Wild sells 35 percent stake to private equity company KKR
That move solved his succession problem. Dr Hans-Peter Wild, the owner of global flavours firm Wild and producer of the Capri Sun juice drinks, on 27 January 2010 announced that he has formed a strategic partnership with investors Kohlberg Kravis Roberts & Co (KKR). This is seen as a first step towards a public listing of Wild on MDax, the stock market for medium-sized companies. As of 1 January 2010, KKR owns a 35 percent stake in Wild’s German flavours and ingredients business, including subsidiaries in a total of 11 countries. The Capri Sun business is not included in the deal. Wild and KKR agreed that operations will remain with the Wild management team. KKR is said to have paid upfront and will not burden the company with debt as is usually the case with private equity transactions. No price was mentioned, but German media sources speculated that KKR paid more than EUR 300 million.
Germany
Subsidies, discount beer and the folly of it all – Comment
The old rivalry between Bavaria and Prussia was stirred in January this year when the Bavarian Brewers’ Association launched a media attack on the Frankfurter Brauhaus in Frankfurt (Oder), a brewery some 100 km to the east of Berlin. The Bavarian brewers complained that the Prussian brewery received state subsidies for an expansion scheme. As if this were not bad enough, the brewery uses its increased capacity to produce cheap beer for discount retailers. The Bavarians fear that, in a market characterised by declining consumption and high overcapacities, this could put other medium-sized breweries out of business and lead to the loss of jobs.
Czech Republic
Heineken closes Louny brewery
As part of its cost-cutting initiative, Heineken announced on 25 January 2010 that it will stop brewing in its brewery located in Louny and transfer production to its other breweries in the Czech Republic as of February this year. In a second phase, kegging will be halted and the Louny site will be turned into a distribution centre. That move leaves Heineken with just four breweries in the Czech Republic, down from an initial seven breweries following the acquisition of Drinks Union in 2008.
Austria
Heineken banks on market recovery in central and eastern Europe
Assuming that the worst of the recession is over and recovery underway, Heineken plans to resume its acquisitions policy in central and eastern Europe, Nico Nussmeier told the media in Vienna on 25 January 2010. Mr Nussmeier, who heads Heineken’s business in CEE, said that it would be premature to tick off the economic crisis as “done with”. However, he was optimistic that, after a year of self-restraint in the mergers and acquisitions department, Heineken might be able to clinch deals again which would widen the brewer’s lead over its competitors in the region. In 2009, Heinekens saw beer consumption drop by as much as 10 percent in some central and eastern European markets.
South Africa
Strike at SAB’s soft drinks unit turns nasty
A strike at SABMiller’s soft drinks operations in South Africa that has dragged on for more than a month continues to be marred by violence. About 1,100 members of the Food & Allied Workers’ Union remain off the job to protest for higher wages, less than a third of the workforce at the beer company’s Amalgamated Beverage Industries (ABI) unit. ABI reported on 26 January 2010 that all its manufacturing plans are operating and deliveries are taking place as normal.
Nigeria
Beer output estimated to have increased by 9 percent in 2009
Thank heavens for Nigeria. Major players Heineken and Guinness will heave a sigh of relief that Nigeria’s beer market registered another massive increase in 2009 after it grew a staggering 10 percent in 2008. Reports have it that beer sales in Nigeria amounted to 16 million hl in 2009. Nigeria is Africa’s number two market behind South Africa. As Nigerian Breweries (Heineken) und Guinness dominate the market by a wide margin, its proceeds must contribute significantly to their coffers, not least since they have largely managed to fend off competition from both SABMiller and Castel. These two are strategic partners in Africa, but they decided to enter Nigeria independently through acquiring regional brewers. In August 2008 Castel bought into International breweries in Ilesha and SABMiller in December 2008 into Pabod Breweries, Port Harcourt.
