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.
Heineken is gearing up for a product launch in Australia this month. But exactly what the product is, the brewer is not saying....
It's Summer in the northern hemisphere and the beer festivals are in full swing. Even the famously secluded North Korea is letting its regulation-cut hair down with the Taedonggang Beer Festival, name...
Drinks companies that use celebrities and influencers to endorse products via social media could be in line for some rule changes....
A couple of months ago, US-based Saltwater Brewery developed 'edible six-pack rings' in an effort to curb threats to wildlife....
- Job cuts not the whole story at AB InBev - Comment
- The decline of the flagship beer brand - Comment
- Craft spirits shake-out will be just the beginning
- Interview- Veltins export manager Udo Bruns
- Concha y Toro's Q2 by region, brand - Focus
- Diageo revamps Gordon's gin bottle in UK
- Craft Brew Alliance poised for AB InBev takeover?
- Pernod deal rescues Corby's FY
- AB InBev to cull 5,500 jobs after SABMiller buy
- Diageo's Guinness Rye Pale Ale - NPD
- The Next Seven Big Beverage Markets
- Global rum insights - market forecasts, product innovation and consumer trends
- Global RTD insights - market forecasts, product innovation and consumer trends
- Carlsberg AS (CARL B) - Financial and Strategic SWOT Analysis Review
- Adultifying Soft Drinks; Capitalizing on rising adult demand for non-alcoholic beverages