Posted April 2012
Dominican Republic - AB-InBev in the lead to acquire CND?
Uh-oh, the rumour mill is spinning wildly out of control. Two
weeks ago, Heineken was supposedly the forerunner to buy
Cerveceria Nacional Dominicana (CND), this week (16 April 2012)
it's AB-InBev. And by the time you are reading this, it could be
someone else altogether. What is more, the asking price for CND
seems to have almost doubled in the course of a few weeks to USD
2.5 billion - and that for a business that in 2010 only had an
EBITDA of USD 120 million.
AB-InBev's Latin American unit AmBev has been operating in the
Dominican Republic, a country of 9.6 million people, since 2004.
It is believed that AB-InBev and CND's majority owner, the
cigarette manufacturer Grupo León Jimenes, which owns 84 percent
of CND, are working on a complex deal which would still give
AmBev control of CND.
What CND's other bedfellow, Heineken, thinks of such an
arrangement remains to be seen. Heineken owns 9 percent of CND.
Austria - Death of Thai tycoon sparks bullish worries for Red
Not sure if Red Bull gives wings to people, but lots of people
give wings to Red Bull's turnover. Publishing its 2011 results
in March 2011, Red Bull said a total of 4.6 billion cans of the
energy drink were sold worldwide in 2011, representing an
increase of 11.4 percent over 2010. Turnover rose 12.4 percent
to EUR 4.3 billion year-on-year.
The privately-owned company does not release any profit figures.
All Red Bull would say was that sales had gone up in key markets
like the U.S. (+11%) and Germany (+10%), and in markets like
Turkey (+86%), Japan (+62%), France (+35%) and Scandinavia
(+34%). Red Bull's products are sold in over 160 countries.
Although sales of Red Bull’s energy drink have soared, branching
out into other beverage segments has proven difficult. Last
year, the company decided to stop selling Simply Cola – a soft
drink free from artificial flavours and preservatives – in the
United States. The firm did not explain the move but American
media reported at the time that sales of the drink were
devastatingly low ever since it was placed on shop shelves.
Already in 2010, the German business publication Manager Magazin
had wondered what would become of the Red Bull company, once the
CEO Dietrich Mateschitz, 68, retires or will have to relinquish
the day-to-day running of Red Bull.
It argued that Mr Mateschitz' partner, the family of Thai
patriarch Chaleo Yoovidhya, who invented Red Bull, might lay
claim to his role. Until now the Thais have not taken on
operational roles at Red Bull - not least because of the
profound cultural differences between their traditional Thai
family business and the formidable Austrian marketing machine.
But speculations have swirled around again as to who will run
Red Bull in the future following the death of Mr Yoovidhya on 17
March 2012, aged 89. Mr Yoovidhya was married twice and -
reportedly - has eleven children. Usually rather media-shy, Mr
Mateschitz felt compelled to tell the Austrian news agency APA
that Mr Yoovidhya's passing will not impact the company at all.
The Thai tycoon, whose personal fortune Forbes magazine put at
USD 5 billion, was the low-key partner behind the iconic energy
drink Red Bull. He developed the drink's formula while the
Austrian Mateschitz, whom he partnered in 1984, created the
marketing buzz. Like Mr Mateschitz, Mr Yoovidhya owned 49
percent of the company. His son Chalerm has 2 percent.
In its obituary The New York Times newspaper on 18 March 2012
wrote that with little formal education, Mr Yoovidhya founded a
small pharmaceutical company, TC Pharmaceutical Industries, in
the early 1960s. He started producing antibiotics but later
turned to concocting a beverage that was loaded with caffeine,
as well as an amino acid called taurine and a carbohydrate
Branded "Krathing Daeng" — “red bull” in Thai — it was marketed
to laborers and truckers in need of a boost. Only Mr Mateschitz
saw the product's potential and, having coined the slogan “Red
Bull gives you wings”, he succeeded in taking the drink
Austria - Stamping out nefarious practices
For more than ten years, Austria's biggest brewers refused to
supply independent wholesalers with draught beer. An Austrian
court, in early March 2012, decided that this was unlawful and
moreover reeked of price fixing - despite the brewers' claims
that hygiene and beer quality would have been at risk had the
brewers not supplied the publicans directly.