USA
Burger King to sell beer (...but in selected outlets only)
Although it may risk losing its family-friendly image, Burger King, the Miami-based fast food chain, has unveiled plans on 22 January 2010 to peddle beer alongside its famous burgers at something that’s called a Whopper Bar. The first one is opening in Miami Beach in February and will target thirsty tourists hitting South Beach. The chain is also reportedly looking to open more Whopper Bars in other tourist meccas such as Times Square New York, Las Vegas and Los Angeles.
Australia
Woolworths to buy a brewer?
New decade, new rules. We all remember the equation: retailer + brewer = brewpub. Now it looks like we have to learn this one instead: retailer + brewer = Woolworths. A rumour abounds that Woolworths, Australia’s biggest retailer, is looking at the country’s biggest maker of alcopops, Independent Liquor, as a potential supplier for its fast-growing, private-label beer business, in order to reduce its reliance on the Foster’s Group and Lion Nathan. Speculation is rife that Woolworths has been examining its options: an outright acquisition of Independent Liquor, a partial acquisition, or a formal strategic alliance.
USA
Tesco’s Fresh & Easy supermarket chain in the U.S. launches third private label beer
British retailer Tesco taking on the likes of Walmart and Costco has not exactly revolutionised U.S. food retailing. But Fresh & Easy bringing in own-label beers at the economy level has certainly alerted U.S. brewers, so much so that the introduction of its third-private label beer brand, Dutch Republic 1581 Beer, a traditional Dutch pilsner-style, made headline news.
Colombia
Government raises ‘vice’ taxes to spend on health…
… or so it claims. As of 1 February 2010 the Colombian government has increased taxes on alcohol, tobacco and gambling to pay for expected rising spending on state-run health insurance. The plans were revealed by Colombia’s Finance Minister Oscar Ivan Zuluaga in January. The government raised the value-added tax rate on locally made and imported beer to 14 percent starting on 1 February this year. On 1 January 2011 the tax will go up to 16 percent from 3 percent originally.
Australia
Shang-Hied Corona from Shanghai, anybody?
Counterfeiters must have been laughing their heads off: Would Aussi punters notice if there was real Corona Extra in the bottle or just some yellow brew? They must have concluded: no. And so they sent off their counterfeit bottles of Corona Extra, four loads of which were intercepted by western Australian customs officers between September and December last year. The popular Mexican import beer costs up to AUD 8 (EUR 5) a bottle in bars. The Foster’s Group, which imports Corona Extra into the country, thinks the source was China.
UK
Kraft tops up its offer and buys Cadbury
Those who thought that Heineken paid too much for FEMSA Cerveza (11.2 times EBITDA) might be pleased to read that in the confectionery industry the going rate is even higher. On 19 January 2010 British confectionery icon Cadbury agreed to an increased GBP 11.9 billion takeover bid (EUR 13.1 billion) from Kraft Foods of the United States. Kraft’s CEO Irene Rosenfeld broke the deadlock with Cadbury’s board by injecting more cash into the cash-and-shares offer, increasing the value to 840p a Cadbury share. In addition, Cadbury shareholders will get a special 10p dividend, bringing the total value of the new offer to 850p or 13 times Cadbury’s 2009 EBITDA. This compares with a previous rejected offer of 769p. Still, you could hear analysts moaning that this was the lowest price in a decade for this sector. Before, valuations ranged between 14.3 times EBITDA to 18.5 times EBITDA, it was reported.
Luxembourg
Consumers vow to boycott Diekirch if the brewery is shut down
Looks like AB-InBev executives not only have a labour dispute at their hands but a minor PR crisis too. Ever since enraged AB-InBev workers boss-napped several managers in early January (as reported by BRAUWELT International), the dispute over AB-InBev’s redundancy plans for Europe was fought in the streets. Until 22 January 2010 worker were blocking the gates to two AB-InBev plants in Belgium. Belgian media reported that supplies of AB-InBev’s popular brands would soon be running dry. Meanwhile, in neighbouring Luxembourg, AB-InBev’s announcement to close the Diekirch brewery and to transfer production to Belgium has got public opinion boiling over. According to a recent poll, 70 percent of the respondents said they would not drink Diekirch beer if it came out of Belgium. Well, that’s a fine mess AB-InBev has got itself into.
