Majors up stake in world beer

Major brewers are tightening their grip on the growing world beer category, with

regional operator Wells & Young’s losing its distribution contracts for Corona and Red Stripe next year.

Corona will join the Molson Coors UK portfolio in January, plugging the gap for a Mexican beer left by the departure of Sol to Heineken UK earlier this month.

And Red Stripe will end a 30-year association with Wells & Young’s in August 2011 when it moves to Diageo, which has a majority stake in the brand’s Jamaican parent Desnoes & Geddes. The switch will boost plans by Diageo GB to build a world beer portfolio, which were outlined earlier this year when it started to market Namibian brand Windhoek.

Wells & Young’s admitted it will be looking to cut costs to make up for the lost business but said it was too early to speculate on redundancies.

“We are going into a period of consultation with our employee consultative group and trade unions, where we will look at ways of reducing costs,” said a spokesman for the brewer.

The Corona and Red Stripe moves are the latest in a two-year period of UK distribution shake-ups in the world beer market.

Over this period Carlsberg UK, Molson Coors UK and Heineken UK have built up significant portfolios (see box). The exception to this has been AB Inbev UK, which demoted Brazil’s Brahma from drive brand status in 2008 in favour of a push behind extended ranges of Stella Artois and Beck’s.

The deal struck by Molson Coors with Corona brand owner Modelo includes the

Mexican brewer’s Pacifico and Negra Modelo brands, but Corona accounts for 90% of Modelo’s business in the UK.

Molson Coors UK chief executive Mark Hunter said the brewer would put “significant marketing support behind these brands”. Corona joins a fast-expanding portfolio that includes Cobra, Blue Moon and Singha.

Although the losses are a significant blow to Wells & Young’s it still has Japan’s Kirin Ichiban, Spain’s Estrella Damm and German brand Erdinger, and has recently launched Mongoose in partnership with an Indian food distribution company.

“We always knew both contracts could expire in 2011, and have planned accordingly,” said Wells & Young’s chairman Paul Wells. “Young’s, Bombardier and Courage, and our other partner brands, will get even more focus.”