UK: Diageo, Grupo Modelo take Red Stripe, Corona back from Wells & Young's in UK
Wells & Young's will re-focus its speciality beer efforts on Estrella Dam, Erdinger and Kirin Ichiban
UK brewer Wells & Young's has confirmed that it will lose the licensing rights for Diageo's Red Stripe and Grupo Modelo's Corona Extra beer brands in the country next year.
Announcing the terminations this morning (5 October), the company has said it will subsequently give “even more focus” to its Young’s, Bombardier and Courage brands, and its other partner brands, Kirin Ichiban, Estrella Damm and Erdinger.
Charles Wells, which merged with Young's & Co in 2006 to create Wells & Young's, has held a licensing agreement with Diageo for Red Stripe in the UK for 30 years. Modelo has employed the firm for 15 years.
Modelo has not yet announced who will be taking on the distribution of Corona Extra, while Diageo will be taking over Red Stripe next summer.
Speaking exclusively to just-drinks today, the chairman of Wells and Young's, Paul Wells, said: “It was always the case that our agreement over Corona would end in January 2011. Our Red Stripe agreement does not finish until the end of the summer next year, but we thought it would be better to brief our employees on everything at once rather than make separate announcements.”
When asked why the two companies have decided to terminate the agreements, Wells said: “Diageo are definitely strengthening their beer interests, which you can see by their recent launch of Windhoek in the UK. Also, I would imagine they looked at this agreement, which we've been talking about the renewal of for some time, and concluded that it would not make sense to renew an agreement with a distributor in the country in which it [Diageo] is based.
“With Modelo, when we took Corona on, it was selling 150,000 cases in the UK. We hand it back selling 5m, and we've all had a really good time with the brand.” Noting that Modelo is one of the last major brewers “to largely work worldwide with importers and distributors”, Wells speculated that, “whoever the next distributor (for Corona) is, it'll probably be a global brewer.”
Regarding potential job losses, Wells said it was too early to say. “A number of jobs would be transferred to the new distributor,” he said, “then we'll have a look internally. We'll certainly go for a cost reduction in almost all areas of the brewery. I would imagine there may be some, but I can't confirm at the moment how that's going to work.”
Looking forward, Wells said the company would continue to focus on specialist beer. “I genuinely think we've broken new ground in helping to create the specialist beer category in the UK,” he said. “We've done that with Red Stripe and Corona, and we're continuing to do that with Estrella Dam and Kirin Ichiban. We're still very committed to this category, which is still growing.
“Equally,” he added “we're going to put a lot more effort into our own brands. The cask beer category is doing very well, not only in the UK but also in export. We're seeing growth in the US, Canada and in the rest of Europe.”
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