Belgium
The strike that wasn’t – Comment
For two weeks in January, Belgian AB-InBev workers blocked the gates to three plants in protest against the brewer’s cost reduction plan which calls for the axing of about 800 jobs across Europe. So what’s been achieved? While pickets may have avoided losing a nose or two hanging out in the cold, managers at AB-InBev’s cosily heated Human Resources department will worry over whose head is to roll next instead. Only one month into the year and already they have clocked up two weeks of strike action. The costs, the costs! Let’s face it, in the end AB-InBev’s redundancy scheme will go ahead, except perhaps that those affected will now receive better packages. And now back to business as usual.
Australia
Foster’s could lose license for Stella Artois and Corona Extra
New game, new luck? The Foster’s Group, which brews AB-InBev’s Stella Artois and distributes Corona Extra in Australia, is fearful it will lose both licences this year. They have been valued at AUD 350 million. The Stella Artois licence is thought to be due for renewal in 2010 and competitors are already circling. A realignment might be called for as Stella Artois is distributed by Foster’s rival Lion Nathan in New Zealand and Lion Nathan has recently acquired the right to distribute AB-InBev’s Budweiser range in both Australia and New Zealand. Thus, Lion Nathan, which is now owned by Kirin, could be a logical distributor in Australia for Stella Artois which has seen its market share dwindle under Foster’s care.
UK
SABMiller’s third quarter lager volumes rose 7 percent in Africa
SABMiller, the world’s number two brewer, said on 19 January 2010 that during the third quarter ended 31 December 2009, lager volumes on an organic basis were level with the prior year, yet 1 percent below last year for the first nine months of the financial year. Obviously, consumer demand during the quarter varied across markets, with some showing tentative signs of recovery, whilst in others demand remained slow.
USA
Siebel Institute launches Craft Distilling Operations & Technology course
The Siebel Institute, in conjunction with the Ethanol Technology Institute, introduces its first-ever course in beverage distillation. The Siebel Institute Craft Distilling Operations & Technology course, to be held 19 to 23 April 2010 in Chicago, is designed to give students the information they need to create distilled spirits in a small-scale distillation environment. With content created and presented by some of the leading international experts in distilling, participants will receive the training they need to operate a distillery efficiently, safely, and profitably.
Belgium
Ex AB-InBev executive Alain Beyens becomes CEO of StarBev
Honestly, we do not own a crystal ball. And we certainly don’t double as clairvoyants at BRAUWELT International. Let’s say we had a hunch when we speculated this past November that Alain Beyens, who had just resigned in a huff as AB-InBev’s Zone President Western Europe, could resurface as the top man of StarBev. Indeed he has. Since January 2010 Mr Beyens serves as CEO of StarBev, the former central European unit of AB-InBev, which the world’s number one brewer had earlier sold to private equity outfit CVC Capital Partners for EUR 2.1 billion.
Germany
Radeberger Group loses 5.7 percent in volume in 2009
If Radeberger Group, Germany’s largest brewing group, were in a position to grade its 2009 performance, it would have given itself a “satisfactory C“. Although the group witnessed a volume decline of 5.7 percent, its turnover only dropped 1 percent – or so it claims since the privately-owned brewing group does not publish results. Last year, Radeberger Group, whose output presumably came to 13.4 million hl, fared worse than the German beer market as a whole. Beer sales are expected to have dropped by 3 percent – more or less in line with previous years’ declines. Radeberger Group says it underperformed the market because it decided to cut private label production.
