Langton Capital – 2015-12-22 – Camden, Kirin, domestic visits, oil prices & other:
A Day in the Life:Follow us on Twitter at either @langtoncapital or @brumbymark. Find previous emails at https://www.langtoncapital.co.uk/daily-notes/ So I think the dog knows it’s Christmas. Because thick though he may be, he’s a pack animal and he has a sense as to when something’s going on. He knows the offspring are back from their various locations across the UK and Northern Europe, the little-one’s quit school and the house Alpha, that would be my good lady wife, is flapping around buying things and for some unexplainable reason is then giving them away to people. But, at the end of the day – the first day, in fact – the excitement got to him and he decided to observe the various comings and goings from the hearth rug and he fell back on his trusty old habits. To wit, why follow somebody around when you can watch them? And why move your head when you need only move your eyes and, if you can smell the people and hear them, then why bother opening your eyes in fact, why wake up at all? I think we could all learn from that. On to the news: The News:Pubs & Restaurants: • AB InBev is to take full control of Camden Brewery in a move valuing the latter at around £85m. • Camden crowd-funded earlier in the year at c£75m but then cut the price when a ‘Belgian investor’ took a stake at c£50m. • AB InBev is selling Meantime, leading some to suggest that it appears to be pointing in two directions at once. The Camden deal adds Camden’s niche Hells, Pils and Pale Ale brands to AB InBev’s existing offer. • Looking at the deal from the other direction, Brewdog has criticised the ‘sell-out’ and will no longer list Camden ales • More on the Camden deal. Founder Jasper Cuppaidge told the Guardian that investors should be ‘ecstatic’ that the shares had been bought at a premium. He said that investors in the last round should be ‘very pleased’ with the deal. Camden last year generated revenues of around £9.5m. Cuppaidge commented ‘AB InBev are investing to build a new brewery to our exact standards, so I can continue to make great beer. They’re not making a beer for us. To stay at the forefront of this movement and secure our future success, we have to build a bigger brewery, employ more people and gain access to an international distribution network.’ • Camden’s Jasper Cuppaidge says ‘we can’t do this on our own.’ Brewdog delists the group’s beers. Interestingly he compared the company’s sale to that of smoothie maker Innocent, which sold out to Coke. He told the Guardian ‘you only have to look at brands such as Innocent …they’ve gone from strength to strength by joining up with Coca-Cola’.
• Camden tells shareholders the deal will ‘support the company’s plan to build a second brewery in London, employing 30 more people’. Jasper Cuppaidge told Business Insider ‘the biggest rationale is security. We wanted to make sure that the brand was around for a long time and this capital investment gives us that security for our employees, for the brand, and also security to continue to make our beer as well as we have for the past 5 years.’ He said ‘we’ve talked to a lot of people over a long time but it took us some time to get the deal right because obviously it’s very important how we work together as companies.’ Re AB InBev, he said ‘they’re a fantastically well-established brewing company and we’re a young brewing company. It’s important that not only the investment was right but also that the relationships were right. That took • Japanese brewer Kirin pushed into loss by deterioration in Brazil business. Brazilian GDP will contract c3.5% this year, 2.7% next. • Leon is to open a restaurant in Holland next year reports The Telegraph. Group has thus far opened 12 sites this year • Mexican Tequila distiller José Cuervo is said to be planning to invest £60m in its Irish whiskey brand Bushmills • Heineken is to take control of Jamaican lager Red Stripe in the UK from 1 Jan following global deal with Diageo worth cUS$780.5m • UK retail sales grew more slowly than expected in Dec according to the CBI. It says the outlook for early 2016 is not strong • Luke Johnson backed Laine Pub Company has reported sales up 9% to £27.5m in the year to end-June. It said that sales in its London pubs were up by as much as 25% LfL in early FY16 trading. • Ontario’s supermarkets can now (from 15 Dec) sell beer and other alcoholic drinks. That would be why we couldn’t find any previously Leisure Travel: • VisitEngland’s Domestic Trip Tracker has said that more Brits will be taking a domestic trip this year than in 2014. Says 27% are ‘definitely’ planning to take an overnight trip during the festive period up 6% on last year. • Eurotunnel services were back to normal yesterday after track faults caused delays over the weekend • Hotels may have to raise prices as a result of the NLW says Best Western following a survey of its hotel owners. Basic wages presumably form a larger part of cleaning staff’s income than would be the case for restaurant staff etc. (no tips) and nor is the money going into chambermaids’ pockets likely to be recycled and spent in hotels (in the same way that it could find its way back into pubs and restaurants). • Best Western survey suggests hotels will cut staff numbers as a result of the introduction of the NLW. Some 90% of respondents said they would put up prices and 43% said that they would cut staff numbers. Some 80% were likely to ‘re-think’ their staffing strategy. Finance & Markets: • Oil prices hit new 12yr lows yesterday before rallying a little. Brent now selling at around $36.55 per barrel • World markets. UK down yesterday on oil stock slide. Europe down, US up but Far East also down in Tues trading • UK consumer confidence up by 2pts in December • Rental costs could rise more rapidly than house prices over the next 5yrs cautions the RICS, blames fewer units, anti-rental moves by HMG. Retail Roundup from Nick Bubb:
Macro Watch: Consumer Confidence Watch: The widely followed GFK Consumer Confidence survey for December flags that consumer morale in December edged up from a six-month low in November, but households remain more worried about the economy than they were at the end of last year. GfK said its overall index rose to +2 in December from +1 in November, marginally stronger than the consensus forecast of +1 in a Reuters poll of economists. GfK trumpeted that “This is the first time since the Consumer Confidence Barometer started in 1974 that the Index has remained positive for an entire calendar year”, but the correlation with consumer spending is not perfect, so it will be interesting to see if the news that consumers are a bit less willing to spend on big-ticket items than in November will translate into the January Sales. John Lewis Sales Watch: Having mocked the CBI Distributive Trades survey for “December”, it’s only fair to say that, after a disappointing November, the great High Street bellwether John Lewis is having a reasonable December so far, despite the unhelpful weather for Fashion sales. Online sales in general have been strong and Electricals sales in particular have been pretty good. The comp for last week was quite soft, so we would pencil in a useful 6%/7% increase in total sales overall (c5% up LFL, ex the impact of the new Birmingham store etc), ahead of the official figures for w/e Dec 19th. Koovs Funding Watch: The Indian Online Fashion start-up Koovs (which floated on AIM in early 2014) has slipped out its interim results for the 6 months to Sept 30th, but the amazing thing is still just how small it is, with total H1 sales of just £2.8m. It is not surprising that losses are therefore escalating and that Koovs is burning through its cash, so there are “material uncertainties” about whether Koovs is a going concern and there is still no firm news on the much-mooted rescue funding… Nick Bubb – nicholas_bubb@hotmail.com |
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