SABMiller Plc Chief Executive Officer Graham Mackay said he’s prepared to make acquisitions and forecast the beer industry will recover from the global recession at a sluggish pace, Bloomberg reported on August, 12.

The company has sufficient investor support to do a deal and enough room to take on debt, Mackay said, though it will refuse to pay a premium price given the distressed market.

“Nothing is stopping us from the right acquisition,” the CEO of the London-based brewer said. “There is money available. Even if we had to raise capital, we think our shareholders would agree with it if it was the right acquisition.”

Mackay declined to comment on how much SABMiller would be willing to spend. He said the brewer would consider buying assets in both developed countries and emerging markets, where the company gets 85 percent of its earnings and it has historically been “easier to make the numbers work” for deals.

The CEO avoided taking the world’s second-largest brewer into the round of mergers that reshaped the industry during more bullish times last year, passing on Scottish & Newcastle Plc, which was eventually broken up by Heineken NV and Carlsberg A/S for more than $15 billion. SAB’s stock was ...More Info

World’s largest brewer Anheuser-Busch InBev is this week expected to showcase the wisdom of last year's $52 billion purchase of Anheuser, with benefits of cost-cutting at the U.S. unit more than offsetting flagging sales and exchange-rate losses, Dow Jones communicated on August, 11.

Analysts expect AB InBev, the world's largest brewer by sales based in Leuven, Belgium, to report earnings before interest, taxes, depreciation and amortization, adjusted for one-time items, of $3.22 billion in the second quarter, a 3% increase over the year-earlier result of $3.12 billion. The figure is closely watched by the markets because it strips out fluctuating tax rates, interest expenses and one-off costs, focusing on the company's operational performance.

The rise in core earnings is expected despite flagging beer consumption across the globe due to the weak global economy and weaker currencies in several of its key markets compared to the U.S. dollar.

Aggressive cost-cutting at AB InBev's U.S. operations as a result of the Anheuser takeover is expected to expand margins there, offsetting profit declines in every other AB InBev market.

AB InBev's executive team, led by Carlos Brito, has pledged $1 billion of cost savings from the merger in 2009 alone, and $2.25 billion in 2008-2010. They've ...More Info

Japanese brewer Suntory Holdings Ltd. said that its net profit in the first half fell 28% from a year earlier, hurt by the yen's strength and higher raw materials costs, Dow Jones reported on August, 7.

The company posted a group net profit of Y8.16 billion, down from Y11.35 billion in the year-earlier period.

The decline is due to the strong yen hurting profits from its overseas business, the privately held food and beverage maker said, adding that higher costs of raw materials and packaging also pressured its bottom line.

The results came after Suntory and Kirin Holdings Co. said last month that they had entered merger talks, in a move that could create a formidable competitor to the world's leading brewer Anheuser-Busch InBev N.V.

"This is a good thing, so we'd like to proceed (with the merger talks) quickly." said Suntory's executive officer Kozo Chiji, but he added that nothing had been decided on the merger.

If the deal goes through, it would create a new food and beverage giant with combined sales of Y3.8 trillion as of 2008 figures, or about $40.9 billion, including about Y1.2 trillion in beer sales.

Suntory's interim sales grew 1.0% to Y731.00 billion in the ...More Info

Mexico’s total beer exports amounted to 5.59 mln hl in the second quarter of 2009, which represents a 3.4% decline as compared to the second quarter of 2008, El Semanario reported on August, 7.

Though the second quarter export volume represents one of the worst performances in 9 years, the result is still better than the 4.8% drop seen in the first quarter, it is reported.

In the June – April quarter of this year, Grupo Modelo’s export volumes shrunk by 4.6%. In contrast, Femsa’s beer exports increased by 2.4%, although its sales in Brazil dropped by 8.4%.

“The export volume contracted by 4.6% but the decrease was significantly smaller than that of the first quarter. We see a recovery in several regions and we are preparing for the summer season,” commented José Parés, Grupo Modelo’s Vice President, International Markets.

According to industry experts, Femsa lost 2.24% of the Mexican beer market to Grupo Modelo in the second quarter. At present, Modelo holds 59% of the domestic market whereas Femsa’s production accounts for the remaining 41%.

Most analysts do not foresee larger beer sales for 2010 yet, sources communicated recently.

There is, of course, some hope that the worst of the economic crisis is behind us, but the recovery will be slow, most experts believe.

However, most brewers must have used their old stocks and purchases by now so that their purchase volumes for 2010 should return to regular levels.

The Drinktec fair of Munich in September is seen as a possible turning point. And the long-term outlook has been unchanged since years: all food and also malt and beer will see a constantly rising demand. But as we have seen once again, the economy and markets do not follow a straight line.

Beer shipments by Japan’s five major manufacturers hit a record low in July due largely to the cool weather, The Mainichi Daily News cited figures released by the companies on August, 12.

The five beer makers' shipments of beer, happoshu, or low-malt beer, and third-category beer posted a year-on-year decline of 11.8 percent last month to 46.18 million cases. One case represents 20 x 633-milliliter bottles.

It was the lowest figure since the industry began keeping statistics using the current method in 1992.

This is the first time that beer shipments have suffered a double-digit year-on-year decline since they fell 18.6 percent in January following a surge in demand a year earlier prior to price hikes.

In addition to the cool weather this year, the decrease in July is also attributable to a rebound from a sharp increase a year earlier as a result of sweltering weather at the time.

