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DealBook: The Brazilians Behind the Heinz Deal

February 15, 2013 by Leave a Comment

3G Capital took Burger King Holdings private in 2010.LM Otero/Associated Press3G Capital Management took Burger King Holdings private in 2010.

Warren E. Buffett’s $23 billion acquisition of H. J. Heinz, a quintessentially American company, is almost a caricature of a Buffett acquisition.

But Mr. Buffett’s partner in the deal, the Brazilian-backed investment firm 3G Capital Management, has also shown a craving for iconic American businesses.

3G, whose principal owner is the billionaire financier Jorge Paulo Lemann, adds ketchup to a portfolio that has included burgers and beer. Mr. Lemann played a major role in the multibillion-dollar merger of the Brazilian-Belgian beer giant InBev with Anheuser-Busch.

And in 2010, 3G took Burger King Holdings private in a leveraged buyout valued at about $3.3 billion. In April, just 18 months after taking it private, 3G sold shares of Burger King back to the public, but still retains majority ownership of the company. The firm has also previously invested in Wendy’s.

The ascendance of 3G and Mr. Lemann as major players on the global mergers-and-acquisition stage reflects the rise of Brazil as an economic power. Armed with strong balance sheets and a growing domestic economy, Brazilian companies have emerged as prominent buyers of American companies. In 2009, for instance, the Brazilian beef company JBS paid $800 million for a majority stake in Pilgrim’s Pride, the Texas chicken company.

Mr. Lemann, 73, who is worth $19.1 billion, according to the Bloomberg Billionaires Index, is said to have come up with the idea to buy Heinz and brought it to his friend Mr. Buffett. The two men have known each other for decades, having served together on the board of Gillette. Berkshire Hathaway is also a large shareholder of Anheuser-Busch InBev. Mr. Lemann and his partners serve on the Anheuser-Busch InBev board.

Mr. Lemann, whose Swiss father emigrated to Brazil a century ago, is a former Brazilian tennis champion who played at Wimbledon. He has lived in Switzerland since 1999, after an attempted kidnapping of his children.

He has been a major player in Brazil since the 1970s, when he acquired a small financial firm and built it into Banco de Investimentos Garantia, one of Brazil’s largest investment banks. Credit Suisse acquired his company for about $675 million in 1998. He and his business partners also gained control of a Brazilian brewery and built it into AmBev, one of the world’s largest beer companies.

The point person on the transaction for 3G, which houses its investment operations in New York, is Alexandre Behring. Known as Alex, Mr. Behring is a Brazilian native who graduated from Harvard Business School in 1995 and lives in Greenwich, Conn.

Another tidbit about 3G: for several years, it employed Marc Mezvinsky, the husband of Chelsea Clinton. Mr. Mezvinsky left 3G in 2011 and has since set up is own hedge fund.

Article source: http://dealbook.nytimes.com/2013/02/14/the-brazilians-behind-the-heinz-deal/?partner=rss&emc=rss

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A Brooklyn Specialty Brewer Dares the French Market

February 13, 2013 by Leave a Comment

PARIS — Garrett Oliver popped the cork of one of his specialty brews, swirled the amber liquid into a wine glass and took a hearty sniff.

“It smells a little like cheese — in a good way,” he said the other night at a tasting of his artisanal beers in Paris.

Mr. Oliver, the brewmaster at Brooklyn Brewery, a New York craft-beer maker now trying to expand into France, has a quirky way of describing his creations. He refers to the more complex ones as “a little bit barnyard,” “having a funky nose” and “like a good sourdough bread.”

Brooklyn Brewery is counting on those earthy complexities to entice drinkers to try something new in a country where even construction workers are more likely to belly up to the bar for un petit verre of the house red than they are to ask for un demi, or small glass of beer.

This is no sure bet for Brooklyn Brewery. Beer consumption in France is Europe’s second-lowest, after Italy, with only 16 percent of French drinkers choosing beer. With nearly two-thirds preferring wine, French consumers have proved so unfriendly in the past that few American craft brewers have bothered to cross the ocean. The only American beer that has caught on to any extent is Bud, largely by dint of the distributive heft of its multinational parent, Anheuser-Busch InBev.

“France is a difficult nut to crack,” said Simon Spillane, senior adviser of the Brussels-based Brewers of Europe, which tracks beer consumption by country. Added to the brewer’s challenge is the 160 percent increase in the French beer tax that took effect Jan. 1, which is projected to raise the price of a typical half-pint of beer by 20 to 30 centimes, the equivalent of 27 to 40 U.S. cents.

And yet, among younger French men and women there are signs of changing tastes. While consumption of all alcoholic beverages in France has been dropping for 30 years, beer is nonetheless an industry with annual sales of €2 billion, or $2.7 billion. And even as overall beer sales in France fell 1.7 percent in 2010, the most recent year for which data are available, specialty beers saw a jump of 8.8 percent, according to the French Brewers’ Association.

