Chris Mercer

The beverage business blog from Chris Mercer

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A Trip to Glenrothes

14 Oct 2011 17:07

The Glenrothes is the latest Scotch whisky brand that appears to be enjoying a vintage year. 

G20 finance ministers meeting in Cannes could do worse than lift their spirits with a dram or three of Scotch this evening. Scotch may be losing customers in its home market, but exports rose by around a fifth in volume and value in the first half of 2011.

I've just returned from a trip to The Glenrothes, the brand owned by Berry Bros & Rudd that contains spirit produced by The Edrington Group at The Glenrothes distillery. Between bouts of shooting and off-road driving, I learned that spirit production at the distillery is to increase to near its 5.5m-litre capacity next year. It is currently operating at around 1m hectolitres below this and on a five-day week.

I'm told that this decision was made prior to the significant amounts of whisky consumed by several journalists on the trip.

With the distillery feeding The Glenrothes single malt brand, and providing spirit for various blended whiskies, the plans to expand production offer another example of high confidence across the Scotch industry (although, to be fair, plans to up production are in part a response to Edrington's deal to sell its Tamdhu distillery to Ian Macleod Distillers earlier this year).      

Scotch is in a sweet spot. In the US, it is still heading in the right direction, while consumers in key emerging markets in Asia and Latin America have demonstrated a growing thirst for most things brown.

There is a degree of nervousness, however, about the global economic situation and, within this context, whether the momentum is sustainable. 

At the same time, and in contrast, the current pace of demand for premium Scotch could throw up supply issues. With such a long maturation period, it would have taken a confident soul to bet on such a high level of success for some of these brands. The Glenrothes is already running low on 1980s vintages (a bit lower after this media trip, by my reckoning) and there is talk of tight supplies over at Beam Inc's Laphroaig, too.    

The short-term, then, is not without its challenges. The long-term, meanwhile, continues to rely on a degree of crystal ball-gazing. Still, things could certainly be a lot, lot worse.

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An iconic drinks blog

11 Oct 2011 15:25

Here is an iconic drinks blog written in iconic times by a member of an iconic team of drinks journalists. If there's one thing you need to remember, it's that what you're reading is iconic.

Or is it? I think you know the answer. Since when does everything the drinks industry does have to be considered iconic, or, to quote the dictionary definition, something "worthy of veneration"?

Perhaps it is just me, or perhaps things really are getting worse. So many people overuse the term that it feels a little harsh picking out individual examples.

But, to illustrate the point here's some recent examples from my inbox: the gold and green colours on Cobra beer were this week described as iconic (that's the colours 'gold' and 'green'); Constellation Brands last week described Ruffino wine as iconic; while Diageo has recently "scoured the globe" to search for the city with the most iconic nightlife.

What does any of this mean? I can't tell you, but I can tell you that it's all becoming too much. I'm overwhelmed with iconic emotions and my ability to venerate is wearing thin. So, please, stop it.

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Czech mate for beer?

28 Sep 2011 17:27

Czech beer consumption has fallen back considerably for the past couple of years, not that you would necessarily know it from the Prague cafe that I have just been sitting in.

It's 11:00am in Prague and three quarters of the tables here at this airport cafe are adorned by lager, mine (ahem) included. Ok, perhaps airports are a special case, but there surely can't be too many countries in Europe where this is the social norm, rather than the exception.

Czech is synonymous with beer, from its renowned Saaz hops to its position as the world's top beer consumer - per capita, naturally. But, under the surface, all of this is changing and brewers in Czech face tough times.

Excise tax has risen by more than 10% in the past two years, the global economic downturn has eaten into consumer spending power and, what's more, wine appears to be turning heads in Prague's trendier quarters. Per capita beer consumption in Czech has fallen from 158.1 hectolitres in 2008 to 144, according to a report published this month by Brewers of Europe

It's not just home consumption, either. The Brewers of Europe figures show that exports of Czech beer fell by 14% between 2008 and 2010. Inevitably, jobs have been lost in the sector.

However, from what I have seen, there are still signs of vitality in the beer sector. For one thing, a flowering of microbreweries has taken the total number of breweries in the country up by 13% in the last two years, to 145. Then, there is innovation. StarBev, who invited to me Prague, this summer launched Staropramen Cool Lemon, a 2%abv lemon beer that has, according to the company, been flying off the shelves. 

