Shop Talk
Retailers, consumers and prices
World Cup soccer hits home-run in U.S. bars
From our correspondent Nivedita Bhattacharjee:
Surprised at the roar from the bar around the corner on an otherwise normal work day in New York City? Don’t be. It’s the FIFA World Cup, and that pub’s full of people rooting for team USA.
As a record number of U.S. viewers tune in to experience the 90-minute soccer matches, bars and taverns from New York to San Francisco are doing all that they can to keep the cheers loud and the beers flowing. And even while at work, some Americans are letting daily tasks idle while they keep score.
Anthony was watching Friday’s nail-biter match between the United States and Slovenia at the Irish Rogue Bar with a friend who had taken a break from work.
“Everyone’s watching it in the city … It’s cool because it’s only once every four years, and unlike the Olympics, there’s only one single country that wins,” he said. “It’s definitely catching … it’s 11 o’clock in the morning and we’re sitting at a bar for the match.”
While soccer is still a distant cousin to U.S. football, baseball and basketball in terms of total viewership, it’s clear that fans’ affection for the game is building. Especially when their team starts winning.
“When they won the first game we had a lot more people in. I noticed today too, there are more people coming in. Last World Cup, I don’t think there were as many people interested, and I think that’s because of how the (US) team is playing,” Ariel Williams, manager of Dave’s Tavern said, struggling to be heard over banging tables and roaring cheer.
Check Out Line: Clink, clink! Wine consumption to rise
Check out all the wine drinking going on.
Two-thirds (67 percent) of Americans surveyed said they partake in wine on holidays and special occasions while at home, while another 58 percent drink wine at home with dinner on an ordinary night, according to consumer trend tracker Mintel.
The wine market has grown 20 percent from 2004 through 2009 despite the recession, but at the peak of the slowdown in 2008 it declined 3.2 percent, Mintel said. With consumers slowly feeling better about the economy, the firm expects the wine market to increase by 2.1 percent this year.
“The future of the wine market looks bright, at least for moderately priced segments,” Mintel senior food and drink analyst Sarah Theodore said in a statement. “Value wines have helped consumers rethink their perceptions about wine.”
And how does wine stack up vs beer?
Mintel said so far this year nearly half (47 percent) of survey respondents say they drink beer compared to 35 percent who drink imported and domestic wines. Champagne and sparkling wines are next at 17 percent, followed by port, sherry and dessert wines at 7 percent.
Certainly wine was on the minds of analysts and executives on Hormel’s earnings conference call on Tuesday.
Check Out Line: This Bud’s for you, NYSE
Check out the return of the “BUD” stock trading symbol.
Anheuser-Busch InBev shares will start trading in New York on Wednesday as U.S.-listed shares, or American Depositary Receipts under the former Anheuser-Busch symbol, a nod to its Budweiser beer label. The return to the New York Stock Exchange comes 10 months after Belgium’s InBev acquired the iconic U.S. brewer and moved its primary stock listing to Belgium.
Anheuser-Busch InBev was formed late last year when InBev, the Belgian maker of Stella Artois and Beck’s, bought St. Louis-based Anheuser for $52 billion to create the world’s largest brewer. Since then, the company announced plans to open an office in New York and has begun reporting quarterly results in U.S. dollars, signaling a greater interest in the U.S. equity market, analysts said.
Investors can only hope the BUD shares will trade as well as Anheuser-Busch InBev shares in Europe, where they have more than tripled in value since late November.
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from Raw Japan:
Cheap brews soothe econ blues
Cheap beer-like drinks are in fashion as suds lovers try to hold onto their daily treat while saving money to ride out tough economic times. Sales of these drinks have been very strong and beer makers are aggressively marketing their products, all of which is just going to further dent the market share of beer, which has been in steady decline for years.
Nowadays, a 350ml can of regular beer will set you back about 210 yen ($2.20) in Japan, while low-malt "beer-like drinks" go for around 130 yen.
