Posted July 2011
Australia - Desperately seeking suitors with loads of cash
What's going on in Australia? Is the country's beverage industry
running a shop clearance sale? Everything but the girl must go?
According to media reports, the Foster's Group, the listed wine
company Treasury Wine Estates and Independent Liquor, a private
equity-owned producer of alcopops, have all been tagged for
disposal.
In the case of Foster's and its refusal to accept a USD 10.2
billion takeover offer from SABMiller, the board seems to await
the next move by SABMiller.
Read on
Ethiopia - Wanted: investors with money to spare
In the latest round of privatisations, Pierre Castel did not get
lucky. Two state-owned breweries, Harar Brewery and Bedele
Brewery, went to Heineken for a reported USD 163 million. Now Mr
Castel's local unit BGI Ethiopia has secured a deal its managers
believe will help them conquer the northern market.
BGI's managers, on 1 July 2011, signed a memorandum of
understanding with the founders of Raya Brewery, claiming 25
percent of a EUR 10 million greenfield brewery project in the
northern town of Maichew, Tigray Regional State. The Ethiopian
founders will have 49 percent and Jobst Meyer zu Biesen, CEO of
Brewtech, Hamburg, 26 percent. Brewtech, which has been involved
in the construction and management of breweries around the world
for several decades will build and run the brewery. The plant,
the first to be installed in the northern part of the country,
will have a capacity of 300,000 hl.
Germany - Paulaner to build a new brewery - perhaps
Not bad. Despite the German beer market declining 2 percent in
2010, Brau Holding International (BHI), the joint venture
between Heineken and Germany's Schörghuber Group which owns
Paulaner brewery, managed to raise turnover and volumes. Sales
were up 1.4 percent to EUR 576 million while output increased 2
percent year-on-year, it was reported.
According to Brauwelt's estimates, BHI sold 4.4 million hl beer
in 2010 and ranked as Germany number six brewing group.
However, when it comes to profits (EBIT), BHI's executives must
have been crying into their beers: only EUR 21.9 million which
translates into an EBIT margin of 3.8 percent.
That's the kind of profitability for which other global brewers
would not get out of their beds in the morning, to quote super
model Naomi Campbell. But that's Germany for you. In a market as
highly fragmented as Germany's, margins are nothing much to
write home about, unfortunately.
Read on
Belgium - Carlos Brito has a skin like an elephant (who would
have thought)
It's been hard for Belgians to stomach the fact that the CEO of
their major concern, AB-InBev, has not deemed it a top priority
to explain himself to their media. Maybe he even considered
public opinion in Belgium irrelevant. After all, what's Belgium
to AB-InBev? 1.5 percent of the brewer's total global volume.
It's taken him five years at the helm before Carlos Brito, on 7
July 2011 gave his first interview in Belgium: to the business
publication Trends.
What could have made Mr Brito change his mind? Possibly it was
the final settlement in June 2011 of a long lasting labour
dispute with Belgium's militant unions which had made headlines
around the world in January 2010. Faced with 300 job cuts, AB-InBev's
workers had taken to the streets, blocked access to AB-InBev's
facilities and brought production to a two-week halt.
When asked how he felt in early 2010 having been called a
vulture by Trends, Mr Brito replied nonchalantly: "Oh, you know
this does not affect me. I have an elephant skin. I simply do
what is best for the company in the long term."
What other pearls of wisdom did Mr Brito spill in the interview?
Read on
UK -
Late bill payments add to the squeeze
The late payment Hall of Shame is getting rather crowded.
Governments and businesses across Europe are increasingly using
underhand methods to delay or avoid paying their bills, Reuters
reported at the end of June 2011.
European companies wrote off a staggering EUR 312 billion (USD
448 billion) for unpaid bills last year, according to
Swedish-based credit management services group Intrum Justitia.
That is more than the Greek, Irish and Portuguese EU/IMF
bailouts combined, and an increase of 4 percent from EUR 300
billion in 2010.
Read on
Ireland - Guinness might redevelop its Dublin brewery
After its plans to move the Dublin brewery to a greenfield site
had fallen through following the collapse of real estate prices,
Diageo, the parent of Guinness had to think anew. On 5 July 2011
Irish media reported that Diageo is in talks with Dublin City
Council with a view to redeveloping part of its historic St
James's Gate brewery site.
