Retail Beverage Council (126)

Thursday, 01 October 2015 08:57

10-1-2015 ABL Update from RBC

Diageo presses ahead with wine sale

The FTSE 100 drinks company is understood to be exploring a sale of its wine brands, which include Blossom Hill

Source: The Telegraph
By Ben Martin
30 Sep 2015

Diageo, the company behind Captain Morgan rum and Smirnoff vodka, is believed to be pressing ahead with a sale of its wine brands, including Blossom Hill, as its under-pressure boss Ivan Menezes continues his sell-off of the group's peripheral businesses.

Australian firm Treasury Wine Estates was named as a leading suitor for the FTSE 100 company's wine business, which also encompasses the Piat d'Or and Rosenblum brands.

Treasury, which was spun out of Foster's in 2011, is the world's largest listed wine maker and produces Wolf Blass and Rosemount Estate.

A disposal would be in keeping with Mr Menezes strategy. Diageo, the owner of Guinness, Baileys and Pimm's, has offloaded a number of non-core divisions under Mr Menezes, including Scotland's famous Gleneagles hotel and golf resort three months ago.

The Diageo boss, who is fighting to restore investor confidence after two years of stalled growth, hinted in July that the company's wine brands could be sold, when he said the group would be "active managers of our portfolio" and that wine "is not going to get bigger for us".

The wine business only accounts for 4pc of Diageo's net sales and has long been considered a prime candidate for disposal. Sky News was first to report that the FTSE 100 giant was stepping up its efforts to sell the brands.

A spokesman for Diageo said: "Wine is a small part of our business but it plays an important role. We have no other comment to make."

Additional Coverage: http://news.sky.com/story/1561554/diageo-uncorks-plan-to-sell-global-wines-unit


Monday, 28 September 2015 08:42

9-28-2015 ABL Update from RBC

The Distillers' Digest (US) - our tracking tool for US spirits in the off-trade

Source: ExaneBNP
September 28, 2015

We have received the latest AC Nielsen data for the distillers in the US, covering the 4 weeks ending 12/09/2015 ('September'). Please see the attached file for related data and dynamic charts. Our key takeaways are as follows:

US spirits market
Another very strong month for the US spirits industry in the off-trade with sales growth of +7.6% (o.w. +3.1% volume), confirming the strong trends observed in the Summer (+7.6% in August and +6.7% in July). Diageo is still ceding the most market share amongst the majors but its sales growth accelerated +5.5% in the month. By category, the Cognac category continues to grow strongly, despite a slight deceleration compared to the last couple of months (sales up 23% in September vs. +26% in Q315TD)

Diageo: Crown Royal-dependent
An ok month for Diageo in September with sales growth of +5.5% vs. +4.7% in August and +4.4% in July. Volume growth remains in negative territory at -0.7% vs. -0.6% in the previous month. Price per unit growth was +6.3% in the month (+5.3% in August and +4.9 in July). Diageo lost 40bps of value share in September (vs. -60 bps in August and -40 bps in July). Scanning the performance by brand, we note that Smirnoff was once again the worst performer (value share down 50bps), that the performance at Crown Royal remains strong (sales up 29.1% vs. 28.1% in August and 30.6% in July), while Johnnie Walker is showed better momentum (+7.4% in September vs. +3.7% YTD). Excluding Crown Royal, a brand that accounted for 70% of the group growth this month, Diageo would have lost 100bps of market share in the month.

Pernod: strong month, volumes improving
Another strong month for Pernod with sales accelerating to +8.0% in the month vs. +7.5% in August and +6.3% in July. Volume growth in the month was +4.1%, vs. +2.4% in August and +0.8% in July. Price per unit growth was +3.7% in the month, vs. +5.0% in August. Pernod's value share was flat y/y in September (= August). Scanning performance by brand and category, we note that pricing on Absolut increased 2.4% in September (while volume are still slightly negative at -1.1%) and that sales growth at Jameson remains very strong (+32.5% in the month vs. +30.8% in August vs. +32.7% in July). While still small for Pernod in the US, its Cognac business grew 51% (vs. +32% YTD).