The court would have none of this and sentenced the brewers
Ottakringer, Stiegl and Brau Union to EUR 1.1 million in fines.
Heineken-owned Brau Union is to pay EUR 750.000, Ottakringer EUR
190.000 and Stiegl EUR 140.000.
It's consoling to see that some are willing to stop the rot and
something about it.
Well, in this case, the court got some help from a
whistleblower, who was revealed by the Austrian media to be Brau
Union. It's more than a juicy tidbit that Brau Union happens to
be Austria's major brewer with brands like Zipfer, Gösser and
Kaiser and a market share of 50 percent. It would have
benefitted most from the brewers' gentlemen agreement.
Kingdom - Beer leads to ... whey hey hey, banned Budweiser
The puritans on the board of the Advertising Standards Authority
lack any sense of irony, or on 10 April 2012 they would not have
banned a radio commercial for Budweiser beer, after a complaint
that it suggested that men who drink beer on a night on the town
would be more likely to "pull" (ie attract the opposite sex)
than .. than ... sadly the commercial would not say.
According to a transcript leaked to British media, the offensive
commercial featured an American football coach giving a
motivational pep talk before a lads’ night out.
- Heineken opens regional office in Nairobi
SABMiller and EABL will not exactly be trembling in their shoes
now that Heineken has opened a regional headquarter in Kenya's
capital, as local media reported in March 2012. But it shows
that global brewers are taking the East African market serious.
The Dutch brewer supplies its Heineken beer to the Kenyan market
through a local distributor, Maxam Ltd, which is associated with
businessman Ngugi Kiuna who has held the franchise since 2007.
Heineken's regional office in Nairobi will be headed by Koen
Morshuis, General Manager East Africa, which underlines
Heineken's intention to get a larger share of the East African
beer market, albeit through imports only.
Mr Morshuis has moved to Nairobi from Vienna where he was
Heineken’s marketing manager for central and eastern Europe.
Also in March 2012, Heineken announced it would open an office
in Tanzania to help push its brands into the market, which is
dominated by East Africa Breweries Limited (EABL) and SABMiller.
Russia - Independent directors - aren't they a pain in the
Why does Danish brewer Carlsberg plan to spend up to USD 1.2
billion to buy the 15 percent of Russia's Baltika brewery that
it does not already own? Anybody in a rush? And why did it
promise to pay so much (the maximum 1,550 rubles/USD 52 per
share represent a 25 percent premium on the current stock
price), although everyone and his dog know that the Russian beer
market spells trouble?
Beer consumption dropped 10 million hl between 2007 and 2010 as
Russia was hit by the global economic crisis and a crisis of its
own making, the 200 percent tax increase on beer in 2010. Last
year volumes declined another 3 percent. And the outlook isn't
all that good as more restrictions on the sale of beer will come
into effect in 2013.
Call it unfortunate timing that Carlsberg's announcement on 20
February 2012 to buy out Baltika's shareholders came when the
Danish brewer reported a drop in full-year profits, due to
weakness in its eastern European operations, aka Russia.
Carlsberg is dependent upon Baltika performing well. In 2011,
Baltika contributed about 40 percent to Carlsberg’s beer volume
sales and 45 percent to its EBIT. Before the crises hit,
Baltika's EBIT contribution stood at 52 percent in 2009.
