LONDON & LEUVEN, Belgium — SABMiller is giving Anheuser-Busch InBev one month to submit an acquisition bid following speculation a merger offer between the two brewers was imminent.

Reacting to rumors, SABMiller issued a response yesterday, confirming “that Anheuser-Busch InBev has informed SABMiller that it intends to make a proposal to acquire SABMiller,” as reported in a 21^st Century Smoke/CSP Daily News Flash. Such a deal would create a $245 billion global company and would likely come under intense antitrust scrutiny in the United States and abroad.

No proposal had been received at the time of SABMiller’s announcement, prompting the brewer to set a deadline of 5 p.m. Oct. 14 for AB InBev to “either announce a firm intention to make an offer for SABMiller … or announce that it does not intend to make an offer.” SABMiller said it will review and respond as appropriate to any proposal that is made. The deadline can be extended only with the consent of a takeover panel.

Following SABMiller’s statement, AB InBev confirmed its intention “to work with SABMiller’s board toward … a combination of the two companies.”

The company continued, “There can be no certainty that this approach will result in an offer or agreement, or as to the terms of any such agreement.”

One potential holdup for the long-speculated takeover, according to a USA Today report, could be that SABMiller holds a 58% stake in U.S. marketing partnership MillerCoors, the brewer of Coors Light and Molson Canadian. Molson Coors, the Denver-based company that owns the rest of the stake in MillerCoors, has the right to increase its stake in the company if SABMiller is taken over. The deal could also face scrutiny in China, where SABMiller co-owns the Beijing-based CR Snow, the nation’s largest brewery.

“The likelihood is that for any deal to go through, SAB would have to end its joint venture in the U.S. with Molson Coors,” Jonny Forsyth, a global drink analyst at market research firm Mintel, told USA Today.

Meanwhile, Paul Gatza, director of the Brewers Association, which represents craft-beer brewers in the United States, said a major splintering of beer brands could happen in the United States if an AB InBev/SABMiller merger were to occur.

“Regulators would be expected to require that the Miller component in the U.S. not be included in the deal for concentration of market concerns,” Gatza said. “That means that Miller brands in the U.S. could be sold off to Molson Coors or other large international entities inside or outside of the current beer universe. Constellation Brands—Beer Division, Heineken or Carlsberg could all have some interest.”

In the meantime, SABMiller is encouraging its shareholders “to retain their shares and to take no action.”

SABMiller plc is a multinational brewing and beverage company based in London. Its beers include Miller Lite, Peroni and Pilsner Urquel.

Anheuser-Busch InBev is a multinational beverage and brewing company based in Leuven, Belgium. Its beers include Budweiser, Michelob, Corona, Stella Artois, Hoegaarden and Skol.

OAKBROOK TERRACE, Ill. — When a Midwest retailer saw the incredible spike in wholesale gasoline prices over an app on his iPhone, he immediately called every delivery truck he could find to draw product before the pricing wave hit the terminal.

The retailer, who spoke to CSP Daily News on condition of anonymity, said that the app, from Wall, N.J.-based OPIS, paid for itself two years over in that one August afternoon. He said his actions were possible because changes in the rack price occur at 6 p.m., where trading ended earlier in the day around 2:30 p.m.

A second Midwest retailer, who also spoke on condition of anonymity, said the one-day spike with his major supplier was 66-cents a gallon, where a typical spike of any significance is more in the 12-cent range.

As reported in CSP Daily News, an emergency shutdown of a unit in BP’s Whiting, Ind., refinery in August forced the oil company to go to the spot market, causing a major surge in wholesale and retail prices that lasted several days.

As the first retailer put it, “essentially the oil companies were having to buy from each other, but there was nothing to buy.”

The wholesale shock did force market leaders to raise retail prices, but not enough to go above water, according to the first retailer. Then the next day, market leaders brought prices up to a $2.99 threshold in his market, where retail postings stayed, despite how wholesale prices rose slightly above that retail ceiling for a bit of time. He said competition worried that passing the $3 mark could have truly hurt volume.

