USA – What’s Grupo Modelo up to?
Carlos Fernandez, the CEO of
Mexico’s major brewer Grupo Modelo must know what he’s doing.
Not only has he reiterated at a recent conference call that his
company, under no circumstances would sell its shares to its
part-partner Anheuser-Busch, thus angering some of his
shareholders with his blatant arrogance. Grupo Modelo on 16
October 2008 also has filed a notice of arbitration against
Anheuser-Busch Cos. Inc., saying that the company's pending sale
to InBev violates their investment agreement.
Since the USD 52 billion deal
to sell the brewer of Budweiser and Bud Light to InBev was
announced this summer, Grupo Modelo, Mexico's largest brewer,
has said that it has consent rights over the deal. The company,
which is 50 percent owned by Anheuser-Busch, had been in talks
with InBev related to that.
In late July, Grupo Modelo
Chief Executive Officer Carlos Fernandez said the company has
rights to be able to choose whether it enters a partnership with
On 16 October 2008, the
company, which is controlled by a small group of shareholders,
filed a suit of arbitration against Anheuser-Busch in an attempt
to exercise these rights. It said in a news release its
investment agreement under Mexican law prohibits Anheuser-Busch
from taking actions that would mean a transfer or sale of its
interests in Grupo Modelo to a competitor in the beer business.
The catch phrase on which Grupo Modelo builds its case is “under
Mexican law”. The brewer believes that under Mexican law its
shareholders would have the right to buy back the shares in
Modelo and its subsidiary, Diblo, which would be transferred by
Anheuser-Busch to InBev. Anheuser-Busch's roughly 50 percent
stake in the company is non-controlling.
Anheuser-Busch and Belgian
brewer InBev said in separate statements that they believed
Grupo Modelo's claims have no merit.
Both companies said the
arbitration would have no impact on the deal and it would close
by the end of the year as expected.
Shareholders of Belgian-based
InBev, maker of Stella Artois, Beck's and Bass, approved the
deal in late September. Anheuser-Busch's shareholders are set to
vote on it on 12 November.
So what is Grupo Modelo
playing at? At the moment the board with its “under no
circumstances” attitude is angering those shareholders who might
like to sell out to InBev if the price were right. That means
that Grupo Modelo must have a long-term plan of sorts to engage
in a public spat with Anheuser-Busch and InBev.
Media commentators have
refrained from speculating why Grupo Modelo has filed a notice
of arbitration. Without saying as much, many probably believe
that Grupo Modelo is engaging in what in the boxing world would
be called “shadow-boxing”. After all, if Grupo Modelo had really
wanted the deal to collapse it would have asking for an
It did not.
Given that the case may take
perhaps up to a year (I am guessing) before it is settled,
Anheuser-Busch, by that time, will have been fully integrated
into the InBev system. Now why would Grupo Modelo pursue
arbitration well aware of the fact that the verdict will come
too late to have any material impact on the contested sale?
The interesting aspect to
arbitration is that it the claimant, Grupo Modelo, has to submit
a statement of claim. Something along the lines of …. “if the
verdict is in my favour I want this and this …”
To date, Grupo Modelo has
refrained from disclosing what is in its statement of claim.
Again, I am guessing. But let’s assume that Grupo Modelo
eventually will be vindicated by the court of arbitration. Then
its chances of buying back its shares at a discounted price are
high – provided this is what its statement of claim reads.
If this is what Mr Fernandez
is gambling at – buying back his shares for cheap in order to
sell the company lock stock and barrel to the highest bidder –
then the arbitration proceedings make great sense.
Australia – Feeling the pinch
Home brew shop operators
report that world’s financial turmoil has brought about a
resurgence in home brewing in Australia, with more people buying
home brew kits as they seek to reduce living costs.
Australia – The debate on binge drinking
Six months on from the Federal
Government’s tax increase on RTD’s in April, the Department of
Ageing & Health is pleased with the impact the rise had on the
market, pointing out that “recent Australian Tax Office figures
show a 23 percent decrease in pure alcohol sold in spirit form,
between April and June”.
Germany – Esau & Hueber with new strong
In the grand scheme of things,
the recent change in shareholders and management at Esau &
Hueber, a privately-owned supplier to the beverage industry,
would only warrant a short notice. But given the current turmoil
at international financial markets, Esau & Huber’s story behind
the headline shows the vulnerability of companies which do not
have a strategic investor whose interest in them is vital and
Germany – Hövels Original: a beer for all
In the past I have had to sing
for my dinner. I even had to give the dinner speech once. But
never, never before did I have to cook my own dinner when I had
been invited out. Well, to be honest never did I have a
Michelin-starred chef to teach me how to cook my dinner. Which
makes all the difference. Especially if there is copious amounts
of Hövels Original to be enjoyed. Read
Ghana - ABL launches nationwide campaign
Heineken watch out. While the
Dutch brewer still seems to pondering as to what to do
internationally with its Strongbow and Bulmers cider brands,
SABMiller’s subsidiary in Ghana, Accra Brewery Limited (ABL) in
October has launched Redd's, which a premium alcohol fruit
beverage “made for the modern, confident woman”.
India - SABMiller takes on Kingfisher
In October SABMiller launched
a new national beer brand in India, appropriately named Indus
Pride. The new mild beer is to crack Kingfisher’s dominance as
the best-selling beer. Kingfisher is owned by United Breweries
in which Dutch Heineken has a 37.5 percent stake. SABMiller is
the number two brewer in India with a market share of 35 percent
in its core markets.
Kenya – End in sight for Kenya’s beer
Keroche Breweries has become
east Africa’s newest beer maker, launching three brands on 24
October 2008. The brands — Summit Lager, Summit Malt and a
yet-to-be-named “black” beer, will compete with East African
Breweries’ Tusker Lager, Tusker Malt and Guinness respectively.
Until the entry of Keroche, EABL was Kenya’s sole large-scale
Serbia – Heineken and Efes united – under
In October 2008 United Serbian
Breweries announced that, following the merger of Heineken and
EFES in Serbia earlier this year, it will operate the combined
business in Serbia under one management team and one name -
United Serbian Breweries. In order to become one of the leading
players in the Serbian market, United Serbian Breweries has also
announced the closure of the former Efes brewery in Pancevo and
the decision to scale back production at its breweries in
Zajecar and Novi Sad from a total capacity of 2.1 million hl to
1.5 million hl.
USA – End of Zima
MillerCoors LLC announced that
it will discontinue the clear malt beverage Zima, introduced by
Coors Brewing Co. in 1992, because of "challenging malternative
segment sales and declining consumer interest."
United Kingdom – InBev launches campaign
for new Stella Artois 4%
Oh la la, ce beer est très
hot. Stella Artois’ new campaign is probably going to bring out
the best franglais in the Brits. Emphasising a spurious French
past, the ads will make many punters walk up to the bar and
order a lower strength Stella by saying: “Bonjours le you. I
voudrais a Stella quatre!” In October InBev has InBev UK
unveiled a new TV, press and outdoor campaign to promote Stella
Artois 4%. The lower-strength Stella Artois 4% was introduced to
the off trade in August this year. A draught version is being
rolled out in the on-trade from November. Read
december 08 ·
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