January 11, 2010
just-drinks.com editor's weekly highlights
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Heineken sprang a surprise on many analysts today (11 January) by announcing that it has beaten SABMiller to acquire FEMSA's beer business, the second largest brewer in Mexico, in a share issue deal worth EUR3.8bn (US$5.5bn).
The transaction, which, including net debt and pension obligations, gives FEMSA Cerveza a value of around EUR5.3bn, will see FEMSA take a 20% stake in Heineken.
The deal transforms Heineken's presence in the Americas, giving it a 43% share of Mexico's beer market, as well as strengthening its position in the US and Brazil. These three markets alone make up a third of the beer industry's global profit pool.
Heineken was widely-believed to be too busy digesting the remnants of Scottish & Newcastle to be considered the favourite for FEMSA Cerveza's hand. And yet, the group has been keen to point out today that the deal will not increase its net debt to EBITDA ratio from the 3.1 reported at the end of June last year.
Analysts have been quick to quiz the brewer on prospects in Brazil, however, where FEMSA is struggling to make a profit and is only the number three brewer. Indeed, this was rumoured to be the main reason why SABMiller walked away from the bidding table.
While it is hard to judge the level of disappointment in the SABMiller camp, surely this will be seen as an opportunity missed.
Although SAB can certainly take solace in the fact that it has maintained its financial discipline, the number of non-organic growth options for the global brewers has just got a little bit smaller.
In other news last week, we reported on Anheuser-Busch InBev's plans to cut around 10% of its workforce in Western Europe, a potential row in India between joint-venture partners Diageo and Radico Khaitan, and the latest set of results from Constellation Brands.
Looking to the future, Chris Losh considered how 2010 might look for the wine industry as a whole.
All this, and 2010 is barely one week old...
Until next time...
Olly Wehring, Managing Editor
With increasing pressure being placed on product development and innovation, it is essential for any business to understand changing consumer trends and the impact these can result in.
While the economy dominated the news agenda in 2009, the coming year will see renewed pressure on soft drinks companies in areas such as sugar content, advertising and functional ingredients. Ben Cooper looks ahead to see which issues are set to come to the fore during the coming year.
There would be little point denying that the poor global economic climate was the major story of 2009 across all drinks sectors. In spirits, US market growth for the major players Diageo and Pernod Ricard had started to slow before 2008 had ended. In wine, we heard that Australian wine exports had fallen in value terms during 2008 for the first time in 15 years; and that US domestic wine sales saw the first annual fall since the last major recession in 1993. In beer, Diageo shelved plans to build a new brewery for its Guinness brand in Ireland, whilst in soft drinks, the story of the year has arguably been the takeover by PepsiCo of its two major bottlers. just-drinks' leading writers round-up a tumultuous year in this month's briefing.
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