The cuddle factor

What is it that persuades advertisers and marketers that grown-up consumers of beverage alcohol products will make brands with animals and infantile logos their tipple of choice?

Best practices

In September, Anheuser-Busch agreed to pay USD 120 million (EUR 101 million) to settle lawsuits brought by the family of former Major League Baseball star Roger Maris. The brewer said in a filing with the U.S. Securities and Exchange Commission that it would take a pre-tax charge of USD 105 million in the third quarter. The Maris family, which operates Maris Distributing Co. in Florida, had been asking for up to USD 5 billion from the top U.S. brewer, which the Maris family claimed had made false statements about the family’s beer distributorship. Anheuser-Busch had said that the distributor was not meeting standards and was re-labelling and repackaging old beer. ...

Brands reborn

What did you do with a tired brand? You axed it. These days, with some luck, you can turn it into a retro brand. This seems to have happened to Pabst Blue Ribbon. The brand, which once was the pride of blue collar workers, has languished for years on the shelves until it was "discovered" by young hipsters in Portland, Oregon, and its popularity began to spread out. Without initial prompting, Pabst Blue Ribbon became the symbol of authenticity and cool. It has been enjoying double-digit growth every year since 2003. ..

Reason for optimism

Leading Mexican brewer Modelo has revised its 2005 forecasts for growth in domestic and foreign markets upwards, following first-quarter sales volumes far outstripping its targeted expansions this year of a 5 percent annual increase in exports and a 3 percent rise in domestic sales. In the first quarter, shipments abroad soared 23.6 percent. Apparently, Modelo, which is half owned by U.S.-based Anheuser Busch, has no short-term plans to raise export prices after bumping up domestic prices in late February this year. Modelo last raised export prices in January 2004. ..

SABMiller makes one of beer’s biggest buys

As was to be expected, SABMiller came first in the race to acquire South America’s number 2 brewer Bavaria for USD 7.8 billion including debt and interests in subsidiaries. The deal makes SABMiller the world’s second-biggest brewer behind InBev. SABMiller said it was buying a 71.8 percent stake in Bavaria from the Santo Domingo family by issuing 225 million shares worth about USD 3.46 billion. This will give the family a 15.1 percent stake in the combined group and make the Santo Domingos SABMiller’s second biggest shareholder, behind Altria (formerly Philip Morris), which holds 25 percent after selling Miller to South African Breweries in 2002. ...

Better late than never

By all accounts, the craze for low-carb beverages has come and gone. That’s why Miller Brewing Co., the U.S. unit of SABMiller, plans to keep its focus on the taste of its Miller Lite brand rather than its healthy attributes to win market share from rival Anheuser-Busch. Miller admitted to having piggybacked on the now-fading low-carbohydrate trend, but after six months the company realised that adults cared more about the taste of a ‘refreshing adult beverage’ than its non-adverse effect on their midriffs. Anheuser-Busch, which accounts for nearly half of all beer sold in the United States, cashed in on the fad by developing new products such as Michelob Ultra and Budweiser Select. ..

Tough competition ahead

SABMiller, reported an expected 33 percent rise in annual earnings for its full year ended March 2005 but warned of modest growth in 2005 after two strong years as competition intensifies in the United States. Chief Executive Graham Mackay was reported as saying that the U.S. market was getting tougher as Anheuser-Busch limited price increases, forcing Miller to follow. Anheuser-Busch has indicated that it would raise prices of 1 percent to 2 percent this year, below historic levels of 2 percent to 3 percent and has stepped up the pressure on number two U.S. brewer Miller by launching Budweiser Select to support its top-selling Bud Light. ..

Coors closes brewery

Molson Coors Brewing Co. announced at the end of February that it will shut its Memphis brewery in early 2007 axing 410 jobs. Production will gradually be phased out, starting in the second half of 2005. The closure is part of a wider restructuring plan that targets annual savings of USD 175 million within three years.
Molson Coors will spend USD 70 million to USD 90 million to shift production, reflecting capital expenditures at its other North American breweries, along with restructuring and other costs.
The company’s breweries are said to operate at about 79 percent capacity utilization, while its rivals have theirs running in the low 90 percent range. Anheuser-Busch has 12 breweries in the U.S., SABMiller six. It was originally built by the Stroh Brewery Co..

Not satisfied

In a statement, Neville Isdell, the Chairman and CEO of the Coca-Cola Company, said: ‘We are not satisfied with our performance in 2004. By most measures, we did not perform to our potential or the expectations of our shareholders. On the whole, I believe 2004 will be remembered as the beginning of an important transition for The Coca-Cola Company. We are making the necessary course correction that will enable us to fulfil our enormous potential.’
In an effort to reverse his company’s recent lacklustre performance, Isdell has reshuffled his board. Sandy Allen, 60, who used to head the Europe, Eurasia & Middle East Group, will be retired. This group will include China, Japan, Russia, Ukraine and Belarus. The changes are effective of 1 May 2005.4 billion, or USD 1.77 per share, in 2003..

Costly end to accord?

Although a ruling by the International Court of Arbitration of the International Chamber of Commerce is not expected before the autumn, many analysts seem to take it for granted that the rights to import Corona Extra into the U.S. will go to Constellation Brands, which is at present Grupo Modelo’s U.S. importer west of the Mississippi. The ­Gambrinus Company, which until 2006 holds the rights to bring Corona Extra to the East Coast markets, is considered the big looser in this battle.
Analysts have already done their homework and put price tags on Grambinus’ business: Grupo Modelo ending its import accord with Gambrinus comes
at a cost. Some reckon that the Mexican brewer could have to pay out USD 260 million to end its business dealings with Gambrinus.S., Modelo’s U.S..