Blog: Don't blame it on Brazil
Chris Brook-Carter | 29 January 2004
Canada's number one brewer Molson has hit troubles, with third-quarter net income falling to 35 Canadian cents a share from 52 Canadian cents a year earlier. Revenues declined to C$623.3m from C$641.3m.
A flat domestic market aside, the majority of the woes stem from Molson's decision to enter the Brazilian beer market, with the purchase of Kaiser.
Kaiser has just not performed to expectations. Its sales have fallen 23% in the quarter and it is losing market share.
However, Molson's CEO Dan O'Neill continues to defend the decision to go into South America, despite the rocky road. His argument, quite rightly, is based on profit potential rather than the here and now.
On a conference call with analysts, Daniel O'Neill said: "The Brazilian opportunity expanded the profit potential and remains as such. It may be delayed from the original plan, but it represents a large opportunity for profit growth."
And Molson points to the success of AmBev in Brazil as evidence of the potential of the market. And indeed, it was a failure in Molson's structure in the country rather than the dynamics of the market itself that are to blame for the disappointing results.
Molson has been putting in place a direct-selling network across Brazil, but the implementation has been delayed - a delay that coincided with a series of heavy investments from the competition.
But Molson's structural changes to Kaiser's sales force are all but finished. The company is now armed with 1,200 sales staff across six regions in Brazil.
And, Sao Paulo apart, the newly-established direct selling organisations all showed growth compared to the same period last year. In fact, excluding the Sao Paulo region, Kaiser's December sales would have been ahead of the previous year third quarter.
It is worth, therefore, taking O'Neill at his word for the moment and giving Molson more time to prove its Brazilian venture's worth.
To support the release of its latest report, entitled ‘The Economic Impact of Scotch Whisky Production in the UK’, trade body The Scotch Whisky Association has released this video, highlighting the si...
The Coca-Cola Co is in the middle of a major restructuring plan, affecting jobs around the world. The company is also downsizing its packaging....
One, perhaps minor, consequence of the conflict in Ukraine appears to be a fall in sales of Russian vodka in the country....
Diageo has jumped onboard Google's latest interactive maps and is opening up the virtual doors to four of its distilleries. ...
- Comment - Diageo Steps Up Defence of Haig Club
- Focus - Diageo's H1 Results by Region, Brand
- Comment - Spirits - Where Next for Scotch Whisky?
- just the Preview - Diageo Q2 & H1
- just the Facts - Top 20 US Beers by Value, Volume
- Belvedere vodka tie-up over new James Bond film
- Diageo speaks out over supplier contract changes
- Brown-Forman appoints Jack Daniel's president
- Diageo inks UK distribution deals
- ASA rejects Haig Club ad complaints
- Global RTD/RTS insights - market forecasts, product innovation and consumer trends research
- Diageo plc (DGE) - Financial and Strategic SWOT Analysis Review
- Edrington Group in Spirits (World)
- Global Consumer Trends and Key Consumer Targets in Alcoholic Beverages
- Global vodka insights - market forecasts, product innovation and consumer trends research