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Do Canadians drink Canadian beer brands? Err, not necessarily. Although the domestic brand Molson Canadian is in a close race for top selling beer with Budweiser (brewed under licence by Labatt), another US brand Coors Light ranks third.
To a Canadian brewer this scenario must appear worrisome. Especially, if his brands seem to be lagging. According to reports, the country’s largest brewer, Molson, saw its market share fall 1.1 percentage points to 43.9 percent in 2002, mainly because of the decline of Molson Canadian. That’s why the brewer intends to pay more attention to its core brands from now on. After all, they still represent the most profitable part of its brand portfolio.
This spring and summer Molson will launch advertising which celebrates Molson Export’s centennial..
From a trip to Cleveland, Ohio in April 2002 the author gives his impressions and observations, combined with his previous knowledge of the US craft brewing industry in a personal snapshot of this industry - what does it look like today, where did it come from, how is it organised - and a glimpse of where it may be going and what impact it may have outside North America.
Why is the US Craft Brewing Industry a topic that should interest readers of Brauwelt? Well, in order to answer this question I have to use some fairly big words and some postulates that may seem preposterous:
1. The wonders of the US Craft Brewing Industry may be considered the best kept secret in the brewing industry outside the USA, and maybe specifically in Denmark.
2.
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Adolph Coors Co. reported a 27 percent increase in fourth-quarter 2002 net income, but its results missed Wall Street’s estimates amid declining net sales in the Americas. On the announcement Coors’ shares dropped about 15 percent because earnings were under expectations. On 6 February 2003, the brewer announced it had a net income of US$20.2 million, or 55 cents a share, up from US$15.9 million, or 44 cents a share, in the year-earlier period. Excluding restructuring expenses and other items, Coors said it would have earned US$23.1 million, or 63 cents a share, in the latest quarter, up from US$17.9 million, or 49 cents a share, a year earlier.
Sales doubled to US$1.33 billion from US$652.5 million. Excluding excise taxes, net sales rose 76 percent to US$981.1 million.S. Coors added..
John Hickenlooper Jr, well known among American craft brewers for having been one of the first and most successful brewpub operators in the country, has decided it was time for a change. At the age of 50, he determined to run for mayor of Denver, a city of 630 000 inhabitants and 12 000 municipal employees, when the law prevented the present mayor Wellington Webb from a fourth term. Incidentally, Hickenlooper had made sure in time that he fulfilled all the "technical requirements" to stand for office. In conservative America, if you are not married and without a family, you stand almost no of getting elected. A confirmed bachelor for years, Hickenlooper got married two years ago and now has a small child. Conducting a campaign is a costly affair.5 million to win the race in Denver.".
Anheuser-Busch Cos. Inc., the world’s largest brewer, announced on 5 February 2003 that fourth-quarter profit climbed amid a solid performance in the key U.S. market including sales of Michelob Ultra, its recently launched low-carbohydrate beer. The company said it earned US$269 million, or 32 cents per share, compared with US$228 million, or 26 cents, a year earlier. The result was in line with analysts’ expectations. St. Louis-based Anheuser-Busch said sales for the quarter rose 7.1 percent to US$3.10 billion. Last month the company said its shipments of beer to U.S. wholesalers hit an all-time high in 2002, and reiterated its earnings growth estimates for 2002 and 2003.
At that time, Anheuser-Busch backed its prior estimate for earnings growth of 18.5 percent in the fourth quarter..
In the end not even his long-term employers, Philip Morris’ Marlboro men, who are SABMiller’s largest shareholders, supported him: In January, after 28 years with Kraft Foods and Miller Brewing Co (which are both part of Philip Morris), John Bowlin took immediate leave as CEO of Miller Brewing Co. Last year, Bowlin, who joined Miller in 1999 to bring about a desperately needed turnaround, was allowed to smile on Philip Morris’ unexpected coup: the sale of Miller to South African Breweries for US$ 4.9 billion. However, at the end of 2002 signs of a turnaround were still nowhere in sight. In 2002, Miller registered another decline in beer output: minus 3 percent. That proved Bowlin’s downfall. The South African of Lebanese origins joined SAB in 1979. No small feat..
Always keen to secure control over its supplies, Grupo Modelo has become a minority investor in John I. Haas’ Supercritical CO2 Extraction Plant in Yakima, Washington, USA. In January 2003, a new company called International CO2 Extraction, LLC., was created. As CO2 hop extract is a critical ingredient for Modelo’s beers, this investment will ensure that its growing extract needs will be met in the future, the brewer said in a statement.
Henry von Eichel, CEO of John I. Haas, Inc. was quoted as saying, that "We are very pleased with Grupo Modelo’s investment in this joint venture. It shows their long term commitment to the US hop industry and their confidence in our technical abilities. Haas, Inc., which will also operate the plant as it has since 1994, when the plant started up.
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Simultaneously, Heineken has agreed with SBE (Southern Breweries Establishment, a joint venture of which CCU owns 50%), to acquire the controlling stake of 68.8 percent in the Croatian brewer Karlovacka Pivovara. The transaction is still subject to a number of conditions, including corporate and regulatory approvals. With a domestic market share of 19 percent and an annual beer volume of around 850,000 hectolitres, Karlovacka Pivovara is the number two brewer in Croatia, a market of 4.5 million people and 3.8 million hl of beer consumption in 2001. The brewery also exports to the region. Karlovacka Pivovara employs 670 people and is located in the city of Karlovacka near Zagreb, with Karlovacka as its main brand. CCU has three breweries and a total annual beer production of 3..
Further, Heineken will sell its 15 percent stake in Quilmes to the controlling shareholder BAC, whilst agreeing to settle all disputes and claims outstanding in the pending arbitration proceeding between Hein-eken and Quilmes.
This will lead to an extraordinary net profit of EUR 73 million for Heineken in 2003. The sale to BAC will be subject only to the closing of the transaction announced by Quilmes and AmBev in May 2002.
As part of this agreement Heineken will be able, at its option, to terminate the licensing agreement to produce the Hein-eken brand with Quilmes. Hein-eken intends to transfer this agreement to CCU as soon as practically possible. The deal will immediately contribute to the net profit of Heineken..
Initially, Germany’s Schörg-huber held indirectly a 50 percent stake in IRSA, while Quiñenco owned the other 50 percent of IRSA, which has a controlling stake of 62 percent in the leading Chilean brewer CCU.
It has to be remembered that Anheuser-Busch owns another 19.8 percent of CCU. Now, with the consent of Quiñenco, Heineken will buy the 50 percent stake in IRSA that is currently held by Schörghuber. Heineken and Quiñenco will thus become partners in the joint venture IRSA. As part of this transaction, Heineken intends to transfer the licensing agreements to produce the Heineken brand in Chile and Argentina to CCU as soon as practically possible..
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