Nice if you can

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.

And the winners are …

… 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.

Patriotic tribute

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.

Fire sale

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.

Free Coke

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, ...

Hostile takeovers – the flavour of the month

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.

Pass the smelling salts, please

What do you make of that: First Anheuser-Busch used its pricing power to engage its rivals in a price war which must have cost them an arm and a leg. Then the brewer latched onto lowbrow humour that is best left unmentioned. Ok, if you must, here’s an example. A recent ad for its Bud Extra with caffeine, ginseng and guarana reads: “You can go home early when you’re married. Go longer with Bud Extra. The beer … that will unshackle the ball and chain from your evening. So go ahead, linger.” Your reaction? A loud yawn? Interestingly, though, Anheuser-Busch next turned around and bewailed the low image of beer in the eyes of the public. That begs the question: Who is responsible for that? The best is yet to come: Anheuser-Busch has since been calling on its competitors for a generous support of its plan to do some generic beer advertising that will raise the image of beer. You have to give it to Anheuser-Busch, few could have pulled that one off.

Fortune Brands quarterly profit falls 59 percent

In November, Fortune Brands Inc., whose products range from Jim Beam Bourbon to Titleist golf balls, said third quarterly profit fell 59 percent from a year earlier, when it recorded a tax credit, as it expensed some of its acquisition costs. According to media reports, profit fell to USD 92.2 million from USD 226.8 million a year earlier.

Doom, gloom and disaster

At the end of October, Anheuser-Busch had to admit to a greater than expected drop in quarterly profit as price cuts on key brands hurt the company’s bottom line. Even more embarrassingly, the brewer also warned that its full-year-profit would fall 10 percent to 11 percent below last year’s figures and its shares slid 2.4 percent to their lowest in more than three years. The company reported a third-quarter profit of USD 518 million. This compares with earnings of USD 684 million in the same quarter last year.

A marriage is made in heaven

… but its problems are usually homemade. When Molson and Coors announced their plans to merge last year, the response from investors and the international media was a loud yawn. With combined beer sales of 51 million barrels, the new entity became the world’s fifth-largest brewing company by volume, with combined sales of USD 6 billion (and a long way behind InBev, SABMiller, Anheuser-Busch and Heineken in both volumes and market capitalisation). The transaction brought together Coors, which is the number three brewer in the United States with a market share of 11 percent and the number two brewer in Britain with a market share of 21 percent, with Molson, Canada’s leading brewer with a 43 percent market share and the third-largest brewer in Brazil. ....