Modern Brewery Age Weekly E-Newsletter •Volume 60, No. 6• February 9, 2009

Analysts say ABI on target with cost cuts

Louis Glunz donates pallets of Schlitz 1960s formula to U.S troops The Schlitz brand and Chicago-area wholesaler Louis Glunz Beer, Inc. recently donated four pallets of the brewery's "Classic 1960s Formula" lager beer for delivery to U.S. troops in Iraq and Afghanistan to enjoy as they watched the Super Bowl. The donation was coordinated by Pizzas 4 Patriots, which worked closely with the U.S. Centcom commander General Petraeus and his staff to allow first-time delivery of beer to U.S. bases via DHL, in time for the game, along with 2,000 Lou Malnati's pizzas. The military makes televisions available for troops serving all over the world to watch the Super Bowl each year, but getting beer and pizza out to the units has been more of a challenge. Jack Glunz, president of Louis Glunz Beer, Inc., (pictured above) and his company's employees, most notably including WWII Veteran, Mac Harvey, VP of Marketing, signed their well wishes to our service men and women on oversized thank you cards that accompanied the special delivery. Local Chicago media covered the good news story which, in turn, was picked-up nationwide, resulting in 400 TV placements at last count. Mr. Glunz noted that Schlitz has a long history of providing beer to the troops. In 1898, three days after Dewey took Manila, one bottle of Schlitz Beer was distributed to the crews on all U.S. battleships; and, during WWII, every fourth bottle of Schlitz Beer produced by the brewery went overseas to the troops.

Global beer market flattening as economies falter Demand for beer could fall in developing markets, as economic pain strikes across the globe, European malt industry executives say. For malt producers, a strong 2008 harvest had ensured plenty of barley to make beer. Now there are concerns that demand for their grain will fall. "With the financial crisis, market conditions are changing. The big question mark is no longer supply but demand," said Alain Caekaert, buying director at Malteurop told Reuters. Between 2005 and 2008, worldwide beer production rose 14 percent to 1.8 billion hectoliters. Forecasts for 2008 had been between 2 to 2.5 percent, but the numbers are looking pretty flat.

"With the crisis, some people think it will be more like zero growth," said JeanClaude Girard, managing director at malt broker Interbrau. "The global recession could lead to changes in consumption patterns," Alain Le Foch, Malteurop's managing director, said, noting that cheaper low-malt beers could become more prevalent. In China, for example, brewers are typically using about half the malt as their European counterparts (17.09 lbs versus 28.66 lbs) per HL. Mr. Girard said Russian malt firms have cut production. "In the coming weeks, this is going to happen in Europe too,” he said. “we could go from 95 percent of capacity used to 90 percent.”

1 MODERN BREWERY AGE WEEKLY, FEBRUARY 9, 2009

The vicious efficiency of ABI’s cost cutters have impressed the analysts, not least Kaumil Gajrawala of UBS. Mr. Gajrawala and his UBS colleagues have raised projections of A-B’s gross cost savings from $1.5 billion to $1.85 billion. Mr. Gajrawala attributes this to higher contributions from ABI’s much-vaunted Zero Based Budgeting and procurement savings. “News since the beginning of the year, as well as the confidence with which ABI management describes the A-B integration process, makes us more positive about the phasing and scale of the US$1.5 billion cost savings, and therefore the margin improvement potential of the A-B domestic US beer business,” Mr. Gajrawala wrote in a note to investors. “We raise our gross (Continued on page 5)

MillerCoors reports 4th quarter decline in profit AP—Molson Coors Brewing and SABMiller said this week that fourth-quarter profit for MillerCoors declined 40 percent, mainly due to hefty impairment charges related to its Sparks brand and costs to integrate the two companies' beer brands in the U.S. MillerCoors earnings fell to $54.1 million from an adjusted profit of $90.7 million in (Continued on page 8)

Bob Lachky to leave A-B Another one bites the dust in St. Louis. Bob Lachky, the legendary A-B marketing man, has announced he will leave Anheuser-Busch at the end of the month. Mr. Lachky was credited with helping to create some of A-B’s most memorable ads, including the Budweiser frogs, the “whassup” campaign, and "Real Men of Genius," the most-awarded radio campaign in history. He was also the guiding force behind the development of A-B's Super Bowl ads. (Continued on page 8)

Sierra Nevada to make ethanol from spent yeast

Negra Modelo tapped as the perfect Valentine’s Day beer Crown Imports says that Negra Modelo is a great choice to pair with chocolate. “While red wine is traditionally thought of as the romantic beverage to pair with chocolate, wine can often overwhelm the flavors of chocolate,” Crown points out in a Velantine’s Day press release, “In contrast, the flavors in Negra Modelo complement and enhance chocolate flavors. Negra Modelo [has a] roasted, caramel and subtle coffee flavor that goes well with various types of chocolate and chocolate desserts.” The importer says that chefs have discovered Negra Modelo’s versatility in pairings with chocolate desserts. The Chocolate Grape, a restaurant/chocolate cafe in Chicago’s trendy Bucktown neighborhood will serve their signature Burnt Grapes with chocolate caramel Negra Modelo mousse on Valentine’s Day. Known for their handmade truffles, Chocolate Grape created a special Negra Modelo Truffle. In New York, Public House NYC will offer Valentine’s Day chocolate samples to patrons who order Negra Modelo, and Dantanna’s in Atlanta will offer chocolate and Negra Modelo samples and recommend pairing Negra Modelo with their Short Ribs with blackberry BBQ sauce. “The creamy flavor and dark malt and caramel aroma of Negra Modelo make it an excellent complement to chocolate,” says Kathy Casey, food expert and president of Kathy Casey Food Studios. “The coffee and mocha undertones in the beer work well with desserts, particularly truffles and chocolate with caramel flavors.” This Valentine’s Day, Casey suggests pairing Negra Modelo with dark chocolate truffle desserts, or even creating a Latin-inspired beer float by scooping dulce de leche flavored ice cream into a chilled glass of Negra Modelo. Casey has also developed a special recipe for Negra Modelo Espresso Fudge Cake with Modelo Cream, which utilizes Negra Modelo as an ingredient (see recipe at right).