Friday, 04 September 2015 14:25

9-4-2015 ABL Update from RBC

Possible M&A in beer/spirits - Diageo / SABMiller

Adding value as "SABGEO"?

Source: Nomura
September 04, 2015

European Beverages
Sector View: Bearish
Ian Shackleton - NIplc

Pressure to deliver at Diageo and SABMiller.
We see strong pressure on both Diageo and SABMiller management to create value for shareholders. In our SABMiller review we discussed potential benefits from a more entrepreneurial culture as well as margin upside from a tighter focus on costs. In our Diageo review we investigated ways to create value through spinning off businesses such as beer or Reserve Brands.

.but macro/forex headwinds are increasing
Would it be enough in a world in which forex and slower macroeconomic conditions are creating more headwinds for profit growth? A report in the UK press (Sunday Times, 29 August) that SABMiller has been consulting new advisors about a possible bid defence appears to show that the company feels under threat still from a bid from AB InBev; for Diageo, updating for forex moves last week, we now estimate slightly negative EPS growth this year in what was supposed to be a recovery year.

Better balance in a merged entity.
That made us think about SABGEO, a merger of equals of Diageo and SABMiller. Some 17 years on, we would see this as a similar move to the creation of Diageo from the merger of Guinness and Grand Metropolitan in 1998. We estimate that with c50/50 emerging and mature market split of profits, a merged group could offer a firmer profit base in uncertain times (for SABMiller holders) and potentially increase its growth profile in the longer term (for Diageo holders).

.and potential to increase combined net profits by 18%
Although Diageo is now making less of its total beverage alcohol strategy, we believe that a more balanced portfolio of beer and spirits could produce material upside. With broadly similar market capitalisations, we see such a deal adding 18% to combined net profits, assuming GBP 1bn of cost synergies and some benefit on tax, with minimal regulatory issues to subtract value. There is potentially further upside from revenue synergies, and scope for a higher rating for a better balanced business. In addition, for the two large shareholders in SABMiller (Altria and Santo Domingo families), we believe a merger would preserve their tax status while giving smaller shareholdings in a more liquid investment.

Valuation
We retain our Buy rating on Diageo (TP 2,000p); CY15E P/E is 19.6x. We retain our Buy rating on SABMiller (TP 3,800p); CY15E P/E is 20.5x.

Tuesday, 08 September 2015 14:20

9-8-2015 ABL Update from RBC

SABMiller and Diageo could benefit from a merger, say analysts

Nomura says a deal could boost profits and see off any ABInbev bid for SAB

Source: The Guardian
Nick Fletcher
4 September 2015

Markets may be plunging again ahead of the US jobs data - the FTSE 100 is currently down 1.6% - but that does not mean that takeover speculation has gone away.

Analysts at Nomura have looked at the drinks sector and examined the prospect of a merger between SABMiller and Guinness owner Diageo as way to overcome slowing growth. The bank said:

We see strong pressure on both Diageo and SABMiller management to create value for shareholders. In our [recent] SABMiller review we discussed potential benefits from a more entrepreneurial culture as well as margin upside from a tighter focus on costs. In our Diageo review we investigated ways to create value through spinning off businesses such as beer or Reserve Brands.

[But] would it be enough in a world in which forex and slower macroeconomic conditions are creating more headwinds for profit growth? A report in the UK press (Sunday Times, 29 August) that SABMiller has been consulting new advisors about a possible bid defence appears to show that the company feels under threat still from a bid from AB InBev; for Diageo, updating for forex moves last week, we now estimate slightly negative earnings per share growth this year in what was supposed to be a recovery year.

That made us think about SABGEO, a merger of equals of Diageo and SABMiller. Some 17 years on, we would see this as a similar move to the creation of Diageo from the merger of Guinness and Grand Metropolitan in 1998. We estimate that with around 50/50 emerging and mature market split of profits, a merged group could offer a firmer profit base in uncertain times (for SABMiller holders) and potentially increase its growth profile in the longer term (for Diageo holders).