Eventually, wholesale prices eased, and the competition in the area kept prices high to recover losses and bank margin in the event of near-term volatility, the first retailer said.

Throughout this process, automation has become an important part of his business, the first retailer said. In addition to the price tracker, he used price-sign software to secure price changes. It not only turned a two-hour job into a half hour, it gave him peace of mind that all his stores would change their prices.

A dual problem arises when a store’s prices don’t change. Not only does a retailer’s internal strategy misfire, the competition gets the wrong message.

“You want to support your market leader and [that can’t happen when] … you think you went to $2.99 but you’re still at $2.59,” said the first retailer. “The only way you can communicate in this business is by posting on price signs.”

“In this case, it was an issue of execution,” said Michael Johnson, director of sales, PriceAdvantage, a division of Skyline Products Inc., Colorado Springs, Colo. “Whoever executes fastest is going to win.”

For other retailers, pricing software also becomes an important day-to-day tool, according to Gregg Budoi, CFO and executive vice president, Kalibrate Technologies, Florham Park, N.J.

While no software solution can predict wild swings in wholesale prices—and certainly not the kind of historic spike seen in the Midwest this past summer, automation can add or save pennies on the gallon, which means a lot if a chain sells millions on a monthly, weekly or even daily basis, Budoi said.

Only a limited number of retailers can take advantage of the kind of dramatic spike the Midwest saw this summer, Budoi went on to say. Simply put, any retailer will see an advantage for however long he or she can sell cheaper-cost product at the higher retail price. For many, that’s not a long time.

An above-average retailer may need to take a load a day or possibly two or three loads a day to stay in stock, which means benefitting for only a day or less of activity, Budoi said. “But if you had bulk storage or were taking oil positions … and were locked into a low price, then you could have gotten a nice windfall over a longer period of time.”

WASHINGTON — The U.S. Food and Drug Administration (FDA) addressed the need for a quicker review path for manufacturers to introduce new labeling or quantities for products that keep the same ingredient characteristics. Last week the agency released the second edition of its March 2015 Guidance “Demonstrating the Substantial Equivalence of a New Tobacco Product,” included the category for a “same characteristics significant equivalent” report, according to theWinston-Salem Journal.

Under the Tobacco Control Act, any tobacco products introduced to the market after the Feb. 15, 2007, grandfather date must submit a premarket tobacco product application (PMTA) or substantial equivalence (SE) application to the FDA. According to the FDA, changes to an existing product label or quantity renders that product a new tobacco product—effectively requiring a PMTA or SE application, even if said product was already on the market in February 2007.

“The material in a same characteristics significant equivalent report is substantially more limited and less burdensome,” the FDA said. “The findings are fairly straightforward. FDA anticipates that as long as the appropriate information is included, its review time should be much less than significant equivalent review generally.”

The FDA elaborated that the same characteristics significant equivalent applications would go in a separate queue from the SE applications and would rule on the applications “within two review cycles.”

This alternative pathway addresses concerns expressed by major manufacturers about the cumbersome application process. In April 2015, Altria Group Inc., Reynolds American Inc. and Lorillard Inc. sued the FDA. The three companies claimed the new packaging guidance would be too restrictive and sought a permanent injunction.

The lawsuit stated that “the substantial equivalent directive does not explain why FDA believes these new pre-market requirements for label changes are necessary, particularly given that Congress chose to grandfather certain underlying tobacco products in the market when the Tobacco Control Act was enacted.”

“Plaintiffs currently have label changes in various stages of development, from those that are ready to be introduced to those anticipated for release in the coming months.”

The lawsuit was dropped on June 2, shortly after the FDA issued an interim enforcement policy addressing these concerns (though lawsuit was dismissed without prejudice and can be refiled at any time). The latest guidance and alternative pathway represents a follow-up to the interim policy. 

Scott Ballin, former chairman of the Coalition on Smoking or Health, told the Winston-Salem Journal that the SE pathway has been “very contentious.”

“As I read the guidance/interim enforcement policy, it seems FDA is trying to work its way through all this and giving industry a little room,” he said. “At least for the time being.”

