Beer Monopoly




    International Reports







Posted April 2015

Belgium – AB-InBev to woo women

With all the hype around Millennials and GenerationYs, brewers can be forgiven for having left a consumer cohort underserved: women. After all, who knows what women want? While handbag and shoe makers always seem to know the answer, brewers in the past mostly failed to get their offerings right: Or does anyone remember Animee (Molson Coors), let alone Eve (Carlsberg)?

Now it’s AB-InBev’s turn. Of course, shrewd as they are, they would not say it out loud. No crass pulling for them. Unlike their predecessors they have given their marketing drive a wholly innocuous term: they call this summer of love “2015 - the year of innovation”. Read on


South Africa – Diageo fully takes over a sorghum beer brewer

Funny that no one asked the question why Diageo should want to invest in sorghum beer in South Africa? Until recently, few Diageo watchers would have thought that premium spirits brands and a cheap traditional beer go together well. Besides, South Africa’s beer behemoth SAB exited the category 15 years ago, probably thinking that there was not much in it for them.

Perhaps Diageo was compelled to clinch the deal as part of its larger dealings with India’s liquor king Vijay Mallya?

In early April 2015, UK drinks group Diageo picked up another piece of the empire of Indian liquor baron Vijay Mallya when it entered an agreement to buy the remaining 50 percent interest in United National Breweries' traditional sorghum beer business in South Africa.

Diageo paid USD 22 million for a 50 percent stake of United National Breweries (UNB). It has also agreed to pay a further USD 14 million should the group meet a certain future earnings target.

Diageo first invested in UNB two years ago, when it reportedly paid USD 36 million to buy half the company, with the other half owned by Pestello Investments, a group connected with Mr Mallya. Read on


USA – Abita Brewery sells stake to private equity-backed craft venture

Is this the new succession plan for U.S. craft brewers? Louisiana's Abita Brewing Co. is becoming a founding partner of Enjoy Beer, an enterprise created to provide resources on a national scale to a select group of top independent craft brewers across the country, U.S. media reported on 7 April 2015.

Abita, which produces 190,000 hl beer annually and ranked 21st among U.S. craft brewers in 2014, recently completed a three-year, USD 30 million expansion that will increase its brewing capacity to about 500,000 hl.

To join Enjoy Beer, Abita reportedly sold a stake to this venture, which was set up by Harpoon Brewery’s co-founder and former CEO Rich Doyle.

Backed by an investment from San Francisco-based private equity firm Friedman, Fleisher & Lowe (FFL), Mr Doyle has launched Enjoy Beer, a consortium aimed at providing back-office support to independent craft brewers.

According to a company statement, “Enjoy Beer will create partnerships with additional top craft brewers who wish to preserve their local independence, while gaining shared resources in areas such as marketing, sales, purchasing, logistics, and finance in order to compete with large-scale corporate competitors.”

Reports say that Mr Doyle plans to find four or five other craft brewers with a similar profile, forming a consortium of proven craft brands that can share expertise and resources. Eventually, he wants his company Enjoy Beer to seek a stock-market listing.


USA – Boston Beer loses craft top spot to Yuengling

Who is the biggest U.S. craft brewer? Well, Boston Beer ain’t any longer. Although the maker of Samuel Adams beers actually increased volumes by 20 percent in 2014, it lost the top spot in the Brewers Association’s ranking to Yuengling, thanks to a change in the trade group's definition of what can be considered a craft brewery.

Last year, the Brewers Association tweaked its criteria. A “traditional” brewer can now use adjuncts such as corn, rice and syrups.

The privately-owned Yuengling & Son of Pottsville, Pennsylvania, the nation's oldest brewery (founded in 1829), uses corn, so previously it wasn't considered in the annual list. Now, it's on top, based on sales volume, surpassing Boston Beer, which sold 4.1 million barrels in 2014. (Some of that is cider and other malt beverages that the association doesn't count.) Read on


USA – MillerCoors’ long search for new CEO has set tongues waging

Do potential candidates think the job a one-way ticket, or does the candidate who suits all still need to be born? Fact of the matter is that MillerCoors, the U.S. venture between SABMiller and Molson Coors, hasn't named a new CEO.

The venture's current CEO, Tom Long, 56, told MillerCoors’ board a year ago that he planned to leave his post, but it had nobody to replace him when it announced his departure in early February 2015. Mr Long will depart on 30 June this year. Read on


Australia – Blame it on the price of beer that volumes slide

The annual excise tax ladled on a glass of beer has weakened demand, leading Coopers Brewery boss Tim Cooper to concede that beer might now be viewed by many Australian drinkers as too expensive.

What does he mean “now”? I for one have long thought that paying over AUD 4 for a 330 ml bottle of beer (craft beer, that is) in a shop was absolutely excessive.

As Dr Cooper told Australian media in March 2015, “over the last year or so I have been banging on about the fact we might have reached a point where the indexation of excise now has created an issue for us where people think that beer is relatively expensive.”

There is no longer inelastic demand — there is elastic demand — so people will make a purchase decision based on what they perceive as value,” he said.

