BELGIUM & UNITED STATES — On February 23rd, Anheuser-Busch InBev agreed to sell its InBev USA, LLC unit (Labatt USA) to KPS Capital Partners, a New York City based private equity group. Labatt USA has been the exclusive U.S. importer of Labatt branded beer brewed by Canadian Labatt Brewing Company Limited. If you recall, InBev put the New York-based business up for sale last autumn as part of a requirement to gain U.S. regulatory for its US$52bn takeover of Anheuser-Busch. The recent deal, which still needs approval from the U.S. Justice Department, also includes an exclusive license to brew, market and distribute Labatt beer for the US. For now, a transitional supply agreement will be put in place allowing Labatt Canadian operations to continue to brew and supply Labatt beer for the U.S. for another three years. KPS Capital Partners also recently acquired Rochester, NY High Falls Brewing Co., maker of Genesee and Dundee brands.
TEXAS – Robert (R.L.) Glazer passed away Wednesday, February 25 in Dallas, Texas, at the age of 71. R.L. was a supporter of many social and charitable causes. He is survived by his wife, Phyllis, of 31 years, his mother, three sons, two daughter-in-laws, five grandchildren, his brother and sister and their spouses.
COLORADO – Southern Wine & Spirits was named the exclusive Colorado distributor for Pernod Ricard effective April 1st. Southern Wine & Spirits is Pernod’s distributor/broker in over 20 US markets which include Illinois, New York, Arizona, Florida and California. This is the latest move in their strategic realignment of their U.S. distributor network.
CALIFORNIA – William Foley, of Foley Family Wines, is purchasing 70% controlling interest in Napa winery Kuleto Estate. The agreement will give Foley 70% interest in not only the brand, but in the winery, inventory and part of the vineyard which consists of approximately 150 acres. The winery produces nearly 7,500 cases per year and plans on increasing to 12,000 – 14,000 cases per year. The deal is expected to close in early to mid-March. Winemaker David Lattin will remain with the winery. Foley also recently purchased Merus winery and Sebastiani Vineyards in Napa.
CALIFORNIA – California legislature approved Gov. Schwarzenegger’s state budget proposal which included increases in personal income tax, sales tax, and higher vehicle license fees. What it did not include was the wine tax proposal to add 5 cents per drink or 50 cents per bottle. It is felt that this possible short-term victory was achieved in part by efforts of a coalition called Sink the Drink Tax. They fought and lobbied to kill the plan and donated tens of thousands of dollars to each of the legislative leaders in the past two years. The Wine Institute also lobbied state leaders during negotiations.
JAPAN — U.S. fund Steel Partners announced on February 17th, they withdrew its proposal to acquire 33.3 percent of Japanese brewer Sapporo Holdings. The company cited the firm’s performance and refusal to negotiate as the reasons for the withdrawal. Steel Partners, which has an 18.6 percent stake in Sapporo, had offered to buy the firm’s shares at 875 yen per share. Prior to the announcement, shares of Sapporo fell 9.7 percent to 381 yen.
CZECHOSLOVAKIA – Heineken NV, largest Dutch brewer, may want to look into buying Prague-based brewer Staropramen from Anheuser-Busch InBev NV. Staropramen was founded in 1869 and is still located in Prague’s Smichov area, near the city’s medieval center. The brewery exports about a fifth of its output and has about 15 percent of the Czech beer market. A purchase like that would expand Heineken’s local market share and even more importantly, Heineken would gain a premium Czech brand for export purposes. Czechoslovakia has the largest annual per capita beer consumption of 159 liters. With little room to grow in local sales, exports would be a key play for increased sales. In late February, the publication The Czech daily Hospodarske Noviny reported Belgium based AB InBev was considering a Staropramen sale. AB InBev spokeswoman Gwendoline Ornigg stated the company is reviewing its brand portfolio for disposals, but no specific transactions were commented on. AB InBev has been reviewing asset sales for ways to reduce debt. It is already auctioning off its South Korean business for as much as $2.5 billion. Analysts suggest that Heineken would be the one to benefit the most from a deal because they would be the second largest in the Czech Republic. Heineken already has 6% of the current Czech market – much of this coming from acquiring brands after last year’s split of Scottish & Newcastle Plc.
DENMARK – On February 24th, Carlsberg announced it was extending current distribution for Modelo beer brand Corona Extra to nine new countries: Russia, Kazakhstan, Uzbekistan, Ukraine, Belarus, Kirgizstan, Turkmenistan, Tajikistan and Moldova. Previously, Carlsberg had only distributed Corona in Italy, Switzerland, Malaysia and Singapore. Baltic Beverages Holding (BBH) among other Carlsberg subsidiaries will have exclusive importing, promotion and selling rights of Corona Extra in these countries. Carlsberg won the Russian deal from a local importer of super premium beers. Carlsberg’s Russian subsidiary, Baltika Breweries, leads the market with a share of approximately 38%.
BOULDER, COLORADO – The Brewers Association, a group that tabulates industry growth data for U.S. breweries, announced February 23rd that estimated sales by craft brewers increased 5.8 percent by volume in 2008 compared to 2007. They reported that of total share of the beer category, craft brewers held 4% of production and 6.3% of retail sales. Nearly half of the more than 1 million new barrels of beer sold in 2008 came from craft brewers. The BA estimated, that of the $100 billion plus beer industry, craft brewer’s 2008 actual sales were $6.34 billion (an increase of nearly 10% over 2007 sales). These increases in share and barrels come at a time when, according to the Brewers Association, the cost of operating a small brewery increased over 39 percent in the period of November 2007 to November 2008.
INDUSTRY — The Wine Institute recently released data that U.S. wine exports, 90% coming from California, surpassed $1 billion in revenue for the first time – this is a 6% increase over last year. Almost half of the U.S. wine exports, worth nearly $486 million in revenue, were sent to the European Union countries (EU). Likewise, 2008 volume shipments to the EU increased 9%.
IDAHO – Good news for Idaho residents, the Idaho House committee killed the proposal that would have increased sales tax on wine and beer on February 25th. If the proposal had passed it would have bumped the wine tax to $1.56 per gallon from $0.45 cents and the beer tax to $0.52 per gallon from $0.15.
INDUSTRY – According to a Reuters report, Pernod Ricard is launching new vodka, rum and gin extensions with hopes to spark some growth during this recession. In contradiction to previous statements that it would minimize further releases of Absolut flavor extensions, Pernod will supposedly be adding an Absolut Mango in the upcoming months. In addition to the new Absolut Mango extension, will be a Brazilian rum by Seagram’s, and a higher end version of the brand Beefeater called Beefeater 24. Absolut Mango will be originally launched in the United States and will have a global roll-out next month. The Beefeater 24 brand, already available in Britain and Spain, is coming to U.S. shelves now. The Seagram’s Rum will be introduced only in the U.S. in May.
PHILIPPINES – Kirin Holdings announced on February 20th its agreement to buy 43% of the Philippines-based brewer, San Miguel Brewery (SMB), for US$1.2billion. This would increase Kirin Holdings stake in the brewery to 49%. The transaction is a good strategic move for Kirin enabling them to expand beer operations outside of Japan and into other markets like Asia and Oceania. SMB reported an 11% increase in revenue and 25% increase in net income for 2008. The company has a 95% share of the Philippines beer market. SMB brands include San Miguel Light, Red Horse and Gold Eagle.
