Beer Monopoly




    International Reports







Posted April 2016

Belgium – AB-InBev’s ambitious 2020 goal

What’s it about 2020? That year AB-InBev hopes to generate revenue of USD 100 billion. Readers will remember Coca-Cola’s ambitious Vision 2020, unveiled in 2009, which called for the revenue generated by the company and its bottlers to double to roughly USD 200 billion by 2020. For several years, Coke’s own revenue has declined and it’s more than doubtful that Coke will ever achieve this target.

In the case of AB-InBev, the goal is part of a new performance-based incentive plan, called “Dream Incentive Plan”, which the brewer has not publicized yet. It only got a mention in AB-InBev's 2015 annual report filed last month.

As says the Wall Street Journal, the Belgian company in December 2015 issued a special stock option grant to be awarded to 65 senior managers if they succeed in boosting AB-InBev’s and SABMiller’s combined revenue more than 50 percent by 2020.

AB-InBev's revenue for the 2015 fiscal year was USD 43.6 billion, while SABMiller's was USD 22.1 billion. On the back of an envelope this adds up to USD 65.7 billion, excluding divestitures. Read on


France – Heineken and Carlsberg to push craft beer brands

Craft beers or rather beers from microbreweries are becoming increasingly popular in France. This phenomenon has come to the attention of France’s two major brewers, Heineken and Kronenbourg (owned by Carlsberg), which enjoy market shares of 30 percent and 29 percent respectively. AB-InBev has about 10 percent of the market through imports only.

According to reports, the beer market in France rose 3 percent in 2015 to 20 million hl. Part of this increase is due to the rising popularity of craft beers. In 2015 there were about 850 microbreweries up from 590 a year earlier.

Though only accounting for 3 percent of the French market, these beers enjoy exponential sales increases, especially since many of the microbreweries now offer a wide range of beer styles, including good tasting lagers, which often are commissioned in either Belgium or Germany but then sold under a French micro’s label, insiders say. Read on


USA – Cider growth has slowed

After several years of impressive growth, cider sales slowed down to grow by just 10.8 percent in 2015, according to Nielsen market research. In 2014, sales increased by 71 percent and in 2013 by 89 percent.

Whether one can say that cider has hit a glass ceiling is debateable, although some of the biggest cider brands in the U.S., including Angry Orchard, Woodchuck, and Johnny Appleseed, reported significant sales declines in late 2015. Read on


United Kingdom – BrewDog brews up coffee

Imitate or innovate? In an attempt to bring more customers through its bar doors, the Scottish punk brewer BrewDog has bought a 33 percent stake in the Edinburgh company Third Wave Coffee, UK media reported on 6 April 2016.

What’s new? The cut-price pub chain JD Wetherspoon, with over 900 pubs around the UK and Ireland, already started selling coffee in 2010. Like other pub companies, Wetherspoon has been forced to adapt to the fast-growing coffee and casual dining chains by broadening its offerings, observers say.

Unlike Wetherspoon, BrewDog will part-own the coffee company whose brew it will offer in its 31 UK bars, where it previously sold coffee produced by a third party. Read on


USA – After Beck’s: AB-InBev now accused of mislabelling Leffe

There must be something in the beer, or why do U.S. beer drinkers tend to drag AB-InBev to court? The most recent plaintiff is Henry Vazquez, an optometrist who said that AB-InBev’s deceptive packaging caused him to overpay for Leffe beer.

He argues that he was fooled into believing that Leffe was brewed in a Belgian abbey, rather than in a 9 million hl brewery in Leuven, where AB-InBev also produces Stella Artois. Read on


United Kingdom – Craft beer is reassuringly expensive… in London

When did we last hear of beer being reassuringly expensive? It was actually Stella Artois’ advertising slogan in the UK from 1982 until 2007. During 2007, the “reassuringly expensive” slogan was dropped by AB-InBev, possibly as a reaction to the lager's perceived connection with lager louts and binge-drinking, which gave it the nickname "wife beater".

In the UK, craft beer may not market itself as expensive but it is perceived as such because it’s driving its status as a luxury good. That’s the major finding of a report by the UK accountancy firm UHY Hacker Young, released on 29 March 2016.

In other words, craft beer is being regarded as something akin to champagne, which has helped boost its demand and has seen the number of new brewery openings in London jump to 36 in 2015. This means the UK capital today has over 100 microbreweries. Read on


Belgium – LuxLeaks, SwissLeaks and now Panama Papers

Seems like tax avoidance is becoming something of an issue in Belgium. Following the Panama Papers scandal, which broke on 3 April 2016, Belgian media reported that the names of 732 Belgians were found on financial documents which have leaked from the Panamanian law firm Mossack Fonseca.

Allegedly, these people are involved in financial packages to Panama to avoid paying taxes. Among them were also members of the de Spoelberch family, one of AB-InBev’s major shareholders. Read on


United Kingdom – What’s Brexit got to do with MegaBrew?

With the referendum on Britain’s membership of the EU to take place on 23 June 2016, investors in SABMiller will soon have to make up their minds which offer to accept: AB-InBev divided its GBP 71 billion (USD 110 billion) bid for SABMiller into two formats. Investors could either take GBP 44 in cash for each SABMiller share or they could receive a mix of cash and AB-InBev shares worth GBP 41.85 at the time of the announcement.

Initially, this cash and stock offer didn’t look exciting since it was at a discount to the all-cash option and moreover was subject to a five-year lock-up.