Craft brewers, an American category for independent breweries producing fewer than six million barrels a year, and smaller microbreweries have been popping up across France. Numerically, they are the vast majority of the approximately 500 brewers now operating in the country, although their sales make up only 2 percent in a market dominated by Carlsberg, Heineken and Anheuser-Busch InBev.

“People are drinking less but they want something that’s good — they’re fed up with crappy, tasteless beer,” said Simon Thillou, a former journalist who in 2006 opened La Cave à Bulles, a specialty shop in the Marais section of Paris. The shop sells 250 craft and microbrews, now including Brooklyn Brewery’s.

Mr. Thillou and others in the French industry attribute the drop in drinking less to a health kick than to an evolution in taste. The French, they say, are now willing to spend more for a better product, be it wine or beer, even if they consume less of it. It is a trend that may bode well even for niche beers that pack a bitter punch and test a French palate predisposed to aromatic, lighter flavors.

Expanding into France is a natural evolution for Brooklyn Brewery, the largest exporter of American craft beer, with sales in 17 countries around the world. Foreign sales account for 20 percent of the privately held company’s annual sales of $50 million. Outside of New York, sales are the second-highest in Sweden, where the company plans to open a brewery by the end of the year.

“It’s a matter of focus and an investment of time,” said Eric Ottaway, Brooklyn Brewery’s general manager and, along with his father and brother, majority owner. “Selling beer in France isn’t very different than in, say, Oklahoma.”

This article has been revised to reflect the following correction:

Correction: February 13, 2013

An earlier version of this article misstated the name of a European brewers organization. It is the Brewers of Europe, not the Federation of Brewers in Europe.

Article source: http://www.nytimes.com/2013/02/14/business/global/a-brooklyn-specialty-brewer-dares-the-french-market.html?partner=rss&emc=rss

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Media Decoder Blog: Replaying Super Bowl Ads’ Effectiveness

February 7, 2013 by Leave a Comment

Given that Super Bowl Sunday is the biggest day of the year for advertising as well as for football, Madison Avenue waits each year after the game with bated breath for the results of the myriad analyses, polls and surveys of consumer responses to the commercials.

What follows is a roundup of some of the information and data released on Monday and Tuesday, after the conclusion of Super Bowl XLVII.

AddThis: AddThis, a data company, tracks what is called brand lift, the difference between online conversations about sponsors on Super Bowl Sunday and the online conversations about them on six previous Sundays.

The sponsor that enjoyed the largest brand lift, up 634 percent, was Anheuser-Busch, part of Anheuser-Busch InBev, which was the exclusive beer sponsor of the game with six commercials. GoDaddy, with two commercials in the game, followed closely behind, with a brand lift of 626 percent.

The sponsor with the lowest brand lift was the Chrysler Group, according to AddThis, with a decline of 35 percent. That may be attributed to the fact that the company ran two commercials for its Jeep and Ram brands but none for the Chrysler brand.

Anheuser-Busch: One of the six commercials Anheuser-Busch ran was a warmly sentimental spot about a Clydesdale and its trainer. When the company offered an online preview of the commercial last week, it asked for suggestions in social media like Facebook and Twitter for a name for a foal that appears in the spot.

The name chosen, the company said, after it received more than 60,000 comments and direct messages, was Hope.

Coca-Cola: The centerpiece of the Coca-Cola Company’s Super Bowl Sunday was a promotion on a Web site, cokechase.com, where consumers could vote to determine which of three groups of thirsty characters competing for a cold Coke in the desert would win the prize. (The winners: showgirls.)

The company said the total number of fan engagements with the campaign – on the special Web site and YouTube – exceeded 11 million, more than projected. And more than 86,000 mentions of the campaign were tracked in social media like Twitter.

The commercial that ran after the game ended on Sunday night, revealing the showgirls’ victory, will be repeated on Wednesday and Thursday on Fox during “American Idol,” which Coca-Cola sponsors. An additional commercial, featuring a character named Vincent who originally had only a small part in the campaign, is to be shown on cable channels this week, the company said.

Dachis Group: The Budweiser commercial about the Clydesdale finished first among the Super Bowl spots in so-called content virality, according to data from the Dachis Group, which specializes in social marketing. That spot generated 310,000 “likes” and shares in social media, the company said, about double the second-place finisher, the Bud Light brand also sold by Anheuser-Busch.

The game sponsor with the most positive conversations in social media, the Dachis Group said, was Pepsi-Cola, attributing that to the brand’s sponsorship of the halftime show. The game sponsor with the most negative conversations, the company said, was GoDaddy, attributing that to the first of the brand’s two commercials in the game, which featured a lengthy kiss between the supermodel Bar Refaeli and an actor, Jesse Heiman, portraying a nerd.

(GoDaddy said in a statement that it was pleased with the response to both its commercials because Monday was the “biggest sales day in company history” – “not just in relation to the Super Bowl” but the “biggest ever.”)

