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Posted October 2008

Belgium - InBev on track to close Anheuser-Busch deal

In the United States, the symbols of capitalism may come tumbling down, yet InBev have said not to worry. With Anheuser-Busch’s shareholders getting jittery, InBev re-affirmed that they are still on track to close their USD 52 billion purchase of American brewer Anheuser-Busch by the end of the year.   Read on

 

Australia - Bottom of the barrel

The Fosters Group have served up the dregs for investors with their first profit drop in 16 years, revealing a fall of 88 percent (AUD 117 million) to 30 June 2008, and due mainly to a massive write-down of the value of their wine businesses. Admitting that they paid too much for their wine assets (principally Beringer and Southcorp), Foster’s said that financial returns from wine have not met expectations and that the multi-beverage marketing approach had failed.     Read on

 

Australia – Will Constellation pull out of Australia altogether?

A range of quality vineyards and winery assets in the Clare Valley, Coonawarra, McLaren Vale, Padthaway and Wrattonbully regions in South Australia and Mt Barker in West Australia has been offered for sale on behalf of Constellation Wines Australia. The relevant winemaking and fruit-supply arrangements are subject to negotiation. In Adelaide, persistent ‘grapevine’ rumours suggest that Constellation is set to pull out of Australia completely if the market for Australian wines does not improve.   Read on

 

Australia - Hail, baron of the Barossa

Peter Lehmann, 78, Barossa valley wine legend, is celebrating the remarkable turnaround of the company that bears his name, following the news of its best-ever financial result.   Read on

 

Australia - First gain for two years

Australian Vintage (formerly McGuigan Simeon Wines), the country’s third largest winemaker, unveiled its first net profit in two years on 27 August 2008.   Read on

 

Japan – Not the Magnificent Seven but strong still

In October Kirin Breweries will launch a new high alcohol (7% ABV) beer in a bid to gain a bigger share of the domestic market. The beer, named Strong Seven, represents Kirin’s development of a third category beer, supplementing regular beers at 5% ABV and low-malt beers at 3% - 4% ABV. The new category is aimed at 30 to 50 year old males. Both Kirin and Suntory have already experienced success with higher alcohol shochu liquor-based drinks.   Read on 

 

USA – Judges don't like caffeine in alcohol...duh!

They should have known what was coming. In the end MillerCoors had to bow to public pressure and announce that they were putting on hold the introduction of Sparks Red, a new caffeinated alcoholic beverage about which 25 state attorneys general have expressed concern.                  

In a statement, MillerCoors - a joint venture of Molson Coors Brewing and SABMiller - said they were putting on hold the introduction of Sparks Red pending discussions with a group of state attorneys general.

MillerCoors noted that the federal Alcohol and Tobacco Tax and Trade Bureau previously approved the ingredients, formulation and labelling for the beverage, which was scheduled to be introduced on 1 October 2008.

In September, 25 state attorneys general, including New York Attorney General Andrew Cuomo and Connecticut Attorney General Richard Blumenthal, called on MillerCoors to abandon plans to introduce the drink, expressing concerns about the drink's high alcohol content and its marketing to young people.

The plea to MillerCoors is the latest move in a crusade against the U.S.’ top brewers over the hybrid beverages, which seem to have become brewers’ best friends. Given that beer sales have grown very little in recent years, these alcoholic drinks spiked with caffeine have become nice little earners for the brewers. Nevertheless, they have remained a small category. Sparks represented only about 1 percent of Miller's U.S. production in 2007, according to industry estimates. Still, Sparks is a high-profit-margin item, and it is the leader in the energy-brew category. Plus, Miller paid USD 215 million in 2006 to buy McKenzie River Corp., maker of Sparks.

The controversy over these energy brews has been going on for quite some time. In February, attorneys general from several states, including Illinois' Lisa Madigan, subpoenaed Miller and Anheuser-Busch, the nation's biggest beermaker, asking for information about energy-alcohol drinks.

Both companies have reportedly complied with the subpoenas, and, in June, Anheuser-Busch said it would remove caffeine and other stimulants from its Tilt and Bud Extra offerings.

Now, the pressure is being ratcheted up on MillerCoors, and not only by the attorneys general. In August, the Center for Science in the Public Interest sued the company, claiming stimulants used in the Sparks offerings are not approved for alcoholic beverages.

With 8 percent alcohol, Sparks Red would pack more of a punch than Sparks' original version or Sparks Plus, which contain 6 percent and 7 percent alcohol, respectively. Most conventional beers have a 4 percent to 5 percent alcohol content.

Like most energy drinks, Sparks is also loaded with caffeine. The attorneys general claim that adding caffeine to alcoholic beverages reduces drinkers' sense of intoxication. Research on the subject is limited.

The U.S. energy drink boom started during the late 1990s with the introduction of Red Bull. Today, it is one of the beverage growth categories, a USD 4.8 billion market according to a report by Mintel International, a market researcher.

