Posted October 2011
USA – Pressure mounts on PepsiCo to split
It's a bit like whistling in the dark.
PepsiCo is busy touting the value of its combined snacks and
drinks portfolio, all the while Wall Street thinks the company
should consider breaking up.
"I firmly believe that PepsiCo’s value is
maximised as one company," said Indra Nooyi, the boss of
PepsiCo, during the announcement of the company’s third-quarter
results on 12 October 2011. What followed was a plea for the
“Power of One”. That is how Pepsi describes its clout with
suppliers, retailers and customers, thanks to its ability to
market and distribute several of its brands together.
USA - PepsiCo to branch out into yogurt
They picked a real wrangler should rumours
become true that PepsiCo is closing in on a joint venture with
Theo Müller Group, a privately-owned German dairy company, which
would give PepsiCo a foothold in the fast-growing U.S. yogurt
market. The logic behind such a tie-up is that PepsiCo hopes to
reach out to health-conscious consumers and is therefore
planning to enter the yogurt market with the help of German
dairy giant Theo Müller. Read on
Brazil - Court rules in favour of Kirin
taking control of Schincariol
In October 2011 a São Paulo court lifted an
injunction against Japanese brewer Kirin which had been sought
by Schincariol's minority shareholders, who had hoped to block
the sale of Schincariol.
In August this year, Kirin announced the
purchase of a 50.45 percent stake in Schincariol for USD 2.56
billion, excluding debt. Schincariol is Brazil's second-biggest
brewer with an 11 percent market share.
USA – Heineken's worries won't go away soon
In Amsterdam, Heineken's executives may cheer
Interbrand's 2011 Best Global Brands Report which shows that the
value of the Heineken beer brand has increased in 2010.
According to the survey, the brand's value increased 8 percent
in 2010 and 60 percent since 2005. Interbrand says the Heineken
brand ended on a 91st position up from 93rd in 2010. Needless to
say that the Coca-Cola brand kept its first position.
However, the same executives cannot be too
pleased with their brand's performance in the U.S., where it has
been losing volume and market share for years.
With declines in July
2011, the U.S. market now equals revenues generated by Heineken
in France, it was reported.
Beer Marketer's Insights says that volumes of
the Heineken brand in the U.S. have dropped 20 percent to 4.9
million hl (2010) since 2007, causing many U.S. executives to
take their hats. The usual explanation given is that a premium
brand like Heineken suffers most in times of weakening
Alas, Heineken's U.S. woes seem to have a
long history. Try googling Heineken +U.S.+problems and hits take
you back to the early years of the past decade.
Small wonder that Heineken's top brass at
recent investor conferences (September 2011) hardly mentioned
the U.S. market and their performance there. The presentations
revolved all around the brewer's successes in emerging markets.
Australia - High dollar hurts wine sales
If you listen to wine companies explain why
they aren't doing well, they are never short of excuses. The
weather, the supermarkets, the consumers. The latest excuse
seems to be "international currency movements". Heavens know how
the wine industry could ever dream of going global.
The latest Rabobank Wine Quarterly
report says global wine exports continue along a general growth
trend with the major exceptions being Australia and South Africa
as the strength of their currencies dampened demand on export
"Conversely, the continued weakness of the
euro provides impetus to exports from France, Italy and Spain,
whose exports are growing faster than their New World
competitors,'' Rabobank said.
Singapore – F&N to expand its soft drink
business in Asia
Heineken has every reason to feel
concerned about Fraser and Neave’s (F&N) future plans. At the
end of September 2011, the Singaporean conglomerate, whose
interests range from food and beverages to real estate, ended a
75 year partnership with The Coca-Cola Company. Or rather, it
was Coke which did not want to renew their contract.
Could Coke’s decision have been in
anticipation of Japan’s beer and beverage firm Kirin buying a
major stake in F&N in 2010? Then Heineken will need to watch its
back. Or Kirin, one day, could crowd out the Dutch in their beer
joint venture with F&N, Asia Pacific Breweries.
