It’s ours

Bavaria, one of Colombia’s largest listed company, bought a 45% stake in its domestic competitor Leona, thus fending off the threat of a powerful international brewer entering the Colombian beer market. Leona was operating at 25% of installed capacity and had about 8% of the market.
The deal gives Bavaria access to Leona’s modern brewery and paves the way for a large-scale restructuring of the industry which has been plagued by overcapacity, made worse by an economic downturn, for some time now. In return for the stake Bavaria will issue shares to the Ardila Lülle group, the owner of Leona. No value for the deal was given but it is believed that Bavaria could pay about US$100 million for the stake..

New CEO

Molson Inc., has announced the appointment of Daniel O’Neill as president and CEO, replacing James Arnett who will step down at the company’s annual meeting on 27 June. Mr O’Neill joined the brewer in 1999 as COO and has played a key role in transforming the former conglomerate into a focused brewing company. The brewer announced that it lost CAN$44 million last year as restructuring costs of CAN$224 million offset strong growth in operating profits.
The Montreal-based brewer posted operating profit of CAN$77 million (US$52.2 million) up from CAN$50.8 million. Annual revenue rose 19% to CAN$2.5 billion (US$1.69 billion). For the fourth quarter Molson posted a profit of CAN$38.1 million. Molson said that its market share for the fiscal year increased to 45.1% from 45.0% to 20..

Cade spoke ...

AmBev has signed an agreement with the Justice Ministry’s anti-trust council, Cade, which specifies the criteria under which the merger between of Brazil’s two major brewing companies can finally receive the official nod of consent. The agreement says that AmBev must sell off the Bavaria brand, share its distribution network, and sell five plants spread over five regions of the country which have a total production capacity of about 7 million hl. All these assets must be sold to a company with less than 5% market share in the domestic beer segment. The whole pro-cess is supposed to be completed within eight months. Bavaria has a market share of presently 4.7% which values the brand at an estimated R$400 million (US$223 million)..

New developments at the Siebel Institute

In an Open Letter to the brewing industry and their customers, dated 23 March 2000, the board of the Siebel Institute, Chicago, announced that despite some misleading information issued in February, the 128-year-old Institute would continue with its spring and autumn courses with existing staff and extended family. This had been made possible by the board accepting a bid put together by Ron Siebel, Chairman and CEO of the Siebel Institute, Siebel staff and faculty and Lallemand USA, Inc. With Lallemand, Siebel has past working relationships in the areas of yeast and yeast nutrients. The board rejected a bid by Alltech Inc., Nicolasville, Kentucky.

"Honey, it must be the Honey Weiss"

Jacob Leinenkugel Brewing Co. increased its sales volume 2.7% in 1999 and expects continued growth in 2000 due to the popularity of its Honey Weiss brand which was originally launched in 1995 as a seasonal summer beer but is now available throughout the year. Honey Weiss has become the company’ third-largest selling brand, just behind Leinenkugel’s Red and the company’s flagship brand Leinenkugel’s Original. The brewer’s sales growth is in keeping with the craft beer segment’s growth which was expected to record little growth in 1999 but in the end proved the gloom and doom prophets wrong. Leinenkugel Brewing Co., which is owned by Miller Brewing Co., declined to comment on the company’s sales volume. A 2.7% increase would give Leinenkugel nearly 329,000 barrels. (1. (382,000 barrels)..

Coors‘ 1999 record sales

For the year ended 26 December 1999, Adolph Coors Company recorded net sales of US$2.06 billion, an 8.3% increase from 1998. Including special items, 1999 net income was US$92.3 million. Beer output was 21.9 million barrels, up 3.6%. The result benefited from an improved industry pricing environment, lower packaging material costs and strong fourth quarter category growth. The company however anticipates additional cost pressures during 2000 from higher packaging material prices, increased consumer demand for long-neck bottles, higher freight costs and increased media spending.

Golden parachute

He must be crying all the way to the bank. Douglas Ivester, Coca-Cola’s former chairman, took early retirement and left the company with a separation package valued at US$17.7 million. Coca-Cola also released US$16.8 million in restricted stock that he otherwise would have lost under the company‘s early retirement plan. Mr. Ivester, 52, who had held the top job for a little more than two years, stepped down after members of the board told him that they had lost confidence in him. Although he had been with the company for over 20 years, it is widely believed that Mr. Ivester mishandled a series of crises and showed reluctant to carry out a large-scale restructuring programme. Mr..

Ceasefire

Kaiser and AmBev have agreed to suspend their heated advertising campaigns against one another. Both companies decided to end their media attacks, kicked off by the merger of Brahma and Antarctica, after a meeting with the Minister for Development, Industry and Trade, Alcides Tapias. The Minister said that he had wanted to tone down media exposure on the AmBev case in order not to interfere with Cade’s (the government’s anti-trust body) future decision over the merger which will be announced in April. AmBev’s co-presidents Marcel Telles and Victorio de Marchi are still confident that the merger will be approved. Both agree that there should be some restrictions, such as separate distribution networks and selling some units in regions where the two brewers dominate the market..

OK, but sell Skol

AmBev, the company formed by the merger of the brewers Antarctica and Brahma, has received a preliminary approval by Brazil’s regulatory body, the Finance Ministry’s Economic Monitoring Secretariat.
However, there are some restrictions: the closure of several breweries, the review of the licensing agreement between Brahma and Miller, the sale of the Skol brand. These restrictions were suggested to prevent AmBev’s three main brands to gain a market monopoly of more than 65% in the country’s regional markets. Antarctica and Brahma together produce 64 million hl of beer and 2.5 billion litres of soft drinks. AmBev lodged an official protest and is hopeful that it will receive the final regulatory approval without having to comply with the restrictions..

Cyber marketing

Hugo Powell, the veteran marketer behind Labatt’s Ice Beer and recently elected President and Chief Executive of Interbrew SA, believes that the explosive growth of the Internet - it already has a 39 per cent penetration in U.S. homes and is expected to rise to 61 per cent in five years - will further the market fragmentation that has become the marketer’s nightmare. What makes matters worse is that the Internet users are disproportionately the younger, well-educated and wealthy groups that advertisers are trying to reach via mature media such as television. "Television for these people is Internet", Mr Powell declared.