Beer Monopoly




    International Reports







Posted April 2014

USA – Craft beer: crunching the numbers

There would have been lots of lots of chest-pumping pride at the Craft Brewers’ Conference in Denver (8-11 April 2014). The Brewers’ Association (BA) reported that U.S. craft brewers sold an estimated 18.2 million hl of beer in 2013, up 18 percent over 2012. Yet, to take a contrary view, the Motley Fool (, a website for investors, ran a story on 5 April 2014, titled: “Brace Yourself: Anheuser-Busch May Just Be Brewing Up the Next King of Craft Beers”. How should this be possible? Did the Motley Fool get the story wrong?

No, they just decided to look at the numbers in a different way. What the BA does not like to talk about too loudly is this: although there are currently some 2,770 craft brewers operating in the market, the top 14 craft brewing companies (with production over 230,000 hl) control nearly half of the segment. What is more, even though the top 14 still scored an average growth of 8.4 percent in 2013, the segment’s total growth was really down to the smaller and regional players, Beer Marketers Insights wrote in February.

Incidentally, there is one brand that is usually ignored by the craft beer purist. It is majority-owned by one of the “megabrewers” and therefore does not answer to the BA’s definition of a craft brewer. Yet, in 2013 its volumes were up 70 percent over 2012. Which brand could that be? Step forward: Goose Island from Chicago. Read on


Czech Republic - Becherovka gets booted from the Pernod Ricard’s House of Brands

Pernod Ricard is looking to sell off its Czech Becherovka brand for up to USD 200 million, according to media reports in April 2014. Becherovka, formerly Karlsbader Becherbitter, is an herbal bitter, often drunk as a digestive aid, with an alcohol content of 38% ABV - in case readers have never had it.

The pending move marks the end of the French drinks company’s effort to take the traditional Czech liqueur to a more global audience, strengthen Becherovka’s sagging local market, and use the company as an entry point to launch the full range of Pernod Ricard beverages into the Czech Republic.

Potential buyers include Stock Spirits, the SPI Group and “other eastern European-based interests”. Many think that Stock Spirits are not really on the list as they already have a full portfolio of bitters. SPI Group, with its Stolichnaya vodka and Latvia’s Balzams herbal bitter, would look like a much closer fit. Read on


Czech Republic – Does the world need another Czech beer brand?

Apparently, Carlsberg think it does. On 3 April 2014 they announced they had entered into an agreement to acquire 51 percent of Zatecky Pivovar (“Zatec Brewery”) in the Czech Republic for an undisclosed sum.

It certainly was not a multi-billion deal as Zatec only produces 34,000 hl beer (2013), although it has a capacity of 200,000 hl, it was reported.

Zatec’s claim to fame is that it is located in the town of Zatec, which is in the heart of the famous Zatec (Saaz) hops growing region and that it purports to uphold Czech brewing traditions.

Carlsberg say that premium Czech beer represents a growing segment across key markets in Europe, although one would have thought that Pilsner Urquell and Budweiser Budvar have that segment cornered already.

The Zatec Brewery also produces the gluten-free beer brand Celia. Celia is a light lager, produced in a unique way, which preserves the typical taste of Czech lager and makes it possible for consumers who suffer from celiac disease to enjoy a beer.

Zatec Brewery was revived by a Brit of Norwegian origin in 2001. That’s when Rolf Munding, a “serial entrepreneur” with interests in hotels, restaurants, breweries, television production, shoe making and distribution, bought it. Although Mr Munding seems to operate his various businesses from his base in Cornwall, he appears to have been closely involved in Zatec. Read on


Czech Republic - Beer market flat in 2013

The Czech beer market was stagnant overall in 2013 with consumption of 17.1 million hl, pushing the per capita level of beer down slightly to 144 litres, the Czech Association of Brewers and Maltsters reported in April 2014. While Czechs are still the global leaders in beer drinking, these numbers mask huge changes in where and what the Czechs are drinking.

