Beer Monopoly

 

  

   About

 

   News
  

   International Reports

        
   Blotter


   Contact

  

   Home

 

 

  

Posted June 2008:

USA – It’s getting complicated

The next act in the takeover battle of Anheuser-Busch has just begun. While SABMiller let it be known that it has conducted informal talks with Grupo Modelo and InBev as concerns a partial or complete acquisition of the Mexican brewer, sources close to Anheuser-Busch said that the American brewer is planning to reject InBev’s offer.        

First it was InBev and Anheuser-Busch. Now Grupo Modelo and SABMiller have entered into the fray. Does anybody know what’s going on?

Until Wednesday 25 June 2008 most people believed that Grupo Modelo could be the stumbling block to InBev’s attempt of taking over Anheuser-Busch for USD 46 billion in cash. The day before, on Tuesday 24 June 2008 it was reported that the world’s largest brewer by volume, SABMiller, had been in secret informal talks with both Grupo Modelo and InBev to discuss whether Grupo Modelo was willing to be bought out by SABMiller and at what price.

As if to diminish the impact of such an unforeseen development, InBev on Wednesday 25 June 2008 sent another letter to Anheuser-Busch, reiterating its offer, saying that InBev had already obtained committed financing and has paid about USD 50 million in fees.

As we reported, purchasing the remaining 49.8 percent of shares in Grupo Modelo that it does not own yet, Anheuser-Busch could finally call the shots at Grupo Modelo and fend off InBev’s unsolicited offer by making itself prohibitively expensive.

This scenario has preoccupied armchair strategists for weeks now – until information was leaked to the press as concerns the contract between Grupo Modelo and Anheuser-Busch. According to the Investment Agreement as of 1993 when Anheuser-Busch first bought into Grupo Modelo, both parties have the right of first refusal. That means: Should SABMiller make Grupo Modelo an offer which Anheuser-Busch can match, then Grupo Modelo will automatically go to Anheuser-Busch. Whether Grupo Modelo likes it or not.

Therefore if SABMiller is really serious about acquiring the Mexicans’ shares in Grupo Modelo, it has to make a really extravagant offer. However, the Mexicans’ share has already been valued as between USD 10 billion and USD 15 billion which equals ten to fifteen times EBIT. In other words, Grupo Modelo will not come cheap.

That is the reason why an offer by SABMiller for Grupo Modelo seems unlikely – unless the South Africans hope that InBev will buy back its stake in Grupo Modelo once the Brazilian-Belgian brewer has successfully taken over Anheuser-Busch.

That’s a scheme with lots of questions marks. Furthermore it implies that history will repeat itself. In 2004 SABMiller and Anheuser-Busch were engaged in a fierce takeover battle for control of the Chinese brewer Harbin. In the end Anheuser-Busch obtained the majority of shares but had to buy out SABMiller at a premium. For SABMiller this was a good deal as it walked away from Harbin having pocketed a risk-free USD 120 million.   

The question that no one can answer right now is: How will the Mexican shareholders of Grupo Modelo decide? Do they want to sell or not?

Rationally speaking, the CEO of Grupo Modelo, Carlos Fernandez, 41, has no reason to agree to a sale. He would lose his job. It also seems that he has some shareholders behind him who do not want to sell either. 

A handful of Mexican families control 45 percent of Grupo Modelo, a holding company. The original Control Trust in 1993 had eight members, of whom four are still alive. Their heirs, not having a vested or personal interest in Grupo Modelo, were never admitted to the Control Trust. Sources familiar with the situation say that there are some 40 odd shareholders that each own between half and one percent of Grupo Modelo. In effect these people sit on shares worth between USD 50 million and USD 100 million. Would they decline an offer by either Anheuser-Busch or SABMiller? Hardly likely.

And the story continues

However, all the above was idle speculation until yesterday. Today, on Thursday 26 June 2008 U.S. media report that Anheuser-Busch will reject InBev’s offer as too low and plans to woo its shareholders with a restructuring plan that entails the sale of the company's theme park operations, layoffs, more than USD 500 million in cost-cutting efforts and the sale of Anheuser-Busch's packaging unit.

That’s what many observers had been expecting. Given its company history, Anheuser-Busch is not the acquisitive type. Put plainly: it is extremely cautious when it comes to buying other companies. Anheuser-Busch’s self-defence plan underlines this. Rather than go for Grupo Modelo Anheuser-Busch hopes to pacify its shareholders with cash.

