Diageo seeks to sell Smithwick’s, Harp and Kilkenny on margin concerns

Discussion in 'Beer News' started by ChicagoJ, Dec 7, 2023.

  1. ChicagoJ

    ChicagoJ Grand Pooh-Bah (4,073) Feb 2, 2015 Illinois
    Pooh-Bah Society Trader

    Every beer brand except Guinness appears to be on the selling block.
    https://www.irishtimes.com/business...-harp-and-kilkenny-on-margin-concerns-report/
     
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  2. JackHorzempa

    JackHorzempa Grand Pooh-Bah (3,181) Dec 15, 2005 Pennsylvania
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    A sign of the business times we are in? I wonder if we will be reading more of this stuff in the near future?

    Cheers!

    P.S. I watched a video on YouTube where an economist discussed the potential for deindustrialization of Germany since the cost of doing business in now very high there. Within the video there were shots of a brewery(s) for illustrative purposes. Some of the discussion is that German companies will move their production out of the country with a main 'culprit' being high energy costs (and secondarily high labor costs).
     
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  3. JZH1000

    JZH1000 Pooh-Bah (1,789) Nov 7, 2021 Colorado
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    Ah of course, this the way of the beverage conglomerate
     
  4. bubseymour

    bubseymour Grand Pooh-Bah (4,656) Oct 30, 2010 Maryland
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    If those 3 disappear, I don’t see too many craft beer consumers crying about it (except for old farts and our nastalgia reasons). That gives me less decision anxiety on what beer to order when I go out on St Patty’s day.
     
  5. WhatANicePub

    WhatANicePub Zealot (598) Jul 1, 2009 Scotland

    Some might do that, but breweries are unlikely to be among them.

    Beer is heavy and bulky and the value of the product is low compared to its weight and bulk. Shipping heavy stuff costs a lot. That's why imported beer is expensive.

    The savings would have to be immense for a brewery to consider moving production somewhere else, and where would they go? Who could make beer cheaper than the big, hugely efficient, modern, automated German breweries? France and Poland also have high energy prices. Not to mention that it would be marketing suicide for a well known German brand if it were no longer "made in Germany".

    The only ones for whom it would make sense would be those who export more than they sell on the domestic market, and I don’t know of any German brewery in that situation.
     
  6. KP7

    KP7 Savant (1,101) Feb 8, 2021 Massachusetts
    Society

    Maybe if we stopped giving executives so much of their compensation in stock options we would stop seeing this type of ridiculousness. Dumping profitable companies to increase your overall margin to boost share price without regard to the underlying business is just a jerk move. Especially as we've seen that sales like this often result in restructuring or premature closure, costing people their jobs so that rich shareholders can get a bit richer.

    If there are any beverage conglomerate execs on BA and you have some profitable businesses with "margin concerns" that you want to get rid of, give me a call. I'll take those pesky things off your hands.
     
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  7. hopfenunmaltz

    hopfenunmaltz Pooh-Bah (2,611) Jun 8, 2005 Michigan
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    Many german brands sell in a 100 km radius from the brewery. The beers are prices low. High shipping costs would not fit well.

    According to friends in Germany NG costs peaked, then came back down some after other sources than Russia came online.
     
  8. JackHorzempa

    JackHorzempa Grand Pooh-Bah (3,181) Dec 15, 2005 Pennsylvania
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    I suppose you (we) can see how energy costs progress over the next few years. Costs of doing business will drive business decisions.

    Cheers!
     
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  9. WhatANicePub

    WhatANicePub Zealot (598) Jul 1, 2009 Scotland

    Having said all that, I recently saw, in a UK supermarket, bottles of Feldschlösschen beer which were made in France, not Dresden, Germany as you might expect. So there must be some cost advantage somewhere. Buyers of Feldschlösschen in Germany will neither know nor care what the brewery is selling on the UK market.
     
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  10. moodenba

    moodenba Pooh-Bah (1,833) Feb 2, 2015 New York
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    The German beer business has one aspect that helps the economics of local breweries that isn't really a factor in the US. The returnable bottle is extra heavy, and takes two trips. Compare that to the disposable aluminum can that's ubiquitous in the US. That is in addition to the local drinker's brand loyalty. But that loyalty will inevitably slip.
     
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  11. TinFang

    TinFang Savant (1,109) Jun 20, 2011 California
    Society

  12. AlfromPA

    AlfromPA Crusader (439) Dec 9, 2021 Colorado

    Yes, but marketing can do amazing things. Who would have predicted not that long ago that Americans would come to pay inflated prices for Mexican AAL, and make Modelo the most popular beer in the US?
     
  13. JackHorzempa

    JackHorzempa Grand Pooh-Bah (3,181) Dec 15, 2005 Pennsylvania
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    Maybe the company that buys the Irish brands can hire Conor McGregor for their commercials and 'sell' the Irish Fighting spirit!?!

    [​IMG]
     
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  14. JackHorzempa

    JackHorzempa Grand Pooh-Bah (3,181) Dec 15, 2005 Pennsylvania
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    Well, it would appear that Conor McGregor will not be available to advertise beers like Smithwick’s, Kilkenny and Harp Lager. I was grocery shopping yesterday at my local supermarket and there was big placard (almost life sized) of Conor McGregor holding the beer brand he owns: Forged Irish Stout.

    [​IMG]

    This placard is the first I have seen/heard of this new beer brand.

    Sláinte!
     
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  15. crazyspicychef

    crazyspicychef Maven (1,427) Sep 27, 2012 Pennsylvania

    I won't miss either of those beers.
    I liked Shmitticks when it first came out on the scene, but quickly tired of it.
    Harp isn't nearly as good as it used to be. Id rather have Guinness Gold back, honestly.
    That wasn't a bad brew.
    Only the kegged Guinness is brewed in Ireland, from what a Guinness rep told me, so it probably doesn't matter who takes over the brands. Not many people will notice or care.
     
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  16. steveh

    steveh Grand Pooh-Bah (4,030) Oct 8, 2003 Illinois
    Pooh-Bah Society

    You remember that weird malt flavor from back then too, eh? I recall Sam Smith's lager having a similar flavor back in the late 80s.
     
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  17. MostlyNorwegian

    MostlyNorwegian Pooh-Bah (1,912) Feb 5, 2013 Illinois
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    An economist? Oh, bother. So what you really mean is that the compensation for the suits who really don't make any beer at all, and just want a vacation home is what is actually out of proportion, and this is gravely irritating them. They want that vacation home.
    That's ALL the economist cares about.
     
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  18. steveh

    steveh Grand Pooh-Bah (4,030) Oct 8, 2003 Illinois
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    Probably the same Guinness rep I encountered a few years ago who didn't know the difference between the Draught in bottles and the Extra Stout in bottles. :rolling_eyes:

    If you check the labels of Draught and Extra here in the U.S., they're brewed in Ireland. I haven't seen FES in a while, so I can't comment, but I'd be surprised if it's brewed in Baltimore.
     
  19. TrojanRB

    TrojanRB Grand Pooh-Bah (3,185) Jul 27, 2013 Texas
    Pooh-Bah Society Trader

    Profitable doesn’t necessarily equal a good investment in today’s environment. Earnings in the P&L is less important, and people are much more concerned with managing cash on the balance sheet because of interest rates.

    Many low margin businesses just aren’t worth it. Juice has to be worth the squeeze.
     
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  20. MostlyNorwegian

    MostlyNorwegian Pooh-Bah (1,912) Feb 5, 2013 Illinois
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    As beer is a consumable, and a physical and money intensive endeavor along every step in its process from grain to glass, this is frightfully hilarious.
     
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