The largest change was in the off-premise’s share of the market, climbing two percentage points to 59 percent. “This 41 percent figure for the on-premise is a historic minimum. It used to be 70:30,” said Frantisek Samal, Chairman of the Czech Association of Brewers and Maltsters. He pinned the difference on two factors: the government raising consumption taxes in 2010 and lifestyle changes on the part of consumers. Read on


Australia - Coopers Brewery’s political engagement

A full-page advertisement in an Adelaide daily newspaper on the eve of the State election on 15 March 2014 reminded readers that “Coopers began life 152 years ago as a really small business with a bathtub as a brewery” and urged readers “to support the team who pledged its support to small business.” The ad, which showed a gilded bathtub, was signed by Tim Cooper, the Managing Director and his cousin Glenn Cooper, the Chairman of Australia’s number three brewer.

Although Coopers Brewery in its ad refrained from attacking the government directly, its message was still clear. The ad raised a few eyebrows among readers as it was a first for Coopers Brewery to voice its political opinion so publicly. It certainly got South Australia’s Labor government worried, who were informed by the paper of the ad’s message even before the ad was printed. Read on


Germany – Watchdog closes investigations into beer cartel and issues EUR 231 million in fines

The antitrust watchdog bared its teeth yet again and issued a total of EUR 231.2 million in fines against Carlsberg Germany, Radeberger, a host of smaller regional brewers (Bolten, Erzquell, Früh and Gaffel), the Association of Rhine - Westphalian breweries as well as against seven brewery executives. The penalties were issued on 2 April 2014.

If you add the EUR 231.2 million to the previously issued fines of EUR 106.5 million, that brings total fines against German brewers to EUR 338 million.

According to media reports, Carlsberg was fined EUR 62 million and the two brewers from Cologne, Gaffel and Früh, EUR 3 million each. That leaves Radeberger, Germany’s major brewer, to face a fine of over EUR 150 million alone.

No wonder, that in view of the steep penalties, Carlsberg, Radeberger, Gaffel and Früh all said they were innocent and would fight the fines in court. Read on


Australia – New turn in Asahi litigation case

Now comes the counter attach. The two private equity firms that are being sued for NZD 500 million (EUR 320 million) by Asahi over their sale of the beer-cum-alcopop company Independent Liquor have retaliated by filing a cross claim against two of Independent’s most senior Australasian executives, Australian media reported at the end of March 2014.

In August 2011, Japan’s Asahi bought New Zealand company Independent Liquor from private equity outfits Pacific Equity Partners (PEP) and Unitas Capital for USD 1.3 billion – a price tag many thought bloated even then.

Eventually, this began to dawn upon Asahi too and in February 2013 Asahi took PEP and Unitas to court, alleging they had inflated the earnings of the Independent Liquor business. Asahi claimed Independent's earnings were manipulated through a process of "channel stuffing" whereby sales - and hence earnings - are brought forward by pumping inventory through the system. They also alleged key information about declining earnings was kept from them.

The private equity sellers deny these claims and have previously said that Asahi and its team of advisers had access to all relevant facts during the three-month due diligence period.

With their cross claim, PEP and Unitas hope to torpedo Asahi's accusations by implicating the two executives who were responsible for preparing the estimates on which Asahi bought the business. Read on


USA – Coke under fire over excessive management rewards

It must be a tough job to keep Coke’s management motivated. Hence the company is planning to award stock worth about USD 13 billion (EUR 9.5 billion) to its senior managers over the next four years, based on the company’s current stock price. When combined with awards from previously approved compensation plans, this figure rises to USD 24 billion. That’s according to estimates by Wintergreen Advisors, a long-time Coke shareholder.

Wintergreen’s CEO David Winters was so stunned when he came across the passage detailing the rewards in Coke’s recent annual report that he sent a letter, released publicly on 21 March 2014, to Coca-Cola’s shareholders and its board. Here’s the link:

Coca-Cola has disputed some of his calculations, but Mr Winters still thinks the plan excessive. Read on


USA – Coke and PepsiCo draw flak over head-office bloat

The same day a Coke shareholder publicly complained about excessive corporate rewards for Coke’s management, The Economist newspaper ran a column headed “Corporate headquarters have put on weight and need to slim down again”.

