Most Wall Street analysts are handicapping Barton Beers as the favored winner in acquiring the eastern rights after Gambrinus’ contract expires. Typical of that sentiment is this from UBS beverage analyst Caroline Levy, who wrote today:
“We believe STZ [Barton Beers] has a good chance of wining the Eastern import rights because: 1) As a self importer, Modelo could face anti-trust issues as A-B has a 50% stake in the company, 2) STZ has done an excellent job with the Western import contract and has a strong relationship with Modelo, and 3) Modelo could renegotiate its contract with STZ at more favorable terms to create a win/win situation.
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As a side note, Gambrinus chief Carlos Alvarez was not notified of the arbitration ruling as of yesterday evening. The news was leaked to this publication anonymously about an hour before the press release was on the wires.
LOTS OF DOUGH. It is estimated that Gambrinus made about $200 million in profits last year. That’s a lot of dollars. The big question is whether Modelo is willing to share those dollars or attempt to build an importing infrastructure on its own. While the analysts are betting on Barton, I wouldn’t discount the real possibility of Modelo/Procermex self-importing, at least initially, as most other foreign brewers now do. Procermex is based in San Antonio (where Gambrinus is based) and conceivably could poach employees from the latter company to get the job done. Still, Barton does have an excellent relationship with Modelo. We’ll see what happens. Either way, Modelo will make more money on each case of Corona sold.
DISTRIB DEALS IN FLUX. Another Big Question is what will happen with pending or near-future distributor consolidation deals in the eastern states. Will Gambrinus approve the deals until rights are transferred? Will Modelo approve or disapprove deals? Lots to think about.
BACKGROUND FOR GREENHORNS. Gambrinus had indicated that their Modelo beer brands increased by 12% in 2005. Gambrinus markets the Modelo portfolio in 25 eastern states including Texas, the District of Columbia and the Caribbean. Modelo accounts for about 90% of Gambrinus sales. Gambrinus’ sales of Corona Extra represent more than 55% of all U.S. sales, and nearly 65% of all U.S. sales for Corona Light, according to the company.
BUMP WILLIAMS LEAVES YUENGLING. That was short. News swirling that recently appointed vp sales Bump Williams has resigned from Yuengling. Word is that Bump wanted to pursue opportunities that better matched his fast-paced personality. Yuengling vp Dave Casinelli told BBD that the parting was amicable that that they “support him 100% and will continue to have a good relationship with him.”
Until Monday, Harry