Nonetheless, it had a big attraction for those wanting to stay invested, especially SABMiller’s biggest shareholders, the U.S. tobacco firm Altria and Colombia's Santo Domingo family, the previous owners of the Bavaria brewery. At the time Altria said the structure was tax-efficient, while the Santo Domingos got a strategic interest in the world's major brewer.

Today, however, the cash and stock offer appears attractive to a far larger group of investors. The weakness of the UK’s currency has pushed the value of the part stock offer up to GBP 46 per share.

Right now, Bloomberg says, “the GBP 2 spread probably isn't big enough to make independent shareholders shun GBP 44 per share in cash for a large chunk of AB-InBev shares they can't sell until 2021. But what if the premium widens and becomes seriously alluring? That’s possible if sterling weakens further around the UK’s referendum on European Union membership, or if AB-InBev stock rallies.” Read on


Denmark – Carry on regardless: Carlsberg’s strategic dilemma

Perhaps if Carlsberg had invited analysts to its Easter special pop-up chocolate pub in London, in which everything from the dartboard to the bar stools was made from actual, edible chocolate – the beer taps were real though –, the money guys would have been put into a sweeter frame of mind.

Unfortunately, Carlsberg’s long-awaited strategy review through 2022, dubbed SAIL, was released a week before on 16 March 2016 and its reception was, well, more or less lukewarm. Read on


Australia – Abstemious hermits or what?

Can it really be true that most Australians only know two styles of beers: lager and light lagers? This is what Lion’s market research suggests. Unless, of course, researchers on behalf of Australia’s major brewer Lion took the easy way out and only polled teetotallers upon leaving church.

Speaking at the 34th IBD Asia-Pacific convention (14 – 18 March 2016) in Sydney, Lion’s Managing Director James Brindley admitted to a packed-out auditorium that Australians on the whole seem to have little understanding of beer and brewing, only recognising two beer styles.

I find this hard to believe since beer and the pub have long been a pillar of male socialising. Where else would Australian men meet their mates if not at a pub? Also most hotels (Australian for “pubs”), if not all, tend to offer many beers, including – in recent years – craft beers. How on earth the rise of craft breweries to over 200 could have gone unnoticed by at least half of the population - the male half that is - is beyond me. Read on


USA –MillerCoors faces antitrust investigation on brewery closure

The Teamsters Union have struck a small victory. North Carolina has decided to investigate MillerCoors’ decision to close its Eden brewery, U.S. media reported on 30 March 2016. The East coast state will join the U.S. Department of Justice in its antitrust investigation into the merger of AB-InBev and SABMiller, the latter being one of the current co-owners of MillerCoors.

The decision to close the Eden brewery in six months’ time, after 38 years in the community, was made public in September last year at about the time AB-InBev made overtures to SABMiller. The Teamsters Union, which represents the 520 Eden brewery employees who received notices that layoffs will begin in June, alleges that the brewery closure is related to the mega merger. It is believed that Molson Coors, the buyer of SABMiller’s stake in MillerCoors, found the brewery surplus to requirements and did not want it included in its separate deal with AB-InBev.

The Teamsters argue, somewhat unconvincingly but politically effectively, that the brewery closure will result in high beer prices since it will delete about 4 percent of the entire U.S. beer production capacity.

However, there is little doubt that MillerCoors is burdened with excess brewing capacity. Read on


UK – CAMRA’s identity crisis

Who would have thought that the British beer revolution would catapult the Campaign for Real Ale (CAMRA) into something akin to soul searching?

The Cask Report 2015-16 recorded 1,700 breweries in Britain, with an average of four new breweries opening every week. Since the Progressive Beer Duty (PBD) was introduced in 2002, providing significant tax relief for small breweries (those brewing less than 60,000 hl per annum qualify for a discount, while those brewing less than 5,000 hl get a 50 percent relief) the number of breweries in the UK has trebled.

That’s the good news. So why is CAMRA, the 45-year-old real ale campaign group, trying to reinvent itself? Read on


Book review: Still Glides the Stream by Evan Evans (2015)

Evan Evans, a well-known and respected Australian barley/malt/beer scientist, has produced a remarkable family history work, based mainly on his travels to France and Belgium, in the footsteps of two great uncles who fought and died in the service of Australia in World War I. In his introduction, Evan states: “This story is actually of two journeys that are separated by nearly 100 years and three generations of my family. They are of my great uncles, Capt. Gerald Evans MC and Pte Francis (Ken) Evans from Australia to the battlefields of France in the Great War and more latterly, my own journey to revisit those fields. This is a journey in search of echoes, primarily guided by the letters home to Australia from Gerald and Ken during this period.”’

Still Glides the Stream is a multi-faceted work, which initially covers the story of the Evans family, following their migration from Wales to north-eastern Victoria in Australia in 1853, in an engaging and relaxed manner. Family anecdotes relating to life on a pastoral property in the 19th century and to characters and times, both good and not so good, enliven the tale.

In similar impressionist vein, Still Glides the Stream then recounts the author’s varied experiences of travel in the battle-field regions, again with significant anecdotal material. Many and varied aspects of his experiences are noted, including snippets about regional foods, beer styles, brewing technology, the design of beer glasses and the many cultural highlights of the area to name just a few.

The chapters are linked by excerpts from the letters of his great uncles and also by the use of pertinent literary and musical references. Delightfully, the work is well illustrated by photographs.

In all, a fascinating, evocative and sometimes poignant work which should be of interest to a great many readers.

John Harvey

The book is free to all who want to read it.

Evan Evans Book: Still the stream glides (Facebook page).

Make no mistake: this is Dr Evan Evans in his lab coat!



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