Is there no end to corporate extravagance and administrative bloat? Apparently not, The Economist on 22 March 2014 points out in its Schumpeter column and refers to research by Sanford C. Bernstein, a research firm, which reckons that Coca-Cola has overheads (general, administrative and sales costs minus advertising spending) that are 30 percent of sales, almost as high as PepsiCo’s 32 percent.

In the Bernstein research, brewers Heineken and Carlsberg also get mentioned. While Carlsberg has overheads that are 30 percent of sales, Heineken’s overheads only amount to slightly over 10 percent of sales, says Bernstein. Read on


China – Are manganese levels in wines a real worry?

Following the catastrophic melamine-contamination scandal of 2008, the Chinese authorities and Chinese consumers have become understandably nervous about other possible contaminants in food and drink products. But why manganese in imported wines has now been singled out by the Chinese authorities as a “baddy” leaves a lot of room for wild speculation.

A statement by Wine Australia – a Federal agency – of March 2014 advises Australian vintners that the Chinese authorities have imposed a limit (2mg/L Mn) for the naturally-occurring trace element manganese, a limit which may be exceeded in wines from many countries, including Australia.

In the past 12 months there have been reports of 14 Australian wines having been challenged after being analysed for manganese on arrival in China. No one knows how much wine in total was rejected, although Wine Australia believes that the volumes were low. The federal agency is not aware of any country other than China that imposes such a limit on manganese content.

All this has Australian vintners seriously worried. After all, it will be remembered that in the past China’s neighbour Russia has used bans on imported wines and other food stuffs because of spurious health concerns as a tried and tested form of political pressure. In the recent past Georgian and Moldovan wines, Lithuanian dairy products and Tajik nuts have all fallen foul of sudden injunctions.

The reason manganese is so prevalent in Australian soils, says the Australian geologist and consultant Paul Harvey, is that geologically Australia is a very ancient and stable continent. “As a result many Australian soils are very old and have developed through chemical rather than physical erosion processes. As manganese is a fairly refractory element it tends to be concentrated in these soils and I suspect manganese levels in many Australian soils are higher than many other areas around the world.”

The Chinese authorities may think otherwise, but in the rest of the world manganese is considered an essential nutrient. Socalled “superfoods” like chia seeds are rich in manganese and many people take manganese supplements.

Nonetheless, Wine Australia has issued a recommendation that, before exporting wine to China, wine companies should have their wines analysed for manganese content, although Australians do not add manganese to their wine and neither do winemakers in other traditional wine producing countries.

Australian vintners are not the only ones falling foul with the Chinese authorities. In 2013 the authorities in Xiamen destroyed 375 cases of Spanish wine because they contained more iron than norms allowed. Elevated levels of manganese led to a consignment of French wines being impounded, the Decanter magazine reported in 2013.

In view of these incidents, many suspect that using limits on substances like manganese or chloride to restrict imports is potentially a convenient way for Chinese authorities of getting around having to remove tariffs with the signing of free trade agreements while still protecting local industries.

In recent years China has shown an insatiable thirst for wine. China’s love of wine is growing at such a rate that it is expected to become the world’s largest consumer of wine by 2016. This is quite a jump for a nation whose per capita consumption of wine is significantly below global levels (perhaps less than a bottle per person per year) and where it’s still not unusual to have red wine served with soda.

To cope with rising demand for wine, China has been increasing its wine-growing area, thereby becoming the world’s fifth-largest producer in 2013, behind Italy, France, the U.S. and Spain, according to the International Wine and Spirits Research (IWSR), a London-based drinks research group.

But China still needs to import huge volumes of wine. Imported wines have risen rapidly - by more than seven times between 2007-2013 - pushing up their share of the domestic market to 18.6 percent, IWSR says.

According to IWSR data for 2012, French wines represented the bulk of wines imported by China (about 45 percent of total). Wines from Australia (ranked second), Spain, Chile, Italy and the U.S. combined almost equalled that amount.

Especially, for Australian wines, China has become a major export market. In terms of volumes, China is Australia’s fourth most important export market (36 million litres in 2012), behind the United Kingdom (238 million litres), the U.S. (173 million litres) and Canada (51 million litres).

