The beverage business blog from Olly Wehring
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Colouring in the grey
10 Jan 2006 17:12
It’s been a day of colourful characters hogging the headlines today. And if the drinks industry has plenty of one thing, then it’s colourful characters.
Karan Bilimoria, the Indian who made good in the UK by personally hawking his Cobra beer around the country’s Indian restaurants in the 1990s, was first up, as details emerged of his company’s flotation later this year. The brewer is eyeing a market capitalisation of US$1bn within the next ten years. Ambitious? Yes. But few would doubt the 44-year-old, who has had so much success in a UK beer market considered stagnant for quite some time now. Not only is he chasing success in the UK, but recent speculation surrounding Cobra has all been about upping its presence in Bilimoria’s home market of India.
Next, we welcome back former Allied Domecq CEO Philip Bowman into the drinks fold. Bowman’s business future has been one of the main talking points amongst spirits industry executives after the dust settled on the Allied sale to Pernod Ricard and Fortune Brands. Would he take the money he earned from the deal and head back to Australia, or would a man of his undoubted talents be tempted back into the fold? At 53 years old, I certainly wouldn’t have blamed him for taking early retirement – would you? But news today that he has joined Scottish & Newcastle as a non-executive director might just suggest that the drinks industry is far too enticing a gig to get out of.
That’s what I’m finding out, anyway.
Confused? They will be
04 Jan 2006 14:22
And so, after the comparative peace of Christmas week, 2006 is here and a crammed inbox suggests we’re going to be busy for another 12 months here at just-drinks. A prosperous and peaceful New Year to you all, although I reckon we may be hard-pushed to have the latter in the drinks industry.
Already, only four days in, one story has generated more than its fair share of traffic on the site. A survey conducted by Viña Ventisquero’s Chilean wine brand Yali in late December concluded that the majority of wine drinkers in the UK feel misled by the labels on wine bottles, as we reported yesterday (3 January). The survey showed that almost half of the UK’s wine drinkers prefer wine with a clear, modern label and are often more likely to base their choice of wine on the look of the bottle.
At a wine tasting in Bordeaux in October last year and again while on holiday in St Emilion in the summer, I recall being well and truly bamboozled by the amount of wares on offer. It’s going to take a fair while for me to comprehend what’s good or not, and what I like or not – and I’m supposed to know what I’m on about when it comes to wine! Pity poor Joe Shmoe in the street, then, for it’s the money in his pocket that the wine companies are all chasing.
While I concede that the survey wasn’t the most scientific I’ve seen – only 1,500 wine drinkers were surveyed in the busy week before Christmas – the findings confirm what Constellation Brands found when it published its research into the US wine market late last year. The creation of a consumer category the company termed as ‘Overwhelmed’ suggests that this is a global issue, and one that needs to be countered by wine companies at every turn. Considering also the problems on the UK high street last month, with Unwins going under, it looks like the onus is on the producers to change consumers’ perceptions.
It looks like 2006 is going to be a rollercoaster year for one sector of our industry, at least.
Looks like we made it
21 Dec 2005 13:14
Well, we’re almost there. The end of another frenetic year for the global drinks industry is just around the corner and, while some of you are racing to get those last, vital orders out, we here at just-drinks can finally ease the foot off the pedal as we look forward to a well-earned respite.
And what a year it’s been. From Pernod Ricard’s purchase of Allied Domecq in the wine and spirits sectors to Anheuser-Busch’s and SABMiller’s ongoing skirmishes in the US beer industry, via the sale of Cadbury Schweppes’ European beverages division on the soft drinks front, I think we can all safely say that the headlines have come thick and fast in 2005. And I should know - I wrote most of them.
In this, my final blog before Christmas (we close for the week between Christmas and New Year, and will be back refreshed on Tuesday 3 January), I want to thank you all for your continued support. We have been deluged on an almost daily basis by tip-offs and story ideas from freelancers, industry insiders, PR companies and internal marketing departments the world over - if your lot aren’t hitting us yet, then give them a nudge - and just-drinks goes from strength to strength as a result.
So, whether you’re already in wind-down mode, or are expecting to be chained to your desk until midnight on 24 December, may I wish you all a Merry Christmas and a Happy New Year. I get the feeling that 2006 might just top 2005, and I for one can’t wait.
Is Constellation REALLY taking no for an answer?
13 Dec 2005 11:15
Is this how it ends, then – not with a bang but with a whimper?
