Posted May 2012
Czech Republic - All quiet in the great
Budweiser beer war
The dispute over the Budweiser trademark
seems to have quieted down as everybody is waiting for the
auditors to release their findings on the workings of
state-owned Budweiser-Budvar. The report, scheduled for release
in June, will ostensibly show if Budvar's management has been
following the rules – and a negative result could give some
politicians a greater say over the Czech brewery. The brewery is
owned by the Czech Ministry of Agriculture.
The audit is conducted by the controversial
HZ Consult (see several reports in Brauwelt International). One
of the most controversial aspects of the audit, says Czech
market observer Richard Hunt, is that it is "led" by a lawyer,
Mr Jindra had been appointed by the Minister
for Agriculture, Bendl to Budvar's supervisory board at the end
of last year. This constitutes a clear conflict of interest in
the audit world. He cannot both lead the audit on behalf of the
Ministry, and sit on the supervisory board of the company being
audited. When this scandal hit the roof, the Czech Prime
Minister took action. He announced that the Budvar issue had
become overly politicised, and sought to address this by
removing Mr Jindra and several other ODS politico types from the
Since then, the media have gone
quiet on Budvar, pending the report.
In the months since AB-InBev acquired
Budejovicky Mestansky Pivovary (BMP), spun off from Samson late
last year, the three parties in the Budweiser trademark dispute
– AB-InBev, Budweiser Budvar, and the Samson Brewery, which is
also located in Budweis - have taken different approaches to
their PR strategies.
Czech Republic – Alain Beyens ousted by
StarBev’s new owner
The Belgian Mr Beyens, 50, wanted to be CEO
of a company himself. That’s why he left AB-InBev for StarBev
when AB-InBev sold its central European unit to private equity
firm CVC in 2009.
In so doing, he also forfeited a super bonus
of over EUR 24 million in current terms, the Belgian magazine
Trends wrote recently. That would have been his share in the big
jackpot awaiting AB-InBev’s top executives if they bring down
the brewer’s debt load to a certain level. But Mr Beyens’
ambition was cut short after only two years when StarBev’s new
owner Molson Coors announced an executive shakeup on 8 May 2012
as part of the StarBev purchase for USD 3.54 billion.
Mr Beyens will leave his post at StarBev once
the transaction is completed to ponder his next career move as
board member of Belgian brewer Duvel Moortgat.
He will replaced by Molson Coors’ very own
Mark Hunter, 48, who has been in the industry for 20 years and
since 2007 has headed the brewer’s UK and Ireland business.
Formerly, he was Chief Commercial Officer at Molson Coors
Stewart Glendinning, currently Global Chief
Financial Officer for Molson Coors, will replace Mr Hunter in
the UK role.
Molson Coors said StarBev had
generated 2011 sales of approximately USD 953 million and an
EBITDA of USD 322 million. The purchase price represents a
multiple of just under 11x EBITDA.
The 13.3 million hl brewer StarBev employs
4,100 people and brews beer at nine plants in the Czech
Republic, Serbia, Croatia, Romania, Bulgaria and Montenegro. As
Brauwelt International wrote at the time of the acquisition,
StarBev’s business and share vary greatly across the region,
depending on the country, which will make the integration
challenge more daunting for Molson Coors.
Russia – Carlsberg’s Russian woes won’t go
but hope springs eternal. On 9 May 2012
Carlsberg reported a 4 percent drop in first-quarter group beer
volumes as a beer tax hike in Russia hit volumes in the
company’s eastern European region, which were down 22 percent.
Volumes in northern and western Europe saw growth. They surged
26 percent in Asia. Still, total volume sales were down to 26.7
million hl from 27.4 million hl in the same quarter last year.
Brazil – Not a good start for Schincariol
While AmBev, the Brazilian unit of AB-InBev,
managed to increase its sales volume of beer by 4 percent in the
first quarter (the total market was up too), Schincariol saw
volumes decline 5.5 percent.
True, the weather had been a little cooler
and rainy in Brazil compared to the same quarter a year ago. But
AmBev nevertheless managed to take advantage of industry growth
and increase its market share slightly to about 69 percent.
