Distinguished Brands International Street Talk – Volume VI Issue 4

Street Talk LogoENGLAND — Fullers London Porter was awarded a Silver medal at the CAMRA Champion Winter Beer of Britain Awards 2009. The awards, judged by a panel of CAMRA experts and leading beer writers, were announced at the CAMRA Winter Ales festival in Manchester last Wednesday, January 21. Fullers U.S. products are represented and imported by Distinguished Brands International, Littleton, CO

UNITED KINGDOM – After the very unpopular decision to up the beer duty, making it even tougher on local pubs, a new campaign has been introduced to try and save the British Pub. The British Beer and Pub Association (BBPA) introduced the Axe the Beer Tax campaign: www.axethebeertax.com and in the last month over 16,000 people have signed up.
Supporters include landlords, customers and those concerned about the impact pub closures are having on communities up and down the country. As a result of over 9,800 people lobbying their MP, 88 MPs have signed and Early Day Motion in support of the campaign. The BBPA have also received a letter from Justine Greening MP, who is in the Conservative’s Treasury team, saying they are now in the process of re-evaluating their policy for the budget.

BELGIUM/SOUTH KOREA — It has been reported that Anheuser-Busch InBev is looking for a buyer for its South Korean brewery, and a bid for $2.5 billion may be what they are wanting. It was also reported that South Korea’s Lotte Group, Japan’s Asahi Breweries, Ltd and SABMiller were among potentials contacted, but an Asahi Breweries spokesperson definitively announced that they had not been approached by AB-InBev or the Lotte Group about the acquisition. If AB-InBev gets their bid it could be possible for them to repay almost all of their near-term debt from the $52 billion merger.

ENGLAND – London brewer, Fuller, Smith and Turner, PLC, continues to invest in high profile advertising – especially in sports. Fuller’s London Pride will be highly visible during the upcoming series of matches for England’s rugby, cricket and football teams as part of the first phase of a comprehensive advertising campaign for 2009. London Pride can be seen on perimeter boards on Sky TV as England’s cricketers battle it out with the West Indies. This will run for each of the four Tests and five One-Day Internationals of the series, taking place from now until April. In addition, a high profile national press campaign around the forthcoming Six Nations tournament starts this weekend for England vs. Italy. Finally, on Wednesday, February 11, will be Pride’s appearance on perimeter boards alongside Fabio Capello’s England football side when they face European champions Spain in the eagerly anticipated match in Seville.

John Roberts, managing director of The Fuller’s Beer Company, said: “London Pride has a long-standing track record of advertising around different sports, including rugby, football, cricket and golf, since 1997 when we launched the ‘Whatever you Do, Take Pride’, campaign.

Fullers U.S. products are represented and imported by Distinguished Brands International, Littleton, CO

MARKET — Restaurant menu lists are no longer reserved for wines only. There is an ever increasing presence of brews that are now listed on restaurant menus and offered with food parings. Some examples from restaurant owners are: foods with an acidic tone can be paired with a beer that has a caramel flavor and toasty undertones versus a maybe a Riesling. Salads with sharp vinaigrette go well with an India Pale Ale. As complex as beer can get, with all the different barley and hops and other ingredients, people still see it as beer, and feel it is lot less intimidating than wine.

UNITED KINGDOM – As if times weren’t tough enough for the UK’s beer market, Carlsberg announced in early February that they plan to raise the standard trade price on its draught and packaged beers an average of 2.8%. The increase is expected to go into effect March. This comes after two price increases in 2008 that totaled a 4.3% jump and at a particularly tough time for the UK beer sector in general. The British Beer and Pub Association released figures last month showing an average of six pub closures per day.

MISSISSIPPI – The Mississippi Senate finance committee killed the gourmet beer bill this month effectively denying Mississippi residents access to beer with a greater than 5% abv (alcohol by volume). The effort to raise the legal limit from 5% to 17% began in the spring of 2007 by the group Mississippians for Economic and Beverage Advancement (MEBA). The group believed a compromise would happen and the legal limit would be raised to 8%, which would still be less than the 10% abv of wine. Mississippi is one of three states, the other two being Alabama and West Virginia, that by law keep the alcoholic content of beer this low. It is felt that the law is stifling local businesses, like Lazy Magnolia. They can’t produce enough and they do so much more if they were allowed to produce a larger variety of gourmet beers. It is illegal in Mississippi to possess any alcohol purchased in another state, so it even prevents consumers from purchasing some of their favorite gourmet beers across state lines.