Winning over a new generation of consumers with new products, then, may offer a lifeline to the industry.

 

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Diageo gives Ireland a Guinness grin

23 Sep 2011 17:02

I've just arrived back from Diageo's third Arthur's Day music festival for Guinness.

There were some long faces at the Bank of Ireland summit taking place at our Westbury hotel in Dublin yesterday evening. I couldn't be certain, but I think the bar tab read: three half-pints, 15 straws. 

It might not seem like great timing for a huge party, but - as the world stands on the precipice of another economic meltdown - perhaps a few pints of Guinness is exactly what people need. That certainly seemed to be the case in Dublin last night, as I saw first-hand the way Diageo has put together its annual Arthur's Day festival.

As bands of all sizes flitted between pubs, bars and theatres, Dubliners came out in their droves. Of course, Diageo and Ireland's on-trade could do with this sort of thing much more often as they seek to arrest declining volume sales in the country. Even so, the annual celebration of Arthur Guinness sealing the 9,000-year lease on what is now St James's Gate has the makings of a second St Patrick's Day, which can only be good news for Diageo and the pub trade. in Ireland.  

Check just-drinks early next week to read about my chat with Diageo's global brand director for Guinness, Oliver Loomes.   

See below for some highlights of the event, courtesy of Diageo.

 

 

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Foster's Group: Going Once, Going Twice...

21 Sep 2011 17:31

It's not too late to beat SABMiller's bid for Foster's Group, apparently.

On a media call today (21 September), Foster's CEO John Pollaers told just-drinks' managing editor, Olly Wehring, that the Victoria Bitter brewer remains open to the idea of rival bids.

Pollaers said that, while Foster's is "very focused on [SABMiller's] proposal", he added that "should any superior offers emerge then the board does remain in a position to address it". He declined to say whether Foster's has received interest from anyone other than SABMiller. 

If either SABMiller or Foster's does renege on the agreement, however, the party breaking off the deal would have to pay a fee to the other.

Ok, so perhaps it was a bit of a leading question, but it's interesting to hear Pollaers sending out that kind of signal.

That said, there is little sign that anyone else is keen to go toe-to-toe with SABMiller. A potential bid from Grupo Modelo has not materialised and most other brewers are looking elsewhere, or seeking to cut debt. 

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Indian summer wine in the UK

20 Sep 2011 12:29

 

Say what you like about the UK wine market, but how many other countries would slug back obscure wines from vineyard regions that they've never heard of?

This month, upmarket retailer Waitrose began selling Indian wine, believed to be the first multiple retailer to do so in the UK. By the end of last weekend, stocks were seriously depleted. Drinkers stampeded through the wine aisles, carrying off as much Zampa Syrah and Ritu Viogner as possible in expensive off-road vehicles, back to their suburban lairs.

Waitrose has conceded that it is surprised by shoppers' thirst for wine from a country more readily associated with curry and Cobra lager. 

But, isn't this sense of adventure precisely what helps the UK to retain its 'pull factor' in the world of wine? On paper, there are good reasons to go elsewhere. Tax amounts to half the cost of a GBP5 bottle of wine in the UK, the national economy is goosed, the exchange rate is bonkers and overall consumption of wine is predicted to continue falling, at least for the near-term.

And yet, without wishing to hoist the Union Jack and direct a patriotic two-finger salute at this cocktail of woe, it does seem that producers around the world continue to be drawn to UK drinkers' gung-ho, try-anything-once attitude. 

Of course, what really matters is how many people go back for more. Waitrose and Zamba producer UB Group would do well to keep a lid on things until the figures from repeat purchases are in. Adventurism is the cousin of frivolity.  

The next problem is building enough scale to achieve some sort of profit; an issue that even the biggest wine sellers in the UK are grappling with. 

Still, it's hard to do anything without open-minded consumers.

 

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Andrew Lansley the toast of the drinks industry

14 Sep 2011 15:27

The UK health minister was received about as warmly as he could have hoped at the Wine & Spirit Trade Association annual conference.

In stark contrast to the combative tone struck by some of his predecessors, Andrew Lansley appeared keen to shower praise on the UK drinks industry at the conference today (14 September). I counted five uses of "thank you" in the first ten minutes of his speech.

