The effects of the global credit crunch show no sign of abating: this week, Cadbury Schweppes has announced its intention to demerge its American drinks business, Dr Pepper Snapple. Although the company originally intended to sell the firm, it was forced into a demerger in the wake of the credit crunch and the potentially devastating effect that it may have on possible bidders for the business. Dr Pepper, which has estimated annual sales of £2.8 billion, will be listed on the New York Stock Exchange as a separate entity, trading as Dr Pepper Snapple Group; in this way, the demerger is the first of its kind for over 12 years.

In other M&A news, the EC has finally approved the acquisition of selected Scottish & Newcastle assets by Heineken in all EU member states, with the exception of Ireland. Referring to Ireland, the regulators said that the proposed transaction (and thus the removal of Scottish & Newcastle) would eliminate the competition which faces Diageo and Heineken, the two companies which hold a duopoly in the Irish market. Despite this setback, however, the consortium of Heineken and Carlsberg has said that it remains confident that the acquisition will be fully completed, for the sum of approximately £7.8 billion, by April 28, 2008.

Edited by

Chris Eatough

IN THIS ISSUE

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LATEST COMMENT

Nestle: boosting its healthy offerings with new smoothie brand

Nestle is continuing its strategy of focusing on the health and wellness trend with the announcement that it is set to launch a smoothie range in the UK. However, while the smoothie market is exceptionally strong in the UK, the company may find that it is hard pressed to overtake the category leader, Innocent, in the short term. Read full article
Company information: Nestle SA

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BREWING NEWS

European Commission approves acquisition of selected S&N's assets by Heineken
The European Commission has approved the acquisition of selected Scottish & Newcastle assets by Heineken in all EU member states with the exception of Ireland. Read full article Company information: Scottish & Newcastle, Heineken N.V.

Marston's acquires Ryland Thompson and its subsidiaries
Marston's has acquired Ryland Thompson and its subsidiaries, of which brewer Refresh UK is the trading arm. Read full article

SABMiller and Molson Coors JV cleared by the EC
The European Commission has announced that it has approved SABMiller and Molson Coors's proposed joint venture to merge their US and Puerto Rican operations into a new company, called MillerCoors. Read full article
Company information: SABMiller, Molson Coors Brewing Company

Boston Beer recalls select bottles of Samuel Adams Beer
The Boston Beer Company has announced a voluntary recall of select 12 ounce glass bottles of its Samuel Adams beer which may contain small grains or bits of glass. Read full article

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WINE & SPIRITS NEWS

Vincor Canada acquires Medallion Wine Marketing
Vincor Canada, a producer and marketer of wine and related products, has acquired the business of Medallion Wine Marketing, its affiliated company in western Canada. Terms of the transaction were not disclosed. Read full article
Company information: Vincor International

Wirtz Beverage announces strategic alignment
Wirtz has announced that its portfolio of wine, spirit and beer distributorships would be united under a new organizational operation of the Wirtz Beverage Group. Read full article

Clif Bar Family Winery launches wines in US
Clif Bar Family Winery, a producer of wines with a focus on sustainably farmed and organic grapes, has launched its wines in the US. Read full article

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NON-ALCOHOLIC DRINKS NEWS

Cadbury seeks backing for Dr Pepper demerger
Confectionary giant Cadbury Schweppes has announced its intention to demerge its American drinks business Dr Pepper Snapple. Read full article
Company information: Cadbury Schweppes plc

Hall of Fame Beverages signs distribution agreement with AVT
Hall of Fame Beverages has announced that Automated Vending Technology will be distributing its beverages in vending machines throughout California. Read full article

Snack Brothers to sell new HealthyCal+ bottled water
Integrated Pharmaceuticals has announced that Snack Brothers has agreed to carry the new mineral enhanced bottled water: HealthyCal+. Read full article

Coca-Cola India sets up new manufacturing facility
Coca-Cola India has developed a new manufacturing facility for its fruit juice line at Nabhipur, Punjab, reported The Financial Express. Read full article
Company information: The Coca-Cola Company

New York baristas sue Starbucks over tips
Starbucks baristas in New York have filed a lawsuit in the US District Court in Manhattan. According to the baristas, the coffee chain forced them to unjustly share tips with shift supervisors. Read full article
Company information: Starbucks Corporation