The Sierra Nevada Brewing Co., working with the E-Fuel Corporation, has announced it will begin testing an ethanol production system at its Chico brewery within a few months. The company hopes to begin full-scale ethanol production by the end of this year. "This has the potential to be a great thing for the environment and further our commitment to be becoming more energy independent," Ken Grossman, president of Sierra Nevada, told LiveScience. The brewery plans to transform the almost 1.6 million gallons of yeast waste it generates annually into fuel. The waste contains 5 to 8 percent alcohol content, including enough nutrients to enable E-100 Microfueler system to raise that level to 15 percent alcohol. The EFuel100 MicroFueler is a portable ethanol micro-refinery system. E-Fuel said the system is designed “for homeowners and small businesses to safely and costeffectively create their own fuel, on-site.”

Negra Modelo Espresso Fudge Cake with Modelo Cream Recipe (Courtesy of Kathy Casey) 3 oz. unsweetened baking chocolate 1 ½ sticks (12 Tbsp.) butter 2 Tbsp. Instant espresso granules or instant coffee 3 eggs 1/3 cup Negra Modelo beer 1 ½ cup sugar ½ cup flour ¼ tsp. salt 1 ½ tsp. vanilla extract Modelo Cream ½ cup whipping cream ¼ c. powdered sugar 3 tbsp. Negra Modelo beer To make the cake: Preheat oven to 400 degrees F. In a bowl over simmering water, melt the chocolate and butter together. Whisk in the espresso granules until well combined. Meanwhile, with a whisk or electric mixer, mix the remaining ingredients in a large bowl together until glossy. Add in the melted chocolate mixture and beat again until glossy and smooth. Grease and flour an 8-inch pie pan or spring form cake pan. Pour batter into prepared pan and place in preheated oven. Bake for 35 to 40 minutes or until slightly puffy. Let cool. Serve cake at room temperature with dollops of Modelo cream. To make the cream: Just before serving, whip the cream and sugar in a bowl until just forming stiff peaks. Add beer and whisk until peaking.

2 MODERN BREWERY AGE WEEKLY, FEBRUARY 9, 2009

Abita’s big beers in big bottles Abita Brewing Co. reports it has launched its big beers in big bottles. “The new bottles are bigger than the bottles for our other Abita brews, a full 22 ounces,” said David Blossman, the Abita Brewing Company’s president. “These big 22-ounce bottles are the perfect size to serve with a meal or share with a friend,” continued Blossman. The beer inside is big too; both Andygator and new Abbey Ale have an alcohol by volume (ABV) content of 8%. Abita calls its Andygator “a creature of the swamp,” and reports it is a high-gravity brew made with pale malt, German lager yeast and German Perle hops. Unlike other high-gravity brews, Andygator is “fermented to a dry finish with a slightly sweet flavor and subtle fruit aroma.” Reaching alcohol strength of 8% by volume, it is a Helles Dopplebock. Andygator has been served on draft before, but never bottled. Abita’s other big beer is Abbey Ale, a new Abita brew in the tradition of monastic strong ales. In tribute to this history, Abita makes a 25-cent donation to St. Joseph’s Abbey in Covington, Louisiana for every bottle sold. The brewer reports that Abbey Ale is “dark amber in color, with an aroma of caramel, fruits and cloves...It is a Dubble or double ale with an 8% ABV... a malty brew, top-fermented and bottle-aged to rapturous perfection.” The brewer said its new 22-ounce bottles offer an oversized canvas for creative packaging design. Both new brews feature a “hand-painted” look designed by Innovative Advertising and applied to the bottle by Vitro Packaging’s Applied Ceramic Labeling System. Innovative and Vitro are headquartered in Covington, Louisiana.

AB InBev Scorecard, four-week and 13-week data ending January 25, 2009 Excerpted from IRI Data Total US Food/Drug/Convenience