Japan’s brewer Kirin, which has owned
Schincariol since last year and hopes to turn the business
around this year, cannot have been too pleased when its nearest
rival Petropolis – with whom it competes for the number two slot
in the market – announced that it plans to build a new brewery
on Schincariol’s home turf.
United Kingdom – Make mine a tequila
No doubt, Diageo would love to lay its hands
on a tequila brand like Jose Cuervo – the world’s leader of the
tequila category. The transaction has been gossiped about for a
year. In early May 2012, several media reported Diageo could be
only weeks away from winning control of Jose Cuervo in a deal
valuing the spirits company at about GBP 2 billion to GBP 3
billion. A likely option would be a share swap between the
controlling Mexican Beckmann family and Diageo, by which the
Beckmanns would sell a majority stake in Cuervo in exchange for
shares in Diageo.
Analysts have said that, if the Beckmann
family were to sell all, or a large part of the company for
shares, they would probably emerge as Diageo’s biggest
Diageo’s agreement to distribute Cuervo in
many countries outside Mexico expires in June 2013, it was
reported. Diageo’s CEO Paul Walsh has already made it clear that
a renewal of the current distribution contract is not an option
as the group does not make enough profit from the brand. But
Nomura analyst Ian Shackleton said he would be surprised if the
business is sold while the family head Juan Beckmann, 72, is
alive and in control.
Germany – High-end beers on the go go go
Volumes are still small and only a few
handful of brewers seem to be keen on dabbling their hands in
these super-premium beer specialities, which retail at EUR 15
for a bottle, but as Brauwelt International wrote about a year
ago, a market for them is slowly evolving, even in Germany. And
about time too. The German beer market, long suffering from
volume declines and creative stagnation when it comes to genuine
product innovation, is finally witnessing a surge in noble brews
and special edition beers, which position themselves decidedly
beyond the bland and boring. These beers are produced by small
or medium-sized breweries, mostly from Bavaria, but not just
As these beers will only sell in urban
cosmopolitan surroundings, two drinks industry specialists
recently founded a marketing and distribution company, called
Gourmetbier-Galerie, to help these small breweries find
The founders – Martin John and Stefan Seidl –
have a background in drinks and wine marketing. They met years
ago when they both worked for König Ludwig Kaltenberg Brewery in
Bavaria. Knowing full well that these high-end beers will go
nowhere and only gather dust if condemned to supermarket
shelves, they are already touring the country with their beer
portfolio to convince bar and restaurant owners in Germany’s big
cities that serving these beers to their discerning clientele
can be a worthy and profitable undertaking.
Usually, trade shows and festivals serve as
launch pads for these products. However, Germany did not have a
fine beer and drinks show that is open to the public. That’s why
they jumped at the opportunity to feature their beers at the
Braukunst Live! Festival“ (20 -22 April 2012) which was held –
of all places – in Munich. This was not a beer guerilla event.
The organizer Frank-Michael Böer had managed to recruit a group
of likeminded brewers around him - 40 exhibitors and several
sponsors, Munich’s Hofbräu brewery, the glass firm Rastal and
brewhouse manufacturer BrauKon among them – who were pleased to
be ambushed by over 2,500 people, all wanting to know the
nitty-gritty of these beers. Many Bavarian brewers came to look
and see, which should persuade Mr Böer to re-stage the show in a
When it comes to fine beer events, Germany
may be light-years behind the Stockholm Beer & Whisky Festival,
but as the saying goes: where there is life, there is hope and
where there is hope, there will be fine beers.
USA – Is AB-InBev acting irresponsibly?
The New York Times newspaper has been on the
warpath against AB-InBev ever since February 2012 when the
Oglala Sioux filed a USD 500 million federal lawsuit against
several large brewers, including Anheuser-Busch (A-B) and Miller
Brewing; local beer distributors; and the four Whiteclay beer
shops, which sold the equivalent of 4.3 million cans of beer
last year. The suit accuses the alcohol businesses of
encouraging the illegal possession, transport and consumption of
alcohol on the Indian reservation, where alcohol is banned.
