Posted April 2011
Obituary - Pierre Celis, founder of De Kluis Hoegaarden brewery,
died 9 April 2011, aged 86
His life is the stuff of legend: from humble milkman to
world-renowned saviour of the centuries-old unfiltered Belgian
witbier style. Pierre Celis had vision, determination,
perseverance ... and a sure touch for picking the wrong
partners.
In Belgium he is revered as the man who
single-handedly took an almost extinct beer speciality to
grandeur. Belgium may be the country which hails the most
unusual beer styles, but it really was his Hoegaarden beer that
made Belgium the beer paradise it lays claims to today.
I am not sure if it is really true that he brewed his first
batch of the coriander and orange peel spiced beer in his
bathtub or that he built his first brewery in a cowshed. It does
not matter. It only adds to his reputation as a beer maverick,
who valued quality over profits and camaraderie over
corporatism.
Read on
Brazil – Who’s behind the rumour that SABMiller wants to buy
Schincariol?
Looks like the end game of globalisation could turn nasty. The
privately-owned Schincariol, Brazil's second-largest brewer, has
strongly denied the claim that it has been put up for sale for
about USD 2 billion and that SABMiller was the likely buyer.
People familiar with the situation believe that Brazil’s market
leader AmBev could be the source of the allegation, first
published by the London Sunday Times on 3 April 2011, in the
hope of denting Schincariol’s public image.
Being at the centre of a takeover speculation
isn’t new to Schincariol. In 2006, media reported that
Schincariol had received an offer from SABMiller, a claim
Schincariol refuted.
Schincariol knows only too well that rumours, even if totally
unfounded, are harmful to its business. If rumours that a
company is for sale reach its distributors, the distribution
channel can be destabilised and sales can be adversely affected.
Moreover, top people might jump ship.
To Schincariol this rumour is bad news aimed straight at its
heart and it's not random at all.
Read on
Germany – Carlsberg Germany to be sold to Radeberger Group?
Poor souls. Having endured one restructuring after another, the
recent rumour that Danish brewer Carlsberg will sell its local
subsidiary will do little to put the minds of its German
employees to rest. Carlsberg’s German unit Holsten (together
with the Lübz brewery) continues to be churned through the
rumour mill. About 18 months ago competitors alleged Carlsberg
would close down its Holsten brewery in Hamburg and relocate
production to Lübz. In March 2011, the German trade publication
INSIDE speculated that Carlsberg Germany could be sold lock,
stock and barrel to Radeberger Group. The privately-owned
Radeberger Group happens to be Germany’s number one brewer and a
few years ago was said to be in talks to acquire AB-InBev’s
German unit.
While there is no denying that Radeberger Group is on the prowl
to increase its market share to 20 percent from currently 13
percent, it’s far from clear which brewer could be Radeberger’s
next target.
Although Carlsberg’s German top honchos were quick to deny that
the group was for sale, employee representatives felt far from
reassured. “The employees are extremely concerned,” the leader
of Holsten’s works council, Rolf Dietzsch, told German media on
5 April 2011. “As far as we are concerned, a sale of Holsten has
not clearly been refuted. Employees want to know the company’s
future strategy.” Last year alone 80 jobs were axed at the
Holsten brewery. Restructurings are a regular feature. “This
does not contribute to employee motivation,” Mr Dietzsch
reportedly said.
Carlsberg’s employees are right to be worried. Market observers
have long wondered when – not if – Carlsberg’s German unit will
be sold. The theory that Carlsberg only bought the German
Holsten brewery group in 2004 to protect the southern glacis of
its Scandinavian Fortress, to speak in military terms – never
convinced us.
Like most brewers in Germany, Carlsberg has been suffering from
declining beer consumption. In 2010 Carlsberg’s beer sales fell
to 3.2 million hl and Carlsberg’s ranking among German brewers
to 8th according to Kelch market research for Brauwelt. In 2008,
Carlsberg still sold 4.8 million hl beer but that was before it
sold two breweries: one to the cheap-beer-producer Oettinger and
the other to the contract brewer Frankfurter Brauhaus.