3 MODERN BREWERY AGE WEEKLY, FEBRUARY 9, 2009

Top AB InBev Brands

Four-Week Case Sales

AB+CRAFT BRANDS -GROLSCH 46,598,100 ANHEUSER-BUSCH -GROLSCH 46,378,900 18,172,420 BUD LIGHT 7,993,050 BUDWEISER 5,338,805 NATURAL LIGHT 3,357,059 BUSCH LIGHT 3,076,860 BUSCH 1,708,641 NATURAL ICE 1,365,128 MICHELOB ULTRA LIGHT 780,755 BUD ICE 683,268 BUD LIGHT LIME 652,473 BUDWEISER SELECT 382,053 MICHELOB LIGHT 284,653 KING COBRA 237,798 HURRICANE HIGH GRAVITY 172,628 ROLLING ROCK 161,831 STELLA ARTOIS LAGER 154,897 BECKS 150,753 BUD LIGHT CHELADA 131,371 ODOULS NA 109,865 MICHELOB AMBER BOCK 109,424 BUDWEISER AMERICAN ALE 94,495 HURRICANE MALT LIQUOR 93,543 MICHELOB 90,228 BUDWEISER CHELADA 85,890 BUSCH ICE 81,825 TILT 8% LEMON LIME MICHELOB GOLDEN DRAFT LT 76,912 65,569 MICHELOB ULTRA AMBER 65,462 BUD DRY 56,798 BUSCH NA 55,140 LANDSHARK LAGER 54,265 BASS ALE MICHELOB ULTRA LIME CACTUS 53,001 43,910 BACARDI SILVER MOJITO 33,963 TILT 32,341 SHOCK TOP BELGIAN WHITE 30,896 ODOULS AMBER NA 29,408 BACARDI SILVER RAZ 24,591 BECKS PREMIER LIGHT BACARDI SILVER STRAWBERRY 22,249 MICHELOB ULTR POM RSPBRRY 19,243 17,900 BUD ICE LIGHT 16,984 MICHELOB SEASONAL 16,020 BECKS DARK 13,883 HAAKE BECK NA 13,678 HOEGAARDEN WHITE ALE BODDINGTONS PUB CREAM ALE 13,471 11,728 ROCK LIGHT 11,156 KIRIN ICHIBAN 10,750 ZIEGENBOCK AMBER BACARDI SILVER WATERMELON 10,237 BACARDI SILVER MOJITO POM 9,618 8,902 WILD BLUE ANHEUSER-BUSCH SEASONAL 7,599 BACARDI SLVR MOJITO MANGO 7,341 MICH ULT TUSC ORNG GRPFRT 6,552 5,893 BACARDI SILVER PEACH 5,212 BACARDI SILVER O3 4,764 MICHELOB PALE ALE 4,624 BUD EXTRA 4,592 MICHELOB DUNKEL WEISSE 4,574 TEQUIZA 4,131 REDBRIDGE 3,403 LOWENBRAU 3,170 BUDWEISER ASSORTED 3,061 MICHELOB HONEY LAGER BACARDI SILVER VARIETY PACK 2,994

Cs sales Case shr Chg YA of cat.

3.4 3.3 2.8 (7.1) 3.2 5.0 6.3 6.2 3.2 33.8 0.8 (6.3) (24.4) (1.0) 38.1 (4.1) 50.6 12.5 24.5 (0.4) (9.0) 0.1 (1.3) (27.1) 17.6 (3.2) 1.6 7.2 (24.9) 2.5 0.4 112.6 8.9 116.5 (12.6) (41.4) 1698.9 (7.4) (17.8) 8.0 (22.9) 73.8 (21.6) 116.0 22.4 6.1 48.7 33.7 0.0 7.5 8.8 (30.0) 28.0 2984.5 (11.4) 0.0 50.6 (28.0) (47.0) 11278137.9 (86.8) 0.0 (48.6) 14.2 19.6 (35.8) 14.9 (33.4)

55.6 55.4 21.7 9.5 6.4 4.0 3.7 2.0 1.6 0.9 0.8 0.8 0.5 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Cs shr of 13-Week cat chg YA Case sale

0.7 0.7 0.2 (0.9) 0.1 0.1 0.2 0.1 0.0 0.2 (0.1) (0.2) (0.0) 0.1 (0.0) 0.1 0.0 0.0 (0.0) (0.0) (0.0) (0.0) 0.0 (0.0) (0.0) 0.0 (0.0) 0.0 (0.0) 0.0 0.0 0.0 (0.0) (0.0) 0.0 (0.0) (0.0) 0.0 (0.0) 0.0 (0.0) 0.0 0.0 0.0 0.0 0.0 36,957 0.0 0.0 (0.0) 0.0 0.0 (0.0) 0.0 (0.0) (0.0) 0.0 (0.0) (0.0) 0.0 0.0 (0.0) 0.0 (0.0)

158,368,500 157,631,600 62,408,420 27,434,140 17,588,870 11,137,620 10,381,530 5,528,047 4,642,265 2,570,352 2,510,528 2,223,917 1,361,463 915,074 740,452 572,641 549,372 550,903 542,965 448,020 384,998 423,271 302,260 329,869 321,985 289,812 276,692 273,686 221,558 215,896 190,753 196,061 186,207 180,686 158,081 123,092 103,091 104,818 106,538 83,534 74,450 66,354 63,992 85,508 52,778 46,644 46,286 47,319 37,373 36,397 32,502 32,897 31,063 57,004 24,556 22,947 20,111 19,045 14,622 17,667 16,392 18,365 14,126 11,783 10,443 11,072 12,401

13-wk cs sls chg YA

(0.2) (0.2) (1.9) (9.2) (0.4) 2.1 5.1 4.1 (0.9) 31.5 0.9 (13.7) (28.2) (3.0) 31.8 (8.3) 38.9 12.9 24.8 (4.9) (13.3) 0.1 (3.0) (30.9) 21.7 (5.1) 4.5 (0.4) (30.7) 1.0 (2.3) 94.2 4.4 110.6 (12.2) (37.7) 5404.4 (8.7) (16.5) 9.7 (26.2) 54.5 (26.0) 38.7 17.0 5.2 45.9 19.5 0.0 2.1 (0.4) (36.6) 22.7 3876.4 8.9 37.9 (39.0) (47.8) 11566052.0 (73.4) 0.0 (43.0) 11.6 27.0 (38.5) 17.0 (17.7)

Excerpted from IRI Monthly U.S. Food/Drug/Convenience data (continued next page)

case shr of cat

cs shr of cat chg YA

55.3 55.1 21.8 9.6 6.1 3.9 3.6 1.9 1.6 0.9 0.9 0.8 0.5 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.3 0.2 (0.3) (0.9) 0.0 0.1 0.2 0.1 (0.0) 0.2 (0.1) (0.2) (0.0) 0.1 (0.0) 0.1 0.0 0.0 (0.0) (0.0) (0.0) (0.1) 0.0 (0.0) 0.0 0.0 (0.0) 0.0 (0.0) 0.0 0.0 0.0 (0.0) (0.0) 0.0 (0.0) (0.0) 0.0 (0.0) 0.0 (0.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (0.0) 0.0 0.0 0.0 0.0 0.0 (0.0) (0.0) 0.0 (0.0) (0.0) 0.0 0.0 (0.0) 0.0 (0.0)

