Posted August 2016
Belgium – Leuven mayor wants to make AB-InBev’s Brito citizen of honour
Not only Leuven’s socialist mayor Louis Tobback is pleased that AB-InBev will remain headquartered in the city following its acquisition of SABMiller. Rik Daems, a city councillor and member of the Liberal party, is also a happy man. Both want AB-InBev’s CEO Carlos Brito to be made a citizen of honour, the Belgian newspaper De Tijd reported on 5 August 2016.
“AB-InBev remains in Leuven. Cool. Maybe Brito now becomes a Freeman. After all it is ‘only’ the largest beer company in the world,” Mr Daems tweeted on 4 August 2016. Read on
United Kingdom – AB-InBev’s new management board raises eyebrows
Oh ye innocents. What do you think a takeover by a foreign company means? It means you end up being run by foreigners. So why the feigned surprise over AB-InBev’s new executive management board? Just because it does not have one single SABMiller veteran on the list?
While AB-InBev has taken on SABMiller’s Mauricio Leyva, who joined the brewer in 2005 and rose to become Managing Director of the South African unit, he is not considered a “veteran” like Mark Bowman who was first hired in 1993. The exclusion of Mark Bowman, SABMiller’s top man in Africa, allegedly shocked the analysts. Read on
Brazil – Losing its fizz
The partly empty stadiums during the Olympics drove it home again: Brazil is in deep recession. Moreover, per capita beer consumption has been flat for several years at 63 litres and people have taken to drinking beer at home rather than at a bar. Off-premise consumption is 37 percent. This puts AB-InBev’s growth prospects somewhat in danger, considering the clear signs that its strategy, which focused on the on-premise with mainstream brands in returnable glass bottles, no longer seems to move the needle, so to say.
Brazil is AB-InBev’s second largest market behind the US, contributing about a quarter to its profits. Its local unit AmBev has a beer market share of nearly 70 percent. Through the first half of 2016, AB-InBev’s beer volumes in Brazil declined 6.7 percent, it was reported. Read on
USA – MillerCoors buys Texas craft brewer Revolver
Stepping up its foray into craft beer, the number two brewer in the US MillerCoors on 11 August 2016 bought into the Texas-based craft brewer Revolver, making it the third such deal announced in less than a month. Revolver was founded in Granbury, Texas, in 2012 by a father and son, Ron and Rhett Keisler.
Known for its flagship Blood & Honey wheat ale, Revolver joins Terrapin and Hop Valley, situated in Georgia and Oregon respectively. As with the other two deals, MillerCoors is taking a majority interest in Revolver, as opposed to buying it outright. Terms of the deal were not disclosed. Read on
USA – New definition of craft breweries in Texas
Are they holier than thou? Only hours after Revolver announced that it had been sold to MillerCoors, the Texas Craft Brewers Guild on 11 August 2016 released a new set of requirements defining what it takes to be a member brewery.
Now, breweries wanting to join the guild, which currently has 205 member breweries either in-planning or already operating, have to be independent and not owned or partially controlled “by an alcoholic beverage industry member”.
According to the Brewers Association, which represents craft brewers nationwide, to qualify as a craft brewer, the ownership stake of a Big Brewer must be less than 25 percent. Read on
Malawi – Carlsberg sells brewery to Castel
All things considered, Carlsberg’s investment in Malawi would not have given the Danish a lot of joy over the years. In fact, it must have been a near-disaster because it remained Carlsberg’s sole investment in Africa. Today, it is listed under the group’s Asian businesses.
Carlsberg does not disclose how much beer it produces in Malawi. It only says that its Malawian brewery has a capacity of 380,000 hl. The local unit is also engaged in the production of soft drinks and spirits. According to the Barth Report, Malawi’s beer output stood at an estimated 835,000 hl in 2015, after a jump from 210,000 hl in 2013 to 830,000 in 2014. This seems implausible, unless the most recent figures include the volumes of sorghum beer produced by SABMiller’s four plants in the country.
