Wednesday, August 11, 2010

Beer: "Global Brewers Can Manage Impact of Grain Price Spike" (CARL-A.CO; ABI)

Thank goodness.
During the great barley shortage of aught-seven we were posting Goering quotes:
"Shut up. You've got your beer, haven't you?"
-Fat Hermann, during the Beer Hall Putsch
The barley shortage was caused by growers switching to other crops intended for fuel ethanol distilleries.

That was followed by the hops crisis of '08.
The latest spike in grain prices had me hearing jackboots and drunken renditions of the Horst Wessel-lied.
Just a fervid imagination.
From Research Recap:
Fitch Ratings says global brewers should be able to manage the potential adverse effects of higher grain prices on their profits as the supply shortage is likely to be a temporary phenomenon. While possible risks are linked to the scarce availability of barley and higher costs, these are offset by cost hedging, ongoing cost-cutting programmes at major brewers and scope for moderate retail price increases.
Even if scarcity continues, leading to higher costs in the next season, brewers are protected in the medium term by hedging or long-term procurement agreements put in place after the sharp price surge of commodities in 2007-2008.
Also, global brewers are still reaping benefits from cost base rationalizations undertaken since 2008. Of the four global players, Anheuser Busch InBev (ABI) enjoys the widest scope for cost-cutting, due to $0.9bn (2.4% of 2009 sales) combined savings planned for 2010 and 2011.
Fitch notes that given that the scarcity of barley is most severe in Russia, where pricing power for beer is currently impaired by having passed through a sharp excise duty increase...MORE