Beverages

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.

Starbucks will start brewing a venti Chinese deal

3 Jan 2019

The $80 bln coffee chain is targeting big mainland expansion, with some 6,000 stores by 2022. Such bold plans will run up against stiffer competition and trade-war-related pressure on U.S. companies. Starbucks would be smart to find local backers the way McDonald’s and Yum did.

U.S. disposal helps clear Diageo’s sales hangover

12 Nov 2018

The booze giant is offloading cheap-and-cheerful drinks like Popov vodka and Black Haus schnapps to rival Sazerac for $550 mln. Forswearing discount spirits, where sales are declining, should give investors a clearer view of consumers’ demand for its more expensive tipples.

Starbucks hasn’t got recipe quite right yet

1 Nov 2018

The coffee chain’s same-store sales increased 3 percent, as it got customers to spend more per transaction while tweaking menus and working practices. Boss Kevin Johnson’s experiments are helping to turn around the lackluster U.S. business. But profitability isn’t keeping pace.

Constellation investors aren’t buying weed yet

26 Oct 2018

The $40 bln drinks company may sell some wine brands to focus on buzzier businesses. Its $4 bln investment in cannabis vendor Canopy Growth hasn’t done anything for shares, though. Pot and beer may eventually be a potent combination, but shareholders regard it as a pipe dream.

AB InBev debt detox points to flat future

25 Oct 2018

The Bud owner halved its dividend to pay down a debt mountain from buying SABMiller. This should free up $4 bln annually, but it could take eight years to hit its leverage targets. Any more trouble in emerging markets will mean an even longer wait for clear heads.

Is Howard Schultz a Starbucks asset or liability?

9 Oct 2018

Bill Ackman, whose Pershing Square unveiled a $870 mln stake, thinks a presidential run by its retired founder might protect the coffee chain’s China business. Yet a liberal campaign could stymie expansion in America’s red states. Schultz’s days as a stock booster may be over.

Pepsi’s fizzy water deal may have flat aftertaste

20 Aug 2018

As CEO Indra Nooyi departs, the drinks giant is buying SodaStream for $3.2 bln. Diversifying into the high-growth carbonated water market has strategic logic, and Pepsi has cash. But new boss Ramon Laguarta will need sparkling revenue growth to make a decent return.

Carlsberg’s drinking game victory looks temporary

16 Aug 2018

The Danish brewer’s second-quarter sales grew a better-than-expected 7.6 pct. The World Cup turned its big Russian business from a drag into a boon. While Carlsberg now trades at a premium to Heineken and AB InBev, less exposure to emerging markets means the bump is temporary.

Diageo could use a chaser as it runs up China tab

26 Jun 2018

The British booze giant wants to spend some $900 mln to own a majority of Sichuan Swellfun. A rally in baijiu stocks means Diageo is buying high again. Absolute control offers defensive value, but a broader strategy will be equally important against $150 bln Kweichow Moutai.

Starbucks boss seeks smoother second shot at exit

4 Jun 2018

Howard Schultz is leaving the company he built into a global icon, and he may even run for U.S. president. He stepped away in 2000, but came back eight years later. If he’s to quit Starbucks for good this time, the coffee chain will need ideas that stay fresher for longer.

AB InBev is one step short of a strong footing

1 Mar 2018

The world’s top brewer served up better-than-expected EBITDA in the fourth quarter and a welcome chaser of volume growth. That will soothe investor worries that ruthless cost cuts are hurting sales. Now it needs to reverse falling market share in its most important U.S. market.

Dr Pepper settles too readily on drinking partner

30 Jan 2018

The $21 bln beverage group’s deal to sell itself to coffee maker Keurig leaves shareholders some 25 pct richer. It’s not the greatest brand. But based on savings achieved in other mergers, Dr Pepper should be able to extract more. Either rivals lack ambition or the company does.

Mondelez slurps Coke’s returns in Dr Pepper deal

29 Jan 2018

The Ritz cracker maker looks to have doubled its $2 bln investment in coffee maker Keurig, now merging with drinks group Dr Pepper. Mondelez’s gain is largely the result of others’ efforts. Pity Coca-Cola, which sold a stake in Keurig just as things started to get interesting.

JAB takes gulp from 3G with Keurig-Dr Pepper deal

29 Jan 2018

The private group’s coffee-pod company is buying the soda and tea outfit, creating a drinks giant potentially worth over $30 bln. Having bought and then cut costs at Keurig, JAB and its partners can apply themselves to Dr Pepper. It’s reminiscent of the architects of Kraft Heinz.

Global giants see Vietnam through beer goggles

1 Dec 2017

The young, hops-happy country is in the sights of big brewers like Asahi and AB InBev. Global growth is as dull as a flat pint. But the presence of entrenched interests, tech-like multiples and the mixed experience of early players should give pause.