...TO: South African Breweries Ltd. Board Members FROM: BiMPSY Business Solutions DATE: August 21, 2011 RE: Assessment of Norman Adami’s Leadership at Miller Brewing _____________________________________________________________________________ Dear Board Members, The BiMPSY Business Solution group, the board of directors for Miller Brewing Company, has recently seen a major cultural change under the leadership of Norman Adami. The following report is an assessment of his leadership at Miller and how that change has affected our company. Adami’s aggressive tactics have rattled our main competitor Anhesuer-Busch (AB). By 2005, AB’s operating income had decreased by 22% with a corresponding loss of 1.8% in sales volume. Miller was also able to gain $10 billion to $12 billion market capitalization from AB.4 Adami has instilled the belief in his employees that the United States’ second largest brewer, Miller Brewing Company, can capture enough market share from its main competitor, Anhesuer-Busch, and possibly overtake it as the number one brewer in North America. We look forward to your questions and comments at the upcoming global board meeting. Best Regards, BiMPSY gives permission for this assignment to be viewed by other students in the MBA cohort. Norman Adami not only changed the climate at Miller Brewing, but in 2003 when he became the President and CEO, he did something even more radical – he “fundamentally changed the direction of the company”5 by changing its...
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...#4: P131, #7 Miller Brewing Co. v. Falstaff Brewing Corporation, 655 F.2d 5 (1997) Abstracts: In 1980, Miller Brewing, whose low calorie beer named “Miller Lite” had been sold since 1970, filed against Falstaff to protect its trademark. The former didn’t want the latter, whose product of similar kind was called “Falstaff Lite”, to use the term which it spent millions of dollar advertising. The outcome of the case: In the original district court, a preliminary injunction was released to restrain Falstaff Brewing Corp. from marketing any low calorie beer under any brand with the word “Lite”. The court found for Miller because its conclusions were based on these findings: (1) Miller since 1972 had sold millions of barrels of a low calorie beer under the name "LITE," (2) Miller had spent millions of dollars on advertising its beer under that name, (3) Miller is likely to succeed in proving (a) that the consuming public has come to associate the symbol LITE with the Miller brand of reduced calorie beer, and (b) that "LITE" presently signifies to the public Miller's and no one else's product, and (4) Falstaff since July 11, 1980 has been brewing reduced calorie beer, and has been bottling and shipping it in containers bearing the label "Falstaff Lite." Consequently, the court believed that Miller has since 1978 acquired a de jure primary meaning for the term "LITE" as its product. Falstaff appealed and won the case basing on two independent grounds: (1) Miller was precluded...
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...SABMilier Aidan McQuade South African Breweries grew on the basis of its strength in developing markets, first in Africa and then in other parts of the world. Following pressure from investors to acquire a brewery in a developed market it acquired Miller in 2002 to become SABMiller and the second largest brewer by volume in the world. This case study explains the business's development. It shows how the strategy has changed with time and circumstances and provides the opportunity to consider its future at both the corporate and competitive strategy levels. ••• Introduction In 2007 SABMiller, the renamed South African Breweries following its acquisition of the American brewer Miller in 2002, had become the second largest brewer by volume in the world. It still vied with Anheuser- Busch. its principal competitor; having dropped back to third place in 2005 it reclaimed the number two position following its conclusion of a US$7.8bn (~6.2bn) deal to take over Grupo Empresarial Bavaira, South America's second largest brewer. In the 2006 annual report SABMiller outlined four strategic priorities upon which its success depended: 'Creating a balanced and attractive global spread of businesses .... Developing strong relevant brand portfolios in the relevant market .... Constantly raising the performance of the local businesses . . . . Leveraging our global scale.' This statement of strategy may be seen as a synthesis of the learning the company has developed...