Following InBev’s offer for Anheuser-Busch launched two weeks ago, market observers have been pondering that InBev, in order to finance the deal, would have to sell off Anheuser-Busch’s non-core assets such as the theme parks and the aluminium packaging unit. That’s exactly what Anheuser-Busch is proposing to do now. 

Nevertheless, Anheuser-Busch is only trying to buy itself some time. The interesting thing is what happens next.

And that is: Will InBev take its offer directly to Anheuser-Busch’s shareholders? Will InBev attempt a hostile takeover? Consensus view among the people in the know is: YES! Obviously, InBev has yet to announce such a move.

To win over Anheuser-Busch’s shareholders, InBev may have to raise its offer by more than USD 3 billion, to around USD 70 per share from its current offer of USD 65 per share, though.               

Posted 26 June 2008

________________________________

 

USA – Chances aren't bad that Anheuser-Busch could be sold

Things are finally moving on. Although the Board of Anheuser-Busch at its Friday 20 June 2008 meeting did not come out in favour of selling the largest brewer in the U.S. to InBev, it did not rule out a sale either. Which can only mean one thing: The Board wants to drive up the price and see how much InBev is willing to fork out for Anheuser-Busch before it commits itself, one way or another.  

At present no one knows how InBev's takeover attempt is going to end. One thing is certain, however: InBev's spin doctors are doing a great job at keeping the rumour mill going. Contrary to apprearances, nothing has happened since InBev launched its USD 47 billion offer for Anheuser-Busch two weeks ago, ... except that Anheuser-Busch has finally gotten down to studying the offer in earnest and in detail. That is in fact some achievement after 18 months of just talking.

You would not believe it. Last week, InBev's CEO travelled to Washington on a charm offensive and what happened? He received the proverbial slap in the face by Missouri's Senator, a woman called Claire McCaskill. Missouri is Anheuser-Busch's home state, which is what got Ms McCaskill involved in the first place. Playing the patriotic card – it's election time after all – she urged Anheuser-Busch's Board to reject InBev's offer. About the same time, the world's richest man, Warren Buffett, who also happens to be Anheuser-Busch's second most important shareholder with about 5 percent of Anheuser-Busch's shares, let it be known that he urges the Board to consider the USD 65 per share offer favourably. The first news the international media picked up more than willingly, the second one less so. Now which news is more important? The second one. Definitely.

U.S. politicians may pander to Joe Six Pack's xenophobia, yet in the end it is people like Warren Buffett, for whom money has no passport, who decide if Anheuser-Busch is soon to be run from a small place in Belgium called Leuven.

As things stands, many investors do not seem disinclined to selling their shares to InBev. That's how the U.S. media have interpreted a letter by Adolphus Busch which was leaked last week and supposedly said that chances for a sale are better than 50:50. What adds an extra bit of spice to his claim is that he happens to be a shareholder and the current CEO's uncle. Both August Busch IV and his father and predecessor August Busch III are against a sale of Anheuser-Busch. If the Board is really open-minded about a sale this means that August Busch IV is in a minority position. 

Another detail that speaks in favour of a sale is that Carlos Fernandez, the CEO of Grupo Modelo resigned from Anheuser-Busch's Board only hours before the meeting last week. Anheuser-Busch controls 50 percent of Mexico's major brewer Grupo Modelo (Corona Extra). That's why Mr Fernandez has sat on Anheuser-Busch's Board since the mid-1990s. To avoid a conflict of interests, Mr Fernandez decided to step down. 

It was reported widely that Grupo Modelo could become a potential spoiler in InBev's takeover of Anheuser-Busch, provided the Mexicans agree to sell the rest of their shares to the Americans. That would add an extra USD 10 billion to USD 15 billion to Anheuser-Busch's current price and might make the brewer too big to stomach for InBev. We at Brauwelt do not think such a scenario very likely. After all, for the better part of 20 years the Mexicans have thwarted all of Anheuser-Busch's atempts to gain control of Grupo Modelo. So why should they help Anheuser-Busch out of a spot of bother now?

With Mr Fernandez gone, it's now up to the 13 members of Anheuser-Busch's Board to decide on the brewer's future. Yet, it's anybody's guess when they will finally announce their decision.

So far the international media have only focused on the financial and political implications of  a takeover. Apparently the U.S. Presidential election campaign is big on everybody's mind. 