Compounding Carlsberg's problems, Baltika's market share in
Russia has fallen 2.5 percentage points to about 37 percent
since 2008. Hardly surprising, last year Baltika's CEO was
forced to fall into his sword and remove himself to Baltika's
Austria - 1516 ... and all that
Visiting Vienna will make Munich beer lovers eat out their
hearts. How come Munich sports only three brewpubs whereas
Austria's capital, which at 1.7 million inhabitants is hardly
bigger than Munich, has so many brewpubs? By Conrad Seidl's
count "about ten" - depending on who's actively brewing or just
using the brewing kit for decor. Conrad is the man to know
because the Viennese beer writer and man- about-town publishes
an annual beer guide of Austria's best pubs and bars.
I am not sure why people go to brewpubs. That means I have never
actively conducted an impromptu poll outside a brewpub. Still, I
frequently wonder: do people go there because they like the
restaurant concept? Or do they specifically seek out the beers?
When visiting the 1516 recently I was forced to reconsider my
either-or-classification. It was a mid-week evening and the
place was heaving. Oh yes, and English was the lingua franca.
The 1516, like all successful brewpubs, is probably a bit of
both. It is a place of pilgrimage for beer aficionados who enjoy
its American-style beers. And it is the home away from home for
homesick tourists and the new class of about 10,000 itinerant
professionals who work at Vienna's many international agencies -
the United Nations and OPEC, to name but two. Above all, it's a
very affordable place to eat and drink, which may be the reason
why lots of people come there as soon as its doors open at 10 in
It also helps that 1516 is very centrally located, just a few
hundred steps away from Vienna's main drag, the pedestrianised
Kärntner Strasse, and that Austria has not yet introduced a ban
on smoking in bars and restaurants. The 1516 has two bars on two
floors, one for smokers and one for non-smokers, which is a good
thing as it keeps the militant non-smokers at a safe distance. I
will not deal with the smoking/non-smoking issue here at length.
Suffice to say that Austria's bars and restaurants will take a
massive cut in business and that even highly profitable ones,
like the 1516 with a total staff of about 50, will suffer should
any future Austrian government bring in anti-smoking
The name - 1516 - will ring a bell with brewers. 1516 was the
year when the Bavarian Reinheitsgebot was forced upon
unsuspecting brewers. I don't think that the regulars at the
1516 get the reference or, if they do, that they care. To them,
the 1516 is an American-style brewpub, where they are addressed
in English by the friendly staff (number one reason for
visiting)... and where they serve different beers with distinct
hoppy notes (not sure most punters would notice). The beers at
the 1516 may be Reinheitsgebot, like the unfiltered 1516 lager,
or not, as in the case of Eejit's oatmeal stout, but I firmly
believe that to the majority of visitors the whole issue is
really beside the point.
Like many Vienna brewpubs, the 1516 has been going for quite a
while. Since 1999, to be precise. It's owned by Horst Asanger, a
former ice hockey player. Horst is a very nice and quiet person
and prefers to run things unobtrusively and efficiently from
behind the bar. He is not one for the limelight or for giving
interviews to journalists. That's what he got Conrad for, who
has been involved with the 1516 right from the start. Which is
probably a good thing as Conrad would make a good brewer and an
even better beer marketer if he did not already have a day-job
as a political editor for Der Standard.
The other thing about the 1516 is that, thanks to Conrad's
outgoing nature and Hans' generosity, it has become part of a
network of microbrewers from around the world, who always seem
to end up in the 1516 when in town. The way to honour these
friendships is to brew each others' beers, it seems. 1516 brews
several special beers whose recipes have been developed by
others, like, for example, the Victory Hop Devil IPA which they
brew under licence (I am not sure if this is the term among
friends) from the American micro Victory Brewing Company in
Downingtown near Philadelphia.
Whether you are interested in tasting very flavoursome Austrian
beers or just need a rest from the wife's power shopping - if in
Vienna, make sure to visit the 1516. It will be time well-worth
Dominican Republic –
Heineken rumoured to take over Cerveceria
Neither AB-InBev nor Heineken has confirmed
it, but a persistent rumour in the Caribbean has it that the two
brewers are in a USD 1.5 billion race to buy the Dominican
Republic's biggest brewer Cerveceria Nacional Dominicana (CND).