By comparison, Coopers’ beers are relatively inexpensive. A six-pack of Coopers Pale Ale in 375 ml bottles will only set you back AUD 15.99 (EUR 11.40 / USD 12.20), while a six-pack of Little Creatures Pale Ale (Lion), in smaller 330 ml bottles, can cost you AUD 21.90 (EUR 15.25 / USD 16.35).

Nevertheless, Coopers has felt the pain of high beer prices too. At one point, the privately-owned brewer from Adelaide, whose national beer market share is about 5 percent, swallowed one round of excise increases on packaged beer to protect sales. This measure cost it more than AUD 1 million, but became impossible to maintain.

Small wonder, beer volumes in Australia have dropped to lows not seen since World War II as higher excise costs, cautious consumers and rival beverages such as cider and wine have eaten into the beer category.

Packaged beer volumes for December 2014 were down 2.8 percent on the same time in 2013, with latest figures showing that that rate of decline had accelerated to a 3.1 percent fall for January this year.

For the first eight months [of our financial year ending 30 June 2015] we are up 4.5 percent in sales, so we are still growing against the trend but it is certainly getting tougher,” Dr Cooper admitted.

If a larger brewer like Coopers finds the whole situation hard going, what about Australia’s craft brewers who need to charge even higher prices than Coopers’?


United Kingdom – BrewDog’s profits soar in 2014

Not bad for a brewer that was only founded in 2007 and started out with two employees and one dog. Scottish brewer BrewDog has posted profits and revenue up over 60 percent in 2014.

On 2 April 2015 the Aberdeen-based brewer reported an annual turnover of GBP 29.6 million (EUR 40 million) in 2014, up from GBP 18 million in 2013, while its profits soared to GBP 4.9 million (EUR 6.7 million) from GBP 2.9 million over the same period. Read on


Netherlands – Heineken takes broom to executive suite

Heineken has shaken up its executive ranks in a bid to boost flagging sales. On 31 March 2015 the Dutch brewer said that a number of its executives, including the company's chief strategy officer, would leave the group as it re-organises its business into four geographic regions.

These changes come less than two months after Heineken reported its slowest sales growth since 2007. In 2014 revenues rose just 0.1 percent to EUR 21.2 billion.

Chris Barrow, who has led the group's strategy since 2013 and who has been with the company for more than a decade, will leave Heineken in July 2015.

Mr Barrow will depart alongside Alexis Nasard, the president of Heineken's Western Europe operations, and Siep Hiemstra, president of the group's Africa Middle East division.

Mr Hiemstra will retire, as planned, in August, while Mr Nasard will leave at the end of June. The company said Mr Nasard “indicated his intention to leave Heineken to meet his ambitions outside of the company”. Heineken did not say where Mr Nasard’s future ambitions lie.

Mr Barrow’s departure is widely seen as underlining the fact that future merger and acquisition opportunities will be “bolt-on deals” with local brewers rather than major transformational deals. This means that there is not much for an M&A man to do. Read on


Vietnam – Government to sell down shares in brewer Sabeco

Vietnam’s Ministry of Industry and Trade has apparently submitted plans to the Prime Minister for approval, which will see the government’s share in the Saigon Beer Alcohol Beverage company (Sabeco) cut to 36 percent, local media reported in March 2015.

The government currently controls 89 percent of Sabeco, which is the country’s major brewer with a market share of about 42 percent.

According to Vietnamese media, Sabeco’s chairman Phan Dang Tuat said: “All the shares will be auctioned. But we haven’t decided on a price yet.”

The news will excite local and foreign investors, many of whom have been waiting for further shares to become available since Sabeco went public in 2008.

There are reports that alongside three Vietnamese companies, Japan’s brewer Asahi, Heineken and SAB Miller are all interested. Heineken already holds a small stake in Sabeco. Read on


USA – Craft brewers see exports rise

U.S. craft brewers are not only taking market share away from AB-InBev and MillerCoors, they are also starting to impact brewers in other countries. Export volume was up 35.7 percent in 2014 for a total of USD 99.7 million, according to the Brewers Association (BA). Total export shipments were 383,422 barrels (450,000 hl) in 2014 – which is less than 2 percent of the total amount of craft beer brewed in the United States.

Small and independent brewers are spreading the culture and community of craft beer around the globe,” said Bob Pease, CEO of the BA. “Beer drinkers internationally are embracing the innovation and flavours offered by American craft brewers.”Read on


USA – Megafood puts Megabrew on hold

Is Megabrew, the potential tie-up between AB-InBev and SABMiller, permanently off or just temporarily? Crystal ball gazers wondered after it was announced on 25 March 2015 that the Brazilian owners of 3G (who also have a 20 percent in AB-InBev) are buying a majority stake in Kraft Foods, together with investor Warren Buffet.

In a second step they will merge Heinz, which they acquired in 2013, with Kraft to create the third-largest North American food company – aka Megafood.

The deal still needs regulatory approval but observers agree that this should not be a problem.