That must be the reason why no one seems willing to pursue InBev's statement that it plans to take the Budweiser brand truly global should its takeover of Anheuser-Busch prove successful.

InBev's intentions make sense – if your memory is that of a goldfish. A few years ago the same company announced that it would take Brahma (out of AmBev's stable of brands) global. After several presumably costly yet unsuccessful campaigns the brand has been relegated to regional status.

Moreover, there is a trifle matter to content with – namely the trademark dispute between Anheuser-Busch and the state-owned Czech brewery Budweiser Buvar over the rights to the Budweiser name.

Lyle Frink reports from Prague that the Czechs have slowly woken up to the fact that InBev's acquisition of the American Anheuser-Busch could have serious implications for the last of the country's “family silver”: Budweiser Budvar. The consensus opinion is that an InBev victory would trash the value of Budweiser Budvar, slated for privatisation in the undetermined future.

The major asset of Budweiser Budvar is its claim to the Budweiser name – and its ability to largely shut Anheuser-Busch out of the European market.

It is widely believed that Anheuser-Busch would be a potential buyer of Budweiser Budvar when it comes on the market, thus ending the trademark dispute. Only the Americans might be willing to pay a strategic (read inflated) price for what is basically a medium-sized Czech brewery with some export business. 

If InBev wins, there dies Anheuser-Busch's dream of making its Budweiser a truly global brand. Also the inflated value of the Budvar brewery would come hissing down to the levels expected of a niche brewery.

Of course, InBev could decide to bargain for Budweiser Budvar. But why on earth should they want to do that? To be able to sell the American Budweiser in all markets on earth? Does anybody in their right mind really believe that InBev would spend millions of Euros for what is only a matter of pride? When they already have a huge portfolio of brands? No. And nor do the Czech. For once the Czechs and Anheuser-Busch's wills seem to coincide. Mark this day. 

Posted 23 June 2008

________________________________

 

Belgium – InBev makes USD 65 per share offer for Anheuser-Busch

On 11 June 2008 InBev made an unsolicited USD 46 billon offer for the American King of Beers. The response from St. Louis? Anheuser-Busch’s board promised they would look at it. 

After weeks and weeks of rumour mongering, InBev yesterday came out with an offer to acquire all outstanding common shares of Anheuser-Busch for USD 65 per share in cash.

Being paid in cash could prove attractive to shareholders, who receive an immediate premium of 35 percent over Anheuser-Busch’s 30-day average share price prior to recent market speculation, and an 18 percent premium over Anheuser-Busch’s previous all-time high of USD 54.97 as of October 2002. 

Circulating rumours rather than fact was a shrewd move by InBev to force Anheuser-Busch back to the negotiating table. It was leaked recently that the two companies have been in secret talks for 18 months over a deal but to little success, it seems. To InBev’s chagrin, Anheuser-Busch does not want to be bought out.

Whatever InBev’s initial time frame was for the deal, it had to make its offer public now before the U.S. presidential campaign gets any more agitated. Otherwise the Brazilian-run InBev could find itself at the receiving end of a patriotic outcry. To most people between New York and Los Angeles, Budweiser is as American as apply pie. 

The Anheuser-Busch deal lacks in obvious synergies. It is highly revealing that InBev does not make an explicit mention of synergies in the offer, which indicates that it is after size – getting back to the top slot in the brewers’ global ranking - and marketing expertise. On both accounts Anheuser-Busch scores highly. Whether these two reasons alone warrant the expense of USD 46 billion – that’s for the financial markets to decide.

Speaking of geography, Anheuser Busch is the perfect vehicle for InBev to extend its presence in the USD 90 billion-U.S. beer market where the two companies already have a distribution agreement. Lacking major overlaps, InBev should not have any problems getting the deal waved through by the U.S. antitrust authorities.

In addition, the deal would allow InBev to combine its Chinese operations with those of Anheuser-Busch, thus competing more effectively with SABMiller’s joint venture in China, CRE Snow.

InBev’s lawyers have been most courteous and careful in the wording of the offer to avoid giving away any indication that InBev is prepared to go hostile should the need arise.

The offer is called a “proposal”. InBev wants to “engage in a dialogue” with Anheuser-Busch leading to “consummating a friendly combination” – which all makes it sound as if Anheuser-Busch’s board has any options of turning down the offer.

