Vertical integration under fire

Scottish&Newcastle’s chairman, Brian Stewart, again had to defend the group’s vertical integration strategy when he presented the financials for the year ended 29 April 2001. While City analysts put into doubt the financial feasibility of S&N’s strategy of integrating brewing and retailing, arguing that S&N will destroy shareholder value if it continues to retain its 1,450 pubs, Stewart said that S&N’s pub estate would deliver double-digit earnings growth over the coming year to April 2002 and that there was no reason to sell off the pub estate.
In the year ended April 2001, S&N increased turnover 22% to £4,354m, EBITDA 15% to £762m, operating profit 14% to £568m and profit before tax 5% to £428m. With the exceptionals included, S&N would have made a pre-tax loss of £272m..

Sun Interbrew sells Krym Brewery

In the Ukraine, too, the competition watchers raised their voice... and Sun Interbrew listened courteously. In order to favour the authorities Sun Interbrew is going to sell its share of the Krym Bewery. This is meant to obtain the OK to acquire an 81% share of the Rohan Brewery. The Rohan Brewery is the second biggest of the country with a capacity of 2.5 million hectolitres of beer. This year they plan to invest EUR 11 million for the modernization of the production and another EUR 55 million for the construction of a malthouse. The Rohan Brewery has been established in 1989, it started its beer production in 1993.

Existential crisis

If Sweden’s monopolist alcohol distributor, Systembolaget, pushes ahead with its plans to cut down on the number of beer brands it carries, up to 35 of Sweden’s small brewers could be pushed out of business.
According to Swedish law, only Systembolaget’s 416 outlets and the country’s restaurants are allowed to sell full strength beer. This prohibitionist regulation has been met with approval by the EU competition authorities.
However, in four years’ time Swedish beer drinkers will be permitted to import as much beer into the country as other Europeans. To prepare for the liberalisation of alcohol distribution and consumption, Systembolaget has to increase its efficiencies as concerns the number of beer brands it carries and the number of people
it employs..

Carlsberg and the EBRD

The Danish brewery Carlsberg and the European Bank for Reconstruction and Development (EBRD) are going to invest the modernization of the brewery Wien, situated in St. Petersburg, Russia, with up to USD 27 million. It is planned to double the capacity of the brewery in the middle of the year 2002 to 24 million hectolitres. Compared with the year 1999 the sales increased by 56% to 6.34 million hectolitres in the previous year, including an increase of the sales of beer by 72% to 5.08 million hectolitres. Thus the enterprise has been able to increase its beer market share in St. Petersburg from 9% to 15%, and in Moscow from 1% to 5%. Wien produces eight types of beer and non-alcoholic, carbonated drinks. 60% of the production are sold in St..

Grolsch and Sumolis sign deal

Royal Grolsch, whose namesake brand hold’s number two position in the Netherlands, and Portuguese beverage manufacturer Sumolis entered a joint venture. Grolsch acquired a 20% stake in Cereuro, a Portuguese company producing and marketing beer. 80% of the shares remain with Sumolis. The joint venture is to provide Portugal’s 6m hl beer duopoly - Unicer and Centralcer - with a competitive challenge on the supply side, a Grolsch statement said. Cereuro which already distributes Grolsch in Portugal, plans to launch a local brand soon. Sumolis is the leading soft drink manufacturer in Portugal. During the financial year ended 31 December 2000 it had a turnover of €160m, an increase of 6. Sumolis also manufactures plastic and glass bottles.10. The market capitalisation was €43.59m.87m or 8..

Carlsberg buys more breweries

Through its Polish subsidiary, Okocim, Carlsberg Breweries has bought two Polish breweries: Bosman and Kasztelan, both owned by Germany’s Bitburger beverage group. In addition, Carlsberg Breweries has acquired a majority stake in the Piast brewery through the Dutch holding company Dyland. The plan is to merge the newly acquired breweries with Okocim. The annual value of synergies of the merger is expected to exceed DKK120m according to a company statement. Carlsberg Breweries aims at achieving an EBIT of 10% in its Polish operations in 2003. Subject to approval by Polish authorities and the general assemblies of both Okocim and Piast, Carlsberg Okocim will have the following shareholding structure: Carlsberg Breweries 67%, Bitburger 18%, minority shareholders 15%..

Grolsch and Miller to co-operate in Europe

In July, Grolsch and Miller Brewing Company signed a long-term brewing, marketing and sales partnership. Under the terms of the contract, Grolsch will be responsible for the production, marketing, sales and distribution of Miller Genuine Draft in The Netherlands and France. Miller Brewing already has European contracts with Scottish&Newcastle in the UK and South African Breweries in Eastern Europe. In Germany, Miller Genuine Draft is distributed by Miller Brands. Grolsch is the second most popular brand in The Netherlands. The brand is marketed in more than 50 countries. Miller Brewing Co. is the US’ second largest brewer with sales of 50.7m hl in 2000.

Syskron GmbH formed

The Krones Group has formed a new subsidiary: Syskron GmbH. On the occasion, Brauwelt spoke to Hans-Jürgen Thaus, Deputy Chairman of Krones AG who, together with Krones Marketing Manager Rainulf Diepold, is Joint Managing Director of Syskron GmbH, and to Reinhard Pritscher, Deputy Managing Director of Syskron GmbH and responsible for the day-to-day business. According to Thaus, there are about 2000 competitors, large and small, in the engineering sector for filling and packaging equipment world-wide. Only a few are able to provide single-source supply, like Krones.
Modern plants nowadays are expected to have round-the-clock availability and high efficiencies. This can be achieved only if hardware and software are well matched.g. the Internet and e-business.
....

Diebels sold to Interbrew

And while everybody was still guessing who would buy Beck’s, the Belgian brewer Interbrew announced that it had finally entered the German beer market by acquiring an 80% stake in the privately owned "Alt beer" brewery Diebels. Rumour has it that at the beginning of the 1990s already, Interbrew had thrown glances at some of Germany’s family-owned brewing businesses. However its then object of desire, the König Brewery, was not for sale. König has since been sold to Holsten. This time Interbrew got lucky. Diebels brewery is located in North-Rhine Westphalia and its Alt beer brand, Diebels, sold 1.5m hl in 2000. Officially Diebels had been on the look-out for a strong partner since the beginning of the year. No mention was made of the price paid by
Interbrew..

Beck’s to be sold

So much for "after action satisfaction". By all appearances Beck’s 67 stakeholders could not find it in the beer business any longer. That is why the Bremen brewer announced in July that it had enlisted the help of US-investment bank Goldman Sachs to find a buyer. In the German media there
was mention of disagreement among Beck’s stakeholder over the strategy which had been raging for years. There was also mention of stakeholders awarding themselves high dividends - a move which seems to
have prevented the brewer from building up a capital base
for its international expansion schemes. Interestingly, the need for capital to grow internationally was now given as the main reason for the sale. Beck’s is Germany’s most well-known brand abroad.7m hl of beer and 2.42bn..