Wet weather may push up bread and biscuit prices

Months of wet weather in the UK could affect this year’s wheat harvest and lead to higher prices for bread, beer and biscuits, acording to a new analysis.

The Energy and Climate Intelligence Unit (ECIU) estimates that UK production of wheat, barley, oats and oilseed rape may be down by 4 million tonnes compared to 2023, a reduction of 17.5%.

Set against the 2015-2023 average, this represents a decrease of over a fifth (21.2%).

“This washout winter is playing havoc with farmers’ fields leading to soils so waterlogged they cannot be planted or too wet for tractors to apply fertilisers,” explained Tom Lancaster, land analyst at ECIU.

Milling wheat, used to make bread, could be hit particularly hard as it needs to meet higher quality requirements that are more difficult for farmers to achieve with the wet weather. UK flour millers last week estimated that the milling wheat harvest could be down by as much as 40%.

Food producers may be forced to make up the shortfall through higher imports, potentially increasing costs.

UK millers normally source around 80% of their wheat from British farms, but that figure that is likely to be well down after this year’s harvest. 

Associated British Foods (ABF), which owns brands including Kingsmill, Allinson’s, Ryvita, Jordans and Dorset Cereals, warned last week of possible price rises due to “very small” grain harvests in the UK.

Anheuser-Busch confirms plans to take full control of Mexican Modelo

Belgian brewer Anheuser-Busch InBev NV (EBR:ABI), or AB Inbev, confirmed it was in talks over a potential deal that would expand its existing relationship with 50%-owned Mexican Grupo Modelo SAB de CV (PINK:GPMCF), the maker of the Corona beer brand.

The statement was issued in response to market speculation that the Belgian brewer was seeking to buy out the remaining stake in Modelo, AB Inbev said, without giving any specifics about the terms or the price under discussion.

Bloomberg reported on Monday citing an informed source that AB Inbev was nearing a deal worth over USD12bn (EUR9.6bn) for the rest of Modelo, with the agreement to be announced this week.

In a report from Tuesday, the new agency cited another informed source as saying that AB InBev could pay USD20bn for the remaining interest in Modelo.

According to the news agency, the negotiations could still collapse.

AB InBev said in response it was routinely considering deals that could boost shareholder value and the discussions with Modelo are not certain to lead to any transaction. Speculation on terms of a potential deal are premature, the company said.

A transaction could help AB Inbev increase profit by reducing costs and create a stronger competitor for Dutch Heineken NV (AMS:HEIA), Bloomberg cited BTG Pactual analyst Rafael Shin as saying. Modelo already leads Heineken in Mexico, the world’s sixth largest beer market, Shin added.

The Belgian group took the 50% stake in Modelo as part of its acquisition of Anheuser-Busch in 2008. Heineken owns the beer operation of Fomento Economico Mexicano SAB (NYSE:FMX) in Mexico, acquired in 2010.

Guinness Peat sells its stake in London-listed brewer Young & Co

British diversified investment holding Guinness Peat Group Plc (LON:GPG) said on Thursday it had exited domestic pub operator Young & Co’s Brewery Plc (LON:YNGA) after selling its entire holding in it for around GBP54m (USD84m/EUR67m).

Guinness Peat said it had sold, through its fully-owned unit GPG (UK) Holdings plc, 4.47m series A ordinary Young & Co’s shares at GBP5.50 apiece and 6.54m non-voting ordinary shares at GBP4.50 per unit through an accelerated bookbuild run by Barclays Bank Plc and JPMorgan Securities Ltd.

The vendor announced the plan to sell its entire Young & Co’s stake earlier today, saying the move was in line with the strategy announced in February 2011 to orderly realise its investment portfolio.

Commenting on the completion of the sale, GPG’s chairman, Rob Campbell, said the stock was sold at a discount and below their book value of GBP64m as at 31 December 2011, but the realised price was still a reasonable value return to shareholders given the previously illiquid nature of the shares.

GPG will use the cash to help pursue its announced capital management initiatives, Campbell added.

The company expects to complete the placing on 19 June pending customary conditions, with the payment to be settled in cash.

Young & Co’s had 219 pubs as of 29 March 2010.

Dutch brewer Heineken acquires Belgian cider maker Stassen

Netherlands-based brewing major Heineken NV (AMS:HEIA) said today it had bought Belgian cider maker Stassen SA from its management for an undisclosed sum.

Through the deal, which is pending customary closing conditions, Heineken gains solid research and development capabilities and facilities as well as cider production capacity in continental Europe, it added.

The buyer said that its decision to purchase the Belgian firm was prompted by the increasing interest in the international cider category. Heineken added that it is strengthening its position by introducing new products, such as Bulmers No. 17 and Jacques cider, as well as through the international roll-out of its global cider priority brand Strongbow Gold.

Heineken’s chief commercial officer Alexis Nasard said that the company will keep Stassen Ciders’ staff. Stassen’s managing director Philippe Stassen added that the firm will become Heineken’s cider R&D centre, thus boosting its position in the category’s premium market segment.

Stassen runs a cider manufacturing plant, a R&D facility, including a new product pilot plant, as well as a de-alcoholisation facility for cider, beer and wine. The firm has collaborated with Heineken in the development of the latter’s Strongbow Gold, Jacques and Bulmers No. 17 ciders.