UK – What if Scotland left Team UK … and what will the whisky industry do?
With the Scottish referendum on secession from the UK scheduled for 18 September 2014, many commentators wonder how the 4 million Scottish voters will decide, considering that for months the campaign to keep Scotland British has been able to offer little more than dire warnings should those north of the border say yes to the Sexit (short for Scottish secession).
Although English media have painted bleak pictures of an independent Scotland, thus barely concealing an undercurrent of threat to the Bravehearts (“Scotland the naïve needs to get real” The Sunday Times newspaper ran a comment on 9 February 2014), the English public has displayed remarkably little interest in the whole affair.
A reason may be that the prospect of Scotland breaking away is not taken seriously. Polls show the no side (to secession) comfortably ahead. On 10 February 2014 only 43 percent of the Scottish voters were in favour of secession. But, as the Scottish First Minister, and proponent of independence, Alex Salmond, likes to point out, the last seven polls have tightened – in favour of yes. Read on
UK – Sugar is the new tobacco
Everybody in the alcohol industry should be worried. Food crusaders have found a new target: sugar. A new and vociferous health lobby, the UK’s Action on Sugar, claims that sugar is “the new tobacco” and that its threat to health has been underestimated for years.
Since before Christmas last year a fierce debate has been raging in the UK’s media over the negative side-effects of sugar. The health and nutrition experts behind the anti-sugar campaign say that rising levels of obesity and type 2 diabetes could cost the country up to GBP 50 billion (USD 83 billion) a year. That’s half the annual budget of the UK’s National Health Service. In fact, according to Action on Sugar, a poor diet contributes to more disease than smoking, physical inactivity and alcohol combined and that it is time to put diet at the centre of preventative health policy.
Whether they are out to stir up a scandal or not, some academics have controversially likened sugar to addictive drugs such as tobacco or cocaine and accused the food industry of cynically hooking children and parents on junk food to maximise profits. They are asking companies to stop advertising sugary drinks and snacks to children claiming sugar has become “the alcohol of childhood.” Read on
France - The long and winding road to tax justice
After the UK charity ActionAid accused SABMiller in December 2010 of tax dodging in some of its emerging markets, many thought the campaigners had scored a victory when western governments in 2013 promised they would put an end to this practice by forcing multinational companies to disclose what they earned and paid in taxes in all the countries they operate in.
But after all the political swash-buckling, the Organisation for Economic Co-operation and Development (OECD), a club of 34 rich industrialised nations with headquarters in Paris, came out with a proposal in January 2014 which campaigners could only call “lame”.
Incidentally, the first to comment were the accountancy firms, warning unisono that the proposals might place an unreasonable burden on companies.
Campaigners on the other hand, complained that the proposals were not going far enough. Richard Murphy, who works for the left-leaning think-tank Centre for Labour and Social Studies, remarked on 21 January 2014: “The G8 called quite explicitly for country-by-country reporting for tax purposes and the G20 endorsed that call. But, if you go to what is called the Base Erosion and Profits Gifting Action Plan that the OECD has produced … you’ll find something quite extraordinary. Country-by-country reporting is not mentioned at all in that plan. … Far from there being a plan for the full set of accounts that country-by-country reporting demands, just the sales, labour cost, profit and tax paid figures may be disclosed, and then only to tax authorities, and not to the public. So the OECD watered down their response to the G8 demand before they even got to work.”
He concluded: “We should be worried. And civil society should not rest on its laurels. Getting tax justice onto the agenda was one thing. Actually achieving it may be something that is much harder to secure.”
When asked by Brauwelt International to comment on the OECD’s proposals, ActionAid Tax Policy Adviser Mike Lewis was less scathing in is criticism. He said on 11 February 2014: "The simple idea that multinationals should report their tax affairs in each country where they operate was considered unthinkable by many governments and large companies just eighteen months ago. That some form of 'country-by-country reporting' is now on the table at the OECD shows how far the global tax justice debate has come in a short time.”
But he too harboured reservations: "ActionAid's investigation of SABMiller showed that, while transparency is important, it is international tax rules themselves that ultimately need to change to ensure that southern governments are not deprived of much needed tax revenue as a result of corporate tax planning. Those rules can't be equitably reformed without involving those countries most vulnerable to tax avoidance - the 154 developing countries that don't have a seat at the table in the on-going OECD negotiations."
This proves to show that governments’ grand announcements don’t always make it into fine print.
Netherlands – Heineken’s annus horribilis 2013
Net profit at Dutch brewer Heineken fell by more than half last year to EUR 1.36 billion (USD 1.85 billion), the company reported on 12 February 2014, as growth in emerging markets had fallen short of expectations.
