Posted December 2011
Germany – Munich’s Paulaner to build a new
brewery
Finally. The news we have been waiting for.
At the end of November 2011 Schörghuber Group, which owns the
majority stake (75 percent – the rest is owned by Heineken) in
Munich’s Paulaner brewery, announced it would relocate the
brewery to a larger outskirts site (190,000 sqm). Ground will be
broken in 2012.
The German trade publication Inside estimates
the project could run to EUR 300 million, including real estate.
I think this is a modest estimate,
considering that the new Paulaner brewery will have a capacity
of about 3 million to 5 million hl. At its current site, which
has been bursting at the seams, Paulaner produces 2.5 million hl
beer annually.
Read on
UK- Heineken buys more pubs
It’s a mystery. Why did Heineken
agree to buy the 918-strong Galaxy Pub Estate for GBP 412
million (USD 646 million) from Royal Bank of Scotland (RBS) on a
cash-and-debt-free basis? The deal was announced in early
December 2011.
True, the RBS was bust and needed a series of
government bailouts in 2008 and 2009, which left the U.K.
government holding an 83 percent stake.
But the pubs did not come cheap. Although the
RBS apparently accepted a loss of around GBP 28 million on the
sale, which it described as a “good result in a difficult
market”, the transaction still values Galaxy at about 7.9 times
its 12- month EBITDA.
What is more, Heineken is buying a tenanted
pub estate and not a managed pub estate. Tenanted pubs are
leased to and operated by third parties. They make up the vast
bulk of the UK's pubs. However, managed pubs, which are run
directly by the operating company and generally have greater
control on pricing, have fared better during the economic
downturn.
Read on
USA – That’s Kräftig stuff
Billy Busch, half brother to August Busch
III, has finally started serving his Kräftig beer in St Louis
bars – only to get served a USD 600,000 suit by consultancy Rio
Creative in a breach of contract. Rio filed a suit on 21
November 2011 against the William K. Busch Brewing Company and
company founder William K. “Billy” Busch, St Louis media
reported.
Read on
Australia – Foster’s CEO to depart with a
golden handshake
The incoming owner of Foster's has
immediately put its stamp on the brewer, appointing one of its
top operators to replace CEO John Pollaers.
SABMiller and John Pollaers have agreed that
he will step down on 16 December 2011, making way for Ari Mervis.
SABMiller is set to formally take control of Foster's that day.
To ensure a smooth transition Mr
Pollaers will be available to provide advice to SABMiller during
the first few months of 2012.
The South-African born Mr Mervis will leave
his Hong Kong-based post as Asian Director with SABMiller, to
live in Melbourne.
Mr Mervis will have the dual titles of
Foster's Chief Executive Officer and Managing Director
Asia-Pacific, keeping responsibility for SABMiller's expansion
into China, where its Snow brand is already the top-selling
beer, media reports say.
Mr Pollaers, who is
set to collect a golden handshake of about AUD 5.6 million (USD
5.7 million) after less than two years on the job, comprising a
year's base salary of AUD 711,000 plus AUD 4.9 million in lieu
of shares issued under the company's long-term incentive scheme,
has wasted no time promoting himself to prospective employers.
In his farewell email to Foster’s
employees – which was circulated widely as probably was intended
– he once more underlined his achievements.
“My
departure,” he wrote, “will not be a surprise to many of you who
know me well. I have always made it clear that my passion is to
be CEO of a large public company. Being CEO of Foster’s and
Managing Director of CUB has been the highlight of my career and
I can only hope that the next company I lead will be filled with
as talented and dedicated people as we have here at Foster’s.”
He went on to list his successes: “We’ve
halted an eight-year decline in our market share when nearly
everyone said it wasn’t possible. We’ve rejuvenated CUB’s brands
with fresh marketing, industry-leading innovation and a sales
team focused on results. We’ve restructured the business to
make it more efficient and productive, and less bureaucratic.”
“Most
importantly, this team has started believing in itself and we’ve
embraced our heritage and refocused on beer and cider. We’ve
started believing that what we do matters and makes a difference
in the lives of Australians every day. We now fundamentally
believe that if a whole lot more people raised a beer in
friendship, the world would be a better place,” he concluded.
No doubt,
Foster’s employees felt proud reading this.
Europe - What happens if the euro zone falls
apart?
