Posts Tagged ‘Coca Cola’

A much more global World Cup

June 24, 2010

Watching the World Cup football in the wee small hours, I have been struck by something (other than the horrific refereeing and those damn horns): the tournament sponsors.

This Cup may go down as the real turning point in the global economy where emerging market brands (i.e. those from non-First World nations) stepped out into the public eye. Look at the list of official FIFA partners and sponsors (the ones exciting me are in green):
– Adidas (Germany)
– Coca-Cola (US)
– Emirates (UAE)
– Hyundai-Kia (South Korea)
– Sony (Japan)
– Visa (US)
– Budweiser (US-Belgium-Brazil)
– Castrol (UK – it’s BP-owned)
– Continental (Germany – auto parts and tyres)
– McDonalds (US)
MTN (South Africa – telecoms)
Mahindra Satyam (India – IT and consulting)
Seara (Brazil – foodstuffs)
Yingli Solar (China – solar/energy)

This contrasts very markedly with the list from just 4 years ago: Adidas, Budweiser, Avaya, Coca-Cola, Continental, Deutsche Telekom, Emirates, Fujifilm, Gillette, Hyundai, MasterCard, McDonald’s, Philips, Toshiba, and Yahoo!.

The BRICS firms (well, actually BICS) have stood up in joining the Emirates on the scrolling billboards etc. Building powerful, recognised brands will be the next important step for firms from these emerging giants.

Of course, hosting the tournament is a big rite of passage also (Brazil’s up next), and brands can piggyback on this opportunity. Disappointingly the local South African sponsors (beyond MTN – they are listed on the FIFA link) have not been particularly interesting or international in their focus.

I’m sure we’ll see more familiar brands come Brazil 2014 – Havaianas anyone?

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Whose shout is it again?

January 5, 2009

Here is a handy summary of the manoeuvring in the Australian drinks markets in recent months. The current offers on the table are:

– NZ brewer Lion Nathan (46% owned by Japanese brewer Kirin) pitching for Coca Cola Amatil (who bottle and distribute soft drinks and beers and are roughly 30% owned by US firm Coca Cola Company) (discussed earlier here).

– Japanese brewer Asahi bidding for the Aussie Schweppes business (but potentially scuppered by Coca Cola Company) (discussed earlier here).

The Asahi offer throws up the possibility that the firm may either expand its relationship with Aussie brewer Fosters’ or go head to head with them. The firm claims to be biding its time until Fosters’ sorts out whether it wants to stay in the wine business.

Meanwhile, a raft of potential international bidders remain on the horizon for Fosters’ beer business if they can dump the less profitable (and less stable) wine arm, including Moors Colson, SAB Miller, presumably the aggressive Anheuser-Busch Inbev or even Coca Cola Amatil (if they can survive the Lion Nathan bid).

This is well and truly a game of chess in terms of the moves and countermoves we are likely to see over the next 6 months. The wild cards in the pack are (i) the competition regulator in Australia (the ACCC), who might deem any one of these current proposals (or any move by Coca Cola Amatil) unacceptable on the basis that rivalry will be reduced,and (ii) the Foreign Investment Review Board could deem an international acquisition of Australian assets to be outside the national interest. The latter is extremely unlikely given the current level of international involvement.

It still remains very unclear whether if there are clear and valuable synergies here.

Are there genuine economies of scope between the distribution of soft-drinks and beer?

Fosters’ experience seems to indicate that the wine and beer don’t mix well, despite sharing the same retail outlets.

Why would we expect the non-alcoholic and alcoholic product lines to gel any more effectively?

Or, in the end, is this just a simple grab for a currently very profitable, oligopolistic Aussie beer market?



More action brewing?

December 29, 2008

The moves in the usually dormant Australian brewing sector just keep coming. A month or so after Lion Nathan made a play for Coca Cola Amatil (discussed in this post), we see another takeover, this time from Japanese brewer Asahi.

Asahi look have puchased the Australian Schweppes business from Cadbury. This gives them access to various soft drink, bottled water and cordial brands, including the bottling and distribution rights to Pepsi and Gatorade stables down under.

