The List Top 100 Beverage Companies
by Jamie Popp
1.The Coca-Cola Co.
From job cuts throughout North America in the beginning of the year to anti-American sentiment
bringing down sales across the globe, The Coca-Cola Co. experienced a
turbulent 2003. In the United States, the loss of 1,000 jobs and
reorganization of the company’s bottle/can, fountain and Minute Maid
product divisions were only part of the challenges Coca-Cola faced in 2003.
The company also experienced a number of organizational changes, naming
Steve Heyer president and chief operating officer, and Daniel Palumbo chief
marketing officer, and later, senior vice president in 2003. And Chairman
Doug Daft’s imminent retirement from the company this year will lead
to a takeover by Coke veteran E. Neville Isdell.
Although 2003 wasn’t as profitable as the
company would have hoped, 2004 started with the company reporting 2 percent
gains in sales compared with results in 2002 due to Vanilla Coke, Diet
Vanilla Coke and Diet Coke as well as continued success of the Fridge Pack,
according to the company.
Year-end 2003 figures show that Coca-Cola’s
overall sales slipped 4 percent, with positive results of 2.5 percent
reported in the drug category. While Coke with Lemon took a hit in 2003,
Coke’s cherry and vanilla renditions picked up some of the slack, and
the introduction of Sprite Remix gave the company and the category a boost
in 2003. It also contributed to Sprite’s trademark volume increase of
4 percent, according to Coca-Cola. Diet Coke with Lime, introduced early
this year, has given the brand more attention, while its C2, a mid-calorie
rival to Pepsi Edge, is expected to attract health-conscious consumers with
its unique taste and fewer calories.
It was a turbulent year for Nestlé and its
beverage business — currency fluctuations, lawsuits, and the promise of a new competitor in the European bottled water
market where it’s a major player, factored into creating a
challenging environment for the beverage industry giant in 2003. Despite
this and despite a sales slump in the first quarter, Nestlé posted a
sales increase of 6.3 percent for the year and met its own growth targets.
Sales were buoyed by an extraordinary heat wave in
Europe that spiked bottled water consumption, most notably in France, Italy
and the United Kingdom. Nestlé Waters remained a stalwart
contributor to growth for the company, maintaining growth for the third
year in a row.
Even though Nestlé’s water business grew
in North America, it was plagued by a couple of lawsuits. One, a class
action suit, questioned the integrity of Nestlé’s Poland
Spring brand of bottled water. The other claimed that Nestlé’s
Ice Mountain Spring Water Co. was causing environmental problems in
Michigan. Nestlé lost both suits, but is appealing the latter and
has been granted a stay of execution that will keep its Ice Mountain
Nestlé strengthened its position in the home and
office delivery segment in Europe and Russia with the acquisition of the
Powwow Co., the leading player in Europe, and Clear Water, which serves the
greater Moscow area. Meanwhile, growth in the HOD segment in North America
was flat. Expansion of Nestlé branded bottled waters continued with
solid growth rates.
Healthy ingredients took center stage in new products
— Nestlé Water launched in Germany with ginseng and herbs, and
the chocolate malt beverage, Milo, was fortified with the new branded
ingredient Actigen-E. Growth in soluble coffee and chocolate/malt beverages
continued in emerging markets.
Leading the charge in the spirits category, Diageo came
out of a challenging year on top. Setting goals to fully integrate Seagram
brands into its portfolio, improve route to market and enhance brand
positioning, the company made progress in 2003. In addition to increasing
its net sales by 4 percent in the premium drinks category, it fully
integrated Seagram brands into the company portfolio. Popular brands in the
ready-to-drink category include Smirnoff Ice, Smirnoff Black Ice, Smirnoff
Triple Black, and more recently, Smirnoff Twisted V. Other company brands
include Guinness, Jose Cuervo, Captain Morgan and Sterling Vineyards wines.
The acquisition of Seagram also has given Diageo a new sales channel in
South Korea and in the United States. Affected by economic challenges in
Latin America, the company expects its North American, Great Britain and
Spanish business to bring it more sustained growth in the future. Beginning
in July, the company will restructure its joint venture agreement with Moet
Hennessy, the wine and spirits division of LVMH. As a result of the
changes, Schieffelin & Somerset will be dedicated to Moet
Hennessy’s Marnier Lapostolle and Rufino brands, while Diageo brands
currently managed by Schieffelin & Somerset will be managed by Diageo
North America. Other company news includes the introduction of low-carb
wine and zero-carb content advertising for its Smirnoff vodka, Crown Royal,
Johnnie Walker and Tanqueray brands. Additionally, the company’s
North American office is going to move its corporate headquarters to
Norwalk, Conn., in early 2005.