Although Diageo is now making less of its total beverage alcohol strategy, we believe that a more balanced portfolio of beer and spirits could produce material upside. With broadly similar market capitalisations, we see such a deal adding 18% to combined net profits, assuming £1bn of cost synergies and some benefit on tax, with minimal regulatory issues to subtract value. There is potentially further upside from revenue synergies, and scope for a higher rating for a better balanced business. In addition, for the two large shareholders in SABMiller (Altria and Santo Domingo families), we believe a merger would preserve their tax status while giving smaller shareholdings in a more liquid investment.

But despite this suggestion, in a falling market SABMiller is down 39p at £30 and Diageo has dropped 14.5p to £16.99.


Wednesday, 09 September 2015 14:14

9-9-2015 ABL Update from RBC

Heineken buys 50 percent stake in U.S. craft beer maker Lagunitas

Source: Reuters
September 8th

Dutch brewing company Heineken NV (HEIN.AS) has bought a 50 percent stake in U.S.-based beer maker Lagunitas Brewing Co to expand into the craft beer industry.

Lagunitas, whose brands include the popular India pale ale Lagunitas IPA and pale wheat ale Little Sumpin' Sumpin', is one of the best-known and fastest-growing craft beer makers in the United States.

Financial terms of the deal were not disclosed.

Dealmaking in the craft brewing sector has increased as companies seek to capture the frothy valuations that have accompanied the industry's boom.

In 2014, barrel volumes in the $19.6 billion craft beer industry rose 18 percent, according to the Brewers Association. By comparison, Lagunitas' barrel volumes jumped 50 percent in the same year.

Earlier this year, California craft brewery Firestone Walker Brewing Company announced its merger with Flemish-family owned brewery Duvel Moortgat.

Private equity firm Fireman Capital Partners purchased a majority stake in Oskar Blues Brewery, maker of Dale's Pale Ale, in May.

Tuesday, 25 August 2015 10:11

8-25-2015 ABL Update from RBC

Judge Cuts Off Suit Over Jim Beam 'Handcrafted' Labeling

Source: Law360
By Kurt Orzeck
August 24, 2015

A California federal judge on Friday tossed a proposed class action claiming the makers of Jim Beam falsely market its bourbon as "handcrafted," ruling a reasonable consumer wouldn't interpret the word to mean that the product is literally created by hand instead of machine.

Granting Jim Beam's motion to dismiss, U.S. District Judge Larry Alan Burns decided that, if Jim Beam uses the term "handcrafted" to appeal to consumers' loose association of the term with higher-quality manufacturing and high-end products - as the plaintiff claimed - then the term is generalized, vague and unspecified.

Scott Welk sued Jim Beam and the U.S. import arm of parent company Beam Suntory Co. in February, claiming he had paid a premium price for the bourbon because he was under the impression it was painstakingly distilled by skilled craftsmen.

Jim Beam argued in March that the labels are protected under California's safe harbor provisions because they've already been approved by the U.S. Alcohol and Tobacco Tax and Trade Bureau, which regulates labels for distilled spirits, wines and malt beverages. Even if the labels aren't shielded from Welk's allegations under California's Unfair Competition Law and False Advertising Law, those claims should be thrown out, Jim Beam said.

Judge Burns denied Jim Beam's attempt to escape the suit under the safe harbor doctrine but held that the UCL and FAL claims failed because "Machines, including stills and other equipment, have always [italicized] been necessary to make bourbon."

Wednesday, 26 August 2015 09:48

8-26-2015 ABL Update from RBC

Amazon expands Prime Now, offers U.S. alcohol for first time

Source: Reuters
Brendan McDermid
August 25, 2015

Amazon.com Inc (AMZN.O) said on Tuesday it will begin delivering wine, beer and spirits to U.S. customers for the first time as part of its speedy delivery service, Prime Now.

The online retailer is expanding Prime Now, its one- and two-hour service, to Seattle, where the company is headquartered, and offering alcohol deliveries there.

Amazon Prime, the company's $99 per year shopping membership program, offers free two-day delivery on millions of items. It is a key testing ground for the retailer's new services, ranging from TV and on-demand video to fast delivery.