The brewer of Presidente beer, which is
available in many other Caribbean islands, has allegedly been
put up for sale by the nation's biggest company, the tobacco
manufacturer Grupo Leon Jimenes, which holds a majority stake in
CND. In 2010, CND had a turnover of USD 455 million and an
EBITDA of 120 million according to company data.
Heineken already owns a 9.3 percent stake in
CND. Acquiring a majority stake in CND would seem like a logical
thing to do, given that in December last year Heineken increased
its stake in neighbouring brewer Brasserie Nationale d'Haiti (Brana)
to 95 percent from 22.5 percent.
Czech Republic – The sober view on Molson
Coors’ heady USD 3.5 billion deal
It’s the wrong sort of emerging market and
it’s the wrong sort of price. Molson Coors' multi-billion foray
into central Europe with the acquisition of Czech Republic-based
StarBev, the brewer of Staropramen beer, which was announced on
3 April 2012, left investors more than underwhelmed. On the day
the deal became public, the U.S.-Canadian beer group’s stock
dropped 5 percent.
StarBev, the former AB-InBev unit in central
Europe (13 million hl), was sold by CVC, a private equity firm,
after merely holding it for three years. The purchase price
represents about an 11x EBITDA multiple. That’s less than what
SABMiller paid for Foster’s but still a lot, as for Molson Coors
the acquisition may turn out to be light on revenue growth. Even
management has already admitted that cost savings will be
minimal, at best.
USA – AB-InBev plans marketing blitz for
nineteen new products this year
After three years of straight volume
declines, AB-InBev thinks it’s got a plan. As the President of
North American operations, the Brazilian-born Luiz Edmond, told
the Wall Street Journal on 29 March 2012, the brewer will
produce more beers this year, while leaning on its distributors
not to carry the competition’s beers.
Already in November 2011, AB-InBev informed
the more than 500 wholesalers who distribute their products
across the U.S. that it wanted them to sell fewer rival brews.
Because of the three tier system in the U.S., brewers and
distillers cannot sell alcohol directly to the retailers but are
required to distribute it through intermediaries.
The toughening rhetoric has made a growing
number of wholesalers "anxious''. They probably remember the old
ways of Anheuser-Busch. In 1996 Anheuser-Busch launched a “100
percent share of mind” programme, which included some incentives
to distributors so that they dropped non-A-B brands and
concentrated on only the important A-B brands. The message to
wholesalers in those days was: “We want their efforts and focus
aligned with ours.”
Mr Edmund, in the interview with the Wall
Street Journal, calls on the wholesalers’ loyalty. Wholesalers
will have to decide which brewer they want to partner with most
closely. "I'm loyal to my wholesalers. Why would I not expect
the same loyalty to me?'' Mr Edmund was quoted as saying.
Australia – Time to define “cider”
Australia seems to be in the middle of a
cider boom. Walk into any big-name liquor store and you'll find
shelves, once packed with bag-in-the-box wines, groaning under
the weight of apple and pear cider bottles. One liquor store
your correspondent visited on a recent trip to Australia claimed
to stock 70 different ciders from all over the globe. Dozens of
shiny brands from Australia and New Zealand, from Ireland and
Sweden, were jostling for the consumers’ attention, alongside
funky French farmhouse cidre and cloudy British scrumpy from the
How times have changed. A decade ago, it was
hard to find any good cider in Australia - especially good
imported cider. Now ciders represent 2 percent of total alcohol
sales in the off-premise sector, having grown 14 percent per
annum over the period 2005 to 2010.
Drinking cider in Australia can turn into an
expensive affliction. Rekorderlig from Sweden costs over AUD 80
(EUR 63) per carton of 24 bottles or AUD 10 per pint (EUR 8.0)
in a pub. That’s what many Australians would call “expensive” or
even a “rip off”, particularly if they knew that in high-excise
Sweden a pint of Rekorderlig will only cost them EUR 6.0.
