UK: SABMiller acquires Sparks® and Steel Reserve® brands from McKenzie River Corporation
SABMiller plc announced July 03 that it has entered into an agreement to acquire the Sparks® and Steel Reserve® brands and related trademarks from US contract brewing partner McKenzie River Corporation (”McKenzie River”) for a cash consideration of US$215million.. In addition, SABMiller and McKenzie River have agreed an ongoing new product development partnership.
Sparks® is a citrus flavored premium malt beverage with added caffeine, taurine, guarana and ginseng and is the leader in the high growth caffeinated alcoholic malt beverage category. The brand is available in three variants: Sparks Orange® (original), Sparks Plus® and Sparks Light®. Sparks® achieved a compound annual growth rate of 107 percent between 2003 and 2005, selling 317,000 hl in 2005.
Steel Reserve® is a high gravity lager which is slow brewed for a minimum of 28 days. It is the leading brand in the US high gravity lager category and has grown at a 35 percent compound annual growth rate between 2003 and 2005 with a total of 1.6 million hl sold in 2005.
McKenzie River is a San Francisco based beverage marketing firm with an impressive track record for innovation aimed at developing new products. The company, which was founded in 1987 by President Minott Wessinger, launched the Steel Reserve® brand in 1997 and the Sparks® brand in 2002.
Completion of the transaction is subject to the customary review by U.S. antitrust authorities
Norman Adami, President and CEO of Miller Brewing Company, commented: “Sparks and Steel Reserve will have an immediate positive impact on our growth profile. In addition, our new product development relationship with Minott Wessinger connects us with a very special guy when it comes to innovation.”
SABMiller plc is one of the world’s largest brewers with brewing interests or distribution agreements in over 60 countries across five continents. The group’s brands include premium international beers such as Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell, as well as an exceptional range of market leading local brands. Outside the USA, SABMiller plc is also one of the largest bottlers of Coca-Cola products in the world.
In the year ended 31 March 2006, the group reported US$2.626 million adjusted pre-tax profit and a turnover of US$15.307 million. SABMiller plc is listed on the London and Johannesburg stock exchanges.
According to analysts’ comments, SABMiller's $215M purchase of Sparks and Steel Reserve brands from US partner McKenzie River is a sensible move that opens up opportunities for top line growth in North America. There is potential for product innovation under the ongoing product development partnership. Further acquisitions may be on the cards because SABMiller is a "consummate acquirer." Shares closed June 30 at 974.5p.
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