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..

Ey Chico, pass me the pisco

In an effort to diversify its interests, Chile‘s biggest brewer CCU joined ranks with a pisco producers‘ cooperative that will boost its production of the popular Chilean spirit. CCU and Cooperativa Agricola Control Pisquero, a cooperative of pisco producers, both committed their pisco plants and assets to a new company that will be 80 percent controlled by CCU. According to local media reports, CCU invested USD 27 million in cash into the venture. The deal allows CCU’s share of Chile’s pisco market to grow to 52 percent from 15 percent. Pisco is a distilled grape alcohol used to make pisco sours and other mixed drinks.

SABMiller said beer sales to retailers at its U.S. division Miller Brewing dipped 0.3 percent in the last quarter 2004, but this compared favourably to a U.S. beer industry which saw beer volumes down between 1.5 and 2.0 percent in that quarter. SABMiller blamed the beer volume fall on the rise in petrol prices in the U.S., price discounting in the beer market in December and rising consumption of wines and spirits. Now, what’s new about that?

For some in St. Louis Christmas came early last year. Anheuser-Busch Co. announced shortly before Christmas that it had won ‘an important victory’ in the World Trade Organization (WTO) in its battle to protect the Budweiser brand name against use by a Czech brewer. In a statement Anheuser-Busch President Stephen Burrows said: ‘This decision by the WTO halts Budejovicky Budvar‘s efforts to rely on this registration of "Budejovicke pivo" to justify its use of the Budweiser name.’ By all accounts the WTO ruling implies that the Czech brewer, Budejovicky Budvar, cannot justify its use of the Budweiser name on the grounds that it was the translation of the place name it had registered for exclusive use under the European Union ‘geographic indications’ regime.’.

Heineken USA announced at the end of last year that it had created an independent panel to review complaints about its advertising amid rising scrutiny over the effects of alcohol marketing. The company, part of Heineken NV, said three experts on public policy, advertising and psychiatry had agreed to serve one-year terms on its review panel. Apparently, beer and drinks producers are seeking to shield themselves from potential lawsuits over advertising messages perceived to contribute to alcoholism or underage drinking.

...but only for some. Anheuser-Busch, Inc., the US beer subsidiary of Anheuser-Busch Cos, has said that fourth-quarter beer shipments to wholesalers decreased 1.5 percent. Wholesaler sales-to-retailers were down 0.3 percent for the full year and decreased 3.2 percent in the fourth quarter. However, for the full-year Anheuser-Busch reportedly managed to increase U.S. beer shipments to wholesalers to 103 million barrels (121 million hl) in 2004 – up 400,000 barrels or 0.4 percent over 2003. Its domestic market share, excluding exports, for the full year 2004 was 49.6 percent, compared with a 2003 market share of 49.7 percent. Meanwhile in Golden, Colorado, ­Coors said its U.S.
For the 13-week quarter ending 26 December 2004, U.S. sales volume to wholesalers increased 4.0 percent..

Mexico’s number two brewer FEMSA is expected to grab more market share from its bigger rival Modelo this year as it expands its convenience store chain and considers a cost-cutting merger of its distribution channels.
After gains last year at the expense of Modelo, analysts were reported as saying that FEMSA will chip further away at the maker of the popular Corona beer in 2005, boosted largely by an expected major expansion of its Oxxo convenience store chain.
FEMSA, the brewer of Sol, Tecate and Dos Equis beers, has more than 3,000 Oxxo stores dotted across Mexico, selling its beers alongside soft drinks made by its Coke unit, Coca-Cola FEMSA .
As FEMSA opens more stores, it will sell more beer. Imports are minimal and Mexico only has a handful of microbreweries..