That’s settled then

Interbrew and Mexico’s FEMSA have agreed to demerge their businesses. Following Interbrew’s combination with Brazilian AmBev, Interbrew will sell its 30 percent stake in FEMSA, held through its subsidiary Labatt Brewing Company Ltd for USD1.3 billion in cash. In addition, FEMSA and its affiliates have agreed to withdraw their lawsuit filed 12 March 2004 in New York, which sought a preliminary injunction of certain aspects of Interbrew’s planned combination with AmBev. The transaction is expected to be completed in the third quarter of 2004, conditional upon the closing of the InterbrewAmBev deal. Now that FEMSA is a "gay divorcee" (to use a phrase from the 1930s), suitors are beginning to line up outside its door....

Molson creates new senior post

In a move to shore up its North American beer operations (i.e. Canada and the US), Molson has hired the Unilever executive Kevin Boyce, 48, to the newly created job of President and Chief Operating Officer for North America. Boyce is expected to take the heat off CEO Dan O’Neill who has been deeply involved in trying to sort out the mess Molson has gotten itself into down in Brazil. Canada is Molson’s major market. Here the brewer leads the market with a share of 43 percent, followed closely by Labatt (42 percent). Imports and speciality brands account for 15 percent.

Sleeman and Unibroue unite

Canada’s number three brewer Sleeman will pay CAD36.5 million for the Quebec-based microbrewer Unibroue. The deal not only gives Sleeman much needed brewing capacity and a distribution channel into the US. It will also add about CAD5 million to Sleeman’s operating profits next year. Sleeman has announced that it intends to nearly double Unibroue’s production to more than 120,000 hl beer next year, and eventually triple it. Unibroue’s three major owners - founder André Dion, rock star Robert Charlebois and businessman Serge Racine - have agreed to sell their combined 71.5 percent stake at CAD5.25 per share which represents a premium of 34 percent over the average Unibroue trading price. Last year Unibroue had sales of CAD25.6 million and earnings of CAD1..

Further pain before any relief

Foster’s wine division Beringer Blass Wine Estates (BBWE) must be giving everybody a booming headache - at least this is the conclusion to draw after having studied its review of the global wine trade business. Owing to an oversupply of wine, particularly in North America, which led to the emergence of new categories such as "extreme value wine" (read "low price"), and a simultaneous slowdown in the historical growth rates for premium priced Californian wine, Foster’s has announced write-downs estimated at between AUD270 million and AUD300 million (USD207 million), which will be included in the 2004 full year results. The group also cut its outlook for earnings growth in the year to 30 June to one percent from an earlier forecast of at least 2.9 percent.....

Boutique tastes

In an effort to keep their customers satisfied, Australia’s major brewers, Lion Nathan and Carlton & United (a division of the Foster’s Group) have moved into microbrewing. As consumers become accustomed to the availability of a wide array of what in marketing speak is called "unique beverage options", Lion Nathan especially thought it necessary to invest in microbreweries. For one, it allows them to position themselves in the premium segment of the on-premise market. The premium sector represents 9.7 percent of the Australian beer market and is one of the fastest growing segments, with 2003 volume up 13 percent over 2002. For another, gives them a chance to set the benchmarks in this segment too.....

SABMiller toasts 3 percent growth in sales

SABMiller reported a three-percent sales increase in the first 11 months of its fiscal year and said the situation at its US branch Miller Brewing Co had improved. The group said that business has continued the momentum of organic growth achieved in the first half, with Miller and Central America posting financial performance above expectations in the second half to date.
However, Miller’s sales to retailers for the 11 months to February 2004 were down 2.7 percent on a pro-forma basis. This contrasted with the nine-month decline to December 2003, when sales had decreased by 3.4 percent.
The group said the slowing of the volume decline trend had to be attributed to continued growth in Miller Lite brand sales offset by some weaker performances elsewhere in the brand portfolio.....

Rallying his troops

Miller Brewing Co is seeking a stronger relationship with its independent distributors or face increased market dominance by industry leader Anheuser-Busch Cos. This is the message the President and Chief Executive Officer Norman Adami sent out to his 470 wholesale distributors. Incidentally, more than half of Miller’s wholesalers also carry products from Adolph Coors Co. As a result, there’s often tension between wholesalers and Miller. Obviously, Miller would like its wholesalers to devote more resources to selling such brands as Miller Lite, Miller Genuine Draft and Miller High Life than to Coors’ brands. The key is for wholesalers to use Miller’s newly created local marketing plans and to invest the proper amount of time and money in marketing those brands.....

Tough being the small guy

With beer distributed being effectively controlled (not owned) by the leading brewers Anheuser-Busch, Miller and Coors, many microbrewers find it increasingly difficult to get their beers to the market. No wonder the auditor for Redhook Ale Brewery Inc. has questioned whether the microbrewer can survive if a distribu- tion agreement with Anheuser-Busch Cos. is terminated early. Redhook, which is based in the state of Washington, entered into an alliance with Anheuser-Busch in October 1994. According to Redhook, the distribution agreement runs for 20 years. But - and that’s a big BUT - the agreement may be terminated by either party without cause on 31 December 2004, or upon other conditions....

Daft to go

His reign at Coca-Cola has to be considered a brief one. Doug Daft, the Australian CEO of the Coca-Cola Company, is to resign at the end of this year. Adieu then to his plans to modernise Coke. In Daft’s world of the future people would have three taps at the sink: one for hot water, one for cold water and one for Coke. One day soon people would be able to turn on the tap marked C at the sink and fresh Coke would pour out of it. Or so he hoped. Like them drinking tap water out of bottles. Alas, it is not to be. The launch of Coke’s Dasani has been abandoned in UK and postponed in Europe.
However, more than these marketing blunders, the decline in Coke’s share price proved Daft’s downfall. Today the stock is at USD51. ....

We were not amused

Chile’s largest brewer Compania Cervecerias Unidas (CCU) said that Anheuser-Busch Cos. Inc. was considering the sale of its 20 percent stake in the company. Market observers had speculated for some time that Anheuser-Busch might withdraw from CCU after its protest last year over Heineken indirectly buying a large stake in the company came to nothing. Anheuser Busch paid USD321 million for its stake in CCU in January 2001. Analysts said it was the most explicit sign yet that Anheuser-Busch was seriously considering pulling out of CCU. CCU is 61.6 percent owned by holding company Inversiones y Renta, or IRSA, in which Chile’s Quinenco has 50 percent and Heineken has 50 percent as of early 2003....