Heineken's sales for 2013 showed a slight rise of 1.3 percent to EUR 21.3 billion.
The figures only drew sighs as they were in line with forecasts after the brewer issued a profit warning in October last year. Read on
USA – Coca-Cola signs deal with Green Mountain
Coca-Cola partnering with a coffee roaster? They couldn’t get Nespresso, so they bought a stake in the U.S. company Green Mountain instead? Wrong guess. The transaction, which was announced on 10 February 2014, has got nothing to do with hot drinks. It’s all about cold drinks in capsules. Coca-Cola will pay USD 1.25 billion (EUR 913 million) for a 10 percent stake in coffee roaster Green Mountain in order to expand Green Mountain’s “Keurig Cold” capsule system globally.
Keurig Cold is designed to dispense carbonated beverages, energy drinks, teas, sports drinks, enhanced waters, and more. Initially, the coffee maker will produce “precisely formulated” single-served pods for Coca-Cola’s cold beverages. The partners said they also planned to “explore further opportunities to collaborate on the Keurig platform.” Read on
USA – AB-InBev: If you can’t beat them, buy them
Chicago’s Goose Island brewery was only the first. In its effort to expand its range of craft beer (or “crafty”) offerings, AB-InBev has agreed to buy the Blue Point Brewing Company, famous for its Toasted Lager brand. The deal was announced on 5 February 2014.
The value of the transaction between Blue Point and AB-InBev was not disclosed, but we at Brauwelt International estimate it would have been around USD 30 million.
When AB-InBev in 2011 bought the similarly sized Goose Island brewery they paid USD 38.8 million.
Blue Point Brewing, based in Patchogue, N.Y., since its founding 15 years ago, will continue to operate there, according to the announcement. The deal will give it capital to expand its operational ability and “enhance the consumer experience,” the announcement said.
As could be expected, it sparked some controversy among U.S. craft beer consumers. On the website “gothamist.com” you can find the usual resigned “Well, there's another beer I can add to my list of ‘do not drink’. A shame, too” and the more outraged “F*** F*** F***. How many beers will InBev destroy? You murdered Beck's, you ass*****! imported from the NJ Turnpike!”
But on the whole, it seems that the deal caused less of a scandal than the one between AB-InBev and Goose Island. Although the wagging finger moralists could be heard loudest, many craft beer lovers on the blogosphere appear to have come to terms with the fact that craft beer is a business and not, as they would like it to be, a labour of love. Besides, it takes two to tango. It takes one willing to buy and another one willing to sell. Read on
USA – Boston Beer and Lagunitas embroiled in public spat
Take it as a sign that competition among craft brewers is heating up that, since December last year Boston Beer, the brewer of Sam Adams beer, and California’s Lagunitas brewery have been engaged in a slugfest. For Jim Koch, the founder of Boston Beer, this row cannot have come at a worse time as in 2014, Boston Beer celebrates its 30th anniversary.
For a long time, craft brewers have promoted an image of amicable competition. So it came as a bit of a shock when Lagunitas accused Boston Beer of specifically targeting its business and trying to replace its brands on tap wherever possible. Read on
Germany – Social media beer game: stupid does as stupid is
The latest online craze of “nekNomination” has doctors sounding the alarm around the world. Chugging beer is not a new concept, but nekNomination is a game that combines social media, peer pressure and drinking. It involves someone being filmed in underwear downing a beer in one, then nominating other people by name to do the same within 24 hours. The videos are posted and shared online.
The game is said to have started in Australia and went viral soon afterwards but it only hit Germany’s Facebook community in early February 2014. Few paid it any attention until a 27 year old, blond and dreadlocked mayoral candidate in Bavaria joined in the fun and posted a video of himself in checked boxer shorts chugging half a litre of beer.
He then challenged his three competitors in the mayoral race to do the same. If they don’t do so within 24 hours, they will have to make amends by sending a crate of beer to the challenger.
That’s when the whole business took a serious turn. On 5 February 2014, the Managing Director of the German Brewers’ Association, Holger Eichele, sent an Open Letter to Facebook, asking them to do something about this as it might promote alcohol abuse among the young.
On the U.S. website “thewire.com” a commentator sent out the following appeal on 4 February 2014: America, please don't fall for this idiotic online drinking game.” But added a resigned: “Who am I kidding? This freight train is coming and we can't stop it. Just don't nominate us.”
Austria – Two brewers fined for collusion
Tu felix Austria? No longer. Like some of their German counterparts, two Austrian brewers have been engaged in some illegal hanky-panky. On 30 January 2014 the Austrian Cartel Court fined two small brewers for vertical collusion with the retailers. Total fines were EUR 252,000 Euro. Villacher Bier has to pay EUR 195,000 and Brauerei Schloss Eggenberg EUR 57,000, it was reported.