Click here for the full Winston-Salem Journal story 

NEW YORK — Largely positive tobacco trends continued through August according to the latest Nielsen data. For the four weeks ending Sept. 5, 2015, Nielsen reports cigarette and smokeless sales grew in the combined xAOC channels (food, drug, mass & WMT scanner data) and convenience stores. The trends were not so positive in the electronic-cigarette segment, where dollar sales declined and unit sales growth decelerated.

Cigarette Sales Burn Up

Cigarette dollar sales increased 3.4% this month (up from 3.1% last month and this time last year, when sales decreased 1.5%), driven by a 3.8% pricing increase and a 0.4% decrease in unit sales. Year to date, cigarette units are down just 0.6%, a vast improvement from the 10-year average of 3-4% declines.

“Given these favorable trends, we remain constructive on U.S. volumes for 3Q15 and the full-year, benefiting each of Altria, Reynolds and Imperial,” Cowen and Co. analyst Vivien Azer wrote in a research note.

In terms of the major manufacturers, Reynolds’ cigarette dollar sales were up 4.9% year-over-year, Altria’s sales were up 2.7% and Imperial’s sales were down 0.9% (versus a 1.5% decline last month and a 7.4% decline last year). Additionally, Reynolds managed to grow its newly acquired Newport brand (approximately 37% of the company’s cigarette sales) by 6.2%.

Smokeless Stays Solid

Smokeless dollar sales grew 5% in August, due to strong performances from leading brands. Reynolds’ Grizzly was up 6.3% and Altria’s Copenhagen was up 7.3%. Altria retained its leading dollar share position, a 57.1% share, followed by Reynolds (a 34% share) and Swedish Match (a 6.8% share).

E-Cigs’ Pricing Problem

E-cigarette dollar sales fell 7.6% year-over-year (versus a 12- week trend of 3.2% declines), with average unit pricing down 15.9%. Unit sales were up by just 9.9%, a deceleration from the 18.2% 12-week growth trends.

“Year-over-year growth continued to be fueled by the national launches of Vuse and MarkTen,” Azer said. “Dollar sales and volumes fell 24.0% and 18.3%, respectively, excluding the two brands.”

As for the leading performers, Reynolds’ Vuse remained the No. 1 player in both dollar and unit sales, but lost dollar share sequentially (down 0.2% to 33.3% of category dollar sales). Meanwhile, the second and third best-selling brands made sequential gains: Imperial’s blu gained 0.2 points in dollar share (to 23.7%), and 0.6 points in units (to 17.8%); and Japan Tobacco’s Logic was up 0.8 points in dollar share (to 15.3%) and 0.6% points in units (to 9.3%). 

CHICAGO— The expression “take two, they’re small” might be the convenience-store foodservice operator’s new mantra for establishing a winning menu, all in consideration of customers who increasingly go for appetizers, small plates and side dishes—so-called “left-of-menu” fare.

This way of eating is now typical consumer M.O., as they embrace the daily mini-meal consumption regimen. In some cases, dishes formerly known as appetizers, such as sliders, are being repositioned as small plates.

In today’s climate of customization, “a meal is what the diner says it is,” wrote Jackie Dulen Rodriguez, a senior manager at Technomic, in a September blog. “Small plates and appetizers can appeal to those driven by a smaller appetite or a limited budget, or at off-peak times to create a dining opportunity that otherwise would be missed. When ordered in multiples, they can answer a desire for more variety or to share with companions.”

These insights came via Chicago-based Technomic Inc.’s new “Starters, Small Plates & Sides Consumer Trend” report that explains the expanding role of small plates, which have increased 80% on FSR menus since 2013 (although only 18% of operators offer them).

Dishing It Out Small

Rodriguez said a good place for operators to start is imparting to customers how their appetizer, small plate and side dish menus deliver on key consumer touch-points, starting with:

• Value. Millennials continue to cite deals and discounts—even freebies—as top ways to entice them to order more appetizers, small plates and sides, wrote Rodriguez. “That does not necessarily mean profit-busting price points, however. The average price for a small plate among Top 500 FSRs is $8.50, up 14% since 2013. Consumers under age 35 also reported much higher price thresholds than older diners, in some cases a difference of $2 or more depending on the segment.”
• Shareability. Appetizers are already more commonly shared than eaten alone, even more so than small plates, said Rodriguez. “And sharing is more popular among women and families, presenting a potential target audience. Sides may be an untapped avenue for promoting shareability, since 43% of consumers are interested in larger-sized sides suitable for sharing, but most are still portioned for single diners.”