Under Japan's tax code, beer is defined as having a malt content of two-thirds or more of the raw material and carries a liquor tax of 77 yen per 350ml can. The tax on the new drinks is only 28 yen, since they use no malt. Instead the beer makers use pea protein or other materials to create a beer-like taste.
Total shipments of malt-free drinks jumped 30 percent in June, industry data showed, while those of beer were almost flat. Today, malt-free drinks account for nearly 30 percent of what used to be the beer market.
The brief history of beer-like drinks is that of a hide-and-seek game between breweries and tax authorities, which have desperately tried to protect sacred tax revenue. In 1994, Suntory released a drink with 65 percent malt content, pioneering a category called "happoshu" (literal translation = sparkling booze), offering a cheap alternative to beer. But two years later, the government, after seeing the growing popularity of such "tax-saving" drinks, lifted taxes on low-malt alcohol beverages, prompting breweries to release new products with even less malt to flee the cheaper liquor tax category.
But the taxman just wouldn't give up. The government raised liquor taxes again in 2003 so that the ultra low-malt booze would not enjoy much of a tax advantage. Then came malt-free drinks, brewers' answer to the tax authorities' tenacious chase.
Constellation’s holiday drink sales less than stellar – CEO
With so many forecasters talking about the 2008 holiday season in extremes (the weakest since 1970, one of the worst in modern times), it’s refreshing to hear an executive suggest that, ok, things were not great, but they weren’t horrible either.
That assessment came on Wednesday from Rob Sands, chief executive of Constellation Brands, when the world’s largest wine producer and maker of Robert Mondavi, Vendage and Ravenswood wines reported third-quarter earnings.
Sands, whose company also sells spirits and beer, said beer sales growth was accelerating due to the recession, while sales of spirits were getting hurt the most.
Following is an excerpt from a conference call CEO Sands and his management team hosted with analysts in which he discusses the impact of the recession on sales of alcoholic drinks:
In the United States, market conditions remain pretty healthy as measured by consumer take-away … for the wine business. The spirits business has probably been impacted to the greatest extent with growth … getting near flattish … The beer business has actually accelerated in general during the economic downturn.
Regarding the holiday season, Sands said:
In the US in particular for beer it wasn’t necessarily a stellar holiday season, but a lot of the IRI data (which tracks sales of packaged goods) that is being quoted is (through) 12/28, whereas last year it was through 12/30 … One of the things that characterized this holiday season is consumers definitely waited until the last minute to do their shopping. So, on beer I think that in the end it will probably wrap up to not be a fantastic holiday season, but on the other hand, I don’t think that it is going to wrap up to be as bad as the … currently published IRI data suggests. On wine … anecdotally from our wholesalers … it appears … consumer take-away was pretty good over the holiday season. So when everything is reconciled we are hopeful that it is going to look pretty good.
Check Out Line: Consumers cut back on discretionary drinks
Check Out Coca-Cola Enterprises feeling the pinch as cash-strapped consumers buy fewer soft drinks.
The world’s largest Coca-Cola bottler cut its full-year outlook on Thursday, even though third-quarter results met Wall Street’s view.
“Our performance remains below our expectations as we work through a combination of significant marketplace challenges, including a weakened North American economic environment, changing consumer purchasing patterns, and the impact of volatile fuel costs,” Chairman and Chief Executive John Brock said.
Brock said his company is working on its fundamental business review and would divulge details of that plan in December. The bottler now expects to earn $1.25 to $1.29 per share this year, excluding items, down from a previous forecast of $1.40 to $1.45 per share.
Meanwhile, Danish brewer Carlsberg said its French subsidiary, Brasseries Kronenbourg, would cut 214 of its 1,400 employees as it works on restoring profitability.
The French beer market has been declining for many years and even market leader Brasseries Kronenbourg is losing market share, hurt by strong legislation and the general economic slowdown, Carlsberg said.
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Sam Adams founder preparing for the Big Leagues
When Jim Koch decided to start making Sam Adams beer in 1984, he raised $140,000 from friends and family, pooled that with $100,000 of his own money, and set a target. Within 5 years his Boston-based brewery would cook up 8,000 barrels of beer a year.