Further, InBev “envisions making St. Louis the headquarters for the North American region and the global home of the flagship Budweiser brand.” To flatter the Americans, InBev has even proposed to re-name the combined company in order to evoke Anheuser-Busch’s heritage.

Hoping to avoid a brain drain, InBev said it would invite a number of Anheuser-Busch’s directors to join the board of the combined company and would seek to retain key members of Anheuser-Busch’s management team across the organisation.

Last but not least, InBev promised it would keep all of Anheuser-Busch’s 12 U.S. breweries running.   

The combination of Anheuser-Busch and InBev would create the global leader in the beer industry and one of the world’s top five consumer products companies, says InBev. On a pro-forma basis for 2007, the combined company would generate global beer volumes of 460 million hl, net sales of USD 36.4 billion, and EBITDA of USD 10.7 billion.

Together they would control 25 percent of the world’s beer output. If you were to add the volume brewed by the – then – number two, SABMiller, their combined volume would amount to more than a third of global production. Compare that to last year, when the big five brewers had 43 percent of global market share and you can see that the consolidation of the brewing industry has entered another stage.

InBev admitted that the brewer would burden itself with more than USD 40 billion in debt because of the deal. Observers have already mused how InBev was going to recoup some of its expenses. Obvious assets to sell are Anheuser-Busch’s theme parks and canning companies.

What may have instilled InBev with a sense of urgency and compelled it to come forward with its offer for Anheuser-Busch now is that on Friday, 6 June 2008, SABMiller and the Molson Coors Brewing Company announced that they have been informed by the Antitrust Division of the U.S. Department of Justice (DOJ) that the DOJ has no objections to their joint venture in the U.S.

The MillerCoors joint venture, which is to give the two brewers a combined 30 percent share of the U.S. beer market, will generate USD 500 million in annual cost synergies, it was reported – and possibly create a player in the U.S. beer market who will be up to the task of challenging Anheuser-Busch.

Posted 12 June 2008

________________________________

 

USA – Who will buy Anheuser-Busch?

For a few weeks now the world’s financial centres have been abuzz with a possible USD 45 billion bid by InBev for Anheuser-Busch.

I do feel sorry for Anheuser-Busch. Honestly. I mean their top brass often lacked dress sense and manners but to have all the world talk about Anheuser-Busch being taken over by some upstart “machete wielding Brazilian investment bankers” (not my description but a U.S. colleague’s), that’s unfair. However, the world has never been good or just. And in this case, the fault is all Anheuser-Busch’s. While Heineken, Interbrew and SAB went international in the 1990s, investing in emerging markets, where the risks were high but the potential profits even higher, Anheuser-Busch decided to play it safe. Their expansion policy was cautious. Overly-cautious, in retrospect. Because where is Anheuser-Busch today? In the U.S., … the U.S., …  the U.S., … a bit in China, a bit more in Mexico. Err, that about sums it up, doesn’t it? Trouble is, the U.S. beer market is basically flat, the U.S. dollar is weak and Anheuser-Busch’s shareholders displeased. To put it bluntly: right now Anheuser-Busch is a bargain.

What has Anheuser-Busch to offer? Quite a lot still. It is the undisputed number one in the U.S., the world’s most profitable beer market in absolute terms, and it has a 50 percent stake in Mexico’s Grupo Modelo. Sorry, readers, I have to bring this in because the potential offer by InBev has implications that do not immediately meet the eye of the armchair beer strategist.

Modelo is doing ok (EBITDA 30 percent) yet could be doing much better (50 percent EBITDA) if it were run better. The Mexicans have so far been able to resist Anheuser-Busch from micro-managing them as they have been able to resist Anheuser-Busch from wholly owning them. Thanks to a complex voting block agreement on their board, no Mexican shareholder has been able to sell his shares to Anheuser-Busch – something Anheuser-Busch has been waiting for patiently for 14 years ever since they made their first offer for a stake in Modelo. It is somewhat macabre to mention it but Modelo’s future hinges on the life of a 90 year old board member, who exercises total control over the other Mexican board members. From what one hears, some Mexican board members would rather sell to Anheuser-Busch today than tomorrow. Alas, they are prevented from doing so. Now, Anheuser-Busch has known as well as InBev about the other half of Modelo coming up for sale if that particular board member decides to … let’s say quit. If Anheuser-Busch played their cards well they could buy the rest of Modelo and become so expensive themselves that no one could take them over. At least, a combined Anheuser-Busch-Modelo would be a very big company to swallow for a competitor.

