POSTED APRIL 2017
United Kingdom – BrewDog sells 22 percent stake to private equity
Were they desperate for cash to fund their global
expansion or plain shrewd? In any case, the move by Scottish craft
brewer BrewDog to sell a 22 percent stake in the company to San
Francisco-based private equity firm TSG Consumer Partners certainly took
the industry by surprise.
On 11 April 2017 BrewDog’s founders James Watt and
Martin Dickie announced they had sold the stake for GBP 213 million (USD
267 million), having been in discussions with TSG since January this
year. They believe that TSG can support their ambition of eventually
going public – a move previously scheduled for 2020.
Some GBP 100 million (USD 125 million) will be
invested in the business while TSG, which also owns US brewer Pabst,
spent GBP 113 million on buying shares from existing investors.
Mr Watt and Mr Dickie are understood to have made GBP
100 million between them from the sale. As a consequence, Mr Watt’s
stake will drop from 35 percent to 25 percent, although he will remain
the largest shareholder. Mr Dickie’s share will fall from 30 percent to
22 percent, it was reported. Read on
India – How to deal with the alcohol ban on highways
That’s a clever workaround plan, literally. Following
the ban on alcohol sales on and nearby highways as of 1 April 2017 in an
effort to reduce road accidents, India’s hoteliers and restaurateurs
ingeniously are trying various ways to increase the actual distance one
would have to traverse to reach their premises. The methods involve
changing entrances and building veritable mazes or zigzag passages to
circumvent the ban.
Hotels will be hit hard by the ban as alcohol sales
alone account for 10 to 30 percent of their total food and beverage
revenue, according to a recent report. But the impact is expected to be
higher, as the ban will also impact the revenue from meetings,
incentives, conferences and exhibitions, as well as room demand.
State governments, which are set to lose out in
excise revenues, acted in a flurry. Soon after the introduction of the
ban, they began “re-designating” highways, calling them “urban roads”
instead, thus allowing for alcohol sales to continue. Read on
USA – Jim Koch wonders: Is this the end of the craft beer revolution?
To coincide with the Craft Brewers Conference in
Washington DC, the largest industry gathering in the US, The New York
Times newspaper invited Boston Beer’s Chairman Jim Koch to express his
views on the future of craft in an op ed on 7 April 2017.
While Mr Koch raises many pertinent points as
concerns headwinds facing craft, industry pundits still thought his
piece somewhat whingey and, in parts, downright one-sided.
No doubt, as Mr Koch says, “the horizon [for craft]
isn’t so bright. After years of 15 percent growth, the craft sector is
down to the single digits. Part of that is to be expected in a maturing
part of any market — but it’s also a result of a pushback by a handful
of gargantuan global brewers, aided by slack government antitrust
He recalls the dramatic consolidation in the brewing
industry in recent years. It started with the takeover of Anheuser-Busch
by InBev in 2008 and continued with the purchase of Miller by Molson
Coors in 2015, which led to over 70 percent of beer production in the
hands of two brewing giants.
Mr Koch points out that this has led to an increase
in beer prices and the end of a decades-long decline in real beer
prices. “Drinkers began paying almost USD 2 billion a year more for
their beer.” What he fails to mention is that this general price hike
for beer has made craft beer economically viable. Why pay serious money
for a six-pack of Bud or a Miller Lite if, for a few dollars more, you
can get a craft beer? Read on
Australia – Former Prime Minister Bob Hawke launches his own beer
Will this become the next must-have? The former Australian prime
minister and world-record beer drinker had his own Hawke's Lager
introduced in Sydney on 6 April 2017. Many wonder: Who’s next? Maybe
former US president Mr Obama, who used to homebrew at the White House? Read on
South Africa – Heineken buys craft brewer Stellenbrau
It was probably only
a matter of time before Stellenbrau would succumb to a sweet offer
from Heineken. At the end of March 2017 it was reported that Heineken’s
South African unit and Stellenbrau had clinched a deal. No transaction
details were disclosed.
The move has long
been expected by industry insiders. Not only did Heineken need a
domestic craft beer label for its stable of premium brands in South
Africa, where the Dutch brewer is dwarfed by AB-InBev in terms of
market share (10 percent for Heineken versus 89 for AB-InBev), what’s
more, Heineken’s joint venture Namibia Breweries has been contract
brewing two of Stellenbrau’s beers since 2015.