On all accounts, Asahi outbid fellow Japanese beer giants Suntory and Kirin, as well as Coca Cola Amatil (CCA). It is still possible the US Coca Cola Company (CCC) could scupper the deal with a counter offer (due to a “last rights” arrangement dating back to the late 1990s). It is unclear whether CCC will exercise this right, nor is it clear how Australian competition regulators would view a greater Coca Cola presence in the market. Also CCC would need to offload the Pepsi business thus reducing the gains from any purchase.

While soft drinks (and other non-alcoholic beverages) are undergoing such a shakeup, the big questions remains whether Asahi are planning to also expand into brewing down here. Currently, their beers are distributed through Fosters in Australia. It is conceivable that Asahi could expand into their own brewing and distribution using the Schweppes facilities and value chain. Asahi have been innovators before. Their launch of the Super Dry product is much studied, as it launched from a minor to a major player in the Japanese market.

Or perhaps they are just going to bombard our market with a huge range of soft drink products from Japan. Canned coffee anyone?

More beer shake-ups down under

November 17, 2008

As I flagged in yesterday’s post, the Australian beer industry looks a prime target for takeovers by international players, as it highly profitable and fairly isolated from the major international brewers. There has been much talk about a potential takeover of Foster’s by one of the big global players, such as Molson Coors (who have recently taken a 5 percent holding). Well, today, we’ve seen the other big player in the Aussie market, Lion Nathan make a bid for Coca Amatil.

This is a rather complex international business scenario (please bear/beer with me).

Lion Nathan were originally a merger of New Zealand’s two biggest domestic brewers. They subsequently became a major presence in Australia in 1990 via the acquisition of the nation’s second largest bundle of brewing assets (principally Tooheys and Castlemaine Perkins). Their brands currently represent just over 40 percent of the Australian beer market. Over time, the major shareholder of Lion Nathan has become Japan’s second largest brewer, Kirin (itself part of the Mitsubishi group). Kirin currently hold a 46 percent stake in Lion Nathan. Kirin also own National Foods, Australia’s largest dairy and juice company (acquired via Kirin’s holding in Filipino brewer San Miguel.

Coca Cola Amatil (CCA) are the bottlers and distributors of the ubiquitous black fizzy stuff in Australia, New Zealand, Fiji, Indonesia, Papua New Guinea, and South Korea. They also have their fingers in the bottled water, juice, canned fruit and coffee markets down under. They recently entered a joint venture with global brewing giant SAB Miller to distribute a couple of major labels in Australia (Peroni and Miller), and also took over a fledgling craft/microbrewer Blue Tongue. The major shareholder (at around 30 percent) in CCA is The Coca Cola Company back in the US (the folks who own the Coca Cola brands)

So is this the consolidation and acqusition play we expected? And is it all about beer assets?

That’s the tricky question here. The CCA/SAB Miller joint venture was supposed to see some competition for Foster’s and Lion Nathan, as CCA’s distribution network into retailers should have overcome the typically high barriers to entry in the market (alas, beer vending machines were fairly unlikely under Australian liquor licensing laws).

If Lion Nathan were successful in acquiring CCA we would be back to square one in terms of competition in the Australian beer market. It is hard to imagine Lion Nathan placing too much emphasis on the minor Peroni, Miller or Bluetongue brands. They may find some use for the CCA distribution network however.

It is more likely that this is a bigger food and beverage story. Kirin would be building a very considerable holding in the non-alcoholic beverages segment if it ended up owning both CCA and National foods. The extent of complementarities of assets across the alcoholic and non-alcoholic beverage segments is still unclear, but market power is market power, and this new beast would be wielding a hell of a lot of it with Australian retailers.

This tale highlights the complexity of telling (and researching) single-industry stories, at either the domestic or international level. The reality is that firms often reach across markets, in terms of both products and countries (I have not even mentioned the additional burden of wine holdings for the Australasian brewers). Trying to untangle motives is a real challenge for scholars (and competitor firms).

It will be intriguing to see the next move in this chess game. The big international brewers are surely still circling.