The world's largest brewer makes more than 30 beers,
including Bud Light, Michelob and Busch. Its focus is on the premium and
specialty beer sector, resulting in ownership of malt and specialty brews,
investment in many small breweries and licensing agreements with
international brewers to bring new brands to U.S. consumers. In addition to
brewing Japanese Kirin Brewery’s beers in the United States, its
specialty brews include Tequiza, “Doc’s” Hard Lemon and
Redhook products. Although Anheuser Busch sells its products in more than
80 countries, its presence abroad is minimal compared with other
international brewers. It does own breweries in the United Kingdom and
China and claims approximately 50 percent of Grupo Modelo in Mexico. A-B
also recently beat out SABMiller in a bid to acquire the Harbin Brewery
Group. In the end, SABMiller sold its 29 percent stake in Harbin Brewery
Group to Anheuser-Busch for $1.64 billion. Harbin Brewery’s 13
breweries in Northeastern China had net assets of $1.06 billion in 2003.
Anheuser-Busch maintained top honors as the No. 1
brewer in the United States in 2003. While the introduction of Michelob
Ultra set off a chain of followers that ultimately gave the U.S. beer
market an innovation and sales boost in 2003, the brand had a cannibalistic
effect on core portfolio player Bud Light. In 2003, the company also
launched Bacardi Silver Raz, the raspberry-flavored sibling of the Bacardi
Silver O3 orange-flavored malternative, and World Select,
Anheuser-Busch’s pilsner beer. In addition to implementing
cost-controlling measures by “removing barriers between brewers,
wholesalers and retailers,” Anheuser Busch’s “Brewery of
the Future” initiative is expected to help the company produce more
beer using fewer resources in 2004.
The struggling beer market posed interesting challenges
for Heineken not only in the United States, but across the globe. Although
the brewer found the American market to be disappointing, it managed to
increase its market share, introduce new packaging and expand its
distribution reach. On the international front, its decision to acquire
BBAG was solidified during 2003 and completely integrated into the Heineken
fold. Operating under the name Brau Union, the combination of companies
makes it the largest brewer in Central Europe. Additionally, the
acquisition further strengthens Heineken’s strategy to advance
business development in countries such as China, the world’s biggest
beer market, where the company currently is
brewing Heineken beer as part of its merger with Fraser & Neave to
become Heineken Asia Pacific Breweries China.
But that’s only the beginning for the global
beer company’s interest in Asia. Early this year, Heineken acquired
an interest in Guangdong Brewery Holdings in China, extended brewery
operations in Thailand to keep up with demand, and opened a second brewery
in Vietnam near Hanoi to add capacity to the brewery near Ho Chi Minh City.
More recently, Heineken’s joint venture with Lion Nathan Australia,
which has been named Heineken Lion Nathan, will begin sales and
distribution of Heineken products in July with potential to brew Heineken
and Heineken brand products in Australia.
In addition to driving volume growth in the premium
beer segment throughout the world, the company expects to raise prices in
several markets this year while cutting costs wherever possible. Like many
global players, Heineken will continue to see its earnings affected by
continuing changes in currency. However it plans to focus on its brand
portfolio and distribution structure to overcome these challenges in the
future. Leading the portfolio is Heineken brand beer, accounting for a 4.3
percent increase in global sales. Amstel beer volume sales also increased
during 2003, with Amstel Light sales in the United States contributing to
the gains. Europe proved to be a strong market for Heineken due to warm
temperatures throughout the summer and improved sales mix.
The Pepsi-Cola Co. had a bustling 2003 filled with
product launches and organizational changes. Beginning the summer selling
season with limited-edition Mountain Dew LiveWire and launching Vanilla
Pepsi at the end of the summer, the Purchase, N.Y.-based company recorded
positive sales results in all channels, except for mass merchandise,
according to IRI and ACNielsen.