Diageo is said to have started preliminary talks with the
council and aims to submit a planning application for a EUR 100
million redevelopment of the site. The improvements would focus
on modernising the brewery and see Diageo consolidate its
European brewing processes at St James's Gate.
Read on
Germany - SABMiller gets it right
Contrary to
popular perception that the German beer market is dominated by
domestic brands, imported beers have gradually made their
presence felt.
Beer
imports have more than doubled over the past eight years from
3.3 million hl in 2008 to 6.9 million hl in 2010. That's 8
percent of total beer consumption.
Although the official import figures published by the German
Brewers' Association should be interpreted with some caution -
no one knows, for example, how much Danish beer exported to
Germany finds its way back into Denmark by Danish bargain
hunters - market research by Dr Kelch for Brauwelt shows that
some imported beer brands have been doing remarkably well.
Read on
Belgium - First the blanket ban on smoking ...
... next the ban on alcohol advertising? Even without a
government, Belgium seems to get things done. On 1 July 2011 a
ban on smoking in cafés was introduced following a ruling by
Belgium's Constitutional Court.
Cafés which did not serve food had hitherto
enjoyed an exemption from the anti-smoking law passed in 2009.
The 2009 law banned smoking in workplaces as well as in
restaurants and pubs where food is served to consumers.
However, when the law was passed, Belgium's then government
provided a temporary relief to cafés. Smoking was still allowed
in cafés which only served snacks such as crisps or peanuts.
Still, this exception was to be scrapped between 2012 and 2014.
Although representatives of the on-trade have argued that the
ban on smoking could put 2,000 of Belgium's 7,000 cafés at risk,
the Constitutional Court decided that the publicans had not
argued their case sufficiently to uphold the cafés' exemption.
Following the ban on smoking in cafés, whose expediency took
many by surprise, Belgium's brewers worry that a ban on alcohol
advertising could be next.
Read on
China
- Diageo acquires control of Chinese spirits brand Shuijingfang
First the release of dissident artist Ai Weiwei, then the
go-ahead for a long-blocked deal. China moves in mysterious
ways. Who would have thought that one day Beijing would allow a
foreign company to gain control of a Chinese brand? At the end
of June 2011, Diageo, the world's number one drinks company, was
given the green light by China's antitrust body to acquire one
of China’s best-known liquor makers in a deal that could pave
the way for one of the first foreign acquisitions of a big
Chinese listed company.
Read on
Germany - Holsten not to be sold after all
Carlsberg issued neither an affirmation nor a
denial. Since Carlsberg had never officially put its German unit
on the block, the Danish did not have to publish a statement
that the much talked about sale of Holsten to Germany's number
one brewing group had been called off.
Carlsberg's German employees, not least Holsten's 470 or so
brewery staff in Hamburg, must have been relieved to read in
their local papers on 30 June 2011 that Hamburg's mayor Olaf
Scholz, having travelled to Copenhagen to meet Carlsberg's top
honchos, had received all kinds of reassurances that Carlsberg
plans to keep its two German breweries under its wings.
From what I have heard, Carlsberg ended talks with the
privately-owned Radeberger Group because the Germans were not
prepared to cough up as much money as the Danish had hoped for.
Read on
USA -
Constellation Brands will cut jobs to save profits
The world's number one wine company Constellation Brands and
maker of Robert Mondavi Wines and Svedka vodka said on 30 June
2011 that it plans to cut about 100 jobs, or 2.3 percent of its
workforce, as part of a business realignment meant to save
money, following the sale of its Australian and U.K. wine
businesses. The company expects the redundancies to save it more
than USD 10 million, with most of the savings realised in fiscal
2013. In the first quarter of fiscal 2012, which ended 31 May
2011, Constellation had net earnings of USD 74.5 million, up
from USD 49.1 million a year earlier.
Read on
Philippines - Taxing issue
The sales of international spirits brands have long been
hampered by emerging markets' tax barriers. Not for much longer,
though. In the case of the Philippines, the World Trade
Organisation (WTO) is expected to rule that the taxes levied on
alcoholic drinks from the European Union and United States are
illegal under global trade rules. According to a confidential
report, which has been circulating since the end of June 2011, a
legal panel at the WTO has supposedly ruled that the
Philippines' spirits taxes discriminate against brands such as
Jack Daniel's and Jim Beam as well as Spain's Brandy de Jerez,
while favouring domestic producers.
