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....

Redhook survives - at least in name

As we reported in our last issue, the auditors of microbrewer Redhook Ale Brewery had warned the board that ending the distribution agreement between Redhook and Anheuser-Busch early could cause Redhook to default under a bank credit agreement or force it to buy back some preferred stock. These matters, auditors Ernst & Young LLP wrote, raised "substantial doubt about Redhook’s ability to continue as a going concern." Apparently the auditors’ suspicion was justified. In May Redhook said it agreed with Anheuser-Busch Cos. on the major financial terms of a restructured distribution agreement, which should help ensure Redhook’s survival....

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.....