Malawi is a country of 16 million people and landlocked between Tanzania, Mozambique and Zambia. Carlsberg Malawi was founded in 1968 in partnership with the Press Corporation, a local conglomerate then under the personal ownership of Malawi’s dictator Kamazu Banda, who ruled the country between 1963 and 1994.
Today, much of Press Corporation is allegedly controlled by the government. But with the looting of public money endemic and the country beset by all kinds of shortage problems, including foreign exchange, fuel and other imports, running the beer and beverage business profitably would have been a challenge. Relying largely on tobacco exports and foreign aid, Malawi is amongst the poorest countries in Africa.
On 10 August 2016 Carlsberg announced it had sold its stake in Carlsberg Malawi to France’s Castel Group for an undisclosed fee, as it executes its strategy to slim down the company and focus on core businesses.
USA – Craft beer growth slows to 8 percent in first half 2016
Bye, bye to double digit growth? Craft beer slowed to its lowest growth rate in seven years. During the first six months of 2016, volumes were up 8 percent over the same period last year, says the Brewers’ Association (BA). That’s a big drop from the 13 percent rate craft beer notched in the first half of 2015, and just half the 16 percent expansion it enjoyed in 2014.
The slowdown in growth is party down to how the BA does its numbers. It excludes all the brewers that were sold, or in which a Big Brewer holds a sizeable stake. That excludes fast-growers like Lagunitas (part-owned by Heineken) and Ballast Point (bought by Constellation for USD 1 billion last year). Another fast-grower like Goose Island (owned by AB-InBev) is not in the numbers either.
But the BA does include Boston Beer, Sierra Nevada and a couple of other big craft brewers, whose volumes declined during the first half, according to Beer Insights, an industry tracker. Read on
Germany – Barth Report: Global beer production down 1.5 percent in 2016
Worldwide beer production declined 30 million hl in 2015, the hop merchant Barth estimates in its latest report. It was as if Australia and The Philippines had suddenly run dry.
This is the second year of global volumes declining. But in 2015 the drop was more pronounced, says Barth.
Sluggish economies in China, Brazil and Russia are partly responsible for this decline.
The biggest losers were China (-25 million hl in 2015), followed by the Ukraine (-4.7 million hl), Russia (-4.0 million hl), Mexico (-3.5 million hl), Brazil (-2.8 million hl), Japan (-2.7 million hl), USA (-2.6 million hl) and Venezuela (-2.5 million hl).
Although several countries posted production increases like Vietnam (+7.8 million hl), Thailand (+1.4 million hl), Cambodia and Ethiopia (both added 1.2 million hl each), global beer production declined to 1,900 million hl.
Belgium – AB-InBev to dominate top jobs after SABMiller takeover
The good news is: The world’s largest brewer said on 4 August 2016 it would continue to be headquartered in Leuven, Belgium, while its global management team, including CEO Carlos Brito and Chief Financial Officer Felipe Dutra, would continue to work out of New York.
The bad news is: AB-InBev said it would keep SABMiller’s offices in Woking, UK, open during a transitional period only, but would immediately close its central London headquarters. SABMiller’s regional hubs in Miami, Hong Kong and Beijing will also be wound down.
The interesting news is: AB-InBev’s executives will dominate leadership positions, filling all but one position on an expanded - if not bloated - executive management board. Read on
UK - Diageo claims return to growth but currency woes hit profits
Which numbers shall we trust? On 28 July 2016, the leading drinks group Diageo reported like-for-like sales for the 12 months to 30 June 2016 that were 2.8 percent higher than the previous year, reversing a two-year trend in which growth was broadly flat because of a slowdown in emerging markets.
However, Diageo’s reported sales were down 3 percent to GBP 10.5 billion (USD 13.6 billion), as currency devaluations and the sale of its wine business hit the figures.