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...recognition, SAB joined the London Stock Exchange in 1999 where it was able to raise money for acquisitions. Their first major acquisition was that of the Miller Brewing Company in North America in 2002. They bought Miller from the Altria Group for $3.4 Billion and changed their name from SAB to SABMiller.2 In 2003, SABMiller decided to further their expansion by acquiring the Italian brewer Birra Peroni. SABMiller bought 60% of the Italian brewer, which cost $280 million. At the time of the transaction, Graham Mackey, SABMiller’s CEO, explained to the press that they decided to buy Peroni because, “Italy is the only Western European country besides Spain where beer consumption is increasing” 3. He said SABMiller expected sales of Peroni, which had 25.2% of the Italian beer market, to increase. However, many analysts believed the price paid for Peroni was too high, which was 12.6 times Peroni’s operating cash flow. The deal also put SABMiller into another competitive market with their rival, Anheuser-Busch. This deal was the company’s first significant investment in Western Europe and allowed them to gain a necessary foundation in those markets. SABMiller’s spokesman Nick Chaloner explained “Birra Peroni will give SABMiller a large foothold in a growing market and provide a way to export SABMiller brands such as Pilsner Urquell and Miller Genuine Draft to Italy” 3. This not only allows SABMiller to introduce...
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...the world of beer. Seeing the vast opportunity, Saab Miller India launched a flavoured beer, named “Indus Pride”. It is the first to be brewed with spices to pair it with Indian gourmet cuisine. It is made from the finest hops complemented with authentic spices to form a burst of Indian flavor. Initially Indus Pride had four variants: Citrusy Coriander, Citrusy Cardamom, Spicy Fennel and Fiery Cinnamon. “Indus Pride captures a truly Indian taste profile and represents the Indian specialty beer segment. It taps into the sensorial experiences of the consumers and is a perfect pairing with Indian gourmet cuisine. We are confident of an encouraging response from the consumers,” Jones added. SABMiller India, the second largest brewer in the country and the Indian arm of the world’s second largest brewer SABMiller PLC entered the Indian market in the year 2000 by acquiring Narang breweries and has since acquired several breweries and brands. The most notable being its acquisition, in June 2001, of Mysore Breweries (with its Knock Out brand) and in May 2003 of Shaw Wallace’s beer brands (Royal Challenge & Haywards). Indus Pride was first launched in 2008 in Rajasthan and rolled out across Karnataka thereafter. The company decided to go for a mainstream offering of alcohol free 100% malt beer, which was lesser relevant to the Indian consumer at that time. In 2012, SABMiller has rejigged its local innovation Indus Pride by brewing...
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...SABMiller case study 2009. SIAMAK MOULAEIFAR 20207133 Introduction: SABMiller (SAB) plc is the second largest brewers in the world with brewing interests or distribution agreements in over 75 countries across six continents. The group’s brands include premium international beers such as Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell, as well as an exceptional range of market leading local brands also SABMiller is one of the world’s largest bottlers of Coca-Cola products. (The SAB Miller, 2009) Exhibit below provides a summary scope of SABMiller operation today. (Below figures refer to year ended 31 March 2009) Source: www.sabmiller.com The purpose of this report is to discuss the strategic position of SABMiller in 2009 (SWOT analysis), the SABMiller acquisition strategy in particular the acquisition of Miller in 2002 along with issues rose in acquisition. It will also set out to recommend a strategic development plan for future. The strategic position of SABMiller in 2009 Understanding the strategic position is concerned with identifying the impact on strategy of the external environment, an organisation’s strategic capability (resource and competent) and the expectations and influence of stakeholders. (Johnson & schools & Whittington, 2008) The strategic position that SABMiller has chosen to follow is to continue to protect and further develop its operations, whilst investing for growth in its international beer business, several...
