It has come to our attention through nefarious back channels that the California Attorney General Office is starting to ask the questions the DOJ is not asking: it is apparently probing A-B on possible alleged antitrust activities.
BBD has talked to several craft brewers who have received calls from the California state AG office concerning possible "vertical integration" issues stemming from the purchase of Cali distributorships by A-B, and how those acquisitions have affected access to market for those brewers. So far those questions are focused on distributor acquisitions and not brewery acquisitions. Developing….
A-B HOUSE FARRELL BUYING G. HOUSEN IN VERMONT
A-B houses Farrell Distributing and g. housen announced yesterday an agreement that will transfer ownership of the g.housen portfolio of beverage brands in Vermont to Farrell Distributing.
Farrell operates facilities in South Burlington and Rutland. They distribute A-B products and 25 Vermont craft brands along with other beers and more than 900 wine brands.
"The New Hampshire and Massachusetts g.housen portfolios, and employees, are not affected by this transaction," per company announcement. Farrell expects to offer a majority of g.housen employees an opportunity to transfer to Farrell Distributing.
The g. housen portfolio of brands, which includes A-B products, "will complement the locally driven portfolio Farrell currently manages."
"This is a good deal between two longtime family businesses that will help both companies improve our scale and achieve efficiencies that offset rising cost pressures in the logistics business," said Farrell president David J. Farrell. "It also significantly enhances our ability to drive the business plans for our brands."
The deal means that Farrell will be "fully aligned with A-B statewide after closing while incorporating their craft beer, wine and NA portfolio to our already strong offerings, including our 'Made in Vermont' portfolio, which includes 25+ in state suppliers between all segments," Farrell marketing director Ryan Chaffin told BBD. He said they're in the middle of a 25,000 square foot expansion that will also help improve quality control and management of this portfolio after closing on October 30.
"Our extended sales network will help bring diversification and access for our portfolio statewide. This will help restore us to our old market share in an ever changing and busy market adding about 10% to beer and wine each totaling somewhere near a 50% total market share for beer and wine each with the entire portfolio coming over."
A-B ALUM JOINS PABST AS VP BREWING OPS
Neil Nersesian will join Pabst as VP, brewing operations, CEO Eugene Kashper sent notice today. Neil hails from A-B InBev, where he spent 20 years in leadership roles in engineering, brewery operations, general management and more. Most recently, he served as director, global supply projects, where he led vertical operations expansion.
With his new role at Pabst, "Neil will report to me and will take responsibility for our supply chain organization, brewing, procurement, quality assurance and performance management functions," per Eugene.
"His focus will be to integrate the PBC end-to-end supply chain operations, putting quality first. He shares my vision for the growth of PBC and with his team will be responsible for delivering the highest quality product to the consumer for Small Town, craft, imports and heritage brands."
As for Doug Walker, who "has served the company in multiple management capacities such as supply chain, operations, production, and pricing as the company has continued to expand," he will now "focus his efforts on managing our business in the critical functional areas of Revenue Management, Sales & Operations Planning, and Innovation. In his new role as VP of Sales Operations, Doug will continue to report to Brian Bousley, President of Pabst Brewing Company, and will sit on the executive leadership team at PBC."
HIGHLIGHTS OF THE GRAVE ISSUES DISCUSSED AT CAP
We travel to countless conferences year-in and year-out and the majority of them focus on promoting beer. You hear words like "penetration" and phrases like "get the liquid into more people's throats" all the time.
So every September I have to do a double take while attending the Center For Alcohol Policy Conference to make sure I'm at the right event. The conference isn't a teetotaling event by any means (it's sponsored by the NBWA) but it's a deviation from the average industry rally.
The conference emphasizes our alcohol regulations that have been in place for 80 years and gives you a deeper appreciation for the 21st Amendment, the three-tier system and the FAA Act. But part of what makes these regulations so useful and effective is their allowance for states and local governments to put forth their own legislation. Sometimes it's a bill, other times it's a monster that takes on a life of it's own as evidenced by panelist Karen Duddleston, Las Vegas Department of Planning's deputy director.
Karen detailed a "painful" lesson she dubbed the Fremont St. Experience as a "perfect case study for WHY there are alcohol regulations." In the mid-1990's the city eliminated one line from its land use code: "Accessory package liquor is limited to grocery and drug stores." This gave way to alcohol sales in gift shops, c-stores and even wedding chapels. These establishments were required to limit their liquor displays to 10% of the retail floor area but they were still generating over 90% of their revenue from liquor sales.
As you can imagine, there was a 66% increase in liquor stores downtown and the area downtown became inundated with crime, vagrants, gang activity, and a number of other issues. The city implemented new regulations in 2014 that have cleaned the area up and there are new proposals that seek to limit off-sale liquor to grocery stores, standalone liquor stores and a 1,000-foot distance separation.
Another solemn issue discussed at the conference is "keeping kids safe." As we noted last week, Americans are largely in favor of regulation generally because it keeps alcohol out of the hands of minors. Bruce Livingston, executive director/CEO at Alcohol Justice, believes some of the larger players in the industry are contributing to underage drinking with their marketing of "Alcopops" -- what we know as FMBs. He suggests that Alcopops "are used disproportionately by youth." He displayed stats from the ABRAND Study, which showed that "nearly half of youth drinkers report drinking alcopops within the past 30 days." While drawing attention to statistics from the FTC that say that only "16-20% of adults report drinking alcopops."
Bruce and his organization plan to reduce "Alcopop-related harm" at the national, state and local level by increasing prices through taxes and fees; decreasing availability at store and licensees; and limit advertising.
J.T. Griffin, MADD'S Chief government affairs office then spoke on perhaps alcohol's most notorious causation: drunk driving. (Although I would note that texting-and-driving is now more of a contributor to car crashes than alcohol). As you may know, MADD's main initiative is to integrate ignition interlock laws. J.T. says that 50-75% of all convicted drunk drivers will continue to drive on a suspended license. The average drunk driver drives 80 times before drunk arrest. MADD believes ignition interlock reduces DUI recidivism by 65%. The number of interlocks installed has also had an inverse relationship with the amount of alcohol-impaired deaths.
More to come from CAP.
MANY OF YOU WONDERED WHETHER EDEN WOULD BE FOR SALE after MillerCoors's announcement yesterday that they would close the North Carolina-based plant. Spokespeople tell us they haven't yet decided what to do with the 9 million barrel capacity brewery or the land once it closes in September of next year. One distributor suggested making it into an aluminum pint manufacturing plant to ease shortages.
NBWA IS ACCEPTING NOMINATIONS FOR NEW BREWER PARTNER OF THE YEAR AWARD. The award was created to recognize the brewer who does the best job in the marketplace producing great beer, building strong partnerships, providing education and offering support to their distributor customers. The deadline is September 18 (this Friday). Nominate a brewer here. The award will be presented during NBWA's 78th Annual Convention & Trade Show next month.
Until tomorrow, Harry
Don't forget to register for Beer Summit 2016 in New Orleans January 25-26 at The Roosevelt hotel. Lineup will be announced later this month. Tickets go quickly, so reserve your spot today: beernet.com/beer_summit.php
"As for me, except for an occasional heart attack, I feel as young as I ever did." - Robert Benchley
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