Homebrewer 'prediction' comes true

[red-beard]

For years, those into homebrewing have referred to the mega brew companies as "budmillercoors", since it is all the same, bland, mass produced swill. The saying goes that the costs are: "one third packaging, one third transportation and one third marketing", which leaves basically nothing for ingredients.

Anyway, article in the WSJ today about how Miller and Coors are combining and calling themselves "Millercoors". All that is left is for Anheiser-Busch to buy them out and we really will have Budmillercoors.

Why Consolidation Storm
Is Brewing in Beer Industry

By JASON SINGER and DAVID KESMODEL
October 18, 2007; Page B1

The world's beer giants are showing a growing thirst for consolidation as they try to gain leverage with suppliers, distributors and retailers amid slowing sales in the U.S. and Western Europe.
A week after two of America's iconic brewers said they will combine forces, two European titans, Heineken NV and Carlsberg AS, said yesterday that they have formed a consortium to bid for the United Kingdom's best-selling brewer, Scottish & Newcastle PLC.
FROM THE ARCHIVES

• Miller, Coors to Shake Up Beer Market
10/10/07


The companies said they plan to divide up the assets of S&N, which has a market value of $14.5 billion. The Edinburgh, Scotland, brewer, however, reacted coolly, calling the proposition "unsolicited and unwelcome."
The announcement followed news that London's SABMiller PLC planned to combine its U.S. unit, Miller Brewing Co., with the U.S. division of Molson Coors Brewing Co., creating a joint venture called MillerCoors.
The maneuvers, coming about 2½ years after the most recent wave of beer-industry consolidation, are a reaction to shifts in beer-drinking habits across the globe. In Western Europe and the U.S., beer sales growth is sluggish amid increasing competition from wine and spirits.
In many emerging economies, however, including Eastern Europe and China, sales are booming. Another factor prompting consolidation is the rising cost of key commodities like grain, glass and aluminum, which is squeezing profit margins.
In the world's mature beer markets, brewers seeking to consolidate hope to use their increased market share to negotiate better deals for everything from commodities to advertising that could bolster profits. That's part of what Miller and Coors plan to do in the U.S., as they seek to forge a stronger competitor to long-dominant Anheuser-Busch Cos.
It's also a key objective of Netherlands-based Heineken in the United Kingdom. Jean-Francois van Boxmeer, the company's chief executive, said in an interview last month that the beer industry today takes so much capital that it isn't worth the expense being in many of the world's markets unless your company is either the No. 1 or No. 2 player. And, he said, the best deals are ones that beef up a brewer's share of an existing market, not ones where it expands into a virgin one.
"Consolidation in terms of operational benefits, synergies, is essentially a local thing," Mr. van Boxmeer said. S&N's marketing and distribution clout in the U.K. could help boost the paltry 3% market share of Heineken's namesake brew, which as a premium brand sells for higher margins.
Carlsberg, of Denmark, and Heineken said they may make an offer, likely in cash, for Scottish & Newcastle, which makes Newcastle Brown Ale, its best-known brand in the U.S, as well as John Smith's and Kronenbourg 1664.
Under the planned deal, Carlsberg, the world's fifth-largest beer maker by volume, or quantity of beer sold, would acquire full control of a joint venture it owns equally with S&N in Russia, where beer drinking is growing as the populace turns away from hard liquor. The venture, Baltic Beverages Holding AB, has the leading market share there, led by Baltika, Russia's best-selling beer. Carlsberg also would acquire S&N's operations in France and Greece.
Heineken, the world's fourth-largest brewer by volume, would take over S&N's U.K. brands and other European markets. Combined, Heineken would be nearly twice as big in Europe by market share, in terms of volume, as the next-biggest player, Carlsberg.

