Insider Flash: Philippine San Miguel discloses Coca-Cola payment details

MANILA (MarketWatch) -- San Miguel Corp. (SMCB.PH), the Philippines' largest food and beverage conglomerate by sales, Thursday provided a breakdown of the amount it will receive for selling its controlling stake in its soft drinks joint venture with Coca-Cola Co. (KO).

San Miguel said last week it will receive $590 million from Coca-Cola for its entire 65% stake in Coca-Cola Bottlers Philippines Inc. It didn't elaborate.

Thursday, San Miguel said Coca-Cola South Asia Holdings will pay the company an initial $370 million and deposit another $100 million with a third-party agent who will disburse the amount after the closing of some financial accounts which may result in a purchase price adjustment.

San Miguel said another $20 million will be paid by Coca-Cola South Asia 18 months after the deal's closing, while another $100 million will be paid on the fifth year of the deal.

San Miguel's sale agreement prevents it from producing either for itself or Coca-Cola's competitors nonalcoholic beverages in the Philippines for five years and elsewhere in the world for three years.

Aside from divesting itself of a drag to bottomline - Coca-Cola Bottlers has been suffering losses for years - San Miguel will also raise funds to ease the burden of debts it had taken on to fund an aggressive expansion overseas. It had bought several companies abroad in recent years, the biggest of which is Australia's dairy company National Foods Ltd.

-Edited by Rosalyn Lim
Source: Marketwatch.com Last Update: 6:24 AM ET Jan 4, 2007

Note:  You are receiving this message as a service from CBAS Cluster Marketing, updating key personnel within the CBAS organization of new and exciting developments within the packaging industry.  If you would like to discontinue receiving this particular update via email from CBAS Cluster Marketing, simply reply to this message with the word 'unsubscribe' in the subject line.  Additionally, if you are a supervisor/director and feel that there are additional individuals within your department/team that should receive this update, please inform us accordingly. 

Insider Flash: San Miguel taps Thai health trend

11/01/2007 - San Miguel plans to launch a new water brand and a range of functional beverages in Thailand as part of its strategy to gain a leading position in this market, reveals a report.

The Philippines-based company, already one of south-east Asia's biggest food and drink producers, made its first steps in the Thai beverage market when it bought a brewery from Thai Amarit Brewery in 2004.

But the acquisition of Australia's National Foods in 2005 gave it a new premium juice brand (Berri), which has recently been introduced into Thailand.

Now it wants to become a major player in the country's beverage market by adding an extensive range of non-alcoholic drinks.

"We want to make ourselves a key player in the overall beverage market in Thailand in the next three to five years," Chirawan Assavanich, San Miguel's Thailand marketing and sales director, told The Nation newspaper last week.

Next month, the company will introduce a new drinking water under the Nam Fa brand, initially on test markets in the eastern region, including Chon Buri and Rayong. "We are also interested in launching other non-alcoholic beverages, such as functional drinks, which have high market potential," Assavanich told the paper.

Thai consumers are increasingly interested in healthy foods and beverages, a trend that is reflected in the growing fruit juice market. Juice drinks have been growing annually by 10.7 per cent, reaching around 109 million litres in 2004 or US$90 million, according to the US Foreign Agricultural Service.

San Miguel estimates Thailand's total fruit-juice market to be worth BT5 billion (€107m), with about 40 per cent of sales from pure fruit juice products and the rest from juice drinks.

Domestic player Tipco claims to have a 43 per cent share of the high-end segment of pure fruit and vegetable juice.
The company expects its Berri imported 100-per-cent fruit juice to generate sales of BT10 million this year, according to the report. A further BT200 million will be earned by its SunBlest 40-per-cent juice, produced in a recently completed factory in Rayong since October last year.

Source: ap-foodtechnology.com

Insider Flash: Foreign investors buy stake in Chinese milk drink maker

09/01/2007 - Three private equity groups have spent US$73 million on a stake in Chinese firm Taizini, a producer of probiotic milk drinks.

UK-based Actis Capital, Morgan Stanley and Goldman Sachs Group acquired about a third of the Hunan dairy company's shares during December, said its investment director Yao Xin.

China's dairy industry is growing rapidly and all of the leading players have already attracted foreign investment. The next wave of investment is therefore expected to be in smaller, regional dairies such as Taizini.

The Hunan company's focus on probiotic products, still very new to the Chinese market, has made it an attractive buy. Probiotic bacteria such as lactobacillus are said to protect the health of the digestive system and also boost immunity, and Chinese consumers are known to be interested in the health benefits of foods.

