The beverage business blog from Olly Wehring
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Is Ashes fever getting to the Aussies?
20 Oct 2006 18:10
Interesting to see the Australians squabbling among themselves ahead of next month’s Ashes series.
Alas, it’s not Shane Warne and Glenn McGrath bickering over who should bowl from which end, but the country’s two biggest brewers arguing over so-called “ambush marketing” surrounding the Ashes, world cricket’s longest and deepest rivalry.
Last week, Foster’s Group, which is a major sponsor of the national association Cricket Australia, accused arch-rival Lion Nathan of “ambush marketing” with its own sponsorship of a nationwide beach cricket tournament.
A Foster’s executive even went as far as labelling Lion’s behaviour as “un-Australian”.
Both Foster’s and Lion have tried to downplay the row. A Foster’s spokesman told just-drinks the spat was “a storm in a teacup” while his counterpart at Lion said he didn’t want to “fuel the issue further” by commenting.
Leaving aside the unlikelihood of Australian beer drinkers confusing beach cricket with the Ashes and Foster’s apparent over-sensitivity on the issue, as unashamed Englishmen we at just-drinks have allowed ourselves a wry smile at the bickering between our Australian cousins. Not because we see it as a sign of Australian nerves ahead of the English holders of the Ashes defending the little urn Down Under, but because, deep down, we’re a tad worried the Aussies are going to win it back.
Beer guru up for grabs - honest
20 Oct 2006 09:41
Greetings from Ukraine. While I’ve been embargoed by my hosts, InBev, for the duration of my jaunt around Russia and Ukraine, I managed to get clearance for this – my postcard from the country, where I have donned the new moniker ‘Dr. Beer’.
For all you other brewers in the region, you’ll be delighted to hear that my rates are most competitive…
Around the world without leaving London
13 Oct 2006 21:40
Well, I’ve had a hell of a week this week - it’s been non-stop and it’s only now, late on Friday night, that I’ve found the time to bore you with my adventures.
Monday evening found me down at Vintners’ Hall in London, for the annual lecture held by the Wine & Spirit Education Trust. Guest speaker this year was Christopher Carson, the former CEO of Constellation Europe and current chair of the Wine and Spirit Trade Association. Carson always makes for good comment, and this time was no exception as he warned the alcohol drinks industry of the dangers of not working together to deal with social responsibility. The alternative to dealing with the situation ourselves, Carson warned, was pretty unpalatable. Heavy-handed government legislation, akin to the type meted out to the tobacco industry, could make things very unpleasant, he said. “We are in their sights,” he warned. “As an industry, we have to get on the front foot and take the message to the people.”
No let-up on Tuesday, with a quick visit to the South African wine tasting at Lord’s cricket ground. A most civilised chat followed, sitting in front of the Nursery Ground with Gary Greenfield, MD of Distell Europe. While Greenfield conceded that the part played by Constellation’s Kumala wine brand may be overshadowing the South African wine sector in the UK market, he remains determined to bring what he called “a little bit of heritage” to the South African offering abroad.
A hop, skip and a jump to south London for a cider tasting in the evening held by the Chevallier Guild brothers, the driving force behind Aspall apple juice and cider makers. Not knocking the cider, but I found the apple juice to be somewhat addictive - it actually tasted of apple. A charming evening with pleasant company ensued. Barry Chevalier Guild would not badmouth Magners for their stranglehold on the UK cider market of late, choosing instead to praise them highly for reintroducing cider to the masses - what he referred to as “the Magners effect”. The fight starts now, however, he warned. “They’ve given us a great opportunity,” he said. “Now it’s up to us to shout about what we actually do.” Cider’s days as the drink of tramps, wurzels and students were over, he laughed, and Magners played a huge part in that.
Wednesday was a relative day of rest, before Thursday exploded in my lap. To the Russian embassy in the morning to collect my visa-minted passport: I’m off to Moscow and then Kiev on Sunday with InBev. Having been to Russia before, I’m prepared for the queuing although the embassy was a dull reminder.
Then to Fleet Street for Diageo’s Asia and China seminar. On paper, the six-hour marathon looked like it would be a struggle, but the opportunity to meet and quiz the likes of Stuart Fletcher (president of Diageo International), John Pollaers (MD for Asia) and Ken Macpherson (MD for Greater China) was too good an opportunity to miss. Macpherson’s view of China bursting with possibility is one close to my heart. On leaving Beijing in 2003 after working there for four months, my then boss said: “If you ever get the chance to come back, then do, ‘cos this place is set to explode.” By the sound of Macpherson’s presentation, that explosion has started.