The Pulitzer Prize winner and New
York Times columnist Nicholas D. Kristof,
who has been following the story, launched
another fierce attack on A-B when he wrote on 5 May 2012 that,
after seeing “Anheuser-Busch’s devastating exploitation of
American Indians”, he was done with its beer. He called upon his
readers to also stop drinking A-B’s beers.
When a major media outlet like the New York
Times, which is often seen as a supporter of Big Business,
publishes a call to action like this one, you can expect the
blogosphere to run away with it. Try googling
“Anheuser-Busch+Indians+reservation” and you will end up with
over 500,000 hits.
Whiteclay, a town in the state of Nebraska,
wouldn’t be in the news if it had not become the metaphor for
all that ails American Indians. The town has a population of
about 10 people, but it sells more than four million cans of
beer and malt liquor annually, because it is the main channel
through which alcohol illegally enters the Pine Ridge Indian
Reservation just 200 metres north — across the state line in
The drink of choice in Whiteclay seems to be
Hurricane High Gravity Lager, a malt liquor (8.1 percent ABV)
which is brewed by Anheuser-Busch. Hence the blame on
Anheuser-Busch. A 16-ounce can costs USD 1.50 – an efficient way
to get drunk without having to rob a bank.
Ethiopia – Heineken to invest in a new
It was to be expected that Heineken would not
be content with owning two breweries in Africa’s second most
populous country behind Nigeria. Early last year Heineken
entered the Ethiopian beer market when the Dutch brewer acquired
the Bedele and Harar breweries — both of which were publicly
owned — for USD 78.1 million and USD 85.2 million, respectively.
Although both breweries have a stake in the
country’s major market – the capital of Addis Ababa – they are
hampered by high transportation costs. Harar brewery, located on
the outskirts of Harar, is 526 km to the east of the capital.
At the end of April 2012 African media
reported that Heineken is currently in the process of acquiring
25 hectares of land near the capital for the construction of a
new brewery. Not enough, Heineken is supposed to invest a total
of around USD 40 million in modernising and upgrading Bedele and
Harar breweries by the end of 2013.
Australia – No changes to cider taxation -
Traditional cider makers have been worried
about rumours that, following the Federal Budget on 8 May 2012,
their products will be taxed at a rate similar to that applied
to RTDs - pre-mixed spirit and cider-based products.
At present, traditional cider carries about
AUD 0.23 (EUR 0.18) tax per standard drink compared with AUD
0.95 (EUR 0.74) for RTDs. Cider makers had estimated that the
cost of production could double if traditional cider is taxed at
the higher rate.
Their worries were dispersed, however, when
the budget was released without making any changes to the cider
Dominican Republic – AB-InBev’s purchase of
Cerveceria Nacional Dominicana “pricey”
The deal is done, and the reviews
are coming in on AB-InBev’s takeover of the Dominican Republic's
national brewer CND. Market observers agree on two things: the
deal is clever but it comes with a high price tag.
According to U.S. media the USD 1.2 billion (EUR
925 million) deal for a 51 percent stake in Presidente parent
Cerveceria Nacional Dominicana translates into 24 times CND’s
EBITDA. In the past beer industry deals were done on a 12 to 14
times EBITDA basis.
Australia - Coopers wins the Carlsberg
Although it had been rumoured for
months, it was only announced in early May 2012 that as of 1
July 2012 Coopers Brewery and its distribution arm, Premium
Beverages, will brew and distribute Carlsberg beer in Australia.
The brand had previously been with
Coopers will produce bottled and draught
Carlsberg beer at its Regency Park brewery in Adelaide, with
sales and distribution to be undertaken by Coopers’ subsidiary,
Premium Beverages. Currently, around 500,000 cartons and 6,500
kegs of Carlsberg are sold in Australia annually, the companies
said in a joint statement.
Apart from the
Carlsberg brand, the French brand Kronenbourg 1664 will also be
distributed by Coopers and Premium Beverages. Part of
Carlsberg’s portfolio since 2008, Kronenbourg 1664 is a premium
lager which is relatively unknown in Australia.