Taizinai, set up in 1997, now claims to have a 76.2 per cent share of China's probiotic drinks market. But the sector is still small compared with that of Europe and Japan. Probiotic dairy products account for less than 5 per cent of China's total dairy market, compared with about 80 per cent in Japan and Europe.

"In China, this [probiotic] sector is developing by 25 per cent every year, which demonstrates huge demand and great market potential," Yao told AP-Foodtechnology.com.

Taizinai plans to use the proceeds of the share sale to build two new factories in Jiangsu and Sichuan provinces, Yao said. Currently, the company has five research and production sites in Hunan, Beijing, Hubei, Jiangsu and Sichuan provinces.

In addition, Taizinai is planning an IPO although it has not yet decided where it will list. A Bloomberg report said that the firm has met with NYSE group chief executive John Thain to discuss a potential New York share sale.

"Yao said preparation for the listing "should probably be finished by the middle of this year" .

Company chairman Li Tuchun told the China Daily that after listing the firm will make a series of mergers and acquisitions, targeting both domestic and overseas manufacturers.

Taizinai is aiming to grow its sales from CNY1.8 billion (€177m) last year to CNY10 billion in three years. By 2017, the company's revenue is expected to reach CNY100 billion, Li told the paper.

Of the new owners, Actis, which is also an investor in one of China's biggest dairies, Mengniu, invested the biggest amount in Taizinai - US$40 million - while Morgan Stanley invested US$18 million and Goldman Sachs US$15 million.

The rest of the shares are owned by Li and senior management.
Source: ap-foodtechnology.com

Insider Flash: Cadbury sues Amcor for overcharging / Australia

21/12/2006 - Confectionery giant Cadbury Schweppes is suing Australian packaging company Amcor for more than A$120 million (€71.5m) over claims that Amcor overcharged for cardboard and PET plastic bottles while operating a price-fixing cartel with packaging rival Visy.

Cadbury filed a claim with the Federal Court of Australia on 15 December, seeking compensation for the alleged cartel and also alleging that the cartel extended beyond the cardboard price-fixing over which the competition regulator is currently prosecuting Visy.

Cadbury is the first major Amcor customer to take action against the packaging group, according to The Australian newspaper.

Amcor alerted Australia's competition authority to the price-fixing in late 2004 in return for immunity from prosecution but the evidence filed against Visy has left Amcor open to attack from customers seeking compensation for alleged overpayment.

Thousands of its smaller customers are taking on the packaging giant in a class action filed in April that seeks up to A$300 million in damages. But 11 major customers named by the ACCC as victims of the cartel, including Coca-Cola Amatil, Goodman Fielder, Cadbury Schweppes and Lion Nathan, had all remained silent on the matter until now, said the paper.

Cadbury alleges that Amcor overcharged it by $46 million for cardboard boxes. And although Amcor has said that the alleged price-fixing never affected its other businesses, Cadbury is also alleging that Visy and Amcor agreed not to poach each other's customers in the PET plastic bottle and aluminium can market, which led to Cadbury being overcharged at least a further $40million.

In addition, by breaching three separate contracts, Amcor had been "unjustly enriched" by a further $33.2 million from 2000 to 2004, bringing the total to around $120 million, reported the paper.

In a statement, Amcor said that the action filed by Cadbury appears "to adopt portions of the ACCC [Australian Competition and Consumer Commission] proceeding in relation to the cardboard business". These allegations "are yet to be proved in court and have been denied by Visy".

Amcor said Cadbury's allegations regarding supply contracts and additional cartel conduct in areas other than cardboard "appear to be widely speculative".

"Amcor will be vigorously defending these allegations and is considering making application to the court for a strike-out at the appropriate time. "

It said that it regretted that its valued customer had issued such proceedings and hoped that the dispute could be resolved amicably.

Source: ap-foddtechnology.com http://www.ap-foodtechnology.com/news/ng.asp?n=72986&m=2APFD21&c=nxfbrgitrbnpklu

Insider Flash: Danone sets up joint venture with China's Mengniu

19/12/2006 - French biscuits, water and yoghurt group Danone said yesterday that it had signed a joint venture with China's leading dairy Mengniu to cooperate in the production and distribution of fresh dairy products in China.

The joint venture will combine Mengniu's market-leading position with Danone's technology and marketing know-how to offer Chinese consumers high quality dairy products, said Danone in a statement.

Danone already has a stake in Shanghai-based Bright Dairy, which produces and markets Danone brand yoghurts in China. But Bright Dairy has seen sales and profits decline in recent years, partly due to a scandal linked to the reprocessing of some of its products in the south.

