HOT TRUB
December 20,
2000
Edited by: Peter LaFrance (peter.lafrence@beerbasics.com)
Presented by: American Brewer
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Vol.1 No.9
This newsletter will post items of special interest to brewers, members of the
brewing and distilling community, and members of the media that covers the
beverage alcohol business.
Should you wish to contribute in any way to this venture please contact Peter
LaFrance at peter.lafrance@beerbasics.com
If you wish to be dropped from this list please respond to this posting to peter.lafrance@beerbasics.com and
include the word remove in the Subject: line.
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First of all I
would like to take the opportunity to wish all of you a happy holiday season
and a healthy New Year.
Cheers!
Peter LaFrance
The Associated Press reported on Monday morning that top management of the Genesee Brewing Company has completed complex financial negotiations effectively dissolving the Genesee Brewing Co. and creating High Falls Brewing Company, LLC. The purchase price was $25.8 million. The Genesee Brewing Company received $14.8 million in cash at the closing.
Main players in the deal were Samuel T. Hubbard, Jr., Genesee’s president and CEO, and the following members of Genesee's management: John B. Henderson, William A. Neilson, Michael C. Atseff, Stephen B. Ashley, Mark W. Leunig and Steven M. Morse.
The High Falls Brewing Co. will start out as the fifth-largest beer producer in the country. The Genesee name will still appear on all the beer labels. All new specialty brews will bear the High Falls name.
According to the AP report, “In order to obtain the consent of Boston Beer Company to assign the production agreement between Genesee Brewing Company and Boston Beer Company to High Falls, Genesee Brewing Company was required to guarantee High Falls' performance of the production agreement and maintain a minimum liquid net worth for three years after the closing, starting at $7.25 million in the first year and declining to $5.15 million in the third year.” (How I love to quote “legal talk”!)
Genesee produced 1.6 million barrels of beer and ale per year with sales of just over $103 million in the 1998-99 fiscal year.
According to a recent Reuters report, Mexican brewer Grupo Modelo said it had completed expansion of its plant in Sonora state, effectively doubling annual production capacity there to 2.5 million barrels.
According to the Reuters report, "This new capacity will allow the company to have major presence in the north of Mexico and continue with its export strategy," Modelo said in a press release.
The expanded facility in Obregon, Mexico produces Corona Extra, Modelo Especial, Pacifico and Light Modelo brands for domestic and export markets.
Earlier this year Modelo said it was investing $300 million this year to expand production capacity and strengthen distribution and sales networks.
(And lets not forget those ties to A-B.)
Notes from the business gurus:
In a recent publicly circulated report by Canadean, a major European economic market analyst, Anheuser-Busch, Carlsberg, Guinness, Heineken, Interbrew and South African Breweries are all reported to be "facing mature markets at home, [and have had to] cast their net wide to find profitable growth".
Of special note is the report that, in order to maintain market share AB is reported to have embarked on a three-pronged strategy. The first is to increase domestic market share as well as increasing per barrel profitability. AB is also looking to expand international beer operations profitability by building Budweiser as a global brand and by making investments in leading brewers in growing beer markets. Finally, AB is looking to exploit investment in packaging operations and entertainment parks in support of its core beer business.
AB has suffered a series of international setbacks over the last few years including a serious trademark issue in the Czech Republic with Budejovicky Budvar. Equally troubling is reports that AB, excluding profit contribution from the shareholding Mexican brewer Modelo (see above story), suffered a loss of $20m on international operations in 1999.
Next week we will take another look at the Interbrew story.
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