Brew News

Brew Blog's picks of news from the beer business and beyond.Corona shows greatest signs of cannibalization from the Bud Light Lime launch, Morgan Stanley analyst Bill Pecoriello writes today in his weekly beer report. Over the 2 weeks that covered the Cinco de Mayo holiday (and the 1st 2 weeks of the BLL launch), Crown volumes declined 10% with Corona trademark volumes down 11%. Average price per volume was down roughly 0.5% over the same time. Share for Crown was off 50bps over the last 2 weeks. Recall that Credit Suisse previously has written, apropos of Bud Light Lime, that "We are hard pressed to conjure a more confrontational challenge for Corona."Beer remains the beverage of choice for Millennials, reports Nielsen Consumer Insight. On a dollar basis, beer accounts for 47% of Gen Y alcoholic beverage spending, and on a volume basis, 83% of purchases. Millennials are almost twice as likely as older consumers to purchase imported beers and almost three times as likely to pick up a craft beer. The article notes, however, that this cohort is more likely to drink wine and spirits than older consumers. Beer consumption dropped 12 percentage points in the 19972007 period among consumers age 2130, with wine and spirit sales picking up the slack. Although the same pattern is evidenced for drinkers over 30, the change was only half as fast for that cohort at 6%. (h/t Wine Spirits Daily)Commenting on the latest cycle of rumors about a potential InBev-Anheuser-Busch hookup, Credit Suisse analyst Carlos Laboy today writes, It is impossible to determine whether a deal is cooking or not. That said: Our position remains that a merger of A-B and InBev makes perfect sense, but we are not convinced that A-Bs leadership is prepared to relinquish control or that it is willing to leave the synergies and turnaround upside of a Grupo Modelo acquisition for somebody else to realize. If A-B is sold on a friendly basis, it may have to go for a price higher than our $64 DCF fair value (21x P/E) at a time that InBev shares are trading at the lowest end of the global peer group, 14x this years P/E. We find it unlikely. As far as a potentially hostile bid: We think A-B can counter a hostile bid by paying up for the other 50% of Grupo Modelo that it doesnt already own, which could stretch the acquisition cost for InBev by another $10-15 billion dollars and massively (or maybe prohibitively) raise the cost of a hostile bid for InBev.