Combination Will Create One of the World’s Five Largest Consumer Products Companies;

Company to be Named Anheuser-Busch InBev;

Budweiser to Expand Globally; Transaction Will Yield Cost Synergies of at Least $1.5 Billion Annually by 2011; Neutral to EPS in 2009 and Accretive Beginning in 2010;

St. Louis, Missouri will be North American Headquarters and Global Home of Flagship Budweiser Brand;

Fully Committed to Support Wholesalers and Three-Tier System; All U.S. Breweries to Remain Open; Commitment to Communities of Combined Company Maintained

InBev and Anheuser-Busch announced on July 14 an agreement to combine the two companies, forming the world’s leading global brewer. Anheuser-Busch shareholders will receive $70 per share in cash, for an aggregate equity value of $52 billion, in an industry-transforming transaction. The combined company will be called Anheuser-Busch InBev. Both companies’ Boards of Directors have unanimously approved the transaction. InBev has fully committed financing for the purchase of all of Anheuser-Busch’s outstanding shares.

The combination of Anheuser-Busch and InBev will create the global leader in the beer industry and one of the world’s top five consumer products companies. On a pro-forma basis for 2007, the combined company would have generated global volumes of 460 million hectoliters, revenues of $36.4 billion (€26.6 billion) and EBITDA of $10.7 ...More Info

InBev’s $52 billion takeover of Anheuser-Busch has created not only the largest brewer in the world but also the largest one in China, Business Week commented on July 14. "The sale of Anheuser-Busch to InBev will not alter Anheuser-Busch's leading position in China, but it will dramatically strengthen InBev's presence in the Chinese market," Zhigang Tao, professor at the University of Hong Kong's Faculty of Business & Economics wrote in an e-mail.

Before the merger, InBev was stuck in fifth place among breweries in China, behind China Resources Snow Breweries, Tsingtao Brewery, Yanjing Brewery, and Anheuser-Busch. With the merger, InBev not only gains control of Anheuser-Busch's breweries in China, but also two of the American brewer's crown jewels: its 27% stake in Tsingtao and 100% ownership in Harbin Brewery, which combined dominate China's mid-tier beer market. "One of the things that makes this deal attractive for them, in terms of a China perspective, is that there's a shoo-in with that relationship with Tsingtao," points out Matthew Crabbe, director of Access Asia, a British market research firm based in Bristol.

Fragmented Market Hurts Margins China's title as the world's biggest beer market, with 1.3 billion thirsty Chinese drinking 39 million kiloliters last ...More Info

The combined company Anheuser-Bush InBev would have about $36.4 billion (23 billion euros) in annual net sales, and would brew about a quarter of the world's beer. But the powerful fusion may not create much of a ripple in one of the world's most important beer markets -- Germany. Germans love their brew to be made close to home, and have little patience for foreign ales.

In an interview with DW-WORLD.DE, Marc-Oliver Huhnholz of the German Brewers’ Union said despite the fact that InBev produces Beck’s, one of Germany’s most famous beers, the new merger is not expected to have a major impact on the German market.

How do you think this will affect the brewing industry in Germany?

“You have to understand that the German brewery sector, or the German market, is very singular, and not comparable to other markets in the world. It’s because of the German people who love their German beer. So it’s very hard for a foreign company to get into the market, and we have seen that. Anheuser-Busch tried some years ago to jump into the market, but wasn’t happy with this because the Germans, as I mentioned before, love their German beer. ...More Info

Representatives of the Bulgarian Union of Brewers announced July 14 at a press conference that its members had invested about BGN 70 mln (EUR 35.7 mln) in their production facilities in the first six months of 2008, according to Novinite.

Compared to the investments for the same period of 2007, this year's sum is BGN 7 M lower.

Carlsberg Bulgaria tops the rankings with its investment of BGN 37 mln (EUR 18.9 mln), followed by Zagorka with BGN 19.1 mln (EUR 9.7 mln), and Kamenitza with BGN 9,5 mln (EUR 4.8 mln).