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...There are more than 2000 brewers in the world, but three of them control 78% of the beer market. Anheuser-Busch controls approximately 45%, Miller Brewing maintains a 23% share, and Adolph Coors controls 10%. Anheuser-Busch's twelve breweries produce more than sixty varieties of beers in a number of families with operations around the world and distribution to over 60 countries. A few of these families are Budweiser, Michelob, Busch, Natural, Bacardi, and Grolsch. Miller Brewing produces more than 130 million barrels of beer annually and has operations in 40 countries with hundreds of brands. In July 2002, South African Breweries purchased Miller Brewing Company, forming one of the largest brewers in the world, called SABMiller plc. Brands range from Miller, Milwaukee's Best, Leinenkugel's, Peroni, Sparks, and Fosters. Adolph Coors produced 42.1 million barrels in 2006 through 12 breweries and more than 40 brands distributed to over 30 countries. Brand names include Coors Light, Milson Canadian, Coors, Killian's Irish Red, Keystone, Blue Moon, and Zima. Beer is distributed through a system called the "three-tier" distribution system. The three-tier system was established by the 21st Amendment to the Constitution and state and federal governments in the wake of the repeal of Prohibition as a means of checks and balances at each tier level. The first tier consists of brewers and importers, followed by wholesalers, and lastly with the retailers. The brewers and importers manufacture...
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...MillerCoors vs. Anheuser-Busch Salman Boer Carly Gorka Stephanie Kalin Kenny Koelling Felipe Naranjo Nizam Qutubuddin Executive Summary The beer industry in the United States is an extremely competitive one. For years, the industry has been solely dominated by one contender, Anheuser Busch. However, large brewers have always been looking for opportunities to extend their reach in the industry and gain more market share. Miller Brewing Company and Coors Brewing Company have been historical staples of the American beer industry since the nineteenth century. These companies merged with international giants South African Breweries and Molson, respectively, in efforts to better compete in the United States brewing industry. However, they still could not manage to take a share of the Anheuser Busch Empire. SABMiller and Molson Coors saw an opportunity in forming a joint venture that would be able to successfully compete with Anheuser Busch in the beer industry, and in 2008, created a third company called MillerCoors. The creation of MillerCoors was a success. Since the creation of the company, in June 2008, MillerCoors has been very profitable and has enjoyed steady growth in their market share. They have done this by integrating innovation as a major goal in their products, providing them with a certain level of differentiation, while reducing costs through the exploitation of synergies that exist in their different processes. MillerCoors was one of the very...
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...Hudepohl Brewing Company Bob Pohl, age 32, was appointed general manager of the Hudepohl Brewing Company following the unexpected death of the company’s president in March 1980. Since 1975, Pohl had managed Hudepohl’s marketing response to rapidly changing conditions in the brewing industry. The death of the president, a relative, left Pohl as the only member of the founder’s family active in the day-to-day activities of the business. Pohl was optimistic about the company’s future despite Hudepohl’s recent disappointing performance. Since 1978 the brewery had been operating at less than 40% of its one-million-barrel1 capacity, and in 1978 the company had experienced the largest operating loss in its history—$538,000. After adjusting for gains on Hudepohl’s securities portfolio and a tax loss carryback, net income for that fiscal year was $95,161, down from $268,611 in 1977. After only three months as general manager, however, Pohl was predicting improved earnings in the near future. A 7% gain in sales during the first four months of 1980 seemed to confirm his expectations. Pohl felt that by 1983 Hudepohl would achieve a 10% growth in sales. Background on the Company Based in Cincinnati, Ohio, Hudepohl was the twentieth largest brewery in the United States. (Financial information is presented in Exhibits 1, 2, and 3.) Ownership and Organization Hudepohl’s board of directors consisted of seven members, all descendants of founder Louis Hudepohl. Chairman John Hesselbrock...
