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Posted March 2013

 

Venezuela - What does Chavez's death mean for brewer Polar?

This beggars belief. Only hours after it was announced that Venezuela's Hugo Chavez had died of cancer on 5 March 2013, the Forbes business magazine, on its website, ran an article entitled, yes, "What does the death of the 'Comandante' mean to Venezuelan billionaires? Will they get richer now that the '21st century socialist' is gone?"

At brewer Polar, which has 75 percent of the Venezuelan beer market, they cannot have been too pleased with this sort of contentious reporting as their owner gets mentioned in the fourth paragraph. Read on
 

Georgia - Brewers' woes, vintners delight

For such a small market as Georgia's, a country in the Caucasus, four brewers are actually quite a crowd. This may be one of the reasons why Castel-Sakartvelo, the smallest one, was put up for sale. From what we have heard, the former Castel business in Georgia, which since 2006 has been owned by BIH, itself majority-owned by Citigroup Venture Capital International (92%) and Jean Paul Lanfranchi (8%), a French lawyer once associated with Mr Pierre Castel, has been sold to the Georgian businessman Temur Chkhonia, who holds both the McDonald's and Coca-Cola licences in Georgia.

Under normal circumstances, this could be interpreted as an exit by the company's private equity owner. After all, they and their ground staff have managed to significantly grow the business in recent years, at least in terms of volumes.

However, what may have hastened the sale is the fact that in April last year a new EUR 30 million (USD 39 million) brewery, Zedazeni, came on stream, whose major owners are a group of businessmen-cum-politicians associated with Georgia's controversial former president Mikheil Saakashvili. The man behind this brewery project happens to be Iago Chocheli, who sold Georgia's Natakhtari brewery to Turkey's brewer Efes in 2008. Read on
 

Australia - What's become of Foster's former wine business?

On the face of it, the former Foster's wine business, Treasury Wine Estates (TWE), on 28 February 2013 posted disappointing half year results to the end of December 2012: net profits fell 23.2 percent to AUD 45 million (USD 45.9 million) and net sales dipped 3.4 percent to AUD 816.9 million, while EBIT dropped 20 percent to AUD 73.4 million and volumes slipped 2.5 percent to 16.5 million cases. However, Treasury's share price rose markedly following the results release. How can this be? Read on
 

UK - Bartenders to create a new brand for Diageo

That's a job many will covet: being a spy for Diageo, visiting bars to suss out all the latest trends in taste and culture. Diageo's R&D people are like the CIA - although they will object to the comparison - who run a string of informers everywhere to detect changes in consumer preferences when it comes to drinks.

Like the fashion industry, the global drinks industry is increasingly looking to the street or bars respectively for inspiration. But to be on the safe side, Diageo have also been calling on bartenders in many countries around the world to come up with ideas for a new spirit or liqueur.

Earlier this year, Diageo launched a competition among bartenders in western Europe, called "Show Your Spirit", whose winner will see his or her concoction become the latest addition to the drinks group’s Reserve collection of luxury brands. Entries for the competition close on 18 March. The finalists will be announced on 15 April this year. Read on
 

UK - New figures show UK alcohol consumption down 3.3 per cent in 2012

2012 was the first year since 1998 that alcohol consumption has dropped below eight litres per head, per year (7.99 litres). Consumption per head is now 16 percent lower than it was in 2004 when the current trend began, says the British Beer & Pub Association (BBPA), which has compiled the new data based on HMRC alcohol tax returns. Read on
 

Canada - SABMiller seeks to end licensing agreement with Molson Coors

Seeing that their own brands are not really going anywhere in the highly lucrative Canadian market, Miller Brewing Company, the U.S. subsidiary of SABMiller, has terminated its Canadian licence agreement with Molson Coors Canada as of 22 July 2013. Although Molson Coors Canada has filed a lawsuit in Ontario seeking to prevent the termination of the license agreement, Miller is vigorously defending that action and maintains its right to terminate, Canadian media report.

