California AG and DOJ Holding Calls with Brewers Re A-B Branch Activity


Dear Client:

As we reported yesterday, several California craft brewers said that the California state Attorney's General office has requested a conference call to discuss A-B's past and possible future acquisitions of distributorships in the state and how that would affect their access to market, among other antitrust considerations.

To update you, at press time, two Cali craft brewers confirmed with BBD yesterday that, indeed, the U.S. Department of Justice will also be looped in on these conference calls. That kind of kicks the gravitas of this issue up a notch when the feds are involved. At this point it is just an inquiry and not a formal investigation, we understand. Developing…..


We got word from the TTB yesterday that they've accepted a $450,000 offer from MillerCoors in compromise for alleged violations of the Consignment Sales provisions of the FAA Act.
The provision says "it is unlawful for an industry member to sell or for any trade buyer to purchase alcohol beverage products with the privilege of return."

Here's what happened: Remember all that excess Miller Fortune in the marketplace that MC cleaned up for distributors with a buy-back program? TTB didn't like that. Although MillerCoors maintains what they did was legal, the TTB said MillerCoors' alleged violations resulted in 1,484,792 cases being sold to its wholesalers located in states with similar state laws.

MillerCoors says it offered to just pay the fine instead of entering into a prolonged fight. MC spokesman Pete Marino told BBD:

"We recently settled a dispute with TTB over an out-of-code beer buyback program for the Miller Fortune launch. We offered the program to ensure we had the freshest beer possible in the marketplace to support the launch, and we believe the program complied with all applicable laws, regulations and TTB rulings. However, in the spirit of a strong history of partnership with TTB and our distributor system, we decided to resolve the dispute to keep our system focused on selling our brands."


After taking a dip last week, beer volumes continue to drop. The latest Nielsen data for the four weeks ending September 5 (all outlet) reveal overall beer volumes are down 1.6%. The category's YTD trend remains at 0.4% growth. (We should note that the data, ending 9/5, cut off on Labor Day Saturday, and the comparison to last year's holiday isn't clean.)

The last time we saw craft as the segment leader was in the Nielsen data set ending July 18. Since then, imports have remained on top and they continue to best the other segments up 7.5% in volumes currently, lead by Constellation, which is a bit of a slowdown from weeks past, imports are now trailing their YTD trend, up 8.6%.

Craft volumes have been waning, the segment was up 5.7% last week and its volumes are up 5.1% in the latest set. Crafts YTD trend is even experiencing single digit growth, albeit barely, up 9.9%. The only other two segments in the black are FMBs and super premiums, up 2.6% and 2.3%, respectively.

We alerted you last week that cider had dived into the red, down 0.4%, and the segment continues to plummet. In the latest set cider is down 4.4%, which is light years behind its YTD trend of 18.4%. What the heck is going on? It seems that if you're not a Mexican beer or a root beer, you're in the doldrums.


COLUMBIA CROWNED WHOLESALER OF THE YEAR. Columbia Distributing has been selected by Market Watch as the "2015 Beer Wholesaler of the Year." The wholesaler will be formally recognized next month at the NBWA convention in Las Vegas.

Until tomorrow, Harry

"I stopped believing in Santa Claus when my mother took me to see him in a department store, and he asked for my autograph." - Shirley Temple

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:

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