Brew News

Brew Blog’s picks of news stories from the beer business and beyond.

Supermarket beer volume fell 0.4 percent during the four weeks ended April 26, according to beer sales statistics from Nielsen. Miller volume share fell 0.5 points while dollar share fell 0.3 points. Anheuser-Busch volume share declined 0.1 points and dollar share dropped 0.4 points. Coors volume and dollar share both increased by 0.8 points. Imports gained 0.1 points of volume share but dollar share slipped by 0.2 points. Craft volume share was up 0.3 points and dollar share was up 0.7 points.

The entry price for a Super Bowl commercial will be $3 million next year, the Wall Street Journal reports. But longtime buyers won’t necessarily have to pay that much. From the story: “Anheuser-Busch, for example, has locked in a rate of about $2 million for each of its spots, according to a person familiar with the matter.”

The St. Louis Post-Dispatch explores the potential impact of an economic slowdown on the beer business.

Diageo Expanding Parrot Bay Lineup

Key Lime on tap.

Yet another new lime line extension?

That seems to be the case as Diageo appears poised to add a Key Lime line extension to its popular lineup of Captain Morgan Parrot Bay rums. The distiller recently received label approval for the brand from federal regulators.

Parrot Bay is a flavored white rum sub-brand of Captain Morgan, the No. 2 rum behind Bacardi. Key Lime joins coconut, mango, pineapple and passion fruit.

The Parrot Bay moniker also appears on a lineup of flavored malt beverages.

Rum sales grew 5.1 percent in 2007, according to figures from the Beverage Information Group.

Here's the label image for Parrot Bay Key Lime.

Here's the label application for Parrot Bay Key Lime.

Can Prepared Cocktails Take Share from Beer?

Diageo has high hopes for lineup.

Spirits growth has cooled as the economy has slowed and people increasingly stay at home rather than go out.

That trend, some observers suggest, should help beer.

In a recent interview with the Miami Herald, Diageo CEO Ivan Menezes acknowledges seeing “a slight shift from going out to at-home consumption.” He adds Diageo is well positioned to capitalize on at-home consumption.

One way Diageo hopes to get sales from people who are staying away from clubs in favor of staying home: prepared cocktails.

Pernod Gets Absolut

Swedish distiller fetches $9 billion.

French distiller Pernod Ricard SA announced on Monday that it's buying Vin & Sprit, the Swedish maker of Absolut, for about $9 billion.

Pernod, the marketer of Seagram’s gin, Chivas Regal Scotch Whisky and Jameson Irish Whiskey, said the iconic vodka brand fills a hole in its portfolio.

From the Wall Street Journal:

Pernod Chief Financial officer Emmanuel Babeau said that Absolut was the "best asset" to fill the gap in Pernod Ricard's premium vodka-product line. He said the acquisition will significantly strengthen the company's growth profile.

Pernod beat out other bidders, including Fortune Brands (the marketer of Jim Beam), Bacardi and a Swedish private-equity firm.

Many observers had pegged Fortune as the bidder to beat because it already distributed Absolut in the U.S. But the Wall Street Journal -- which broke the story -- suggests that Fortune’s ability to bid may have been hurt by weakness in the housing market. Fortune, a conglomerate, makes construction equipment including faucets.

Fortune said the price was too steep:

Fortune Brands Chief Executive Bruce Carbonari said he had hoped the company could buy Absolut "at the right price" but that shareholder interests came first.

"We didn't see the appropriate return for our shareholders at the announced price, so we preserved our financial flexibility to create significant value in other ways," he said in a statement.

Fortune is now buying back shares as well as an equity stake in its spirits business that's held by V&S.

Fortune also said it will continue to distribute Absolut in the U.S. until 2012, under terms of its current joint venture.

The Wall Street Journal story can be seen here.

CNNMoney's coverage of Fortune can be seen here.

Tabasco Tequila?

Spicy brand latest example of cobranding.

Tequila’s a hot category. Heaven Hill Distilleries Inc. is trying to make it hotter.

The distiller has received label approval from the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau for Tabasco Premium Gold, described on the label as a “spicy tequila.”

The label, emblazoned with the Tabasco logo, calls it a “premium tequila with Tabasco brand pepper sauce & other natural flavors.” Tabasco sauce is the property of the privately held McIlhenny Company.

Tabasco sauce already is used as an ingredient in some tequila cocktails.

The new product seems reminiscent of Anheuser-Busch using Clamato, from Cadbury Schweppes, as a branded element of its Bud Chelada and Bud Light Chelada.

The label can be seen here.

The label application can be seen here.

Diageo Buys Stake in Ketel One

Drops out of Absolut hunt.

Diageo is opting to buy into a small but fast-growing premium vodka rather than a big, established one.

The world’s biggest distiller announced today that it’s paying $900 million for a 50 percent stake in a company that will distribute the Dutch vodka Ketel One.

In doing so, Diageo says it’s dropping out of the bidding war for Absolut.

From Bloomberg’s coverage:

Ketel One has ``huge'' growth potential because the brand is smaller than Absolut, Chief Executive Officer Paul Walsh said in a Bloomberg Television interview.

Walsh discussed his plans for the brand:

Diageo aims to expand distribution of Ketel One to Europe and Latin America, Walsh said. He forecast sales growth for the vodka of more than 20 percent a year, in line with the ``super premium'' spirits market.

The Bloomberg story can be seen here.

A Surge of Mojitos

New Bacardi rum, Parrot Bay FMB on tap.

Two of the biggest spirits marketers are poised to capitalize on the growing popularity of the mojito cocktail.

Bacardi USA has registered the label for Bacardi Classic Mojito – apparently a mojito-flavored rum with 30 percent alcohol by volume – with the Missouri Division of Alcohol and Tobacco Control.

Diageo North America, meanwhile, appears ready to roll out two new mojito-related beverages.

It has received label approval from the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau for Captain Morgan Parrot Bay Mojito. The brand would be the newest extension for the popular Captain Morgan Parrot Bay FMB lineup.

It also has received label approval for two mojito-themed ready-to-drink products under the T.G.I. Friday’s On the Rocks label: Berry Mojito and Passion Mojito.

Constellation Cuts Outlook

Acquisition costs a factor.

Constellation Brands -- which markets brands including Svedka vodka and Robert Mondavi wines and owns a stake in Corona Extra’s importer -- on Tuesday cut its earnings outlook for its fiscal 2008.

Constellation cut its outlook to $1.06 to $1.11 per share. Previously it had forecast earnings of $1.16 to $1.24 per share.

The reduction was largely driven by costs related to its recent acquisition of Fortune Brands Inc.’s wine business.

Constellation reported third quarter earnings of 55 cents per share, in line with Wall Street estimates.