UK - European Court ruled in favour of pub
A temporary victory for long-suffering
publicans. On 4 October 2011 the European Court of Justice (ECJ)
ruled against the UK football’s Premier League stating that the
imposition of national borders to sell rights on a
territory-by-territory basis contravened EU laws on free trade.
The court said that restricting the sale of European foreign
satellite decoder cards is “contrary to the freedom to provide
services”. Essentially the court agreed with Karen Murphy, a
publican from Portsmouth. Ms Murphy's lawyers had argued she was
entitled to show the matches because she had paid a subscription
to a Greek broadcaster and that to enforce Sky's exclusivity in
the UK was against European free trade laws.
But the European judges – knowingly or
unknowingly – appeased both aisles of the courtroom when they
advised further that, while beaming in the matches themselves
from overseas did not breach the Premier League's copyright,
broadcasting the Premier League's "anthem", graphics and build
up without its permission did amount to a breach.
The rights holders (aka the football league)
could use this to their advantage and force their TV partners to
include more copyrighted elements throughout the broadcast –
playing music when goals are scored, for example. This way, the
Premier League and other rights holders could help protect their
businesses in pubs and clubs.
The ruling will now go back to the British
High Court for final ratification and interpretation. This will
not be an easy task as there is enough ambiguity in the ECJ’s
ruling to keep the lawyers busy for months to come.
Belgium – AB-InBev enters price wars
How silly of us to think that beer
price wars are only a thing the Germans and the Brits engage in.
In neighbouring Belgium brewers seem to have resorted to this
last ditch effort too given that beer sales in the self-styled
Beer Paradise have gone south for almost two decades.
For two days in September 2011, AB-InBev had
an offer running at supermarket chains Spar and Delhaize which
gave you one crate (24 x 25 cl) of Jupiler pils free if you
bought at least EUR 20 (USD 27) worth of other AB-InBev beers.
The timing of the bumper offer says
it all: hoping to drive up beer sales for Belgium’s top-seller
brand Jupiler at the end of the third quarter, AB-InBev’s
managers probably sought to meet volume targets and related
Beer sales for the third quarter
(July-September) must have been awful. From what Brauwelt has
heard, they declined in the high teens in July alone
year-on-year. In August they dropped at a lower rate. Still, not
good. Hence brewers felt they had to slash prices to prevent
further volume losses in the third quarter.
However, if truth be told, AB-InBev’s
September offer was also in response to a long-running special
by rival brewer Alken Maes (Heineken-owned) for its Maes pils at
the Carrefour hypermarkets. On certain dates, if you returned an
empty crate of any pils brand, you got a full crate of Maes Pils
Alken Maes isn’t the only brewer to discount
its pils beer. Prior to the Jupiler special, discount retailer
Aldi had the Schultenbrau beer brand (brewed by Belgium’s
Martens brewery) on sale for EUR 0.49 (USD 0.66) per 0.5 litre
Pils brands in Belgium usually
retail at between EUR 9 and EUR 10 per crate plus deposit. In
effect, a litre of Pils sells for EUR 1.0 to EUR 1.50.
Top-fermenting beers (at 6% to 11%
ABV) are available for EUR 2.0 to EUR 3.0 per litre, while
Trappist beers set you back EUR 3.0 per litre.
In November 2011AB-InBev and
Heineken will release third quarter figures. Then we will know
the true extent of this summer’s Belgian beer sales drama.
France – Tumult-ous times ahead?
The Coca-Cola Company seems to have high
expectations for a fermented non-alcoholic beverage. Although
its Spirit of Georgia brand failed to dethrone Bionade, a
similar but long-established malt-based soft drink, in Germany,
Coke has not given up on the category yet. Instead it has
decided to launch Tumult, a fizzy drink made from a natural
fermentation process without the production of alcohol, in
Paris, hoping to take it to the rest of Europe eventually.
