Beverage Industry

Mondavi shifts focus to 'lifestyle' brands

October 1, 2004

Mondavi shifts focus to ‘lifestyle’ brands

The Robert Mondavi Corp. recently announced plans to focus its business entirely on premium and super-premium “lifestyle” brands. The company will divest itself of its luxury wines, including Robert Mondavi Winery and vineyards; its 50 percent interest in Opus One, Ornellaia, Luce della Vite, and Vina Sena; the Byron Winery and Vineyards and the Arrowood Winery and Vineyards. Primary brands for the company will now be Woodbridge and Robert Mondavi Private Selection brands. It also plans to introduce new products such as Papio.
“We believe that a lifestyle-focused company creates a new and unique business model with compelling future earnings growth, strong cash-flow generating capabilities, and relatively high financial returns, which provides an excellent profile for the investing public,” said Gregory M. Evans, president and chief executive officer at Mondavi, in a statement.
“By contrast, because our luxury wine brands and assets are fundamentally agricultural in nature, with long-term investment horizons and lower financial returns over the next several years, they are better suited for a private entity that has different investment criteria.”
Evans says the company expects to see financial returns in excess of 12 percent within five years. The restructuring, which also will eliminate the controlling votes held by the Mondavi family, hasn’t been without controversy. Michael Mondavi was asked to resign following quotes in the press that were attributed to him. In a statement, the board said it believed Mondavi’s comments “violated the confidentiality of board discussions and undermined the board’s efforts to conduct a fair process for the disposition of company assets which maximizes shareholder value.” BILabatt, Becks form InBev USA
Labatt USA and Beck’s North America have combined operations to form InBev USA, with a unified operation for distribution in the United States. A wholly owned subsidiary of InBev, Leuven, Begium, the company will be completely reorganized to focus on high-profit international brands such as Stella Artois, Beck’s and Bass. InBev USA plans to triple its spending behind Stella Artois in 2005 to support full national distribution, increase spending on Beck’s by more than 50 percent during the next three years, and continue its investment in Bass.     Simon Thorpe, president and chief executive officer of Labatt USA since 2003, will hold the same title at InBev USA. Tom Cardella, president and chief executive officer at Beck’s North America, will lead the new company’s sales organization as vice president of sales.     “The new company has been built for growth from the ground up,” Thorpe said in a statement. “Our organizational structure has been simplified to ensure complete focus on delivering the world’s best premium beer, and our growth objectives are backed up by unprecedented investment.”     InBev USA also is considering introducing Brazil’s Brahma to the United States. “We believe that Brahma has the potential to be the next great crossover brand for American beer drinkers,”said Thorpe. BIOzarka plant gets green award
Nestlé Waters North America has earned a Silver Leadership in Energy and Environmental Design (LEED) rating from the U.S. Green Building Council for its Ozarka bottled water plant in Hawkins, Texas.      Some of the environmental considerations of the plant include: using construction materials that contain recycled content, recycling of construction site material, and the use of native plants that require no irrigation.      The building was designed by The Haskell Co., which also has submitted a Nestlé Waters North America plant in Madison, Fla., for LEED certification. BINBWA gathers in San Diego
The National Beer Wholesalers Association held its 67th Annual Convention in San Diego last month, celebrating record membership revenues and lobbying donations, but reminding beer wholesalers of the challenges they face from direct shipping  and “neo-Prohibitionist” campaigns.     “Some say our industry faces serious challenges,” said association President David Rehr during the convention’s general session. “I prefer to characterize them as opportunities. Opportunities to ensure the continuing viability of our distribution system; to make beer the healthy beverage of choice for even more Americans, both on and off premise; to promote responsible consumption of alcohol among adults and discourage illegal, underage drinking. And, yes, to tell our story to people across this nation to be certain that the distortions and misrepresentations of the neo-Prohibitionists are recognized for what they are.”     The issue of direct shipping takes center stage for wholesalers this year, as the Supreme Court plans to review decisions in Michigan and New York. NBWA has filed an Amicus Brief with the court arguing against the practice.The efforts of retailers such as Costco to bypass wholesalers and purchase products directly from brewers also is a top concern to the association.