MillerCoors Scorecard, four-week and 13-week data ending January 25, 2009 Excerpted from IRI Data Total US Food/Drug/Convenience

MILLERCOORS + GROLSCH COORS LIGHT MILLER LITE MILLER HIGH LIFE KEYSTONE LIGHT ICEHOUSE MILWAUKEES BEST LIGHT MILLER GENUINE DRAFT STEEL RESERVE HIGH GRAVITY MILWAUKEES BEST ICE MILWAUKEES BEST COORS MILLER GENUINE DRAFT LIGHT MILLER HIGH LIFE LIGHT OLDE ENGLISH 800 MALT LIQ BLUE MOON BELGIUM WHITE KEYSTONE ICE MICKEYS MALT LIQUOR SPARKS FOSTERS LAGER SPARKS PLUS GEORGE KILLIANS IRISH RED RED DOG MOLSON CANADIAN HAMMS STEEL RSERVE TRIPLE EXPORT MILLER CHILL MAGNUM KEYSTONE MOLSON ICE BLUE MOON SEASONAL HENRY WEINHARDS PVT RSRVE OLDE ENGLISH HG800 SOUTHPAW LIGHT PILSNER URQUELL LEINENKUGEL SUNSET WHEAT LEINENKUGEL SEASONAL HENRY WEINHARDS PALE ALE GROLSCH LAGER FOSTERS SPECIAL BITTER ALE SHARPS NA PERONI NASTRO AZZURRO LEINENKUGEL HONEY WEISS LEINENKUGEL MOLSON GOLDEN MICKEYS ICE ALE MOLSON XXX COORS NA MOLSON CANADIAN LIGHT LEINENKUGEL BERRY WEISS BLUE MOON VARIETY PACK HEN WEINHARDS HONEY HEFE SPARKS LIGHT LEINENKUGEL RED HENRY WEINHRD CLASSC DRK HEN WEINHARDS BLONDE COORS EXTRA GOLD LEINENKUGEL VARIETY PACK OLD VIENNA HEN WNHARDS BELGIAN WHT LEINENKUGEL LIGHT LEINENKUGEL CREAMY DARK MILLER LITE ICE TYSKIE GRONIE HAMMS SPECIAL LIGHT HEN WEINHARDS SEASONAL ZIMA XXX HARD LEMON LIME HENRY WNHRD NRTHWST TRL

24,687,370 6,082,412 6,015,278 2,283,742 2,080,152 1,044,377 911,495 747,655 720,849 673,831 601,682 516,275 323,384 281,695 257,276 216,116 213,270 194,253 145,503 132,176 132,055 101,755 85,349 83,516 65,490 60,233 57,030 56,355 45,602 42,888 41,722 35,512 34,266 30,674 28,639 28,333 24,709 20,898 20,156 18,450 17,898 16,689 16,589 16,395 15,838 12,976 12,033 11,128 10,635 9,520 9,241 8,696 7,100 6,634 5,374 5,174 5,141 4,569 4,111 3,846 3,657 3,294 2,878 2,486 2,315 2,293 2,239 2,144

Cs sales Case shr Chg YA of cat.

(1.0) 4.0 (4.4) 1.9 13.6 (9.8) (9.1) (14.7) (8.8) (11.6) (14.5) 5.5 240.8 (1.5) (4.6) 5.3 36.2 2.2 (1.4) (9.9) 13.6 (11.9) (20.1) (4.1) (13.2) (11.0) (58.8) (18.5) 19.6 (10.4) 41.6 (7.8) (7.2) (21.2) (15.8) (8.6) 126.8 (11.3) (62.3) 52.9 (26.7) 36.8 (20.7) (6.5) (16.6) (6.4) (4.2) (15.6) (19.1) 7.3 0.0 (18.2) (45.4) (20.6) (9.9) (13.4) 6.6 23.6 20.6 31.8 2.0 (20.3) 54.1 (34.3) (10.4) (8.8) (80.0) (31.4)

29.5 7.3 7.2 2.7 2.5 1.2 1.1 0.9 0.9 0.8 0.7 0.6 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Cs shr of 13-Week cat chg YA Case sale

(0.9) 0.1 (0.5) (0.0) 0.3 (0.2) (0.1) (0.2) (0.1) (0.1) (0.1) 0.0 0.3 (0.0) (0.0) 0.0 0.1 0.0 (0.0) (0.0) 0.0 (0.0) (0.0) (0.0) (0.0) (0.0) (0.1) (0.0) 0.0 (0.0) 0.0 (0.0) (0.0) (0.0) (0.0) (0.0) 0.0 (0.0) (0.0) 0.0 (0.0) 0.0 (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) 0.0 (0.0) (0.0) (0.0) (0.0) (0.0) 0.0 0.0 0.0 0.0 0.0 (0.0) 0.0 (0.0) (0.0) (0.0) (0.0) (0.0)

84,119,770 20,932,660 20,898,220 7,659,053 6,872,473 3,551,290 2,998,927 2,631,162 2,331,506 2,231,542 2,012,216 1,735,333 1,017,075 942,917 879,036 733,735 698,958 633,803 490,164 456,235 445,836 342,263 289,098 286,915 215,692 212,535 232,716 181,574 152,115 143,187 191,975 122,275 120,362 102,985 107,602 98,220 107,878 71,428 75,518 59,790 63,973 60,338 63,803 60,217 54,457 44,787 40,014 37,958 36,723 34,975 34,398 30,285 29,452 26,745 19,978 18,534 15,568 23,096 14,417 13,856 12,816 12,627 10,497 10,155 8,650 9,159 18,765 7,427

