A large American beermaker is moving into the caffeinated alcoholic beverage market with the purchase by its parent company of two brands from McKenzie River Corp. for $ 215 million in cash.
Miller's corporate parent, SABMiller, the second largest brewery company in the world by volume, after InBev, said on Monday that it has agreed to buy Sparks, a citrus-flavored malt drink with caffeine, and Steel Reserve, a sweetened malt liquor, from the San Francisco-based beverage marketing firm McKenzie River Corp. for $ 215 million. The sale is subject to review by antitrust regulators.
SABMiller also will form a partnership with McKenzie River to produce other new products.
The deal places Miller, the nation's second-largest brewer after Anheuser-Busch Cos. of St. Louis, to enter the growing caffeinated alcoholic beverage market, Miller spokesman Pete Marino said.
The US brewer, for whom the acquisition and marketing agreement with McKenzie River marks a new tactic, has concentrated on turning around its main brands, led by Miller Lite, Miller High Life, Miller Genuine Draft and Milwaukee's Best, since Norman Adami was named president and chief executive officer in 2003.
Miller Lite, which accounts for about 40% of the company's sales volume, has been revived. But the other major brands have had either flat or declining sales. Miller Brewing's sales volume dropped 1% during the 12 months that ended March 31.
Milwaukee-based Miller will continue to focus on its core brands, spokesman Pete Marino said. But the acquisition allows Miller to tap a pair of fast-growing brands, he said.
"Sparks and Steel Reserve will have an immediate positive impact on our growth profile," Adami said in a statement announcing the deal.
Sparks is considered the leader in the caffeinated alcoholic malt beverage category. Sparks' compound annual growth rate grew 107% between 2003 and last year, SABMiller said. Whereas, Steel Reserve witnessed sales grow 35% in the same period.
Sparks' volume sales totaled 270,000 barrels in 2005, while Steel Reserve's sales totaled 1.39 million barrels. Miller's total sales volume in 2005 was over 38 million barrels. The new brands together would be just over 4% of Miller's total volume last year.
However, Miller launched its own caffeinated beverage, Mickey's Stinger, in California, Nevada and Arizona in late May, spokesman Marino said. Though, he said, he's heard the introduction has done well but added that it's still too early to tell whether the beverage will be sold beyond those markets.