Compare that to the price of a mainstream
Australian beer brand: a similar-sized carton of any mainstream
beer will set you back less than AUD 40.
Apparently, younger Australian consumers lace
their cider with a shot of liqueur or brandy. Many will think
this custom vile, unless they know how lacking in flavour many
Brauwelt’s Australian reporter John Harvey
and I conducted a cider tasting of twelve randomly purchased
domestic and imported ciders last month and here are our
Several sported a colour which was not
inviting. Many showed poor noses, especially those which claimed
to be pear ciders (or perry, to be precise) and had no pear
notes whatsoever. Using a 20 points score, most ciders only
achieved 10 points or less. Best performed the aforementioned
Rekorderlig cider from Sweden and 5 Seeds Clean Crisp Cider (by
Tooheys/Lion) at 16 points each.
What is really annoying is that consumers of
cider often aren’t told how the ciders have been made. As there
is no Australian legislation defining what actually constitutes
cider, we often could not find out from studying the label if
the ciders we tasted had been made from crushed apples, or if
they had been blended (ahem), using an alcohol base and added
Rekorderlig, for example, states on the label
that the cider “is made from the purest Swedish spring water and
is bursting with deliciously ripe summer apple flavours.” It’s a
nice product but not what we would have called a cider.
Our personal evaluation suggests that tighter
regulations, leading to more informative labelling, could be
beneficial for consumers.
For example, it would be good to know the
types and sources of juices used: natural juice, concentrated
juice or reconstituted juice.
Many orange juice products currently marketed
in Australia carry labels which indicate the types and sources
of the juices used … similar labelling for cider and perry would
certainly be useful.
Czech Republic - MolsonCoors will buy
So all the pundits got it wrong. Neither
Asahi nor another private equity firm were the forerunners in
acquiring StarBev. AB-InBev's former central European unit went
to Molson Coors. The brewer said on 3 April 2012 that it will
buy StarBev from private equity fund CVC Capital Partners for
EUR 2.65 billion (USD 3.52 billion) to expand in central and
Czech Republic - Back off from Budweiser,
PM tells Minister for Agriculture
With the ruling centre-right party ODS
lurching from scandal to scandal, the Czech Prime Minister Petr
Nečas apparently did not want to open another battlefield with
brewer Budweiser Budvar. In mid-March 2012 he finally had enough
of his Minister for Agriculture's macho posturing and told him,
probably in not so many words, to leave Budweiser Budvar alone.
More specifically, he ordered the Minister,
Petr Bendl (ODS), to replace his cronies on the state-owned
brewer's supervisory board with experts and cancel Budweiser
Budvar's controversial audit by HZ Consult (as reported by
The Prime Minister took it upon himself to
announce on 14 March 2012 that there will be changes at the
brewery. “Yes, there will be a restructuring of Budvar’s
supervisory board. It will be smaller and there will be
personnel changes, whereby experts close to the National
Economic Advisory Council to the Government will be appointed,”
Mr Nečas was quoted as saying.
Earlier this year, Mr Bendl appointed his
personal advisor, the lawyer Tomáš Jindra, to Budvar's board. Mr
Jindra later acted on the Minister's behalf when he asked for
copies of the brewery's accounts, which were denied to him by
Budějovický Budvar’s director Jiří Boček, it was reported.
Media reports at the time hinted that Mr
Bendl was looking for an excuse to sack Mr Boček from the
brewery and privatise Budvar - but not before securing a cut for
himself and his buddies.
All these plans are off - for the time being
at least. But to many people in the Czech Republic, the
attempted raid on Budweiser Budvar underlines what their country
suffers from: namely politically malleable state agencies,
greedy politicians, over-mighty businesses and a culture of
impunity (The Economist newspaper).
