Weekly Brewing News and Updates.....4/1/11

• BUD: $58.86
• SAM: $92.11
• TAP: $47.24

Well let's get straight to business this week. Obviously today was April fools day but nothing too exciting happened that caught me off guard or 'fooled' me. Instead, rather, a long day of work and then straight home to where I sit now bringing you your weekly brewing industry news. So let's get to business.
First off this week I want to talk about an article I read at minyanville.com posted by Matthew Mallon titled Top Alcohol Sales: The Year Booze Came Back. In this article, Mallon talked about how the recession hit the booze industry almost as hard as it hit everybody else. He states that all that bad news may have driven many of us to drink, but post-2008, we were downing the cheap stuff , switching out top-shelf brands for supermarket vodka. Alcohol sales declined overall in 2009 and into 2010, especially for premium brands, which makes 2011 an enticing time for adding some bottle service to your portfolio. Up-market sales are on the rise as customers are once again reaching for the high-end hooch, and he went on to talk about a few of the spirit-fueled companies poised to make a big splash in 2011 as a result.

 The first company he mentioned was Diageo (DEO). This company has a library of brand names from Guiness to Johnnie Walker to Smirnoff, which are all market leaders in their categories. Diageo is the world's largest alcoholic beverage conglomerate. Aside from producing the top-selling brands in almost every conceivable form of firewater, they also produce Captain Morgan (rum), Bushmills (Irish whiskey), Gordon's (gin), and Bailey's (liqueur). Diageo is also the world's biggest producer of Scotch, operating a vast range of single malt distilleries and blending plants. They HAVE been experiencing some tough times in Europe lately as the ongoing Eurozone implosion has affected consumption, but North American and Asian sales are on rise and analysts predict a 2011 acquisition spree by the conglomerate, possibly involving a little Jose Cuervo in their future????

The next company looking to make some significant improvements this year is Constellation Brands (STZ). They are currently the worlds largest wine company and home to some well-known names such as Robert Mondavi, Woodbridge, and Clos du Bois, not to mention beer brands such as Corona and Negro Modelo. They have been on a premium tear over the last decade or so, snapping up some high-end names while divesting value spirits and low-end wineries such as Inglenook and Paul Masson. Now, the company did take on a great deal of financed debt through their restructuring phase, but they are in a good position to make a strong comeback from their financial hardships as wine sales in the U.S. were up 4% last year and exports of American wine were up 25%. That is why this company will be well positioned to take advantage in a market with a great deal of continued growth potential.

The third topic this week is about the Fortune Brands (FO), who is home to Jim Beam and Maker's Mark as well as a catch-all of home/hardware brands brands and high profile golf names such as Titliest, recently announced it was going to spin off it's non-booze divisions and focus itself on the hard stuff, both existing brands and new acquisitions. Mallon states that to that end, it's Beam Global Spirits and Wine unit just picked up reality TV star Bethany Frankel's Skinnygirl line of "low-calorie" cocktails. Launched just a year and a half ago, the brand has quickly become one of the US ready-to-drink cocktail markets biggest sellers, which is part of a growing trend towards low-calorie spirits that Fortune is eager to exploit. Mallon also went on to say that was a wise move as women's alcohol consumption continues to rise while men's alcohol consumption has stayed relatively the same or decreased even. So, look for this company in the general alcohol market to put up some impressive numbers in the market this year and to make some astonishing growth.

The next company on the table for discussion in news this week is about Brown-Forman (BF.B), who is the owners of my personal favorite for an iconic brand which is Jack Daniels, as well as Southern Comfort, Finlandia and several other high-profile spirits. Brown-Forman was knocked around quite a bit during the recession as target drinkers went off-brand, but recently the company posted an unbelievable 30% improvement over the final quarter of 2010 compared to just a year earlier. The company, which generates 45% of its sales from good-old-boy tipple Jack Daniels, made its gains by selling off non-spirits related divisions including luggage and ceramics and turning their focus to international markets instead. This change of direction will continue to give them the needed momentum to move back to a market position they were once noted with.

The last company Mallon talked about was our American favorite Anheuser-Busch InBev.

Anheuser-Busch InBev is the dominant player in the beer biz and one of the five biggest consumer products corporations in the world. They currently have a 49% U.S. market share and unsurpassed global reach as they hold either the #1 or #2 market position in 19 countries. The companies sheer size and marketing muscle makes it a sensible long-term choice, and Mallon also stated that along with Anheuser-Busch, the number two US market leader Molson Coors and would be a smart move as well.

The last thing Mallon talked about was how although Molson Coors and Anheuser-Busch control the standard beer market, people should also take a look a something a little tastier and invest in the craft beer industry and companies like Boston Beer and the Craft Brewers Alliance because these tasty brews will only become more attractive as time goes on.
Well, thats about it for this week guys and girls, so until next week..........."stay thirsty my friends"!!