There is no doubt that, in the Conservative-led Coalition Government, the drinks industry has found a significant amount of common ground. Lansley, a Conservative Member of Parliament, heaped praise on the industry's commitment to the government's 'responsibility deal' to reduce alcohol harm. He also reinforced the official line that this Government prefers "voluntary action" over regulation.

Hard-talking, anti-alcohol health lobbyists have largely been driven underground by a Government that prioritises business and dislikes intervention.

Can this honeymoon last? It depends on what is achieved and whether enough people in the industry see this for the golden opportunity that it is. The early signs are promising for the sector, with 110 companies signed up to the responsibility deal.

But, the industry has to be mindful of the constant conflict in Conservative Party thinking. That conflict comes when its non-interventionist values are challenged by threats to public order and, relatedly, to anything that further jeopardises the economic wellbeing of the nation. 

For now, though, the industry and the current administration have an understanding that never looked possible before the general election in 2010.

 

 

 

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Coca-Cola Enterprises Pulls Back

09 Sep 2011 15:25

Coca-Cola Enterprises has stepped back from the eye of a political storm in France.

The bottler has reinstated its plan to invest EUR17m US$24m) in a bottling plant near Marseille, only 24 hours after suspending it. Such was the political backlash from what the company has termed a "communication error", the president of Coca-Cola Enteprises in Europe, Hubert Patricot, was forced to explain himself on French television.

Following yesterday's announcement, some French politicians accused the group of holding France to ransom, while labour minister Xavier Bertrand also expressed his dismay.

Coca-Cola moved quickly to patch up relations, even though Patricot said that the company still isn't pleased at all about the planned tax hike on added-sugar soft drinks.

All very confusing. It's a moment to forget for Coke - either it has bowed to political pressure, or it got its communications wrong. Whichever the reason, the episode shows that relations between French officials and Coke are as highly-strung as ever.

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Coca-Cola Co: It's Our Ball & We're Taking It Home

08 Sep 2011 15:30

Coca-Cola Co has reacted to a tax hike in France by "re-evaluating" investment and cancelling a birthday party. 

Coca-Cola's fractious relationship with France has taken another turn for the worse. Incensed by the government's decision to raise tax on sugar-added soft drinks by almost four-fold, the group has suspended a planned investment in the country.

It has also cancelled a 40th birthday party for its Pennes-Mirabeau plant near Marseille, which, really, just seems a bit petty.

Then again, Coca-Cola and the French authorities have a long history of antagonism. The French government briefly banned Coke following the end of the Second World War. 

I expect that we will see more 'handbags' in the run-up to the tax implementation date, in January 2012.

Of course, it's also just possible (isn't it?) that Coca-Cola is using the tax hike as a convenient juncture at which to review an investment that probably looks less appealing given the downturn in western economies. 

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Sharp's Brewery is Rock solid for Molson Coors

06 Sep 2011 14:10

You know the drill: big brewer swoops on small-time, passionate-yet-endearingly-haphazard beer maker and sucks the tanks dry. The only problem is that things don't look quite like that at Sharp's Brewery.

It is just over half a year since Molson Coors landed in Rock, Cornwall, to scoop up Sharp's Brewery. For the past couple of days, I've had the particularly gruelling assignment of checking out the local landscape (well, ok, mainly the beer).

You'll hear more from my time down there in a couple of days, once my head has cleared enough to make sense of the notes. 

It's clear, though, that this deal was not at all the usual drill, as described above. For one thing, before Molson Coors (BC), Sharp's' previous owners did not see themselves as purveyors of artisan beer; rather more as out-and-out brand builders. They certainly did a good job on Doom Bar, which is 90% of Sharp's volumes. But, they always intended to sell up and, in January, did just that.

Head brewer Stuart Howe says that he has more time now than has ever had to work on his new-fangled beers: a good thing too, judging by the great Honey IPA and Monsieur Rock that we sampled yesterday. Previously, Howe claims he was forced to hide such experiments from the owners, who took little interest in non-Doom Bar business. "It's like Jim'll Fix It came along," Howe told us yesterday.

Howe himself is the second reason why Sharp's is slightly different from your average 'big brewer takeover story'. His engaging personality is stamped all over the place: to an extent, he is Sharp's and, for now at least, Molson Coors seems to 'get that'.

The Carling brewer also reaffirmed that it wants to continue brewing Doom Bar in Rock, over the long-term.

It's an interesting deal for all parties. We'll have more insight on it, as well as future plans for the business, in a longer piece later this week.

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