The beverage business blog from Olly Wehring
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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.
Uncool is the new cool - hopefully
17 Nov 2005 16:19
A trip into the Big Smoke (that’s London town) on Tuesday, to an event that, while promoting brands that were cool, left me feeling a tad out of touch with the young folk of today. It’s official – coolness has finally left me.
The CoolBrands CoolLife event was a celebration of the 100 brands that have been dubbed ‘cool,’ by an independent panel of dudes, no doubt. “CoolBrands are brands that have become extremely desirable among many leaders and influencers,” the blurb says. “They have a magic about them signifying that users have an exceptional sense of taste and style.”
So, heartiest congratulations to the following drinks companies, for being cool in 2005: Asahi, Budweiser Budvar, Campari, Cobra Beer, Coca-Cola, Guinness, Havana Club, Hoegaarden, Stella Artois, and mein hosts, Tiger Beer.
The evening included the Campari Red Passion Burlesque Bar, with beds for relaxation; the De’Longhi sound kitchen mixing VJs and DJs; the Dermalogica face mapping station; the Tiger Beer martial arts screening room and stila make-up touch-ups through-out the night. Sounds exhausting, doesn’t it?
I only lasted an hour – far too bright, far too loud, far too cool.
We're new here, so stop fighting, you lot.
15 Nov 2005 15:50
And so, a new week, a new editor (hopefully that turnover will be less frequent) and two new acquisition rows that look set to dominate the just-drinks headlines for the weeks ahead.
First things first, however. A big hello to you all from me, Olly Wehring, your new editor, and Dean Best, our newly-appointed news editor. As Chris Brook-Carter makes his way upstairs with a box-full of memories and his fluffy gonk, it leaves Dean and I to fill his warm seat. Having spent the last two years as news editor with just-drinks, I hope to keep things running as efficiently as usual, although do feel free to let me know at any time how things out there are looking. Just click reply, and come and say hi (I should be in marketing).
Meanwhile, on the other side of the World…
Lion Nathan’s attempts to buy up the family-owned Coopers Brewery in Australia has prompted a strong attack from the brewer. Last week, Coopers suggested that Lion was resorting to “desperate” moves to buy it, while putting pressure on any person involved in the takeover battle. “The level of hysteria from (Lion’s managing director) Robert Murray seems to increase daily,” claimed Coopers’ MD, Tim Cooper.
And in the US, Constellation upped the ante late last week in its bid to buy Vincor. In a lively conference call, CEO Richard Sands accused the Vincor board of not working in the best interests of shareholders, while suggesting the Canadian-based company was changing the rules as it goes along. “They (Vincor’s board) will not give us the (company) information unless we give them a firm offer at a price that we don’t know what it is,” he said.
With stories like this on the go in my first week in charge, it looks like a rollercoaster introduction to the big league for me.
Now, if I could just find my Snoopy doll.