After almost three months in the breach, Constellation Brands finally admitted defeat in its attempts to buy Canada-based Vincor International on Friday (9 December). The announcement was accompanied by a statement in which Constellation’s notoriously bullish CEO, Richard Sands, said: “We will move on to other priorities and we will continue to build upon our outstanding track record of delivering growth and value to our shareholders.”
This from a man who, one month earlier, accused Vincor of “changing the rules (for Constellation). They will not give us access to the information unless we give them a firm offer at a price that we don't know what it is.”
Although the official line is that Constellation has walked away from the C$33-per-share bid, as well as the sweeter C$35 (US$30.45) offer, this may not be the end of things, with rumours abounding that the US wine giant hasn’t entirely lost interest in Vincor. Considering the company’s track record of acquisitions in recent times, taking no for an answer can’t be sitting well on Sands’ shoulders.
And with Vincor refusing to open its data room to Constellation unless it made an offer “not a million miles north of C$35,” as a spokesperson for Vincor told just-drinks, could it be more of a case of when and not if Constellation is prepared to make one final push?
The company seems adamant, however, that this is the end of the story. “Life goes on,” a spokesperson for Constellation said yesterday. “We’ve got a business to run.” We here at just-drinks will, naturally keep you posted if that doesn’t remain the case.
Everyone's a winner, with just-drinks
07 Dec 2005 17:40
As we’ve been crowing about often enough these past few weeks, the times here at just-drinks, they are a-changing. And the recent launch of our new, personal research manager is just the beginning.
The service is designed to give you personal, unbiased research support, which will not only save you time, but could also save you money. As well as a price promise - if you find a report cheaper online, then we’ll match the price and give you three months’ free membership to this site - there’s also a money-back guarantee if the report doesn’t meet your expectations.
On top of all this, any research you buy before the end of March will earn you a free copy of our 2006 drinks trends briefing, due to be published next month. The 5,000-word report alone is worth US$320.
So, check out the new service and see what just-drinks can do for you, above and beyond what we do already, you lucky folk.
To try this new service email email@example.com , or call Allyson directly on (UK) +44 (0)1527 573 609.
Mais non, le Kiwi est Francais!
07 Dec 2005 15:56
While everyone knows how tough a time the winemakers in France have been having of late, the lengths to which they will go to protect their lot never cease to surprise. If it’s not firebombing wine cellars or disrupting internal transport services, it’s protecting their geographical heritage. But maybe, just maybe, they’ve gone too far with this one.
Kahurangi Estate, a wine maker on New Zealand’s South Island, has been threatened with legal action by France’s Lacheteau wine company this week. The reason? Lacheteau has registered the name ‘Kiwi Cuvee’ as a trademark, and will sue anyone selling wine with that name anywhere in the European Union, the New Zealand Herald has reported.
Kahurangi Estate, which makes a chardonnay called Kiwi White, has been exporting its wine to Sweden since before Lacheteau trademarked the name in May.
“It’s a case of the pot calling the kettle black,” Kahurangi founder Greg Day told the paper. “Here’s the French trying to protect Burgundy as a geographical indicator and saying we can’t use Kiwi.”
There's a new sheriff in town
06 Dec 2005 15:55
The list of potential candidates for just-drinks’ ‘Man or Woman of the Year’ is shortening. The recovery job at Coca-Cola in the last 12 months has CEO Neville Isdell in with a shout, and Pernod Ricard chairman Patrick Ricard has brokered the most-talked about deal of 2005 in his acquisition of Allied Domecq.
Interestingly, one of the dark horses for this coveted position was in town last week, giving us the opportunity to see first hand the myth that surrounds a character who has been described as India’s answer to serial entrepreneur Richard Branson.
Chairman of India’s UB Group Dr. Vijay Mallya visited the UK on Thursday (1 December) to talk about his hopes for the Indian beer market along with his hosts Scottish & Newcastle - the two companies hold 37.5% each in United Breweries in the country.
Mallya’s resume is extraordinary: drinks baron, airline owner and Indian MP. His experience as a politician came in handy when deflecting tricky questions on international competition in the Indian beer market and on the thorny issue of deregulation. And he remains supremely confident about UB’s prospects for beer growth on the back of the strength of the Kingfisher brand and his nationwide deal with S&N.
For a relatively unknown figure in the drinks industry, this reasonably private man (Mallya was unavailable for interview) cut an impressive figure and was happy to speak his mind - one need only look at his comments on India’s high whisky tariffs to see this in action.