Incidentally, the week after the PM finally
managed to draw a line under the Budweiser affair, the Czech
daily MF Dnes published wiretapping records of five-year old
phone calls between the then-Prague mayor Pavel Bém (ODS) and
the influential lobbyist Roman Janoušek. They discussed,
apparently improperly, sales of city and state property and
office appointments. The story immediately became a major
political scandal, as it revealed the degree of the lobbyist's
informal influence over the Prague City Hall's decision-making.
The provenance of the tapes has caused a
separate scandal. Mf Dnes says the tapes were originally the
work of the country’s security service and were leaked to a
private company, then owned by a leading politician in another
As if this wasn't bad enough, only days after
the wiretapping story had made headlines, Mr Janoušek was in for
more trouble following a traffic accident on 23 March 2012.
Newspapers reported that he crashed his Porsche into another car
and ran over its driver as she tried to stop him from fleeing.
They also say he was drunk. Strangely enough, Mr Janousek was
not arrested by the police after he was detained in a park,
apparently doing a runner.
Looks like the Prime Minister will
have his hands full for some time if he wants to clean up his
party's corruption-tainted image. Budweiser Budvar should use
this reprieve well.
Australia - More brands to leave Foster's
It's like a mass mutiny. First Stella, then
Asahi and Corona, now Carlsberg. One by one, Foster's is being
deserted by foreign brand owners. The latest ones to leave the
Foster's stable are Carlsberg and Kronenbourg, both owned by the
Danish Carlsberg Group.
In 2007 Carlsberg and Foster's signed a
licensing agreement for the production and distribution of both
the Carlsberg and Tuborg brands, which previously had been with
Independent Distillers, a beverage company now owned by Asahi.
The agreement between Foster's and Carlsberg was renewed in
December 2010 and called "long-term" (What is long-term? Two
years and a bit?).
Belgium - The outrage of the month: Mr
Brito's EUR 133 million super bonus
As could be expected, many on the
bloggosphere screamed "à la lanterne" when an article appeared
in the Belgian magazine Trends on 9 March 2012 which said that
AB-InBev's CEO Carlos Brito was entitled to a super bonus of EUR
133 million. What had Mr Brito done to earn this? Bring down
debt two years ahead of target that had been piled up following
the acquisition of Anheuser-Busch.
Now, that's hardly news. Readers have known
for years that executive options totalling about EUR 1 billion
were given to CEO Carlos Brito and 39 AB-InBev executives
provided they would cut debt to a set target.
What makes this scheme unusual is that the
bonus was tied to a single criterion, a debt reduction target,
and not to a host of criteria. But remember, the bonus was
awarded at a time when the world was facing a severe financial
crisis. And special circumstances require special measures.
India - Heineken rumoured to be
negotiating a further stake in United Breweries’
What did I argue a few weeks ago - that
Heineken should make the UB Group's Chairman, Vijay Mallya, an
offer he could not refuse and obtain majority control of United
Breweries - now that Mr Mallya is struggling to prevent his
ailing airline Kingfisher from getting grounded for good. So, lo
and behold, what did several media report at the end of March
2012? That UB Group’s chairman wants to sell a 12 to 13 percent
stake in United Breweries to Heineken, which would raise
Heineken's stake to just over 50 percent from currently 37.5
According to sources, Heineken is expected to
pay about EUR 250 million for the 12 to 13 percent stake.
Negotiations are said to be in an “advanced phase”.
That's an obscene amount of money for such a
small stake given that India's total beer profit pool (measured
in EBIT) amounts to merely EUR 28 million. That's according to
UK - PM Cameron wants to introduce floor
price for alcohol
In an effort to clamp down on binge drinking,
the Prime Minister has radical plans. Taking his lead from
Scotland, whose parliament voted on 14 March 2012 to introduce a
minimum price per unit of alcohol as of next year, David
Cameron, on 23 March 2012, proposed the same for England and
Mr Cameron favours a minimum price of GBP
0.40 (EUR 0.48) per unit of alcohol, which equals a small glass
a wine. That would affect nearly half of all alcohol on sale,
some experts think.
2009 december ·