Southcorp sells water heater business

In an effort to transform itself into a wine company only, Australia’s Southcorp has completed its long-awaited sale of its water-heater business to Japan’s Paloma Industries for A$540 million. The sale price was above the book value of A$430 million and would deliver a A$200 million after-tax profit, Southcorp’s CEO Keith Lambert was quoted as saying. Two other companies in Southcorp’s appliances’ division were excluded from the sale and still have to find a buyer prepared to spend A$650 million to A$700 million on them. Investors were pleased with the sale. In 2001 Southcorp also sold its packaging business for almost A$1 billion.

Lion Nathan reconsiders China options

Having failed to find buyers for its brewing operations in Wuxi and Suzhou, Australasian brewer Lion Nathan is exploring the production of other products apart from beer. The breweries, which have a combined capacity of 4.0 million hl of beer, are presently working at just 30 percent. Lion Nathan will not leave the Chinese market but aims at achieving a cash breakeven as soon as possible.

Girlie tipple

In an effort to persuade fashion-conscious women in their twenties to consume a light alcoholic drink, Japanese beverage company Takara Shuzu plans to produce 1.4 million 330ml cans of Can Chu Hi "Sour" in Thailand this year. The drink is made from spirits and fruit juice and has 6 percent ABV. In Japan this drink is doing well among women who would otherwise not consume alcoholic beverages, earning US$ 219 million in sales in 2000. Can Chu comes in three flavours: lychee, grape and orange. The Thai version is sweeter than the Japanese original and is priced at 35 baht (US$0.8) per can. According to Thai media reports, the market for light alcoholic beverages amounted to 3 million cases last year. The market was led by Spy Wine Cooler, an alcoholic fruit cocktail, and Bacardi Breezer.

Frothing ahead

Sales growth of 5 percent per annum over the period to 2006 is forecasted for the Indian beer market by drinks industry analysts Canadean. However, this growth depends on an increase of personal income and taxation changes. At present per capita consumption is low at 0.5 l not least because taxation at around 60% means that only the middle and upper income groups can afford a beer every now and again.
Domestic beer production was 5.5 million hl in 2000 according to the Barth Beer Report. Beer has always been easier to tax than locally produced spirits which are unregulated. Consequently, beer is an important revenue earner for the government. Over the past five years compound growth has been encouraging. In 2000 beer sales rose 7 percent compared to 2 percent in 1999. +44-1256-394218.

Tsingtao to continue consolidation drive

China’s largest brewer, Tsingtao, will continue the strategy of expansion by buying up breweries across the country in an effort to raise the group’s market share from presently 8 percent to 10 percent by 2003. This announcement was made following the sudden death of its CEO Peng Zuoyi (56) from a heart attack. Peng Zuoyi has been credited for being the main driver of the group’s aggressive acquisition policy. Over the past 4 years, Tsingtao has bought 38 breweries. This year the group is expecting a 44 percent increase in beer production to over 26 million hl.

SAB’s fast boat to China

While other international brewers would be more than happy to steamboat out of China, South African Breweries (SAB) has gradually increased its market presence there. Last month SAB’s joint venture vehicle, China Resources Breweries (a joint venture with the government-owned and stock-market listed China Resources), formed a joint venture with Blue Sword Breweries, which is based in the province of Sichuan, to the southwest of the country.
The deal not only brings the total number of China Resources Breweries’ plants up to 25, it also makes the new joint venture the second largest brewer in China with a production of 25 million hl of beer. SAB’s contribution in cash was about US$26 million for its 49 percent stake in the investment. US$ 2.4 million hl..

BBH acquires brewery in Belarus

The BBH subsidiary Baltika Brewery has entered an agreement to acquire majority shareholding of the brewery Krinitsa situated in Minsk, Belarus. As part of the privatisation process, the Board of Directors of Krinitsa will approve the agreement formally in December. The present capacity of Krinitsa is 700,000 hl of beer annually and the brewery is the market leader with a market share of approx. 21 percent. The first phase of modernisation of the brewery, which will be completed next spring, is intended to bring the brewery’s quality of beer up to Western standards. Belarus has a population of 10.2 million people and per capita consumption of beer is 26 l. Over the past few years, the Belarus beer market has seen a moderate increase and total consumption is 2.7 million hl.

Gotcha

Determined to get its foot in the door of the Australian wine industry, albeit with the help of a A$300 million wedge, Lion Nathan appears to have successfully completed the Petaluma wine company deal after increasing its offer per share. Five weeks after opening its bid, Lion Nathan had secured more than 90 percent of the shares of the premium wine group Petaluma. Its chase of fellow South Australian wine company Banksia seems to have been successful too as rival bidder Allied Domecq failed to increase its 15 percent stake.

Foster’s ambition

Some have a vision, others a dream, but Foster’s has a plan. Ted Kunkel, CEO of the Foster’s Group, outlined a plan to double the group’s market value from presently A$11 billion to A$20 billion within the next five years. This should take the drinks company from being a mid-sized player to a global player competing with the likes of Diageo. How does he see it happening? By using the wads of cash thrown up by Foster’s beer division to fuel organic and acquisitive growth in its wine operations. Kunkel was quoted as saying that the A$2.9 billion acquisition of the US wine company Beringer Wine Estates had solved Foster’s growth impasse. "There are 19 million people here (in Australia) - we could only grow so much," he said. Major take-over targets were sought in the US and in Europe.

Tie a knot in your hankie...

... Or keep a bottle of your favourite beer in your fridge. For those consumers who cannot remember the street address of their brewery of choice, Adelaide’s brewers have the answer. First the West End Brewery (owned by Lion Nathan) came out with a beer called "107 Pilsener", named after its location at 107 Port Road (see the previous issue of "Brauwelt International"). Now it seems that Cooper’s too is considering releasing a beer called "Regency 416" in honour of its new home at 416 South Road, Regency Park. So there is hope at hand for all consumers troubled by senior moments.