Beer Marketer’s Insights focuses on the performance of Crown Imports, the U.S. marketer of Corona and other Grupo Modelo brands (Crown has a stake in Crown). While sales-to-retailers were up low single digits, third quarter revenues slipped and fourth quarter comps were described as “difficult.”

Growth Gap Narrowing Between Beer, Spirits

Craft beer a factor?

The Associated Press recently picked up on a story that’s been the talk of the beer press: Spirits is no longer growing dramatically faster than beer.

From the story:

"After years of losing people to mixed drinks, industry experts say the beer industry regained some of its lost luster in 2007, helped by surging interest in craft beers, a slowing economy and the desire of more drinkers to imbibe at home.

"Final year-end data has not yet been released, but Eric Shepard, executive editor of trade magazine Beverage Marketers Insight, said growth in the number of spirits sent to sellers slowed in 2007 while beer shipments remained about the same."

Stoli Adding New Vodka Flavor

Here comes “Blakberi.”

Pernod Ricard USA appears poised to introduce a new flavor of Stolichnaya vodka: blakberi.

Pernod Ricard, which picked up the marketing rights for Stoli when it acquired pieces of Allied Domecq a couple years ago, has filed a label application for the flavor with the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau.

Stoli has been a pioneer among vodka marketers in introducing novel flavors that can be used to create new cocktails and generate buzz among consumers. Flavor proliferation, now entrenched in the spirits business, has been a key part of the growth strategies of vodka and rum makers.

Some are pushing the boundaries. One distiller, for instance, has created herb-infused vodkas, including dill and cilantro.

Other Stoli flavors include: ohranj, vanil, razberi, blueberi, citros, cranberi, strasberi and peachik.

To see Brew Blog’s coverage of Garden Variety Vodka Company’s herbal-flavored vodkas, go here.

The label application can be seen here.

Beer Pricing Outpaces Spirits

Spirits up a modest 1 percent in supermarkets.

There’s been a lot of talk in the beer press lately about whether spirits, which for years has been taking share from beer, is starting to slow down.

Beer Business Daily made the interesting point on Monday that retailers appear to be giving spirits less support. From the report:

"The average number of items featured for spirits is down by nearly 10% while the average number of beer items is up 5% versus a year ago, says Nielsen."

Here’s another data point suggesting spirits -- while by no means declining -- is starting to decelerate.

For the 24 weeks ended November 17, spirits average equalized pricing in supermarkets was up a modest 1 percent, according to Nielsen.

During the same period, the average weighted case price in the beer category was up 4.0 percent.

Spirits Slowdown?

Brown-Forman CEO says growth rate is down.

For years spirits has been growing and taking share from beer.

Is spirits finally slowing down?

It’s a question worth asking after Brown-Forman reported last week that U.S. sales of Jack Daniel’s fell during the company’s second quarter. Brown-Forman CEO Paul Vargas blamed it in part on a broad industry slowdown.

From a Reuters report:

"'The spirits industry growth rate is down a little from where it was just 12 months ago,” said Chief Executive Paul Varga.

"'Within the spirits industry, Brown-Forman is disproportionately down,” Varga said, citing factors such as consumers pulling back on discretionary spending, aggressive discounts by competitors and the company being distracted by its own reorganization."

A-B Announces New Vodka

Playing on popularity of organic.

The St. Louis Post Dispatch today reported that Anheuser-Busch, which mocks cocktails in recent advertising for Bud Light, is test marketing an organic, Italian-made vodka called Purus.

From the story:

"The country's biggest brewer is selling a new organic wheat vodka in the Northeast's 'most exclusive' lounges and restaurants, as well as in wnine some specialty grocery and liquor stores."

Recall that Brew Blog reported about Purus in October.

The St. Louis Post-Dispatch Story can be seen here.

Brew Blog’s previous coverage can be seen here.

Beer Business Daily (subscription required) weighs in here.

Mike’s Goes Mojito

New addition to its cocktail line.

Mark Anthony Group, the marketer of Mike’s Hard Lemonade, appears to be bolstering its line of “premium malt cocktails” with a new flavor: Mojito.

The company earlier this month received a label certificate from the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau for the Mojito premium malt cocktail.

In an apparent effort to capitalize on the growth of spirits, Mike’s earlier this year began marketing cocktail-flavored flavored malt beverages in addition to its “Hard Lemonade” lineup. Mojito joins Crantini, Mike-arita, Lemon Drop and Screwdriver.

Like the other brands, Mojito comes in an 8-ounce bottles and should be served over ice, according to the label application. It has 8 percent alcohol by volume.

Mike’s is the latest FMB marketer to go Mojito. Anheuser-Busch launched Bacardi Silver Mojito earlier this year and quickly followed it with a pomegranate extension. A-B, which appears poised to introduce the brand on draft, has declared the brand to be a success.

Indeed, according to a report earlier this week by Beer Marketer's Insights, A-B told distributors that it expects Bacardi Mojito and some other new brands -- including Bud Chelada and Landshark Lager -- to generate more than 1 million barrels combined in 2008.

Meanwhile, Mike’s is the latest alcohol beverage marketer to jump on the pomegranate bandwagon. Earlier this month it received a label certificate for Mike’s Hard Pomegranate Lemonade.

The Mike's Mojito label application can be seen here.

A label image can be seen here.

The Mike's Hard Pomegranate Lemonade application can be seen here.

Coverage of A-B's distributor meeting can be seen here.

Smirnoff Ice Lightens Up

Diageo files label application for low-cal flavored malt beverage.

Diageo North America, which has used a steady flow of line extensions to drive its Smirnoff Ice label, appears poised to introduce a light version of the No. 1 flavored malt beverage.

Diageo on October 17 received a label certificate from the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau for Smirnoff Ice Light.

According to label information, the drink has 110 calories and 11 grams of carbohydrates per 11.2 ounce bottle. It has 4 percent alcohol by volume.

Diageo has another flavor in the hopper as well: Strawberry Acai.

Smirnoff Ice had 0.9 case share in supermarkets for the 52 weeks ended October 6, down 0.2 points. It had 1.6 dollar share, down 0.2 points.

The label image for Smirnoff Ice Light can be seen here.

The label image for Strawberry Acai can be seen here.

A-B Creating Organic Vodka?

Purus is “100% Organic Wheat Vodka.”

Anheuser-Busch appears poised to introduce an organic vodka.

The Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau on October 2 issued a certificate for Purus, a “100% organic wheat vodka” that’s distilled in Italy and bottled in Holland.

The label says it’s imported by “Purus, St. Louis, Mo.” The applicant was Long Tail Libations Inc., a new product development arm of Anheuser-Busch.

Assuming A-B goes to market with Purus, it will mark the latest effort in A-B’s effort to try to make inroads in the spirits business. Its first move came two years ago when it rolled out the liqueurs Jekyll & Hyde. Since then it has inked distribution deals for vodka and soju brands, as well as creating new products.