Heineken also would increase its share of the U.S. market through the deal. It would import Newcastle Brown Ale, which had 1.7% of the highly fragmented market for imported beers in the U.S. last year, according to Beer Marketer's Insights, an industry publication.
The Heineken brand is the second-largest imported beer in the U.S. after Grupo Modelo SA's Corona. Heineken could use that size to help raise Newcastle Brown Ale's U.S. profile. Imports account for about 14% of the U.S. beer market.
Heineken and Carlsberg left in question how other joint ventures would be carved up, including businesses in fast-growing regions such as India and China.
The brewers haven't approached Scottish & Newcastle. A person close to the matter said the consortium aims to negotiate a friendly deal. But Scottish & Newcastle said it "is confident in its future as an independent group" and "strongly urges shareholders to take no action," a sign that it fears the consortium may try to buy shares in the market.
The move marks the latest example of a breakup proposal from corporate buyers who group together to acquire businesses that, for a variety of reasons, couldn't be snapped up by just one bidder.
A group of three European banks this month clinched a record $101 billion takeover of Dutch lender ABN Amro Holding NV; the sprawling operations will be sliced apart and divided among the buyers. Consortium bids have been increasing in recent years because despite the difficulty of assembling groups of competitors and getting them to agree on value and strategy, together they can pay a higher price and often overcome obstacles such as antitrust concerns that no single buyer could surmount.
Shares of S&N surged 19% to £7.56, or $15.36. Because rumors of a bid for the company have been around so long, the consortium considers the price on March 19 of £5.31 to be the best reflection of where the shares traded before the rumors began, according to a person familiar with the matter.
Because Carlsberg is already a joint-venture partner with S&N, it could be difficult to assemble a rival group to make a counterbid. The venture has a clause that allows one side to buy back the other's stake.
One potential buyer is SABMiller, but the company earlier indicated it wouldn't be interested in S&N, at least not as a solo bidder. SABMiller Chief Financial Officer Malcolm Wyman said in April the Western European beer market is "singularly unattractive." SABMiller is the world's second-largest beer maker by volume after Belgium's InBev SA.
Another possible suitor for S&N is Anheuser-Busch, the world's third-largest brewer by volume. The St. Louis-based beer maker is heavily dependent on the U.S. market and may be attracted to the opportunity to gain a big stake in Russia or the U.K. W. Randolph Baker, Anheuser's chief financial officer, declined to comment.
Write to Jason Singer at jason.singer@wsj.com and David Kesmodel at david.kesmodel@wsj.com

[dtw]

Heh...yep! I've always called that stuff "Budmilloors"

[Joeaksa]

Rarely drink any of the domestic "big three" beers anyway, so they can have it.

Local stuff or German beers are the best anyway.

[jyl]

I stick to Guiness, other British ales, and microbrews which are deliciously abundant here in the Pac NW. I like Negra Modelo too. Haven't drunk a Bud, Miller, or Coors in - well, can't remember the last time. The stuff tastes like water with a faint beery tinge.

[Rick Lee]

I can't understand how anyone willfully buys that vile swill that should not be allowed to be called beer by Budmillercoors. In the last 15 yrs., the only such beer I've ever bought was at concerts when nothing else was available. It's the worst beer in the world. In China when you sit down at a bar or restaurant, these girls dressed up in the beer co's. cosutmes come over and try to get you to pick their beer. I was a little insulted that the Bud or Miller girls thought I'd like that beer because I'm white. I guess it's all marketing, since they've managed to convince some Chinese people that it's good beer, when China has its own pretty good beer. Are Budmillercoors even allowed to be sold as beer in Germany? Don't execs. from those companies realize how awful their product is? It's not like Pabst, who doesn't even pretend to be high end, markets to college students.....and I think it tastes WAY better than any of the big three's products.

[Vipergrün]

I went to the Great American Beer Fest in Denver last weekend. With all of the killer micro-brew beers to taste, there was an unbelievable number of people standing in line at the Coors and Miller end caps. I just don't get it.....

BTW, Boston Beer had their Utopias there, 25% ABV

[Porsche-O-Phile]

Any of the three is pure crap. I drink plain old water in preference to any of them. Life is too short to drink bad/cheap beer.

[legion]

Originally Posted by bb80sc

I went to the Great American Beer Fest in Denver last weekend. With all of the killer micro-brew beers to taste, there was an unbelievable number of people standing in line at the Coors and Miller end caps. I just don't get it.....

BTW, Boston Beer had their Utopias there, 25% ABV

My wife bought me Utopias for our anniversary a few years ago. It may technically be a beer, but you treat it more like a cognac or port wine. I would pour a little into a short glass and drink it with a cigar on the back porch.