Wonder if the paymasters would let me work from Beijing…
Battle in Brazil - global brewers on the prowl?
09 Oct 2006 14:33
As I approach my third anniversary here at just-drinks, I am reminded by an analyst of one area I wrote heaps about during my first few months in the job.
Some of you may remember, in 2003, when the Brazilian beer industry provided interesting reading. The country’s second-largest brewer, Schincariol, stole a march on market leader AmBev almost overnight, with a marketing push that succeeded in eating away at AmBev’s dominance. With hindsight, AmBev concedes that it was “arrogant” and “slow” at the time.
In a note to clients today (9 October), industry analyst Bear Stearns is warning that a new battle is brewing in the South American country. This time, it looks like Kaiser, which Molson Coors sold to FEMSA at the beginning of this year, who is going to give AmBev a run for its money. The unit is poised to launch its own advertising blitz, which may lead to another round of market share grabbing.
While Kaiser has its work cut out, AmBev could take quite a body blow if the campaign proves effective. If the global brewers get wind of the preparedness of Brazil’s beer drinkers to chop and change, then what’s not to stop them paying the country a long, possibly permanent visit?
We’ll keep a close eye on how the situation pans out. But, for now, in the words of Bear Stearns: “Let's Get Ready to Rumble.”
Pilsner Urquell - a good time had by all, but how much??
06 Oct 2006 16:39
Back into London on Wednesday evening, at the request of SABMiller’s Pilsner Urquell. The beer is the subject of a GBP2m promotional push in the UK, also announced last week.
The swanky do, held at the very smart Serpentine Gallery in Kensington Gardens, included DJs, Czech sentry guards and canapés created by renowned chef Albert Roux.
We also got the chance to try pouring our own beer (sounds easy, eh? You’d think!), and a super goody bag to take away, including two Pilsner Urquell-branded glasses in a presentation box.
I’ve a worrying feeling, however, that most of the GBP2m went on just the one night…
Playing swap-sies with Foster's boss
05 Oct 2006 14:34
Into London yesterday, to meet the Foster’s Group CEO Trevor O’Hoy for the first time.
Despite being quietly-spoken, O’Hoy was certainly not backward at coming forward, and fielded all questions with a straight bat. Most noticeable was his response to my query about whether Foster’s would look to change its name in the future. After all, having sold the rights to the Foster’s beer brand in several markets recently, is the name not a little redundant nowadays?
“The name Foster’s gets us access to people like you (I’m hoping he means journalists) and also to shareholders,” he said. “Foster’s as a name is actually bigger than it really is – it’s very well-known. We see it as a net positive at the moment. You’ve got to have something to hang on to!”
When I asked him what potential names he’d consider, he smiled: “What’s Diageo backwards?”
“Actually, just-drinks is quite an apt name,” he added, glancing at my name badge. “I’ll swap you ‘just-drinks’ for our brewing interests in Vietnam, if you like!”
I would, Trevor, but the commute would probably kill me.
Sunbathing's over, it's back to business for Bacardi
02 Oct 2006 17:27
You’ve heard it here first. Summer is officially over - at least for those of us in the northern hemisphere anyway.
The sun may be still just about shining here in London, but last week marked the end of the industry’s annual summer slowdown as it rolled up its sleeves and got back to business.
Bacardi, in particular, has been busy. The privately-owned spirits giant has made a couple of changes to its distribution partnerships here in the UK. First, it has sold its stake in First Drinks Brands to its venture partner, UK distiller William Grant. Bacardi has also moved to extend its relationship with Brown-Forman in a deal that will see the two companies work together in the UK for five more years.
However, the highlight of Bacardi’s busy week was its NZ$138m (US$90m) bid for New Zealand’s upstart distiller 42 Below. The company, best known for its namesake premium vodka, was only founded in 1999 but has managed to build the brand into one of the most in-demand vodkas worldwide through irreverent advertising.
Bacardi’s move, approved by 42 Below’s founder and chief executive Geoff Ross, looks to be a win-win situation for both parties. Bacardi gets a premium vodka with great potential, which has been a hit in style bars on both sides of the Atlantic.
Sure, it’s only two years since Bacardi paid a whopping US$2bn for Grey Goose and super-premium vodka has proved highly competitive but 42 Below has succeeded due to its cheeky and unique brand proposition.
For 42 Below, the company gets capital. 42 Below needs greater financial and distribution muscle and Bacardi will take its vodka into far more markets worldwide. The company will also continue to operate from New Zealand, which is key, as much of the brand’s cachet has come from the country’s clean and fresh image.