Many think that after this string of disposals, Carlsberg
Germany has very little left to justify its presence in Germany.
Still, on 5 April 2011, about 250 of Carlsberg’s employees in
Hamburg were asked to gather outside and form a 17 metre crowd
in the shape of a Carlsberg bottle in celebration of the new
global slogan “that calls for a Carlsberg”.
Carlsberg’s CEO Jorgen Buhl Rasmussen said in a statement that
while Carlsberg's green logo is known around the world, its
sales do not measure up to its brand recognition.
Carlsberg said it will introduce new packaging for the beer in
more than 140 markets, hoping that the new branding will help it
reach its goal to become the fastest-growing global beer
company.
“Consequently,
by 2015, Carlsberg anticipates that the Carlsberg brand will
have doubled its profits,” the company said.
Currently, the Carlsberg brand sells about 6
million hl world-wide (excluding its market of origin).
Ethiopia – Heineken submits highest offer for Bedele Brewery
Have they all gone mad? Or did global brewers suffer from a last
minute panic attack in the scramble for Africa? According to
Ethiopian media, Heineken, SABMiller, Castel and Carlsberg have
submitted offers for the 290,000 hl state-owned Bedele Brewery,
which many think blatantly over-valued. Heineken's bid of USD
85.2 million exceeded those of Carlsberg Brewery (USD 68
million), Castel Ethiopia (USD 64 million) and SABMiller (USD 70
million). In January 2011 Ethiopia’s privatisation agency PPESA
invited bids for Bedele Brewery. These are currently being
reviewed.
Obviously, Ethiopia is the last unconsolidated beer market in
Africa. With 85 million inhabitants it ranks third among
Africa’s most populated countries – behind Nigeria (150 million
people) and Egypt (100 million people), while its beer
consumption stands at only 4 litres per capita.
But does this really justify offers to the order of almost 20
times profits (EBIT)? These days you can build a new 290,000 hl
brewery for probably half the price Heineken is allegedly
offering.
Read on
Ethiopia – Diageo has a tiger by the tail
So Diageo has made a bid for the Meta Abo brewery on its own.
It’s another madcap offer – rumoured to run to USD 150 million,
which is way over the top like Heineken’s USD 85 million bid for
Bedele Brewery. But the interesting question is not why the
world’s number one drinks group and brewer of Guinness beer is
prepared to spend so much on a medium-sized brewery in a market
where all the global big wigs will be stepping on each others’
toes. The more pertinent issue is: why isn’t Diageo going for
Meta Abo in tandem with its Kenyan partner, East-African
Breweries (EABL)?
Read on
USA – August Busch IV sued over girlfriend’s death
Just as well August Busch IV resigned from AB-InBev’s board. The
world’s media is not letting him out of their clutches now that
the family of his 27-year-old girlfriend, who died last year of
what authorities say was a drug overdose at the mansion of
August Busch IV, is suing the Anheuser-Busch heir. According to
U.S. media reports, Mr Busch is being accused of carelessness
and negligence in the death that produced no criminal charges.
Read on
USA – Beer freedom for Texas
The complexities of the
Three-Tier System in the U.S. never fail to amaze us at Brauwelt.
Here is another maddening anti-competitive regulation. Under
Texas law, brewpubs may serve beer or sell it directly to the
public for home consumption, but they are not allowed to sell it
via distributors or retailers. On the other hand, a brewpub in
California isn't subject to Texas restrictions, so it can sell
beer on site as well as package it for distribution to other
states, including Texas. A Texas brewpub can't do this. So in
Texas you have a situation where you can buy beer from a
California brewpub at your local shop, but you can’t buy beer
from the brewpub down the street. The only place to get a Texas
brewpub beer is from the source.
Read on
USA - Federal small
brewer excise tax bills introduced in Congress
Belgium, the Czech
Republic, Germany, the UK, France, Poland: all have progressive
duties for beer (with variable thresholds and reductions) which
benefit the smaller guys. So why has it taken the U.S. a quarter
of a century of craft beer growth to think about alleviating the
excise burden for craft brewers? Of course, tax regimes in “Old
Europe” don’t mean anything to American politicians. That’s why
it’s a brave and laudable move by The Brewers Association (BA),
which represents America’s craft brewers, to try to convince
their legislators in both Houses of Congress that a change to a
graduated beer excise rate is really needed.
