No wallflower

Scottish & Newcastle (S&N) does not behave like a wall-flower when it comes to waltzing with suitors. In early February, there was renewed speculation that SABMiller would finally complete the originally planned three-way merger between SAB, Miller and S&N, which was first suggested in November 2001 when documents apparently prepared by investment banks Goldman Sachs and Lazards for Belgian brewer Interbrew were leaked to the British media. With the spotlight on SABMiller, UK commentators wondered aloud if S&N were not the obvious target for an acquisition-hungry SABMiller given that S&N has no dominant shareholders and moreover enjoys strong positions in the UK, France and Russia. Next they turned to spirits group Diageo and other venture capitalists as potential buyers of S&N.e..

Which way you look at it

Due to currency impacts Baltic Beverages Holding (BBH) either increased its 2003 net sales by 13 percent to USD1.3 billion or witnessed a decline of 6 percent to EUR1.2 billion. Likewise EBITDA either rose 4 percent to USD400 million or fell 14 percent to EUR352 million.
New brewery openings and investments in Baltika’s sales and distribution network saw costs rise last year, which is why BBH’s EBITDA margin dropped 2.7 percent. However, BBH’s full year EBITDA margin still remained high at 30.3 percent. After a bad start (or rather very cold start in Russia) with group beer volumes falling one percent year-on-year, BBH’s fortunes returned in the second quarter and the financial year ended with total beer volumes reaching 31.4 million hl (up 8%).4 percent to 33 percent.7 percent (up 1.

The taxman’s new found greed

After two rises in excise duty in one year alone, Slovakia’s brewers had to face a 14 percent drop in beer sales last year. In July 2003 the excise duty was increased from EUR7.28 to EUR12.13 per hl, which added EUR0.02 on each half-litre bottle of beer. Given that beer cost between EUR0.24 and EUR0.37 per 500 ml bottle, brewers were forced to pass the excise increase on to the consumer. Following the January 2003 increase in excise duty, there had been a 10 percent drop in beer consumption. Brewers have already expressed their concern over the speed of tax increases and what they call the uncertainty in Slovakia’s tax system. Slovakia’s beer production has been stagnating for several years at 4.4 million hl. Beer consumption in 2002 was 93 litres per capita..

The taxman’s new found modesty

Poland’s lower house of parliament, the Sejm, recently passed a bill which would lower the excise duty on beer by 30 percent as of May this year when Poland and nine other states will join the European Union. The bill still awaits the president’s signature.
Polish brewers have long lobbied for a lowering of the excise regime in order to preserve Poland’s competitiveness in a common European market. In Poland, today, one must pay twice as much in excise for every half-litre bottle than in neighbouring Germany, the Czech Republic, Lithuania and Slovakia. For the nine months to September 2003 Polish breweries registered a sales volume of 21.5 million hl beer, an increase of 3.6 percent over 2002. Okocim currently controls 14 percent of the Polish beer market..

More than meets the eye

Carlsberg-Tetley and Scottish Courage announced that they are in discussions to launch a new independently managed technical services company in the UK. According to an official statement, this company shall provide the equipment and associated support to dispense draught beer from cellar to glass.
Both parties believe that this proposal is the best way to secure significant benefits for customers, including enhanced services, quicker response times and unrivalled product quality. Furthermore, benefits would be derived through streamlined processes, reduced administration costs and a reduction in duplicated activities.The new company, Serviced Dispense Equipment Ltd (SDEL), would own all the dispense assets of both brewers. Mike Foster and Mr. Nick Bryan respectively..

Price war

The government may not like it, but brewers Ringnes and Hansa Borg have started a fierce price war last autumn in an effort to counter falling beer sales. Norway’s two largest brewing groups, Carlsberg-Ringnes (4 breweries) and Hansa Borg (3 breweries) control over 85 percent of the beer market. The rest of the 2.3 million hl market is shared by five independents and four brewpubs. At the end of 2002 official per capita beer consumption was 52 litres. Since then beer sales seem to have dropped as Norwegians have grown more and more displeased with their country’s high excise regime on alcohol. The Norwegian Minister of Social Affairs, Ingjerd Schou (Conservative), voiced her concern to the local media and said: "It is regrettable that the price of beer goes down. This is not what we want..

Beer exports soar in 2003

Hats off - last year Italy’s beer exports rose 38 percent over 2002 according to Assobirra, the national association of beer producers. What may seem a huge increase is really no big deal, as the country’s beer exports in 2002 amounted to less than 700,000 hl. Beer imports on the other hand, stood at 4.4 million hl in 2002. In its preliminary market report for 2003 Assobirra omitted to mention how imports had fared last year but given the rise in beer production of 7.1 percent to 13.5 million hl and the increase in beer consumption from 28 litres to 30 litres per capita, it can be assumed that beer imports went up too. Among Europe’s beer producing countries, Italy ranks 12th with 16 major breweries producing and distributing 120 brands.

Holsten’s sales decline ten percent

Following the introduction of the compulsory deposit on cans, Holsten’s domestic sales in 2003 suffered a massive set-back. Despite a slight increase in international sales, last year’s bottom line still showed a decline of 10 percent to 12.9 million hl. As a consequence, turnover dropped 9.8 percent to EUR752 million. Nevertheless, Holsten declared its 2003 annual results "satisfactory". As Holsten had been one of the major supplier of supermarket own-label beers, the sale of beer in non-returnable container, i.e. cans, suffered most (-73.3%) when discount chains began to de-list their beer brands altogether. But soft drinks in non-returnable containers were affected too: they fell 11.3 percent to 3.5 million hl. Holsten’s beer sales outside Germany, however, grew 2.6 percent to 1.8%)..

Can’t blame it on the weather

Despite a scorcher of a summer, beer sales in Germany (excluding export) declined 2.1 percent to 105.5 million hl last year. Beer mixes, which used to be all the rage, have dropped in volume by 2.6 percent to 2.7 million hl. Brewers blame the introduction of the compulsory deposit on non-returnable beverage con-tainers, especially cans, for the decline in sales. Consumer loyalty to the product category has dwindled fast. Apparently, when Germany’s discount chains, which sold large amounts of beer in cans, de-listed beer altogether –-as they did not want to faff around with empty containers and deposits - consumers remained faithful to their one-stop-shopping habits. Instead of buying beer elsewhere, they just bought what was available beverage-wise at their favourite discounter.

Brau und Brunnen sold

On 13 February, Germany’s number four brewer, Brau und Brunnen (B+B), was finally sold to the Dr. Oetker Group. The diversified family concern Dr. Oetker (shipping, food, champagne, beer, mineral water) is not only Europe’s leading pizza baker. It has also a large stake in the German beer market (7.8%) with its Radeberger Group (Radeberger, Clausthaler, among others), which made it the third-largest brewer before the acquisition. Traditionally, Dr. Oetker has had large cash reserves, which is why it probably paid for B+B out of its piggy bank. Dr. Oetker/Radeberger had been considered the most suitable suitor for B+B as the group would have reaped the highest synergies, once production in both Dortmund and Berlin (where they have a brewery each) would have been concentrated.5 billion..