Beer Monopoly





    International Reports











Russia – Beer price erosion is a big worry for all

For longer than most like to remember news coming out of Russia represented an unmitigated disaster for international brewers. Over the past eight years, Moscow has raised taxes on alcohol and banned advertising. In January 2017, finally, it began limiting the size of plastic beer bottles to a maximum of 1.5 litres.

If you think that’s an obscenely large size for a beer bottle, remember that in 2014 Russian brewers voluntarily stopped using plastic beer containers larger than 2.5 litres.

In a declining market, some brewers chose to do the obvious thing: they aggressively slashed prices to keep up volume sales and ultimately market shares. Initially, Carlsberg played this game too. But they seem to have seen the end of this route. So they began raising prices to preserve profitability. The result: Carlsberg’s subsidiary Baltika reported a 5 percent drop in the brewer’s share of that market during the first half of 2017, to below 30 percent. Read on


USA – Indie seal garners support

How do you measure success? In less than two months, the Brewers Association’s “independent craft brewer seal” has been embraced by over 1,700 breweries. Launched at the end of June 2017, the seal is aimed at helping craft brewers distinguish their beers from those owned by multinational corporations.

While this number indicates that only one in three craft breweries has signed up to the seal to date (August 2017), the BA has said that these breweries represent more than 50 percent of the craft beer in production. This means a lot of the bigger players have adopted the seal. Read on


United Kingdom – SIBA’s indie seal adopted by 350 brewers

SIBA’s “Assured Independent British Craft Brewer” seal was launched in August 2016 to make it easier for UK consumers to differentiate truly independent craft beer from that of the global beers, or other non-craft products.

By July 2017, around 350 brewers had pledged their active support for the campaign and had begun to incorporate the seal into their packaged beer or pumpclip artwork. Read on


United Kingdom – Heineken’s Punch deal off the hook

Heineken’s takeover of pub group Punch Taverns will not face an in-depth competition probe after the brewer offered to sell pubs to address concerns.

The Competition and Markets Authority (CMA) had criticised there were 33 areas where pubs would not face sufficient competition if the deal went ahead.

But following Heineken’s offer to sell pubs in the affected areas, the CMA said it was satisfied its concerns had been addressed. Read on


USA – Dopey beer: just a conversation piece?

Tony Magee, the founder of Lagunitas Brewery, has made his enthusiasm for cannabis very well known. So it was only a matter of time before Lagunitas would launch a cannabis beer. Before you rush over to California to try it, be warned: the beer does not get you high. However, if you drink enough of it, the alcohol may. Read on


Australia – Women, booze and a mission

Nomen est omen. The women-run Sparkke Change Beverage Company from Adelaide, which has brought together some of Australia’s youngest brewers and winemakers, has two goals: to create great booze and trigger social change – not just in society at large but equally in the male-dominated alcohol industry.

Believing that it is best to start a political discussion over a can of booze (a “tinnie” in Australian lingo), Sparkke has chosen to print bold political messages on its cans. Cans are a popular package in the Australian market not least since several craft brewers actively embraced it. Craft brewer Pirate Life, also from Adelaide, which will brew about 30,000 hl beer this year, only packages its beers in cans and kegs.

Sparkke has four products out already: a cider addressing sexual consent carrying the line, “Consent Can’t Come After You Do”, a ginger beer raising asylum seeker issues through its tag “Boundless Plains To Share”, a Pilsner targeting Australia Day called “Change The Date” and a hard lemonade tackling gender equality through the line “Nipples are Nipples”. Read on


Russia – Efes and AB-InBev combine forces

What took them so long to see the light? Negotiations must have dragged on a bit because only on 9 August 2017 brewers AB-InBev and Turkey’s Anadolu Efes announced they have agreed to merge their operations in Russia and Ukraine in an attempt to strengthen their positions in those declining markets.

Ever since AB-InBev finalised its takeover of SABMiller in October 2016, there was a rumour that negotiations went on behind closed doors as to the future of AB-InBev’s 24 percent stake in Efes, which it had “inherited” from SABMiller.