ALABAMA – A state senate panel approved legislature seeking the sale of stronger beer – up to 13.9 percent by volume and would permit selling many gourmet beers in grocery stores and restaurants that can’t be offered in Alabama now because they exceed the alcohol limit. Free the Hops, a statewide group of beer consumers, has been trying for four years to legalize stronger beer in Alabama. The Senate Tourism and Marketing Committee unanimously approved the latest measure. It will go to the Senate next where it could come up for a vote very quickly.

AUSTRALIA — Foster’s Group announced that it will keep its winebusiness. Right now is not the time to sell and the company feels it can be successful on making the wine business more attractive. In order to improve performance, the company plans on separating its wine and beer businesses into two different units, global supply operations will be integrated with respective demand regions, and a new leadership team was appointed. Alex Stevens will be Managing Director of Australian BCS and Peter Jackson will continue as Managing Director of EMEA Wine. New Managing Directors of Australian Wine and Americas Wine will be announced in the near future. In addition, the Foster’s wine portfolio will change to include more focus on the Australian tail brand, a number of non-core vineyards will be sold and 3 wineries will be either closed reconfigured or consolidated.

ARKANSAS — Wal-Mart Stores Inc. announced it will cut 700 to 800 jobs at its northwestern Arkansas headquarters. It was said the cuts would be in the real estate, apparel and health and wellness departments and there is no immediate plan to make other positions available to them. The company is scaling back on the number of new store openings from 166 new stores last year to between 125 and 140 this year — leading to the cuts in the real estate unit. The company is moving positions in its apparel buying and planning group from Bentonville to New York, because it is the fashion hub and they should have more employees located there. In the health and wellness departments, Wal-Mart is consolidating the Pharmacy, optical and in-store health clinic areas into one. These, in the past, have operated as separate units. Combining them will result in job cuts.

ALABAMA — A Senate committee approved a bill that would allow Tuscaloosa voters to consider legalizing Sunday alcohol sales. The bill was introduced by Sen. Bobby Singleton of Greensboro on behalf of the hospitality industry, and it would authorize 14 municipalities to hold referendums on off-premises and on-premises Sunday alcohol sales. These referendums can be held either by petition drive or by municipal ordinance. If the bill passes, the Tuscaloosa City Council, at its discretion, could schedule a referendum on Sunday alcohol sales, or voters could force a referendum by submitting a petition signed by at least 10 percent of the registered voters in the last election. The Senate Tourism and Marketing Committee approved the bill with no discussion. It could be in position for full Senate consideration on Tuesday, when the first round of opposition is expected.

UNITED STATES – MillerCoors, the US joint venture between SABMiller and Molson Coors, reported a 3% revenue increase in Q4 2008 to $2.04 billion. The 8% jump in revenue per barrel can be attributed to the price increases implemented last year. The increases helped MillerCoors to offset a 2.3% drop in retail volume sales and a 4.3% sales drop to wholesalers for the quarter. Reported net income dropped to $54 million which MillerCoors claims is due to the impairment charges surrounding its Sparks brand. MillerCoors agreed to reformulate the product following pressure from attorneys general and health organizations over the combination of alcohol and caffeine. The group re-iterated its focus on cost savings going forward. It aims to achieve $500m of annual cost synergies by the third year of combined operations.

IDAHO – More state attempts to raise taxes on alcohol. The state of Idaho is proposing a more than 20 cent tax hike on a six-pack of beer from 8.4 cents to 29.3 cents and an increase of 3.5 cents on a single 12 ounce can. If passed, tax on wine would also increase to 6.1 cents from 1.8 cents per glass and to 30.9 cents from 8.9 cents per bottle.

OREGON — Four Portland legislators joined forces with a Springfield senator to introduce Oregon House Bill 2461. The bill would impose a substantial $49.61 tax per barrel of beer produced by Oregon brewers, who state this would cripple their business. The legislators want the revenue the tax would raise for the state. The bill defends the tax hike by arguing that Oregon currently ranks 49th in its malt beverage tax rate and has note been raised in over 30 years. More specifically, it states it would fund prevention, treatment and recovery programs for those addicted to alcohol and other substances which cost the state over $4 billion in lost earnings, more than $8 million for health care, and close to $1 billion in law enforcement costs. The brewers say the state’s low tax on rate is what makes it such an attractive place for crafting beers. The state’s brewery guild claims it would also amount to the single largest beer tax hike in the nation’s history.

GLOBAL MARKET — Bloomberg News reported global beer consumption grew by less than 2% in 2008. Not such good news for the big brewers, like Anheuser-Busch InBev, that control more than half of the global market. It is also expected that 2009 will be another year of slow growth. Sales are slowing down in countries from the U.S. to Russia and Brazil as consumers are left with less spending power to buy beer. Shipments in the U.S. last year grew at their slowest since 2005, according to Beer Marketer’s Insights research. It is thought that to compensate for the slower market, the brewers will have to raise prices.