The company, which
is based in the wine region of Stellenbosch near Cape Town, produces
four flagship beers, including a red lager with rooibos, and a
hefeweizen. Read on
USA – Founders to buy back small stake to regain craft brewer status
Why did they not do this in the
first place? At the Barcelona Beer Festival (24 – 26 March 2017), Tim
Traynor, International Market Manager of Founders Brewing Co, said his
company was planning to buy back 8 percent of its own shares,
previously acquired by Spanish brewer Mahou San Miguel, in order to put
an end to the debate whether Founders is still a craft brewer or not.
controversy over Founders’ status only arose when in December 2014 the
Grand Rapids-based brewery sold a 30 percent minority stake to Mahou
San Miguel of Madrid. Although Mahou San Miguel is privately-owned and
has been going for over a century, it’s far too large in terms of beer
output to live up to the “size” criterion (7 million hl) as established
by the Brewers Association.
Even then the self-appointed
industry watchdogs sniggered that this transaction made Founders a
craft brewer no longer since the stake sold was larger than was allowed
by the Brewers Association (less than 25 percent) and thus scuppered
Founders’ status as independent. Read on
USA – Craft beer hikes market share to 12.3 percent in 2016
Looks like the days
of heady growth are a thing of the past. According to recently released
data by the Brewers Association (BA), craft beer increased its volume
share of the US beer market by just 0.1 percent in 2016 to reach 12.3
reported that in 2016 craft brewers produced 24.6 million barrels (28.8
million hl) beer, or 1.4 million more than in the previous year.
However, the craft beer industry also lost out on 1.2 million barrels
that would have been considered “craft beer” had their breweries not
been acquired by larger corporations prior to the start of the year.
Because of these
sales, craft beer production among the BA’s members only grew by 6
percent in 2016, which is down from 13 percent in 2015 and 18 percent
in 2014. Read on
Japan – Asahi takes on EUR 7.4 billion loans
That’s an ambitious debt load.
Following its purchases of SABMiller’s businesses in western and
eastern Europe, Asahi will take on EUR 7.4 billion (USD 7.8 billion) in
bank loans to fund the transactions, it was reported on 29 March 2017.
As a result, Asahi’s
debt pile will more than double to over 5 times profits (EBITDA) in
2017. That’s high, or as some would say, very high. By rule of thumb, 2
x EBITDA is considered a comfortable gearing.
Asahi’s gearing is
certainly higher than Heineken’s and Carlsberg’s (< 2 x EBITDA) and
even Molson Coors’ (4 x EBITDA after their purchase of Miller). Only
AB-InBev’s gearing is more pronounced (6 x EBITDA), but then the
Brazilians have proven several times over that they can pay down debt
example shows, it does not matter so much if your debt pile is the size
of the Matterhorn; it’s the size of your cash flow that will bring it
Asahi’s cash flow currently stands
at 10 percent of turnover, compared with Heineken’s at 18 percent and
AB-InBev’s at 28 percent. Read on
Hungary – Heineken strongarmed into deal with small Romanian brewer
It was a satire of
the highest order. In a highly publicised move, the Budapest government
in March 2017 threatened to ban Heineken’s red star logo as a symbol
How on earth had the
Hungarians gotten it into their minds that Heineken’s logo was party
political in any way? Well, it was merely a big show to force Heineken
into submission in neighbouring Romania.
In January this
year, Heineken’s Romanian subsidiary won a brand-name dispute against a
small craft brewer Lixid Project, which self-identifies as Hungarian
in a region of Romania that is heavily populated by ethnic Hungarians.
Although a Romanian
court had ruled in Heineken’s favour and said that Lixid’s
Hungarian-language “Csiki” beer was too similar to Heineken’s
Romanian-language “Ciuc” range and infringed trademark rights, the
Hungarian government would have none of this. Read on
Czech Republic – Budweiser Budvar nudges up production in 2016 again
Budweiser Budvar beer reached a new record in 2016. Budejovicky Budvar,
the Czech state-owned brewery, said on 17 March 2017 that its output
rose 0.8 percent to 1.6 million hl beer, the highest volume in its
122-year history. The company stated its
sales could have been higher but it had to turn down orders during the
summer peak as it lacked the capacity to fill them. It did not disclose exact export figures but said it sells about 60 percent of its production abroad.
