The TOP 100 Beverage Companies
By JENNIFER KOROLISHIN
Barring a massive merger,
the major beverage companies that occupy the Top 10 slots on Beverage Industry’s annual
Top 100 list tend to hold their positions year after year. The same is true
for 2006. But while Coca-Cola Co. and Nestlé SA retained the No. 1
and No. 2 spots, respectively, the Top 10 saw some movement.
InBev unseated Diageo by coming in third; Diageo,
which placed third on the 2005 list, moved to seventh place in 2006.
Anheuser-Busch repeated last year’s appearance in the No. 4 spot, but
its closest competitor, SABMiller, was bumped down to the sixth position by
import beer leader Heineken NV. Heineken’s fifth-place finish was
thanks to tremendous gains it experienced in 2006 due to the successful
introduction of its Heineken Premium Light extension.
status as the leading U.S. domestic brewery, InBev’s strong
performance during the last two years, and the two companies’ working
relationship has many industry watchers speculating on a possible merger in
the near future. The two already have worked together on InBev’s sale
of Rolling Rock to Anheuser-Busch, and an agreement for Anheuser-Busch to
distribute a number of InBev’s import brands.
SABMiller, Diageo, PepsiCo, Pernod-Ricard and
Starbucks round out the Top 10. All of those beverage-makers appeared in
the 2005 Top 10, as well, with the exception of Starbucks. The
Seattle-based coffee giant experienced a sharp sales increase in 2006,
jumping from nearly $6.4 billion in 2005 to almost $7.8 billion in 2006.
That helped vault Starbucks over Kraft Foods, which moved down a spot to
No. 11 on the Top 100 list.
Top 100 by categories
continue to churn out new and innovative beverages, no single category can
claim industry dominance. Beer and bottled water are the top two beverages
produced by companies on the Top 100 list, with 23 different companies
producing each. Spirits and juice aren’t far behind, with 22
beverage-makers manufacturing products in each of those categories.
Nineteen of the Top 100 companies produce wine. Interestingly, soft drinks,
a category that’s been on the decline in recent years, and the
up-and-coming alternative beverage category are both offered by 18
companies. However, a great deal of crossover occurs as many beverage
companies that produce soft drinks also manufacture bottled water,
alternative beverages, juices and teas.
Number of Top 100 companies that produce:
Growing outside of CSDs
Soft drink makers are
positioning themselves for a future that lies beyond the core
category’s flat and declining sales. The CSD category’s two
major players, The Coca-Cola Co. (No. 1 on the Top 100) and PepsiCo (No. 8
on the Top 100), are expanding their portfolios by acquiring smaller,
up-and-coming alternative beverage companies — a trend that’s
re-igniting the rivalry between the soft drink giants.
Coca-Cola made the latest move with its agreement to
acquire No. 38 on the Top 100, Glacéau, the maker of the
Vitaminwater, for $4.1 billion. The Glacéau deal comes on the heels
of Coca-Cola’s acquisition of Fuze Beverage (No. 62 on the Top 100)
earlier this year.
In addition to buying smaller companies, Coca-Cola
also is making distribution deals to help the company bolster its image as
a provider of healthier products. It just announced an agreement with No.
40 on the Top 100, Campbell Soup Co., to distribute V8 and Campbell’s
PepsiCo made two non-CSD
acquisitions in 2006. It purchased Izze Beverage Co. (No. 92) in September
2006, a maker of all-natural, sparkling fruit juices. In November, PepsiCo
followed that move with the acquisition of No. 56, Naked Juice Co., a
leader in the superpremium juice category. PepsiCo also is involved in
distribution deals; it renewed an alliance with
Ocean Spray (No. 28) last year to market, bottle and distribute
single-serve cranberry juice products across a number of retail channels.
Crafts, imports provide boost
The rise in import and craft beers is a bright spot
amid overall beer category sales declines of the past few years, with each
surging as much as 10 percent in 2005 and 2006.
As a result, mainstream brewers, including industry
leaders Anheuser-Busch (No. 4), SAB Miller (No. 6) and Molson Coors (No.
12), are staking claims in these hot categories. All are either renewing
their push behind existing import and craft brands, launching new beers or
acquiring smaller brands and/or U.S. distribution rights for import beers.
Anheuser-Busch led the way in 2006, becoming the
exclusive U.S. importer of several of InBev’s (No. 3) premium
European imports, including Stella Artois, Beck’s and Bass Pale Ale
— a move that came on the heels of similar deals with Holland’s
Grolsch brand and Singapore’s Tiger Beer. Anheuser-Busch also owns a
50 percent stake in No. 16, Grupo Modelo, the maker of Corona.
SAB Miller’s 2006 import efforts included a
merger with Grupo Empresarial Bavaria, the second largest brewer in South
America. In the United States, SAB’s Miller Brewing Co. placed
renewed focus on both its Peroni and Pilsner Urquel imports, and the
Leinenkugel’s craft brand. Miller invested $50 million in a global
brand campaign for Peroni, a premium Italian beer. Miller’s
Leinenkugel’s push included expanded distribution for the craft
brand, which is primarily sold in the Upper Midwest, but can now be found
in 42 states.