Kingdom - Alan Clark to become CEO of SABMiller in 2013
Proven right again. As early as 2007 in a Brauwelt article
called "The candidate" I predicted that Alan Clark, currently
Managing Director of SABMiller Europe, would be the most likely
person to succeed Graham Mackay as CEO of SABMiller, once Mr
Mackay chooses to take on a non-executive role with the brewer.
Those supposedly in the know muttered then, no, Mr Mackay would
be replaced by whoever happens to head the brewer's South
African business, since SABMiller's income from South Africa is
much bigger than that from Europe.
But here you go: SABMiller on 23 April 2012 announced a series
of directorate and senior management changes, which again
underline how well the brewer manages its succession by
promoting its own, yet without falling prey to the "youth cult"
afflicting other companies.
In its statement SABMiller said that Meyer Kahn,72, who first
joined the group in 1966, and who has been Chairman of SABMiller
since its primary listing on the London Stock Exchange in 1999,
will retire as Chairman after 46 years of service with the Group
Graham Mackay, 62, who joined the group in 1978 and who has been
Group Managing Director since 1997 and Chief Executive since
1999, will become Executive Chairman, with the intention that he
will continue in that role for one year, before becoming
Non-Executive Chairman at the annual general meeting in 2013.
Alan Clark, 52, will be appointed as Chief Operating Officer of
the Group and as an Executive Director, with the intention that
he will succeed Graham Mackay as CEO at the Annual General
Meeting in 2013.
Sue Clark, 47, who joined the Group in 2003 and is currently
SABMiller's Director of Corporate Affairs, will replace Mr Clark
as Managing Director of SABMiller Europe. Her successor will be
announced in due course.
This makes Ms Clark the first woman among global brewers to hold
such a position.
All these changes will become effective from this
year's Annual General Meeting on 26 July 2012.
What will AB-InBev buy next? Pepsi? Or more U.S. distributors?
Contrary to many pundits, Germain Hansmaennel and I have always
maintained that AB-InBev will struggle to buy SABMiller. In our
humble opinion AB-InBev would be better off acquiring PepsiCo's
beverage business or more U.S. distributors. To our delight this
was confirmed by Harry Schuhmacher, one of the most astute U.S.
beverage market observers. Here's what he wrote on 27 April
"Look, they [AB-InBev] would have to write a very big cheque
indeed [for SABMiller], something north of USD 100 billion and
that's a lot of money in anybody's language", SABMiller's CEO
Graham Mackay reportedly told U.S. distributors at a recent
If AB-InBev went after SABMiller, price would be one obstacle,
says Mr Schuhmacher. But there are more to contend with.
1. SABMiller's purchase of Foster's and Efes has
made the deal less bankable.
2. SABMiller is already lean and there are few synergies in such
3. SABMiller's continued building of breweries in emerging
markets seems to indicate that its management is in it for the
4. Major SABMiller shareholders would likely want stock for tax
reasons, and the AmBev/AB-InBev controlling families are loathe
to give up control.
5. SABMiller is a major Coke bottler and AB-InBev is a major
That's why, with U.S. volumes improving, Mr Schuhmacher thinks
that AB-InBev may be looking to the U.S. beer and beverage
profit pools for growth.
"If there is one thing that AB-InBev has learned over the last
three years, it's how much money can be made in the United
States. I think it has even surprised them, as their synergy
targets here have been consistently surpassed and ahead of
schedule. And if SABMiller is indeed taken off the table, and
Modelo continues to insist that it wants to remain independent,
where else is AB-InBev to turn to grow margins and profits?"
Mr Schuhmacher suspects that AB-InBev could look in two places
in the U.S.: its distribution network, and PepsiCo's Americas
soft drink business.
United Kingdom - SABMiller met MPs on tax in developing
The UK parliament's International Development Committee (IDC) is
seeking transparency from oil, gas and mining firms over the
amount of tax paid in developing countries. A parliamentary
inquiry is likely to press the UK government into signing an
international agreement to force these companies to report on
how much tax they pay to developing countries.