 

Germany – New brewhouse for Tucher

When Germany’s Brau + Brunnen Group bought the Tucher brewery five years ago, they did not worry that they only bought the brands but not the real estate. They knew that someone else would have to fork out the money for a new brewery and making the whole investment pay off. Now who would that be? Well, Brau + Brunnen’s buyer, the Radeberger Group.   Read on

 

Korea - InBev apparently mulls selling Korean arm and some German assets

According to the Financial Times, InBev is weighing up whether to sell their Korean beer business, Oriental Brewery, and certain brands in Germany, among other assets, as they try to find the best way to fund their purchase of U.S. brewer Anheuser-Busch.                         

Citing people familiar with the matter, The Financial Times newspaper in early September reported that InBev is currently reviewing sale prospects for their operations in Korea and Germany, as well as Anheuser-Busch's entertainment division, its packaging operations, and its 27 percent stake in Chinese brewer Tsingtao.

The Korean business could sell for up to USD 2 billion. Oriental Brewery has a market share of 40 percent and sold 6.9 million hl of beer 2007, a figure that in part led sources to estimate the roughly USD 2 billion price tag. The business is South Korea's second-largest brewer behind Hite Brewery Co Ltd. Oriental Brewery sells global brands Beck's and Stella Artois, as well as Cass beers.

It became part of InBev's operations in 1998 and merged with the Jinro Coors Brewery in Chungwon, South-Korea in 1999. That gave Oriental Brewery a 48 percent market share in South-Korea and a volume of about 7.5 million hl of beer per year. Only in 2004 had InBev (then Interbrew) exercised a put option and paid EUR 612 million for 100 percent control of Hops Cooperatieve U.A., which held 45 percent of the shares of Oriental Brewery. That raised InBev’s stake in Oriental to 90 percent.

InBev's decision to sell Oriental comes at a time of high saturation in the South Korean beer market. South Korea is a relatively mature market and quite profitable, but not a significant profit driver, say market observers.

InBev would not be the first to exit the South Korean beer market: Early on, Coors saw the light, later followed by Carlsberg, which sold its remaining stake in Hite Brewery in 2006.

Deutsche Bank and JPMorgan Chase are believed to run the auction for the business. However, the auction is not likely to start until the closing of InBev's takeover of Anheuser-Busch.

Oriental Brewery was quick to deny the rumours, saying its Belgian parent does not plan to sell the division to fund its Anheuser-Busch takeover. InBev’s spokeswoman Marianne Amssoms would not comment on Oriental’s statement, saying that it was too early to discuss specific targets.

Either it was the silly season or the hacks were away – in any case, the German media did not pick up the rumour that InBev might also sell some secondary German beer brands such as Hasseröder to finance the Anheuser-Busch deal. In Germany, InBev sits on a huge portfolio of brands that they gobbled up during their shopping spree in the early 2000s. Already InBev managed to offload a brewery and its brands that did not go anywhere to its previous owners: that was the Dinkelacker-SchwabenBräu in 2006. 

Whether anybody would be willing to help InBev out of a glitch? In Germany’s low-margin market? Highly unlikely. 

 

Ireland – Magners cider sales under pressure

The C&C Group announced in August that its key cider brands had been hit by a wet summer and the economic downturn and warned that revenues and operating profits will be under pressure during the second half.  Read on

 

South Africa – SAB to launch the Hungarian Dreher brand

Grolsch, Dreher - who cares that they aren’t exactly Germanic in heritage? To the discerning South African consumers these brands are the closest they will get to an old-time Germanic beer brand, although Grolsch is Dutch and Dreher Hungarian.     Read on  

 

Colombia – SABMiller sells bottled water business

SABMiller announced that its Colombian subsidiary Bavaria has agreed to dispose of its Agua Brisa bottled water business and assets, which will be acquired jointly by Coca-Cola FEMSA and The Coca-Cola Company, for a consideration of USD 92 million. The disposal of Agua Brisa is subject to approval by the Colombian competition authorities and other customary pre-closing conditions, with the closing of the transaction expected in late 2008 or early 2009.      Read on

 

United Kingdom – Landlords sought

Punch Taverns, one of the largest pub operators in Britain has seen its share fall over fears that its business model will not prove sustainable. Already almost one in five of its tenanted public houses is looking for a new licensee.     Read on

 

United Kingdom – The story of British beers

The author Martyn Cornell has published a new book. “Amber, Gold and Black, the Story of Britain’s Great Beers”, his 220-page ebook which reveals how the beer styles of Britain have developed over the years, is now out and available.

The book can be downloaded at just GBP 5 a time from www.thecornerpub.co.uk.

Whether you are a beer beginner or a buff, Mr Cornell guarantees readers will learn things they never knew, about both beers they are familiar with and beers they have never heard of.

The questions asked – and answered – include

- Who really developed porter? (Not the man most other books tell you did it)

- How did India Pale Ale – IPA – really come about? (Not the way most other books tell you it happened)

- Is pale ale the same as bitter? (The definitive answer, with historical proof)

- What is the difference between porter and stout? (A full and proper explanation)

- What exactly is mild? And what was it? (Not necessarily what you thought it was)

- What were daucus, Dr Butler's ale, mum, audit ale, O Be Joyful, OK, gill ale and dozens of other obscure beers, some still around, others vanished that once filled the pint pots of Britain? (Never heard of Cornish white ale? Learn all about it.)

 

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