When you are reading this, the world will
have come to an end. Why? Olli Rehn, the European Economic
Commissioner, said recently that the euro zone has only until 12
December 2011 to save itself. So what exactly will happen on 12
December?
It's hysteria over reason. The warnings on
Europe by so-called business journalists are beginning to sound
more and more shrill and apocalyptic as time goes on. On 30
November 2011 Wolfgang Münchau, commentator for the Financial
Times Germany, wrote that in the current situation Germany's
chancellor Angela Markel was facing only two options: bankruptcy
or ruin. That's like saying: turn up your toes and hope to die.
What a load of irresponsible nonsense.
Weathered journalists should not denigrate
the euro zone's problems, but likewise they should not act as a
crisis booster either. Just imagine what happens if the
escalating prattle of the euro zone's imminent crash takes us
all to the point-of-no-return and millions of Europeans rush to
their banks to withdraw their savings?
Hopefully, European consumers keep
calm and continue to ignore these doomsday scenarios. As it is,
the whole economic situation is far from rosy and all these
elements of insecurity will only undermine consumer confidence
further.
While politicians are frantically thrashing
out plans to save the euro and media commentators are losing
their cool, big companies are quietly drafting contingency
plans. Drinks company Diageo, on 30 November 2011, admitted that
they have a "Plan B" in case the unthinkable happens and the
euro zone breaks up.
Still, Diageo's public statement was
fundamentally a note of confidence. They said that they will be
able to counterbalance tough trading in the "euro zone problem
markets" with strong growth in markets like Turkey and Russia.
Consumers and shareholders should be
grateful for this information.
The maker of Smirnoff vodka and Johnnie
Walker whisky bought Turkey's raki maker Mey Icki this August to
double the percentage of its European sales coming from
fast-growing emerging markets such as Russia, eastern Europe and
Turkey to 20 percent.
Diageo's Europe chief Andrew Morgan said in
an interview that he sees these markets continuing to grow in
double-digit percentages, helping to offset the troubled markets
of Greece, Italy, Iberia and Ireland.
"Barring some external factors such as the
break-up of the euro we will see improving trends in Europe, and
over time - such as 2 to 3 years - we want to be in growth," he
was quoted as saying.
Mr Morgan added that it was prudent to plan
for a possible break-up of the euro zone, which could lead to
massive devaluations and so make Diageo's imported spirit brands
more expensive.
Fortunately, Mr Morgan refrained from
elaborating further what a break-up of the euro may look like,
probably because he did not want to stoke fears.
If Diageo, which realised 26 percent of its
sales in Europe (in its past financial year ended 31 June 2011),
has a Plan B, what about Europe's major brewers Heineken, AB-InBev,
Carlsberg and SABMiller?
When approached by Brauwelt, both Heineken
and SABMiller refused to reply.
Which may mean something or nothing.
At AB-InBev, at least, they don't seem all
too fazed by economic developments in Europe. As we all know,
AB-InBev has only limited exposure to Europe as a whole and
especially little to the southern part of it. In the first nine
months of 2011, western Europe represented 8 percent of AB-Inbev's
total global volumes, 11 percent of total revenue and only 7
percent of the normalized EBIT of the group. These numbers
include the UK business, the largest business unit in the zone
by volume and revenue.
Therefore, no reason to panic. A spokesperson
told Brauwelt: "While we won't speculate on the evolution of the
European economy, the euro, or our future sales in western
Europe, we do believe we have the right focus brand strategies
and plans in each of our key markets."
A spokesperson for Carlsberg would not say if
the Danish brewer has a contingency plan in a drawer but said
that they are looking at some difficult years (!) ahead.
Also on 30 November 2011 Carlsberg said they
will reduce the number of positions in headquarter functions
across Europe by 130 to150, of which 95 had already been
scrapped in Denmark, Poland and Switzerland. On top of this,
Carlsberg is planning to transfer 25 employees from Carlsberg IT
to BSP, its business standardisation project. Part of these
changes will be implemented during 2012.
Further, Carlsberg is establishing
an integrated supply organisation for Europe, which will
incorporate the group procurement, supply chain and logistics
functions. The organisation will be located in Switzerland and
will be in place by the end of 2012.
The job reductions and the setting up of a
pan-European supply organisation, could be interpreted as the
brewer's drastic actions to fight the crisis. However, the
bundling of supply functions is already standard business
practice among the world's leading brewers - and Carlsberg has
just been tardy in implementation. As to the job losses -
haven't brewers been axing jobs even when the times were good?