In January-June Zagorka was the largest beer producer in Bulgaria with 1 710 053 hectolitres, followed by Kamenitza with 1 542 362 hectolitres, and Carlsberg with 1 459 542 hectolitres. Bolyarka and Lomsko Pivo are fourth and fifth with 533 619 and 123 951 hectolitres respectively.

The Bulgarian brewers export only 2% of their production mostly to Romania, Hungary, and countries with many Bulgarian immigrants such as USA, Italy, Spain, Portugal, and Greece.

The Union of Brewers announced also that in 2007 the Bulgarians consumed about 70 liters of beer per capita compared to 160 in Ireland, and 130 in Germany and the Czech Republic.

The highest levels ...More Info

Hanoi-Beer-Alcohol-Beverages Corp., a Vietnamese brewer partly owned by Carlsberg A/S, announced its pretax profit fell 9 % in the first half because of a surge in the cost of malt used to produce beer, Bloomberg communicated on July 16.

Pretax profit at the Hanoi-based brewer, commonly known as Habeco, fell to VND247 billion (US$15 million) from VND271 billion in the same period last year, according to a statement posted on its website.

The maker of the “Hanoi Beer” brand said the price of malt, which makes up 70 % of the raw materials needed for beer, rose 40 % in the first half.

Increases in global commodities prices, including the rice and sugar needed for its products, are hurting Habeco, Chairman Le Ba Co said.

“Fast inflation, plus unexpected global increases in prices of food and energy have put our company in a very difficult situation,’’ Hanoi-based Co. said in an interview Tuesday. “Prices of just about every raw material have increased rapidly in the first six months.’’

Vietnam’s inflation quickened to 26.8 percent in June from the same period last year, the fastest pace since at least 1992. Prices in the category that includes rice rose 45.6 percent, the General Statistics Office ...More Info

A new study says China, the world’s top beer-producing country, produces almost a quarter of the world's beer, AFP commented.

According to the study in 2007 China boosted its market dominance producing 22.0 % of the global beer supply, compared to 20.6 % the year before, the study held by German hop trader Joh Barth and Sohn revealed. China brewed about 394 million hl of beer, marking an 11.8% jump in output.

The second largest beer producer last year was USA with almost 234 mln hl of beer a 1.2 % increase year-on-year. Russia was ranked on the third place producing about 116 mln hl of beer a 16% growth compared to 2006.

Germany, which has the highest per capita beer consumption on the planet, saw beer production fall two per cent to 105 million hectolitres - placing it fourth among beer brewing countries behind China, the United States and Russia.

Global beer production hit 1.8 billion hectolitres, 5.2 % higher than last year, according to the same study.

Now that InBev has snared Anheuser-Busch Cos., the Belgian company might already have its eye on another brewer: Grupo Modelo, St. Louis Post-Dispatch posted on July 15.

Analysts say InBev could seek the other half of Modelo, the Mexico City-based maker of Corona, Modelo Especial and 10 other beers. In a relationship that started in 1993, Anheuser-Busch has a 50 percent stake in Modelo.

"I would not rule out the possibility of (Modelo) selling out to InBev — if they get the right price," said Tufic Salem, a beverage analyst for Credit Suisse in Mexico City. s the Anheuser-Busch deal with InBev proceeds, Modelo's role in the new company will be part of the talks.

At least initially, though, Modelo says it has some bargaining power.

Through its deal with Anheuser-Busch 15 years ago, the Mexican brewer has contractual rights that prevent A-B from selling its stake without Modelo's consent. These rights don't appear to be applicable with a "change-of-control" situation, which will happen when InBev takes over A-B.

However, Modelo now says it would have to approve a partnership with InBev before any deal is finalized. In a statement late Sunday, the company said it has been in "active ...More Info

SABMiller, the world's second-largest beer maker, says it believes that InBev's takeover of its rival Anheuser-Busch will give it an opportunity to build on its MillerCoors venture in the US, Business Day commented on July 15.

Imara SP Reid analyst Warwick Lucas said Anheuser held more than 50% of the US beer market. With such a dominant position, the chances of it growing market share were slim, so it had little option but to cut costs. "This deal is good news for SABMiller" in the US, Lucas said.