The Austrian anti-trust watchdog said the two illegally coordinated beer prices, especially promotion prices, with the retailers over several years. Read on
Australia – Competition watchdog to investigate brewers' grip on pubs
Competition watchdogs on the prowl. In January 2014, the Australian trust-busters launched an investigation into the supply of beer to Australia's pub industry to find out if brewers are resorting to anti-competitive tactics that lock out rival beer brands.
In a letter sent to major brewers, the Australian Competition and Consumer Commission indicated that it was seeking a better ''understanding'' of the market to assess whether anti-competitive conduct was taking place. It is also scrutinising the profit margins of the beer companies, media said.
The commission is seeking responses by 21 February 2014. Read on
Australia – Closure of Foster’s Bluetongue brewery long overdue
It served its purpose while SABMiller was in a joint venture with Coca-Cola Amatil (CCA). Now that SABMiller own CUB, the former Australian unit of Foster’s, they decided to close the Bluetongue brewery down. Dozens of workers at this New South Wales brewery are set to lose their jobs, when the plant is shut down by the end of the year, media reported in January 2014.
CUB will "re-install" equipment from Bluetongue’s Warnervale site into the company's broader network, starting from May.
The Bluetongue brewery originally was founded by four Hunter Valley businessmen – Philip Hele, Bruce Tyrrell, Ian Burford and Paul Hannan – back in 2001. In 2005, they sold a half stake to John Singleton, a radio and television star turned adman. Mr Singleton quickly put his marketing touch on the brand and within five years the beer had gone from a boutique brand to one sold in every state of Australia.
Mr Singleton and his partners cashed in just before 2007, selling Bluetongue to Pacific Beverages, the Australian joint venture between SABMiller and CCA, for a price estimated at AUD 30 million (USD 27 million). Read on
Nigeria – Beer consumption declines but SABMiller plans for expansion
If Diageo is right, the Nigerian beer market declined in 2013 to perhaps 10 million hl from about 12 million hl in 2012. While Diageo and Heineken must be suffering from a bit of a headache given their excess capacities, rival SABMiller announced on 23 January 2014 that they need to expand their brewery in Onitsha, South Eastern Nigeria. The brewery only went on stream in August 2012 at an initial investment of over USD 100 million.
"Due to our growth and in particular the success of Hero Lager, a further USD 110 million will be invested in the brewery to triple its current annual capacity from 700,000 hl to 2.1 million hl," Simon Harvey, SABMiller Nigeria's Managing Director was quoted as saying.
Apart from Onitsha, SABMiller operates two other breweries in Nigeria.
How much beer SABMiller actually sells in Nigeria is hard to fathom as the company’s self-attributed volume of 1.75 million hl in 2013 may include non-alcoholic malt and bottled water.
The capacity expansion at Onitsha has already begun and is due for completion in the first quarter of 2015. Read on
UK – BrewDog takes the mickey out of Mr Putin with beer for über-hetero men
This is political activism with a twist. On the occasion of the 2014 Winter Olympics in Russia’s Sochi, the fearless Scottish brewer BrewDog has launched a beer in early February 2014 called “Hello, my name is Vladimir”.
It’s a double IPA brewed with Limonnik berries, which BrewDog says are great for improving sexual performance
The artwork on the label sports Mr Putin in Andy Warhol style, wearing lipstick. The important bit is the asterisk at the bottom which reads: “I am not for gays”.
James Watt, the co-founder of BrewDog, was quoted as saying that they produced the beer as a protest against President Putin's gay laws and to “hold up a mirror to discriminatory legislation signed off by Mr Putin.”
BrewDog reports on its website that it has sent a case of the beer to the Kremlin and that it will be donating 50 percent of the profits from this beer to charitable organisations that support like-minded individuals wishing to express themselves freely without prejudice.
Cheers to the Olympics and may the best (man) win.
The label says it all. Photo: BrewDog
USA – The “Terminator” to star in Bud Light Super Bowl commercial
Former California Governor Arnold Schwarzenegger has landed a new role:the wrinkly 66-year-old former bodybuilder and "Terminator" actor is the star of two commercials (out of six) designed to promote AB-InBev’s Super Bowl advertising campaign. The full commercials will be shown on Super Bowl Sunday, 2 February 2014.
"Surprise," Mr Schwarzenegger says in one of two Bud Light "teaser" commercials that debuted on national television in January.