The conference also addressed changing consumer preferences. Incoming Chairman Jeff Vukelic told attendees, “We all know that for various reasons, beer did not have a banner year in 2003. Yes, this year has been better, but we can’t ignore an obvious fact: spirits continue to gain share and we must ask ourselves why and what we can do to reverse this troubling trend.”
NBWA will soon launch an educational campaign with restaurant servers to cover specific varieties of beer, how to pair beer with food, and what types of beer to recommend to diners. “By promoting beer generically — not the brand — NBWA strives to put America’s beverage in the forefront of adults’ minds when they choose what to consume with their meal,” Vukelic said.
NBWA also will be creating its first health brochure to advise the public of the potential health benefits of moderate beer con-sumption. BIBrewers groups merge
The Association of Brewers (AOB), Boulder, Colo., and the Brewers Association of America (BAA), Durham, N.C., have agreed to combine their groups into a new organization to promote and protect the interests of small brewers in the United States. The new Brewers Association will be based in Boulder and is expected to begin functioning in January.     “We believe that a combined organization will result in a stronger voice for small brewers in the media, in the nation’s capital and in state legislatures,” said Gary Fish, chairman of the BAA and president of Des-chutes Brewery, Bend, Ore., in a statement.     “We are part of a government-regulated industry, and we need to marshal all the support we can to represent the interests of small brewers. The goals of both organizations are to promote and protect the industry. Together, we will do a much better job.”     In other association news, the Association of Brewers recently hosted the Great American Beer Festival, Sept. 30-Oct. 2 in Denver, Colo. Almost 400 brewers participated in 67 categories during the competition. In all, 201 medals were awarded. BIHonickman receives lifetime achievement honor
P  epsi-Cola North America (PCNA) recently bestowed a Lifetime Achievement Award on Harold Honickman, longtime New York-area Pepsi bottler and chairman of Pepsi-Cola and National Brand Beverages. The award was presented by Donald M. Kendall, co-founder and chairman emeritus of PepsiCo, who described Honickman as “an individual of extraordinary passion and achievement.”      The award recognizes the bottler’s career, community involvement and spirit of innovation, according to PCNA.      This year, Honickman’s company celebrates its 20th anniversary bottling Pepsi products for the New York metro area. He also is responsible for Pepsi bottling and distribution operations in Westchester County, New York and Pennsauken, N.J. Pepsi-Cola and National Brand Beverages is one of the largest privately owned bottling and distribution organizations in the United States. BI
Great American BeerFestival Winners:
Large Brewing Company of the Year — Miller Brewing Co., Milwaukee, Wis.
Large Brewing Company Brewmaster of the Year — David S. Ryder
Mid-size Brewing Company of the Year — Widmer Brothers Brewing, Portland, Ore.
Mid-size Brewing Company Brewmaster of the Year — Kurt Widmer
Small Brewing Company of the Year — Sprecher Brewing Co., Glendale, Wis.
Small Brewing Company Brewmaster of the Year — Craig Burge
Large Brewpub of the Year — Elysian Brewery & Public House, Seattle, Wash.
Large Brewpub Brewmaster of the Year — Dick Cantwell Small Brewpub of the Year — Pizza Port Solana Beach, Solana Beach, Calif.
Small Brewpub Brewmaster of the Year — Tomme Arthur

New Product Introductions by Category
  SKUS YTD SKUS YTD PERCENT
CATEGORY 10/04/04 10/04/03 CHANGE
Alcohol Beverages 650 637 2.0%
Coffee & Tea 842 679 24.0%
Dairy Drinks & Alternatives, Health Drinks 235 239 -1.7%
Fruit & Vegetable Drinks 475 493 -3.7%
Other Drinks 272 267 1.9%
Soft Drinks, Sports Drinks & Bottled Water 440 369 19.2%
Total Beverages 2914 2684 8.6%
Source: Productscan Online (productscan.com)