- Beer and coffee anyone?
So brewers have woken up and
smelt the coffee? Several families with interests in - rival -
breweries have clubbed together with
Germany's Joh. A. Benckiser (JAB), the investment vehicle of the
Reimann family, to make a bid for Dutch company DE Master
Blenders, best known for its Douwe Egberts coffee brand.
On 12 April 2013 DE Master
Blenders agreed to be bought for EUR 7.5 billion (USD 9.84
JAB, which already owns a
portfolio of global coffee brands, including Caribou Coffee and
Pete's Coffee & Tea, is looking to build a beverage company to
eventually rival Nestlé (Nescafé, Nespresso). JAB operates as a
holding company and through its subsidiaries LABELUX Group GmbH,
Coty Inc., and Reckitt Benckiser Group, offers household and
personal care products in Germany.
JAB was already the largest
shareholder in DE Master Blenders with a stake of more than 15
percent. To fully take over DE Master Blenders it led a
consortium of buyers, including the Belgian families Van Damme
and Van der Straten Ponthoz, who, according to the Belgian
magazine "Trends", had a 11.03 percent stake in AB-InBev in
Again, according to "Trends", the Belgian
families were joined by the Colombian family Santo Domingo.
Through their investment firm Bevco, the Santo Domingos own a 15
percent stake in brewer SABmiller.
Who could have brought the Belgian and
Colombian families to the table? Most likely Peter Harf, who is
Chairman and Chief Executive Officer of Joh. A. Benckiser. Mr
Harf served as Chairman of first InBev, then AB-InBev, from 2006
Incidentally, Mr Harf is also Deputy Chairman
of the Board of Reckitt Benckiser, where SABMiller's CEO Graham
Mackay was appointed a Non-Executive Director in 2005.
Finland - Heineken to sell Hartwall
That's it. Heineken hopes to exit Finland.
According to media reports on 11 April 2013, Heineken has
initiated sales procedures for its Finnish beer and beverage
According to anonymous sources, Heineken has
sent preliminary information on Hartwall to potential buyers and
requested indicative bids by the end of April.
Hartwall is believed to fetch about EUR 500
million, with interest most likely to come from equity
investors, the sources said.
Heineken acquired Hartwall in 2008 as part of its
joint purchase of Scottish & Newcastle with Carlsberg.
In February 2013, British media had revealed
that Heineken may look to offload the Finnish unit. At the time,
Heineken only admitted that it had started a review of its
Finnish operations with a decision to be taken in the course of
India - Diageo's
bid for a majority stake in United Spirits is set to fail
That's tough: stumbling in the home straight.
For years, Diageo, the world's number one drinks group, has
tried to buy part of Vijay Mallya’s United Spirits group. In
November 2012 it finally managed to clinch a deal for a 53
percent stake in the company.
That bid for majority control is likely to
fail, leaving Diageo with less than a third of India’s largest
distiller, media reported in early April 2013.
Poland - Heineken buys 3.21 percent stake in
Zywiec from Harbin
Who on earth is Harbin? It was only a small
news item on 9 April 2013 that Dutch brewer Heineken, via its
Austrian unit Brau Union AG, bought a 3.21 percent stake in
bewer Zywiec from the minority shareholder Harbin.
The stake is worth some PLN 159.9 million (EUR
39 million/USD 51 million). Zywiec, which is Poland's number two
brewer with a market share of 32 percent, has a market
capitalisation of USD 1.6 billion.
Before the transaction Heineken's unit Brau
Union AG controlled 61.94 percent of Zywiec, while Harbin NV, a
private company Heineken described in one of its documents as
its partner at Zywiec, controlled 36.22 percent.
Now who happens to be Harbin? Well, that's a
long story of big risks, even bigger daring and plain good luck.
The story takes us right back to 1990 when Poland's communist
regime fell and in the course of what was later called "economic
transformation" former state-owned breweries were privatised.
The man who gambled high was the Australian
Allan Myers, 66, a commercial lawyer whose area of expertise
includes taxation and revenue. Insiders say he can command up to
AUD 20,000 (USD 21,000) a day in fees for appearing as leading
counsel in large and complex cases.
A few years ago, "The Australian" newspaper
revealed that Mr Myers had amassed one of the nation's largest
fortunes, estimated to be more than AUD 700 million, through a
far-sighted investment in Polish brewing in 1990.