Read on
Russia – Russia’s
Ministry of Finance wants to raise the price of vodka
Wars have started on less.
Remember La guerra del fútbol, the four-day war fought by El
Salvador and Honduras in 1969 over lost football matches? Should
Russia’s Ministry of Finance push ahead with plans to quadruple
the price of a half-litre bottle of vodka to over 400 roubles (EUR
10) by 2012 from less than 100 roubles (EUR 2.50) today, there
will be a revolution Russia-style: everybody will be heading for
their dachas, firing up illegal stills and producing moonshine.
In March 2011 Russia’s
Minister of Finance Alexej Kudrin made another attempt to wean
his countrymen and -women from vodka while filling up his tax
coffers.
The current budget
foresees a rise in alcohol taxes by 10 percent as of January
2012. The Minister does not think this is enough. He plans to
raise it by 20 percent. In July 2012 there will be another tax
hike as there will be in 2014.
All in all, excise on
vodka could rise to 900 roubles (EUR 22.50) by 2014, running to
a stream of almost EUR 15 billion in government revenues, it was
reported.
Russia-watchers doubt that
such an exorbitant take hike will ever come into effect. The
fact that it is scheduled to become law only AFTER the next
parliamentary elections to be held in December 2011 is an
indication that the Minister of Finance’s push for it is
half-hearted at best.
In the past, the ministry
has made several attempts to implement higher taxes on vodka and
cigarettes but to no avail. In the end, Russia’s strong alcohol
and tobacco lobby always had its way and ambitious goals were
trimmed down to very moderate levels.
Regulating the sale of vodka smacks
very much of political window-dressing. Last September, Moscow
banned the sale of vodka in shops after 10 at night. However,
the ban had very little material effect on vodka consumption
around the capital as vodka is still freely sold late into the
night at restaurants and bars that serve food.
Let’s bear in mind that no
Russian government to date has been able to stem the production
of moonshine. In 2009, unofficial vodka production was estimated
at over 30 percent of total production, according to Synergy, a
Russian drinks group.
Moreover, in March 2011 Russian
parliamentarians decided to allow alcohol back into the Duma's
canteen, five years after drinking was banned in the building,
Russian media reported.
Call that taking a tough stance
against alcohol abuse?
China - China Resources and SABMiller
don’t get Heineken’s stake in Kingway Brewery
Let this be a warning to all
armchair strategists: the much discussed tie-up between AB-InBev
and SABMiller could run into troubles in China if the latest
deal is anything to go by. At the beginning of April 2011,
Kingway Brewery announced that its controlling shareholder GDH
Ltd has exercised its right to buy the 21.37 percent stake
currently held by a Heineken joint venture.
In a filing to the Hong
Kong bourse, Kingway said the state-owned GDH, a wholly-owned
subsidiary of Guangdong Holdings Ltd, would buy the stake for
1.08 billion yuan (USD 164.94 million), increasing its holding
in the Chinese brewer to 73.82 percent. That way Kingway Brewery
will remain in Chinese hands. GDH is owned by an investment arm
of the Guangdong provincial government.
Read on
USA - Fortune Brands
buys Skinnygirl RTD brand
Wimmin, stop popping Prozac. There’s
an alternative: it isn’t fattening, not even addictive and
doesn’t require a prescription. Mother’s little helper is called
Skinnygirl, a ready-to-drink (RTD) Margarita cocktail, which
sells at a store near you.
In the U.S., RTDs seem to
be back in fashion. Especially if they promise the full flavour
of a cocktail without putting all those calories on your hips.
That makes Skinnygirl particularly appealing to American women,
who constantly worry about their looks – if their TV shows are
to be believed.
That’s why Fortune Brands,
which makes Jim Beam, must be glad they managed to buy the
Skinnygirl cocktail brand, created by reality TV star Bethenny
Frankel, at the end of March 2011. No terms were disclosed.
