Blog: Call my bluff
Chris Brook-Carter | 27 July 2004
Ian Molson, an ex-board member of Molson, is apparently in talks with other international brewers, according to press reports, as part of his plan to deliver a competing C$4 bln buyout plan for the company.
Both Heineken and SABMiller have been linked to these talks.
But how seriously these rumours should be taken is debatable. "Don't believe everything you read in the press," one contact close to the situation told just-drinks today. "It is a hard sell to get anyone to buy Molson at the moment because its a huge turnaround project."
This corporate battle is fast becoming characterised by bluff and brinkmanship.
The tone has been set by claims by Coors CEO Leo Kiely that he would pull out of the current distribution deal with Molson should the Canadian brewer fall into other hands. An existing joint-venture marketing deal allows Molson to brew and sell Coors Light in Canada. Losing that deal would cost the Canadian brewer millions.
A number of analysts already believe Kiely is bluffing and his comments have sparked some great reactions in the Canadian press, particularly one article in the Globe and Mail.
Bluffing, bluffing, bluffing," said David Hartley, an analyst at First Associates Investments in Toronto.
"It's despicable," one anonymous Molson shareholder was quoted as saying. The two CEOs "are just trying to blow smoke to get it out there in the press . . . I think it's ridiculous."
They may have a point. After all, the deal has become almost as important to Coors. Coors Light holds around 8.5% of the market in Canada and the alternatives to the Molson distribution deal do not add up. The US brewer could export to Canada - an expensive option. Or, it could set up its own breweries in the country - again expensive. Or it could find another distributor - but who?
Do you have a water source in your garden? By which, I mean a spring, rather than an outside tap....
Here's a round-up of the top stories on just-drinks last week, featuring PepsiCo and Coca-Cola Co, Castel, Molson Coors and the cachaca sector....
There was a big focus on supermarkets and their Scotch offerings this week when a couple of own-brand malts scooped top awards at the International Wines and Spirits Competition (IWSC)....
You can't seem to move at the moment for news of US craft brewers expanding....
- just The Preview - Diageo's FY preliminaries
- Analysis - SABMiller's Australian issues continue
- Comment - Beer - What’s in a (Brand) Name?
- Molson Coors CEO exit - Mega-Merger on hold?
- just The Preview - Anheuser-Busch InBev's H1 & Q2
- ASA bans Jägermeister TV ad
- Diageo silent over Shuijingfang writedown report
- Diageo boosts exec committee
- Belvédère chairman to step down
- Diageo bags Facebook unit boss as director