13-wk cs sls chg YA

(1.8) 3.8 (6.4) 0.8 14.4 (6.8) (12.8) (16.4) (9.6) (9.3) (16.0) 4.7 192.8 (4.1) 1.6 8.3 40.2 2.5 (1.5) (10.1) 19.6 (16.8) (18.4) (4.0) (17.0) (4.5) (59.5) (19.5) 23.8 (9.3) 48.9 (6.7) (2.7) (24.4) (12.2) (9.9) 110.1 (12.3) (57.7) 48.5 (27.0) 28.8 (15.4) (3.6) (18.0) 4.0 (6.8) (18.4) (25.0) 13.4 0.0 (14.5) (30.2) (20.6) (10.1) (9.8) (0.1) 17.9 22.6 42.8 (2.9) (28.6) 50.8 (25.1) 6.2 23.9 (54.8) (30.9)

case shr of cat

29.4 7.3 7.3 2.7 2.4 1.2 1.0 0.9 0.8 0.8 0.7 0.6 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Excerpted from IRI Monthly Food/Drug/Convenience Data

cs shr of cat chg YA

(0.3) 0.3 (0.5) 0.0 0.3 (0.1) (0.1) (0.2) (0.1) (0.1) (0.1) 0.0 0.2 (0.0) 0.0 0.0 0.1 0.0 (0.0) (0.0) 0.0 (0.0) (0.0) (0.0) (0.0) (0.0) (0.1) (0.0) 0.0 (0.0) 0.0 (0.0) (0.0) (0.0) (0.0) (0.0) 0.0 (0.0) (0.0) 0.0 (0.0) 0.0 (0.0) (0.0) (0.0) 0.0 (0.0) (0.0) (0.0) 0.0 (0.0) (0.0) (0.0) (0.0) (0.0) 0.0 0.0 0.0 0.0 (0.0) (0.0) 0.0 (0.0) 0.0 0.0 (0.0) (0.0)

MODERN BREWERY AGE WEEKLY, FEBRUARY 9, 2009 4

Top MillerCoors brands

Four-Week Case Sales

at th ve ts t2We ar s-

Analysts like A-B cuts... (Continued from page 1) cost savings estimate to US$1.85bn and bring forward the phasing to 40% in Year 1 (from 33% previously).” Mr. Gajrawala notes that InBev had a rough fourth quarter 2008 in the Brazilian market, due to bad weather and market share loss, but he holds to an estimate of organic growth of 2.8% in 2009. Mr. Gajrawala had been skeptical that ABI could sell off assets at good prices, but sad the company’s success in partially refinancing its bridge loans has taken the pressure off to sell assets at fire sale prices. “We believe that the imminent and pressurized disposal of assets for low valuations is less of a risk,” he wrote. “Based on our cashflow forecasts, even if ABI did not sell any assets in 2009, it could pay the remaining US$3.5bn outstanding from the Tranche B bridge loan which matures in November 2009 with free cash flow and the US$500m net cash proceeds from the Tsingtao sale.” ABI still gets a “neutral” rating from UBS analysts, but the analysts have raised ABI from being their “least preferred European brewer,” to number two preferred brewer after Heineken. Their brighter assessment is due to the bigger A-B cost savings, and what they see as reduced risk of covenant breach with ABI’s bankers and asset fire sales. UBS analysts stated in their recent global beer report that “Beer faces near-term pain, but long-term gain.” The analysts take the view that ABI has good upside potential from beer per capita consumption across its geographical footprint, compared to other brewers, since 53% of ABI’s EBIT is from emerging markets. “This favorable mid-term growth exposure coupled with cost savings story in the short-term is an attractive combination.,” Mr. Gajrawala wrote. “However, given its premium rating relative to its brewing peers, the strong outperformance of the stock year to date (23% relative to market and 12% relative to the sector) and the fact that we believe the Q4 results will highlight a slowdown in emerging markets (especially Eastern Europe and in ABI’s case a weak Brazil due to poor weather and market share pressure) and trading down in mature markets, we would look for a more attractive entry point.”

Israeli and Palestinian brewers meet at Weyermann Malting Co. Nadim Khoury (second from left) the owner-brewer of the Taybeh Brewing Company, the only brewery in Palestine, met with several Israeli brewers at a post Brau Beviale Bavarian party at the Weyermann Malting Co. in Bamberg, Germany last November. A press release from the Weyermann Malting Co. celebrated the meeting. “What the diplomats and the generals have not been able to accomplish in decades, happened over pints of Barley Wine, Rauchbier, English Bitter and Pumpkin Ale, all made in the Weyermann Pilot Brewery in Bamberg: A Palestinian and an Israeli brewer sitting peacefully side by side, smiling, exchanging ideas, and enjoying each other's company!” Weyermann wordsmith Horst Dornbusch waxed eloquent on the event: “In a world divided by so much strife, the unity of people involved in beer takes on a poignant significance: Wherever people make hot wort and cold beer instead of hot and cold war, it seems, the brew can still bring people from all cultures and all walks of life together … even Palestinians and Israelis!” About 300 people from 35 countries attended the Weyermann party, including brewers from countries around the globe, from Russia to France to Australia to the United States. The UBS analysts said that discussions raise our gross cost savings from with ABI management indicate that cost US$1.5bn to US$1.85bn. However, to capsavings will be higher than expected, with ture the risk of increased competition from US $1.1 billion related to A-B’s existing MillerCoors, we assume 10% of the gross Blue Ocean plan and US $415 million due savings are reinvested in additional marketing spend.” to ABI’s integration of the two businesses. Mr. Gajrawala noted that Zero Based “In our discussions with the management it is clear that the integration is proceeding Budgeting for the old A-B business is in faster than expected,” Mr. Gajrawala wrote. place from January 1st. InBev expects “We believe there is upside to cost savings fixed cost savings of 12-15% in Year 1, and guidance from Zero Based Budgeting thereafter UBS estimates 5-7% in Year 2 (ZBB) on top of G&A savings within Blue and 2-3% in Year 3. ABI’s guidance is for US$250m of proOcean, as well as procurement savings. In aggregate therefore we raise our gross curement synergies within its US$1.5bn cost savings from US$1.5bn to US$1.85bn. cost savings target, which would represent Furthermore, given the faster than antici- 1.2% of purchasing spend. “However, we pated integration process, we have brought believe that ABI’s 1.2% target is conservaforward the phasing of the cost savings tive,” Mr. Gajrawala wrote, “[so we] from one third each year, to 40% in Year 1, increase it by 1% to 2.2%, adding 75% in Year 2 and 100% in Year 3. We US$210m of incremental cost synergies.”

