Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Hot Emerging Market Stocks For Global Growth

Companies / Investing 2009 Aug 11, 2009 - 06:25 AM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleJason Simpkins writes: With sales volume plunging in Western markets, Molson Coors Brewing Co. (NYSE: TAP) and SABMiller PLC (OTC ADR: SBMRY) are tapping into emerging markets for refreshing growth.

SABMiller, for instance, saw beer sales slump 7% in Europe and 0.8% in the United States, while Africa and Asia combined for 11% sales growth. Sales in China alone soared 17% in the quarter.

"While demand in Europe has dropped sharply, countries in emerging markets such as Africa and Asia have fared relatively well despite falling back from the high - one might say unsustainable rates of growth of recent years," said SABMiller Chairman Meyer Kahn.

As a percentage of commercially produced alcohol, beer now accounts for 49.0% of the market in Africa and 32.8% in Asia, Meyer said.

In China, SABMiller's success is largely attributable to the popularity of a Chinese beer named Snow, which recently supplanted Bud Light as the world's most popular beer. Snow is a brand of beer brewed by SABMiller and its partner China Resources Enterprise Ltd. (OTC ADR: CRHKY) and it encompasses at least two-dozen varieties.

The only problem is that while SABMiller's Chinese unit accounted for about 14% of sales volume, it contributed just 2% to earnings because of low pricing. But that's something the company expects will change as sales rise.

The growth rate of beer sales in Asia over the past five years remains the highest of any region, averaging 8.4%, according to SABMiller. China, in particular, has seen beer-sales growth averaging 10.7% per year.

The "margin story is improving gradually," SABMiller spokesman Jonathan Oates told Bloomberg News.

There's a similar story unfolding in Africa, where total beverage volumes grew by around 10% organically. That increase has been helped greatly by particularly strong growth in Tanzania and Angola, where the company is building new brewing facilities.

SABMiller's brewing and beverage operations cover 14 countries in Africa, with a further 19 covered through a strategic alliance with French wine-and-beer distributor Castel group.

SABMiller is the No. 1 brewer by market share in most of these countries.

The company has operations in Vietnam, a joint venture in Australia, and now exports significant volumes to South Korea and Taiwan, as well.

"We are also judiciously expanding our geographic footprint in other parts of the world where it makes sense to do so," said Kahn. "In the past year, we've acquired one of the larger breweries in the Ukraine and a beer and malt operation in Nigeria, each marking our first entry to the country in question. In the case of Nigeria, the move takes us into the only major African market in which SABMiller did not previously have a presence."

Molson Coors' Blowout Quarter

Molson Coors is looking to broaden its geographical footprint, as well. And it's working.

Taking a global approach to its business helped Molson Coors to more than double its profit in the second quarter from a year ago. Second-quarter profit at Molson Coors jumped 136.3% to $187.3 million from $79.4 million in 2008. Underlying after-tax income rose 20.6% to $205.4 million or $1.11 per diluted share, up from $170.3 million, or 92 cents per diluted share a year ago.

Those gains came despite sales volume declines of 2.9% in Canada and 12.4% in the United Kingdom - two of the company's biggest markets.

Molson Coors' joint venture with SABMiller, known as MillerCoors, was also a big help.

The two companies struck a deal last July that combined the shipping, transportation, and brewing resources of America's two largest breweries. Now, instead of being shipped from Denver, Coors Light can be made and shipped out of Miller's East Coast production plants, saving on shipping.

The companies predicted $50 million of cost savings in the first year of the joint venture, but had reached $78.4 million by March of this year. Miller and Coors now expect cost savings to be $128 million in the first year, and have shaved six months off their three-year goal of saving $500 million.

MillerCoors reported underlying net income, excluding special items, increased by 16.4% to $325 million. Even more impressive, the company grew its global markets business by 18% in the second quarter, thanks in large part to strong Coors Light sales in China.

"For Molson Coors Brewing Co., it's been an unqualified success," Sam Walker, the beermaker's chief legal officer and managing director, told the Denver Business Journal. "Our objectives of brand-building take time, but we're starting to see evidence that giving more choice to consumers in many markets is ultimately going to lead to success."

Another way Molson Coors expanded choices for its customers was by obtaining the exclusive distribution rights to Singha, a Thai lager that has 95% distribution in Thai restaurants.

"For our customers, its positioning as an authentic brand offers an opportunity to build their retail offer around high value, growing Thai, Japanese and Asian Far Eastern food occasions, as well as becoming part of a valuable 'World Beer' segment," the company said.

Singha joined Molson Coors' portfolio of 10 specialty beers that make up the Different World Drinks Co., a business-to-business company that aims to promote foreign beers to bars and retailers. The other nine beers consist of:
  • Blue Moon.
  • Dos Equis Lager.
  • Dos Equis Ambar.
  • Groelsch.
  • Groelsch Weizen.
  • Kasteel Cru.
  • Kasteel Cru Rose.
  • White Shield.
  • And Zatec.
Molson Coors has also hired Adeye - a mobile marketing company with offices in Norway, Sweden and Denmark - to promote the line of beers.

Stock Prices Rebound

Both SABMiller and Molson Coors have seen their stock prices race back from their early-March lows, a period in which the benchmark Standard & Poor's 500 Index has rebounded 49%.

Since bottoming at $31.44 each on March 16, Molson Coors' shares have slightly lagged the S&P, though they've surged a still-respectable 46%. Molson Coors closed yesterday (Monday) at $45.79.

SABMiller has performed even better. From their March 9 nadir of $12.44, SABMiller shares have zoomed 80%, closing yesterday at $22.33. And they're up 32% so far this year - easily outdistancing the benchmark S&P (+10%) and rival Molson Coors (-6.0%).

Analysts have established a consensus one-year target price of $50.56 for Molson Coors shares, which would represent a gain of about 10% from yesterday's close. The Denver-based firm's shares feature a 2.1% dividend yield.

Obscure Law Forces Companies to Come Clean on Gold Mandatory government filing NI 43-101 required gold mining companies in Canada to disclose how much gold they really have. This one company's filing just revealed that it�s sitting on the 7th largest gold strike in North American history. Few know about this yet. And for a short time, savvy investors will be able to buy gold for 17 cents on the dollar. Read the full report.

Money Morning/The Money Map Report

©2009 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in