USA
Denver mayor and former brewer Hickenlooper will run for Colorado governor
Never say never. Although Denver’s mayor and brewpub owner John Hickenlooper, 57, has always maintained that he will never run for state governor, he changed his mind on 12 January 2010 after pleas from President Barack Obama and other prominent Colorado Democrats to take the spot vacated after Governor Bill Ritter’s announcement that he would not run for re-election this autumn. Mr Hickenlooper, who founded Denver’s Wynkoop brewery and was the brewing industry’s most eligible bachelor for a while, had never run for office before being elected Mayor of Denver in 2003 and re-elected in 2007. He has advocated for economic development, a modern transit system, and the arts since taking over at City Hall.
Romania
Heineken to close the Hateg brewery
Although Romania in March 2009 managed to obtain a EUR 20 billion aid package from the International Monetary Fund and the European Union to stabilise its stricken economy, the country of 22 million people still saw its GDP decline by as much as 8 percent in 2009. The economic prospects for Romania, already one of the European Union’s poorest countries in per capita terms, remain bleak. This year 100,000 public sector jobs are to be cut. Already thousands of workers have been laid off and several factories have reported work stoppages in recent months. Heineken’s announcement on 14 January 2010 to close the Hateg brewery and relocate production with the loss of about 100 jobs, comes just months after SABMiller’s Romania-based subsidiary Ursus Breweries pulled the plug on Bere Azuga’s brewing facility and AB-InBev temporarily shut down its Blaj bottling plant.
Peru
Franca exported to Spain
Have you heard about the latest trend in fine cuisine? Looking for something different yet delicious? Well, the reviews are in and Peruvian food is fast becoming a hit with discriminating diners in the United States. Peruvian cuisine is one of the most diverse in the world because it is a blend of many different cultures: Incan, Spanish, Basque, African, Japanese, French and Italian. Peru reportedly boasts 35 varieties of corn, 15 varieties of tomatoes and over 2,000 varieties of potatoes and sweet potatoes – yes, 2,000. Add to that two dozen beer brands and you know why the Ajegroup, the producer of the famous Big Cola brand and a relative newcomer to Peru’s booming beer market, has decided to ship its Franca beer brand across the seas to conquer markets in the U.S. and Europe.
USA
Siebel Institute to host Professional Beer Tasting & Styles Course
With the amazing array of beverage styles on the market, those involved in the production, distribution, sales and service of beer need to keep up with the emerging world of ales, lagers and specialty brews.
Europe
Happy New Year? Fat chance! – Comment
Drinks all around for Cadbury’s shareholders. And pink slips for almost a thousand AB-InBev workers in Europe. While Cadbury’s shareholders are set to benefit greatly from an increased offer by Kraft Foods, Europe’s brewery workers will be biting their nails, worrying when the next round of cost cuttings will scrap their jobs. You need not be a clairvoyant to forecast that 2010 will be a trying year for Europe’s brewers. Acquisitive CEOs know that in a low-growth economy, takeovers and synergies are another way of driving growth. But who should they buy? And who could they buy? So it will be slashing costs here and closing plants there, until the numbers look half-way decent – or what the stock market considers decent. Europe’s brewers and their suppliers are headed for a ferocious dogfight over margins and costs and no one will be spared. Welcome to the “Tough Teens” (i.e. the second decade) of the 21st century.