5 MODERN BREWERY AGE WEEKLY, FEBRUARY 9, 2009

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Modern Brewery Age Editorial: (203) 544-8185 E-Mail: [email protected] Web-site at www.breweryage.com EDITORIAL STAFF Editor Peter V.K. Reid Contributing Editor Gregg Glaser PRODUCTION Graphic Artist: Pete Reid ADVERTISING Ad Manager: Diane Apicelli [email protected] SUBSCRIPTIONS: $95.00 per year includes 52 issues of the weekly e-newsletter. $125.00 per year includes weekly newsletter, quarterly e-magazine and printed bi-annual show issues. Copyright Modern Brewery Age LLC 2008. Editorial: Send press releases to [email protected].

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To add your business card to our marketplace page, contact 203-544-8185 6 MODERN BREWERY AGE WEEKLY, FEBRUARY 9, 2009

March 29-April 1—The 19th Annual NBWA Brewers/Legislative Conference. Washington, D.C. Contact NBWA at 800300-6417 or e-mail to [email protected]. April 22-25—New York Beer Wholesalers Association 2009 Spring Business Meeting, Disney's Grand Floridian Resort & Spa, Orlando, Florida. June 24–28—Virginia Beer & Wine Wholesalers’ Associations. 20th Annual Joint Convention at the Ritz-Carlton, Amelia Island,Florida. For more information, contact Shelley Gravatt at (804) 783-2655 ([email protected]). September 22-25—National Beer Wholesalers Association Annual Convention and Bi-Annual Trade Show. Caesar’s Palace, Las Vegas, NV. November 11-13—California Beer & Beverage Distributors 62nd Annual Convention November 11-13, 2009 at the Estancia LaJolla Hotel and Spa in LaJolla, California.

Brew Notes Tasting notes from the tasting panel for Modern Brewery Age, by Pete Reid, editor of Modern Brewery Age; with regulars Gregg Glaser, editor of Yankee Brew News, and Tom Conti and Robert Lachman of the YBN tasting panel. Joining us each week is a rotating cast of tasters, to include Dr. Steve Victor, formerly of Yale University; Lieut. Commander Von Bair, USN, ret.; expat-Briton Gerry Nicholls, graphic designer Phil Simpson, videographer Paul Lin; Neil Balkun, beer buyer for Ancona’s Wines & Liquors, Redding, CT, Greg Zannella, field sales director for Northeast Beverage of Orange, CT, and Michael Anstendig, a writer for New York Magazine on-line. And in this edition, we welcome two new additions to the panel: Marty Juliano, a Northeast sales rep for the Sierra Nevada Brewing Co., and Frank Fermino, brewer at the John Harvard’s Brewhouse in Manchester, Connecticut. To have a product reviewed, send two 12-ounce bottles to Modern Brewery Age, 44 Indian Valley Road, Weston, CT 06883. Brewers are welcome to publicize any comments about their beers with attribution to Modern Brewery Age. This week, we taste some Belgian style beers from here and abroad.

Abbey-Style Bourbon Barrel Quadruple Boulevard Brewing Co. Kansas City, MO The biggest brewery in Missouri may now be Belgian, but InBev has never brewed anything like this Belgianstyle Quad, not even in their wildest dreams. Probably because it would cost too much to make. Fortunately, zero based-budgeting hasn’t caught on yet at the other end of the state, and the Boulevard brewers took the non cost-effective route of aging a batch of their Quadruple in Bourbon barrels for a year. The result is an unusually fresh and lively quadruple. Everything works with this beer—The potent 11.8% abv is well hidden, and all the flavors meld together perfectly. The panel loved this huge, rich, delicious beer. "Smells like a barley wine," said Tom Conti. "Rich with alcohol and dark fruit. Excellent." "I sure appreciate it when they do it right," said Frank Fermino, after taking just one sip. "There is a nice sweetness, but it doesn't linger, and then the alcohol hits. I like it." "Oaky and complex," said Gregg Glaser. "It's a very interesting beer, with a lot going on. Good stuff." "Vanilla and cherries," said Robert Lachman. “Very tasty.” "Yeah, cherries for sure," Von Bair observed. “You can almost taste the pits! Some almond notes as well.” “Rounded malt sweetness, and a lot of rich, fruity flavor,” said Peter Reid,

Saison Brett Boulevard Brewing CO. Kansas City, MO

A worthy barrel-aged offshoot from Boulevard’s SIxth Glass Quad, the Bourbon Barrel Quadruple is a strong, malty treat.

“And the flavors comes out even better when it warms.” "Great stuff," agreed Marty Juliano. "It is great," Dr. Steve Victor agreed. "My one complaint is that it’s only sold in such a big bottle. You’d have to drink it on a special occasion, with four of your best friends, because you couldn't drink this whole bottle by yourself. I wish beers like this would be offered in small bottles." "Hey, I'll take yours if you can't finish it,” Greg Zannella said. “I love it. I am officially removing myself from the panel tonight, so I can knock off this bottle."

