AROUND THE WORLD

USA – Fortune Brands, the US consumer brands company involved in Pernod Ricard’s Allied Domecq buy-out, has reported a strong first quarter…UK – The WSA has been renamed as the Wine & Spirit Trade Association (WSTA), as part of the review of governance and purpose…

Americas

USA

Fortune Brands, the US consumer brands company involved in Pernod Ricard’s Allied Domecq buy-out, has reported a strong first quarter. Sales in the spirits and wine category, excluding foreign exchange and excise taxes, grew by 4%. First quarter net income of $152.7m, or $1.02 per diluted share, was up 11% from $0.92 last year. Net sales increased 5% to $1.79bn, and the net impact of acquisitions, taxes and foreign exchange was minimal, the report said.

In other US news, the world’s second-richest man, Warren Buffett, has acquired a significant stake in Anheuser-Busch through his holding company Berkshire Hathaway Inc. The exact size of the holding was not disclosed.

CHILE

In a move to raise money for new investments and refinance some debt, Viña Concha y Toro has placed US$59.42m in local, peso-denominated and inflation-indexed bonds. The winemaker said in a statement that the 21-year bonds had been placed at 3.9%, (a relatively low yield in an emerging country) and the sale of bonds was three times oversubscribed.

Concha y Toro says that around 35% of the money will be used to refinance short-term debt, but it expects to use the rest for new investments in agriculture, oenology, technology, and projects in Argentina.

Europe

UK

The WSA has been renamed as the Wine & Spirit Trade Association (WSTA), as part of the review of governance and purpose. Joanna Delaforce, the WSTA’s chairman, said, “This change is long overdue. Our comprehensive scope has not always been recognised by others in the trade and I welcome the decision that our executive committee has made.” The new name is designed to underline its unique position as the only trade association representing the broad range of businesses within the wine and spirit industry.

Belgium

In spite of tough conditions in the US and Western Europe the world’s largest brewer, InBev, has reported overall organic volume growth of 4.1% (4.4% for beer and 2.9% for soft drinks) in the first quarter results of 2005, to 47.3m hectolitres.

A market slowdown in the UK led to a 13.5% volume decline, but the quarter ended on a more positive note with volume growth of 3.9% for the month of March.

Western European volumes declined by 6.9%, with Benefralux countries down by 5.6%; Germany/Italy/Spain/Austria/Switzerland down by 4.5% and UK/Ireland dropping 8.1%. InBev is reported to be happy with the development of its three global beer brands. Although Stella Artois volume declined by 4.6% because of the weak UK market, Beck’s grew by 4.3%, and Brahma grew by more than 17%, after market share recovery in Brazil. A gross dividend of e0.39 has been approved by the general shareholders meeting of April 26.

France

French giant Castel is investing e4m in its wine preparation and vinification facility at Beziers. The investment will include a sixth bottling line for its “bag-in-box” range and the construction of a new tasting room, new pallet preparation facilities, a 5,000 sq.m warehouse, and another 10,000 hectolitre vat. Each year Castel vinifies 60,000 hectolitres of locally sourced grapes at the Beziers site.

Czech Republic

Budweiser Budvar has been awarded Protected Geographical Indication status by the EU, in recognition of the fact that it is only brewed at source in Budweis, or Ceske Budejovice. The award is made only to food and drink products that are manufactured in the  specific place indicated in the product’s name. Budvar has joined the ranks of Cognac, Champagne and Parmigiana cheese that can display the PGI seal.

Asia

Japan

Asahi is launching a “third category” beer brand, Asahi Shin-Nama, with a view to capturing a 30% share of the sector. The company had plans to ship almost 3m cases of the brand in April alone.

Third category drinks use ingredients other than malt and wheat, and are consequently taxed at a lower rate than beer. Low prices have helped the sector capture 8% of the entire beer market.

Asahi’s shipment figures slot in just behind Kirin Brewery, which shipped around 3.5m cases of its third category beer last month. Sapporo Breweries is looking to ship 2m cases, while Suntory plans to shift between 700,000 and 800,000 cases.

China 

Chinese beer company, Kingway Brewery Holdings, has posted a leap in full year earnings of 58% to HK$166.16m (US$21.3m), on the back of a 35% rise in sales to HK$924.5m.

The Heineken and Asia-Pacific Breweries joint venture, Heineken Asia-Pacific Breweries China, holds a 21.44% share in Kingway.

However, earlier this year Kingway revealed it was in preliminary talks with Heineken, which could see the Dutch brewer further increase its stake in the the Chinese company.

Earnings are expected to rise by another 26% this year.

Australia/oceania

Australia

McGuigan Simeon has confirmed a net profit for the full year in the range of AUS$35m to AUS$40m. The company also announced that tonnages harvested from its vineyards were around 5% above expectation and the quality was excellent. However, tonnages from contracted vineyards were around 3% below expectation. The total crush is up 10,000 tonnes on last year. Consequently, the company warned that prices in its bulk wine trading division remain depressed, but that domestic and exported branded sales have continued to perform to expectations.

In other Australian news, the Barossa Wine Grape Growers Council in South Australia is backing a national campaign to dissuade investors from planting new vineyards.

Growers are worried by economic forecasts that are in favour of further planting despite the current wine surplus and plummeting grape prices. Some investors are being encouraged to plant vines for tax benefits and not actual costs and returns.

© db May 2005