Home Depot Moves $37M US Hispanic Account to Richards/Lerma

NEW YORK (AdAge.com) -- Home Depot is moving its $37 million U.S. Hispanic account to Richards/Lerma, a little-known Hispanic capability fielded by Home Depot's general market shop Richards Group, from incumbent Vidal Partnership. The account shift, a stunning upset for Hispanic ad agencies in general, is the clearest example yet of general market agencies' growing attempts to persuade cost-conscious clients to consolidate their Hispanic accounts with their general market agency. 

Read the full story: http://adage.com/hispanic/article?article_id=142969  --Laurel Wentz 

Beer: Heineken grabs Dos Equis maker Femsa for $5.5B

AMSTERDAM — Dutch brewer Heineken said Monday that it will buy the beer-making operations of Mexico's Femsa in an all-stock deal that values the maker of Dos Equis, Tecate and Sol beers at $5.5 billion, excluding debt.

The deal increases Heineken's presence in growth markets and cements its position as the world's second-largest brewer by sales behind Anheuser-Busch InBev. It also continues a decade-long trend toward concentration among the biggest players in the global beer market.

Femsa Cerveza brands have a 43% market share in Mexico and a 9% share in Brazil — two of the world's top four most profitable beer markets, and both are still fast-growing. Femsa's Tecate and Dos Equis brands are also significant players in the U.S. beer market, where Heineken vies with Grupo Modelo's Corona.

"This is a really good deal for Heineken, for our position in the Americas," said Heineken Chief Executive Officer Jean-Francois van Boxmeer on a conference call. "As a worldwide brewer this was a (region) where we perhaps were weaker."

Femsa Cerveza had sales of euro2.6 billion ($3.7 billion) and operating profit of euro618 million ($885 million) in 2008, Heineken said. Including debt that Heineken will assume, the deal is worth $7.6 billion (euro5.3 billion).

Analysts welcomed the buy as a pleasant surprise, given that many had expected SABMiller— now the world's third-largest brewer by sales — to win the race for Femsa.

Analyst Kris Kippers of Petercam Bank praised the deal as a "a great acquisition for Heineken" because Femsa was one of the few remaining large independent brewers in growth markets — and Heineken didn't overpay. Heineken now has 40% of its operations in developing markets, up from 32%.

Heineken shares rose 6% to euro34.25 in Amsterdam, while SABMiller shares fell 1.9% to 1,803 pence in London. Heineken is based in Amsterdam.

Femsa — formally Fomento Economico Mexicano S.A.B. de CV — is one of Mexico's largest conglomerates, bottling Coca Cola and operating the Oxxo convenience store chain throughout much of Latin America, among other activities. It is based in Monterrey, Mexico.

The acquisition is Heineken's second major buy in the past two years, as it bought Scottish & Newcastle operations worth euro10.2 billion ($14.6 billion) in May 2008 to become the largest brewer in Britain and Europe.

In the same year, Belgium's InBev bought Anheuser-Busch for $52 billion, while South African Breweries bought Miller for $3.6 billion in 2002.

"In the context of the reconfiguration of the global brewing landscape, scale and geographic diversification are more important than ever," Femsa CEO Jose Antonio Fernandez Carbajal said Monday.

"This transaction responds to that imperative."

Heineken said it expects the deal to close in the second quarter, pending approval from regulators and shareholders.

Under the deal, Femsa will take a 12.5% stake in Heineken and a 14.9% stake in its parent, Heineken Holding.

Those shares are valued at $5.5 billion, and Heineken is assuming Femsa debt and pension obligations of $2.1 billion.

Heineken's unusual holding structure allows descendants of the Heineken family to control the brewer, and the company said Monday that they have agreed to the deal. A trust holding 39% of Femsa shares has also agreed, Heineken said.

Heineken forecasts cost savings from combining the companies' operations will amount to euro150 million per year by 2013. It said the acquisition will begin adding to Heineken's per-share earnings "after two years."

Analyst Kippers estimated the combined company is currently valued at 12 times its 2010 earnings, compared with an industry average of around 15 times.

He said by paying in shares, Heineken had not damaged its balance sheet at a time of economic uncertainty. He upgraded his rating on the shares to "Buy" from "Add."

Heineken was the best-selling imported beer in the U.S. for years before being surpassed by Corona Extra — owned by Femsa's larger Mexican rival, Grupo Modelo — in the late 1990s.