Pre-tax profit fell 2.6 percent to GBP 2.86 billion (USD 3.7 billion). Incidentally, its operating profits were reduced by GBP 170 million (USD 221 million) because of the fall in sterling, Diageo said. Read on
Netherlands – Heineken’s sales slow in Africa
Perhaps it was a mistake to club Africa, the Middle East and eastern Europe into one unit. All these markets appear to be in trouble. Heineken reported on 1 August 2016 that second-quarter beer volumes dipped 5.9 percent on an organic basis across Africa, the Middle East and eastern Europe, hurt by a weakening environment in Russia and Nigeria, where low oil prices and falling currencies are denting growth.
Heineken’s CEO Jean Francois van Boxmeer told media that he is “praying for higher oil prices” to reinvigorate demand in Africa, the Middle East and Eastern Europe. Read on
Kenya – Cheap beer boosts profits at EABL
Low-end brands such as Senator beer helped East African Breweries Ltd. (EABL), Kenya’s largest brewer and spirits producer, post a 7 percent increase in full-year profit to 10.3 billion shillings (USD 101.6 million) in the 12 months through June 2016. “The performance was largely driven by continued growth in the spirits category, recovery of Senator in Kenya, and innovation across all markets,” EABL said in a statement at the end of July 2016.
The so-called emerging beer segment, a euphemism for budget beers, which includes brands like Senator in Kenya, Ngule in Uganda and Pilsner in Tanzania, grew by 112 percent. EABL’s sales of mainstream beer were down 6 percent, while premium and emerging spirits declined by 9 percent and 2 percent respectively, it was reported. Read on
Germany – Carlsberg plans to build a new brewery in Hamburg
To all appearances Carlsberg’s German unit Holsten will vacate its present inner city site in Hamburg and build a new brewery south of the river Elbe. There it has found a spot in an industrial area under lease from the city of Hamburg. Officially, Carlsberg Germany plans to move to its new site during the first quarter of 2018, estimating that it will only take it 70 weeks to plan and build a brewery. But the brewer has already said that, in case it misses this target, it will postpone relocating by a year and might shift production elsewhere, at least temporarily. Read on
United Kingdom – AB-InBev and SABMiller play poker again
Hello, what’s happened to risk? Why should AB-InBev have to compensate SABMiller’s shareholders for the UK’s droopy currency?
For several weeks SABMiller’s shareholders have grumbled that because of the weakening pound they would receive less money in dollar terms for their shares than they originally thought they would. Whereas the pound’s slide has not made much of a difference for British investors in SABMiller, who are now getting a slightly better price for their shares thanks to AB-InBev putting a bit more cash on the table, it has had a much bigger impact on the company’s American and European investors, who had calculated their potential returns using a much better exchange rate when the deal was announced.
When AB-InBev agreed in November 2015 to pay GBP 44 per share, the total price of the deal came to almost USD 108 billion. Since then, though, the British pound has tumbled against the US dollar, largely as a result of Brexit. That meant AB-InBev, which had planned to pay for the deal mostly using debt denominated in dollars, will not have to fork out as much as they thought.
As I see it, luck was on AB-InBev’s side. It was tough on SABMiller’s shareholders, but that’s how it goes on the stock market. Some win, some lose.
But as the takeover has not been wrapped up yet, SABMiller’s shareholders thought they could force AB-InBev to renegotiate the offer. Read on
USA – MegaBrew receives regulatory approval with conditions
Finally, on 20 July 2016, AB-InBev received US antitrust approval to merge with SABMiller. The approval by the Department of Justice (DOJ) was seen as a major obstacle towards the eventual merger, expected to be completed later this year.
Commentators say that the antitrust enforcers, who have blocked several major US acquisitions lately, showed leniency and took limited action against AB-InBev.
