Beer Monopoly





  International Reports








Posted October 2011

USA – Pressure mounts on PepsiCo to split in two

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. Read on


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. Read on


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 consumer confidence.

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. Read on


Australia - High dollar hurts wine sales growth

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 markets.

"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. Read on


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. Read on


UK - European Court ruled in favour of pub licensee

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. Read on


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 bonus payments.

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 free.

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 can.

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. Read on


France – Government doubles tax on sugary drinks

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 obesity epidemic. A recent study found that a diet of junk food is turning the traditionally skinny French into a nation of fat bottoms.

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 million). Read on


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 a year.

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. Read on


USA – A Busch to re-enter the brewing industry

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. Read on


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 town?

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 those markets.

"Only major headaches"? Shome mishtake shurely. It's either "only minor headaches" or more correctly "major headaches". And major headaches they will be. Read on


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 Foster's.

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. Read on


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, instead.

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. Read on


Germany - Carlsberg is committed to Holsten

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 this year.


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 worldwide.”

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 ( 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 Boxmeer.

Oh really? And all of that is reflected in capital letters?

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 retail outlets.

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 countries.

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. Read on


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