Twenty-four years and a stock IPO later, Boston Beer Co is selling nearly 2 million barrels of beer a year and is poised to become the largest U.S.-owned brewer. Assuming InBev’s takeover of Anheuser-Busch goes through.
When the St. Louis-based brewer of Budweiser falls into foreign hands, it will be the third of the big U.S. beers to do so, following Miller‘s combination with South African Breweries and Coors’ tie-up with Canada’s Molson Inc.
The Anheuser buyout puts Boston Beer in a bizarre situation.
“Like your kid’s Little League team winning the World Series because nobody else showed up,” Koch said. ”Anheuser-Busch spills more beer than we make.”
“We’ve gone from being invisible to infinitesimal all the way up to tiny. We’re not even small yet,” Koch said of his company, which now makes nearly 2 million barrels a year and has 0.8 percent share of the U.S. market. The company has a market capitalization of $576.3 million, based on the latest available share count.
Another interesting consequence of consolidation is what Koch called a “complete role reversal for American beer”.
Despite deal, Cubans may not crack open Budweisers soon
Anheuser-Busch’s “Cuba defense” against a takeover by Belgium-based InBev may have gone flat after the Budweiser folks agreed to be bought out, but don’t expect to see America’s top-selling beers in Havana bars any time soon.
InBev brews and sells Beck’s, Bucanero, Cristal and Mayabe beers in Cuba through a 50/50 joint venture with the Cuban government. Could Cubans now be one mambo step closer to cracking open a cold Bud on a hot Havana night?
Not so fast, says Uncle Sam.
According to a U.S. embargo against Cuba “no products, technology, or services may be exported from the United States to Cuba, either directly or through third countries. This prohibition includes dealing in or assisting the sale of goods or commodities to or from Cuba, even if done entirely offshore.”
Exceptions include things like medicine, food, agricultural products, works of art or publications.
“There will not be any Bud in Cuba. That’s a business that doesn’t exist now and it will not exist in the future until the regime changes,” said Todd Malan, president and chief executive of the Organization for International Investment, a lobbying group that represents U.S. subsidiaries of foreign companies.
But talk to enough people in Cuba and someone will remember when Budweiser was sold there. A waiter at Havana’s landmark Hotel Nacional recently said the last time he saw it was in the early 1990s – right about the time the Soviet Union collapsed and Cuba’s economy, heavily subsidized by Moscow, went south.
It’s too bad that your reporter Martinne Geller didn’t take the time to do even the most rudimentary research into FACTS for this story. FYI, the Cuban Convertible Peso (CUC) is valued GREATER than the US dollar. Today’s official exchange rate is 1.11341.
Oh, and Cuban beers are very nice in their own right. The Cubans surely don’t need imported Budwater to drink!
Check Out Line: A Brewing Showdown
Check out things looking hostile in InBev’s bid for Anheuser-Busch.
InBev, spurned so far in its attempt to acquire the maker of Budweiser and Bud Light, filed papers with the Securities and Exchange Commission that would lead to Anheuser shareholders voting on the future of the U.S. company’s board.
The Belgian beer maker also unveiled its own proposed board that would include Adolphus Busch IV, an uncle of Anheuser‘s current chief executive. Makes you go Hmmm…
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Oil drops below $142 a barrel as dollar gains
Check Out Line: Hostile Light?
Check out signs of possible acrimony in InBev’s takeover bid for Anheuser-Busch.
Could InBev be bringing a new flavor — Hostile Light — to the beer wars as it pushes forward with its $46.3 billion takeover bid for the maker of Budweiser?
On Thursday, InBev reiterated its preference for a friendly combination that would create the world’s biggest brewer but filed suit to establish that Anheuser’s shareholders could remove their entire board, possibly setting the state for a more contentious battle.
Anheuser, which rejected InBev’s bid on Thursday, said on Friday that it will challenge its would-be acquirer’s lawsuit over the board removal.
Still, some say the door is open to a friendly deal. Stay tuned.
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Anheuser-Busch sees year profit above Wall Street views
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