A copy of the label application can be seen here.

A label image can be seen here.

Fortune Makes Case for Absolut

CEO goes to Sweden to meet “broad constituency” of “interested parties.”

Fortune Brands, which markets Jim Beam bourbon and other spirits brands, last week took its case for acquiring Absolut vodka to Sweden.

CEO Norm Wesley and others met with “a ‘broad constituency’ of interested parties” to discuss the sale of distiller Vin & Sprit, according to news reports. From a Reuters report last week:

At a news conference on Wednesday where he extolled the virtues of a merger, Fortune Brands Chief Executive Norman Wesley declined to say if executives had met officials handling the V&S sale, which analysts say could fetch about $6 billion.

"It's owned by the state and parliament controls the process and we have not come here to try to influence them to do anything but to try to anticipate what might happen," Wesley told reporters.

Wesley said Fortune would expand production in Sweden, the article says.

He also characterized Fortune as the best buyer, given it -- unlike other interested parties including Diageo and Bacardi -- doesn’t market a vodka.

Moreover, Fortune has a distribution deal to handle Absolut.

From the story:

Wesley said a Fortune Brands-V&S [VSG.UL] merger would be a "natural extension" of their current relationship, which includes distribution deals for Absolut.

These agreements, which carry hefty fees for premature termination, could serve as an effective poison pill
by deterring other suitors, industry analysts have said.

The Reuters story can be seen here.

Tequila Tussle

Patron founder, Bacardi battle for control of company.

This week’s issue of BusinessWeek has an interesting story about how Bacardi Ltd., which wants to broaden its spirits portfolio, is engaged in a legal fight for control of Patron Spirits Co., the distiller of the red-hot Patron tequila brand.

From the story:

“Last year, sales of liquor priced under $12 a bottle inched up just 0.3%, according to the Distilled Spirits Council trade group. Sales of brands priced $40 and up jumped 23%. Bacardi wants to add a 50% stake in Patrón to its liquor cabinet, especially if it can enforce a three-year-old contract to buy it at what now seems like a bargain price.”

Acquiring Patron would broaden the spirits portfolio of Bacardi, which since 2004 has acquired the Grey Goose and 42 Below vodkas and has made plain its desire to add additional brands. It has said it wants to deepen its presence in “brown” spirits and has expressed interest in Absolut vodka.

Its gambit for Patron, as the BusinessWeek story makes clear, is complicated.

Patron was founded nearly 20 years ago by entrepreneur John Paul DeJoria and architect Michael Crowley. When Crowley died in 2003, he left his estate to a trust that seeks to educate poor children around the world, the story said.

Bacardi, which had recently purchased Grey Goose for $2 billion, in September 2004 offered the trustees $175 million for their stake, according to the story. They agreed.

But DeJoria, who had been seeking the trustees’ half-interest, subsequently offered the trustees $755 million – an offer they accepted.

Bacardi has obtained an injunction, the story says.

The BusinessWeek story is here.

A-B Preparing Yet Another Liquor

Files trademark application for “Luzia.”

When August Busch IV was named CEO of Anheuser-Busch last year, industry observers suggested the brewer would deepen its involvement in spirits.

That prediction appears to be playing out.

In its latest move in the spirits front, A-B earlier this month filed a trademark application for "Luzia" with the U.S. Patent and Trademark Office. Luzia is described in the application as a Cachaca.

Cachaca is a rum-like spirit from Brazil.

A-B has been picking up the pace in spirits initiatives in the more than two years since it launched the liqueurs Jekyll & Hyde -- under the Long Tail Libations LLC imprint -- to test the waters in the spirits category.

Last year it expanded its portfolio by striking a distribution deal with a Korean maker of soju.

This year it has struck a regional distribution alliance with Vermont Spirits to handle some upscale vodkas. And it has filed trademark and label applications for Pomacai, a pomegranate-acai berry flavored vodka.

If there’s any common denominator among the more recent moves, it’s that A-B appears to be focusing on more niche categories within spirits.

The trademark application can be seen here.

A wikipedia entry about cachaca can be seen here.

Previous Brew Blog coverage of A-B’s spirits initiatives can be seen here.

A-B Set to Launch Vodka

Files label application for Pomacai.

Anheuser-Busch, which has stepped up its involvement in spirits over the past 12 months, now appears poised to roll out a vodka.

On June 29 a label application was filed with the federal government for Pomacai, described on a colorful label as “pomegranate & acai berry flavored vodka.”

The vodka has 35 percent alcohol by volume, according to the label. It appears the brand will be available in 1 liter, 1.75 liter, 375 milliliter and 750 milliliter bottles.

Brew Blog reported in April that A-B had filed a trademark application for Pomacai. This appears to be the next step.

This marks the latest effort by A-B to establish a presence in the spirits space. It started a couple years ago by rolling out the Jekyll & Hyde liqueurs. Within the past year it has inked a distribution deal for a Korean soju brand. And in June it announced a distribution deal in the Northeast for Vermont Spirits’ vodkas.

When that deal was announced, Dave Peacock, vice president of business operations for A-B, said: “Products like these distinctive, high-quality Vermont Spirits vodkas allow us to compete in this growing category in a limited way, while gaining a deeper understanding of distributing a liquor-based product through our wholesaler system.”

The label application for Pomacai was filed by U.S. Distilled Products Co. in Minnesota, which already makes Jekyll & Hyde for A-B. The label says “Produced and bottled by Jekyll & Hyde spirits.”

To see the label application, click here.

To see previous Brew Blog coverage about Pomacai, click here.

To see A-B's press release about Vermont Spirits, click here.

Chivas TV

Following in the steps of A-B.

Apparently following a trail blazed by Anheuser-Busch, distiller Pernod Ricard is plugging an online entertainment channel in support of its Chivas Regal scotch brand, according to a report in Advertising Age.

Pernod Ricard -- seemingly undeterred by the challenges A-B has faced in building a following for Bud.tv -- says the “This Is the Life” channel is a new way of communicating the brand’s lifestyle positioning.

The channel differs from Bud.tv in some respects, Ad Age reports. Its age verification system is less rigorous, which has invited criticism. And its content, unlike much of the programming on Bud.tv, is heavily branded.

The Ad Age story describes some of the content:

"The online channel -- the latest manifestation of the brand's web ramp up -- shows affluent young Chivas enthusiasts cooking gourmet meals on 50-foot yachts, boutiquing, golfing and learning about hand-rolled cigars."

The Ad Age story can be seen here .

Absolut Auction

Fortune makes case as Swedish parliament OKs sale.

The Swedish Parliament on Wednesday voted to privatize Vin & Sprit, the state-owned distiller of Absolut vodka, paving the way for one of the most anticipated spirits sales in recent memory.

