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.
The Coca-Cola Co has had its fair share of critics this year, from health campaigners to investor David Winters, who this week called for CEO Muhtar Kent to be replaced....
The UK health lobby is always very vocal on alcohol at this time of year, predictably so, and this year is no different. ...
“Ah, yes, you've hit upon a very sensitive area,” says Thomas, my guide at the Carlsberg Brewery in Copenhagen last Friday....
Experimentation has long been a watchword in the Scotch whisky industry. It is what has given consumers the huge range of ageing options, from refill hogsheads to virgin oak to Sherry butts....
- Cuba-US Normalisation: Bacardi, Pernod Winners?
- Review of the Year 2014 - Part IV: Spirits
- Sustainability in Wine - Part I
- Comment - The Appeal and Perils of Craft
- Time is Right for Refresco Gerber Exit
- Belvédère to sell assets, streamline portfolio
- Belvedere vodka tie-up over new James Bond film
- Diageo ups focus on China with Mortlach roll-out
- Diageo welcomes verdict on Crown Royal "confusion"
- Bacardi, Pernod Ricard welcome US-Cuba deal
- Global vodka insights - market forecasts, product innovation and consumer trends research
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- The IWSR Forecast Report - 2014-2019 Global Review
- just-drinks on-trend: Craft beer - fortunes and future
- Global Tequila Market 2014-2018