In a new marketing twist, Tumult is
positioned as a premium non-alcoholic aperitif, priced at EUR
3.50 (USD 4.70) for four 25 cl glass bottles.
France – Government doubles tax on sugary
Perhaps The Coca-Cola Company should speed up
the roll-out of Tumult. On 5 October 2011 the French Government
released more details of a plan to levy a tax on fizzy drinks,
which is part of an aggressive campaign to fight a growing
A recent study found that a diet of junk food
is turning the traditionally skinny French into a nation of fat
The French government wants to impose a EUR
0.02 tax on cans of carbonated, sugary drinks – double the
original projection. Plans to impose a sugar tax were first
announced in August and will come into force on 1 January 2012.
The tax is expected to raise an extra EUR 240 million (USD 320
USA – Drink more beer! The government
needs the money
Putting money over morals, dozens of
states and cities across the U.S. have tinkered with laws that
regulate alcohol sales as a way to build up their budgets. With
cities across the country facing their fifth straight year of
declining revenues, raising money from people who enjoy a
cocktail is becoming an increasingly attractive option.
U.S. media report that 12 states have raised
taxes on alcohol or changed alcohol laws to increase revenue,
including Maryland, which in July pushed the sales tax on
alcohol to 9 percent, from 6 percent – the first such increase
in 38 years and one that is expected to bring in USD 85 million
U.S. states and local governments take in USD
17 billion a year from alcohol taxes. And although the number
has been rising steadily, the recession has slowed that growth.
USA – A Busch to re-enter the brewing
It must be in their genes. While August Busch
IV, 47, the last CEO of Anheuser-Busch, seems to have left the
brewing industry for good, his uncle William “Billy” Busch, 51,
has decided to enter it. According to St Louis newspapers, the
federal Alcohol and Tobacco Tax and Trade Bureau in September
2011 granted label approval for the first two beers from the
recently announced William K. Busch Brewing Co.: Kräftig Lager
and Kräftig Light.
USA - World domination
The SABMiller-Foster's deal is not even
completed and already there is talk by "bankers" about the next
tie-up looming between AB-InBev and SABMiller. We wonder: who
are these clowns (the "bankers") and when did the circus come to
According to a report by Reuters, on 26
September, “bankers” are hopeful of an USD 80 billion plus deal
to end all deals between the industry's two giants,
Anheuser-Busch InBev and SABMiller.
Yeah, these unnamed bankers would be hopeful.
If such a deal materialised, they would gain the most: at least
USD 6 billion in bankers' fees alone.
The anonymous bankers in the Reuters article
say the world's number one brewer AB-InBev will not be deterred
from making a move for SABMiller even after the number two
brewer swallows up Australia's Foster's by the end of 2011 in an
AUD 12.3 billion deal.
According to one banker, a deal between the
two heavyweights would cause "only major (!) anti-trust
headaches in the U.S. and China" which would force sell-offs in
"Only major headaches"? Shome mishtake
shurely. It's either "only minor headaches" or more correctly
"major headaches". And major headaches they will be.
Australia – Spirits next for CCA
What are the “don’t-tempt-us-with-booze”
bosses at The Coca-Cola Company going to say to Mr Davis’
latest? The CEO of Coca-Cola Amatil (CCA), Terry Davis, is to
turn the Australian company's alcohol ambitions to spirits after
losing its slice of the beer business to the new owner of
As Brauwelt reported, SABMiller will buy out
its stake in the joint venture with CCA, Pacific Beverages, set
up in 2006, for at least AUD 305 million. This deal, struck with
CCA, allowed SABMiller to go after Foster’s alone, while
obtaining full ownership of Pacific Beverages’ AUD 120 million
brewery near Sydney.
Pacific Beverages brews and distributes the
Peroni and Bluetongue beer brands in Australia.