Friday, 21 August 2015 16:46

ABL Weekly - August 21, 2015

Calendar

September 8-10 - Beer Institute | Annual Meeting | Washington, DC
September 9-11 - Center for Alcohol Policy | Alcohol Law and Policy Conference |Chicago, IL
September 12-13 - American Beverage Licensees | Fall Board Meeting | Helena, MT
September 14-17 - Montana Tavern Association | Annual Convention & Trade Show | Helena, MT
September 17 - Tavern League of Wisconsin | 17th Annual State Golf Outing | Mishicot, WI
September 20-22 - Illinois Licensed Beverage Association | 130th Annual Convention | O'Fallon, IL
September 21-24 - Alaska CHARR | 45th Annual Convention | Fairbanks, AK
September 27-29 - Michigan Licensed Beverage Association | Fall Convention | Kalamazoo, MI
Thursday, 20 August 2015 16:20

8-20-2015 ABL Update from RBC

National Survey Finds Americans Overwhelmingly Support the Current System of Alcohol Laws and Regulations

Center for Alcohol Policy Releases Survey Results on Public Attitudes on Alcohol Policy

Source: CAP
August 19th

According to a bipartisan national poll commissioned by the Center for Alcohol Policy (CAP), the American public overwhelmingly supports the current system of alcohol regulation in the U.S. Additionally, the current regulatory system for alcohol is viewed by Americans as necessary to keeping the public safe.

"Americans recognize and agree that when it comes to a unique product such as alcohol, regulation is vital, and they support the states' ability to set their own laws and regulations around alcohol," said Mike Lashbrook, the Center's executive director. "Additionally, this national survey shows that consumers are highly satisfied with the choice and variety available to them in the American marketplace."

Key findings include:

Americans agree that regulation is important, especially when it comes to alcohol.

89% of adults agree that it is very important to keep the American alcohol industry regulated.
82% agree that parents, police officers and retailers already have a difficult challenge keeping alcohol out of the hands of minors. Getting rid of alcohol rules, regulations and safeguards could make the problem worse.
94% believe that people selling or delivering alcohol should verify that a person is 21 or older before they sell or deliver alcohol to that person.

Friday, 21 August 2015 15:58

8-21-2015 ABL Update from RBC

July, 2015, Control State Results

Source: NABCA
August 20th

During July sales of nine-liter cases of spirits in the control states grew at 4.2% compared to same period sales last year. Rolling-twelve month volumes grew at 2.7%, nearly flat with June's 2.8%. Alabama, Idaho, Montgomery County Maryland, Michigan, North Carolina, New Hampshire, Ohio, Oregon, Virginia, Vermont, and West Virginia reported monthly growth rates exceeding their twelve month trends. Year-to-Date nine-liter spirits case sales are up 2.9%.

Control state spirits shelf dollars grew at 7.6% during July while trending at 5.4% during the past twelve months. Alabama, Idaho, Montgomery County Maryland, Michigan, North Carolina, New Hampshire, Ohio, Oregon, Virginia, Vermont, and West Virginia reported growth rates exceeding their twelve month trends. Year-to-date shelf dollars have grown 5.5%.

Price/Mix for July is 3.2%, up smartly from June's 2.0%.

During July, Irish Whiskey, with 1.0% share of the control states spirits market, was the fastest growing category with 21.4% reported and a twelve month trend of 13.9%. Vodka, with 35% share, grew during the same periods at 3.4% and 2.0%. Of note is the Brand/Cognac category growing at 16.4% during July and trending at 9.1% during the past twelve months. Brandy/Cognac, Canadian Whiskey, Cocktails, Domestic Whiskey, Gin, Irish Whiskey, Rum, Scotch, Tequila, and Vodka grew at rates exceeding their twelve-month trends.

July's nine-liter wine case sales growth rate was 0.6%. Pennsylvania, New Hampshire, Utah, Mississippi, Montgomery County Maryland, and Wyoming reported 2.3%, -2.2%, 3.0%, -4.8%, 0.4%, and 0.8%, respectively. Rolling-twelve month wine volume growth was 1.3%, mirroring June's reported 1.3% growth.


------
Page 1 of 9