With Anheuser-Busch focusing on cost-cutting, SABMiller could mount a challenge to the brewer's dominance in the US. The InBev takeover could result in "significant disruption" of Anheuser's operations, SABMiller said yesterday. Anheuser is MillerCoors' biggest competitor in the US.

Anheuser accepted a takeover offer of $52bn from InBev, a 27% premium to Anheuser's highest share price in October 2002, to create the world's largest beer maker and end a month-long standoff.

SABMiller said it would be a challenge for InBev to extract $1,5bn of cost savings from Anheuser-Busch.

The deal sees InBev regain the top world brewing position it lost to SABMiller last year with the London-based group's strong growth in China and its Grolsch acquisition.

In October, ...More Info

The EU expects a large grain crop of good quality. Planting and vegetation conditions in large parts of Europe were very good, the West and Southeast looks particularly favourable. Harvest of winter barley has started all over the south and centre of the continent, analysts commented by the end of June 2008. The one part, which was less lucky, too dry too long, was the Northeast, all countries around the Baltic Sea. Lately, even these countries recorded good precipitation, but the question is, how much damage has already been done.

Coceral predicts an EU-27 total grain crop of 289 million tonnes vs. 254 million tonnes last year. Wheat and maize (corn) show the largest increases of 29 resp. 9 Mill. tons. By comparison the increase of the barley crop from 57 to 61 million tonnes looks modest. Barley crops of 1 million tonnes in Romania and 720.000 tonnes in Bulgaria makes these two countries competitive in the feed barley export market from Black Sea ports. The Spanish barley crop looked very poor before the heavy rainfalls of late April till early June, but now the official crop estimate has been increased to 9.9 million tonnes and private sources anticipate a ...More Info

Barley is Russia’s second most important grain export, averaging 2 Mt annually, Agriculture and Agri-Food Canada published in one of their bulletin on July 11. In 2002, Russia exported a record 3.1 Mt of barley, of which 1.6 Mt went to Saudi Arabia. Of the 50 countries that bought Russian barley over the 2001-2005 period, the following 5 countries accounted for about 70% of those exports: Saudi Arabia (4.5 Mt), Israel (1.0 Mt), Iran (0.7 Mt), Libya (0.6 Mt), and Cypress (0.6 Mt).

Export tariffs is one of mechanisms used to regulate food prices. In early 2008, Russia imposed a 40% tariff on wheat and barley exports. However, the tariff is not expected to be extended beyond July 1, 2008 due to forecasts of a good harvest this year. It must be noted that the price freeze on food items such as bread was discontinued on May 1, 2008.

Russian barley lower production, due to reduced seeded area and yields, is a major factor in the decline in available supplies for 2007-2008. As a result, exports and domestic consumption are expected to decrease significantly, and carry-out stocks are expected to be the lowest in recent years.

Barley production 2008-2009 is ...More Info

Karel Krofta, Alexandr Mikyška, and Danuša Hašková

Abstract

J. Inst. Brew. 114(1), 3-13, 2008 The method based on the reaction of stable DPPH radical proved to be the best for the determination of antioxidant characteristics of hops and hop products. Antioxidant activity is expressed as the rate of decline in absorbance of the reaction environment and assessed in relative percents. Differences in the values of antioxidant activity were determined in Czech and foreign hop varieties. The highest antioxidant activities in the scope of 70 to 80% rel. were measured in Saaz and Spalter Select. Antioxidant activity in most of the varieties moved in the scope of 40 to 60% rel. A part of antioxidant activity of hops is irreversibly lost in the course of drying. The loss does not usually exceed 5% of the original RADPPH value. Drying also resulted in a decrease of polyphenol compound contents. Drying in belt and chamber kilns is comparable from the point of view of preserving hop antioxidant properties. Results of determination of antioxidant activity in hot water extracts of raw hops and ground hops were comparable and statistically non-significant. The same held true for pelletizing of ground hops. The antioxidant activity of raw hops declined in the course of long-term storage in dependence on storage temperature. Storage temperature had no effect on the antioxidant activity of the hop pellets packed in a multi-layer foil without air access.... Load full article, 7 pages, 246 Kb, PDF file