A blockbuster performance
The Heineken NV (No. 5 on the Top 100) family of beer
brands welcomed a new member in 2006, Heineken Premium Light, and it
already has become a star performer. Last year, the Heineken brand grew
11.8 percent, its best annual growth figure since the 1980s, far
exceeding the company’s forecast. That was driven largely by its U.S.
business, where Heineken Premium Light made the biggest impact and helped
lift sales of Heineken Lager, as well.
Sustainability for the future
Earlier this year, PepsiCo, No. 8 on the Top 100, made
“green” history with a landmark purchase of renewable energy
certificates (RECs), which matches the purchased electricity used by all
PepsiCo U.S.-based manufacturing facilities, headquarters, distribution
centers and regional offices. Green power is produced from renewable
resources, such as solar or wind power, and purchasing RECs helps drive the
development of additional renewable energy capacity nationwide.
Also showing industry strides in conservation, The
Coca-Cola Co., No. 1 on the Top 100, pledged to lead its global beverage
operations, including those of its franchise bottlers, to replace the water
it uses in its beverages and its production. Coca-Cola will focus its
actions in three core areas: reducing the water used to produce its
beverages, recycling water used for beverage manufacturing processes, and
replenishing water in communities and nature.
New name, new outlook
In 2006, Jim Beam Brands Worldwide Inc. changed its
name to Beam Global Spirits & Wine
Inc., No. 22 on the Top 100. The move is more than just semantics
— it’s a new identity. Last year, the Deerfield, Ill.-based
spirits company finalized its acquisition of a number of former Allied
The acquisition transformed the company into the
world’s fourth-largest spirits firm, up from seventh position in
global rankings; doubled its revenue from $1.2 billion to $2.5 billion;
tripled its number of top-100 premium spirits worldwide; and shifted sales
from being predominantly U.S.-based to a more global focus. Its
distribution is now split 50/50 between the United States and the rest of the world.
One of the most buzzed about stories in the spirits
industry is the impending sale of Sweden’s Vin & Spirit
(V&S), the maker of Absolut vodka and spirits brands including Plymouth
Gin and Cruzan Rum. No. 26 on the Top 100, V&S is wholly owned by the
Swedish government, which plans to sell it and several other state-owned
firms as part of a privatization push.
The Swedish parliament is expected to vote on the
V&S sale this month, and while details of how the sale will proceed are
still undecided, a recent survey indicated that 57 percent of Swedes would
be interested in buying shares of V&S if the Swedish government decided
to list it on the stock market.
However, private equity firms also are in the mix, as
are a number of beverage industry competitors. While Pernod Ricard (No. 9)
and Bacardi (No. 18) have been mentioned as possible buyers, published
reports indicate that Fortune Brands, the parent company of Beam Global, is
a front-runner in the V&S acquisition race. Fortune and V&S operate
together in the United States under a partnership dating back to 2001.
Industry analysts speculate that V&S could sell for as much as $6
Going (algae) green
With a green facility, an on-staff sustainability
specialist and processes designed to conserve water and other natural
resources, environmentally friendly practices are a way of life for No. 65
on the Top 100, Fort Collins, Colo.-based New Belgium Brewing Co. In fact,
in 1998, it became the country’s first brewery to subscribe to wind
energy. Employees not only voted for wind energy, they dipped into their
bonus pool to finance the conversion.
Now, New Belgium is taking green practices to the next
level. The brewery is partnering with a neighboring energy start-up, Solix
Biofuels Inc., which is researching ways to make biodiesel fuel from algae:
Solix believes it can use algae to produce oil, and is studying how to do
so on a large and fast enough scale to be commercially viable. New Belgium
is providing the project’s CO2, which is a byproduct of fermentation
and boiler operations; it produces about 5,000 metric tons of CO2 annually,
according to a report in the Rocky Mountain
Jonesing for football
Next season, Seattle
Seahawks fans who work up a thirst cheering on
the team will be reaching for a Jones Soda. No. 81 on the Top 100, the
small Seattle-based company acquired the soft-drink rights at Qwest Field,
marking the first time a National Football League team has entered into
such a deal with a beverage company other than Coca-Cola or Pepsi.
According to the Seattle
Post-Intelligencer, one of the keys to the deal
was Jones Soda’s ability to place individual photos on its labels. It
plans to put player and fan photos on the plastic bottles sold at Seahawks
games and on glass bottles sold in Seattle-area supermarkets, creating a
“trading card” marketing vehicle for both Jones and the
Jones will sell fountain drinks and soda in plastic
bottles at the stadium, as well as providing canned soft drinks in its
luxury suites, as part of its five-year deal with the team. While the
company is known for its offbeat flavors – such as Turkey & Gravy
soda, which is released annually around Thanksgiving – it will offer
at least six flavors at Qwest Field, including
newly developed cola and diet cola flavors.