So we may draw comfort from the fact that at
least two of the world's leading brewers say that for them it's
business as usual.
Austria - Heineken's Nico Nusmeier leaves
Another one bites the dust. Nico Nusmeier,
50, who joined Heineken 26 years ago and became President of
Heineken's Central & Eastern Europe business (CEE) in 2005, has
decided to leave Heineken and will be replaced by Derck van
Karnebeek on 1 January 2012, Heineken announced on 29 November
2011. Derck van Karnebeek is currently Managing Director for
Heineken in Romania.
The change at Heineken follows Carlsberg's
announcement last month that Isaac Sheps will become its new
Senior Vice President for eastern Europe. Anheuser-Busch InBev,
meanwhile, has appointed Stuart MacFarlane, formerly head of AB-InBev's
UK operations, to run its central and eastern European business
from Moscow as of 1 January 2012.
It was not immediately clear why a Heineken
veteran like Mr Nusmeier has decided to quit. There was no
mention where he is moving to. All this could be interpreted
that he had very strong personal motives to chuck it all in.
Read on
Australia - SABMiller receives final
approval to buy Foster's
Having vented their anger at Foster's Annual
Meeting on 25 October 2011 over the allegedly excessive bonuses
awarded to Foster's CEO John Pollaers, shareholders in brewer
Foster's nevertheless gave an overwhelming go ahead to the
takeover by SABMiller. On 1 December 2011 at the Scheme Meeting,
99 percent of the shareholders voted in favour of the deal. An
OK from at least 75 percent had been required by Australian law.
Following the vote, on 2 December 2011
Foster's was de-listed from the stock exchange.
Read on
Germany - Brauwelt hosts anniversary party in
Nuremberg
This August, Hans Carl Publisher celebrated
150 years of its Brauwelt publication. While the anniversary
issues have already been out, the party was only held in
Nuremberg on 8 November 2011 on the eve of Brau Beviale to give
advertisers and readers, authors, partners, as well as staff
members and members of the owners' families a chance to attend.
Read on
Germany - Toxic vodka warning
Where does Europe's "Wild East" begin? East
of Poland? Or perhaps further to the west, in Germany itself? In
early November 2011, German customs officers raided a distillery
in the eastern German state of Thuringia, which they suspected
had handled and re-sold moonshine from eastern Europe thus
defrauding the taxman of EUR 1 million (USD 1.3 million) in
excise.
A EUR 1 million tax fraud must be considered
peanuts compared to the EUR 230 million tax evasion scheme
involving the carbon market that six managers are currently
being tried for at a German court. Still, EUR 1 million in
un-paid excise translates into almost 80,000 one-litre bottles
of vodka. Hardly small fry.
According to media reports, the plant was
shut down immediately and the main suspect, a 37-year-old man,
was put into custody.
So far so bad. Two weeks later the German
Government's consumer watchdog issued a warning for the brands
“Vodka V 24 Original”, “Vodka AntiVirus” and “Premium Vodka
Cosmos”, produced by another Thuringian distillery called
Bärenkrone ("bear's crown"), after laboratory tests found that
the drinks contained methanol, a highly dangerous type of
alcohol that can cause blindness and even death if
over-consumed.
Especially, the brand "Vodka AntiVirus"
showed circa 17.5 g of methanol per litre, which is about 2,000
times the legal level for methanol in vodka. Anybody drinking
half a bottle of this vodka would have been very seriously ill.
The consumer watchdog fears the vodkas have
been distributed all over Germany and has banned the brands from
further sale.
Both cases beggar belief. How did these two
spirits companies manage to stay under the radar despite their
allegedly shady dealings?
Read on
UK - Five men sentenced over counterfeit
vodka plant
Where does Europe's "Wild East"
begin? Apparently as far west as the UK. On
25 November 2011 five men, who masterminded a
major counterfeit vodka manufacturing and bottling plant in
Leicestershire, were sentenced to a total of 17 years and ten
months at Hull Crown Court, UK media reported.
The men were all charged with
Conspiracy to Cheat the Revenue.
