Following the arbitration court’s ruling in March 2006, Mexico’s Corona beer brewer Modelo has the best part of a year to find a new partner in the U.S. who can help it squeeze more profits from its already-booming exports to the East Coast states. Early in March an arbitrator ruled in Modelo’s favour in a contract dispute, saying it could terminate a deal with its long-standing U.S. importer, the Gambrinus Co., at the end of 2006. Since 2004 San Antonio-based Gambrinus Co has been trying to block the termination clause in its contract with Modelo. Modelo, half owned by Anheuser-Busch, works with another U.S. importer, Constellation Brands, in other parts of the U.S. Thanks to Gambrinus’ and Constellation’s efforts, Modelo’s exports increased 12..

Fix it, sell it, or kill it. Is that all they teach them at business schools these days? Apparently, in their quest for ever higher margins, InBev’s powers-that-be know no other way out when dealing with a brewery that is not delivering “stellar performance”. Now it’s “fix it or sell it” for Rolling Rock, InBev’s only U.S. brewery. Rumour has it that InBev is looking to sell its U.S. domestic beer brand Rolling Rock after struggling to revive the iconic brand over the last decade. InBev has decided to concentrate its U.S. sales and marketing resources on imported brands such as Bass, Brahma and Labatt Blue, as well as Stella Artois and Beck’s, which means that it might sell the Latrobe Brewery in Pennsylvania, where Rolling Rock is being brewed, and keep the brand. Alternatively, InBev might sell the whole lot, lock stock and barrel, which might fetch an estimated USD 50 million to 100 million, depending on any cost-saving synergies available to a purchaser. Pundits claim that Rolling Rock is unlikely to attract bids from the top three U.S. brewers, but might attract attention from smaller players. Rolling Rock has been brewed at Latrobe since 1939 and has a strong following among beer drinkers in the north-eastern U.S. InBev came into possession of Rolling Rock when it purchased Canada’s second-biggest brewer Labatt in 1995, but according to media reports its

When SABMiller last year completed its acquisition of Colombian-based Bavaria brewery, Backus become an indirect subsidiary. Therefore it was just a matter of time before SABMiller would try to mop up the rest of backus’ shares. At the end of March 2006, SABMiller had completed an 89.5 percent acquisition of the investment shares of Peru’s largest beer maker, Backus & Johnston, for USD 361.6 million. The London-based brewer had made the offer on the Lima stock exchange for 12 trading days for 100 percent of the investment shares of Backus at a price of 2.47 soles (USD 0.74 cent) per share in cash, which represents a 20 percent premium on the Backus investment share price before the offer was announced.

At the end of January 2006, Muhtar Kent (53) was promoted to the newly created post of international operations president of the Coca-Cola Company, having previously been responsible for Coke’s markets in Russia, China, Japan, Central Asia and the Middle East. This promotion makes him the effective number two in the Coca-Cola Company as in his new post, Kent will be responsible for all operations outside North America, and all group presidents outside North America will report to him rather than to Neville Isdell (62), the Chairman and CEO of Coca-Cola. The international operations accounted for more than 70 percent of Coke’s volume last year and 80 percent of its operating income, the company said in a release.

Grupo Modelo, the number one Mexican brewer and the maker of Corona Extra beer, expects domestic sales volumes rising in line with economic growth in 2006, which has been forecasted to reach 3.5 percent. According to reports, the brewer has no plans for the moment to push through a price hike in exports, which mainly go to the United States, even though domestic prices were bumped up in January 2006 in line with inflation. Mexico‘s annual inflation rate fell to 2.9 percent at the end of November 2005 but is expected to climb to 3.5 percent.

… imports and craft beers. In a preliminary research note, Beer Marketer’s Insights reports that beer sales in supermarkets in 2005 declined 0.1 percent, following a 2 percent drop in 2004 and a 0.3 percent decrease in 2003. Although the research is far from conclusive – only 16 percent of total beer shipments and exclusive of Wal-Mart – it indicates several trends: generally speaking, U.S. consumers are trading up. In the premium segment volume was up 2 percent, in the high-end segment it was up nearly 4 percent. Imports (+4.8 percent ) and craft beers (+7.3 percent ) outshone the domestic beer brands by taking 19.2 percent of all dollar sales in this channel thanks to better pricing (up 1 – 1.5 percent compared with flat pricing for premiums). The erstwhile growth engine for domestic brewers – light beer – has hit some trouble: last year volume in this segment dropped 0.8 percent, in value terms it fell even 1.2 percent.

Anheuser-Busch has extended its free ticket programme to soldiers at its theme parks. The “Here’s to the Heroes” military tribute programme, which is to run through 2006, offers free one-day admission for more than 900,000 U.S. and coalition members of the military and their dependents at the company’s nine theme parks. The programme was first launched in February 2005. Free admission is available at any of the company’s SeaWorld, Busch Gardens, Sesame Place, Adventure Island or Water Country USA parks, including SeaWorld San Antonio.

In January 2006, Mexico’s beer and beverage group Femsa bought control of Brazil’s Cervejarias Kaiser from Molson Coors Brewing Co. for USD 68 million in cash. Femsa paid significantly less than Molson which had taken over the Brazilian brewer three years ago for USD 765 million. However, Femsa also assumed Kaiser’s debt liabilities of USD 60 million and contingent tax liabilities of up to USD 258 million. As part of the transaction, Molson Coors, the Canadian-American brewer, will keep a 15 percent share of Kaiser, while Dutch brewer Heineken has seen its stake in the Brazilian brewer drop to 17 percent from 20 percent.

How desperate can you get to have to give away your product for free? Probably, Coke executives took one look at the table below and someone said: “What can we do about this decline? Quick!” So they quickly whipped up the free Coke campaign. In summers past, Coca-Cola lured soft drink buyers with prizes: cash, cars and NASCAR ride-alongs. In the summer of 2005 the company all but gave away the drinks themselves. In a break from recent practice, ...

Constellation Brands, the world’s largest wine company, reaffirmed its hostile bid to buy Canadian rival Vincor International for about USD 900 million. Vincor International is one of the world’s top ten wine companies by revenue with wineries in British Columbia, Ontario, Quebec, New Brunswick, California, Washington State, Western Australia and New Zealand. Vincor is also one of the largest wine importers, marketers and distributors in the United Kingdom.

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