Here we go again

Could it be that ...? Is this the sign the markets have been waiting for? FINALLY, indeed Capital letter-finally, Six Continents, the former Bass group minus the breweries, has announced that it would demerge its hotel and retail divisions. This opens up the door to a merger of its pub estate with, for example, Scottish & Newcastle’s retail division, once
S&N’s own demerger plans are finalised. Of course both companies have refused to comment on the speculations, but bankers continue to believe that such a merger is too strategically and financially compelling to be allowed to be bypassed. One of the proponents of a merger between Six Continent’s and S&N’s retail division is Stuart Price, analyst at WestLBPanmure, London. On our estimates, S&N needs a cash injection and quickly..

Heineken‘s profit up 11% in first half of 2002

For the first half of 2002 net profit on ordinary activities of Heineken N.V. rose by 11 percent (EUR32m), from EUR298 million to EUR 330 million, a statement by Heineken says.
First half year operating profit was 13 percent higher, up from EUR513 million to EUR581 million. Operating profit as a percentage of net turnover increased slightly to 11.7 percent. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by EUR101 million to EUR 842 million and rose as a percentage of net turnover from 16.6 percent in the first half of 2001 to 17.0 percent in the first half of 2002. Group beer volume rose 12 percent from 37.2 million hl to 41.5 million hl. Total sales of Heineken beer increased from 11 million hl to 11.4 million hl (4%). Sales of Amstel beer, at 5..

Selling the family silver

Cadburry Schweppes, London, announced that it has agreed to buy Brau und Brunnen’s 72 percent interest in the Apollinaris & Schweppes joint venture in Germany for EUR151 million. The transaction includes the Apollinaris, Heppinger and Big Apple brands and gives Cadbury Schweppes 100 percent control of Apollinaris & Schweppes. The joint venture was set up in 1991.
Apollinaris, which has been sold for over 100 years, is the best known mineral water brand in Germany. The troubled Brau und Brunnen Group, Germany’s number 3 beverage group with 18 beer brands and 7 mineral water and soft drink brands, has had to sell its 72 percent interest in Apollinaris & Schweppes to reduce its debt load which stood at DM250 million (EUR125m) at the end of 2001. Brau and Brunnen is 55..

Heineken makes public offer in Egypt

When Heineken made a public offer for up to 100 percent of the issued shares of Al Ahram Beverages Company (ABC) in Egypt, it expected to acquire at least 76 percent of the shares. By the end of September 2002 Heineken had bought 97,8 percent of the shares for which it paid USD14 per share or a total of USD280 million. The bid valued Al Ahram at circa 7.3x 2003 EV/EBITDA.
Needless to add that the public offer by Heineken had the full support and commitment of the management of ABC.
Founded in 1897, ABC was privatised in February 1997 and its shares are quoted on the Cairo Stock Exchange and the London Stock Exchange in the form of Global Depository Receipts. It is the only Egyptian brewery group with a beer output of 430,000 hl annually.8 million and net profit to USD22.8 million.

Hole in the dyke

Although the Danish are experts in building safe and sound dykes, there was one which only held fast for 21 years: the dyke against cans. At the end of September, it broke and for the first time in two decades beer packaged in aluminium cans became available in supermarkets.
Thanks to the European Union’s competition watchdogs digging into the Danish Government’s dyke, legislation was swept away which banned metal cans from the shelves because of their detrimental effect on the environment. However, market observers have always maintained that the concern for the environment was only a pretence and that the real reason for banning cans was protectionism - protecting Carlsberg’s almost monopolistic position in the market. Why? Because a 0..

Acatris sells brewery division

The Royal Schouten Group (RSG) daughter Acatris, based in Londerzeel, Belgium, has sold the assets and the business of the brewery division to Lupofresh Ltd. The sales consists of the Belgian and English hop-business of Acatris. On 4 October 2002 Lupofresh, a hop merchant and trader based in Kent, UK, will take over all employees of the brewery division and will continue the business under the former name "Morris Hanbury".
RSG acquired the brewery activities of Morris Hanbury (UK) and De Coninck (BE) in 1999. The disvestment of these activities are in line with Acatris’ strategy to focus on the markets for food and health ingredients..

It’s called optimisation ...

.. but it means the axing of jobs and the closing of plants. In an effort to bring down costs, Interbrew has put its 17 plants in Western Europe under close scrutiny. A report which was published by Interbrew in September, argues in favour of the closure of one brewery in the Netherlands (Breda) and the down-sizing of another in the United Kingdom (Manchester). Interbrew said that by re-locating beer production to Dommelen (The Netherlands) as well as to Leuven and Jupiler (Belgium), the 2 million hl brewery in Breda will become surplus to requirements over the next 18 months. 335 people will be made redundant, of whom 45 will find further employment within Interbrew’s Dutch organisation..

"A beer and a tenner, please"

In the old days if you were strapped for a bit of cash, you ran up a tab with your local publican. These days you cut out the publican and use a cash machine instead. But not the one down at the other end of the High Street but the one inside the pub. Punch Taverns, which is one of the biggest pub operators in the UK, is putting cash machines in 100 more of its pubs, after negotiating a bulk-buy deal with the manufacturer, Hanco of Milton Keynes. According to media reports, trials in 20 Punch outlets saw a 4.5 per cent rise in beer sales, as customers withdrew an average £40 and then spent £3.60 of that in the pub. The £1.50 fee charged each user means that pubs need only two people a day to use the machines to cover the £20 rent..

With brawn and brain

They should have known that Interbrew was not one to trifle with, certainly not after its spat with the UK’s competition authorities. Moreover, they should have been more cautious in their dealings with an antagonist who calls himself "The Leading Consolidator in the world beer industry". Consolidator? - doesn’t that sound like Terminator, Predator, an opponent with brawn and brain? Sorry, we have watched too many Arnold Schwarzenegger movies.
Interbrew took the news organisations to court in order to obtain the original copies and to find out more about their source. Surprisingly, Interbrew won the case. Even the House of Lords on 10 July 2002 re-fused the UK news organisations the permission to appeal. Watch this space..

No appetite for roses Wolverhampton & Dudley Breweries and the consolidation of the UK beer market part 2

"I am the hunter," cried the wolf as he slid down the chimney. "I’ll huff, and I’ll puff and I’ll blow your house away." "Sorry, you seem to have forgotten something," replied the little pig as he lit a fire to scorch the wolf’s tail. Fortunately life has not caught up with fairy tales yet. Wolves is alive and kicking, having fought off two hostile takeover bids between August 2000 and August 2001.

In order to survive the occasional low periods in the City, bankers console each other with the advice: "If you can’t take a joke, don’t work in the stock market." This advice does not only apply to bankers. CEOs too should take it to heart. But churning them out was not enough.
Nevertheless, hostile takeovers are still something of an anomaly in the brewing industry.
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