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...ALRIDGE BREWING COMPANY Craft Brewing Goes Public In August 1995, Paul Shipman, the CEO of Alridge Brewing (AB) prepared himself to enter uncharted territory. A craft brewing operation had never before been taken public in the United States, and he and his management team were about to do just that. Sure, there were massive large-batch breweries like Anheuser-Busch and Miller Brewing Company that were profitable, publicly traded firms—but there was something different about Alridge: it embodied the ethos and grassroots beginnings of the microbrew movement, and Shipman was confident that widespread market demand for craft beer was set to explode. He and the team had steadily developed their premium-quality handmade ales for nearly fifteen years, and their loyal customer base was strong. In the last year alone, he’d forged alliances with both Starbucks (for the purposes of co- branding a coffee- flavored brew) and A-B that had purchased a capped 25% interest in AB in exchange for access to its national distribution networks and accounting systems. Shipman had overseen significant capacity increases, with plans on the horizon for yet another brewery in Portsmouth, New Hampshire. He had worked hard to position AB favorably for expansion, and the public offering would provide the necessary capital. But how would the “microbrew” feel of AB translate to the largescale commercialization and growth pressures of the open market? Producing and distributing microbrews on a large scale...
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...Case New Belgium Brewing (B) New Belgium Brewing: Developing a Brand Personality * Background NEW BELGIUM’S INITIAL MARKETING STRATEGY The idea for the New Belgium Brewing Company began with a bicycling trip through Belgium. Belgium is arguably the home of some of the world’s finest ales, some of which have been brewed for centuries in that country’s monasteries. As Jeff Lebesch, an American electrical engineer, cruised around that country on his fat-tired mountain bike, he wondered if he could produce such high-quality beers back home in Colorado. After acquiring the special strain of yeast used to brew Belgian-style ales, Lebesch returned home and began to experiment in his Colorado basement. When his beers earned thumbs up from friends, Lebesch decided to market them. The New Belgium Brewing Company opened for business in 1991 as a tiny basement operation in Lebesch home in Fort Collins. Lebesch wife, Kim Jordan, became the firm’s marketing director. New Belgium beers quickly developed a small but devoted customer base, first in Fort Collins and then throughout Colorado. The brewery soon outgrew the couple’s basement and moved into an old railroad depot before settling into its present custom-built facility in 1995. The company’s standard line has grown to include Sunshine Wheat, Blue Paddle Pilsner, Abbey Ale, Trippel Ale, 1554 Black Ale, and the original Fat Tire Amber Ale, still the firm’s bestseller. Today, New Belgium Brewing is America’s third largest...
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...and Tobacco Product Manufacturing. NAICS states that “Industries in the Beverage and Tobacco Product Manufacturing subsector manufacture beverages and tobacco products. The industry group, Beverage Manufacturing, includes three types of establishments: (1) those that manufacture nonalcoholic beverages; (2) those that manufacture alcoholic beverages through the fermentation process; and (3) those that produce distilled alcoholic beverages…” Although beer is within the same section as wine and distilled spirits, they do not consider them the same. Within section 312 they have five separate sections: Beer can be found under section 312120 Breweries. Within this section the term Breweries is comprised of “establishments primarily engaged in brewing beer, ale, malt liquors, and non-alcoholic beers”. However, Standard & Poor’s would say that distilled spirits, wine, beer and tobacco are all a part of the same industry the “Alcoholic Beverage and Tobacco Industry”. The question we must ask is who is right? How do we determine if beer is an industry on its own or...
