Sunday, September 21, 2008

Iconic Brands Affected By Economy

A few random notes regarding various companies that are on, or probably belong near the Top 100 Company list...

Anheuser-Busch has completed a deal that will sell the company that is something of an American icon for $52 billion to Belgian brewer InBev.

InBev is the maker of Stella Artois, Beck’s and Bass, and the addition of Anheuser-Busch gives it remarkable global marketing power in the beer category, making it number one in the segment ahead of SABMiller.

According to the New York Times, InBev upped its original unsolicited bid for Anheuser-Busch from $65 to $70 per share, and a number of A-B shareholders urged the company’s board of directors to seriously consider InBev’s proposal, which at first sparked more than a month of hostilities between the two companies.

The companies plan to call the new brewer Anheuser-Busch InBev. Anheuser would have two seats on the board.

The Wall Street Journal reports that since InBev and Anheuser don't overlap much across the globe, cost cuts from combining staffing and brewing operations may be difficult to achieve.

“For its part, InBev has pledged that it wouldn't close any of Anheuser-Busch's breweries --- and will even keep the iconic Clydesdales -- but it hasn't ruled out job cuts and said it would be interested in selling noncore assets, apt to include Anheuser-Busch's theme parks. At the same time, (the company) promised St. Louis it would remain the company's North American headquarters and Budweiser would become its flagship global brand.”

“Anheuser’s concession caps a wave of consolidation within the beer industry. InBev and SABMiller, themselves the products of mergers this decade, have led efforts to gain distribution channels across the globe. The rising cost of beer ingredients like grain has also driven companies to seek greater scale and purchasing power.”


The Chicago Sun-Times reports this morning that Starbucks will look to re-energize its sales today with “a new line of made-to-order protein shakes called Vivanno. The product name, which Starbucks created, comes from the Italian word for life (‘viva’) and is intended to evoke a feeling of healthful vitality … The new Vivanno drinks will come in flavors such as Orange Mango Banana and Banana Chocolate and will be made with the same equipment used for Starbucks' trademark Frappuccino coffee drinks. The Vivannos will include ingredients such as whey protein and fiber powder, as well as fresh bananas. Customers can customize their Vivannos via the addition of a shot of espresso or green tea powder too. The drinks will retail in the U.S. for between $3.75 and $3.95.”

The Sun-Times suggests that this new product could work against CEO Howard Schultz’s stated plan to return the company to its coffee-driven roots: “Not only does it infringe in a big way on Jamba Juice's well-defined turf, but it also seems to shift focus from the coffee drinks that are the heart and soul of the Starbucks brand. When he retook the reins as CEO of Starbucks last winter, Schultz suggested he was going to intently work on improving the brand's coffee and the whole coffeehouse experience. Now he seems to be veering from that course with this protein shake tactic.”

Advertising Age reported that Starbucks has announced that “it is offering prolonged and far-flung sampling of summer beverages to assuage consumers and boost traffic through the season. The promotions, which vary by region, are focused in major cities.”

However, Ad Age says that some analysts believe that the sampling program signals even deeper-than-believed problems at Starbucks, which recently announced that it is closing 600 underperforming units.

Whole Foods

The Chicago Tribune reports that a Whole Foods store in the Lincoln Park section of the city has finally reopened after failing two health inspections in three days.

Corona Extra Beer Sales down since losing affilaition with Jimmy Buffett?

Advertising Age reported that while Constellation Brands expected the sales of its Corona Extra brand to rebound this summer, that hasn’t happened – leading analysts to suggest that “new domestic competitors such as Bud Light Lime and Miller Chill, as well as stronger import brands -- are taking a toll on the leading import beer.”

According to the story, Corona Extra “is still a juggernaut: It sold 8.3 million barrels last year, making it the largest import,” and analysts expect “the brand to pound the sand harder through packaging innovations similar to the ‘cold’ emphasis Coors has employed via color-changing labels and cooler boxes to emphasize its ‘Rocky Mountain refreshment’. They also expect greater emphasis going forward on Corona Light, which is the largest imported light beer despite being something of an afterthought in Corona's messaging.”

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