Cobra International Beverage introduces Viuda Negra for Mexican market
Cobra International Beverage has launched Viuda Negra, a new energy drink specifically created for the Mexican marketplace. Read full article

H3Enterprises completes area development agreement with Multicore
H3Enterprises, a company that owns, creates, licenses, and franchises HipHopSodaShops in the US, has completed negotiating the terms of an area development agreement with Multicore Group, a company engaged in long range development of franchises in the provinces of Ontario and Quebec. Read full article

FSA says artificial colorings are as unhealthy as petrol
A GBP750,000 study carried out at Southampton University has found that seven food colorings could affect children's development as much as leaded petrol. Read full article

Sun Shower introduces new Stamina Superfood Smoothie
Sun Shower has introduced Stamina Superfood Smoothie, a new, all natural juice smoothie. Read full article

Rudy Nutrition signs new agreement with AVB Sales and Marketing
Rudy Nutrition, a manufacturer of health-conscious products, has announced a new agreement with AVB Sales and Marketing. Read full article

Coca-Cola North America introduces vintage bottle
Coca-Cola North America has introduced a vintage Coca-Cola bottle called the 1906 Diamond Label. Read full article
Company information: The Coca-Cola Company

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REPORT BESTSELLERS

MARKET TRENDS

Milk and yogurt drinks: top flavors in new global product launches
According to the Productscan database, aside from blend, strawberry and chocolate were the most popular flavors of new milk and yogurt drinks launched worldwide in the 12 months to February 2008. Vanilla is now in fourth place on the leader board, replacing peach, which moves down to seventh place. Pineapple is the only new entrant on the leader board, making an appearance in joint ninth position. Read full article

Product claims: new drinks launches, November 2007 to January 2008
According to the Productscan database, 'high vitamins', 'upscale' and 'natural' were the most frequently used claims on new global drinks launches for the three months ending January 2008. Meanwhile, over 5% of new drinks launched during the period were tagged 'low sugar', more than double the figure in the same period of the previous year. Likewise, the growing popularity of 'organic' is demonstrated by its appearance at fifth place on the list. Read full article

New drinks launches by category, November 2007 to January 2008: isotonics energize the market
According to Productscan, fruit and fruit flavored drinks was the leading category in new global drinks launches for the three months to January 2008. However, the category has witnessed more than 25% fewer launches compared with the previous year, and liqueurs, bottled waters and soft drinks have also seen a sharp decrease. Read full article

Coffee: top flavors in new products
According to Productscan, aside from blend, milk was the leading flavor of coffee products launched in the 12 months to January 2008. Cappuccino was the third most used flavor of new coffee drinks launched in the period, up two places compared to the previous year.
Read full article

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COMPANY SPOTLIGHT

Constellation Brands, Inc.

Constellation Brands, a producer and marketer of beverage alcohol, has incurred a net loss of $610 million, or $2.82 diluted loss per share, for fiscal 2008, compared to net income of $332 million, or $1.38 diluted earnings per share, for 2007.

The net loss was driven by an estimated $822 million of impairment charges, primarily related to goodwill and intangible assets associated with the company's Australia and UK businesses, and a $52 million deferred tax asset valuation allowance.

Fiscal 2008 net income, on a comparable basis (which excludes acquisition related integration costs, restructuring charges and unusual items), totaled $321 million, or $1.44 diluted earnings per share (EPS) This was a significant decrease compared to net income of $403 million and diluted EPS of $1.68 in fiscal 2007.

The company has reported a net loss of $832 million, or $3.90 loss per diluted share, and an operating loss of $735 million for the fourth quarter of fiscal 2008.

Rob Sands, president and CEO of Constellation Brands, said that the company had achieved its strategic initiatives and exceeded its key financial goals for 2008. He also said that the company exceeded its comparable earnings per share estimate for the year, and generated record free cash flow of $376 million.

Key Facts

Constellation Brands, Inc.
370 Woodcliff Drive
Suite 300
Fairport
NY 14450 4222
US

Tel: 1 585 218 3600
Fax: 1 585 218 3601
Web: www.cbrands.com

New York Ticker: STZ
No. Employees: 7,700
Financial Year End: February

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