That’s what InBev knows too and that may be one of the reasons why the Brazilians have decided that if they want to buy Anheuser-Busch they have to do it now before Anheuser-Busch has a chance to move in on Modelo. But there are other considerations to bear in mind too. InBev may be a big company whose management has been good at deal-making and cost-cutting but they have not exactly been covering themselves with glory when it comes to selling beer and marketing beer brands. Think of the Stella Artois disaster in the UK, or what’s become of Beck’s and the other brands they have gobbled up on their purchasing spree.  

InBev needs a deal and it needs marketing talent - talent that Anheuser-Busch have. Anheuser-Busch’s people have for a long time proven themselves as very capable beer marketers. Even if InBev, post a takeover, would throw out a lot of Anheuser-Busch’s workforce they would try to make an effort to keep a certain amount of talent.

What can Anheuser-Busch do at this stage? Nothing, really. The current Busch heading Anheuser-Busch, August Busch IV and his father August Busch III together owned only 1.7 percent of the company's common stock as of 31 January 2008. Directors and executive officers owned 4.5 percent of the company. Needless to say that both August Busch III and IV oppose a deal. However, Adolphus Busch, a half-brother of the chief executive, recently expressed the opinion that if a good deal is ever put on the table, it should be considered. Such a rift in the founding family is what you get if, as a chief executive, you are more concerned with corporate patriotism and family pride than with raising shareholder value.

So far InBev has not made an official offer so it does make any difference if they will eventually have to pay USD 45 billion or USD 50 billion. Obviously, most people in the financial world seem to believe that InBev will be able to secure financing for that sort of deal. Looks like Anheuser-Busch’s fate is sealed.

 

________________________________

 

Azerbaijan – Baltika buys Baku-Castel

Too late. Although Efes CEO Alejandro Jimenez made some ominous remarks at the Canadean Madrid conference in April that Efes was planning further acquisitions in the former Soviet Union states, Efes was beaten to the pole by its Russian rival Baltika when it came to clinching a deal with the French-owned Baku-Castel brewery in Azerbaijan.            

On 15 May 2008 Baltika signed a contract with Brasseries Internationales Holdings (Eastern), a holding company of Groupe Castel, to purchase the Baku-Castel brewery for an undisclosed sum. The deal, which still requires approval from the anti-monopoly authorities of Azerbaijan, was made in a bid to develop Baltika’s business in the country.

Until today, Baltika beer has to be imported into Azerbaijan. Baltika claims it has a 3.5 percent share of the local beer market in Azerbaijan and that is the leader of imported beer segment. Brauwelt has no idea how much beer is actually consumed in Azerbaijan. But since Efes some years back claimed it was selling about 30,000 hl there – which is about 10 percent of total consumption – Baltika cannot possible be the market leader with such a small market share. 

Be it as it may, Baltika has grand plans for Baku-Castel, a brewery which was bought by the French Castel group in 2000. Around the same time Castel also bought breweries in neighbouring Georgia and Armenia, hoping to implement his well-proven African business model of running a quasi beer monopoly in the Caucasian region. Somehow Castel’s fortunes in the other two countries were mixed. Only Azerbaijan’s Baku-Castel has thrived over the years. This year the country’s sole brewer expects to produce about 300,000 hl.

It is yet unclear if Baku-Castel has pursued an exit strategy right from the start or whether the octogenarian Pierre Castel has decided to concentrate his efforts elsewhere. Brasseries Internationales Holding Ltd., a subsidiary of Groupe Castel, is a holding company and by its own account primarily engages in distribution of wine in Armenia, Azerbaijan, Georgia, and Russia. The company is based in Gibraltar. Over the years Brasseries Internationales Holding has had the European Bank for Reconstruction as a minority shareholder and since 2006 the Citigroup Venture Capital International as its majority shareholder. The CEO of Brasseries Internationales Holding is Jean Paul Lanfranchi, a confident of Mr Castel.  

According to Russian media sources, Baltika plans to invest USD 20 million

"We were led to the decision to make this purchase by an optimistic estimate of the prospects for developing the market in Azerbaijan, by the favourable investment climate and the strong position of the Baku brewery and its brands on the market," said president of Baltika Anton Artemiev. The annual rate of growth of the beer market in Azerbaijan in the coming three years is 12 percent to 14 percent, Baltika forecasted. The company not only has plans to start producing its own brands there in time for the 2009 season, it also wants to bring production up to one million hl according to people familiar with the situation.