Introduced in August, Pepsi Vanilla and Diet Pepsi
Vanilla had Smith Barney analysts predicting that consumption in the
vanilla cola category would continue to expand based on its 2003
performance. And the most recent decision to launch Pepsi Edge, a
mid-calorie cola, will have analysts watching this category closely in
In other company news, Pepsi decided to capitalize on
the success of tea during 2003 and entered into a joint agreement with
Unilever to market and distribute Lipton ready-to-drink teas. Pepsi Lipton
International builds on the partnership formed early in the 1990s as a way
to enhance portfolio strength for the two companies. Additionally, its
purchase of The Quaker Oats Co. and its Gatorade brand gave the company a
leading role in the noncarbonated beverage category with Gatorade being
added to the Tropicana, All Sport, and Lipton tea brands. This year, the
company has reportedly been in talks with juice company Ocean Spray to
create a second beverage joint venture. Toward the end of 2003, PepsiCo
announced it was dividing its North American operations into three core
businesses. It proceeded to cut 750 jobs while consolidating into
Pepsi-Cola, Gatorade and juice divisions to streamline manufacturing and
supply chain operations. The creation of five subdivisions in its North
American operations is expected to result in more job cuts in 2004.
Interbrew had a strong 2003 in the global
beverage arena. Its net sales of beverages increased 0.7 percent last year
over 2002, according to the company’s annual report. Additionally,
Chief Executive Officer John Brock claimed in a recent release that the
company’s focus on operational performance resulted in organic volume
growth three times the industry average. Other 2003 highlights for the
company included strong global performance by Stella Artois and
Beck’s, and share gains in markets such as Western, Central and
Eastern Europe. Beck’s products faired particularly well in Germany,
where the brand grew by more than 11 percent. And Stella Artois took the
United Kingdom premium segment by storm, accounting for a more than 12
percent volume increase. While the Americas produced weak numbers for
Interbrew brands due to a slowing growth rate in sales of imports in the
United States and a brewery strike in Canada, the company managed to
acquire Bass Ale, and it introduced a new marketing and management
structure for Beck’s in the United States. Central and Eastern Europe
accounted for more than 20 percent of the company’s organic volume
growth as a result of cost management and turnaround of business in
countries such as Russia, Bulgaria and Romania.
Interbrew acquired a 70 percent stake in the K.K.
Group located in the Yangtze delta in November 2002 and completed the
transaction in April, which added 2.3 million hectoliters of production and
gave the company larger representation in China’s Southeastern
coastal region. Interbrew more recently closed an agreement with the
Malaysian Lion Group, acquiring a controlling interest in Lion
Group’s beer business in China. The company also took a majority
stake in Apatinska Pivara Apatin, the largest brewer in Serbia, and began
the acquisition process with Gabriel Sedimayr Spaten-Franziskaner Brau KgaA
(Spaten Brewery) in Germany, which is expected to close this year. In other
acquisition activity, the company has picked Brazilian brewer AmBev as its
next conquest to become the world’s largest brewer, a merger still to
Suntory International Corp.
Suntory’s operations in the United States
include importation of wine, beer, spirits and other non-alcoholic
beverages from Japan as well as a 65 percent investment in Pepsi Bottling
Ventures and a new joint venture with Danone — DS Waters of America.
DS Waters combines the operations of the Suntory Water
Group and Danone’s U.S. home office delivery business. Each company
holds a 50 percent stake in the venture that is said to be the largest HOD
operation in the world with annual revenues estimated in excess of $800
million. Brands marketed by the company include Crystal Springs, Sparkletts
On an international basis, Suntory Ltd. reported that
its group net profit rose 13.3 percent in 2003. Despite the profit growth,
economic woes, a tax hike on low-malt beverage products and a cooler than
normal summer in Japan depressed overall sales. Sales of beer and
low-alcohol malt beverages were down 6 percent and sales of whisky, wine
and other liquors were down as well. Relatively high unemployment and
continued deflation pushed consumers away from more pricey drinks toward
local brews and FABs.
During the year, Suntory established a subsidiary in
Taiwan where a distributor previously represented it, and it announced
plans to build a new factory in China. The plant in Shanghai is expected to
be operational in 2005, and Suntory will hold an 80 percent stake in the
New products include a white peach flavor of Calori
— a reduced-calorie, reduced-sugar version of the company’s
successful CHU-HI beverage. Another healthy addition to the beverage
line-up is Catechin-Shiki, a green tea.
SABMiller’s transformation from an African
brewer to an international conglomerate is progressing, albeit slowly, as
it tries to turnaround Miller Brewing’s U.S. business. A management
shift at the beginning of the year brought Norman Adami to the United
States as president and chief executive of Miller Brewing. The SAB
executive replaced John Bowlin, who came on board with the acquisition from
Kraft/Philip Morris. A restructuring was announced mid-year that reduced
corporate staff by 200.