However, in terms of value, China is Australia's largest export market for wine over AUD 10 a litre. According to data released by Wine Australia, Chinese imports in the AUD 10-plus category (EUR 6.80) in 2011 almost equalled that of the U.S. and British markets combined.

This figure does not include Hong Kong which managed to import more wine in this price bracket than the entire British market.

More importantly even, most of the growth for China came in the premium-priced AUD 20 to AUD 50 price bracket, where profits are significant.

Although China will be seeking to import wine to cover its consumption in the coming years, the majority of wine the Chinese will drink in the long run will be made in China. And that’s just the way Chinese authorities like it. Viz their resorting to bans.

Funnily, Chinese investors, who have been buying up wineries all over Australia in recent years, seem undeterred by their country’s ban on manganese-rich Australian wines. In Australia’s Hunter Valley, it has been claimed that every winery sale in the region over AUD 1.5 million (EUR 1.1 million) in the past few years has been to Chinese buyers.

What their reasons for these investments are remain unclear. At least in France, there is suspicion that winery purchases are often used to launder money. According to an article in TIME magazine, French anti-money laundering authorities, Tracfin, raised the alarm in 2013 over acquisitions of vineyards by Chinese and Russian investors through multiple holding companies. As the article says: “Buying a vineyard happens to be a useful way to launder money as paying in cash is not unusual and the price of wine is never fixed.”

There seems to be no stopping China from becoming a wine superpower: it has the domestic demand and obviously the money too.


Stockholm – Brooklyn Brewery opens first overseas branch

On 28 March 2014, Nya (“new”) Carnegiebryggeriet, an 8,000 barrel brewery cum restaurant, opened in Stockholm. Behind the two-year project are Carlsberg Sweden and Brooklyn Brewery, plus some private investors. Sweden’s Minister of Rural Affairs, Eskil Erlandsson did the ribbon-cutting in the presence of Marc Jensen, CEO of Carlsberg Sweden, Brooklyn Brewery’s GM Eric Ottaway, Brewmaster Garrett Oliver and co-founder Steve Hindy.

Nya Carnegiebryggeriet is a revival of the Carnegie Brewery, a 178-year-old brand that is the oldest trademark in Sweden. Read on


Russia – AB-InBev to close third Russian brewery

A year of brewery closures? First, Efes closed their Moscow brewery in January, now AB-InBev follow suite. On 26 March 2014 media reported that AB-InBev will shut down their brewery in Perm. It will be their third plant to go off-stream in less than two years after closing one in Kursk in 2012 and another in Novocheboksarsk in 2013. This will leave AB-InBev with six breweries, it was reported.

This all proves to show how bad the situation in Russia has turned for western brewers. Toughened regulation of alcohol sales, coupled with tax hikes, a ban on advertising and sales in kiosks, have made the Russian beer market slump by more than 25 percent since 2008, creating excess capacity for most of the market players and forcing them to shut plants and rethink strategies.

AB-InBev's Russian sales fell by 13.6 percent last year amid a broader market decline. The outlook for 2014 is not rosy either. Observers say Russian beer sales could drop again by mid to high single digits.


South Africa – Competition watchdog dismisses case against SAB

The mills of the law grind slowly. On 24 March 2014 South Africa's Competition Tribunal threw out a seven-year antitrust case against SAB, the South African unit of SABMiller, arguing there was not enough evidence to prove the brewing company is breaking the law.

The Competition Commission - which investigates and refers cases to the tribunal for a ruling - had alleged SABMiller broke the law by giving its appointed distributors discounts and making it difficult for those without such discounts to compete. Read on


Germany – Beer cartel: AB-InBev sued after all?

Although they went scotch free, having turned themselves whistleblower in the watchdog’s investigation into the German beer cartel, AB-InBev may be dragged to court after all – by German Rail (DB). In 2008, when several German brewers colluded over beer prices, according to German trust busters, AB-InBev were the exclusive beer supplier to DB. AB-InBev’s contract with DB only expired recently after six years. They have since been replaced by Bitburger Brewery (another culprit in the beer cartel case) and wheat beer brewer Erdinger.