The plot was uncovered in an industrial unit
by HM Revenue & Customs (HMRC) when they carried out raids in
September 2009. They seized 9,000 bottles of fake vodka, branded
as "Glen’s", manufacturing equipment, bottles and counterfeit
packaging – labels and cardboard boxes - at the remote
industrial unit at Moscow Farm (how appropriately named!) near
Great Dalby, Leicestershire.
The bottles of vodka seized featured
professionally printed labels, duty stamps and bottle tops – all
of which were counterfeit.
The excise loss to the Exchequer on this haul
alone was GBP 1.5 million (EUR 1.8 million).
There was no mention during the
court proceedings as to where the vodka had come from.
Apparently, this was a substantial
production, bottling and distribution plant with the
infrastructure to distribute large quantities of counterfeit
Glen’s vodka to independent stores throughout the country.
As in Germany, the gang planned to
adulterate the vodka with poisonous methylated spirit.
In the raid over 25,000 litres of pure
denatured alcohol (methylated spirits) were seized, enough to
make around 100,000 bottles of vodka.
Denatured alcohol is used as a solvent and is
coloured purple to distinguish it from drinkable alcohol as it
is not fit for human consumption.
Evidence found suggests that bleach was used
by the gang to remove the colouring to make it clear before
diluting to the required strength.
There was no mention in the media which
bleach the gang used - whether it was chlorine or peroxide.
Hopefully it was not chlorine, which would have been the cheaper
option, as the use of chlorine would have created a very fine
mess in the final product, chemists say.
At least a further 165,000 bottles of fake
vodka were manufactured at Moscow Farm during 2008 and 2009.
We never thought that the Russian
"Na zdrowie" ("to your health") should be taken literally in
western Europe too.
Germany - Bionade adds grist to the rumour
mill
Ho-ho, could it be that German hacks have
already had too much advent punch? At the end of November 2011
they spread the rumour that Bionade's former owner Peter
Kowalsky was in talks about setting up a cooperative to buy back
Oetker's 70 percent stake in his company.
Read on
Germany - Jägermeister to change track?
That's a tipsy rumour if ever there was one.
On 22 November 2011 the German edition of the Financial Times
reported of a big board-room brawl at Germany's privately-owned
Mast-Jägermeister company, which is world-famous for its
Jägermeister schnapps and its corporate secretiveness. Sluggish
growth of its Jägermeister brand in recent years seems to have
given board members a bit of a headache. While some board
members appear unperturbed and would like the company to
continue as a single-brand business, other more powerful members
favour a bit of M&A activity to get the company out of the
doldrums.
Read on
Australia - Retailers Coles and Woolies start
another booze price war
Let's hope SABMiller know what they are
getting themselves in. The country's major retailers Coles and
Woolworths are locked in a discount liquor price war as the
festive season approaches. With prices cut by up to 31 percent
at its Liquorland and 1st Choice chain of stores, Coles declared
a "war on liquor prices" on 16 November 2011. That was not long
before Woolworths countered by saying that prices in its Dan
Murphy stores would always be lower.
Market observers say it will be interesting
to see SABMiller's reaction to discounting practices in due
course. Foster's tried to stop the price wars earlier this year
by refusing to supply the chains with its beer ...after it had
heard of a plan to sell them for AUD 28 (USD 28) a carton (24
bottles), well below cost.
Did Foster's last minute action make any
impact? Alas, no.
Read on
USA - Draught beer on the rise again
When it comes to on-premise beer,
the U.S. has always sported strange customs. Go to any bar and,
more likely than not, you will be served a beer in a bottle
rather than a draught beer. Thankfully, things are changing. And
it's because of craft beer.
Currently not quite one in ten beers sold in
the U.S. is draught, but should rise to 10 percent of U.S. beer
volume next year, Lester Jones, the Chief Economist of the Beer
Institute, a trade association, told delegates at the Beer
Insights Seminar in November 2011 in New York.
Draught volume grew 1.1 percent between 2009
and 2010 in a market which went down 1.3 percent.
Read on
USA - What's left of Anheuser-Busch?
... very little, it seems. Exactly three
years after Anheuser-Busch was taken over by InBev, the local St
Louis newspaper, St Louis Post, on 26 November 2011 ran a story
on the new culture at Anheuser-Busch's headquarters in St Louis,
which highlights the profound changes.
Most obvious to bystanders are the changes in
numbers and in corporate dress code. Fewer people report to work
each day at the St. Louis brewery and adjacent office building.
And they wear jeans to work now.
Read on
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