Netherlands
Heineken buys FEMSA Cerveza in an all-share deal
Having been on the market for more than half a year and the target of a competitive bid between Heineken and SABMiller, Mexico’s FEMSA Cerveza on 11 January 2010 finally agreed to be sold to Heineken in an all share deal valued at EUR 5.3 billion (USD 7.7 billion). SABMiller reportedly pulled out in December after differences over the valuation of the business, particularly over the loss-making Brazilian unit. In Brazil, FEMSA/Kaiser ranks third or fourth with a market share of 9 percent. Heineken admitted that FEMSA’s Brazilian business was profitable – but only at the EBITDA level. To finance the deal, the Dutch company will issue new shares to give FEMSA a 20 percent stake in the Heineken Group. FEMSA Cerveza was a “must-have” deal for Heineken, more so than for SABMiller, after it had missed out on Colombia’s Bavaria. After this deal, Heineken will have much more balanced portfolio with 60 percent of its EBIT derived from developed markets, and 40 percent EBIT from emerging markets. This will reduce Heineken’s profit reliance on mature European markets significantly. Heineken, which already distributes FEMSA’s brands Tecate, Sol and Dos Equis in the U.S., expects so-called synergies of EUR 150 million a year by 2013. The deal is still subject to regulatory approval in Mexico and the United States.
Netherlands
FEMSA or Heineken’s last minute panic – Comment
Losing out to SABMiller in the battle for Colombia’s major brewer Bavaria in 2005 must have been traumatic for Heineken – so traumatic in fact that when FEMSA’s beer division was put on the market, Heineken was prepared to offer the full Monty: namely a stake in the Heineken Group and seats on Heineken’s boards. Such an agreement would have been considered sacrilegious only a few years ago. But that’s exactly what Bavaria’s owners, the Santo Domingo family, wanted: a say in the brewer who they sold their company to. SABMiller had no qualms about granting the Santo Domingo family that wish. Heineken did. This time Heineken, however, had learnt a lesson and done a bit of thinking so that it was ready and could match SABMiller’s offer by offering even more. Times are a-changing.
Belgium
Seven AB-InBev bosses held hostage by workers
It’s called “boss-napping” and by all accounts it is quite a common and largely condoned practice in France during labour disputes. The Belgians seem to be quick learners because on 7 January 2010 thirty or so aggrieved AB-InBev workers kidnapped seven of their bosses and kept them hostage for eight hours. Their demand: They wanted the bosses to face workers and tell them who would be among the 260 people who would lose their job as part of AB-InBev’s latest cost cutting scheme. Throughout western Europe, AB-InBev is planning to shed up to 30 percent of its 8,000 strong workforce. The company said it would cut up to 386 jobs in Germany and 303 in Belgium – where the creation of 40 new call-centre salesman posts would lead to the net loss of 263 jobs. AB-InBev has 3,000 workers in Germany and 2,700 in Belgium. AB-InBev would not say how many jobs would disappear in Britain, one of its biggest European markets, but that its Dutch operations would lose 42 jobs and another 19 would go in France.
Germany
AB-InBev accused of gussying up sales figures
In an effort to bring up sales and secure bonus payments, AB-InBev’s German executives have been accused by a trade union representative of having struck secret deals with German wholesalers. Referring to a report in the German trade publication Inside, the trade unionist said that wholesalers have been asked to “store” large quantities of AB-InBev’s German beer brands, so that AB-InBev’s German unit would meet its 2009 sales targets and managers receive their bonuses. AB-InBev has denied all allegations of manipulation, saying that it was usual to produce large amounts of beer before the holidays and store them externally.
Brazil
AB-InBev investors Lemann, Telles and Sicupira to pay record fine
To the St Louis lagerhead bloggers this news was even better than Christmas. On 24 December 2009 the Brazilian financial tycoons Jorge Paulo Lemann, Marcel Herrmann Telles and Carlos Alberto Sicupira, who also happen to be among AB-InBev’s major shareholders, agreed to pay USD 10.6 million to settle a five-year old case. A news agency reported that Brazil’s securities regulator had accused and convicted the three gentlemen and six other AmBev executives of an abuse of power as controlling shareholders of beverage company AmBev. The fine may only be walking-around money for Messrs Lemann, Telles and Sicupira, but the bloggers got endless mileage out of it.
