A-B Meets with Distributors: An Early Take

FILED MAY 24, 2010

Dear Client:

A-B distributors converged in three cities last week to vett out several issues with A-B senior brass, mainly Dave Peacock and N. American zone chief Luiz Edmond. Each meeting brought lively back-and-forth between distributors and A-B brass. In some meetings the Care Act came up more than the Chicago lawsuit, in others the opposite, we hear. We don't wish to give too many details away as there is one more today, but suffice to say that A-B did its best to assuage its distributors that it continues to support the three-tier system, and it's distributors challenging the status quo. A-B did have some gripes about the sub-committee hearing, which it said "stung", and the provisions of the Care Act which would threaten federal consistency, not to mention gripes about Pam Erikson and the "bashing of the product." A-B brass expressed surprise that they were being singled out as the enemy when it is distributors that are trying to change the status quo (with the Care Act). Some distributors have bristled at this notion.

Not any specific talk of a GI, but there was some heat brought by distributors about the fact that when you go up on frontline pricing on a 70:30 split and then you discount it back 50:50, it benefits the brewery on margins (one distributor called it the "definition of whiplash". But that gripe is nothing new). But all in, very candid discussions which is always good tonic for moving things forward. Where you there? What do you think? hs@beernet.com.

MILLERCOORS NOT CLOSING MILWAUKEE BREWERY

That's not really surprising, right? But the Milwaukee area press has been having a field day with local rumors that MillerCoors will close its iconic Milwaukee brewery when it was announced that the city was enacting a substantial water rate increase, with MillerCoors' water rates going up as much as 40%. The brewery gave signals that it would shift production to other breweries to save water. That is what likely sparked press reports that the brewer was considering shutting 'er down. On Friday MillerCoors issued a press release to the local press saying that the "sensational statements and over-the-top media reporting of the last few days about the impact of the proposed Milwaukee water rate increase has blown this issue completely out of proportion." MillerCoors said it has "no intention" of closing the brewery, and has even increased production "since the successful joint venture between Miller and Coors launched nearly two years ago." However, they could shift production to other breweries as a result of the rate hike. "We'd ask everyone to relax and enjoy one of our fine beers with the reassurance that we will be making beer in Miller Valley for many years to come."

TRUTH SQUADERS ON PRICING

Remember when I said I thought we wouldn't have a discount war this Summer. Many readers responded, and most said they agreed with Bump Williams. One analyst said that while he "enjoys your take," he reminded me that the industry doesn't have the final say on pricing, the consumer does. "Another year of price first, whatever happens to volumes will signal the permanent, decline in premium lights," says our analyst. Add in the fact that Corona will be promoted heavily, and you have a situation where premium lights lose their high-end "umbrella."

This week will be interesting as we'll see the ads breaking for Memorial Day. I still stand by my prediction, and will buy Bump a steak dinner in the city of his choosing when I'm wrong.


BEER BRIEFS:

PRESIDENTE BEER HAS TAPPED ViVA Partnership, a U.S. Hispanic and multicultural marketing firm, to help market the Caribbean beer in mainstream markets and "advance the brand closer to a leadership position for imported Latin beers."

Until tomorrow, Harry

"A throne is only a bench covered with velvet."
-Napoleon Bonaparte

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