US: Modelo triumphs in Gambrinus distribution spat
Mexico's leading brewer Grupo Modelo has won its contract dispute with distributor the Gambrinus Co.
Modelo, the brewer of top-selling US import Corona, said yesterday (9 March) that an arbitrator had ruled in its favour giving it the right to end its distribution agreement with Gambrinus at the end of this year.
Gambrinus, Modelo's distributor on the East Coast of the US, started an arbitration case in 2004 to contest a termination clause in its contract with Modelo that becomes live at the end of this year.
Carlos Fernandez, chairman and CEO of Grupo Modelo, said: "The arbitral award, in our favour, will allow us to seek the best available options with the aim of enhancing the value of our export business and create more value for our shareholders."
Gambrinus refused to comment when contacted by just-drinks today (10 March).
Modelo gave no hint as to who would next receive the distribution rights to its portfolio, which thought to be worth in the region of US$200m to Gambrinus.
Mark Swartzberg, a beverage analyst at US bank Stifel Nicolaus, said Constellation Brands, which distributes the Modelo stable in the western parts of the US, could be a front-runner.
"We continue to hear trade gossip that Modelo is interested in cutting a deal with Constellation. We consider this the highest probability event..outside of Modelo doing the eastern US itself," he said in a research note today.
However he added: "Although it is clear that they will not make the noted US$200m (in its press release, Modelo said "the arbitral award will allow us to seek the best available options with the aim of enhancing the value of our export business and create more value for our shareholders") and Modelo will not simply hand them a profit stream. They'll have to pay for it."
Modelo is half-owned by US brewing giant Anheuser-Busch.
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