Today’s infographic is yet another pair of slides from a Powerpoint presentation on the Beer Industry by Christian Adeler and Jon Bjornstad in 2011. The first shows that worldwide, the beer industry is dominated by four global conglomerates, ABI, Heineken, SABMiller and Carlsberg.
The second slide shows the market share for each of the four companies in the major regions of the world.
According to a new report by the Beverage Information Group, “the beer industry saw gains in both dollar and volume in 2012 after a three-year downturn.” Their conclusion was that “well-marketed new products and slight improvements in the unemployment rate contributed to the beer industry’s overall growth.” Here’s the group’s press release with additional findings:
Super-premium, Craft, Imported and Flavored Malt Beverages out-performed the industry overall, as there is increasing demand for higher-priced beer. Super-premium and Premium increased 1.6%, and Craft increased 13.7% to reach 185.2 million 2.25-gallon cases. This is the largest increase for Craft beer in more than a decade.
Imported beer also increased for a third year, even though major brands such as Bass, Beck’s and Red Stripe were removed from the category because they are now domestically brewed. This 1% increase is largely due to consumer demand for a wider selection of products.
Innovations in the Light Beer category, such as the launch of Bud Light Platinum, were not enough to turn things around for the category. Light beer declined for the fourth year in a row. Popular and Malt Liquor also lost volume.
Although the beer industry saw positive changes in 2012, challenges still remain. According to the Beer Handbook, the beer industry will still see increases in the higher-priced categories such as Super-premium, Craft and Imported beer. It remains to be seen if these gains will help the beer industry maintain 2012’s positive direction.
“Today’s consumer no longer sees beer as their only drink option,” says Adam Rogers, senior research analyst, Beverage Information Group, Norwalk, Conn. “Spirits and wine marketers have been savvy in targeting consumers with flavored vodkas, rums and whiskies, as well as sweeter wines which have continued to take share away from the beer industry.”
For a mere $790, you can buy a copy of their annual Beer Handbook.
Rumors and discussions of a possible merger between Anheuser-Busch InBev and SABMiller are nothing new, it’s been talked about by the business press off and on for a number of years now. But it had been quiet lately, most likely because of the deal by ABI to buy Grupo Modelo. But yesterday Reuters fanned the flames of merger once again, in a piece of speculation: Bets on for mega brewer merger as virgin ground shrinks.
With the acknowledged bullet points that “Asia main area with assets left to buy,” and that the ABI and SABMiller would combine the “growth markets” of Africa and Latin America,” they put the price for ABI to buy SABMiller at at least $100 billion. According to Reuters:
Now, with AB InBev planning to return to a comfortable pre-deal debt-to-EBITDA ratio of below two next year, industry experts are betting on a combination of its Budweiser and Stella Artois brands with SABMiller’s Peroni and Grolsch. Some expect a deal within a year.
“It’s more a question of when, not if,” said a banker who has worked on drinks deals. Others, also speaking on condition of anonymity, cited AB InBev’s record as a serial acquirer and the need for a target to match or surpass its $52 billion purchase of Anheuser Busch in 2008.
Asia, they claim, is the next frontier, though many of the bigger breweries are state-owned (which means expensive). Interestingly, while they admit that SABMiller would also be expensive the Reuters’ business analysts believe “a tie-up would be straightforward with antitrust issues relatively easy to fix and immediate benefits of scale.” Other analysts, however, do see potential problems with the merger from “regulators is in the United States and China” because of the market overlap in those countries.
Price, not surprisingly, is the elephant in the room, and the estimated $100 billion ticket price would make such a deal the “fifth-largest corporate acquisition ever.” Reuters places the current value of SABMiller at $84.5 billion and believes it’s in ABI’s best interest “to move fast before SABMiller gets more expensive.” But would SABMiller be interested in selling? “SABMiller’s two top shareholders — cigarette maker Altria Group and the Santo Domingo family of Colombia, which own 27 percent and 14 percent, respectively — ‘may think this is as good as it gets,’ said another banker.” So that suggests that the people behind the curtain might be amiable to the buyout. A couple of years ago, writing about this very possibility of a merger, I recalled that when the AB/InBev merger went down, someone joked that eventually there would be just one international beer company and it would just be called “Beer.” I remember laughing at the time, but truth really is stranger than fiction. So who knows? It should be an interesting year.
ABI Beer Brands …
plus …
SABMiller Beer Brands …
Equals = ?
Depending on your perspective, there’s good and bad news for women who love beer. Yesterday, Marketwatch casually mentioned that “SAB Miller, the world’s second largest brewer, is testing a new line of lighter and sweeter beers. Executives are also planning new ad campaigns geared towards women.” Other CBS affiliates, such as WREG Memphis, picked up the story but added little, apart from saying the new line will be “brewed especially for the ladies.” That’s all the information there is, so far, not even the SABMiller website has any additional information or a press release, at least not yet.