Kantar Media: The highest-rated commercial, according to data from the Kantar Media division of WPP, was not from a marketer but rather from CBS, the network that broadcast the game.

The commercial, promoting the CBS series “Person of Interest,” came at 10:31 p.m., at the two-minute warning at the end of the game. (That was also the case for the highest-rated commercial in the Kantar Media data for the Super Bowl last year.)

CBS ran 42 promotions during Super Bowl XLVII, Kantar Media reported; the network broadcasting the game always includes a hefty load of spots to promote its own shows.

The highest-rated commercial from a marketer, according to Kantar Media, was for Samsung Mobile, which ran just before the “Person of Interest” promotion, at 10:29 p.m.

Frank N. Magid Associates: The company teamed with React Labs on Sunday night for what it calls its Magid Advertising Performance research, asking consumers which commercials engaged them and generated buying intent.

The top commercial in the game, according to Magid, was the Budweiser spot, and the bottom commercial was one of two for Subway, which promoted a special “February” sandwich sale.

TiVo: The TiVo Research and Analytics division of TiVo, the digital video recorder company, said that a commercial for Taco Bell was the “most engaging” of the game, according to its data, compiled in 30,000 households with TiVo service.

The most engaging moment in the Super Bowl, however, was a play in the game (the final whistle) rather than a commercial, TiVo reported. In some previous years, a commercial turned out to be played back more in TiVo households being surveyed than any part of the game.

Visible Measures: According to the True Reach data from Visible Measures – gauging the performance of video clips released by Super Bowl sponsors as well as clips uploaded by consumers across the Web – the most-watched commercial of Super Bowl XLVII was a spot for the Toyota RAV4 featuring the comedian Kaley Cuoco as a modern-day genie with an attitude.

The Toyota RAV4 video had 16.3 million True Reach views as of Monday, Visible Measures reported, more than 4 million views ahead of No. 2, a commercial for the new Mercedes-Benz CLA that featured Willem Dafoe, Usher and Kate Upton.

The ranking of the top videos on the Visible Measures list may change, the company said, because about half the overall views for Super Bowl spots take place after the game. Last year, when there were more than 400 million total video views, more than 180 million took place through the Thursday after the game.

Article source: http://mediadecoder.blogs.nytimes.com/2013/02/06/replaying-super-bowl-ads-effectiveness/?partner=rss&emc=rss

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DealBook: Justice Dept. Seeks to Block $20 Billion Merger of Brewers

January 31, 2013 by Leave a Comment

The deal would add Corona to Anheuser-Busch InBev's brands of beer.Carolyn Kaster/Associated PressThe deal would add Corona to Anheuser-Busch InBev’s brands of beer.

4:06 p.m. | Updated

The Justice Department sued on Thursday to block Anheuser-Busch InBev’s proposed $20.1 billion deal to buy control of Grupo Modelo of Mexico, arguing that the merger would significantly reduce competition in the American beer market.

The deal, announced last summer, would add Corona Extra to the company’s formidable stable of brands, including Budweiser and Stella Artois.

But the Justice Department said in its lawsuit, filed in Federal District Court in Washington, that allowing the merger to proceed would reduce competition in the beer industry across the country as a whole and in 26 metropolitan areas in particular. The combined company would control about 46 percent of annual sales in the country, the government said, far outpacing Anheuser-Busch InBev’s closest competitor, MillerCoors.

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“Even small price increases could lead to significant harm,” William J. Baer, head of the Justice Department’s antitrust division, said on a conference call with reporters. “We took this action today because we believe the acquisition is a bad deal for American consumers.”

The deal is the biggest to be opposed by the Justice Department since 2011, when it sued to block ATT’s proposed $39 billion takeover of T-Mobile USA.

The government’s move is the first significant effort to halt widespread consolidation in the beer industry in some time. Anheuser-Busch InBev itself was the product of a blockbuster merger between two of the world’s biggest brewers, and one of MillerCoors’s parents is the acquisitive SABMiller.

In its complaint, the Justice Department said Modelo had served as a low-price counterbalance to its larger competitors, resisting the price increases Anheuser-Busch InBev has promoted regularly.

The government derided the main concession offered by Anheuser, a deal to sell Modelo’s stake in its main United States importer to Constellation Brands, as creating a “facade of competition.” The Justice Department’s complaint highlighted an memorandum that the chief executive of the importer, Crown Imports, sent to his employees soon after the Modelo deal was announced. “Our #1 competitor will now be our supplier,” the executive, Bill Hacket, wrote in the memo.

In a statement, Anheuser-Busch said, “We remain confident in our position, and we intend to vigorously contest the D.O.J.’s action in federal court.”

Article source: http://dealbook.nytimes.com/2013/01/31/justice-dept-seeks-to-block-anheusers-deal-for-modelo/?partner=rss&emc=rss

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