According to a story in the Chicago Tribune, Fortune Brands – which markets Jim Beam whiskey and has a joint-marketing deal with V&S in the U.S. – is making its case as the best buyer.

From the story:

"[CEO Norman] Wesley said Fortune Brands offers the Swedish company and its employees the best chance for continuing operations uninterrupted.

"As a partner and not a competitor, we believe Fortune Brands is in a unique position to maintain the momentum of V&S, protect the heritage of the brands and preserve jobs in Sweden," said Wesley."

But Fortune will face stiff competition. According to the Swedish government, three spirits giants are interested in V&S: Diageo, Pernod Ricard and privately held Bacardi Ltd.

The Trib story can be seen here.

Diageo Preparing Brazilian Cocktail

New Smirnoff drink inspired by Caipirinha.

Diageo North America appears to be readying a premixed cocktail inspired by the Caipirinha, the national cocktail of Brazil.

This spring Diageo filed a certificate of label approval application with the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau for Smirnoff Caipiroska.

The label describes the drink, which is made with Smirnoff vodka, natural lime flavors and certified colors, as a “Brazilian style lime cocktail.”

It has 21 percent alcohol-by-volume.

The classic Caipirinha is made cachaca, lime and sugar. There is vodka variant.

Diageo has been rolling out a series of premixed cocktails that involve Smirnoff vodka. Spirits marketers are trying to increase usage occasions, and this seems to fit in with that trend.

Diageo also appears to be trying to tap the growing trend of Latinization and mainstreaming of Latin culture, as it is also making a premixed Mojito. Miller Brewing Company is trying to tap into that same trend with Miller Chill, a light beer brewed with lime and salt that’s inspired by the Mexican chelada.

The label application can be seen here.

Brew Blog coverage of the Smirnoff Mojito can be seen here.

A wikipedia entry about the Caipirinha can be seen here.

Fortune Exec Says Absolut Tie-Up “Logical,” Report Says

Exec recently met with key Vin & Sprit officials.

The top executive of Fortune Brands, which markets Jim Beam and other spirits brands, says acquiring Absolut distiller Vin & Spirit would be a “logical” move, according to a report in a Swedish publication.

Dagens Industri, a Swedish business newspaper, has reported that Fortune CEO Norm Wesley has met with “key persons in the sales process.”

The story quoted him as saying:

"'We have cooperated for a long time with Vin & Sprit ... It would be a natural and logical step after our close cooperation if we bought Vin & Sprit," Dagens Industri quoted him as saying."

Fortune, a conglomerate whose spirits arm is Beam Global Spirits & Wine, has been identified as a strong contender for V&S ever since speculation first surfaced that the Swedish government would sell the state-owned company.

Fortune and V&S already have a U.S. marketing alliance, and Fortune has the most to lose if another company acquires V&S. Also, Fortune has demonstrated an appetite for acquisition since it and Pernod Ricard carved up Allied Domecq a couple years ago.

A Reuters story about the Swedish newspaper report can be seen here.

Smirnoff Takes on the Mojito

Diageo introducing premixed vodka mojito.

A vodka mojito?

Diageo North America, the U.S. arm of the world’s largest spirits company, is trying to capitalize on the popularity of the mojito with a ready-to-serve Smirnoff Vodka Mojito.

The bottle describes it as “A perfect fusion of Smirnoff No. 21, the world’s number one premium vodka, Triple Sec Liqueur, and a dash of mint. A true cocktail experience inspired by the world’s great bartenders.”

The product fits in with Diageo’s efforts to build and extend the Smirnoff brand. Also the spirits industry is trying to increase usage occasions as it seeks to gain share of the total alcohol-beverage market. This premixed cocktail appears aimed at home consumption.

It also builds on Diageo’s foray into premixed cocktails. The marketer previously introduced the Smirnoff Grand Cosmopolitan and the Jose Cuervo Golden Margarita.

A certificate of label approval application filed with the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau can be seen here. An image of the bottle (from the North Carolina ABC Commission site) can be seen here.

A-B Getting Deeper into Spirits

New initiatives coming later this year.

Anheuser-Busch -- which, as CEO August Busch IV recently said, seeks to become “the leading global brewer and specialty beverage company” -- is ramping up its push into spirits and spirits-inspired products.

The latest installment of Beer Marketer’s Insights Express touched on some of A-B’s initiatives.

From the report:

"'As we continue to gather learning,' AB wrote distribs in several New Eng states (at least), it will begin an alliance with Margaritaville Spirits, maker of 7th largest Tequila. Other brands from Vermont Spirits Co, Vermont Gold and White, coming to AB's New England distribs this summer too."

BMI also reported that A-B is seeking to recruit a director of spirits.

Meanwhile, A-B appears intent to build a line of mixed-drink inspired flavored malt beverages under the Mxologi label.

Brew Blog previously reported on Mxologi Hurricane. A-B recently has filed for label applications for “Mxologi Long Island Iced Tea” and “Mxologi Pina Colada.”

All these moves call to mind Busch’s response last year to a spirits executive who criticized Busch’s use of the term “hard liquor.”

Busch’s deadpan response (reported by BMI): “If we’re in the business, we’ll start calling ‘em spirits.”

So is A-B going to start calling them spirits?

The Beer Marketer’s Insights home page can be reached here.

The label application for Mxologi Long Island Iced Tea is here. The Mxologi Pina Colada label application is here.

Absolut Change

Why the imported vodka changed its advertising strategy.

Earlier this year, Absolut Spirits Co. dropped a legendary 28-year-old print campaign that focused on the iconic bottle.

The reason, according to Advertising Age: While those ads worked when the brand had cachet they fall short now that Grey Goose and other vodkas have elbowed past Absolut as the image leaders.

From the story:

"When the bottle campaign was introduced in 1979 with the now-legendary "Absolut Perfection" print ad, the brand was dripping with cachet. But today, thanks to the emergence of dozens if not hundreds of pricier (sometimes it seems there's an arms race of overcharging in the category), glitzier vodkas led by Bacardi's fast-growing Grey Goose, Absolut has instead become the Budweiser of vodkas: a midshelf brand whose overwhelming volume has made it ubiquitous."

The marketer now is running an ad campaign called "In an Absolut World," which features “scenes from a world where everything is as ideal as Absolut vodka allegedly is,” Ad Age says. One ad portrays pregnant men with their wives.

Whether this shift in advertising direction will improve the brand’s fortunes -- sales have been sluggish in the crucial U.S. market -- remains to be seen.

To see the Ad Age story, click here (subscription required).

Wine, Spirits Keeping Up Pressure on Beer, Analyst Says

Cuts A-B’s stock price target, earnings forecast.

The domestic beer industry should expect continued pressure from wine and spirits, Morgan Stanley analyst Bill Pecoriello wrote in a report released Sunday.