As was expected, the DOJ settlement requires AB-InBev to divest SABMiller’s entire US business – its stake in MillerCoors – to Molson Coors. But the DOJ also insisted on several caps to maintain competition in the US beer market and protect wholesalers as well as craft brewers. Read on
USA – MillerCoors buys two craft brewers
You don’t announce a deal these days via the media, you tweet it to all and sundry. The Oregon craft brewer Hop Valley, which was founded in 2009 and has two pub locations in the Eugene area, announced the sale of a majority stake to MillerCoors on its Twitter feed on 29 July 2016. Read on
Belgium – Private equity firms circle Pilsner Urquell
Long time, no hear regarding AB-InBev’s divestment of its central and eastern European assets, announced in April 2016. But at the end of July 2016 media reported that several US and European buyout funds are putting together bids, with some seeking to join forces to snap up assets worth up to EUR 7 billion (USD 7.7 billion). The companies, based in the Czech Republic, Poland, Hungary, Romania and Slovakia, are for sale as part of AB-InBev’s USD 100 billion-plus takeover of SABMiller. AB-InBev has offered to sell SABMiller’s entire European business to secure antitrust approval for the takeover. Read on
Italy - 32 Via dei Birrai collaborates with perfumer
It’s an interesting name for a microbrewery: 32 Via dei Birrai. It reads like an address (32 Brewers Street), but 32 actually refers to the Nice Classification, an international system of classifying goods and services for the purpose of registering trademarks, where beer is listed as class number 32. It may appear a bit long-winded, however for a brewery that claims to give a new definition to tradition and provide “a new language for the boundless scenario of the brewery sector”, this is probably just as well.
No wonder that a brewery with a name that needs to be pronounced carefully decided to join the Slow Brewing movement. It was the first to do so in Italy.
Founded in June 2006 in Pederobba in the northern Italian province of Treviso, three beer enthusiasts - Alessandro Zilli, Fabiano Toffoli and Loreno Michielin - realised their dream of producing craft beers that would stick out, both in terms of content and packaging.
When celebrating their 5th anniversary, the microbrewery launched its 8th style called 3+2 to mark five years (3+2). In a funny twist, the label also refers to the beer’s low alcohol content of just 3.2 percent ABV.
For their 10th anniversary the three founders went one step further and introduced the 32 Nebra by Angelo Orazio Pregoni, a beer that was brewed in collaboration with the perfumer Angelo Orazio Pregoni, which is said to offer a new and surprising sensory experience. It is obtained – as all the beers of 32 Via dei Birrai – thanks to the perfect harmonisation of modern production techniques procedures inspired by craftsmanship. As 32 Via dei Birrai says, its new beer is an “amber, re-fermented in the bottle; its intense buttery and baked fragrances evolve to fruity tones. Toasted hazelnut and coffee blend perfectly with the malt, hints of sweet red watermelon and bitter notes of cocoa, floral arrangements and apricot herbaceous fragrances.” Its alcohol content is 8 percent ABV.
What makes the beer special is that it’s probably the first beer ever that was produced in conjunction with a perfumer whose task was to enrich the beer formula with new aromas and fragrances.
The 32 Nebra is sold in a limited edition magnum bottle. It is available too in a hand-made gift box. Containing batteries and two mechanisms the box can be transformed into a highly original clock in just a couple of simple steps.
To celebrate their anniversary in style, the microbrewery invited 150 friends and clients to a party in Venice at the end of June 2016. The location was the grand Palazzo Flangini directly at Canale Grande. The Venice location came with a message. “Venice represents Italy and internationalism, just like we do,” said Mr Michielin, who sells his beer world-wide.
Taking things yet another step further, 32 Via dei Birrai will provide all its beer bottles with the letters “birra 32” in Braille this year, making it the first Italian company, whose glass bottles “speak”.
Currently, 32 Via dei Birrai distributes its beers to 35 countries and 2.500 customers. It was the first Italian craft brewery to be certified DIN ISO 9001:2008 und CI, which means 100 percent “Made in Italy”. It became a certified member of Slow Brewing in 2013.