as everyone expects Mexican brands to grow.

But Alison Payne, VP Marketing Mexican Beer Portfolio, HUSA, told BBD that Dos Equis is starting 2019 with better trends.

“In January, Dos Equis grew 6.3%,” per Alison. That was driven by North Texas and distribution gains on draft.

“Our new brew, Dos Equis Mexican pale Ale (MPA) continues to expand distribution in the on prem as beer lovers get ready for its 2019 off-premise launch this month in Texas and New Mexico.”

And Tecate Titanium, a new, 7.5% ABV version of the brand that will come in 24-oz. cans [see BBD 10-15-2018], “is also off to a strong start in the convenience channel as the first high ABV Mexican Import.”

Stay tuned.

IRI DATA FOUR WEEKS TO FEB 3 SHOW WORSENING TRENDS FOR BEER

Last week, IRI reported beer data the 4 weeks ended Jan 27, 2019, which was particularly rosy. Even the volume trend was up almost 4%.

As BBD noted, there was a bit of noise in that data, as the 4 week period included the NYE day (Monday 12/31/18), where the comp period did not.

IRI director of client insights for bev alc, Patrick Livingston, offered more perspective on the most recent data.

“We also provide Beer trends for 3 weeks ending 1-27-19 that showed volume trending +1.0%. This illustrated that Beer was not growing as fast once the NYE comp timing was eliminated,” he said.

NEWER DATA: SUPER BOWL WEEK IS WORST. Now IRI has newer data, and the closer you get to February, the worse things look.

In fact, the single week ended 2-03, Super Bowl weekend, is the worst for beer in the four-week period ended February 3.
“We now have data through 4 weeks ending 2-3-19, and beer volume trends have slowed to +0.5%, with the latest 2 weeks pulling the trend down (-0.3% and -0.9% volume trends.),” said Patrick. (They’re not yet analyzing Super Bowl trends, as they’re waiting for week-after data to come in, given that ads usually run through mid week.)

Curiously, in the single week that ends Feb 3, the day before Super Bowl, beer is down 0.9%. (The single week prior to that is barely down, and the one before that is up 3%, though it’s really tough to read much into one-week periods. Still, interesting to see such a down trend during a week where people would be loading up for The Big Game.)

Spirits continues strong trends posting a +6.3% volume trend and +8.7% in dollar trend for the latest 4 weeks.

Recall, yesterday we posted numbers from Nielsen, noting their four weeks to February 2 saw beer volumes down 0.6%.

DRIZLY EXPANDS IN CALIFORNIA THROUGH BEVMO PARTNERSHIP

Drizly has announced a partnership with California-based retailer BevMo, to bring Drizly’s on-demand delivery program to 45 BevMo stores throughout California.

This expansion is not about launching into new markets, however, it’s about “adding breadth and depth” to areas in California where Drizly is already available, Drizly svp of commercial sales and operations Bryan Goodwin told sister publication Wine & Spirits Daily.

BevMo currently operates around 150 locations throughout California. When asked if the plan is to eventually add the other locations to the Drizly network, Bryan said “absolutely” and they’ll evaluate that opportunity to expand as their relationship with the retailer evolves.

“We’re constantly trying to expand the retail network with different markets and better retailers. They’re a top-tier retailer that have been on our list for a long time,” said Bryan. Adding, that bringing on more locations helps to increase selection as well as price transparency.

BEER BRIEFS:

PA BEER ALLIANCE HIRES FORMER SENATOR CHUCK MCILHINNEY. The PA Beer Alliance, the association representing beer wholesalers in Pennsylvania, has hired ex Senate Law & Justice Chairman, Chuck Mcilhinney. Chuck dealt with all alcohol legislation in the Senate and will serve as a consultant for the beer wholesalers in the PA Beer Alliance.

CONSTELLATION’S MIKE MCGREW SNAGS ANOTHER PROMOTION. Constellation Brand’s vice president of corporate communications, Mike McGrew, has been promoted to senior vice president, corporate communications, the company announced yesterday. It is the third promotion awarded to Mike since joining the company in 2014.

Until tomorrow,

Harry, Jenn, and Jordan

“Anyone who works is a fool. I don’t work – I merely inflict myself upon the public.” – Robert Morley

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