Industry Issues

August 1, 2005
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Sabmiller to Acquire Bavaria
SABMiller, based in London, will take on Colombia’s Grupo Empresarial Bavaria in a merger worth $7.8 billion. SABMiller will assume a 71.8 percent interest in Bavaria, and Santo Domingo Group will take a 15.1 percent interest in SABMiller.
Graham Mackay, president and chief executive officer at SABMiller said he expects annual cost synergies and operating improvements to reach $120 million by 2010. Bavaria is the second-largest brewer in South America, with annual beer volumes of 175 million hectoliters. Its major brands include Aguila, Cristal, Pilsener and Atlas.
Bavaria’s current holding company will be able to nominate two directors to the SABMiller board, and Bavaria executive committee members Alejandro Santo Domingo and Carlos Alejandro Perez will serve as vice chairmen of a newly created board that will oversee SABMiller’s operations in Latin America.
“We are particularly proud of the fact that, for the first time, Colombian interests will have such an important role in a company the size and magnitude of SABMiller, and that SABMiller will establish their South American regional headquarters in Bogota,” said Julio Mario Santo Domingo, chairman of Bavaria, in a statement. BI
CCE says Bravo! to dairy business
Coca-Cola Enterprises and Bravo! Foods International are negotiating a master distributor agreement as well as a share purchase plan that would give CCE a controlling interest in the company that produces Slammers and other dairy beverages. The agreement would give CCE exclusive distribution rights to Bravo! products throughout North America as well as Canada, Belgium, France, the United Kingdom, Luxembourg, Monaco and the Netherlands.
Of the potential deal, Bravo! Chief Executive Officer Roy Warren said, “A distribution and purchase agreement with one of the largest distributors in the country is a giant leap forward for Bravo! as we continue our momentum in retail outlets across the county and abroad. We look forward to a mutually beneficial relationship with CCE and substantial growth of Slammers worldwide as a result.” BI
Pernod Ricard, Fortune complete Allied deal
Pernod Ricard and Fortune Brands have completed the acquisition of Allied Domecq, making Paris-based Pernod Ricard the second-largest wine and spirits company in the world, and the largest outside of the United States.
As a result of the sale, Fortune Brands will pick up the Courvoisier, Canadian Club, Sauza Tequila and Makers Mark businesses, pending Federal Trade Commission approval. In the United States, Allied Domecq initially will operate as a wholly owned subsidiary to allow for the sale of the brands to Fortune.
“We are confident that Pernod Ricard USA will continue to be one of the most successful and fastest growing players in the U.S., with a superior brand portfolio as Pernod Ricard USA continues to move ahead in the U.S. market, where just five years ago the company was ranked No. 15,” said Michele Bord, president and chief executive officer of Pernod Ricard USA.
In a separate agreement, Pernod Ricard USA has sold the Seagram’s Vodka brand to Young’s Holding Inc. to allow it to focus on the new Stolichnaya brand as its sole U.S. vodka. The brand, which was introduced in 2002, had sales of 640,000 cases in 2004. BI
Cadbury to sell European beverage business?
Cadbury is said to be considering a sale of its European soft drink business, according to a report in London’s The Independent. The company reportedly has asked investment banker Goldman Sachs to find a buyer for the business, which also includes the Orangina and Oasis brands, although it chose to not comment on the speculation. BI
PepsiAmericas opens new facility
PepsiAmericas has opened a new regional distribution center in Pleasant Prairie, Wis. The 90,000-square-foot facility will provide sales and service for the company’s southeast Wisconsin and northeast Illinois businesses. It will integrate operations in Kenosha, Wis., and Gurnee, Ill., but is not expected to affect employees due to its close proximity to both former locations.
The center includes advanced truck loading equipment, a fleet maintenance shop, vending machine repair facility and administrative offices.
“Our current facilities are dated and don’t allow us sufficient space to operate,” said Region Manager John Ruffolo. “The new facility will maximize our day-to-day operations and allow us room to expand.” BI
Ste. Michelle adds Spring Valley business
Ste. Michelle Wine Estates, Woodinville, Wash., announced it will manage the Spring Valley Vineyard and acquire the brand from the Derby family of Walla Walla, Wash. The company says in its short time on the market, the Spring Valley brand has become a sort of Washington State “cult wine.” All of the wine is estate-bottled and quantities are limited. Only 900 cases of the Uriah 2001 and 1,200 cases of the Uriah 2000 Merlot blends were produced.
The lineup also includes Frederick, which is primarily Cabernet Sauvignon; Nina Lee, a Syrah; and Muleskinner, a Merlot.
“These are some of the most remarkable wines made anywhere in the world today,” said Ted Baseler, president and chief executive officer at Ste. Michelle. “We are familiar with the Spring Valley Vineyard since grapes we purchased from there consistently make the final blend of Northstar, our acclaimed Walla Walla Merlot.”
“We chose Ste. Michelle Wine Estates to take on the vineyards and wines because of their dedication to Washington wines,” said Dean Derby. “That is why we are pleased to lease the winery to them as well. They are committed to the highest-quality wines.” BI
Saint Arnold expands capacity
Following record sales in 2004 and the first half of 2005, Saint Arnold Brewing Co., Houston, announced plans to add equipment and personnel by a third. The company says the investment will include a new bright beer tank, extra refrigeration and a new pair of fermenters, each twice the size of the facility’s current fermenters. The company also has doubled its staff to keep up with demand.
“Craft beer’s popularity is continuing to grow throughout Texas,” said Saint Arnold Founder Brock Wagner. “This investment will increase capacity to more than 300 barrels per week.”
Last year, the company grew sales 27 percent, and Wagner predicts production will reach 12,000 31-gallon barrels in 2005, which is full capacity for the brewery. The new equipment will increase capacity to 16,000 barrels per year.  BI
go figure
1.5
Billions of dollars in sales last year through the Pennsylvania Liquor Control Board, an increase of 7.6 percent. This is the second year of more than 7 percent sales growth, reports The Philadelphia Inquirer.
8
Percent of Americans who regularly drink green tea, according to a study by the American Institute for Cancer Research that was released at the International Research Conference on Food, Nutrition and Cancer. That makes green tea the least popular category of non-alcohol beverage in the United States.
10
Percent of dining parties with children under age 13 at tableservice restaurants, according to the National Restaurant Association’s Tableservice Restaurant Trends 2005. More than two-thirds of operators say that is consistent with previous years, but a quarter of operators say the number of family parties has increased. Reflecting the change, two of five operators say they have changed food and beverage offerings for children.
15.6
Billions of dollars earned by the sports nutrition and weight loss industry in 2004, an increase of 14 percent, according to Nutrition Business Journal. Annual gains of 5 to 7 percent are expected for the next eight years for a total of $22.8 billion in 2013.
16
Percent decline in sales of traditional British teabag in England during the past two years, according to Mintel International. Loose tea sales are down 9 percent as younger people opt for energy drinks, juice, water, herbal teas and fruity hot drinks, reports The Contra Costa Times.

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