In one of the 17-second-teasers, the ex-Governor is wearing a shoulder-length blond wig, a black-and-white athletic suit and a matching elastic headband – like the tennis star John McEnroe in the 1970s.
In the second spot, "Arnold Warmups," he does a few stretching moves, including appearing to touch his toes, before picking up a ping pong racquet and taking a few combative practice swings in the air.
What’s the message? Actually, I have no idea. To me, these teasers are as bizarre as some of Anheuser-Busch’s “Wassup?” ads more than a decade ago. But then, American humour has always escaped me. Read on
Czech Republic -Lobkowicz Group plans stock-marketing listing
Who they? And why would they even consider going to the stock-market? The Czech brewer Pivovary Lobkowicz is planning Prague’s first initial public offering (IPO) since 2011 to tap investors’ craving for new stocks and expand in the nation with the world’s heartiest quaffers of beer.
The Lobkowicz group is controlled by the K Brewery Group and operates seven regional brewers: Černá hora, Protivín, Pivovar Uherský Brod, Jihlava, Klášter, Rychtář Hlinsko, and Vysoký Chlumec. It was cobbled together in the past few years by the former banana seed trader turned investment banker Martin Burda and associates. Insiders say he would have got them for a lark. Several breweries were doing ok, while others were struggling. All together they produce about 70 different brands and a total of 900,000 hl beer.
According to Czech media, the group ranks fifth in the country behind SABMiller (Pilsner Urquell), Molson Coors (Staropramen), Heineken and Budweiser Budvar. The Czech market is basically divided into three international brewers and three domestic ones (Lobkowicz, Budejovicky Budvar and Pivovary Moravskoslezske) plus a host of about 200 microbreweries. The microbreweries‘ total output represents only about 1 percent of the annual beer production in the country, industry experts say. Read on
Korea – AB-InBev re-enters market
Those who thought that private equity firms are only good at milking assets need to think again. The private equity outfit KKR, which bought the Oriental Brewery in 2009 from AB-InBev for USD 1.8 billion including debt, recently re-sold it to AB-InBev for USD 5.8 billion. That’s three times the original transaction price. Not bad, eh?
The deal, announced in January 2014, values Oriental at 11.6 times EBITDA. When AB-InBev sold it to KKR Oriental was only worth 8.6 times EBITDA.
Admittedly, 2009 was a bad year for deals. The markets were in the throes of the financial crisis and AB-InBev was desperate to raise cash in order to finance its takeover of Anheuser-Busch in the United States.
Still, you have to give it to KKR that in the course of the past five years they beat AB-InBev in what the Brazilians claim to be best in class: cutting costs and raising profits. Read on
Australia – Coopers’ shareholders enjoy pay-out bonanza
It was a good year to marry into the family that owns Australia's largest locally owned brewer, Coopers Brewery, Australian media joked in January 2014. Its 143 shareholders were showered with AUD 14.7 million (EUR 9.4 million) in dividends in fiscal 2013 (ending June 2013), making it the biggest pay-out in the brewer’s 150 year history.
Coopers' annual report, dispatched to its tiny shareholder base, of whom 90 percent are linked - via birth or marriage - to the brewery's 19th century founder, Thomas Cooper, reveals the generosity of directors to relatives.
The dividend payment represents a recent strategic shift by the board, led by Chairman Glenn Cooper, to funnel a greater proportion of profits into the hands of its family shareholder constituency. Read on
Vietnam – Beer sales soar
Some achievement. Vietnam’s beer production grew faster than the country’s economy in 2013. For the full year, GDP was up 5.42 percent, while beer output rose 7.4 percent to 29 million hl, Vietnamese media report.
Saigon Beer Corporation (Sabeco) and Hanoi Beer Company (Habeco), the country’s two largest brewers, respectively accounted for 13.3 million hl and 5.3 million hl.
On average, Vietnam’s 87 million people consumed about 32 litres of beer per year.
With this momentum, output could increase to 33 million hl in 2014 and 36 million in 2015, the Viet Nam Beer, Alcohol and Beverage Association (VBA) said, echoing Heineken’s forecast that Vietnam is going to remain an attractive beer market in the future.
Already, Vietnam is the “beer drinking champion” of the ASEAN region. In terms of volumes it ranks third in Asia after China and Japan. In profits per hl it outdoes China and India by far, according to estimates by Nomura, a bank.
Still, the market remains difficult territory for foreign brewers. The only international brand to have successfully cracked the market is Heineken. Vietnamese consumers are notorious brand-hoppers. They are open to tasting new products when invited to do so but only buy popular brands. This may also be the reason Foster’s, Zorok (launched by SABMiller in 2007), and even Sapporo, which were mainly given as gifts in previous years, are not as attractive anymore.