USA – AB-InBev faces storm in a beer glass
Who are these people that are suing
Anheuser-Busch for millions of dollars in damages over claims
that that the brewer is watering down its Budweiser, Michelob
and other brands? Since the end of February 2013 at least eight
lawsuits have been filed against Anheuser-Busch (A-B), the U.S.
unit of AB-InBev, accusing it of adding water to several beers,
bringing the alcohol levels in the beers below those stated on
Hello, are these plaintiffs suffering from
the symptoms of mass hysteria? Or are there any merits to their
claims that they have received less bang for their buck?
In the European Union, for example, labelling
regulations permit an "analytical tolerance" of +/-0.5% ABV for
all beers below 5.5% ABV. As a consequence, a beer with stated
5% ABV can in fact be 4.5% ABV or 5.5% ABV. If the beer has over
5.5% ABV, the legal tolerance is +/-1.0% ABV.
These fairly wide tolerances are meant to
help small brewers that may have trouble in always getting the
stated alcohol content right. However, it is assumed that big
brewers on the whole manage to get within +/-0.1% ABV of the
stated alcohol content. Food monitoring agencies in all EU
countries keep a close eye on these things to prevent any
"systematic exploitation" of these tolerances.
In the U.S., there are labelling regulations
in place with similar tolerance ranges. If the U.S. plaintiffs
and their lawyers had bothered to read the law concerning
alcohol labelling, they would have found the following:
(1) For malt beverages containing 0.5 percent or more alcohol by
volume, a tolerance of 0.3 percent will be permitted, either
above or below the stated percentage of alcohol. Any malt
beverage which is labelled as containing 0.5 percent or more
alcohol by volume may not contain less than 0.5 percent alcohol
by volume, regardless of any tolerance.”
This means that a 5% ABV Budweiser can have
an alcohol content as low as 4.7%. A 4.2% ABV Michelob Ultra
could legally drop to 3.9% ABV and still be in compliance with
what its label says.
In wine, tolerances are even wider. Wineries
in the U.S. can actually decide which alcohol content to put on
their labels. A wine with an actual alcohol of 13.3% ABV has
within its label alcohol options a range from 11.8% ABV to 14.0%
Have consumers complained if the label said
“14% ABV” and all they got was a 13.3% ABV buzz?
USA – AB-InBev and DoJ close to a settlement
The U.S. Department of Justice (DOJ) and AB-InBev
jointly requested on 5 April 2013 that a stay in their legal
fight be extended to 23 April 213. However, they said they had
reached the framework of an agreement to settle.
The DOJ had filed a lawsuit on 31 January
this year to stop AB-InBev, the world's major brewer, from
buying the 50 percent of Mexico’s Grupo Modelo it does not
already own for USD 20.1 billion, saying that it would seriously
hamper competition in the U.S. beer market, where AB-InBev and
Miller Coors already control close to 80 percent.
However, the most recent statement indicates
that AB-InBev’s Plan B – to sell Modelo's Piedras Negras brewery
in Mexico near the U.S. border to wine company Constellation for
USD 2.9 billion plus the perpetual rights for the Corona brand
and other Modelo brands in the U.S. – seems to have won the DOJ
If the DOJ and AB-InBev finalise an
agreement, it will need to be approved by the court. The
proposed transaction must also be approved by Mexico’s
The revised deal will make Constellation,
whose wine labels include Robert Mondavi wines, the third
largest U.S. beer company.
Netherlands – Heineken’s executive committee
What can it mean that Alexis Nasard, formerly
Heineken’s Chief Commercial Officer, has been appointed
President Western Europe & Chief Marketing Officer as of April
For Mr Nasard to become President Western
Europe, Didier Debrosse had to vacate this post. At the end of
March Mr Debrosse was sent to Latin America to take on the
challenge of Managing Director Heineken Brazil. Whether Mr
Nasard volunteered for the new job or whether the portfolio was
pushed his way in the recent committee reshuffle announced in
February this year, we cannot say.
What is beyond doubt is that Heineken’s unit
Western Europe remains the brewer’s main building site. You
don’t need to be a clairvoyant to predict that beer volumes in
Western Europe will continue to decline and that competition
among brewers will grow even fiercer. Among the top 4 global
brewers, only Heineken and Carlsberg still significantly depend
on Western Europe for their profits. While AB-InBev make 7
percent (EBITDA) and SABMiller 17 percent (EBITA) of their
profits in these markets, Heineken realise 32 percent (EBIT) and
Carlsberg 46 percent (EBIT) there.