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Boulevard Brewing Co. is now one of the very best Belgian-style beer brewers in the United States. We've been consistently blown away by the big Belgians in their smokestack series. They are superb, and the new Saison Brett is in the same vein. The use of Brettanomyces yeast could scare off some drinkers, and there is some typical earthy Brett funkiness in the nose, but it is not overpowering. We got this sample very fresh, and the Brett character may become more pronounced with time, but at this drinking, it was first and foremost a fresh, fruity farmhouse ale that would appeal to any ale drinker. "Nose is Brett and hops," said Dr. Steve Victor. "And it tastes just like the nose," said Von Bair, “which is fine by me.” "Nice clean nose," agreed Marty Juliano. "Citrusy and fruity." "Good aroma, with a touch of grapefruit, just a little funky," said Gregg Glaser. "Lot of effervescence to this beer, it explodes in the mouth." "Mmmm,” said Greg Zannella. "Grapefuit and orange peel. It's like biting into a piece of fruit, and getting a spray of juice. It's got this big tartness on the tongue, I like it." "It's a little peppery," said Frank Fermino. "The Brett is not overpowering. Nicely done."

Tomme Arthur guest brews at Bend Brewing Co. California Small Brewers Award-winning Bend Brewing Co. Head Brewer Tonya Cornett teamed with awardwinning Lost Abbey Head Brewer Tomme Arthur to brew a traditional stein lager at Bend Brewing Co. on February 5 and 6. Cornett traveled earlier this year to the San Marcos, California, brewery, the Lost Abbey, to collaborate with Arthur to make the first batch of this unique beer. On March 5 and 6, Arthur traveled to Bend so that he and Cornett could make the same beer at Bend Brewing Co. Tomme Arthur has been brewing professionally for 13 years and is widely respected within the industry. He has won multiple awards for his beers and was named Great American Brew Festival Small Brewpub Brewer of the year for 2003 and 2004. Tonya Cornett has also garnered several gold, bronze and silver medals for her beer

and was honored as the first woman to win the title of World Beer Cup Brewmaster of the Year in 2008. Arthur noticed Cornett's talent while teaching a Hop Union professional seminar that she attended, and asked her to team up with him. The two brewers said they chose a stein lager for its traditional nature and audience appeal. Historically, rocks would be heated and added to a wooden kettle to set the wort to boil. Arthur and Cornett have modernized this traditional process. "We heat granite to red hot and drop it into the wort, which caramelizes the sugars, offering caramel-like toffee notes in the final beer," explains Cornett. Arthur was in Bend for the two-day brewing process on February 5 and 6. The lager will be available on tap at Bend Brewing Co. towards the end of April.

Miller Coors see profit drop in fourth quarter due to charges (Continued from page 1) the year-ago period. Excluding integration charges related to the joint venture and the Sparks brand, profit climbed to $135 million from $116 million a year ago. MillerCoors agreed in December to change its Sparks brand to remove caffeine, taurine, guarana and ginseng from its Sparks drink after a dozen state attorneys general complained the drink targeted young drinkers. Revenue for MillerCoors grew 3.1 percent to $1.74 billion. Molson Coors also said its fourth-quarter earnings from continuing operations fell 49 percent on a stronger dollar, commodity inflation and lower sales volumes. "While the U.S. beer category softened in the fourth quarter, we increased pricing and net revenue to deliver strong profit growth," said MillerCoors Chief Executive Officer Leo Kiely. "Our early progress with integration, including our efforts to assemble the most talented team in the beer business, is helping us to accelerate the timing of our 2009 synergies." The company said that five out of six MillerCoors priority brands increased sales-to-retailers (STRs) in the fourth quarter. MC said Coors Light increased 1.0%, posting its fourteenth consecutive quarter of growth; MGD 64 continued to deliver strong growth since its national launch; Blue Moon was up double digits; Keystone

Light delivered strong double-digit growth, while Miller High Life increased marginally. Miller Lite STRs declined 7.5% with strong net price growth for the quarter. The company said its craft and import portfolio rose in the fourth quarter led by the strong double-digit performance of Blue Moon, high-single-digit growth of Peroni Nastro Azzurro and sales of Grolsch, despite weakness in the import segment. Coors Banquet increased mid-single digits, posting its seventh consecutive quarter of growth During the period, the company said that MillerCoors overall STRs declined 2.3 percent, reflecting a weaker quarter for the industry and softness in Miller Lite and certain above-premium brands. Domestic sales-to-wholesalers (STWs) dropped 4.3 percent, driven largely by a reduction in distributor inventory levels and lower sales to retail. The company said pricing remained strong as domestic net sales per barrel, excluding contract brewing and companyowned distributor sales, increased 8.0 percent versus the prior year “driven by strong front line pricing, reductions in discounting and favorable mix.” The company said that front-line pricing benefited from an acceleration of general price increases. The company added that it is well on its way to “deliver its stated goal of $500 million of annual cost synergies by the third year of combined operations.”

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to conduct silent auction

The California Small Brewers Association will hold its 2nd Annual Silent Auction in conjunction with the “Best of the West” Brewfest at the Oakland Convention Center this Sunday. The association reports that there will be “an incredible array of rare beers and brewery items on the auction block” at the event. Items include the “world’s heaviest sixpack,” lift tickets and lessons at Dodge Ridge ski resort, a day of brewing your own beer in a craft brewery and a broad array of aged, rare beers. The event will be held at the Oakland Convention Center Marriott Hotel in Oakland, California. According to CSBA, the auction will allow beer enthusiasts to bid on rare, and in some cases priceless items, including two tickets to the members and industry-only session of the Great American Beer Festival in Denver, six magnum bottles of Anchor Christmas Ale, each a different vintage, private dinners with brewers, VIP brewery tours, gift certificates galore. Admission into the Best of the West Brew Fest allows bidders to participate in the auction. There is no cost to bid. The CSBA reports that the beer fest will have over 50 breweries pouring beer from around the world. Tickets are $35 per person. A Media/VIP session starts one hour early and will feature special limited production beers. VIP tickets are $50. All proceeds go directly to the CSBA, a non-profit trade organization protecting the craft brewers of California. Ticket sales by Visa/MC, phone 800-430-BEER or visit celebrator.com and buy tickets on line from Pay Pal. The CSBA can be reached at 530265-0422.