Read on
Australia - SABMiller bids for Foster's
Finally! An official offer for Foster's
Group. After what has been the longest rumoured takeover in the
history of the brewing industry, SABMiller is the first to come
out of the woodwork. At the end of June 2011the world's number
two brewer made an AUD 9.51 billion (USD 10 billion) all-cash
takeover offer for Foster's, which was immediately rejected by
Foster's board. Foster's thinks the offer undervalues the
company.
Read on
Australia - Modelo's exports seen at risk
from SABMiller's takeover of Foster's
As soon as SABMiller's offer was on the
table, analysts began to speculate on the future of Grupo
Modelo's fast-growing export sales to Australia. Currently,
Foster's imports and distributes Corona Extra Down Under. Should
Foster's change hands, Modelo may have to look for another
distributor, analysts at Credit Suisse reckon.
Read on
Australia - Unions worried that Foster's
new owner will close down Abbotsford brewery
What's in a brewery? Only the value of the
real estate. Given that Melbourne's real estate prices have been
soaring in recent years, any new owner of Foster's might be
tempted to close down Foster's historic Abbotsford brewery (it's
located in a Melbourne suburb) and build a new brewery
elsewhere. Abbotsford's real estate is said to be valued at AUD
1 billion, whereas a new brewery could cost up to AUD 500
million. Sounds like Abbotsford's fate is sealed.
No wonder unions are worried and have said
that any foreign buyer of Foster's should guarantee the historic
Abbotsford Brewery stays open.
Their demand came only days after Foster’s
had rejected a takeover bid by SABMiller, sparking fears among
the 200-odd employees at Abbotsford that their jobs could be
axed.
Read on
Brazil - Heineken rumoured to be
frontrunner for Schincariol
Following SABMiller's bid for Foster's the
international rumour mill is working overtime. Call it a
coincidence or clever timing: on 21 June 2011, the day SABMiller
made overtures to Foster's and was rejected, Heineken's CFO Rene
Hooft Graafland gave an interview in which he implicitly ruled
out a multi-billion dollar counterbid for Australia's Foster's
Group. But he also said that it's "better to spend your money on
Mexico, Brazil, or Africa or Asian markets."
What fired the imagination of armchair
strategists was that he declined to comment on Heineken's
interest in Schincariol, Brazil's privately owned second-largest
brewer, which is reportedly up for sale for USD 2 billion. The
FEMSA deal handed Brazil's number three brewer Kaiser to
Heineken.
Read on
Netherlands - Heineken wins reduction of EU
beer cartel fine in court ruling
So they thought the Court would overturn a
finding by the European Commission? Fat chance. On 16 June 2011
Heineken announced that the General Court of the European Union
in Luxembourg has largely upheld the finding of the European
Commission dated 18 April 2007, which said that Heineken and
Bavaria had violated EU competition rules during the period 1996
- 1999 by setting up an illegal beer cartel in the Netherlands.
Four years ago the European Commission fined
Dutch brewers Heineken, Royal Grolsch and Bavaria a total of EUR
273.8 million because they had coordinated prices and price
increases of beer in the Netherlands.
The Belgian brewer InBev, although involved
in the illegal activity, received no fines as it acted as the
cartel’s whistleblower.
Read on
India - Molson Coors and Cobra India set up a
joint venture
India is next for Molson Coors. Hope they
know what they are in for. On 23 June 2011 Molson Coors and
Cobra India announced the formation of a joint venture that will
brew and market Cobra beer in South Asia.
Under the terms of the agreement, Molson
Coors will purchase a controlling stake of Cobra India from the
existing shareholders and will have operational control over the
new Molson Coors Cobra India.
Read on
United Kingdom - Britvic launches foamy Tango
drink in aerosol cans
I have no idea what it’s like to spray
something resembling shaving foam into your mouth but soft drink
company Britvic thinks its latest offering, Turbo Tango, has
great potential. Turbo Tango, launched in the UK at the end of
June 2011, is a variant of the fizzy fruit drink, which is
dispensed through an aerosol container using "nitro-fuelled"
technology.
Britvic believes it is the world’s first soft
drink company that is using an aerosol container.
Read on
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