Beer makers are desperate to increase sales in August to make up for the decrease last month. However, they are pessimistic about their prospects because there have been fewer fine days this month than normal.

Shipments of the cheapest third-category beer increased 5.2 percent from the corresponding month of last year, while that of regular beer ...More Info

A government initiative to triple the excise tax on beer would be disastrous for the brewing industry, resulting in job losses and crippling smaller producers, members of the Union of Russian Brewers were quoted as saying by the Moscow Times on August, 12.

“The plan being considered by the government will cause production to drop by 40 to 50 percent, and thousands of people will lose their jobs,” said Daniil Briman, vice president of Baltika, the country’s largest brewer. “I don’t think anyone in the government seriously considered the social consequences of this initiative.”

The government proposed filling holes in its 2010 budget, which is now forecast to run a 9.3 percent deficit, with 96 billion rubles ($3 billion) of additional revenues from increased excise taxes, including 63.8 billion rubles from excise duties on beer.

The Finance Ministry plans to increase the tax by 200 percent, from 3.3 rubles per liter to 9 rubles per liter, although it has not said when the new tax would take effect. A draft of the budget was approved last month.

The industry currently employs about 50,000 people, and more than 500,000 work in adjoining sectors, according to data provided by the union.

Union officials did not say how ...More Info

Early 2008 forecasts were still optimistic, but the crisis ended a long beer boom, experts advised in a recent research note.

While a lot of new malthouse projects were halted, a few new factories were built, providing for additional capacity, which is not needed time being.

Brewers had overly large malt stocks and large purchases in their books, which alone would have blocked new malt orders for a while; but brewers reduced their stocks to unprecedented levels, because some of them were squeezed financially by their acquisitions of other brewing companies, most others by the reduced availability and high cost of bank credits.

Lower stock markets had reduced the book value of all major brewery groups, and lower beer sales threatened their P/L and cash flow, experts reported.

With feed barley prices largely at intervention levels (support price) the weight of the sheer size of this year’s EU barley crop has really pressured the malt markets in the last couple of weeks, eFarming reported on August, 9.

Malt prices reached new lows with increased farmer selling and slack demand.

While some weather risks remain across Germany and northern parts of Europe, the quality problems that were expected a couple of weeks ago when the harvest was being delayed by rain, have not eventuated. The favourable yields combined with limited downgrading have lead to an expansion in the expected surplus of malting barley this year in Europe, with estimates as high as 3 mln metric tons.

The higher than expected malt barley surplus may require some malt to be sold into the feed sector and this knowledge has pushed the malt barley premium back into 10 Euros, industry sources report.

US barley crop estimates range from 4.1 to 4.4 mln tons this year, analysts communicated earlier this month.

Canada’s barley production 2009-10 is forecast to reach just 8.7 mln tons.

Barley experts in the US and Canada point to the steady erosion of barley acreage over the past years. In the late 1980’s the combined acreage was 10 mln ha. This year, 5 mln ha were planted, and a further reduction to 4 mln ha is anticipated for the years to come.

Barley yields 3.2 tons/HA on average are expected in North America.

Usage of feed barley will drop fast and deep in the US, experts forecast. There is a risk that barley will become a specialty crop for food and malting, with an obvious supply risk in case of crop failures.

Barley is already a specialty crop in South America and South Africa, a similar situation in North America would leave only the EU, CIS and Australia as feed barley suppliers to the world.

For 2009-10, Canada’s barley seeded area decreased slightly to the lowest level since 1967, Agriculture and Agri-Food Canada (AAFC) reported on August, 7.

Abandonment is expected to rise as more farmers than usual graze or cut their crops for green feed. Production is expected to fall by about 26% to 8.7 mln tons as dry growing conditions cut yields.

Canada’s total barley supply is forecast to fall by 19% to 10.84 mln tons. Domestic feed use is projected to decrease while exports are unchanged at 2.3 mln tons. Carry-out stocks are forecast to fall by 29% to 1.5 mln tons.

The off-board price for barley is forecast to fall slightly while the PRO for malting barley (Sel CW 2-Row) is C$245/t.

Winter barley harvest in the U.K. advances slowly from south to north, frequently interrupted by rains. The harvest of spring barley has not started yet, industry sources report.

English analysts estimate receivals of up to 600,000 tons of winter barley and 2 mln tons of spring barley, leaving an export surplus of up to 800,000 tons. It is essential, though, that the weather improves to allow combines in the fields, experts comment.

B.G. Osborne, G.P. Fox, A.M. Kelly and R.J. Henry

Abstract:
J. Inst. Brew. 113(2), 135–141, 2007 The Single-Kernel Characterization System (SKCS) 4100 was used to test whole grain barley from a replicated breeding trial across two environments and two seasons. Hardness was calculated from a crush response profile of the resistance to shell and endosperm crushing as a function of time. This rheological data recovered was averaged over 300 grains for each sample then partitioned into genetic, environmental and error components in order to calculate the genetic components and heritability. The results demonstrated a high level of genetic variance for all rheological parameters at all sites and years. In addition, the heritability was also moderate to high (68% to 90%) for the SKCS hardness and the rheological parameters that had been previously shown to provide information about endosperm modification during malting. Since the rheological information is recovered for individual grains within a sample, the SKCS 4100 may provide a new tool for screening breeding material for uniformity of quality. Key words: Barley, grain rheology, malting quality, plant breeding, SKCS Load full article, 7 pages, 715 kb , PDF file