The analyst identifies four trends as headwinds for the industry. First, among people who drink an alcohol beverage every week, the percentage of beer drinkers is declining while wine and spirits are increasing their share (beer still leads, however). Second, spirits is now the favorite alcohol beverage among weekly consumers. Third, beer is losing share of drinking occasions to wine and spirits. Finally, health conscious consumers are skewing toward wine.

The trends were identified in Morgan Stanley’s annual survey of consumer alcohol beverage trends.

Pecoriello also wrote that imports and crafts are expected to drive 200 percent of the beer category’s growth through 2009. Light beer is expected to continue to grow but that will be offset by weakness in the premium and economy segments. Overall the category is expected to grow at a 0.8 percent clip.

Based on the survey’s findings, Pecoriello reduced A-B’s stock price target and earnings per share forecast.

The reduction was based on the growing pressure on A-B’s core brands and A-B’s need to spend more to compete effectively, Pecoriello said.

“We are reducing our annual domestic beer volume forecast for A-B to down 0.5% from flat,” he wrote. “We believe that over the next several years, A-B will have to spend more to fight the pressure from wine and spirits, import and craft beers, and improve the image of its core trademarks.”

Is A-B Getting Ready to Roll Out a Vodka?

Brewer files trademark application for “Pomacai.”

Anheuser-Busch CEO August Busch IV has said the brewer isn't going to buy Absolut.

But it may be preparing a vodka of its own.

Earlier this year A-B filed a trademark application for “Pomacai,” described in filings with the U.S. Patent and Trademark Office as a vodka.

No details of the product appear on the filing, but Brew Blog guesses from the name that it could be a vodka infused with pomegranate and acai flavors.

Pomegranate is the hot flavor in beverages these days, including alcohol beverages. Pomegranate liqueurs, vodkas and beers are on the market. Indeed, A-B recently announced it was introducing a pomegranate-flavored version of Michelob Ultra.

Acai berries, from the acai palm in South America, are popular in smoothies and juices.

A-B filed the application in January. Assuming Pomacai comes to market, it would mark the brewer’s latest move to establish itself in the spirits business. A-B got started two years ago with its Jekyll and Hyde liqueurs. Last year it started marketing Ku Soju.

The Fourth has stated that A-B will explore its options in the alcohol beverage space as wine and spirits take share.

Indeed, it’s increasingly important for A-B to find sources of growth. A-B reported earnings this week that reflected weakness in its core brands, causing analysts to reduce earnings estimates.

To see a copy of the trademark application, click here.

To see previous Brew Blog coverage about A-B's Pomegranate Raspberry Michelob Ultra, click here.

Bacardi Eyeing More Brands

In the hunt for Absolut, also looking for cognac and American whiskey, report says.

Andreas Gembler, the CEO of Bacardi Ltd., told the Los Angeles Times that the world’s biggest rum maker wants to acquire more brown spirits brands.

From the story:

“Gembler says Bacardi could expand into other kinds of spirits and that it would like to own a cognac and an American whiskey — to cash in on the increasing popularity of the category.”

Bacardi is looking to acquire more brands as it continues to diversify from its namesake rum. Over the years Bacardi has acquired Dewar’s Scotch whisky and Bombay gin. A few years ago, in a deal that shocked the industry, Bacardi bought Grey Goose vodka from Sidney Frank Importing Co. for a reported $2 billion.

Last year it acquired 42 Below, a New Zealand vodka brand. And, in a deal that would establish Bacardi as the world’s No. 2 spirits maker if it happened, Bacardi is in the hunt for Vin & Spirit’s Absolut vodka.

The acquisition strategy has reduced the company’s dependence on rum sales, the story says:

“Two years ago, Bacardi rum accounted for half its sales.

"But after a series of acquisitions -- over the last decade, it has bought Dewar's whiskey, Bombay Sapphire gin and Grey Goose vodka -- the rum has dropped to about 37% of sales.”

The story notes that Bacardi is trimming its product portfolio where it makes sense. For instance, it’s discontinuing the Bacardi Breezer product.

To reach the LA Times home page, click here.

Dill Leaf Vodka?

Vin & Spirit subsidiary offering herbal vodkas.

Flavored vodka may have found a new frontier.

Cruzan International, a unit of Absolut vodka marketer Vin & Spirit, is rolling out a lineup of herbal-flavored vodkas under the “Herb’s Aromatic Vodka” imprint. The flavors include cilantro, dill leaf, fennel and rosemary.

The vodkas are 40 percent alcohol by volume and are infused with herbal extract, according to the label applications.

The certificate of label approval applications were filed last month with the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau.

Spirits marketers have rolled out a seemingly endless variety of flavored vodkas and rums -- from apple to chocolate to pomegranate -- in an effort to attract consumers who are increasingly willing to experiment with new brands and cocktails.

Cruzan, which was acquired last year by V & S, was a pioneer in rolling out flavored rums.

The application for the cilantro vodka is here, dill leaf is here, fennel is here and rosemary is here.

UPDATE: In comments, Jerome Hyafil, CEO of the Garden Variety Vodka Company, writes in to say:

"Herb's and its line of Herbs infused vodka are the property of the Garden Variety Vodka Company, North Miami, FL.

Florida Distillers, a contract bottling affiliate of Cruzan, is one of our copackers."

Wine, Spirits Gaining Trade Support

Poses challenge for beer.

The growing consumer interest in wine and spirits is being noticed by supermarket retailers, according to data from ACNielsen.

Wine and spirits are gaining increasing levels of feature ad, display and discount support. Indeed, wine is closing in on beer in total levels of support.

Wine already leads beer when it comes to store displays that aren’t connected to feature support. Spirits continues to make gains in this class.

Spirits also racked up a significant increase in discount-only support, broadening its incentive offers to consumers.

The upshot: The increased support will put pressure on the mainstream light segment, which risks losing ad and display support to wine and spirits.

The December 2006 issue of Brew Magazine laid out the economic case for retailers to focus on mainstream beers. A big reason is their velocity.

Mainstream beers turn much faster than wine and spirits. Speed counts for retailers because it fuels the gross margin return on inventory investment And every dollar invested annually in mainstream beer returns nearly $9 to the retailer, according to the consultancy Willard Bishop. That’s more than seven times the return for spirits or wine.

Go here to see a PDF version of the December 2006 issue of Brew.

Drop a line here if you'd like a free subscription to the print version of Brew.

A-B Distributing Korean Liquor

Started distributing Ku Soju last year, according to filing.

Anheuser-Busch last year started distributing Ku Soju, a Korean liquor, in seven test markets, according to the company’s annual report filed with the Securities and Exchange Commission.

The spirit is marketed by California-based Ku Soju Inc.

A-B -- which has expressed concern about beer’s declining share of the alcohol beverage category -- has been dabbling in the spirits space for some time now. It has been testing a liqueur called Jekyll & Hyde, which is now available in 56 test markets.