In actual fact, Western Europe has long been
Heineken’s “engine room”, a much-liked metaphor among brewers,
providing the profits needed to fund Heineken’s acquisitions.
Belgium – AB-InBev says CVC owes them money
me if you can”, seems to be CVC’s attitude in an ongoing spat
between AB-InBev and the private equity company CVC. According
to the fine print on page 27 of AB-InBev’s recent regulatory
filing (25 March 2013), AB-InBev says that CVC owes them money
from the 2009 sale of AB-InBev’s central European unit which
later became StarBev.
The hitherto undisclosed dispute which has
been raging since last year – when CVC disposed of StarBev to
Molson Coors - is now headed to court.
UK – Bring out the Radlers
And we thought the Brits would fight
all continental “muck” on their beaches. Apparently not. They
even seem to produce it themselves. Judging from the recent
launches, this year will be the year of Radlers – courtesy of
the global brewers Carlsberg, Molson Coors and Heineken.
Radler-style beers — a blend of beer and
lemonade — are said to have been
invented in the early years of the 20th
century by German publicans seeking to offer cyclists a
refreshing beverage to enjoy after a bike ride. The category has
already enjoyed some success in Europe where it comprises 3
percent of the total beer category in Germany, 5.8 percent in
Austria, 3.9 percent in Hungary and 9.1 percent in Croatia.
Brewers in the UK seem to be unsure if they
should use the German word "Radler" for their beer mixes (or
“flavoured beers” as some like to dub them). While Molson Coors
and Carlsberg have zestily avoided the issue altogether by
calling their launches brand extensions (“Carling Zest” and
“Carlsberg Citrus”), only Heineken dared to speak its name. In
March 2013 Heineken UK brought Foster’s Radler - a 2.0% ABV mix
of Foster’s beer and cloudy lemon juice - into the market.
USA - Consumer lawsuit could delay AB-InBev’s
takeover of Modelo
The name “Joseph Alioto” is probably mud at
AB-InBev, or unprintably worse. Mr Alioto is a San Francisco
antitrust attorney who on 22 March 2013 filed a private
antitrust lawsuit in California on behalf of nine consumers,
thus hoping to prevent AB-InBev’s USD 20.1 billion takeover of
Mr Alioto is not an unkown at AB-InBev. In
2008 already he filed a lawsuit seeking to block InBev's
purchase of Anheuser-Busch, but to no avail.
Nevertheless, AB-InBev seem to take this
lawsuit seriously as it could throw a spanner in their works. On
25 March 2013 AB-InBev said in a regulatory filing: “Even if we,
Grupo Modelo, Constellation and Crown Imports resolve the
litigation with the Department of Justice, the court in this
private action could enjoin the parties from completing the
combination with Grupo Modelo, or could further delay it.” AB-InBev
added: “We intend to defend against it vigorously.”
Whatever AB-InBev’s lawyers think of this
lawsuit in private – whether it will get Mr Alioto and his
clients anywhere or not – a suit is a suit and hence it poses a
Therefore, shareholders had to be told in the
Germany - Big German brewers accused of
running a beer cartel
Ho ho – a German beer cartel? At first sight,
it cannot have been a very effective cartel, if brewers in
Germany fail again and again to drive the price of a crate of
beer above EUR 10 (for 10 litres of beer). But then, perhaps
it’s a novel kind of cartel, aimed at dropping the average
retail price of beer even further?
Whatever the case, German media reported at
the end of March 2013 that for more than a year now Germany’s
antitrust authorities have been investigating a dozen major
brewers, including Carlsberg, AB-InBev, Bitburger, Erdinger and
Radeberger, over alleged price fixing.
German brewers Warsteiner and Krombacher
confirmed that they are under investigation as did Carlsberg.
AB-Inbev and Radeberger refused to comment.
The antitrust authorities would not say how
much longer the investigation will draw on. If brewers are found
guilty they could face million euro fines, running to
In a separate proceeding, the antitrust
authorities have been investigating several Kölsch brewers in
Cologne since December 2011 after a whistle-blower accused them
of price fixing. This case is also still pending.