Skinnygirl, which was
launched in 2009 by Bethenny Frankel, 40, and David Kanbar
(whose uncle created Skyy vodka), is currently distributed
mainly in New York, New Jersey and Florida. Annual shipments
exceed 100,000 nine-litre cases, it was reported.
Read on
UK – Rum revolution
comes to Sheffield
With a rumoured backing by
the Bacardi Company, Inventive Leisure launched its first
Cuban-themed rum bar on April Fool’s Day. It was no joke.
Inventive Leisure, which has built a chain of 64 Revolution
vodka bars across the country since opening its first outlet in
Manchester in 1996, is now branching out into rum because they
believe that Revolucion de Cuba, as the bar is called, has the
potential to see similar growth to the Revolution chain.
Nevertheless, any further openings would depend on the success
of the launch.
At Inventive Leisure they
think that rum has become fashionable again, particularly in the
student and young professionals market, with cocktails like the
Mojito, Cuba Libre and Caipirinha.Read on
Germany – If sugar is the new tobacco …
…
why are Bionade’s sales in decline? The
lemonade for LOHAS (that’s consumers seeking a Lifestyle based
On Health And Sustainability) once proved immensely popular.
From its launch in 1995, when it was solely sold in health food
shops, the brand grew to become the almost uncontested leader in
its “better lemonades” segment. Having grown at a rate of almost
300 percent each year,
Bionade sold over 200 million bottles
(600,000 hl) in 2007, ranking fourth among Germany’s most
popular lemonades – behind Fanta, Sprite and Sinalco. Since 2008
when turnover reached EUR 40 million, sales of the
premium-priced lemonade, have been in free fall: by 2010 it had
dropped to about 230,000 hl, it was reported. Many wonder: what
are the reasons for this decline?
Read on
USA – What’s the next Coke?
For the sixth year in a row, total volume of
sales for the carbonated soft drinks industry was down in 2010,
says Beverage Digest. Fortunately, total moneys made – thanks to
higher prices – were up from the previous year. So gloom all
around? Not quite. Because Americans are increasingly shifting
their preference to diet drinks.
The Coca-Cola Company is still holding on to
42 percent of the domestic market, far outpacing PepsiCo's 29.3
percent and Dr. Pepper Snapple's 16.7 percent.
Read on
Australia – Those dastard retailers (oh
really?)
For a few days in March 2011 Australia's
major brewer, Foster's, stopped delivering its VB, Carlton
Draught and Pure Blonde brands to Coles’ First Choice liquor
stores and Woolworths’ Dan Murphy's chain after learning that
the two big retailers intended to sell them for AUD 28 per
carton of 24 bottles. The usual wholesale price of a VB carton
is AUD 33, and the usual retail price is AUD 38, it was
reported.
As if this was not enough, Foster’s had to
send out its troops a few weeks later to buy back heavily
discounted wine from Coles’ liquor outlets. Australian media say
that Coles was selling Penfolds 389 wine for AUD 37 a bottle or
AUD 7 below the AUD 44 wholesale cost.
Read on
Australia - Aldi plans to sell booze in NSW
The German
discount retailer Aldi has been selling liquor in the state of
Victoria for seven years, offering about 70 varieties of
non-refrigerated beer, wine and ready-to-drink spirits, most of
which are Aldi brand products. In March, it was reported, Aldi
applied for the right to sell alcohol in its New South Wales
(NSW) stores too, which is its latest attempt to disrupt the
Woolworths and Coles grocery and liquor duopoly.
The German retailer confirmed that it had
applied to sell liquor in all its 102 NSW stores and had begun
the licence application process.
Read on
Australia – Foster’s shareholders to vote on
the demerger
The Supreme Court of Victoria has ruled that
a meeting of shareholders of Foster's Group will take a vote on
the proposed demerger of Foster's beer and wine operations. The
shareholders meeting will be held in Melbourne on Friday, 29
April 2011. Foster's had said in February that they would
proceed with the separation of their beer and wine operations
into two separately-listed companies. It has finally been
revealed that under the terms of the demerger, shareholders will
receive one share in the wine unit, Treasury Wine Estates, for
every three Foster's shares.