Indeed, comparisons in the Indian press between Mallya and Branson appear justified. Not only do they both own airlines, but both back words with actions.
Although Pernod and Allied may have captured the headlines in the spirits industry this year, the UB’s acquisition of Shaw Wallace & Co. earlier this year to create the world’s second largest spirits group may ultimately be the more significant deal.
Given UB’s expansion aspirations beyond India, international groups will no longer be able to view the group as a large but local player of less relevance than other international rivals. The fact of the matter is that UB is a powerful and growing force with virtually unrivalled mass in one of the very development markets that multinationals such as Diageo are looking to for growth.
Houston (hic), we have (hic) a problem
30 Nov 2005 13:55
It’s all well and good boasting that the drink you’re holding after dinner has been holed up in, say, a Scottish warehouse for 10, 12 or 25 years. A group of Japanese brewers has gone just one small step further, however.
Sake brewers in the Japanese prefecture of Kochi have started preparing this year’s batch of sake rice wine with yeast that spent 10 days on the International Space Station, according to local reports this week.
Nihon Keizai Shimbun said yesterday (29 November) that the drink, known as ‘Space Sake,’ will be ready for global and domestic sales in April.
Ten test tubes of the yeast were launched on the Russian Soyuz rocket on 1 October at a price of JPY12m (US$1m) the Japanese business daily said.
An official for the sake brewers’ association of Kochi was quoted by the paper saying: “Sip it with dreams and romantic ideas in your mind, and you will get the taste of outer space.”
What time is it? I DON'T CARE!
24 Nov 2005 14:33
Ah, what a great day to be a Brit. Today, 24 November 2005, finally sees the introduction of new legislation which, among other things, affects the hours our pubs can close at. The compulsory closing of Britain’s boozers at 11pm – originally introduced in the run-up to World War I to ensure factory workers weren’t drunk at work – has given way to the possibility of 24-hour drinking in these fair isles.
After a media frenzy unlike anything I’ve seen in all my days, and a last-ditch attempt to scupper the legislation by various pressure groups, the police and Her Majesty’s Opposition, I can now walk into my local, any time I like, and ask for “a pint of best, please, landlord.”
What this will result in for the nation’s binge-drinkers remains to be seen – blood on the streets? Less violence? A lager drought? In the short-term, the situation may, indeed, get worse before it gets better. But at least now, I, as one of the majority of responsible adults who enjoy drinking in moderation, am finally in a position to drink what I like, when I like. And that can only be a good thing.
So, tonight, I will raise my glass to you, my dear reader, at whatever time I see fit.
A happy, happy day.
Cadbury looks sweet after drinks sales
24 Nov 2005 09:53
Having confirmed as recently as September that it was looking to offload its European Beverage unit, Cadbury Schweppes confirmed this week that it has sold its business to a consortium led by Blackstone Group International and Lion Capital LLP for EUR1.85bn (US$2.17bn).
Although this sale had been widely expected prior to Cadbury Schweppes’s official confirmation almost three months ago, the speed in which a buyer has been found impressed even the company’s CEO. “I am delighted that within such a short time we have achieved a firm offer for Europe Beverages,” Todd Stitzer said. And with estimates early this year pricing the unit at US$2bn, Stitzer was also suitably “delighted” at what he got for it.
The price, at around 9.5 times the unit's forecast EBITDA for 2005, is just ahead of many analyst estimations and above recent transactions in the soft drinks sector - the UK soft drinks group Britvic is expected to float next month at 7.5 times.
However, the threat as late as last week that PepsiCo might enter into the fray and drive the asking price up will surely mean Blackstone/Lion will settle for what they had to pay for such a quick deal. The questions now are what next for Cadbury and how will Blackstone/Lion fair with its new purchase?
Lyndon Lea, founding partner of Lion Capital, the former European arm of US-based Hicks Muse Tate & Furst, believes the acquisition will close early next year. And she was quoted saying she expected to hold on to the company for three to five years, investing in marketing and innovation – all good news for the brands and the sector.
Cadbury, meanwhile, is now free to pay down some of its debt and concentrate on its more successful confectionary and Dr Pepper/Seven Up businesses. However, the divestment of the under-performing European subsidiary may now make it more attractive to potential takeover attempts - commentators are already suggesting the mighty US group Kraft may take an interest.