Rodriguez added that “bumping up portion sizes slightly may justify a higher price point, and just as importantly, address consumers’ reluctance to order an item because they don’t have the appetite for an entire side in addition to an entree.”

Two tips Rodriguez offered to make small plates a more compelling offer include:

• Bolder flavors. A majority of diners are looking for more appetizers with new or unique flavors, spicy ingredients and ethnic flair. In response, Asian flavors in small plates grew 650% in the past two years, and Mexican flavors grew 320% on leading full-service restaurant menus.
• Premium ingredients. More than simply arriving before or with an entree, these “left-side” menu items are increasingly showcasing high-quality ingredients and preparation methods, such as tableside mixing of guacamole. No less than 67% of consumers say high-quality/premium ingredients are important when choosing an appetizer, and one in three millennials agree that appetizers prepared tableside are higher in quality.

Step Up to the Small Plate

The Hartman Group recently described how a range of QSR operators are experimenting with new items that play to on-the-go consumption and the adoption of the small plate with consumers.

These offerings, which were quoted by The Hartman Group from a recent Associated Press report, include:

• Arby’s lineup of sliders, which are miniature versions of its regular sandwiches and cost less than $2 each.
• Sonic’s “Lil’ Doggies” and “Lil’ Chickies” (petite hot dogs and chicken sandwiches) and a “mini” size for its ice cream shakes.
• Taco Bell’s “Dare Devil Loaded Grillers,” which are smaller burritos.
• Burger King’s “Chicken Fries,” which the QSR claims is helping push up sales, with many people stopping in to get french fry-shaped fried chicken as a snack.
• Dunkin’ Donuts’ new sandwiches, which are meant to be snacks—not lunch—to fit with the changing way people are eating.
• Popeyes’ “Rip’n Chick’n” (developed to work as snacks and be easy to eat on the go), which is shaped so pieces can be torn off easily.

NEW YORK — Dos Equis, one of the fastest growing upscale Mexican imports in the U.S., is celebrating the Halloween season with its fifth-annual Masquerade program. The fully integrated, 360-degree program provides legal-drinking-aged consumers access to the Most Interesting Man’s entourage to help them create or attend an epic, fall celebration that rivals the Masquerade itself.

Masquerade will be supported by a comprehensive marketing campaign that includes national TV, radio and out of home advertising, digital partnerships, retail and on-premise POS materials and a sweepstakes providing consumers the opportunity to enter to win the grand prize trip to New York City to attend a Dos Equis inspired event. 

“As a brand, Dos Equis encourages consumers to be interesting and spontaneous, and Halloween is the holiday that encompasses this uninhibited spirit,” said Leanne Maciel, brand manager for Dos Equis, a brand of Heineken USA, New York. “We know that more than half of adults are likely to throw or attend a Halloween party that features alcohol creating a great opportunity for retailers to utilize creative programs, like Masquerade, to drive profit. With the help of the Most Interesting Man’s little black book and his party planning guide, Dos Equis will entice consumers to make this year’s party more epic than ever.”

In order to drive traffic in store and increase program awareness, Dos Equis has formed partnerships with hyper-targeted digital platforms, including Evite, Ibotta and Valassis Digital to help consumers plan and attend parties and provide desirable offers to increase consideration.

At retail, eye-catching POS will include five- and 10-case stackers, standees, pole toppers and interactive decals. Door handles and fridge headers will engage consumers and encourage cross-category purchases (where legal) with partner Jim Beam Casa Sauza to leverage the Halloween party occasion and provide consumers with all of the party essentials, including Sauza and Twang Beer Salts. In addition, MIR (mail in rebate) and IRC (instant redeemable coupon) offers (where legal) on salty snacks and Halloween supplies including decorations, adult-sized costumes and pumpkins will aim to amplify the spirit of the season and increase basket rings for retailers.