The distribution deal with Ku Soju appears to be another move.

In a sign of A-B’s push into nonalcohol beverages, the SEC filing noted that A-B is distributing Icelandic Glacial Spring Water (owned by Icelandic Water Holdings) in 16 test markets.

To learn more about soju, a vodka-like spirit, check out this wikipedia definition.

Go here to see A-B’s 10-K.

Bacardi Eyes Absolut

Rum maker’s CEO says vodka “would be a perfect fit.”

Bacardi Ltd, which shook up the spirits industry a few years ago by acquiring Grey Goose vodka for $2 billion, now has Absolut vodka in its sights.

Bacardi has informed the Swedish government that it wants to buy Vin & Spirit, the state-owned distiller of Absolut, the No. 1 imported vodka in the U.S.

From the Financial Times:

“V&S and Absolut especially would be a terrific fit for Bacardi,” (Bacardi CEO Andreas Gembler) told the Financial Times. “Of the few global brands that are really left to acquire, V&S – and in particular Absolut – obviously represents a jewel for a company like ours.”

The future of Vin & Spirit has been the subject of much speculation since last year, when pro-privatization conservatives came to power in the Swedish parliament.

Rumors swirled that Anheuser-Busch, which has made no secret it’s interested in spirits, might be a potential buyer. But A-B CEO August Busch IV has said the brewer will not go after Absolut.

Other contenders for Absolut include Pernod Ricard and Fortune Brands, which has a U.S. marketing joint venture with V&S.

Constellation Buying Svedka vodka

Pays big price for hot brand.

Constellation Brands today announced it was buying the fast-growing Svedka vodka brand for $384 million.

The deal gives Constellation a solid entry in the vodka segment, the fastest-growing part of the spirits business. It also gives Constellation a bigger presence in the premium part of the market. And Svedka, owned by Guillaume Cuvelier and Belgium-based Alcofinance SA, has grown at a torrid rate: It moved 1.1 million cases in 2006, up 60 percent from 2005.

But as Morgan Stanley analyst Bill Pecoriello notes, while the deal “makes strategic sense” it comes with a price. The deal will be dilutive for three years.

Wrote Mark Swartzberg: “On its face, three years of EPS dilution is not value creation, but the Svedka brand is on a strong, multi-year trend of growth, and Constellation emphasized its intention to plow profits back into the brand for the sake of future growth.”

The deal underscores the fact that the cost of acquiring premium spirits brands -- following Bacardi Ltd.’s $2 billion acquisition of Grey Goose a few years back -- is steep. The upcoming sale of Absolut by Sweden’s Vin & Spirit could set another benchmark. Anheuser-Busch is rumored to have an interest in that brand.

UBS analyst Kaumil Gajrawala notes:

We believe the acquisition of Sweden-produced Svedka, makes it less likely at this stage that (Constellation) would also look to acquire Swedish-produced Absolut vodka.

Constellation markets a variety of wine and spirits brands and, with Grupo Modelo, is a participant in Crown Imports, which markets Corona Extra and other Modelo brands in the U.S.

The Constellation release can be seen here.

Spirit Sales Slow in December

Strong year ends with whimper.

Spirits industry volume fell in December, suggest figures from the National Alcohol Beverage Control Association.

Spirits sales slipped by 3.0 percent in control states, according to the association. For the year, volume grew 3.9 percent. That figure tracks closely with the 3.8 percent figure reported earlier by the Distilled Spirits Council of the U.S.

Discus predicts volume will slow down in 2007. It's forecasting 3.2 percent growth.

No. 1 spirits marketer Diageo reported a decline, according to an analysis by the London office of investment bank Lehman Brothers:

Diageo continued to outperform but its volume still fell 1.9%. (For the full year its) volume was up 6.0%, slightly below the 6.1% it achieved in 2005. Most key brands posted volume decline for the month with the exception of Johnnie Walker Black.

Spirits Gain Share in 2006

Sales volume rises 3.2 percent.

The distilled spirits industry once again gained share of the total alcohol beverage market in 2006, the leading spirits trade group said.

The Distilled Spirits Council of the United States on Monday said spirits share grew of alcohol beverage revenues grew by 70 basis points (100 basis points=1 percentage point) to 32.8 percent.

Spirits sales increased 6.3 percent to $17 billion, Discus said. Volume increased by 3.8 percent

The growth was driven by premium brands, particularly vodka.

A Reuters report, meanwhile, said Discus expects spirits revenue to increase to $18.1 billion in 2007. Volume is expected to grow by 3.2 percent, a slightly slower rate than in 2006.

Discus said spirits has been gaining market share at the expense of beer. A St. Louis Post- Dispatch story, citing figures from Beer Marketer’s Insights, noted beer’s share of total alcohol beverage sales has slipped to 55.1 percent in 2005 from 59.4 percent in 1995.

The Post-Dispatch story also noted that beer volume increased in 2006:

“Beer had an outstanding year in 2006, up two percent through November,” Jeff Becker, president of the Beer Institute, a trade group in Washington D.C., said in an e-mailed statement.

Pernod Ricard USA Hires New Marketing Chief

Brings in Moet Hennessy USA vet.

Pernod Ricard USA on Thursday said it was hiring a new marketing leader to drive growth for its portfolio of premium and superpremium brands.

Patrick Piana becomes senior vice president-spirits marketing for the wine and spirits company on January 18. He joins Pernod from Moet Hennessy USA, where he held the rank of senior vice president.

Piana will oversee U.S. marketing for brands including Chivas Regal, Martell, Kahlua, Malibu, Stolichnaya and Beefeater. He will oversee global marketing efforts for U.S. brands including Seagram’s Gin, Wild Turkey and Hiram Walker liqueurs. See the release here.

Piana is the second big spirits marketing appointment of the week. Earlier in the week Beam Global Spirits & Wine hired Rory Finlay, a Wm. Wrigley Jr. Co. marketing executive, as its new chief marketing officer.

Both executives face the challenge of trying to find growth opportunities for spirits brands at a time when the category is starting to slow down from its torrid growth of recent years. As Advertising Age noted of Finlay:

At Beam, the world's No. 4 spirits concern, he will preside over a portfolio that includes brands such as Jim Beam bourbon and Sauza tequila. But, Beam, like most spirits companies, has seen its explosive growth earlier this decade hit a slowdown.

Jim Beam Taps New CMO

Hires Wrigley marketing vet.

Beam Global Spirits & Wine has tapped a Wm. Wrigley Jr. Co. executive as its new chief marketing officer.

Beam, the wine and spirits arm of Fortune Brands, is hiring Rory Finlay as senior vice president and global chief marketing officer. He takes the job on January 29 and will report directly to CEO Tom Flocco.

