Beverages

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.

Heineken sets premium bar high for rival AB InBev

13 Feb 2019

The world’s two mega-brewers are aggressively wooing customers to pay up for higher-quality, and craftier, suds. The Dutch brewer’s full-year results suggest it’s managing the shift well despite - or perhaps because of - the increased heft of its $129 bln competitor.

Pernod Ricard half answers Elliott critique

7 Feb 2019

The spirits maker converted more sales into operating profit in the second half of 2018, and promised higher growth and more savings. That addresses some of the activist investor’s concerns. But it glossed over worries about the family-dominated board lacking outside perspective.

Asian drinkers justify Carlsberg’s premium price

6 Feb 2019

The Danish brewer trails bigger rivals AB InBev and Heineken in terms of profitability, yet trades on a higher multiple of earnings. That reflects the promise of higher margins, and greater exposure to growth in China and India. A $491 million share-buyback plan helps too.

Elliott’s Pernod overhaul can start with wine

6 Feb 2019

The spirits maker’s wines could be worth 2 billion euros including debt. Following rival Diageo’s lead by selling lower-margin wine brands could boost Pernod Ricard’s share price. That might keep aggressive activist shareholder Elliott at bay.

Pernod Ricard takes baby step towards Elliott

24 Jan 2019

The French spirits maker has named a lead independent director. The increased focus on corporate governance is a welcome start and one of the demands of the activist investor. More radical changes and cost cuts will be needed to close its operating margin gap with rival Diageo.