How they plan on achieving this feat remains a puzzle unless Baltika intends to send a lot of expats down to Baku. Azerbaijan may be oil rich but oil riches often prove more a curse than a blessing. There is no industry to speak of in Azerbaijan apart from oil. Unemployment is high. Hence the country suffers from an extreme shortage of talent. Skilled Azeris either work in the oil industry, in import-export or leave the country altogether in search of a better future. People who have worked in the brewing industry and might be susceptible to an offer from Baltika just do not exist.

Moreover, Baltika’s people may be in for a culture shock because Baku-Castel is still a smallish set-up compared to what they are familiar with. Also Baltika in the past has adopted a policy of hiring talent from other industries. Their inexperience with matters beer and brewing may prove beneficial to a large bureaucratic entity such as Baltika. But to run a real brewers’ brewery like Baku-Castel which was as lean as it can be – that’s another issue altogether.   

Baltika brewery, which is 85.6 percent owned by Baltic Beverages Holding (which in turn is now 100 percent owned by Carlsberg) is a leader on the Russian beer market accounting for over 37 percent of the country's beer output. It is also one of the leading European beer producers. The company owns 11 breweries in Russia and also holds licenses to produce French Kronenbourg 1664 beer, Danish Tuborg and Carlsberg and Australian Foster's. In the past, its international expansion has been through Baltic Beverages Holding. Purchasing a brewery abroad is a first for Baltika. "Baltika has set up the production of licensed brands at its own breweries and has arranged for licensed production of its brands in Ukraine and in Great Britain. Now we will add to this experience practice in managing production abroad," said Mr Artemiev.

 

Belarus - Heineken acquires Rechitsa brewery in Belarus

You would have thought that most Belarusians drive taxis in New York. But no. They are back home drinking beer brewed by Heineken.           Read on

 

Brazil – What’s Schincariol up to?

In May, Schincartiol agreed to buy the Cintra brands that market leader AmBev had been forced to divest following a competition authority ruling.             Read on

 

 

Ireland - Diageo does NOT do the unthinkable …

… namely cease production at its St. James’ Gate brewery in Dublin. However, it will lay off more than half of its brewery workers, close two breweries and shift most production to a new, high-tech plant in the Dublin suburbs by 2013.             Read on

 

USA – Tiny glass splinters, big expensive recall

Following April’s recall of defective 12 ounce beer bottles, Boston Beer, the brewer of Samuel Adams, reported a net loss of more than three million dollars during the first quarter.                          Read on

 

USA - Summer’s here. Bud Light Lime’s the beer.

Anheuser-Busch scored a surprise success with the launch of its Buds Light Lime, a beer that is to compete directly with Miller Chill and Corona Extra.            Read on

 

Despite a so-so response to its last Budweiser extension, Budweiser Select, Anheuser-Busch has launching another, called Bud Light Lime, for which it has earmarked a USD 35 million ad budget. At the Beverage Forum held in New York City in May, David Peacock, Vice-President Marketing at Anheuser-Busch called the product “a beer with a little lime” and justified the launch by saying that the flavoured beer segment in the U.S. grew 7 percent in 2007.

Last year SABMiller launched Miller Chill, a light beer brewed with lime and salt, which sold more than half a million barrels (600,000 hl) during its first year, says SABMiller.

Although Mr Peacock would not say how much volume Anheuser-Busch has been selling of the product since its introduction during the first week of May, a flip comment by Jim Koch says it all. Mr Koch commented: “It took me more than twenty years to grow Samuel Adams from invisible to infinitesimal. And they are doing more in just a month!” Samuel Adams’ current 0.8 percent share of the U.S. beer market warranted a lifetime-achievement award by the Beverage Marketing Corporation, the organisers of the Beverage Forum.

In 2007 Boston Beer sold 1.80 million barrels or 2.1 million hl beer.    

 

USA - Molson Coors donates beer fuel to Democratic convention

The search for alternative fuels is taking a crazy turn. Molson Coors is donating fuel made mostly out of beer waste to the Democratic National Convention to be held in Denver from 25 to 28 August at the Pepsi Center.             Read on

 

United Kingdom – No more drinking in public on London’s Underground

An alcohol ban on London's transport network sparked a party on the Tube that got out of hand.     Read on

 

France - Heineken announces reorganisation

Heineken plans to close one brewery and sell another one in France in order to cut costs.                   