He succeeds Beth Bronner, who left the company in July.

Finlay was an 18-year veteran of Wrigley. His most recent post was vice president and managing director for new confectionary brands.

At Beam he will handle marketing duties for brands including Jim Beam bourbon, Canadian Club Canadian whisky, Courvoisier cognac, Laphroaig scotch, Sauza tequila and Maker’s Mark bourbon.

The Beam release can be seen here.

Could Fortune Brands Split Up?

Break up could unlock value, fund manager says.

BusinessWeek raises speculation that Fortune Brands, the parent of Beam Wine & Spirits, might break up to fully capture the value of its wine and spirits business.

The article says that Fortune’s status as a conglomerate -- its businesses include golf gear as well as house ware such as cabinets -- is seen as a drag on the stock. A solution: combine the golf and spirits units into one company and spin off the home unit.

The article quotes fund manager Mario Gabelli as saying a split "is one way to unlock the value in the spirits operation."

Fortune markets brands including Jim Beam, Sauza and Courvoisier.

Crain’s Chicago Business earlier this fall raised speculation that Fortune might spin off its golf unit.

The article comes shortly after Fortune named Bruce Carbonari, who led the house ware unit, as president and chief operating officer.

Absolut-ly A-B?

Absolut to go on auction block. Will king of beers try to add to its crown?

As expected, the Swedish government on Thursday said it plans to sell Vin & Spirit, the marketer of Absolut vodka, Cruzan rum and other spirits brands.

In all, Sweden plans to privatize six companies it either wholly or partially owns.

“State ownership should only exist if there is a motive for it,” Enterprise and Energy Minister Maud Olofsson said in an Associated Press report. “That’s why we have chosen these six companies, because we don’t think there is such a motive.”

The sale of V&S has been the source of much speculation since September when a conservative coalition was elected in Sweden. The most obvious buyers would be wine and spirits marketers including Pernod Ricard, which has stated it is looking for acquisitions, or Fortune Brands, which already has a marketing alliance with V&S.

Diageo, which markets the giant vodka brand Smirnoff, is considered an unlikely suitor for antitrust reasons.

In the beer industry, of course, the big question is whether Anheuser-Busch will make a run for the spirits marketer. Rumors abound that A-B is keenly interested in the company. And A-B has suggested it will branch out from beer if alcohol beverage industry trends continue the way they are -- with wine and spirits growing at the expense of beer.

Since August Busch IV took the reins this month analysts and pundits have said he’s likely to be more flexible than his father in making dramatic moves to reshape the company. How he responds to the availability of one of the prime assets in the spirits industry could be a test of his appetite for game-changing deals.

Update: AdAge has more on the story.

Smirnoff Ice Pounces on Pomegranate

Diageo files label application for “Pomegranate Fusion.”

Diageo appears to be jumping on the pomegranate bandwagon.

The spirits marketer has filed a certificate of label approval application with the U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau for Smirnoff Ice Pomegranate Fusion.

Diageo frequently introduces new variants of Smirnoff Ice to grab consumers. It recently introduced an alcohol-infused water called Smirnoff Source.

Case sales for the Smirnoff Ice franchise dropped 10. 2 percent during the 52 weeks ended December 2. The total flavored malt beverage category slid 3 percent.

Offering pomegranate flavored drinks is one of the hottest beverage industry trends going right now. Pomegranate juice became hot a few years ago. More recently spirits marketers have gotten into the act, including Luctor International’s Van Gogh pomegranate vodka and Pama Spirits Co.’s Pama pomegranate liqueur.

Bacardi Completes Acquisition of 42 Below

Continues diversification of No. 3 spirits player.

Bacardi Ltd.’s acquisition of New Zealand vodka marketer 42 Below is all but a done deal.

Bacardi, the world’s No. 3 spirits marketer, on Tuesday announced its $91 million offer received approval from 90 percent of the New Zealand company’s shareholders, the threshold necessary for the deal to go through.

In a statement, Bacardi CEO Andreas Gembler said:

“Bacardi is thrilled to welcome 42 BELOW's young and innovative brands into our global portfolio of premium products. With substantial investment, time and nurturing, these brands show long-term potential in the global spirits industry, especially in the growing Asia-Pacific region."

Apart from 42 Below vodka -- which includes the flavors Manuka Honey, Kiwifruit, Feijoa and Passionfruit -- Bacardi is picking up South Gin, Stil Vodka, Seven Tiki white rum, Tahiti dark rum and 420 spring water.

The acquisition continues Bacardi’s drive to diversify from its namesake rum. Its biggest move to date has been the $2 billion acquisition of Grey Goose vodka.

Earlier this year, Gember -- who joined Bacardi last year from Philip Morris -- tapped John Esposito, former head of Moet Hennessy USA, to build its superpremium business in the U.S.

Pernod Ricard Eyeing Expansion

Spirits marketer looking to buy new brands.

Pernod Ricard, the world’s second-biggest marketer of wine and spirits, wants to acquire tequila and vodka brands and strengthen its presence in the United States, it said on Tuesday.

Pernod, which surged to its position more than a year ago by (along with Fortune Brands) carving up Allied Domecq brands, wants to secure the rights to Stolichnaya, which it now markets, according to this report in Reuters.

Also in its sights: Absolut vodka, which is marketed by Sweden’s Vin & Spirit. The new conservative Swedish government has said it wants to sell off state owned companies, spurring speculation that V&S might go on the block.

Anheuser-Busch, which hasn’t been shy about its interest in spirits, has been cited as a potential bidder for V&S.

Tequila brands also are on Pernod’s shopping list. Pernod was reportedly in the hunt for Mexico’s Herradura, but Brown-Forman (maker of Jack Daniel’s) scooped up the tequila company.

The Reuters story quotes Pernod managing director Pierre Pringuet:

“There are very good reasons for further consolidation in the spirits business, because it is very profitable and has good synergies, but as most companies are private, timing is unpredictable…”

Pernod’s brand lineup includes Kahlua, Chivas Regal and Beefeater gin.

Sparkling spirits?

Diageo seeks patent to make spirit brands sparkle.

Hold the tonic. Diageo last week said it had filed a patent for a process that would naturally add fizz to spirits brands.

According to press reports, Diageo has found a way make its brands bubbly with the help of a yeast and a fermentable carbohydrate.

From Just-Drinks.com (subscription only):

Diageo said it is committed to innovation and that it is investing “significant amounts into new product development”.

However, a spokesperson played down the prospect of Diageo, famous for spirits brands including Smirnoff vodka and Gordon’s gin, unveiling a sparkling spirit in the UK.

Diageo and other spirits marketers have relied on innovation – such as new flavors and bottle shapes – to attract consumers who are drawn to the latest thing, particularly if it’s upscale.