While Miller’s year-long commitment to
reinvigorate its Miller Lite Beer in the United States with a new logo and
advertising saw some success, its growth was
offset with weakness elsewhere in the domestic beer market. The company
claimed that U.S. beer volumes were affected by low consumer confidence, a
lackluster economy and world events. It was frank in its annual report,
saying, “certain of Miller’s core brands have been losing
market share for a number of years. However the rate of decline increased
over the past year, and we believe this to be due to a combination of
factors including loss of management focus on core brands following the
introduction of four FMBs and some understandable disruption during the
transaction and subsequent integration into SABMiller “
Several of the aforementioned FMBs were scaled back
early in the year and eventually dropped. The sole survivor is Skyy Blue.
According to the company, Skyy Blue is the fourth-largest spirits-branded
FMB in the United States. Meanwhile, the Miller brand was launched in
Central and Eastern Europe as well as into South Africa. SABMiller’s
launch of Pilsner Urquell and Miller Genuine Draft into South Africa
replaced Heineken as the company’s entry in the premium beer sector.
SAB had to sever its ties with Heineken when it acquired Miller Brewing.
The SABMiller group is taking a long view on its
integration of Miller, saying last spring that rebuilding the brands and
repositioning would take 18 months. During this time, the company will
strengthen sales and distribution based on experience in other parts of
SABMiller. The company said it expects that Miller’s profitability
will be affected over the next two to three years by the current volume
declines, adverse mix effects and reorganization and restructuring.
Allied Domecq reported 6 percent volume and value
growth for 2003. The world’s second-largest wine and spirits group
said its growth came from increasing the gross margin of its spirits and
wine business, notably through its core brands and premium wine. The North
American market led the growth in spirits and wine, followed by a recovery
in the Spanish market along with strong wine sales there. These gains were
partially offset by declines in Asia Pacific and Latin America.
The company divides its portfolio into four groups:
core brands, local market leaders, premium wine and other spirits and wine
brands. A 10 percent increase in advertising and promotion pushed growth in
core brands. Global brand’s such as Ballantine’s, Beefeater,
Canadian Club, Malibu, Kahlua and Sauza make up the core brands for Allied.
On the management front, Allied Domecq named Jim
Clerkin, president of its North American division. Clerkin replaces Tom
Wilen as president and is the third chief executive for the division in as
Going after the coveted 21- to 29-year-old market,
Allied introduced Kuya Fusion Rum under the Kahlua trademark into the U S.
market. The rum has spices and citrus flavor. Continuing to capitalize on
the growth of flavored vodka, Allied launched two new flavors of
Stolichnaya vodka, Stoli Cranberi and Stoli Citros. Another flavorful
extension is Beefeater Wet, a pear-flavored gin. The company also launched
two ready-to-drink, pre-mixed cocktails under the Sauza label —
Premium Original Margaritas and Premium Strawberry Margaritas.
In other product news in the United States, Allied
Domecq gave a license to American Beverage Corp. to produce a line of
non-alcoholic cocktail mixers using its brand names. Initial offerings
include Kahlua Mudslide, Sauza Tequila Traditional Margarita and Malibu Rum
Pina Colada. The company also extended nationally its initial launch of
Hiram Walker Fruja flavored liqueur.
Premium wine brands volume declined but net turnover
increased, reflecting a strong price/mix improvement. The Clos du Bois
brand is the primary growth driver in the United States with volumes up 18
percent. Clos du Bois launched a wine named after Jerry Garcia of Grateful
Dead fame, and featuring the singer’s artwork. Its first release was
sold out. Another strong performer was Mumm Cuvee Napa champagne with
volumes up 16 percent.
|Top bottlers and distributors
|The Pepsi-Cola Bottling
|Southern Wine & Spirits
||Rolling Meadows, Ill.
|Dr Pepper/Seven Up Bottling
|National Distributing Co.
|Glazer's Wholesale Drug
|Young's Market Co.
|Coca-Cola Bottling Co.
|National Wine & Spirits
|Swire Pacific Holdings
|Buffalo Rock Co.
||New york, n.y.
|Georgia Crown Distributing
|Peerless Importers Inc.
|St. Paul, Minn.
** Coca-Cola FEMSA, S.A. de C.V. purchased Panamerican Beverages Inc.
in May 2003 for $3.6 billion
***The Pepsi-Cola Bottling Group acquired Pepsi Gemex in Dec 2002. Sales
in millions U.S. $