V&S - worth an Absolut fortune to many
27 Sep 2006 18:06
Late last year, Bengt Baron, the president and CEO of Sweden’s V&S Group, told just-drinks that he believed there would be “a pause” in the consolidation of the spirits industry, as the world’s distilling giants took a breather to reassess their priorities.
“I won’t be surprised if there’s a pause right now because there are some balance sheets that would need some mouth-to-mouth,” he laughed. “But once that happens, we’ll see more.”
It’s likely that Baron did not expect V&S, the state-owned producer of Absolut vodka, to become the next big prize on the block. Sweden’s Social Democrat Party, ousted at the polls on 17 September, had ruled the Scandinavian country for six out of the last seven decades.
However, a centre-right coalition has won office and looks set to sell off a slew of government assets, possibly including V&S.
Although the company has refused to comment on any speculation, and the new government has yet to announce its intentions, the industry rumour mill is in action, grinding out possible suitors for V&S.
Fortune Brands has been touted as a potential front-runner alongside a number of other possible bidders - Brown-Forman, Constellation Brands, Bacardi and Pernod Ricard, as well as brewing giant Anheuser-Busch.
It’s clear that any auction for V&S will be fiercely competitive. The jewel in the V&S portfolio is Absolut, the world’s third-largest spirit brand and a product that has managed to maintain its premium reputation in the eyes of consumers despite being launched in the US almost 30 years ago.
A possible obstacle for any bidder could be V&S’ membership of the Maxxium distribution network. A prospective buyer would have to pay the other members of Maxxium a fair amount of cash to extricate V&S from the partnership.
Fortune, as a partner in Maxxium, would not have that problem but it remains to be seen if the company could afford a price tag estimated by analysts at EUR4bn (US$5.1bn) after its role in the Allied Domecq takeover last year.
Bacardi could face competition problems due to its ownership of Grey Goose vodka. Constellation could be one to watch. Last month it announced a share offering had raised US$700m, suggesting it has the financial firepower to bid for V&S, while it is keen to bolster its stable of premium spirits.
Pernod is known to want to boost its presence in the US, even after integrating the Allied business. Joint managing director Pierre Pringuet was quoted as saying Pernod would watch the V&S situation “very closely” but there would be competition concerns over the company’s ownership of the international rights to Stolichnaya.
The world’s drinks giants look ready to do battle once more.
Hello from Romania - No Ursus? No comment
26 Sep 2006 05:06
Greetings from stop two on our whirlwind tour of Central and Eastern Europe.
The observant of you may have guessed from yesterday’s top story that our first port of call on SABMiller’s whistle-stop tour of some of its facilities in the region was Hungary. A quick hop yesterday afternoon has brought us to Romania. Later today, we head to Poland. It’s not quite jetlag, but I'm pleasantly confused right now.
A marvellous dinner last night, involving flaming pots of Transylvanian goulash, a drop of Romanian rum, and a musical trio that piped us in and out (“Look, folks, the violinist is ON THE BUS!”), concluded - for those of us still standing - in a trawl of our home city for the day, for one last nightcap.
Imagine my hosts’ faces as, after taking in two different bars in this town (Cluj, located in the north-west of the country, 500km from Bucharest, and home to one of four breweries run by SABMiller’s Ursus subsidiary), we failed to find one stocking their own beer brands.
Good job our merry way was made at the end of a very long day - otherwise who knows? Mein hosts could have been a darn sight more annoyed than they actually were.
Cider - first the best, second the worst?
19 Sep 2006 17:38
It seems there is no quenching the thirst for Magners cider. UK demand for the brand has forced its owners, C&C Group, to double capacity at its plant in Clonmel, the second time in a year that the company has expanded the site.
C&C is spending a significant amount of money, around EUR200m (US$253m), and the investment is a sign the company believes the cider boom will continue. The company saw Magners’ volumes soar 250% during the first half of the year and the performance of its sister brand, Bulmers, in Ireland suggests demand for cider is more than just a fad.
Scottish & Newcastle commands a dominant share of the UK cider market and no doubt hoped its marketing and distribution muscle would drive sales of Strongbow Sirrus and Bulmers Original, two products it launched after the first signs of Magners success in the UK.
However, C&C’s continued success with Magners demonstrates the benefit of being the “first mover” in what has become a lucrative category. Consumers see Magners as the premium packaged cider and the danger for S&N is that its offerings could be seen as a pale imitation of the Irish brand. After years in the doldrums, there seem interesting times ahead in the cider category.