Australia – Beer and politics I: Coopers’ Bible Society sponsorship fiasco
Seems like civilized political
debate has gone down the drain together with 10,000 cases of Coopers
beer. When Dr Tim Cooper, the Managing Director of Adelaide-based
Coopers brewery gave a joint news conference with the Bible Society on 9
March 2017 to announce a limited edition, co-branded run of 10,000
cartons (900 hl) of its light beer carrying various biblical verses,
he could not have been prepared for the backlash to the partnership.
In the ensuing witch hunt on social
media, following the release of a video in which two partisan
politicians discuss marriage equality over a couple of Coopers beers,
the brewer was variously accused of “commercialising” gay marriage or
even “sponsoring ads against marriage equality”. How bizarre.
Plenty of netizens were quick to
divorce themselves from Coopers, declaring they would never drink its
beer again. Allegedly, some venues and pubs now refuse to serve it.
Irrespective of what you think of
religion, gay marriage and Coopers’ involvement, what was lost in the
controversy was respectful public discourse. As one commentator said,
“people were quick to judge, accuse, assume a hostile stance and assign
pejorative labels.” Read on
Australia – Beer and politics II: firebrand Hanson to launch a craft beer
When the Australian anti-immigrant
hothead politician Pauline Hanson announced in early March 2017 that
she wants to have her own craft beer, the ensuing media outcry was
It was reported that Senator Hanson
developed the idea after realising how much she loves to have a drink
and a chat with her constituents. It is believed the beer line will be a
way for the outspoken senator to connect to everyday Australians.
Pundits joke that her first beer can only be a “pale ale”, referring to
her firm stand against immigration. Read on
Australia – Beer and politics III: craft brewers association to vote on “independence”
Although a new constitution for the Craft Beer Industry
Association (CBIA) has not yet been finalised, proposed changes in
criteria for membership eligibility have already caused the resignation
of Lion’s craft beer breweries – Little Creatures, Malt Shovel and
CBIA has indicated that it “will
re-define membership eligibility based on independent (privately held)
brewers without relying on an arbitrary definition of craft beer.”
Further, it plans to change the board structure and the name of the
association to reflect the new direction. Discussions are expected to
continue for a few months.
Whether some other members, such as
Australian Beer Co, owned by Coca-Cola Amatil and Mountain Goat, owned
by Asahi, will be able to retain their membership, is doubtful. Read on
Belgium – “Leuven beer” in Brazil causes irritation in Belgium’s Leuven
News travels very slowly these days. Since 2010,
Cerveja Leuven has boasted of brewing several beers in Belgian style.
But only now the city of Leuven has found out. Guess what, Leuven’s
councillors are not amused with those beers as they are brewed in
Piracicaba, a city 150 km northwest of Sao Paulo, and have no
connection with Leuven whatsoever.
According to Belgian media, Leuven’s tourism alderman
Dirk Vansina is considering taking the matter to court because Leuven
is the home of AB-InBev.
The Brazilians say
they only borrowed the name. On their website, Cerveja Leuven are
lauding the city as “one of Belgium’s most charming”, while pointing to
the city’s long-time beer tradition. Read on
United Kingdom – Tesco supermarkets throw Heineken brands off shelves
Britain’s biggest supermarket chain Tesco has pulled
more than half of Heineken’s beer and cider range from its shelves
after the brewer tried to increase prices following the UK’s vote to
leave the EU, media reported on 22 March 2017.
The retailer is now stocking only 22 of the 53 products
and pack sizes that it was selling at the start of the year and names
such as Amstel, Sol, Tiger, Foster’s Gold and Radler have completely
Although a Tesco spokesperson reportedly said the cuts
were about ensuring its range “meets the needs of customers”, the
decision is also believed to be connected to price negotiations.
In February 2017, the UK’s major
brewer Heineken announced price increases of GBP 0.06 (USD 0.07) a pint
across its brands in UK pubs, blaming a 15 percent drop in the value
of the pound since the Brexit vote.
Perhaps Tesco used Heineken’s price increase as a
pretext for a large-scale revamp of its beer shelves, which will see
the stock of craft beers increase to around 30 from only two different
kinds. This move would imply that Tesco needed more space rather than
cheaper beers, as craft beers in the UK tend to be pricey.
A Heineken spokesperson told media they could not comment on commercial arrangements with supermarkets.
2017 march · february · january