The recommendation is expected to follow the conclusion of a
series of select committee hearings in front of the
International Development Committee, including a session on 24
April 2012 when two of the largest multinationals listed on the
London Stock Exchange - brewer SABMiller and commodity trading
group Glencore - insisted it would be difficult and costly for
them to make wider disclosures on taxation.
United Kingdom - Minimum pricing to hit 8% of non promoted
More than one in 12 alcoholic drinks sold in supermarkets,
outside of promotions, would clash with UK government plans to
ban sales of items priced below 40 pence (USD 0.65/EUR 0.50) per
unit of alcohol, and cider would be hit the hardest.
In March 2012 the UK government unveiled plans for minimum
alcohol pricing in England. The proposal suggests a minimum
price of 40 pence per alcohol unit as part of a wider alcohol
strategy to curb health problems and crime associated with binge
A survey by research company Brand View found that of 12 April
2012, 8 percent of products in the alcohol category had a base
price (non-promoted) below 40 pence per unit. More than
one-third of these were supermarket own-label brands.
- Brewers get a boost from emerging markets
The first quarter reporting season is upon us. AB-InBev said on
30 April 2012 that it shipped 1.8 percent more beer and other
drinks overall in the first quarter of 2012. The world's biggest
brewer reported its net profit jumped 75 percent, thanks to
lower financing costs and taxes as well as higher beer sales.
Its core profit (EBITDA) rose 7.4 percent to USD 3.55 billion.
That was slightly below the average analyst expectation of USD
AB-InBev's Chief Financial Officer, Filipe Dutra, said the
company was benefiting from growing profits in countries like
Brazil, where the tax rate is lower than in Europe and the
Revenue meanwhile increased 3.7 percent to USD
9.33 billion, as strong sales in Latin America and Asia offset
falling sales in Europe.
After years of decline, U.S. beer shipments grew 1.0 percent in
the quarter, aided by mild winter weather, an extra shipping
day, restocking after inventories were cut at the end of 2011
and deliveries ahead of an earlier Easter.
However, AB-InBev warned that U.S. sales may fall in the second
quarter as it squeezed more shipments into the first quarter to
avoid higher transport costs in the summer.
Australia - Coopers Brewery is celebrating its 150th
anniversary this month
... and is already setting its sights on the future. In April
2012 Australia's biggest independent brewer bought America's
largest home-brew brand, consolidating its position as leader of
the global home-brew market.
Coopers revealed on 25 April 2012 that it has acquired Mr Beer,
a company based in the U.S. state of Arizona.
Coopers is already the world's largest producer of home-brew
concentrates and distributes do-it-yourself beer kits and
accessories to more than 20 countries.
Scott Harris, Coopers' Marketing Manager of brewing products,
said Mr Beer sold brewing kits, concentrates and accessories to
more than 14,000 U.S. stores and directly to consumers online.
Coopers has not disclosed how much it paid for Mr
Beer, but Mr Harris said it was a multi-million-dollar deal.
He described it as the first major international acquisition by
the Adelaide-based brewer in nearly 30 years.
Coopers will retain the Mr Beer brand, but U.S. customers would
notice some subtle changes aimed at improving the quality of the
beer, such as replacing the malt extracts.
The company says that Mr Beer sold more than 200,000 home
brewing kits last year and there are no signs of that demand
waning. Mr Beer's sales have been increasing by 10 percent per
year for the past decade.
Coopers became Australia's biggest independent brewer late last
year after global beverage giant SABMiller acquired Foster's. It
has been securely in family hands since its founder, Thomas
Cooper, a former stonemason and shoemaker, produced his first
commercial brew in May 1862.
Australia - Modelo's beer brands Negra Modelo and Pacifico are
looking for a new home
Foster's lost the low volume brands along with Corona Extra when
owner Grupo Modelo cut ties with the SABMiller-owned company in
However, they were not taken up by Corona's new Australian
Negra Modelo is Mexico's top-selling dark beer,
while Pacifico is a pilsner-style brew.
Like Danish beer brand Carlsberg, the Mexican brands are seeking
a new distributor and have been heavily linked with the
Coopers-owned distribution business, Premium Beverages, but
neither party would comment at this stage.
2009 december ·