On-premise programming will include banners, posters, table tents and coasters with a call-to-action directing shoppers to DosEquis.com/Masquerade where they will find party planning details on entry to the consumer sweepstakes.

“Historically, the Dos Equis Masquerade promotion is a proven seller, driving 20% growth in off-premise and growing over two times faster vs. the category in the on-premise,” Maciel said.

Dos Equis’ Masquerade program runs September through Oct. 31.

LONDON — Anheuser-Busch InBev has informed SABMiller that it intends to make a proposal to acquire SABMiller, said SABMiller in a press statement addressing “press speculation.” SABMiller said it has not yet received a proposal.

A deal would likely value SABMiller well in excess of its $75 billion market capitalization and would create a brewing giant that would dominate much of the global beer market, according to a report by The Wall Street Journal.

SABMiller plc is a multinational brewing and beverage company based in London.

Anheuser-Busch InBev is a multinational beverage and brewing company based in Leuven, Belgium.

Watch for details on CSPnet.com and in CSP Daily News.

COLORADO SPRINGS, Colo. — Starting in October, people in Colorado Springs, Colo., will be able to go to the same place to fill up their vehicles and purchase medical marijuana. Native Roots, a Denver-based company, is set to open up two Gas & Grass locations.

“It’s really just kind of pairing the convenience in one specific stop,” company spokesperson Tia Mattson told KOAA.

She said the dispensary will have its own entrance and must follow all the same rules and restrictions that apply to all other medical marijuana stores in Colorado.

The gas station, like all gas stations, will be open to the public.

“I believe we’ll have lottery tickets, beverages, cigarettes and similar things that you would pick up in a convenience store,” Mattson said.

“You’re not allowed to smoke in our centers ever,” Native Roots spokesperson Dave Cuesta, reacting to criticism of the concept, told KXRM in a separate report. “That is a state law, local law. There’s many, many rules and regulations that prohibit any onsite consumption.”

Native Roots has 11 medical marijuana dispensaries and retail marijuana stores statewide. The store have a uniform look with common merchandise and pricing structures. In addition to marijuana products, the stores also sell marijuana-themed shirts, hats and souvenirs.

Mattson said the gas station concept simply expands that other-than-cannabis business idea.

“We definitely are leaders and we’re visionaries,” she said. “It’s just one more thing for us to pair up the shopping and convenience of gas with a stop for somebody who is a patient, to knock off both errands at one time.”

Native Roots will offer loyalty discounts to their marijuana patients. Mattson said she envisions a process similar those used by grocery stores and warehouse retailers that have their own gas stations.

Click here to view the full KOAA report.

WASHINGTON — The U.S. Food & Drug Administration (FDA) issued orders on September 15 to stop the sale and distribution of four R.J. Reynolds cigarette brands—Camel Crush Bold, Pall Mall Deep Set Recessed Filter, Pall Mall Deep Set Recessed Filter Menthol and Vantage Tech 13 cigarettes—because they are “not substantially equivalent” (NSE) to their respective previously marketed products.

Click here for complete coverage, including R.J. Reynolds’ response.

Consequently, the FDA said, these products can no longer be sold, distributed, imported or marketed in interstate commerce, including by convenience stores and other tobacco retail outlets.

When the FDA issues an NSE order, the tobacco product in inventory, including at a retail location, becomes “adulterated and misbranded,” the agency said. As a result, it is illegal to sell or distribute the product in interstate commerce or to sell or distribute the product received from interstate commerce. Doing so may result in the FDA initiating enforcement action, including seizure, without further notice.

Recognizing that retailers may have limited options for disposing of products in their current inventories, the FDA said it does not intend to take enforcement action for 30 days on previously purchased products that a retailer has in its inventory. Retailers can sell their remaining inventory of the four brands through Oct. 15, 2015. This policy does not apply to inventory purchased by retailers after the date of the order.

The FDA is encouraging retailers to contact their supplier or manufacturer to discuss options for existing inventories at specific retailer locations, it said.