Mexico – SABMiller expects competition watchdog ruling this
How SABMiller can be so sure that their
complaint with Mexico’s competition watchdog will be successful
this time, is beyond me. Through their – legal -exclusivity
contracts with retailers, Grupo Modelo and Heineken have held
the Mexican market in a tight grip, thus preventing SABMiller
from gaining significant market share. After 20 years of trying,
SABMiller has only managed to gain just 0.7 percent of market
Now SABMiller has joined with several
microbreweries to challenge exclusivity contracts and a ruling
is expected this month. "We're feeling positive about [the
market] opening up," said Karl Lippert, SABMiller's Latin
America regional chief, at an investors’ presentation on 25
In Mexico, Heineken-owned FEMSA Cerveza
controls about 38 percent of the beer market in volume terms,
while Grupo Modelo has around 59 percent, leaving just 3 percent
to other players. Both major brewers have used exclusive
contracts with retailers to “compete” in Mexico’s roughly 70
million hl market.
SABMiller’s lawyers must be well known to the
Mexican authorities by now. According to the 21st
amendment law blog, in 2004 SABMiller filed a complaint with the
Federal Competition Commission (“FCC”) in Mexico alleging unfair
competition stemming from Modelo’s exclusive contracts. In 2006,
Mexico’s antitrust agency initially found in favour of SABMiller;
but, on appeal, Modelo was able to get the ruling reversed,
allowing Modelo and others to continue entering into exclusive
In 2010, SABMiller filed a second complaint
with the FCC claiming the country’s beer duopoly—Modelo and
FEMSA— is unfairly restricting competition by offering payments,
loans, and refrigerators to restaurants and retailers that agree
not to serve other brands.
New Zealand – Lion hits back at craft brewers
with new beer range and advertising
The new Crafty Beggars range of beers,
produced by Lion, has been banned by a retailer because its
advertising material is “an insult to a great industry". In
early March 2013 the retailer Liquorland Newmarket tweeted that
it would no longer stock Crafty Beggars brews due to the tagline
causing a backlash among drinkers.
The range is marketed with the following
description: “Someone should make a craft beer you can actually
drink. That's the conclusion we Crafty Beggars came to. A rogue
society, hidden deep within the industry, made up of nine
brewers of unsurpassed skill and fanaticism, who all agreed that
beer had gone in two directions - either hopelessly middle of
the road, or so snobbily crafty that one overpriced sip will
blow your face off in a blitzkrieg of hops and whatever else has
been arbitrarily thrown in. Something had to be done.“
Although there may be a kernel of truth in
this, Lion was quick to point out that the promotional bumf was
pure irony. The range was designed for mainstream drinkers
interested in trying something new but who were not yet ready
for some of the extreme flavour options available from the craft
Lion also insisted that the nine brewers
mentioned are real people within the company.
Namibia - SABMiller to begin construction of brewery in Namibia
Norman Adami, former South African MD of
SABMiller would not do it. So the task fell to his successor
Mauricio Leyva Arboleda: to honour their commitment to build a
brewery in neighbouring Namibia.
In April 2013 ground will be broken in
Okahandja, a town north of capital Windhoek, for the
construction of a USD 34 million 260,000 hl brewery. It is to
open in 2014.
The Namibia entity is 60 percent owned by
SABSA Holdings, a wholly owned subsidiary of SABMiller. The
other 40 percent is held by local Namibian partners comprising
20 percent Onyewu Investments and 20 percent by three charitable
trusts for the benefit of local communities. Previously,
SABMiller had said that the new brewery will create some 150 new
permanent jobs – which are desperately needed in the Okahandja
SAB, the South African unit of SABMiller, has
been trying for nearly 20 years to set up a brewery in the
country of its main competitor in the region, Namibia Breweries
Limited (NBL), the brewer of Windhoek Lager. But when Heineken,
Diageo and NBL were granted permission to jointly build a
brewery in Johannesburg, South Africa, in 2008, the Namibian
government must have felt pressured into dropping its resistance
to SABMiller’s plans in 2009. Construction was scheduled to
start the following year.
SABMiller blames the three-year delay on
“rezoning obstacles”. However, if truth be told, Mr Adami was
probably not all that keen on investing in Namibia, a relatively
small and mature beer market (per capita consumption is fairly
high at 40 litres beer), with a total population of about
2.1million people, which could easily be served by importing
beer from South Africa. Currently, SABMiller controls under 20
percent of the beer market in Namibia, sources in Namibia say.
2013 march · february
2009 december ·