just-drinks.com editor's weekly highlights
In This Issue...
Frustration seemed to give way to satisfaction in the Scotch whisky industry last week, on one issue that has long irked many distillers – the prices of private-label Scotch.
UK retail prices of own-label Scotch have long been in the doldrums and most distillers usually refuse to discuss the situation, frustrated, no doubt, that there seemed no prospect of improvement.
However, Whyte & Mackay, which sells over half its volumes as private-label Scotch, has indicated that there may be light at the end of the tunnel. The company’s managing director Bob Brannan told just-drinks last week that retail prices were rising for the first time in 15 years.
Brannan said the firming of prices at the UK’s big four supermarkets over the last three months, plus growing sales of the company’s branded labels, had convinced Whyte & Mackay to hang on to its Invergordon Distillers business to safeguard its stock levels. Whyte & Mackay had put the business, which mainly produces own-label Scotch whisky for UK supermarkets, up for sale last year.
The decision to keep Invergordon could be a positive sign that the prospects for own-label are indeed improving. However, Whyte & Mackay’s figures on the price of private-label Scotch apply only to the summer months – traditionally a quiet time for Scotch sales. Let’s see what happens closer to Christmas when retailers are only too keen to slash spirits prices and launch promotions to drive footfall.
It must have felt like Christmas come early down in Melbourne last week. Foster’s Group finally offloaded their Asian brewing assets, an intention first revealed by just-drinks in March. In two separate deals, the Australian drinks giant sold its business in Vietnam to Asia Pacific Breweries for US$105m and sold its brewery and the rights to the Foster’s brand in India to SABMiller for US$120m.
Foster’s looks to have played a shrewd hand. It remains the owner of the Foster’s brand in Vietnam, a booming beer market growing at double-digit pace on an annual basis and where demand for international premium beers is buoyant. However, in India, Foster’s has sold the rights to its namesake brand alongside its brewery. India is also a fast-growing market but red tape and restrictions on advertising make it tough to grow international brands. The Foster’s brand has been present in India for just under a decade with dubious success and SABMiller, with a less than successful launch of Castle Lager behind it in India, looks to have its work cut out.
Elsewhere in the brewing world, Molson Coors announced first-half figures that, on first glance, looked pretty impressive. A 38% leap in operating income and a 5% rise in sales for the world’s fifth-largest brewer looks in-line with impressive performances from its peers. But strip out one-time items and consider a favourable change in the Canadian corporate tax rate, and the garden doesn’t look quite so rosy.
It’s been almost 18 months since Molson and Coors merged, in what appeared to be an attempt to keep pace with the bigger brewing players. But could it be that Molson Coors just can’t step up to the same league as the InBevs and SABMillers of this world? As one analyst noted last week, the company is suffering from an unfavourable geographic footprint and a lack of scale – two things that InBev and SABMiller both seem to have covered (in their own, very different ways).
As all other beverage companies of similar size or bigger post impressive six-monthly figures around it, Molson Coors has plenty to ponder in the next six months.
As a postscript, I’d like to draw your attention to my thoughts on the UK’s supermarkets – click here. Your silence on this matter is deafening…
For more on Whyte & Mackay, click here.
For the lowdown on Foster’s Asian sale, click here.For the background on Molson Coors figures, click here.
Until next time...
Olly Wehring, Managing Editor
The US Tequila category continues to show strong growth, while the premium Tequila sector is booming, making it a highly attractive investment opportunity for major spirits companies. Dean Best reports.
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