Beer Monopoly





    International Reports











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 oversight.”

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.

The whole 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 percent.

The organisation 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 quickly.

As AB-InBev’s 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 down.

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 of totalitarianism.

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

Production of 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 deafening.

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 White Rabbit.

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 disappeared.

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.


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