Posted March 2012
Republic - Asahi allegedly after StarBev
The rumour mill is spinning wildly. According to gossip mongers,
the Japanese brewer Asahi is only days away from buying eastern
European brewer StarBev in a deal likely to fetch up to USD 3
billion. If Asahi finally manages to clinch a deal, it will be a
true indication of how desperate the Japanese alcohol producers
are to grow overseas sales.
Private equity firm CVC Capital Partners, which owns StarBev,
apparently wants to sell the business and Asahi is said to have
put a big price on the table thus outdoing private equity
Needless to add that all parties declined to comment.
Driven by falling domestic sales, Japan's leading drinks
companies have embarked on an overseas spending spree. This is
supported by low borrowing costs and a strong yen.
No doubt, the Japanese firms are willing to splash out big time.
In August 2011, Asahi purchased New Zealand beverage company
Independent Liquor from Pacific Equity Partners (PEP) and Unitas
Capital for NZD 1.5 billion (USD 1.27 billion). The transaction
valued the company at 13 times EBITDA, similar to valuations
paid by Japanese companies in other deals.
Kirin's AUD 3.3 billion buyout of Australian brewer Lion Nathan
in 2009 came in at 12.5 times EBITDA, preceding its USD 970
million acquisition of Singapore-based Fraser & Neave a year
later, also valued at 12.5 times EBITDA. That was topped by
Kirin acquiring Brazil's Schincariol in August 2011 at 15.7
times EBITDA. Meanwhile, rival Asahi in July of last year agreed
to buy Permanis, Malaysia's second-biggest soft drink maker, for
USD 273 million, which equates to an EBITDA of 15.4 times.
For comparison, InBev paid an EBITDA multiple of
12.4 for Anheuser-Busch in 2008.
Speaking of which: AB-InBev, which has strong ties (brand-wise
and other) with StarBev, shouldn't be too worried about StarBev
going to Asahi. Nowhere do the two compete against each other
directly. In fact, the Japanese and the Brazilians got to know
each other well when AB-InBev sold a 19.9 percent stake in
Chinese brewer Tsingtao to Asahi in 2009, reducing its own stake
to 7 percent.
What would Asahi get out of buying StarBev? I would say:
management expertise and a beer company that is probably as lean
as a skinless chicken and therefore more profitable than any of
Asahi's other operations. Asahi reported an EBITDA margin of 11
percent for the financial year 2011. StarBev definitely must do
better than that.
Asahi afford to fork out USD 3 billion for
StarBev? They sure can although Asahi's debt level in 2011
already stood at 2.35 times EBITDA.
Australia - SABMiller criticises
the previous management of Foster's
Hello? Didn't they do due diligence before they bought Foster's?
So why complain now? At two recent investor conferences in the
U.S. (February 2012) SABMiller's head of investor relations,
Gary Leibowitz, accused former Foster's CEO John Pollaers and
his team of failing to properly implement beer sales and
marketing fundamentals and said it’s time to go back to basics.
Mr Leibowitz told analysts the key areas Foster's will
concentrate on to resuscitate the business. They will centre
around better relations with retailers and improved channel
Above all, a mutually beneficial relationship with Coles and
Woolworths - the nation's largest sellers of liquor - will be
established in an effort to repair the business' performance and
arrest the decline in Foster's national share of the beer
Mr Leibowitz criticised Foster's previous executives for
neglecting these areas, including brand differentiation and
creating category value.
Australia - Coca-Cola Amatil hopes to snatch Corona licence
Will Foster's be trembling in their boots? Coca-Cola Amatil
chief Terry Davis has warned former joint-venture partner
SABMiller, the new owner of brewing major Foster’s, that he will
be back in the Australian beer market in 2014. Speaking at the
release of the Coca-Cola Amatil's (CCA) annual results on 22
February 2012, Mr Davis said expansion into the alcoholic
beverage sector remained a "core strategy for CCA".
CCA has already held talks with global brewers for new licences,
such as Grupo Modelo’s Corona Extra as soon as a two-year
non-compete agreement with SABMiller comes to an end.
- Crash landing for Kingfisher Airlines and United Spirits?
What a partner Heineken has picked in India. The
larger-than-life entrepreneur Vijay Mallya is having troubles
both at his Kingfisher Airlines and at his liquor company United
Spirits. On 20 February 2012 The Times of India newspaper
reported that the beleaguered
Kingfisher Airlines' operator Mallya plans not to shut down the
private carrier which struggled to stay afloat after further
large-scale flight disruptions and resignation of pilots.
Kingfisher Airlines' bank accounts were frozen by income tax
officials due to non-payment of bills. The airline has
repeatedly requested additional loans from its lenders but none
of the pleas have yet been agreed to.
UB Group's flagship spirits arm, United Spirits, is on wobbly
financial ground too as interest costs mount and it faces low
growth in markets such as Tamil Nadu and West Bengal due to
regulatory issues, Indian media reported on 24 February 2012.
Kingdom - Sam Adams to be brewed by Shepherd Neame
They have had Sam Adams contract-brewed in the U.S. for decades,
so why not have it produced under licence abroad? In February
2012, U.S. craft brewer Boston Beer
said that Kent-based Shepherd Neame will now be producing the
beer after having previously served as their importer into the
Italy - Revolving doors at Birra Peroni
Italy, the eurozone's third-largest economy is in recession and
prime minister Mario Monti predicted worse to come. What do
brewers do in times of economic crisis? Change executives.
Roberto Jarrín, 46, is the new CEO of Birra Peroni, the Italian
subsidiary of SABMiller Group.
Mr Jarrín, born in Brazil and raised in Ecuador, joined Birra
Peroni in January 2012, swapping seats with Birra Peroni's
previous CEO Alfonso Bosch, who has, in turn, become president
of SABMiller's subsidiary in Ecuador, Cervecería Nacional.
Mr Bosch has headed Birra Peroni, Italy's number two brewer
behind Heineken, since 2008 and has seen the brewer's domestic
Italy or Ecuador? If pressed for a decision, I would choose
Ecuador over Italy.
Australia - Milk wars hit Lion's profits
When the supermarket chain Coles began selling two-litre bottles
of house brand milk for AUD 2 (USD 2.12) in January last year, a
discount of up to 33 percent that was instantly matched by
larger rival Woolworths and German-owned discounter Aldi,
Australia's brewer-cum-dairy-company Lion knew they were in for
a rough year.
This was confirmed in February 2012 when Lion, a fully-owned
subsidiary of Japan's Kirin, reported they had to write-down AUD
1.2 billion (USD 1.3 billion) across its business for the
financial year to 30 September 2011.
While the milk price wars between Coles and Woolworths was the
single biggest blow, the business faced other significant
2009 december ·