London Times: ABI to Sell Bass in UK?

FILED MAY 26, 2010

Dear Client:

The word in the UK press is that AB InBev may be putting Bass Ale, Boddingtons and Flowers up for sale in the UK, while retaining the trademark and international rights (including the US). The Times reports that ABI is seeking a buyer for Bass at around $15 - $21 million. That seems pretty cheap for an iconic brand, when Pabst is going for $250 million (which in itself is only about $3 a case). And the Times says there aren't many folks lining up to buy it. Molson Coors, Marston's, Wells & Young and C&C Group have all taken a pass, says the Times. It tells you just how horrible the UK beer business is right now. It also tells you how aggressively ABI is going about paying down debt, if it's even true, when $20 mil is a rounding error for a company that size.


Molson Coors/MillerCoors chairman Pete Coors said that he does not believe in the "life cycle" argument for premium light beer brands, even though some companies have experienced brand life cycle issues. At the Beverage Forum conference earlier today, Pete said that premium light still have some growth left in them, particularly given that the legal-age population is growing. With that growth, you'd have to be betting on "very large per capita consumption decreases" and share losses for the category to decline long-term. Globally this is even more true.

Regarding MillerCoors J-V, Pete said that they have successfully combined two very different cultures (Miller was more procedural and Coors was more collegiate). And as far as managing both portfolios together, he said that "distributors lead the way" in teaching MC how to position the brands, since many of them were combined Miller/Coors houses before the J-V was in existence.

Regarding distribution, Pete says there is always the worry that distributors can get "too large" and become merely delivery companies, with smaller accounts getting neglected, which is bad for long-term growth. But on the three-tier system, MillerCoors believes it in, and will "defend it aggressively." He said that MC agrees with 80% of the Care Act, but fears that if states get too much control they could present risks to a uniform supply chain. He brought up the New York state specialized UPC on labels.


FOSTER'S HAS DECIDED to split up its beer and wine divisions, possibly with separate stock symbols for each. That would eventually make it easier to sell one or the other.

Until tomorrow, Harry

"Chaos is the score upon which reality is written."
-Henry Miller

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