South Africa
SAB’s beer operations unaffected by strike
Workers at SABMiller’s Amalgamated Beverage Industries (ABI), one of the largest bottlers of Coca-Cola in the southern hemisphere, walked off the job just before Christmas to press demands for a 9.5 percent wage hike, a 45-hour week and overtime payment on Saturdays. Some unionized workers at SAB’s beer operations joined the strike in sympathy on 6 January 2010. The company reported that fewer than 45 percent of the union’s members at ABI are supporting the strike, while SABMiller’s local beer unit, SAB, has reported full attendance by employees.
USA
Modelo’s U.S. sales down in September – November quarter
The U.S. partner of Mexican brewer Grupo Modelo, Constellation Brands, said on 7 January 2010 that sales and operating profit at their beer joint venture fell in the quarter ended 30 November 2009, largely as an effect of a weak economy. Constellation Brands owns 50 percent of Crown Imports, a joint venture with Grupo Modelo that distributes top U.S. import beer Corona Extra and other brands by the Mexican brewer in the United States. Constellation Brands admitted that in its 2009 fiscal third quarter Crown’s sales fell 10 percent to USD 499 million, with operating profit down 26 percent at USD 91 million.
Iceland
Terror of virtue: first it was alcohol, now it’s sugar
No luck for the Icelandic government. First, the president scrapped a law which would have entitled Dutch and British savers to USD 5.5 billion in compensation for the money they lost when Icelandic banks collapsed in 2008. Then the government tried to please the WHO and fell over itself to introduce a controversial tax on sugar. And while it was at it, the government also raised the alcohol tax. Smiles all around? Far from it. Both taxes were met with opposition, not least since the sugar law was a hodgepodge of exemptions. Does the Icelandic parliament know what it is doing, many wondered, especially when the new 14 percent value added tax (VAT) on sugared beverages, biscuits and chocolates, only announced in September 2009 and to be implemented on 1 January 2010, was quietly abandoned in December. The sugar tax being revoked was no relief to Iceland’s major brewer and soft drink producer Ölgerdin, whose executives had been forced to lay off 30 people in November 2009 as they saw their business plummet.
UK
The absolute power of the retailers
The Australian wine industry’s phenomenal growth story seems to have come to its inglorious end in Britain – the market which once guaranteed Australia’s success. Orlando Wines, the flagship wine business owned by French multinational Pernod Ricard, has been losing market share because of the pressure on prices exercised by Britain’s retailers. Orlando Wines, famous for its Jacob’s Creek label, has booked an AUD 32 million provision against the falling value of grapes it has bought from growers. According to media reports, this write-off reflects the growing chasm between what Orlando paid for contracted grapes and the future value of the wine that will be processed for coming vintages.
Australia
From water to wine
Why drink water if wine is cheaper? That’s what many Australian consumers must have thought when they saw that filtered water costs more than wine. In the weeks before Christmas, discount alcohol retailer Dan Murphy’s sold cleanskin bottles (i.e. bottles without a label) of chardonnay and cabernet merlot for as little as AUD 1.99 (EUR 1.26). Despite the ongoing drought, the ravages of fire and the rising cost of water rights, Australia’s grape growers have still managed to produce a surplus – equivalent to 100 million cases of wine – at a time when Australia’s two largest export markets, Britain and the U.S., are in trouble. Not helping is the Australian dollar which is booming against the U.S. dollar and the pound. This will erode profit margins for Australia’s wine companies even further and price their wines out of the competitive new world wine market, where producers from Chile and South Africa have a cost advantage thanks to lower labour costs.
Japan
Kirin expects a 0.4 percent drop in beer sales volume this year
On 8 January 2010 Kirin Brewery said it aims to sell 176.1 million cases of beer this year, 0.4 percent less than its estimated sales in 2009. Like other food and beverage companies, Kirin has to cope with a difficult business environment in Japan, where a shrinking population and a weak economy affect sales adversely.
In an effort to drive growth, Kirin is in talks to merge with privately held competitor Suntory. Meanwhile, Asahi reportedly managed to maintain the top spot in the domestic beer market.
