Singapore – Heineken faces a new roadblock
in its APB takeover bid
In Amsterdam they will be scratching
their heads. Only days after Heineken’s takeover offer for Asia
Pacific Breweries (APB), Kindest Place, a company controlled by
Thai billionaire Charoen Sirivadhanabhakdi’s son-in-law, raised
the stakes on 6 August 2012 by offering to buy the 7.3 percent
of APB owned directly by Fraser & Neave (as opposed to shares
owned in the joint venture with Heineken).
Kindest Place offered 55 Singapore
dollars apiece for the stake, which is 10 percent more than
Heineken's 50 Singapore dollars (USD 40) offer for Fraser &
Neave’s entire APB holding.
On 3 August 2012 the board of Fraser
& Neave had recommended to shareholders that they should sell
their APB shares (direct and indirect) to Heineken.
South Africa - Lawmakers target alcohol as
public health problem
South Africa is crafting a new law
to restrict alcohol advertising, raise the minimum drinking age
to 21 from 18 and clamp down on drink driving, media reported in
August 2012.The bill would also propose warning labels on
alcohol containers, raising taxes and stricter licensing laws
for alcohol outlets.
The bill will be discussed in South
Africa's cabinet in the next few weeks before its release for
Politicians from South Africa to
Kenya are under pressure to do something about a problem that is
adding to Africa's burden of HIV, birth defects, road accidents
and violent crime.
According to reports, South Africa
has the world's highest measured rate of Foetal Alcohol
Syndrome, caused by mothers who are binge drinking during
pregnancy. In some towns in the Cape Town region, ten percent of
children have the condition, which causes learning difficulties
and stunts growth.
USA – Craft brewers report growth
On 6 August 2012, the Brewers
Association (BA), the trade association representing the
majority of U.S. brewing companies, released strong mid-year
numbers for America’s small and independent craft brewers.
Dollar sales were up 14 percent in the first half of 2012, while
volume of craft brewed beer sold jumped 12 percent during that
same time period, compared with the same period last year, says
Russia – AB-InBev shuts down one of its
nine Russian breweries
AB-InBev intends to close its Kursk
brewery, located about 500 km south of Moscow, in an effort to
reduce costs, SUN InBev, the brewer’s Russian unit said in early
August 2012. With Russia’s beer consumption in steep decline,
the Kursk brewery's output fell 30 percent in 2011. Following
its shut down, production will shift to other sites. From the
plant's existing 275 staff, only 50 are expected to remain with
the company. The Kursk brewery has a capacity of 1 million hl.
Australia – Foster’ to axe jobs
It was to be expected. With the loss
of some licensed brands like Stella Artois and Carlsberg,
Foster’s owner SABMiller took a long hard look at its production
site at Abbotsford near Melbourne and decided to shut down one
of its seven production lines by October this year. This will
lead to loss of 33 jobs, hopefully through voluntary
Singapore – Heineken closer to deal with
Fraser & Neave
Phew – no bidding war yet. After only two
weeks of deliberations, on 3 August 2012 Fraser & Neave’s board
of directors recommended Heineken’s USD 4.1 billion offer for
its 40 percent stake in Asia Pacific Breweries (APB) to
shareholders, the Amsterdam-based brewer said in a statement.
Heineken already owns a 42 percent stake in APB.
Heineken was pushed into action to seek full
control of Singapore-based APB following Thai Beverage’s bid for
a 22 percent stake in Fraser & Neave (F&N) earlier in July. Thai
Beverage, the brewer of Chang beer, is controlled by Thai
billionaire Charoen Sirivadhanabhakdi. At the same time, a
company owned by his son-in-law also acquired about 8.4 percent
of APB, it was reported.
Analysts were relieved that Heineken was not
forced to up its initial offer, which many believed was already
very fair. Many had expected Heineken to raise its offer to
secure control of APB, with which it has been involved since
1931 and through which it brews and distributes its brands in
Russia - Oasis right in the heart of action
Why would anybody want to build a
new brewery in Kazakhstan? It’s not a terribly fair question
because the question is loaded. It implies that Kazakhstan, a
huge country south of Russia, is a somewhat peculiar market.
Well, it is. Larger than Western Europe, it’s home to only 15
million people. Think Berlin - Paris and hardly anybody in
between. Not good for shunting beer around. If you pardon the
comparison, Kazakhstan is a bit like an island market in terms
of brewers’ profits. Alright if you’ve got a monopoly. So-so if
it’s a duopoly. And truly, shockingly bad if there are several
players in the same field. Already, beer consumption stands
somewhere between 30 and 40 litres per capita. Sorry, market
researchers are a bit vague here. Whatever the exact figure, it
would still be ok for an emerging market. It would be even
better, nay spectacularly high, for a predominantly Muslim one,
which is what Kazakhstan is.
But how much higher can beer
consumption rise? In Turkey, another Muslim country, beer
consumption is way below 20 litres per capita. And this is not
for brewers’ lack of wanting or trying.
Which brings me back to my initial question:
why would anybody want to build a new brewery in Kazakhstan? I
think it becomes a slightly fairer question if you take into
consideration that two long-established players have already
cornered the beer market: Turkey’s Efes and Carlsberg. Together
they allegedly control 86 percent of beer production which stood
at 4.25 million hl in 2011, according to the recent Barth
Report. Carlsberg has one brewery while Efes has three. Efes’
webpage curtly says: “For the present moment the company owns 2
breweries in Almaty region and [one in] Karaganda city.” Do they
plan to have another one? Your guess is as good as mine.
