If thou art not willing …
Call it Argentine whispers or strong-arm tactics. Coca-FEMSA let it be known through the media that it was interested in buying the German-owned Isenbeck brewery. Was Isenbeck pleased? Well, …
For weeks the Latin American media have been awash with rumours that the Mexican Coca-Cola FEMSA, in which the U.S. Coca-Cola Company holds about 30 percent of the shares, has made an offer to purchase Warsteiner’s Argentine brewery C.A.S.A Isenbeck. According to local media Coca-Cola FEMSA’s intentions were rather firm although no reference was made to either price of date of the takeover.
A German spokesman for Warsteiner said: “No, there is nothing to these rumours. But we feel very flattered that a company like Coca-Cola wants to cooperate with us. This is a nice confirmation that our colleagues in Argentina have done a good job so far.”
Well, who said anything about “cooperation”? Is this perchance a Freudian slip that Coca-Cola FEMSA and Isenbeck were actually talking about some form of combination behind closed doors? But what happened? Did the Coca-Cola men stand up and say: “So you want to cooperate with us. By the way, guys, we like your outfit. How much?” Interesting thought.
In 1994 the German brewery Warsteiner, which is privately owned by Albert Cramer, began building a brewery near Buenos Aires. Everything seemed right back then. Beer drinking age cohorts growing, the economy on the upswing, what more could you ask for? Since then Warsteiner has spent USD 180 million on this project which has survived several up and down years, not least in the wake of the Latin American economic crisis in the late 1990s.
By its own admission, Isenbeck produces about 1 million hl of beer. Its market share in Buenos Aires, the country’s most important market, is 15 percent. Its domestic share is 7 percent.
Coca-Cola FEMSA’s offer has “Muhtar Kent” written all over it. Muhtar Kent, who is Chief Operating Officer of the Atlanta-based Coca-Cola Company and thus the second most powerful man in the company, was previously CEO of the Turkish Efes brewery, which also has links to Coca-Cola. Not only did Muhtar Kent agree to the cooperation between Coca-Cola-Amatil and SABMiller in Australia, which is to culminate, perhaps, in the building of a brewery down-under, he must have also given his consent to Coca-Cola FEMSA, which is the world’s second-largest Coke bottler, pushing ahead with its plan to take over the Isenbeck brewery.
Outside of the U.S., Coke has no qualms about getting involved with beer. Beer is more profitable than soft drinks and, not to forget, a beverage with a sizeable share-of-throat. It has been Coke’s aim for a long time to increase its total share-of-throat and not just of the non-alcoholic segment. And if that’s to be achieved with the help of buying existing beer companies, so what? In Mexico, Coca-Cola FEMSA is linked with Cervecería Cuauhtémoc Moctezuma, which is Mexico’s number two brewer and produces the beer brands Sol and Tecate, whereas in Brazil it owns the Kaiser brewery.
Moreover, Isenbeck’s competitor, Quilmes, which controls 84 percent of the beer market, is controlled by Brazil’s AmBev, which has held a Pepsi licence for Latin America for many years. For Coca-Cola, this is the picture. Let’s wait and see for how much longer Isenbeck will be able to resist Coca-Cola’s offer.