On 24 March 2014, German media reported that state-owned DB is considering filing for compensation. As DB said: "We are affected by one out of three cartels that are set up in Germany and we want to recoup every euro that we and the taxpayers are entitled to." Read on


USA – The battle of the cider marketers: Johnny Appleseed versus Smith & Forge

Is it the lure of the ampersand that we got Gieves & Hawkes (tailors), Fortnum & Mason (food store), Gilbert & George (artists), … plus tatties & neaps, blood & thunder, shock & awe, and now Smith & Forge, a new cider launched by MillerCoors in the United States?

Obviously, the ampersand (“&”), linking something & something or somebody & somebody, is a very conventional word form in English. Adding a sense of history and authority, it’s being used more now because of this general retro mood that everyone's into over in the UK, marketing buffs say.

The 1990s and early 2000s were pretty modern, techno, progressive, hi-tech etc. It was common in those years to simplify marketing language into a sort of “newspeak” of acronyms, abbreviations and serious rationing of the definitive article. However, it looks like these days we all like tweeds and brogues and floral print dresses as well as the homely appeal of the ampersand.

The renaissance of the ampersand is not limited to the UK. In the U.S., there is a tradition too of linking names by it: popular culture’s Wyatt Earp & Doc Holliday, Starsky & Hutch, Rizzoli & Isles, Lois & Clark spring to mind.

But in the U.S., there is no immediate retro chic to it, or an “olde worlde” connotation that consumers will grasp immediately. Hence MillerCoors’ new cider brand Smith & Forge, which came out in March 2014, had to lay on the feel of times-gone-by thickly by using the moniker “A Sturdy Drink for the Hardy Gent” and giving its TV ads a pre-Prohibition look (one features a mutton-chopped blacksmith). Read on


France – Heineken’s roll out of beer cooler SUB begins

Who buys these kitchen appliances? Popcorn makers, ice cream makers, waffle makers, pasta makers – don’t they all get used once and end up cluttering your kitchen counters? Never mind the wife’s complaints, Heineken is to launch their latest must-have kitchen appliance, branded the SUB, which is a draught beer lifestyle appliance. It has been created in collaboration with Heineken, the designer Marc Newson and consumer technology experts Krups.

With the SUB comes the TORP, a two-litre keg, which uncannily resembles a bomb. Though only a two-litre keg, the beer is allegedly pasteurised so that it keeps fresh for two weeks.

THE SUB will be rolled out across a number of markets in 2014, starting with France and Italy. Already, the gadget is being advertised in French interior design magazines, probably in an effort to tell their predominately female readers what to give their husbands and boyfriends for a present. Read on


UK - Coca-Cola Enterprises to invest GBP 1 million a week

As the anti-sugar campaign gathers pace, the targets – food and beverage manufacturers - decided it was high time to tell the government what’s what, and in a language politicians understand: the language of money. In March 2014 members of the Food & Drink Federation and Coca-Cola Enterprises (CCE) met in Westminster to point out the wider impact The Coca-Cola Company has on the UK economy. As UK media reported, CCE had enlisted the help of independent researchers, who – no surprise really – found out that for each job provided by Coca-Cola, a further eight jobs are created across Great Britain both upstream and downstream – a total of 34,500. Read on


Germany – Augustiner’s chief dies in avalanche

The co-owner and Managing Director of Munich’s Augustiner Brewery is dead. Dr Jannik Inselkammer, 45, was buried by an avalanche in Canada on 24 March 2014. He was waiting for his helicopter to fly him out after a heli-ski expedition to the Selkirk mountain range in British Columbia.

The Augustiner Brewery praised Mr Inselkammer in an announcement on its website. "His sudden death touches us deeply and we bow our heads in an eternal bond." Who will succeed Mr Inselkammer is not clear at the moment.

A commemorative service for Mr Inselkammer was held in the Jesuit church of St Michael in central Munich, just across the street from the Augustiner beer hall on 29 March 2014. More than 1500 people attended, while one of Augustiner’s beer drays, pulled by four black cart horses, stood outside. Read on




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