The top two brands still account for more than 40% of the U.S. import market. Modelo Especial is in third place and Femsa's Tecate in fourth. Corona Light, Dos Equis and Heineken Light are also among the top 10 imported brands, according to trade magazine Beer Marketer's Insights.

Femsa is the second-largest brewer behind Modelo in Mexico, where it also sells Carta Blanca and Indio. Together Femsa and Modelo have an estimated 98% market share.

In Brazil, Femsa sells Kaiser, Bavaria Clasica and Xingu in addition to brands previously mentioned.

By Toby Sterling, AP Business Writer

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Pepsi eyes emerging markets, healthy fare

NEW YORK, March 22 (Reuters) - PepsiCo Inc (PEP.N) laid out its priorities for growth on Monday, including plans to invest heavily in emerging markets and healthier products in addition to folding in its North American bottling operations.

Chief Executive Indra Nooyi detailed her vision at the start of a two-day investor meeting at New York's Yankee Stadium, where the maker of Pepsi-Cola, Frito-Lay snacks and Gatorade also affirmed its growth forecasts.

The company still expects earnings per share to rise by 11 to 13 percent this year, excluding the impact from currency. It is still targeting low double-digit growth for 2011 and 2012.

Nooyi said a key priority is to restore its North American beverage business to sustainable profitable growth starting in 2010, after "an incredibly difficult year for us" in 2009.

PepsiCo is integrating its two largest bottlers, which it acquired last month in a $7.8 billion bid for more control of its North American distribution system. Rival Coca-Cola Co (KO.N) plans to do a similar deal with its top bottler.

EMERGING MARKETS, NEW PRODUCTS

Regarding higher-growth emerging markets, such as China, India, Russia and Brazil, Nooyi said Pepsi plans to invest aggressively in markets where the company can achieve leadership or parity with rivals such as Coca-Cola, whose international business is broader than Pepsi's.

On a worldwide level, Nooyi said PepsiCo is targeting mid-single-digit revenue growth and mid-to-high single-digit operating profit growth in its beverage business.

Nooyi said Pepsi plans to build and expand its snack business, especially products that are healthier. PepsiCo expects its "nutrition business," which includes Quaker Oats, Tropicana juice, nuts and seeds, to reach $30 billion in sales by 2020, up from about $10 billion now.

Executives said growth in its overall snack business would be fueled by expanding core brands, such as by offering whole-grain and blue corn Tostitos corn chips, as well as moving into adjacent categories like dips and salsas.

Nooyi also said PepsiCo would invest in "breakthrough" drinks, develop new zero-calorie beverages and step up innovation in the area of natural sweeteners.

At the meeting, Pepsi unveiled new Gatorade drinks, including some made with a low-calorie natural sweetener and a new salt product that can reduce sodium in potato chips without changing their taste.

Aside from its regular "G Series" Gatorade drink, Pepsi is launching "G Series Pro" targeted at professional athletes. It will be sold at General Nutrition Center (GNC) stores and other specialty sporting goods stores, said PepsiCo, which also unveiled a "G2 Natural" Gatorade drink for sale at Whole Foods Market Inc (WFMI.O) stores.

John Compton, head of PepsiCo's Americas Foods business, said PepsiCo was working on bundling snacks and soft drinks that go well together, such as spicy Doritos and lime-flavored Pepsi, to help boost sales and streamline delivery.

Pepsi also unveiled targets to cut levels of salt, sugar and saturated fats in its top-selling products. [ID:nN21136811]

DEALS AND ALLIANCES

Looking ahead, Nooyi said there would be more room for tuck-in acquisitions and alliances, especially when it comes to cutting costs or expanding abroad.

She said a deal with Anheuser-Busch InBev (ABI.BR) to combine back-office and information technology functions was just "the tip of the iceberg." Future alliances could even involve sharing intelligence between "like-minded" consumer packaged goods makers, she said, since companies that make cosmetics, food and beverages often do similar research.

"What you eat is how you look," Nooyi said.

When asked if PepsiCo planned to spin off the bottling operations in a few years, like many analysts believe Coke will do, Nooyi stressed that PepsiCo is "an operating company at the core," since it already sells and distributes its snacks products. Coca-Cola, on the other had, sells beverage syrup to franchised bottlers.

"We are not in the business of holding assets temporarily," Nooyi said. "But nobody should ever say never."

PepsiCo shares closed down 0.4 percent at $66.31 on the New York Stock Exchange. (Additional reporting by Nivedita Bhattacharjee in Bangalore, editing by Michele Gershberg, Gerald E. McCormick, Matthew Lewis and Bernard Orr).

