Where the music plays

Hark his words. According to John Brock, Chief Executive Officer of InBev, acquisitions in the beer markets of China, Russia and Latin America offer the highest growth potentials. This is not to say that InBev, the combination of Interbrew and AmBev, will neglect future takeover targets in mature markets. However, there has to be a strategic fit. A ‘land grab’ is not what Brock has in mind.
In 2004, western European beer markets contributed 32 percent to InBev’s EBITDA of EUR 2.1 billion, the United States 20 percent, central and eastern Europe 13 percent, Asia 8 percent and Latin America 22 percent. AmBev only began contributing to InBev’s accounts from September 2004 onwards. InBev’s turnover in 2004 was EUR 8.5 billion (+21.6%). In 2004 EBITDA margin was 24.6 percent (2003: 21. ..

A winter’s tale

When the going gets tough - Increased consolidation and aggressive sales promotions, rapacious bargain hunters and declining demand: Did the international brewers know what they were in for when they entered the German beer market?

It’s a funny old world. For months a rumour had gone round that the marriage of true minds between Germany’s hotelier-to-brewer Schörghuber and Heineken had hit the rocks. But come October and there were smiling faces all around when their vassals announced the acquisition of the Fürstenberg brewery - a brewery established in the 13th century and situated in the Black Forest. In 2003 Fürstenberg brewery, which was owned by the House of Fürstenberg, had sold 700,000 hl of beverages and achieved a turnover of EUR 57 million. Heineken got lucky.

This was the conclusion drawn by Dipl.-Ing. Ralf Mezger, Scientific Assistant at the Faculty of Technology I in the Weihenstephan Scientific Centre for Nutrition, Land Use and Environment of the Technical University of Munich, in his lecture on the occasion of the 7th Bad Kissingen Brewer’s Day 2004 held in Bayreuth on March 25th, 2004. 99.5% of hops produced worldwide is processed in breweries, the remainder goes to the pharmaceutical industry. Valuable components of hops are:
--hop resins: 10 - 25% of hop dry matter;
--hop oils: 0.5 - 3.0% of hop dry matter;
--hop tannins: 4 - 14% of hop dry matter.
75% of hop essential oils are terpene hydrocarbons and 25% oxy-compounds. They also contain small quantities of sulphur compounds. Threshold levels are 5 µg/l and > 20 µg/l..

Teimuraz Bolloev, 51, Baltika’s charismatic and colourful president of 13 years, handed in his resignation shortly before Christmas last year. His decision did not come as a surprise to Scottish & Newcastle that jointly owns Baltika with Carlsberg. While no one knows his plans for the future, it is not ruled out that as one of President Vladimir Putin’s close associates, Bolloev could take a high-level government job.
As early as September, in the wake of the Beslan hostage drama, when Chechen rebels, who were backed by Muslim militants, took more than 1,200 people hostage in this North Ossetian village, leaving several hundred dead, some Russian politicians tipped Bolloev to become North Ossetia’s next president. According to the Stepan Razin brewing company (St.0 to 1..

In January 2005 Heineken Russia and Diageo have announced that they would commence a partnership for the production and distribution of Guinness in Russia. From 1st of July 2005 Heineken Brewery LLC will become the authorized importer and distributor of Guinness and Kilkenny brands in Russia. Heineken will start local production of Guinness Foreign Extra Stout under license in St Petersburg before July 2005.
Guinness Foreign Extra Stout will be produced and sold in 0.5 litre cans and 0.5 litre bottles at the former Bravo brewery which Heineken bought in 2002. The acquisitions provided the company with a reported market share of 8.6 percent in Russia and strengthened its position as number three brewer on the Russian beer market. Heineken Russia is an employer of over 4,000 people..

British pubs enjoyed a sales boost of five million pints a day over the festive period, bringing total sold over the period to 270 million pints. Martin Information, London, reported that more than 15 million people visited a pub every week over the Christmas period. This is just as well as price discounting of beer by the grocers in the running-up to Christmas was at least as bad as the previous year. According to industry sources, Scottish & Newcastle, the UK beer market leader, generates a lower operating profit margin in November and December than any other time of the year.

Question: How do you top a living myth? Answer: By buying the brewery. Lucky are those who own a brewery by the name of Mythos and can convince themselves each day that a fresh Mythos out of a bottle is better than any old myth. Scottish & Newcastle, which bought 47 percent of the Greek brewery Mythos in 2002 has upped its stake to 68 percent at the end of last year. The consideration was modest: EUR4.8 million which values the brewery at EUR22.5 million. Mythos has 11 percent of the Greek market, which equates to an output of 0.5 million hl. Thus S&N has paid the equivalent of USD 59 per hl. This does not look expensive, especially as it translates into an enterprise value of 5.7 times EBITDA or 9.0 times EBIT. Beer consumption rose from 3.84 million hl in 1996 to 4..

At first glance, Usti nad Labem is an inauspicious home for the Czech Republic’s fastest growing brewery group, Drinks Union, writes Lyle Frink from Prague. The city - called Aussig during the times of the Austrian-Hungarian Empire - is a centre for chemical and machinery industries, with buildings wearing an ochre stain from nearby factories. The main brewery facility dates back over a hundred years. Inside the brewhouse, production is decidedly low-tech. Wort is boiled in a copper older than most employees and passes its first fermentation in traditional open square vats. Total production for 2004 is expected to hit 945,000 hl of beer.
The group is acquiring more than a domestic presence. Going abroad is driving volume growth, while domestic sales are increasing more slowly.s.

Food for thought

The market in pub food has been valued at GBP3.4 billion a year, according to figures from hospitality industry consultant Horizons. The report estimates that the 60,000 pubs in the UK are serving about 405 meals a week at an average cover price of GBP4.70 (EUR6.70)

Hungry Wolves

At the beginning of December, Wolverhampton and Dudley Breweries revealed plans to buy the Burtonwood pub estate for GBP119.9 million (EUR 172 million). According to Martin Information, London, Burtonwood’s and Wolves’ estates represented a good geographic fit, taking Wolves’ total number of properties to over 2,000. This is Wolves’ second major takeover deal since it completed a GBP150 million refinancing in March to give it a war
chest for buying pubs. In June Wolves paid GBP89.9 million (EUR130 million) to buy the 63-strong estate of Wizard Inns from Japan’s Nomura Bank.
The announcement of the Burtonwood acquisition came as Wolves reported a 6.3 percent increase in full-year pre-tax profits to GBP77.7 million, at the mid-range of forecasts. Turnover was up 4..