But if you’re one of those of the female persuasion that can be reduced to the stereotype of only liking sweet flavors, and don’t mind being pandered to, this just may be the beer for you. But if you’re a real person, like pretty much every beer lover I know who also happens to be a woman, this is probably just going to piss you off. I honestly don’t understand why the big beer companies keep trying this. Has it ever worked, anywhere in the world? People who understand and can appreciate the complex flavors of a good beer, will like it, irrespective of their reproductive organs. So just make good beer, educate your customers about it, and beer lovers — male and female — will drink it. Why is that so hard?
Wednesday’s ad is for the American Corn Millers’ Federation, from 1933, just as Prohibition ended. The ad is singing the praises of brewing with “dry milled corn grits,” which they explain is “the public preference.” And then there’s this great tagline: “Brewed with Corn Means Quality Beer.”
The inevitable approval of the merger between Anheuser-Busch InBev and Grupo Modelo moved one step closer today, according to Harry Schuhmacher’s Beer Business Daily, who writes that a “consent decree has been filed with a federal judge today seeking court approval of the ABI-Modelo-Constellation deal with the DOJ. News of the settlement agreement comes before the April 23 court deadline to report to U.S. District Court.”
Apparently, “[t]he agreement is close to the one A-B revised in February, selling the big Piedras Negras brewery to Constellation and allowing them to some time to expand that facility to brew all of US Modelo beers (and any others Constellation wants to brew there). But the agreement also includes ‘certain distribution guarantees for Constellation in the United States.'”
Constellation Brands released a statement, Anheuser-Busch InBev and Constellation Brands Announce Revised Agreement for Complete Divestiture of U.S. Business of Grupo Modelo, outlining the deal, and the transaction website, Global Beer Leader, also has a statement.
Here’s part of ABI’s press release:
AB InBev to sell Piedras Negras brewery and grant perpetual rights to Constellation for Corona and the Modelo brands in the U.S. for USD 2.9 billion
Constellation to acquire 50% of Crown it does not own for USD 1.85 billion
Terms and merits of combination between AB InBev and Grupo Modelo relating to global deal remain unchanged
AB InBev synergy projection revised to approximately USD 1 billion from USD 600 million
Anheuser-Busch InBev (Euronext: ABI) (NYSE: BUD) and Constellation Brands, Inc. (NYSE: STZ, STZ.B) today announced a revised agreement that establishes Crown Imports as the #3 producer and marketer of beer in the U.S. through a complete divestiture of Grupo Modelo’s (BMV: GMODELOC) U.S. business. The transaction establishes Crown as a fully owned entity of Constellation, and provides Constellation with independent brewing operations, Modelo’s full profit stream from all U.S. sales, and rights in perpetuity to the Grupo Modelo brands distributed by Crown in the U.S.
As part of AB InBev’s acquisition of the 50% of Grupo Modelo it does not already own, AB InBev has agreed to sell Compañía Cervecera de Coahuila, Grupo Modelo’s state-of-the-art brewery in Piedras Negras, Mexico, and grant perpetual brand licenses to Constellation for USD 2.9 billion, subject to a post-closing adjustment. This price is based on an assumed 2012 EBITDA of USD 310 million earned from manufacturing and licensing the Modelo brands for sale by the Crown joint venture, with an implied multiple of approximately 9 times. The sale of the brewery, which is located near the Texas border, would ensure independence of supply for Crown and provides Constellation with complete control of the production of the Modelo brands for marketing and distribution in the U.S.
AB InBev and Constellation have agreed to a three-year transition services agreement to ensure the smooth transition of the operation of the world-class brewery, which is fully self-sufficient, utilizes top-of-the-line technology and was built to be readily expanded to increase production capacity. During this 3 year timeframe, Constellation plans to invest approximately USD 400 million to expand the Piedras Negras facility, which will then enable it to supply 100% of Crown’s needs for the U.S. marketplace. Today, Piedras Negras fulfills approximately 60% of Crown’s current demand.
As previously announced on June 29, 2012, AB InBev has agreed to divest Grupo Modelo’s 50% stake in Crown, the joint venture between Modelo and Constellation, that currently imports and markets Modelo’s brands in the U.S., to Constellation. The transaction value remains USD 1.85 billion, providing Constellation 100% ownership and control of Crown.
Carlos Brito, Chief Executive Officer of AB InBev, commented, “The AB InBev and Grupo Modelo transaction has always been about Mexico and making Corona more global in all markets other than the U.S., where the brands will be owned and managed by Constellation. We are pleased to have reached this revised agreement that preserves the merits of the Grupo Modelo transaction while allowing us to move expeditiously to the Modelo integration process and the capture of approximately USD 1 billion of synergies, up from our original estimate of USD 600 million.”
