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    Miller Set To Acquire Two McKenzie River Corp. Brands

    Long-term brewing rights for Sparks and Steel Reverse brands bought for $215 million.

    MILWAUKEE -- The parent company of Miller Brewing Co., in an effort to form a new product development partnership, has reached an agreement with Minott Wessinger, founder and president of The McKenzie River Corp., to acquire two of its brands -- Sparks and Steel Reserve.

    Miller will pay McKenzie $215 million for the two brands, which the brewer says define their product categories and are outpacing overall industry growth. With this acquisition, Miller aligns itself with a brand that is known for its innovation and entrepreneurial success, the company said in a written statement.

    "Sparks and Steel Reserve will have an immediate positive impact on our growth profile," president and CEO of Miller Brewing Co. Norman Adami said. "In addition, our new product development relationship with Minott Wessinger connects us with a very special guy when it comes it innovation."

    Wessinger said in a written statement, "The U.S. beverage market is changing rapidly and there are tremendous opportunities for us to create new brands that bring value to customers, wholesalers and retailers."

    The Sparks brand, introduced in 2002, was the first caffeinated alcohol malt beverage to hit the market and created the category, the company claims. Sparks is citrus flavored and infused with such herbs as ginseng, guarana and taurine. Between 2003 and 2005, Sparks had a compounded growth rate of 107 percent annually.

    Steel Reserve is a high gravity lager that is brewed for a minimum of 28 days. Steel Reserve has seen a 35 percent compounded annual growth rate between 2003 and 2005.

    The Sparks brand has grown at triple digits under Wessinger's leadership, and the Steel Reserve brand has shown double digit growth. Miller plans to grow these brands even further with its marketing, sales and distribution.

    The two brands are currently brewed under a contract brewing agreement with Miller. This new agreement allows a long-term contract brewing relationship. The majority of the two brands' volume is distributed by wholesalers who also carry the Miller brand.

    McKenzie developed national distribution for the two brands by seeding into independent convenience stores, then eventually expanding into chain stores and other channels. With this contract, Miller plans to expand the two brands into more channels.

    "Our new relationship with McKenzie River will enable Miller to tap into emerging consumer trends and leverage new brands through our national system of distributor partners," Adami said in a written statement.

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