At long last, here is biggest global beer deal yet: SABMiller plc. And make no mistake, SABMiller  plans more deals to come.   PM and SAB struck deal to combine #4 worldwide brewer SAB and #7 brewer Miller and create a new #2 brewer.  Deal expected to close in Jul.  SAB ceo Graham Mackay said deal “represents a new chapter in our development…positioning us to be a major participant in the ongoing consolidation of the global brewing industry.”

SABMiller sold 102 mil bbls in yr thru Mar 31, 2002 (including licensed volume), about 5 mil bbls behind AB.      Combo had pro-forma  revs of $9.3 bil and EBITDA of $1.5 bil.    But both Miller and SAB earnings declined in latest year.   PM will keep 36% stake in combined co (stock worth $3.6 bil), have 3 seats on board  (out of 13) and voting rights just under  25%.   PM said deal will be neutral to its earnings for next 2 yrs, but it will have 1-time gain in 3d qtr of a mere $3 bil pre-tax, $2 bil after-tax.  Because of way transaction structured, PM minimizes taxes and SAB minimizes cash outlay. SAB sez it expects deal to add to earnings in yr 1 and  bring cost savings of $50 mil per yr starting in yr 3.  Miller prexy John Bowlin stays on “responsible for SABMiller’s business in the US and Central America.”  PM agreed not to sell any shares for 3 yrs and not to buy any more for at least 2.5 yrs, “subject to certain exceptions.”  

In conference call this morning, PM ceo Louis Camilleri emphasized that PM has “flexibility” to either buy more of SABMiller  and “form a 3d leg” (to go with tobacco and food) if it likes where SABMiller headed in global beer game, or reduce its stake.  SAB chairman Graham Mackay said talks with PM about future “had nothing to do with withdrawal [of stake], but much more with keeping their position and supporting it, in fact even improving it in the longer term.”   Deal “gives us scale and the benefits of a hard currency, a large profit pool in which we will now operate without having to pay a high price for it” added Graham.   Lots more details in Beer Marketer’s INSIGHTS.   

 

Wow!!!  This afternoon, US Dist Ct Judge Martin granted FEMSA tuff-to-get preliminary injunction in its lawsuit to stop Beck’s integration into Labatt USA.  LUSA had already started putting the companies together.  “We’re disappointed and we’re looking at our options,” Labatt USA prexy Steve Cahillane told INSIGHTS at hearing.   Right now, no further steps can be taken to integrate Beck’s into Labatt USA for 30 days.  Expect appeal.  That ain’t best way to start peak-selling season.  More details tomorrow.

 

Turns out 2001 was best growth year for the beer biz in Mid-Atlantic region in over a decade. NY posted a 540,000-bbl, 5.3% increase. In NJ, shipments were up 3.4%, and Pennsy?s growth rate doubled in 2001 to 1.7%. Yet even with gains in 2000-2001, Mid-Atlantic shipments still down 1.5 mil bbls, 6% for 10 years. Likewise, shipments to New Eng increased 2%+ for the 1st time in over 10 yrs. Each state up 1% or more: up 3%+ in ME and RI, and the growth pace in Mass just below 2%. Conn up in 2001, but just made up 2000 loss. Long-term, New Eng shipments in 2001 still just even with 91.

?We?re going after the big fish,? Gambrinus director Don Mann told Ad Age. ?Corona Light can have the same appeal [for] domestic light beer drinkers that Corona has had versus regular beer drinkers." In Gambrinus territory, Corona Light 7% of volume but will get 20% of this yr?s mktg. Barton is not doing separate Corona Light campaign. Corona Light shipped 420,000 bbls in US in 2001.

Imports up just 67,000 bbls, 3.5% in Mar. On up-and-down path: up huge in Dec, flat in Jan, up 16% in Feb, up slightly in Mar. Imports up 297,000 bbls, 6% in 1st qtr. But Mexican and Dutch shipments up 19.5% and 9% respectively, so each gained share. Shipments from several other large importing countries down: Canadian ?21.6%, UK -13.9%, German shipments -3.5%. Canadian shipments clearly af-fected by Diageo shifting Smirnoff production to its US plants.

New info shows Miller biz had clearly not yet turned in 1st qtr. Tho Miller shipments up 1.6%, sales-to-retailers down 2.6%, PM reported. Shipments up because of ?higher shipments for core brands? and ?introduction of SKYY Blue,? wrote PM. Retail sales down ?reflecting lower retail sales" of Lite, MGD, others. Miller?s mktg, gen and admin costs up $30 mil in 1st qtr.

To get preliminary injunction against Labatt USA, FEMSA had to meet tuff standard of ?irreparable harm,? harm that could not just be compensated by money damages. US judge ruled FEMSA entitled to its injunction because ?there has been a breach of the agreement? by Interbrew against FEMSA in their Labatt USA arm (70% owned by Interbrew, 30% by FEMSA). He relied on recent case that said ?denial of bargained-for minority rights? in and of itself constitutes ?irreparable harm.? Judge ruled there had to be some agreement between Beck?s and LUSA to combine bizzes (Interbrew denied there was agreement), and that triggered clause that apparently gives FEMSA veto power. At Apr 25 LUSA board meeting, Interbrew decided to proceed with integration tho FEMSA execs on board voted against. Interestingly, judge anticipated appeal and said that if ?mere denial? of FEMSA's minority rights weren?t enuf, he would have ruled against injunction because FEMSA didn?t prove ?irreparable harm? to its biz going for-ward. Perhaps that?s why Interbrew spokesman referred to decision as ?wisdom of Solomon,? even tho it lost. ?We will promptly appeal,? Interbrew ceo Hugo Powell said. ?We won?t get all the synergies we were looking forward to? said yet another Interbrew exec. Interbrew said it "would likely have to wait about 3 months to re-solve the dispute," reported Reuters. Lots more in Beer Marketer?s INSIGHTS.

“What we’re saying is the taxpayers of this country ought to set a limit on how much advertising they want to subsidize.”  So said Senator Stabenow (D-MI) to Reuters recently, referring to her bill that limits the amount drug companies can deduct for ad expenses.  Senator Durbin (D-IL) chimed in that current level of drug ads “is ridiculous.”  They’re recycling an old anti-alcohol proposal that never got traction when aimed at brewers.   Gotta figure if pols willing to target drug co’s, alc bev biz might not be far behind.

That’s name of Miller-Jack Daniel's cola-flavored malternative, Reuter’s reported this morning.  On-premise rollout will be in Jul, off-premise by Sep.  Expected shipments in 2002: about 5 mil cases, said JD brand director. 

So sez most recent survey from Mediamark Research, Inc from fall  2001.  Approx 43% of adults 21+ said they’d had a beer in the month prior to survey.  Compares to 39% who said they drank liquor (79.5 mil), 33.5% who drank wine (68 mil).  Obviously, some drank 2 or all 3 alc bevs.  Over half of 21-34 yr-olds drink beer, and nearly half of those 35-44 are beer drinkers, then figures drop sharply to just 26% of those 65+.  Similar pattern for spirits, but not wine: in fact 29-30% of 21-24 and 65+ say they drink wine.  We don’t have previous Mediamark data to report trend, but back in 96, another big mkt research co had reported 46% of those 18+ were beer drinkers.