Over the past couple years Diageo has overhauled the Smirnoff bottle; introduced a high-end version of Crown Royal Canadian whisky that retails for $150 a bottle; and rolled out Ciroc, a vodka made with grapes. In Texas it’s testing an alcohol-infused water called Smirnoff Source.

Will Fortune Brands Give Up Its Golf Game for Spirits?

Drive to become bigger spirits player may encourage sale of golf unit, report says.

A report in this week’s Crain’s Chicago Business speculates that Fortune Brands – the marketer of Jim Beam, Maker’s Mark, Sauza and other spirits brands as well as Titleist golf balls – might sell its golf business to focus on spirits.

Fortune’s acquisition of some Allied Domecq brands last year strengthened its position in spirits. But as the report says, “if it is going to compete with dominant industry players like Diageo PLC, the Deerfield-based company is going to have to continue buying.”

Fortune particularly will be put to the test if Vin & Spirit, the distiller of Absolut vodka, goes on the block. Fortune has a distribution deal with V&S and, as one analyst quoted in the story notes, has “the most to lose” if they don’t acquire it.

Given V&S could fetch more than $5 billion, Fortune likely would have to raise money through asset sales, the story said, citing an analyst.

Fortune's home and hardware unit, which includes Moen faucets, represents the majority of its sales. Fortune’s “smallest and weakest” division is golf, which has had “flat sales and declining profit through the first half of the year.”

A-B Poised to Expand Peels Line

Filed label application for Spiced Apple.

The Anheuser-Busch new product assembly line continues to churn as the brewer appears ready to serve up a “Spiced Apple” flavor of Peels.

Peels is a line of alcohol beverages the brewer rolled out this past spring in a bid to win female consumers. Available in clear 10-ounce bottles in four packs that retail in the $4 to $6 range, the current lineup of flavors includes: Cranberry Peach, Pear Lemon, Blueberry Pomegranate and Strawberry Passionfruit.

So far at least, the brand has not made much of an impact at retail: Peels ranks 19th among flavored malt beverages/coolers in supermarkets and convenience stores, according to figures from ACNielsen.

A-B, which appears poised to expand the lineup, recently filed a label registration with the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau for the Spiced Apple flavor.

This is the label:

The application can be seen here.

Sidney Frank Importing Gets into Rum

Trying to create new superpremium spirits category.

Sidney Frank Importing Co. fueled the superpremium vodka trend when it rolled out Grey Goose vodka a decade ago. Now it appears poised to try to repeat that success in rum.

The spirits marketer – named for its founder who died last year – has filed a label approval with Missouri regulators for the brands Tommy Bahama Golden Sun rum and Tommy Bahama White Sand rum. It can be seen here (scroll to lines 539 and 540).

Sidney Frank joins a host of other spirits marketers that are trying to fuel a trading up trend in rum. Diageo, for instance, has rolled out a brand called Oronoco. Moet Hennessy has a brand called 10 Cane.

Given Sidney Frank’s success with Grey Goose – it sold the brand to Bacardi Ltd. a few years ago for $2 billion – the marketer’s effort has to be taken seriously.

The Wall Street Journal first reported Sidney Frank was exploring a Tommy Bahama-licensed rum in December 2005 (must purchase to view).

What’s the Next Big Deal?

Beer Business Daily lays out speculative scenarios.

If you’re in the mood for intriguing speculation about the beer industry’s next major transformational deal, Brew Blog recommends Monday’s installment of Beer Business Daily.

A quick rundown of hypothetical scenarios:

SABMiller acquiring MolsonCoors. The trigger for this is a recent research note from investment bank Cazenove.

A-B loosening its exclusivity requirement so that its distributors can purchase Coors or even Miller wholesalers. BBD notes, “Nothing’s off the table at this point, but A-B isn’t ready to fold on the issue of exclusivity.”

A-B acquiring the Absolut brand. Brew Blog has reported on this matter at length.

A-B being purchased or merging. BBD says the most likely buyers would be Diageo or InBev. BBD publisher Harry Schuhmacher adds “I think at this point I have a better chance of being struck by an asteroid. But it could happen.”

Read the whole thing here (subscription required).

A-B and Absolut Rumors Swirl

Press reports point to possible combination.

Monday’s editions of Advertising Age and Beer Business Daily both point to the possibility of Anheuser-Busch acquiring Vin & Spirit, the Swedish distiller of Absolut vodka. (Brew Blog raised the possibility last week.)

In a front-page story headlined “Absolut Appeal: A-B Eyes Move into Spirits” Ad Age reports that gossip about such a deal circulated at last week’s National Beer Wholesalers Association meeting. One reason wholesalers expect some kind of deal: A-B repeatedly pointing to how wine and spirits have gained share of the alcohol beverage industry.

August Busch IV, president of the brewery, made the point at a meeting with A-B wholesalers. Ad Age (subscription required) says:

While Mr. Busch didn't lay out specific steps A-B intended to take, distributors in attendance said there was little question he was telling them-without specifically telling them-that A-B is on the verge of a major spirits purchase or venture.

"It sure sounded like it to me," said one convinced northern-state A-B distributor who asked not to be identified. "They want the growth and margins that spirits offer, and they've made it very clear they've done more than just think about it."

UBS estimates that V&S, if the privatization-minded Swedish government does decide to put it on the block, could fetch $4.3 billion. A high sticker price for anyone – but brands like this do not come up often. It would attract the interest of most spirits marketers (apart from Diageo, which would be ruled out for antitrust reasons as it markets Smirnoff).

Beer Business Daily challenges the conventional wisdom that spirits marketers would be more synergistic buyers than A-B.

Says BBD (subscription required):

…actually it may be Anheuser-Busch who may have the most acquisition synergies to gain, at least in the US: synergies in distribution, packaging, production (breweries can make anything if they decide to go that route), and, yes, synergies in marketing, both in spending and know-how. We stress that the revenue-based synergy in using their beer distribution system (where legal and/or practical) is not to be underestimated. The coverage, market penetration, and service levels of their network could be a significant advantage over the W&S houses in many markets.

Absolut Busch Part 2

UBS says A-B “could consider looking at V&S as one route” to getting into spirits.

UBS has issued a research report identifying Anheuser-Busch as a potential buyer of Swedish distiller Vin & Spirit, the maker of Absolut vodka, if the government-owned enterprise goes on the block.

From the report:

Over the last 18 months Anheuser-Busch has been diversifying its portfolio very tentatively into spirits in the US with the launch of Jekyll & Hyde in selected markets. We believe that one mid-term strategic option for the company is to expand further into the spirits category, therefore we believe they could consider looking at V&S as one route into this.

However, the report did go on to note:

Clearly this is a more speculative opportunity and a spirits buyer would have greater strategic synergies and portfolio fit.

The report said antitrust issues would likely prevent Diageo, owner of Smirnof