Rob Sands, President and Chief Executive Officer of Constellation Brands, said, “The revised agreement with AB InBev will make Constellation’s Crown beer division a fully independent competitor and the third largest producer and marketer in the U.S. beer industry. This is a transformational acquisition for our company as we will hold perpetual rights to Corona and the Modelo brands distributed by Crown in the U.S. We will have autonomous control of production, distribution, marketing and promotion of these brands in the U.S. Bill Hackett, President of Crown, and his management team have decades of experience in the beer industry with the iconic Modelo brands. I am confident that all Constellation and Crown stakeholders, including our valued wholesalers, shareholders and employees will see the benefits of this amended agreement.”
Should be all over but the shouting at this point.
NOTE: This NOT their official new logo, I made this up as a parody.
In what has to be one of the most unusual marketing efforts by a large brewer, Olympia Beer has offered to pay $1 million dollars — in increments of $25,000 a year for the next four decades — to anyone who can find conclusive evidence of a live Bigfoot. The contest is the brainchild of Evan and Daren Metropoulos, who recently bought Pabst Brewing Co., which also owns the Olympia brand.
Full details and rules can be found at OlympiaBigfoot.com, but here’s their “Mission Statement” for finding Bigfoot:
Olympia Beer and Bigfoot have been leaving footprints together in the Pacific Northwest since 1896.
We have been sharing the same backyard for over a century and we believe it’s time to do what has never been done, and that is to offer a one million dollar reward to anyone who can ensure the safe capture of Bigfoot. When we say safe capture that means Bigfoot has to be alive and breathing folks, with no wounds. That’s right you can’t use any act of violence, no guns/knives/boxing gloves/nets/etc, only sugar or sweets to lure him in.
You must register to participate in the search. To report your discovery of irrefutable evidence of the existence of Bigfoot, click on the “Submit Capture Report” link on the left and follow the instructions to report your evidence. You participation in the search is subject to the complete Official Rules.
To aid us in this adventure, Olympia Beer is partnering with The Falcon Project
The Falcon Project has been identified as “the most penetrative search for Bigfoot ever conducted in the United States.” They will conduct an aerial search for Sasquatch employing an unmanned airship with high definition thermal imaging camera equipment.
Sure, it’s a publicity stunt, but it’s a funny one. And what if someone actually does it? Apparently 14% of all Americans believe Sasquatch to be real, while another 14% say they’re not sure.
Winners must provide “irrefutable evidence” of Bigfoot’s existence and, according to the rules, may include “DNA Evidence.” From the rules:
“Bigfoot” refers to a previously undiscovered species of upright, bipedal hominid, native to North America existing contemporaneously with the Contest Period or the twenty-five (25) year period immediately prior to the Contest Period. There is no set type or amount of evidence required to establish proof for purposes of this Contest other than that all evidence presented must satisfy the Judging Panel. Evidence may include, but is not limited to DNA Evidence. DNA Evidence may include hair, blood, tissue or saliva that proves the DNA sequence of the donor shows that said donor resides in the primate evolutionary family tree, among other apes or hominids, but does not have the same genetic markers and DNA sequence as any known species. Evidence may also include “Visual Proof” of a live physical body. Physical remains may be considered as evidence provided that it can be conclusively demonstrated that the date of death pre-dated the Contest Period. Visual Proof shall not include footprints, bone fragments, inconclusive skeletal remains, or any other non-definitive evidence of the existence of Bigfoot. Any photo or video taken with photographic or video equipment is not sufficient to qualify as evidence in and of itself for consideration in the Contest, but may be considered as supporting evidence.
NO HARM SHOULD BE DONE TO BIGFOOT OR ANY LIVING CREATURE AS A RESULT OF PARTICIPATION IN THIS CONTEST. ANY EVIDENCE OF SUCH ACTIVITY SHALL LEAD TO DISQUALIFICATION FROM THE CONTEST AND NOTIFICATION TO THE PROPER LEGAL AUTHORITIES.
This is my seventh annual annotated list of the Top 50 so you can see who moved up and down, who was new to the list and who dropped off. So here is this year’s list again annotated with how they changed compared to last year.
Not too much movement this year, except for a few small shufflings. Only three new breweries made the list; Founders, Southern Tier and Karl Strauss.
Off the list was BJs Restaurant & Brewery, Narragansett Brewing and Goose Island Beer, which had plummeted 30 from #18 the year before, after selling their production brewery to Anheuser-Busch InBev.
If you want to see the previous annotated lists for comparison, here is 2011, 2010, 2009, 2008, 2007 and 2006.