Australian beer awards The Australian International Beer Awards (AIBA) judging begins this week, with an panel of judges tasting packaged and bottled beers from February 9-13, and draught beers February 17-19. The Judges will award 15 trophies, The event was established in 1987 to reward excellence in the field of brewing and assist the promotion of the brewing industry. The AIBA trophies will be announced at an awards presentation in Melbourne, March 19 2009.

Heineken announces dedicated on-premise team

Artist creates beer labels; any takers? Tim Nyberg calls himself “a creative thinkin', beer-lovin', graphic designin', acrylic paintin', wild man.” Mr. Nyberg says he is attracted to beers that have interesting, provocative labels. His personal favorites are the Ralph Steadman Flying Dog labels. “I’ve also discovered some great beers hidden under some pretty uninspiring labels,” he says. “Maybe your beer is one of them?” With the thought of interesting a brewery in his illustration and design abilities, Tim selected twelve of his paintings, came up with some faux beer names (like "Brewer's Bad Hair Bitter," "Psycho Stout" and "Buxom Blonde Ale") and created his own labels. Mr. Nyberg said he would like to strike a deal with a brewer desiring a facelift, and in the meantime he's selling a poster of the labels at his web site: www.OctaneCreative.com.

Avery to release new barrel-aged Brabant Brabant, the first in a barrel-aged series of beers from the Avery Brewing Co., will be poured February 18th at a kick-off event at the Avery tap room in Boulder, CO. Due to limited quantities of this brew, 12oz. single bottles will be sold for one night only at the tap room, with additional cases available at select retailers. This free event will feature President/Brewmaster Adam Avery, who will be on hand to sign bottles and discuss the brewery’s new barrel-aged series.

Heineken USA has announced that it has recently established a dedicated on premise national account team focused on corporate national accounts. The company said the new group is comprised of sales, marketing and analytical personnel who will be dedicated to providing greater resources and focus to this growing market opportunity. Heineken execs said they recognize that nearly 30% of the on-premise market is controlled by national and regional chains and this segment is getting larger. The intent of the new group, which is staffed with experienced sales, marketing, and analytical personnel, is to provide resources for this growing segment of the market. “Our new division is in keeping with the company’s long term desire to focus greater resources against key customers,” said Andrew O’Rourke, Director OnPremise National Accounts, Heineken USA. “We at Heineken USA recognize that nearly one third of the on-premise market is controlled by national and regional chains and this segment is growing. We recognize to achieve ongoing success, we need to approach sales on a channel by channel, segment by segment basis. That’s why we have established sales experts in each of our core business segments including:

Casual Dining, Hospitality, Casinos, Airlines and Concessions.” The new on-premise team, managed by Mr. O'Rourke, will report to Steve Ward, Vice President of National Accounts who is responsible for all On and Off-Premise National Accounts efforts. The team will consist of five National Account Managers each assigned to a specific channel including: Steve Hutcherson and Jeff BennettCasual Dining; Greg Melton-Hospitality, Andy Timothy-Casinos and Airlines and Barney O'Connell-Concessions. The team is supported by Patrick Libonate-Customer Marketing and Todd Camassar-Category Management “Heineken is committed to providing sales tools, programs and support that help our customers build a more profitable business with our brands,” Steve Ward said. “We understand these are difficult times for our on-premise partners. Our portfolio of premium brands is particularly well placed to drive ‘trade up’. Now more than ever, people who make the decision to eat out want to make the most of the occasion. Treating themselves to a world-class beer for a relatively small additional cost fits the bill nicely. On-Premise operators should offer a range of well-known import and specialty brands and they need to look no further than the Heineken USA portfolio.”

Bob Lachky to leave post at Anheuser-Busch (continued from page 1) Mr. Lachky was one of the highest-profile executives to stay with the company after the InBev acquisition closed in November. He has said that A-B president Dave Peacock had to cajole him to stay on. In the months since the takeover, A-B’s old St. Louis headquarters has been wracked by layoffs, including cuts in the marketing department. Some observers said Mr. Lachky may have agreed to stay on simply to see his last big A-B Super Bowl campaign through to the finish. Filming of the Super Bowl spots had already begun when the InBev acquisition was announced. Mr. Lachky said he had enjoyed “a great run” at Anheuser-Busch, but said it was time to move on. Mr. Peacock told Ad Age that A-B will not appoint a new chief creative officer to succeed Mr. Lachky, but will use a more "decentralized" approach in the future.

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Mr. Lachky was named A-B’s vice president-brand management in 1997, a post he held until 2005, when he was shifted out of the creative role and tasked with creating A-B’s “Here’s to Beer” campaign. When August Busch IV became CEO in 2006, he asked Mr. Lachky to return to creative advertising work. Mr. Busch praised his former management at A-B, and particularly singled out Mr. Busch IV. The two had worked closely on developing Anheuser-Busch advertising in the 1990s. Mr. Lachky called Mr. Busch "my angel," and recalled that he had been “fired more times than Billy Martin” (presumably by August IV’s father, August III). Mr. Lachky called August Busch IV “one of the best friends a creative could have." Lachky added that "If it wasn't for people like Mike Roarty and August Busch IV, I would never have been able to do what I was able to do [at Anheuser-Busch].”