Interbrew, the Belgian company which became one of the biggest players in the UK market with the acquisition of parts of the Bass and Whitbread businesses, has now taken back the US distribution rights to Bass beer from Diageo's Guinness Bass Import Company (GBIC).
Interbrew paid US$105 million (€105.3m) to Diageo, which has been the US distributor of Bass since 1998, and will take over distribution of the brand in June 2003. The two companies said they would work together to grow the Bass brand in the US until that time. GBIC had been granted the rights to Bass in the US until 2016.
Although Bass is sold as a standard ale in the UK, it is seen as a super-premium imported beer in the US. With volumes of around 7.5 million cases in 2001, the brand accounts for more than 25 per cent of the super-premium imported beer market.
Interbrew CEO Hugo Powell said the deal would give the company operational control of seven of the top 12 best-selling imported beers in the US, as well as strengthening its position in the US on-trade. "We look forward to working with Diageo on developing Bass Ale in the US market during the transition period. I firmly believe that Bass Ale will considerably enhance our portfolio of brands, and strengthen our position in the rapidly growing import," Powell said.
Profits slide
The announcement from the US came as Interbrew published its first half results, posting an 18.3 per cent decline in net profit to €165m. In volume terms, sales were down 1.2 per cent to 42 million hectolitres, in turn pushing net turnover down by 1.8 per cent to €3.42 billion.
Profits were impacted by the high cost of Interbrew's expansion programme, which has seen it add Bass, Whitbread, Diebels and Beck's to its portfolio in recent years, as well as poor summer weather in key markets.
In western Europe, a mature market for the brewer, Interbrew posted organic growth of 1.7 per cent in volume terms and 2.3 per cent in turnover. The group's flagship beer brand Stella Artois had an excellent half in the UK, lifting value sales by 9.4 per cent compared to 5.5 per cent for the premium lager segment as a whole. The addition of the more mainstream Castlemaine XXXX brand, brewed under licence and distributed by Interbrew UK, will give the company a balanced portfolio in the UK market.
In Belgium, Jupiler continued its strong performance, both in the on- and off-trade business, while in Germany Beck's showed its strength, being the only brand to post double-digit growth (17.8 per cent) in that market during the half.
There was strong sales growth in the Czech Republic, Hungary and Croatia, offsetting weaker performances in Bulgaria, Romania and Montenegro, where difficult economic conditions meant that expensive imported beer brands were less popular. In Russia, the first-half performance was negatively impacted, mainly because of capacity constraints in the market's fast-growing PET and can segments, Interbrew said.