On August 27, the Wall Street Journal had an article on the beer industry. The article mentioned that the country's two largest beer makers Anheuser-Busch InBev NV (OTC:AHBIF) and MillerCoors (OTC:SBMRY) (TAP) are planning price increases this fall due to "favorable pricing environment". Not many companies plan to raise prices in the current economy. Beer makers apparently think they have the pricing power despite the recession.
The article added:
"Overall U.S. beer volumes are declining at the sharpest rate in more than a decade. In the first half of this year, sales from distributors to retailers fell 0.9%, and shipments from brewers to distributors fell 1.3%, according to the Beer Institute, an industry group. Anheuser recently began offering $2 rebates in several states on its economy brands.
Still, beer prices in the U.S. have risen faster than other consumer goods. In July, the price of beer, ale and other malt beverages sold for consumption at home rose 4.6% from a year earlier. Meanwhile, consumer prices in the U.S. overall were down 2.1%, the biggest 12-month decline since 1950, according to Labor Department data."
In addition to domestic brands, Americans also consume many foreign brands such as Heineken, Fosters, etc. In this post let's review four foreign beer company ADRs.
1. Melbourne, Australia-based Fosters Group (OTC:FBRWY) is engaged in the manufacture and sale of beer, spirits, ciders and wine products. For the fiscal year 2009 that ended in June, Fosters announced that its profit quadrupled due to increases in beer sales. However its wine business did not perform so well. Beer sales in Australia and Asia remained strong. For 2009, "net profit rose 292.3% from the prior year to 438.3 million Australian dollars ($367 million), while net sales revenue rose 2.7% to 4.49 billion Australian dollars." Currently FBRWY has a 5.52% yield and the stock is up 14% YTD.
2. Heineken NV (OTC:HINKY) is a Dutch maker of many popular beer brands including the flagship Heineken. The company has over 200 brands in its portfolio and sells them in over 70 countries. The dividend yield is 1.70% and YTD the stock has grown by 36.16%.
3. In 2007, SAB Miller (OTC:SBMRY) of UK and Coors merged their US operations and formed MillerCoors to compete against Anheuser-Busch. Some of the famous brands of SAB Miller are Miller Genuine Draft and Miller Lite. YTD, SAB Miller's ADR has increased by about 37.50%.
4. China's second largest brewer by volume, Tsingtao Brewery (OTC:TSGTY) is mainly a beer maker but with operations in other areas related to car rental, logistics, domestic travel services, etc. Profit in the first half of this year was up 67%. Sales rose by 12.6% in the same period. As of Friday's close, the OTC traded stock has risen by nearly 67% YTD.