More trouble ahead

Its Brazilian business faltering, Molson may be forced to write down the value of its Kaiser operation by hundreds of millions of dollars. Its minority partner in the venture, Hein-eken, has already announced that it would take an impairment charge on its investment. Heineken said that it would review the valuation of its stake in Kaiser which it bought from Molson for EUR190 million in April 2002. If the calculation of the decrease in value would be based solely on the impact of the drop in value of the Brazilian currency real against the euro, the impairment charge would amount to EUR85 million according to Heineken. Since the deal was signed, the Brazilian real has lost 41 percent against the euro.
Up to now Molson has not taken a write-down on its investment..

Rumours galore

We were promised fireworks. But all we might get is a damp squib. By the time you will be reading this, all talk about a rival bid for Molson could have dissolved into thin air. The story so far: In July, Canada’s leading brewer Molson agreed to merge with the number three brewer in the U.S., Coors, to form the world’s fifth-largest brewing group by volume. As there seems to be some doubt concerning the level of shareholder approval for the merger, the world has been biting its fingernails waiting for the disaffected Molson family member Ian Molson to put together a rival bid - with a little help from friends such as Heineken or SABMiller.S. imported beer segment. In September we heard it on the grapevine that SABMiller was negotiating with Ian Molson over the possibility of a bid..

A merger of equals

"Oh yeah, Coors and Molson have merged. And - what else is new?" That seems to have been the general response to the announcement at the end of July that the North American brewers Coors and Molson would unite forces. Their "merger of equals" will create a new company, to be called Molson Coors Brewing Co., that will be the world’s fifth-largest brewing company with a total volume of 60 million hl beer, a combined revenue of about USD6 billion and EBITDA of approximately USD1 billion for the twelve-month period ending 31 March of this year. After all, the two companies have for years worked closely with one another. For example, Molson brews and sells Coors products in Canada - an arrangement which accounts for nearly 25 percent of Molson’s earnings.
As concerns leadership, Eric H...

Figures for thought

The Beer Institute recently released a study which showed that the US brewing industry, including wholesalers and retailers, provides 857,000 jobs and pays USD19 billion in wages. Add to that the 805,000 jobs at its suppliers’ and you’ve got a total of 1.6 million jobs and USD47 billion in wages. When it comes to taxes, the brewing industry and its consumers pay more than USD27 billion a year in excise taxes, sales taxes and personal taxes. In fact, the amount of taxes on a can or bottle of beer represents about 44 percent of its costs.

The battle of the bulges

..seems to have been won by light and low-carb beers. According to market research firm Mintel, light-beer sales will surpass regular beer in the U.S. by next year as low-carbohydrate diets such as Atkins and South Beach become even more popular. Almost 30 percent of Americans now consume light or low- carbohydrate beer, such as Anheuser-Busch Cos.’s Bud Light and Michelob Ultra, compared to the 27 percent who drink regular beers like Budweiser, Mintel said.
Light and low-carb beers represented 47 percent of US beer sales in 2003 and were valued by Mintel at USD40 billion excluding bar sales and imported beers.
And you would have thought that Miller Brewing Co.’s turnaround was all the work of Norman Adami, who heads SABMiller’s North American unit.

Heineken and FEMSA join forces in the USA

What did we predict in our previous issue: Interbrew pulls out of FEMSA and Heineken or Coors like ardent students will cry "Miss, Miss". Shortly after we had gone to press, Heineken announced that its American subsidiary and FEMSA Cerveza have reached a definitive agreement that will make Heineken USA the sole and exclusive importer, marketer and seller of FEMSA’s beer brands in the United States.
The three-year agreement is expected to become effective towards the end of the year, 120 days after FEMSA completes its announced repurchase of a 30 percent stake of FEMSA Cerveza from Interbrew. At the end of the three-year period both parties will discuss how they will take this commercial relationship forward. The FEMSA brands are supposed to add about 1.9 million hl (+28 percent)..

Revolving doors

Well, it was to be expected. Coca-Cola’s second in command, Steve Heyer, 51, will leave the company in a few months time after having been passed over for CEO. Instead the board chose Coca-Cola veteran E. Neville Isdell, 61, to succeed the outgoing CEO Doug Daft. In a surprise move, the board lured Isdell out of semi-retirement, probably by waving a fat cheque before his eyes. To become Coca-Cola’s chairman and CEO Isdell had to resign as a non-executive director of Scottish & Newcastle....

Rising from the ashes

Remember Pabst Blue Ribbon - PBR for short? That former blue-collar brew whose heydays were in the 1970s when it sold more than ten million barrels? For years the brand has been in decline not least because Pabst’s parent, the San-Antonio-based Pabst Brewing Company, which does not own a brewery anymore but contracts out, eschews conventional advertising. In 2001 sales of the 160 year old brand PBR had fallen to fewer than one million barrels. The brand’s resurgence began when young consumers in Portland Oregon adopted the brew. In 2002 sales rose five percent although Pabst only spent a total of USD427,000 on advertising compared with Anheuser-Busch’s USD419 million and Miller’s USD275 million. Last year PBR’s sales were up 15 percent, even though no one quite understands why..

Putting it on

As the popular saying goes, most things nice are either fattening, unhealthy or illegal. Well, Anheuser-Busch has decided to prove us wrong on all accounts and introduced a low-carbohydrate option to its line of flavoured malt beverages, which are designed to cash in on the popularity of Atkins-style diets.
The new product, called Bacardi Silver Low-Carb Black Cherry, is the latest in Anheuser-Busch’s efforts to support weight-watching Americans in their strive to shed some flab. Bacardi Silver Low-Carb Black Cherry contains 2.6 grams of carbohydrates and 96 calories, compared with 32 grams of carbs and 225 calories for other Bacardi Silver drinks. Anheuser-Busch declined to give sales goals for the drink but said it would be targeted at 21- to 27-year-old consumer..

SABMiller against Anheuser-Busch - take two

At the end of May SABMiller Plc.’s Miller Brewing filed a lawsuit against Anheuser-Busch Cos Inc. (A-B), claiming the top US brewer was making "false and misleading statements" about Miller Lite in its advertising. Miller also complained in the court filing that A-B’s distributors have been placing Anheuser-Busch stickers on Miller Lite cases, cans, bottles and advertising displays. The tactics are part of a subtle or not so subtle warfare between the two brewers, which are competing for weight-conscious consumers with their Bud Light and Miller Lite brands....