Beverages

Moutai investors channel their inner Carl Icahn

13 Aug 2019

Scrappy shareholders challenged the $180 bln Chinese distiller, echoing the U.S. activist’s tilts at titans such as Apple. State-backed Kweichow Moutai will sidestep a vote and cap related-party deals. There’s more work to be done, however, on Beijing-linked corporate governance.

Kirin’s Japanese makeover is only half pretty

7 Aug 2019

The Japanese brewer is buying 30% of cosmetics and kale juice maker Fancl for $1.2 bln. Diversifying away from booze makes sense; rivals are doing it too. But paying a multiple of almost 40 times earnings, over twice the buyer’s own, for a minority stake is not a good look.

How China turned wine into vinegar for Remy

29 Jul 2019

Remy Cointreau spotted China’s wine potential too soon. Its 1980 joint venture proved a ground-breaking disaster. The venture’s shares, halted for six years amid fraud allegations, have resumed trade at half the closing price. Sometimes it’s worst to be first.

Heineken outlook only stacks up after a few pints

29 Jul 2019

The $62 bln brewer saw first-half operating profit rise only 0.3% year-on-year, but still assumes mid-single digit growth in 2019. Higher prices used to offset changing drinking trends. They will need to once again for CEO Jean-François van Boxmeer to avoid a new year hangover.

AB InBev makes Australia sale look like insurance

25 Jul 2019

Sales and EBITDA at the $163 bln brewer expanded strongly in the second quarter. It's a decent recipe for gradually reducing its $104 bln debt load. But the decision to sell AB InBev's business Down Under to Asahi suggests CEO Carlos Brito doesn't want to rely on that.

Asahi Aussie deal passes all but one sobriety test

22 Jul 2019

The Japanese brewer is buying AB InBev’s Australian unit for $11 bln. It’s a highly profitable business that ticks lots of boxes for Asahi, but justifying the price requires clever cost savings. Asahi will have to take a more proactive approach than usual to make the deal work.

Irn-Bru maker learns limits of customer virtue

16 Jul 2019

Soft-drinks maker A.G. Barr’s shares fell by 26% after it forecast weaker-than-expected sales. One factor was the UK tax on sugar, another was punters’ reluctance to pay up for healthier recipes. Hoping to keep selling both safer and more-profitable products is backfiring.

AB InBev checks into prolonged debt detox

15 Jul 2019

Cancelling the IPO of its Asian unit leaves CEO Carlos Brito with few options to quickly reduce net debt of $102 bln. Flogging Budweiser and Corona should bring borrowing below 2 times EBITDA, but not until 2023. The deal-happy group has no choice but a period of abstention.

Morgan Stanley’s Asian crown gets Bud-shaped dent

15 Jul 2019

The Wall Street bank, along with JPMorgan, led AB InBev’s now-scrapped $9.8 bln listing of its Asia unit. The bankers either misread the market, or caved into the clients’ pricing demands. Either way, it takes the shine off Morgan Stanley’s local league-table pre-eminence.

Budweiser’s IPO swagger turns into a drunk stumble

12 Jul 2019

AB InBev delayed pricing a $9.8 bln listing of its Asia unit, hinting at poor demand for the year’s biggest float. Boss Carlos Brito and his bankers didn’t leave room for manoeuvre, setting a punchy price range and shunning cornerstone investors. The result is an early hangover.

Elliott pounced on the wrong booze company

4 Jul 2019

The activist made a 1 bln euro bet on Pernod Ricard in December, arguing the French spirits group could be more profitable and better run. The Absolut maker’s shares have bounced 17% since. That’s about par with the market. But its arch-rival Diageo has done even better.

AB InBev’s debt belly needs more than fizzy growth

7 May 2019

Pricier beer helped the brewer’s first-quarter sales rise faster than expected. Yet AB InBev still has an unsightly debt pile and is battling falling volumes in key regions. An IPO of its Asian operations sooner rather than later would help investors breathe more easily.

The Exchange: Marco Polo 2.0

23 Apr 2019

Italy irked the United States by backing Beijing’s grand infrastructure plan. The country needs to improve ties with the People’s Republic to sell more wine and other exports, says Rome’s top China expert. Overcoming trade barriers will, however, require an EU team effort.

China’s wannabe Starbucks brews a muddy IPO

23 Apr 2019

Luckin Coffee is rushing to deliver a New York listing before its business plan leaks. Its prospectus argues fair value doubled in three months, and an April round put the company’s worth at nearly $3 bln. Its money-losing model and murky corporate structure leave a bitter taste.

Viewsroom: Wells Fargo searches for a leader

11 Apr 2019

The U.S. bank may be tempted to recruit from splashy peers like Goldman Sachs. But there are better reasons to poach from smaller firms. Meanwhile, the $170 bln Chinese liquor maker Kweichow Moutai is worth more than Diageo. Breakingviews columnists discuss the firewater’s draw.

China’s firewater punch diluted by a political put

9 Apr 2019

The $170 bln Kweichow Moutai is now worth about as much as Diageo, Pernod, Campari and Remy combined. Eye-popping earnings and foreign interest have fuelled a 50 pct stock price surge this year. But officials in Beijing keep its valuation from reaching maximum intensity.

AB InBev shareholders get more smoke, less 3G

20 Mar 2019

The brewer nominated former Altria CEO Martin Barrington as chairman. Though he’s not linked to the Brazilian investment firm that jointly controls the $143 bln company, the Marlboro maker is a shareholder. Investors who want a more radical shake-up have an opportunity to say no.

Goudet exit shows AB InBev model’s last dregs

6 Mar 2019

Chair Olivier Goudet is leaving the brewer because of conflicts with his role at JAB. Both groups share a taste for buying assets, and cutting costs. Yet the tension with JAB’s Snapple or Dr Pepper brands shows the strategy’s limits, and AB InBev’s need to go beyond alcohol.

LVMH-Pernod bid talk makes for watery cocktail

4 Mar 2019

Ever since activist Elliott showed up at Pernod, Paris has been awash in speculation that LVMH covets the $46 bln spirits group. Adding booze brands like Absolut to its portfolio would dilute LVMH’s luxury profile. Bernard Arnault’s public disavowal of a deal is believable.

Strong dollar gets up Coca-Cola’s nose

14 Feb 2019

The beverage giant is forecasting reasonable sales and strong operating profit growth, but expects a big hit from currency moves. Cutting costs to compensate is hard amid competition from rivals like PepsiCo. If Coke can’t adjust, its premium valuation will have to instead.