Besides, running two breweries in Almaty, a
city of 1.3 million people, must be one too many for Efes’
liking. But they cannot help it. One of these breweries dropped
into their lap when Heineken decided to join forces there with
Efes in 2008 and left the management of the Kazakh operations to
Efes. Now why would Heineken have done such a thing, unless …
well, unless they had struggled to continue going alone?
Actually, Denmark’s Carlsberg followed Heineken’s example and in
a flash of inspiration merged its Kazakh Derbes Brewing Company
with Baltika-Almaty in 2010. In other words, the world’s major
brewers knew when it was best to apply common sense: if you
cannot beat them, join them.
My question, why anybody would want to build
a new brewery in Kazakhstan, becomes fairer still if I reveal
the location of the new brewery. It’s Almaty. From what I have
heard it’s going to be a big brewery. The capacity is between
300,000 hl and 500,000 hl. That’s what I would call an
optimistic capacity. Because to run such an operation profitably
you will need volume. And quickly. You see, this is what is
worrying me: Will Efes and Carlsberg welcome the new kid on the
block? Will they say: “Come in, make yourself at home, let’s all
be friends and share the spoils”? Will they generously
relinquish some of their volume to accommodate the newcomer? If
you remember what I said about island markets above, you will
know the answer.
UK – AB-InBev’s sales drop in the second
The UK loses its taste for InBev lager,
British media concluded with some ill-concealed glee in early
August 2012, after AB-InBev released second quarter results on
31 July 2012 which showed that it suffered a double-digit slide
in UK lager volumes because of heavy promotions by rivals.
AB-InBev said the wet weather between April
and June left beer drinkers less thirsty than usual and
contributed to AB-InBev registering a 10 percent decline of its
UK lager volumes compared with the same period a year ago.
UK – SABMiller benefitted from Euro 2012
Like its rival AB-InBev, SABMiller’s western
European sales volumes in the quarter ended June 2012 suffered
from a combination of poor weather and weak economic conditions.
However, on an organic basis (excluding the impact of
acquisitions and disposals), lager volumes for the group were 5
percent ahead of the prior year for the quarter, the brewer
reported on 26 July 2012.
USA – Speculation mounts on the AB-InBev deal
Hopefully AB-InBev did not reckon without its
host – which in this case is the U.S. anti-trust body at the
Department of Justice. One of the biggest news stories in recent
weeks was AB-InBev’s acquisition of the remaining stake in Grupo
Modelo. Now the U.S. is abuzz with gossip that AB-InBev may have
to sell off brands to clear antitrust hurdles.
Last year, AB-InBev had a 47 percent beer
market share in the United States. Modelo, through its exports,
had a 5.7 percent market share. Combined these would push AB-InBev
over 50 percent market share in the United States.
Well aware that this would alarm
antitrust regulators, AB-InBev has made a move to work around it
by selling Modelo’s 50 percent stake in Crown Imports to
Constellation Brands. This separate deal ensures that AB-InBev
will maintain a market share of less than 50 percent in the
But will antitrust regulators consider the
Crown divestiture as sham and say that AB-InBev effectively owns
the products being imported, which means that it does have a
monopoly in the United States? In the U.S. having a 50 percent
plus market share is considered a monopoly.
USA – The impact of the AB-InBev-Constellation
deal on U.S. beer market
believe this transaction brings no change to the U.S. market,”
AB-InBev’s CEO Carlos Brito told analysts when the deal was
announced on 29 June 2012. Mark his words.
Several market observers beg to differ. As
they see it, the deal could change things. For one, the price of
imported beers could go up.
Traditionally, leading imports such as Corona
and Heineken have cost more than mainstream domestic lagers like
Bud or Miller Genuine Draft. But in recent years, because of the
U.S.’ economic wobbles, import pricing has stayed flat, and the
gap between the two segments has narrowed. The result has been
weaker sales for the domestic brewers, because consumers don't
have to pay as much of a premium for the imported brand.
Germany – Did Radeberger mislead consumers
and the taxman?
The scale of the Corona empties scandal can
be measured in its ever-widening ripples. After the German
environmental pressure group Deutsche Umwelthilfe revealed in
early July that brewer Radeberger had deceived consumers for
years about what happened to the Corona bottles once they had
been returned to Mexico as empties (where they were not refilled
and shipped back to Germany as required by German law), the
matter has now been taken up by the Association of Private
The Association of Private Breweries in
Germany, a large professional organisation of German breweries,
has asked the Hessian taxman to investigate if Radeberger dodged
paying VAT because of the empties scam.
Sweden – Carlsberg launches a craft beer
called “Lawn Mower”
That’s hopeless. That’s truly hopeless.
Carlsberg Sweden will launch a new “craft-style lager” named
Lawn Mower in Sweden this October. What on earth possessed them
to call a craft beer Lawn Mower? Don’t they know that “lawn
mower” is the term Americans use for those inoffensive bland
light beers men quaff on a Saturday afternoon after having mown
the lawn? Selling Lawn Mower in a can makes matters even worse.
Cans are the packaging of choice for those who want to chug a
beer in no time. It’s not the conventional container for a craft
So Carlsberg is either making the beer
wrongly, or describing it completely wrongly.Or both.
2009 december ·