R.J. Reynolds Tobacco, an indirect subsidiary of Reynolds American Inc., Winston-Salem-N.C., is the second-largest tobacco company in the United States. Its brands include Newport, Camel and Pall Mall. These brands, and its other brands, including Doral, Misty and Capri, are manufactured in a variety of styles and marketed in the United States.

WINSTON-SALEM, N.C. — R.J. Reynolds Tobacco Co. said it “strongly disagrees” with the ruling by the U.S. Food & Drug Administration (FDA) that four of the company’s brands—Camel Crush Bold, Pall Mall Deep Set Recessed Filter, Pall Mall Deep Set Recessed Filter Menthol and Vantage Tech 13—are “not substantially equivalent” (NSE) to their respective “predicate” products (defined as products that were commercially marketed as of Feb. 15, 2007).

The U.S. Food & Drug Administration (FDA) issued orders on September 15 to stop the sale and distribution of the four R.J. Reynolds cigarette products because the company’s submissions for these products did not meet requirements set forth in the federal Food, Drug & Cosmetic Act (FD&C Act), the agency said.

As reported in a 21st Century/CSP Daily News Flash, the FDA’s evaluation found that Camel Crush Bold, Pall Mall Deep Set Recessed Filter, Pall Mall Deep Set Recessed Filter Menthol and Vantage Tech 13 cigarettes were “not substantially equivalent” (NSE) to their respective predicate products as identified by the manufacturer.

The agency concluded that the products have different characteristics than the predicate products and that the manufacturer failed to show that the new products do not raise different questions of public health when compared to them.

Consequently, at this time, these products can no longer be sold, distributed, imported or marketed in interstate commerce, the FDA said.

“We believe that our substantial equivalent applications fully satisfied the guidance the agency provided, and we respectfully disagree with their evaluations of the products in question,” said Jeffery S. Gentry, Ph.D., executive vice president of operations and chief scientific officer for R.J. Reynolds in a statement the company issued to respond to the ruling. “We supplied the agency with extensive information on each of the products, and responded to all of the agency’s questions. Our product stewardship process is rigorous and ensures that we are producing the highest quality products that meet regulatory requirements.”

All of the brands included in the order represent a very small portion of R.J. Reynolds’ business, less than 0.4 share of market, the company said.

“Our submissions to the agency on these brands were comprehensive, and we believe we effectively demonstrated substantial equivalence. We’re examining all of our options at this time,” Gentry said.

Cowen & Co. analyst Vivien Azer said she expects Reynolds American Inc. “will either file for a preliminary injunction to suspend this action or pull the products and then contest these findings legally,” according to a report by StreetInsider.com.

“These decisions were based on a rigorous, science-based review designed to protect the public from the harms caused by tobacco use,” said Mitch Zeller, J.D., director of the FDA’s Center for Tobacco Products. “The agency will continue to review product submissions and exercise its legal authority and consumer protection duty to remove products from the market when they fail to meet the public health bar set forth under law.”

The products receiving NSE orders entered the market during a provisional period established by the Family Smoking Prevention & Tobacco Control Act of 2009. As part of the provisional period, the company had to submit a substantial equivalence (SE) application to the FDA for review by March 22, 2011, in order for the products to remain on the market.

The scientific basis for these four decisions include the company’s failure to demonstrate that increased yields of harmful or potentially harmful constituents, higher levels of menthol or the addition of new ingredients in the currently marketed products, when compared to the predicate products, do not raise different questions of public health.

Click here to read Brief Summary of “Not Substantially Equivalent” Determinations.

In the case of Camel Crush Bold, a failure to demonstrate that the addition of a menthol capsule in the filter did not affect consumer perception and use also contributed to the decision, the FDA said.

R.J. Reynolds Tobacco, an indirect subsidiary of Reynolds American Inc., Winston-Salem-N.C., is the second-largest tobacco company in the United States. Its brands include Newport, Camel and Pall Mall. These brands, and its other brands, including Doral, Misty and Capri, are manufactured in a variety of styles and marketed in the United States.