Perhaps it was not meant as a joke although everybody laughed. At the Canadean Madrid conference in April a delegate asked Alex Myers, Senior Vice President Western Europe of Carlsberg why he had taken on the Kronenbourg business of Scottish & Newcastle, insinuating that France was not a very profitable or easy market. Mr Myers said something to the effect that Kronenbourg was a great brand. However, most delegates would remember that earlier in April Scottish & Newcastle's French brewery Brasseries Kronenbourg sold its distributor subsidiary company Elidis to C10, an independent distributor, for EUR 108 million. Scottish & Newcastle had announced its intention to sell Elidis to C10 in November last year. Based in Strasbourg, Elidis, with its 1,600 staff, sells beverages to cafés, hotels and restaurants. The company has 59 warehouses across France and saw its 2007 turnover amount to EUR 380 million. However, Scottish & Newcastle estimated Elidis’ financial losses for 2007 at EUR 1 million and was happy to see it go.

That may serve as a background to Heineken’s May announcement to reorganise its French production units “in order to drive efficiency improvements”. Well, we know what that means.

Heineken said that it would close the Brasserie Fischer in Schiltigheim by the end of 2009 and transfer its production to the l'Espérance brewery in Schiltigheim. In addition it would sell the Saint Omer brewery, the production site of Heineken’s non-branded beer business. It is expected that the total reorganisation will lead to 126 job losses in Alsace and 62 in Mons-en-Baroeul by the end of 2010.

At the same time Heineken said it will invest EUR 124 million over the next three years to upgrade its three remaining breweries in Mons-en-Baroeul (North of France), Schiltigheim (Alsace) and Marseille. Their combined capacity is over 6 million hl. 

The exceptional restructuring costs associated to the reorganization will be charged to the 2008 and 2009 consolidated profit and loss accounts and will be recovered in 3 years after completion of the programme. For 2008, these restructuring costs are included in the F2F programme. For 2009, Heineken forecasts additional assets write-off of approximately EUR 20 million, which will be treated as exceptional items.

In its statement, Heineken would not be explicit on the sale of its Saint Omer brewery other than saying that there were talks with its former owner and current chairman, while the French media already reported on 31 May that André Pecqueur had agreed to buy back the brewery for an undisclosed sum. Only 12 years ago Mr Pecqueur and his brother had sold the Saint Omer brewery to Heineken because they thought that as a private company they could not survive in the French beer market. The Saint Omer brewery, popular with “booze cruise” tourists from Britain because it is located close to Calais, produces 1.8 million hl beer, 90 percent of which are distributor own brands (DOB). That’s a segment of the French market that has been growing over the years.

Unfortunately, there is not enough money to be made in the DOB business for the likes of Heineken. As Heineken wants to concentrate on its premium brands Heineken, Pelforth and Desperados in France, the Dutch brewer was glad it found Mr Pecqueur, at 65 years of age not exactly a hotspur, willing to take back his former brewery.  

In France Heineken has a market share of about 30 percent. Brasseries Kronenbourg controlled 36 percent in 2007.

 

Denmark – Carlsberg expected to close breweries in Europe

At Carlsberg they are taking their own sweet time. Although they announced massive brewery closures in 2005 already, nothing drastic happened. Now Carlsberg’s top brass seems to be investigating the issue again. Read on

 

Switzerland – Competition authority to probe into Heineken-Eichhof deal

Fearing an unhealthy duopoly, the Swiss competition authority could take up to four months to investigate the takeover of the Eichhof brewery by Heineken which would give the Dutch brewer a 29 percent share of the 4.3 million hl beer market.          Read on

 

United Kingdom – It’s all about money

In a recent interview with the English newspaper The Telegraph, SABMiller’s CEO Graham Mackay was his usual bullish self and called a spade a spade and a beer a beer.         Read on

 

Germany – Radeberger considers closing its Frankfurt brewery

Radeberger, Germany’s largest privately owned brewing group with 15 breweries in Germany, is building a EUR 20 million brewery in Nuremberg/Fürth. Meanwhile the Frankfurt brewery site is threatened with closure.   Read on

   

Archiv

december 08 · november 08 · october 08·· september 08 · august 08 · july 08 · june 08 · may 08