Inner Mongolia-based Mengniu and another dairy in that region, Yili, have risen to the top of the sector during this time, and with growing competition in the Chinese dairy industry, foreign players like Danone are increasingly seeking a larger piece of the action by getting more involved in production.

Danone's news follows last week's announcement by Fonterra that it would set up a dairy farm with its joint venture partner SanLu in China. Both foreign players have underlined their know-how in producing quality products, and as incomes rise, Chinese consumers are spending more on what they perceive to be higher quality.

Mengniu has recently launched a premium milk brand, Telunsu, backed by a major advertising campaign as it seeks to create a differentiated, higher margin product. Mengniu said today that it will invest CNY1.6 billion (€155m) in the production and sale of fresh dairy products under the joint venture, with CNY381.5 million worth of production facilities and properties.

Danone is already the leading producer of bottled water and biscuits in China and posted sales of around €1.2 billion there last year. Under the new agreement with Mengniu, in which it holds a 49 per cent share, it will be aiming to increase its share of the dairy market, which still has considerable room for growth.

Per capita consumption is still very low, at an average 20kg, but this is expected to increase to 30kg in 2015
Source: ap-technology.com

F&N raises funds for food and beverage growth / Singapore

12/12/2006 - Singapore conglomerate Fraser and Neave has sold a 14.9 per cent stake in the group to raise funds for expansion of its food and beverage business.

The group raised approximately S$900 million (€443m) in a share sale to state-owned investor Temasek holdings, it announced on Friday.

F&N chief executive Dr Han Cheng Fong said Temasek's participation would "strengthen the growth potential of F&N's food and beverage business" .

"We have well-known brands in the Asia Pacific such as Tiger, F&N, 100Plus, Ice Mountain, Magnolia and Nutrisoy, all of which have great potential to grow beyond their existing markets," he said.

The group is also looking to acquire brands and businesses in the region to increase its presence in the food and beverage sector. In October it signed a RM310 million (€67.2m) deal with Nestlé for the rights to produce and sell the Swiss group's liquid milk products in south-east Asia.

That deal will more than double current annual turnover at F&N's dairy operations to more than RM1.5 billion, and give it significant economies of scale to reduce the impact of high raw material costs.

"We really want to see a more balanced portfolio. We see the opportunities in food and beverage and we hope to make more acquisitions in areas such as beer, milk and soft drinks," Dr Cheng Fong told a media briefing.

Temasek said in a statement that its acquisition of 205.5 million shares in F&N was its "most substantial" investment in the food and beverage sector in recent years.

F&N earned a net profit of S$432 million during 2005/06, up 15 per cent from a year ago with sales up 8.8 per cent to S$3.8 billion. Brewing and properties were largely responsible for the growth however as weak consumer demand hit soft drinks sales in Malaysia.

Source: ap-foodtechnology.com / By Dominique Patton

Enviga lawsuit hangs over Coke, Nestlé / USA

07/12/2006 - Coca-Cola and Nestlé face a potential lawsuit in the US over claims that their new Enviga energy drink can help consumers burn off calories.

The Center for Science in the Public Interest (CSPI) said it would sue both firms if they did not stop making the claim on Enviga, a green tea-based energy drink set for official launch in January.

The announcement coincided with a US Food & Drug Administration (FDA) hearing on how to regulate labelling and health claims for functional foods and beverages, such as Enviga, which have no legal category of their own to date.

It is the optimum combination of Enviga's green tea, caffeine and plant micronutrient content which creates the ‘negative calorie effect', according to chief Coca-Cola scientist Rhona Applebaum.

The formula was made possible through access to decades of research on green tea by the Nestlé Research Center in Switzerland. It found the tea contained a powerful antioxidant, EGCG (epigallocatechin gallate), which could speed up metabolism and energy use when combined with caffeine.

Tests have shown that drinking three cans of Enviga everyday could burn an extra 60-100 calories in thin to normal weight people, the firms announced.

CSPI accused both companies of misleading advertising, alleging that evidence for Enviga's ‘negative calorie' effect was not substantial.

It also criticised the drink's caffeine content, around 300g in one can, which sits right at the top end of the maximum daily intake advised by the American Dietetic Association. The same limit is advised in the UK by the country's Food Standards Agency.

Some scientists in the US recently called for all caffeinated drinks to show caffeine content on their labels, even carbonated sodas. Current caffeine levels in drinks were not clear enough for consumers, their article, published in the Journal of Analytical Toxicology, said.

“In certain people, consumption of caffeine causes serious health effects, such as anxiety, palpitations, irritability, difficulty sleeping and stomach complaints,” said Dr Bruce Goldberger, one of the researchers.

Source: beveragedaily.com / By staff reporter