USA - MillerCoors sues Patriots football team
over sponsorship deal
When is a deal a deal? Oh, that depends. On
26 September 2011 MillerCoors filed a lawsuit against the New
England Patriots claiming the team reneged on an exclusive deal
and chose to award that deal to its competitor, AB-InBev,
MillerCoors (a joint venture of SABMiller and
Molson Coors), which has been a sponsor of the Patriots for
nearly ten years, said it negotiated an exclusive beer deal with
the team that would begin at the end of this season 2011/12 and
run through to 2019.
Germany - Carlsberg is committed to
Will they stay or will they leave –
Carlsberg’s German employees have wondered. After a series of
brewery sales in recent years, which have shrunk Carlsberg’s
German unit to merely two production sites, many wondered if
Carlsberg was still interested in keeping a presence in Germany.
Following a review of its business, Carlsberg announced on 21
September 2011 that they would invest more than EUR 40 million
in Germany - especially in its Hamburg Holsten brewery.
Hamburg’s mayor, Olaf Scholz, who had travelled to Copenhagen to
talk to Carlsberg’s top brass, is pleased that a total of 700
jobs have been saved.
Rumour has had it for a while that the Danish
brewer wants to sell its business in Germany, which would have
meant putting the Hamburg brewery and its brands Holsten and
Astra on the block.
Now the world’s number four brewing group has
clearly rejected such speculation. The company will invest more
than EUR 40 million in its two remaining sites, Hamburg and Lübz.
As part of a comprehensive five-year plan,
both the Holsten brewery and the Lübz brewery in north-eastern
Germany will be modernized and upgraded.
While the investment programme creates no new
jobs, there will not be any lay-offs either.
Carlsberg Germany is facing a tough business
environment. The German beer market has been declining for
decades. Consumption is expected to go down by another 3 percent
Netherlands - Heineken gets a new look
It’s a bit like “spot the difference”. And be
damned if you cannot. On 19 September 2011 Heineken announced
the launch of a new global company visual identity that is
supposed to reflect the “significant transformation of the
Heineken business over the past decade.”
The re-designed HEINEKEN name, now in capital
letters and complemented by a red spark, is to “represent the
spirit and energy of the company's more than 70,000 employees
Who would have thought?
The logo’s capital letters (previously they
were in lower case) are to distinguish the company from its
major brand. Ok, so there is a practical benefit to this costly
switch from one logo to another.
The logo will appear on all
corporate publications, printed materials, the corporate website
(www.theHEINEKENcompany.com) and will be used in some capacity
by the majority of its operating companies worldwide.
Thank goodness, the visual identity and
design of the iconic Heineken beer brand remain unchanged.
"HEINEKEN has evolved significantly during
the past ten years. Today, our company has the most global
footprint of any brewer, we have a portfolio of more than 250
beer and cider brands and we employ more than 70,000 people. The
new identity differentiates the company from the Heineken brand.
In doing so it better reflects who we are today and the company
we aim to be tomorrow," said HEINEKEN CEO Jean-François van
Oh really? And all of that is reflected in
The new visual identity will be
rolled out internationally starting in October 2011.
Amsterdam-based branding and design agency
VBAT developed the new visual identity for the company. Sure,
they made a fortune with this flash of genius.
Europe – The bitter facts
More than a quarter of a million jobs have
been lost in two years as a result of the growing tax burden and
impact of the economic crisis on beer, damaging the European
economy as a whole.
According to an Ernst & Young and Regioplan
study on behalf of the Brewers of Europe, beer consumption fell
8 percent from 2008 to 2010, cutting 260,000 jobs, 85 percent of
which were lost in the hospitality sector. Beer sales fell by 15
percent in the hospitality sector, compared to 4 percent in
Government revenues from the sector,
including excise duties collection, fell a staggering 6 percent
in one year, from EUR 54 billion in 2008 to EUR 50.6 billion in
2009, in spite of tax increases on beer across a number of
Although the overall contribution of beer to
the EU economy has decreased by 10 percent since 2008, the
contribution of the brewing sector to the economy remains very
significant, Ernst & Young says.
may11 · april 11
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