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...Analysis of the Anheuser-Busch Company Report by Valanium Analysts: Chris Rigopulos, John Schneider, Jayne Tan Investment Recommendation: MARKET PERFORM December 5, 2001 BUD – NYSE (11/30/01) 52 week range Revenue (2001E) Market Capitalization Share Outstanding $43.10 $36.75 – $49.00 $14.9B $38.2 B 884.3M EPS Forecast (FYE 12/30) EPS Ratios Trailing P/E Forward P/E Leading PEG M/B Price/Sales 1999A 2000A 2001E 2002E $1.49 $1.71 $1.89 $2.09 Dividend Yield 1.67% Avg. Daily Trading Volume (3mo) 2.13M Book Value per Share (mrq) Return of Equity (ttm) Return on Assets (ttm) Est. 5 Years EPS Growth Rate Sector: Consumer/Non-Cyclical Industry: Beverages (Alcoholic) $4.83 40.39% 10.71% 11.0% BUD 23.2 20.6 1.87 8.93 3.11 Competitors Avg. 17.4 15.9 1.37 3.10 1.21 Valuation Predictions Actual Current Price Trailing P/E Valuation Leading P/E Valuation PEG Valuation M/B Valuation Price/Sales Valuation EBO (Abnormal Earnings) Valuation DCF Valuation Performance (Trailing, Annualized) Return on BUD Return on S&P 500 Return on Competitors $43.10 $32.38 $33.24 $31.48 $14.95 $16.73 $19.25 $46.87 6 mo -2.1% 18.3% - 2.9% 12 mo 24 mo -7.4% 9.9% -13.4% -10.3% 2.1% 8.9% Source: finance.yahoo.com, Valanium analysis • • Our valuations reflect a range of predictions, all falling below the current price point with the exception of the DCF estimate. However, we believe that A-B’s brand value and domestic presence are not captured within the accounting numbers...
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... Organic development 10 Question 4 10 Johnson and Scholes framework of Suitability, Feasibility and Acceptability 11 SABMiller’s strategic priorities: 11 Constraint of acquisitions 13 Reference 14 Question 1 Using information exclusively from the European Brewing Industry and SABMiller cases as supplied and appropriate models from the course analyse the external environment in which SABMiller operated in 2010. After conducted a series of cross broader mergers and acquisitions SABMiller successfully become the second largest brewer by volume in the world. SABMiller is now operating worldwide: Latin America, Europe, North America, Africa, Asia, and South Africa. Nevertheless, the environmental condition and potential of growth vary between each region (Blee and Whittington, 2010). European brewing industry was one of the world’s major beer consumption regions. Recent years, the market has come into mature stage of the industry life cycle and demand is now decreasing (Euromonitor, 2010). PEST analysis and Porter five forces model are the appropriate methods to evaluate external environment on European Brewing Industry (Johnson, 2002). PEST analysis Political / Legal Governments were strongly against drunken driving, meanwhile, increasing the awareness of the effects of alcohol on health and fitness. This campaign has beaten beer consumption and furthermore shifted the selling pattern from on-trade (sales...
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...Year of establishment and very brief history Heineken International is a Dutch brewing company, founded in 1864 by Gerard Adriaan Heineken in Amsterdam. It owns over 190 breweries in more than 70 countries and employs approximately 85,000 people. Cruzcampo, Tiger Beer, Żywiec, Starobrno, Zagorka, Birra Moretti, Ochota, Murphy’s, Star and Heineken Pilsener are some of it’s well known brews all over the world. Milestones of Heineken history; 1864 Gerard Adriaan Heineken buys the Haystack brewery on February 15th 1873 On January 11, HEINEKEN’s Bierbrouwerij Maatschappij N.V (HBM) is established. 1889 HEINEKEN is honored with the "Diplome de Grand Prix" at the World’s Fair in Paris 1900 HEINEKEN imports first beer into Africa. 1932 HEINEKEN co-founds Malayan Breweries and starts to brew Tiger for the first time 1933 After 13 years of prohibition, Heineken® sets foot on American soil 1937 HEINEKEN’s Nederlandsch-Indische Bierbrouwerij Maatschappij, Multi Bintang, begins operation 1939 HEINEKEN is listed on the Dutch stock exchange 1946 HEINEKEN enters Nigeria 1968 HEINEKEN acquires Amstel, its major rival in The Netherlands 1974 HEINEKEN acquires a majority stake in the Dreher Group 1975 A new Dutch brewery opens in Zoeterwoude, the largest modern brewery in all Europe at the time. 1991 The former Amsterdam brewery on the Stadhouderskade is converted to a Heineken museum which was renamed Heineken Experience in 2001. 2003-20010 HEINEKEN acquires Brau Union...
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