August Not as Bad as Thought
Mega-Brand Declines Steady

FILED SEPTEMBER 17, 2009

Dear Client:

At least in off-premise chains scanned by IRI, August trends were pretty much in line with the quarterly IRI trends for food-drug-convenience. In other words, it sucked just as bad, but at least it wasn't worse. Given the anecdotal evidence we were getting of a Labor Day meltdown, August wasn't as bad as we thought. However, we do know that on-premise, which is un-scanned, continues to struggle mightily.

Beer volumes were down 5.5% for the four weeks ending September 6 per IRI, compared to the same period last year, with much of the declines continuing to come from c-stores. When you compare that to the 13 week quarter ending September 6, which was down 6.3%, you see a 0.8% improvement in the trend, suggesting a stabilization of the trend. Of course, four weeks of data can be susceptible to weekend/holiday/payday timing, so you have to take it with a grain of salt. Still, it can be helpful to track the difference between the 13 and 4 week trends of the top brands to tease out broad trends over time.

Most of the larger brands experienced an improvement of trend from the quarter to the latest month. Bud Light, Bud, and Miller Lite's trends all improved at least by 0.5 points. Coors Light, which of the mega-brands is the only one with a positive trend, saw its trend remain about the same.

Import trends Corona and Heineken, while both still have significantly negative trends (especially Heineken, down 14%), both however experienced trend improvements of over one point.

Most sub-premiums saw their already good trends improving, naturally, with the exception of Natural Light. The category's trend improved by nearly a point, according to IRI. Bud Ice trend improved by 5 points (with a buck a case drop in price) and Icehouse improved by 4 points. The rest of the subs improved between 2 and 3 points, with Coors Banquet up 6 points, even with a 75 cent price increase.

Bud Light Lime's trend fell by 3 points, which I suppose is to be expected. MGD 64's trend fell by 11 points, also be expected as it runs up against the law of big numbers and rollout.

Until tomorrow, Harry

"Do not let what you cannot do interfere with what you can do."
-John Wooden

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