- BUD: $55.20
- TAP: $45.00
- SAM: $91.74
Well, certainly an uneventful week in the brewing industry. Outside of my stocks hitting some unsettling lows, there was little news to make the headlines since my last week's post. So, here we go.
First off, on a positive note, on Tuesday the NHL agreed to a sponsorship deal with Molson Coors. This means that Molson Canadian is set to become the official beer of the National Hockey League. Certainly the biggest shock of this agreement was felt by the league's current sponsor Labbatt Breweries. Labbatt, who has been the league's sponsor for more than a decade, was under the impression, until recently, that things were on track for them to remain sponsors until 2014. They later were informed by the league's chief operating officer John Collins that he feels the NHL needs to take steps in a different direction. Collins, who was quoted saying "this is a monster deal", feels that this change in sponsorship is going to allow for Molson Coors to have major positions across all of the league's current events and the ones they are hoping to create. This seven year deal between the NHL and Molson is just another sign of the postive momentum Collins has been working toward since he was brought on in
2008. He feels that this will allow for the NHL to gain abundantly more American TV contracts and agreements with various American networks like NBC and Versus. As for the feelings of those at Molson Coors, current president and CEO Dave Perkins feels this will allow the company to take their brand to a whole new level. He also stated that he feels it will enable them to really take hockey to their beer drinkers and to their fans, and to provide hockey experiences to the brand. My opinions on this matter is that I feel it will give Molson Coors some great momentum in the market and most definetly will increase brand awareness in a sport where the could receive a great deal of sales and publicity. In other news, Belgium owned Anheuser-Busch announced this week that they will be closing their Manitowoc, Wisconsin malting plant. This decision, which will be taking place within the next six to nine months, will affect thirteen employees currently working at this plant. The decision to close the plant was based on current market forcasts, location of raw material supply and more efficient malting processes elsewhere. According to news reports at bizjournals.com, the company determined that their current malting needs were being sufficiently met through other sources, including their malting facilities in Idaho and Minnesota. The brewer did say that there are no plans to change operations at any of Anheuser-Busch's other plants. Certainly my regards go out to those at the Wisconsin plant who will be out of work over the course of the next year from this decision.
My last topic this week for discussion deals with an article written by Colleen Paulson of The Motley Fool. Paulson's article, which was titled "Who's Broke Now?", certainly caught my attention with curb appeal when I strolled across it while browsing through my industry-related news. So, in this article, Paulson went on to discuss the pain that has been felt by the beverage companies because of a weakened economy. She talked about how many consumers have chosen to eat out less over the course of the last three years or so and have resorted to cheaper beverage options. One of the companies Paulson feels could dish out some pain to investors is the Craft Brewers Alliance. The CBA has been feeling a great deal of pain through the current recession and has dwindled their liquid assets down while continuing to dig a deeper hole for themselves with debt. She also went on to point out that the Anheuser-Busch owns 35% of the CBA and she feels this could lead to unfavorable situations, as it did for Rolling Rock. In the article she informed us that Rolling Rock was, at one time, a craft brewer with a loyal following and a one-of-a kind taste that they received from the Latrobe,PA's rolling streams' water they used in their brewing. Once being bought out by Anheuser-Busch, the company got packed up and moved to a new operating facility in New Jersey. The loyal following and distinct taste they once had suddenly faded away as the commercialization began. The CBA has fortunately boasted a five-year revenue growth rate of 34.7% but a 53.20 trailing-12-month P/E. This, she stated is why its too rich for her blood and also why she feels that one misstep could lead the company to what could be a "very painful hangover". Well that's it for this week, and until next week I remind you to PLEASE "stay thirsty my friends"!
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