Marketers ignore growing Hispanic population, survey says

Marketers ignore growing Hispanic population, survey says

10 Mar 2010

The 2010 U.S. Census is expected to find that Hispanics number more than 50 million in this country, and they command $1 trillion in buying power. Yet 50 percent of U.S. advertisers, who acknowledge the cultural impact of Latinos, do not include Hispanics in their marketing efforts. 

That's the key finding of a new Hispanic marketing trends survey of senior marketers at Fortune 1000 companies, commissioned by Los Angeles-based Hispanic advertising agency Orci. The survey, conducted via e-mail in February of 2010, was designed to offer a broad and deep look at advertisers' strategy, spending plans and viewpoints of the U.S. Hispanic market. Respondents included senior marketing and advertising executives of B2B, consumer, small, medium and large Fortune 1000 businesses across the country.

 

Latinos comprise more than 15 percent of the U.S. population, and are predicted to rise to 50 million in the 2010 Census, an increase of 42 percent since the last Census in 2000. In the 2000 report, the Hispanic growth rate of 24.3 percent was more than three times the growth rate of the total U.S. population (6.1 percent).

 

Yet the Orci research showed that 51 percent of respondents do no marketing to Latino consumers. And, 82 percent have no plans to begin or increase existing efforts aimed at American Hispanics in the next 12 months. This despite the fact that the great majority of respondents – more than 8 out of 10 – agreed that Latinos will impact U.S. companies' product and service offerings in the next five years, particularly in food tastes, fashion and technology.

 

The survey also found that 78 percent of respondents do not use social media to engage Latinos despite the fact that Hispanics are the heaviest users of wireless access through mobile phones and laptops than any other ethnic group. In addition, close to 80 percent of Latinos engage in some kind of online socializing. 

The news comes on the heels of the Latinum Network's early 2010 report that Hispanic spending grew more than twice as fast as the general populations' from 2005 to 2008. Latinum Network is a business network devoted exclusively to helping corporations penetrate the U.S. Hispanic market.

Vivendi Acquires Rights to Televisa Content - will release all of Televisa’s content among the U.S. market.

Vivendi Entertainment has acquired U.S. distribution rights to Televisa Home Entertainment's new DVD releases. Under the multiyear deal, Vivendi will release at least 15 titles annually.

Mexico's Televisa, the world's No. 1 Spanish-language media company, is best known for its popular television programming. Their original programming, which airs on Univision, includes highly rated telenovelas such as "Destilando Amor," "La Fea Mas Bella" and "Rubí" as well as such Mexican comedy icons as El Chavo del Ocho and El Chapulín Colorado, from their eponymous TV shows.

"Televisa is the premier brand within the Latino community, and they are a perfect complement to our anchor brands in other categories," said Yolanda Macias, EVP of acquisitions and business development for Vivendi. "The relationship and influence they have with their consumer is unparalleled."

Vivendi already distributes Code Black, National Geographic, Salient, Shout! Factory and The Weinstein Co., among others.

A few Televisa titles already have rolled out under Vivendi. Upcoming titles include the telenovelas  Mañana Es Para Siempre, with Lucero, Silvia Navarro and Fernando Colunga; and Sortilegio, with William Levy and Jacqueline Bracamontes. Dates and prices have not yet been announced.

While this is Vivendi's first exclusive agreement with Televisa, it is not the first time the companies have worked together.

In 2004 Vivendi picked up distribution for Xenon Pictures, who brought along Televisa titles. Xenon has long held the distribution rights to the coveted Televisa titles since August 2002, when Grupo Televisa partnered with Xenon to develop and distribute its domestic video brand, Televisa Home Entertainment.

Between 2004 and 2008, Vivendi and Xenon launched the telenovela category in the DVD marketplace and helped create special sections for the genre at retail with such popular titles as  Rebelde and Amor Real.

"Televisa Home Entertainment is proud to partner with Vivendi Entertainment, who has confirmed year after year their leadership in the Hispanic market, thanks to the strong support and professionalism they put in every title," said Maca Rotter, executive director of Televisa Consumer Products. "From now on THE and Vivendi Entertainment will release all of Televisa's content among the U.S. market."

Lionsgate most recently distributed Televisa titles. In March 2008 the rights to Xenon's products, including Televisa titles, went to mini-major Lionsgate. Xenon will continue to distribute Televisa's catalog titles through Lionsgate, under the "Televisa Classics" line. As Xenon's rights expire, the titles will revert back to Televisa, and Vivendi.