At the Annual General Meeting of SABMiller yesterday, CEO Graham Mackay said SABMiller “continues to make progress [globally], in line with expectations at the time of our preliminary results announcement in May of this year, with first quarter organic lager volumes for the group growing by 7%.”
Lager volumes weren’t so hot in the US. Graham reports that for their fiscal quarter ending June 30, Miller’s US domestic sales to retailers (STRs) decreased by 2.4%, and Miller Lite volumes were flat. “The trading environment remains highly competitive,” he said.
Recall that SABMiller reported full year ending March 31 US sales-to-retailers down 1%, so Miller’s sequential trends continue to deteriorate, at least compared to their last fiscal year. New Miller CEO Tom Long has his work cut out for him.
The good news, or at least surprising news, is that Miller Lite trends remain flat for the quarter ending June 30, which is a somewhat better performance for that brand than we expected. We had earlier predicted that full year 2006 trends for Lite would be down low single digits, but it looks as though we were being pessimistic. Miller president Norman Adami, in a recent conversation about something else, mentioned that he thought our glass-half-empty prediction needed a bit more water in it. Miller Lite comparisons actually become easier as the year rolls on, so the brand will likely remain flat for the year, unless…..
SIDEBAR COMMENTARY: BBD noticed last week at our local gas station (yes, even BBD must purchase beer as a commoner, as we keep a wide variety of brands represented in our company fridge in the event a brewery dignitary shows up unannounced, as they tend to do) that the engineers who designed the new Miller premium fridge pack 2/12 LNs somehow forgot to place a handle on the top, which makes it precious awkward to get out of the well.. so much so that it makes the Coors Light and Bud Light 2/12s right next door look mighty inviting. Surely others have noticed this. We finally found the handles, not punched out, on the sides. Halleluiah.
This is not the time to have flaws in longneck bottle packaging. Why? Other than it being the middle of summer, Modelo is still experiencing painted bottle shortages, despite their claims to the contrary. As this is being written, Corona features are being set aside for Labor Day in certain chains for lack of supply. Coors is surprisingly the most likely domestic brewer to capitalize on this, as they seem to be the nimble trade executors of the year, while A-B struggles to integrate Rolling Rock [RR distribs reporting little response out of St. Louis on issues as simple as a promo schedule] and Miller takes market surveys. It’s a tough beer world out there.
Bear Stearns analyst Carlos Laboy, who doesn’t pull many punches, calls SABMiller’s US results “a sore spot” against what were impressive results in the rest of the world. Says Carlos:
“The company reported 2Q06 STRs of -2.4% in an environment where the entire industry was +0.9%, domestics were +0.4% and the company’s main competitor, A-B, posted +2.2% shipments in the quarter this week. Assuming Miller built at least some inventory, shipments were likely down -2%. We expect these negative trends to moderate as the impact of last year’s price war unwinds into 2007. Miller Lite volumes were “flat”; we suspect the company’s subpremium brands were down in mid-single digits during the quarter.”
A-B JUMP IN SUB-PREMIUMS. Morgan Stanley analyst Bill Pecoriello reports, citing IRI scanner numbers, that A-B’s sub-premium beers took a jump in the week after July 4 due to increased discounting. True, it’s just a week. Writes Bill:
“Beer trends for the week ending July 16 (the week after the July 4 holiday) were strong in food stores relative to what we have seen over the last several periods, driven by a relatively easy comparison. In the latest data we saw continued share gains from imports and crafts but also share gains from A-B (driven by a jump in sub-premium share on increased discounting), while Miller and Molson Coors lost share.”
Until Monday, Harry