It's a funny thing that in the business world divorce procedures by one partner are often resisted by the other. It's probably not because the abandonee is still harbouring deep feelings for its former partner. More likely it's the sudden drop in taken-for-granted profits that makes the one left behind seeking a court ruling to prevent the other from walking out on them. Read on

 

Australia – Deception most foul!

The dispute over what constitutes a craft beer – as opposed to a pseudo craft – has now broken out in Australia too. While in the U.S., craft brewers complain that the “Big Brewers” put crafty-looking beers into the market thus hoping that their me-too creations can help them cash in on the growing craft beer boom, Australian consumers have long grown used to the fact that several former craft breweries are owned by the country’s major brewers. What has now caused an outcry is that one of the smaller craft brewers, Byron Bay Brewing, is having a beer brewed, packaged and marketed by Foster’s/SABMiller – without as much telling consumers.

Why this detail should have caused such a hullabaloo is hard to fathom, unless you are prepared to accept that in the grand scheme of things history tends to repeat itself.

If I remember correctly, the last time craft brewers’ labels came under scrutiny was in the mid-1990s when the “Big Brewer” Anheuser-Busch, yes, launched an attack on craft brewers Boston Beer Co and Pete's Brewing Co because their labels failed to reveal that their beers were actually brewed and packaged under contract by, you guessed right, some other big guys.

In response to the accusation Boston Beer said in 1996 this campaign by Anheuser-Busch was aimed at confusing consumers by making the location and ownership of the brewery more important than what's inside the bottle.

Boston Beer’s founder, Jim Koch, added the reason the “host breweries” were not mentioned on the label was that they had no say in how the beer was made. Nor did they have any control over it.

Mr Koch had a point there. But if the issue is really such a minor one, why not come clean on it? Why not state on the label that the brand is owned by x and brewed by z? Unless, of course, both x and z want to make consumers believe that their craft beers are produced in small batches in tiny breweries by strapping men in dungarees – as many consumers probably still do.

Here’s the story so far. Read on
 

Belgium – Has the great AB-InBev money-making machine run out of steam?

Looks like AB-InBev desperately need this Modelo deal to go ahead as they seem to have reaped most of the benefits from their last transaction with Anheuser-Busch in 2008. Organic growth does not seem easy to come by any longer when you look at AB-InBev’s past financials. In actual fact, AB-InBev’s revenues have not really risen much since 2008. True, AB-InBev have driven up EBITDA to USD 15.5 billion from USD 12.1 billion in 2008, but for the past two years EBITDA growth has kind of stalled.  Read on

 

Belgium – AB-InBev’s uphill struggle with Corona

They need to be bullish, don’t they? Although their USD 20 billion transaction with Mexico’s brewer Modelo is far from cut and dried, AB-InBev said on 27 February 2013 “we remain excited about the potential to grow the domestic Mexican business and the Modelo brands outside of Mexico and the United States”.

As we all know, potential is not the same as actual reality. All of us may have the potential to win the Nobel prize, but how likely is it that anyone is going to give it to us?

Same with the Corona brand’s potential. While it’s true that the Corona brand is the leader in Mexico with almost two times the volume of the second largest brand, it is still a piddling little brand amongst the global beer brands.

Consider this. In 2011, 29.5 million hl of Corona were sold globally, says Canadean, a market research company. If you deduct domestic volumes (16.9 million hl), that leaves an export volume of 12.6 million hl. Not bad. However, you need to bear in mind that of these 12.6 million hl, over 8.4 million hl of Corona were sold in the U.S. alone, according to estimates by Beerinsights.com. That left 4.2 million hl in total volumes for the rest of the world, or more precisely 38 countries in which Corona is currently sold.  Read on
 

UK – Oxfam slams global food and beverage giants over CSR accountability

Stakeholder pressure on multinational companies is rising. Last July AB-InBev got rapped by the Berlin-based corruption watchdog Transparency International (TI) for not disclosing enough about what it does to fight corruption. Six months later, in February this year the UK charity Oxfam released a report, “Behind the Brands”, which, though wider in scope than TI’s, came to a similar conclusion: multinational food and beverage companies, such as Nestlé, Coca-Cola and PepsiCo, are failing on CSR goals. Read on

 

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