Foster's Group has been working to split its
beer and wine businesses -- calling the former New Foster's and
the latter Treasury Wine Estates -- for more than a year, in a
move it argues will realise better value for shareholders and
probably attract takeover bids.
Read on
USA – Craft beer volume up 11 percent in 2010
On 21 March 2011the Brewers Association, the
trade association representing the majority of U.S. brewing
companies, released 2010 data on the U.S. craft brewing
industry. Small and independent craft brewers saw volume
increase 11 percent and retail sales dollars increase 12 percent
over 2009, representing a growth of over 1.2 million hl.
“Beer
lovers increased their appreciation for American craft brewers
and their beers in 2010,” said Paul Gatza, Director of the
Brewers Association.
The Association also reported a growth in the
number of U.S. breweries, with eight percent more breweries than
the previous year. In 2010, there were 1,759 operating
breweries. Craft brewers produced 9.9 million barrels beer (11.6
million hl).
Read on
USA – Carlos Brito named one of Barron’s top 30 CEOs
Mr Brito will be pleased. The business
magazine Barron’s has named him one of the top 30 CEOs in the
world among such notables as the investor Warren Buffet, Steve
Jobs (Apple), Peter Löscher (Siemens) and Michael O’Leary (Ryanair).
While 18 of the 30 CEOs run U.S.-based outfits, Australia,
Ireland, Germany, Japan and several other countries are also
represented.
The list was published at the end of
March 2011.
It’s the first time Mr Brito is on that list.
Barron’s says that “in just six years Carlos Brito has turned a
South American brewer into the world's largest beer concern, AB-InBev.
He runs it with a lean, flat management structure, with few
perks and meritocratic promotion practices that pay little
attention to seniority. He also encourages employees to use
their imaginations. ‘Dreaming big or small takes the same amount
of energy,’ he says.”
Beer Marketer’s Insights, in a delightfully
irreverent comment, wrote that they were not sure if many U.S.
distributors will agree. “Lots of them find AB in the U.S.
increasingly dysfunctional with local employees fearful and/or
unable to make decisions, while centralised AB-InBev management
comes up with decisions inappropriate for local markets.” But,
they concluded, to make it on to Barron’s list was quite an
honour for Mr Brito.
USA – August Busch IV does not seek
re-election to AB-InBev’s board
Adieu, then, August Busch. At
the end of March 2011, AB-InBev said that August Busch IV will
step down as a director at AB-InBev in April, which brings the
Busch family's formal involvement in the brewing giant to a
close.
Mr. Busch was CEO of Anheuser-Busch, when the
largest brewer in the U.S. was taken over by InBev for USD 52
billion in 2008. Although he had tried to avoid a takeover, he
was named a director of the newly formed company AB-InBev.
Even then, many industry
observers thought Mr. Busch's appointment to the board was
largely ceremonial.
Read on
USA – AB-InBev buys interest in Chicago’s
craft brewer Goose Island
For the world's number one brewer, AB-InBev,
spending USD 39 million on Chicago specialty brewer Goose Island
is a joke. But the deal, announced on 28 March 2011, highlights
a shift in consumer preferences that matters to the USD 91
billion brewer. In the U.S., sales of mass-market beers have
been in decline while those of high-end beers are growing.
For investors in Big Beer, any move to buy
more craft brewers won't be a big financial outlay.
Anheuser-Busch can easily pay for Goose Island out of its petty
cash.
Goose Island's annual production of 150,000
hl beer pales next to AB-InBev’s 348 million hl. However, Goose
Island produces only high-end craft beers. While total U.S. beer
sales fell about 1 percent in 2010, the craft beer category
leaped by some 11 percent. Over at Anheuser, weak U.S. volumes,
down 3 percent, drove a sales decline of 1.3 percent last year.
Growth in American mass-market beer sales is
expected to lag GDP growth for the next five years, according to
industry researcher IBISWorld.
Read on
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