Heinz shareholders will own 51 percent of the combined company and Kraft shareholders the rest. By combining Kraft Ketchup and Kraft Macaroni Cheese, the new entity will save about USD 1.5 billion in annual costs by the end of 2017 and will have eight brands worth over USD 1 billion each, the companies said.

Kraft Heinz, as the company will be called, is to be led by Heinz CEO Bernardo Hees and will have revenues of about USD 28 billion, or roughly half of PepsiCo’s in 2014.

The private equity firm 3G Capital also controls Restaurant Brands International, formed when its Burger King business bought the Canadian coffee and doughnut chain Tim Hortons last year.

UK media commented that the biggest loser in the Kraft Heinz Group merger is SABMiller, whose share price slid more than 1.1 percent on the day. There had been speculation that 3G was considering a bid for the brewer and combining the firm with AB-InBev.

However, given the size of the Kraft-Heinz deal, many observers thought it unlikely that 3G would be willing and able to execute simultaneously two substantial deals, from both financial and strategic perspectives.

Last June, when takeover speculation was almost feverish, analysts agreed that AB-InBev would be able to extract USD 1 billion in annual cost savings from SABMiller.

In the acquisition of Kraft, however, 3G and Berkshire Hathaway have said they expect to achieve USD 1.5 billion in cost savings, implying that they expect to extract more value from this deal than from an AB-InBev-SABMiller combination.

Nevertheless, the jury is still out if the Kraft-Heinz deal merely postponed an AB-InBev+SABMiller transaction or in fact called it off


United Kingdom – UK ad agencies call for strike against AB-InBev

Is this the Brave New World? An industry group for ad agencies in the United Kingdom is calling for a “strike” against AB-InBev over what it calls “despicable” business practices, St Louis media reported on 19 March 2015.

The London-based Marketing Agencies Association (MAA) is proposing that all agencies that currently work with the brewer stop doing so by 7 April 2015. In a statement, the MAA pointed to an AB-InBev e-auction for marketing services that “made a number of exploitive demands”.

According to MAA’s account, in AB-InBev’s pitch the brewer asked firms about their lowest rates, how many work hours they would “effectively give free to AB-InBev, out of the scope of total work,” how far beyond 120 days the agencies would be willing to wait for payment, and how much they would pay the brewer in rebates over the stipulated minimum for AB-InBev’s “Better World” sustainability programme. Read on


United Kingdom – Chancellor cuts beer tax for the third year running

The beer duty escalator, a system whereby beer tax was increased above inflation year on year, was the bane of UK brewers. However, after much lobbying from the brewers, the UK government saw sense and on 18 March 2015 the British Chancellor George Osborne announced that beer taxes will be cut for the third year running.

Commenting on the impact the latest tax cut is set to have on the UK economy, Brigid Simmonds, Chief Executive of the British Beer & Pub Association stated: “It will boost employment by 3,800 this year alone and attract new capital investment. It will put GBP 180 million (EUR 246 million) in the pockets of beer drinkers and pub goers. That is a huge difference.”

What this latest announcement shows to other EU governments is that a water-tight case can be made for beer tax cuts as a means of stimulating investment, growth, jobs and ultimately new tax revenues for the government too. Read on


United Kingdom – How to define craft beer

Is it something in the water? Brits like eccentrics – think Boy George and David Bowie. By the same token they passionately dislike labels. This applies to the country’s recent crop of small brewers too.

Figures from market research outfit Mintel show that one in five British adults have drunk craft beer in the past six months. Over the past 15 years, the number of breweries in the UK has risen threefold to more than 1,400, despite the total beer market shrinking by around a quarter during that time.

London, which had two breweries in 2006, now boasts close to 70. “Craft beer is the biggest thing to hit beer in living memory. There’s just one problem: no one involved in this thing seems to be able to agree on what it actually is”, a Guardian newspaper commentator wrote on 21 March 2015. Read on


Australia - Collaboration beer for AIBA

Nice idea. A Collaboration Beer, which has become the highlight of the annual Australian International Beer Awards (AIBA), is created by the previous year’s Champion brewers in the Large, Medium and Small Australian Brewery categories.

The 2015 brew, called Girt by Three, will be a celebration of Australia’s rich brewing history as the name implies, along with a hint of the future direction of the industry.

The collaboration between 2014 Champions – that is CUB (Large), Thunder Road Brewing (Medium) and 3 Ravens (Small) - shares experience and innovation across three diverse elements of Australian beer. All the breweries are in the State of Victoria and the three brewers will produce a beer featuring old and new world influences with a view to explore and expand the future of the Australian Pale Ale style. Read on


Belgium - Europe’s brewers commit to ingredients listing and nutrition information for consumers

It’s probably one of the best kept secrets that a glass of orange juice has more calories than a glass of alcohol-free beer. In view of Europe’s expanding waistlines, The Brewers of Europe, a lobby group, announced on 26 March 2015 that its members would voluntarily list ingredients and nutrition information on their brands per 100 ml. This is in line with the legal requirements for all non-alcoholic drinks, including non-alcoholic beer. Read on



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