By throwing their lot in with each other in Russia and the Ukraine, as Efes and SABMiller had previously done in 2011, the much needed consolidation of the Russian beer market is finally underway. Read on


USA – Sapporo takes over San Francisco’s Anchor brewery

Given the agitation over Anchor’s sale to Japan’s Sapporo, which was announced on 3 August 2017, it makes you wonder if craft beer lovers are in denial over private equity’s game: buy a company, build it up and then sell it on.

When the private equity Griffin Group bought Anchor from Fritz Maytag in 2010 for an undisclosed sum, the clock was ticking away for the Anchor brewery. What the investors, who had worked in the drinks industry before, were really interested in was Anchor’s distillery (which was not sold to Sapporo), whose growth in recent years must have lived up to the investors’ heady projections, whereas the brewery has witnessed a sales decline, in fact. Read on


Japan – Craft beer could revitalise beer market

Sapporo’s purchase of San Francisco’s Anchor brewery needs to be viewed against recent developments in the Japanese market. Beer production has declined for the past decade to 55 million hl in 2016, according to the Barth Report, which included real beer, low-malt “happoshu” and zero-malt third-category beer, while craft beer has slowly risen to control between 1 and 2 percent of the market. There are currently over 260 small breweries in Japan.

Worse still, for the Japanese Big Brewers, US craft beer exports to Japan grew 22.6 percent in 2016, according to the Brewers Association, compared to just 5 percent growth in 2015. Read on


USA – New Belgium buys San Francisco’s Magnolia brewery

Is this the season for snapping up San Francisco craft breweries? First Brooklyn Brewery bought into 21st Amendment brewery, then Sapporo took over Anchor and, on 10 August 2017, New Belgium agreed to purchase the assets of Magnolia out of bankruptcy for USD 2.7 million.

Magnolia was established 20 years ago. Its founder Dave McLean filed for Chapter 11 bankruptcy in late 2015. Since then, his two San Francisco breweries have remained open, but the future remained unclear.

Despite this, sales of Magnolia beer increased 3 percent in 2016 to 3,900 barrels (4,600 hl), according to recent Brewers Association data. Read on


USA – Constellation Brands acquires Florida’s Funky Buddha brewery

Florida has a lot going for it. Sun, beaches, thirsty tourists and an as yet underdeveloped craft beer market. With only 195 craft breweries in 2016 it ranks near the bottom in the US in terms of breweries per capita (1.3 per 100,000 adults) according to the Brewers Association.

On 11 August 2017, the number three brewer in the US, Constellation Brands, purchased the Funky Buddha brewery, located in the Fort Lauderdale area. Read on


USA - Mikkeller to open brewpub in New York Mets’ stadium

Is this the beginning of the end of gypsy brewing, now that its supremo, Denmark’s Mikkel Borg Bjergso, better known as Mikkeller, announced in July 2017 that he would open a brewery and restaurant in New York later this year?

It will be his second brewery in the US, complementing his San Diego plant, and his 32nd location worldwide.

For a dedicated runner like Mr Bjergso, the choice of location is interesting. Mikkeller NYC will be built inside Citi Field, in Flushing, Queens, which is the home stadium of the New York Mets baseball team (in case you don’t follow this sport).
Read on


Australia – Craft brewers and takeover speculations

When asked by Brauwelt International if the going rate for Australian craft breweries was really only 5 times EBITDA, financial advisers Deloitte replied that the reference to this low multiple during their presentation at the Craft Brewers Conference in Adelaide (26 July) “was purely for illustrative purposes and in no way reflects the valuation of Australian craft breweries generally.”

Craft brewers will be relieved to hear this, especially those who put themselves on the market.

Currently, two craft breweries are officially up for sale: Rocks brewery in Sydney and Vale brewery in South Australia. Read on


USA - Brooklyn Brewery purchases stakes in two US craft breweries

Funny they should only think of it now: establishing a joint marketing platform.

On 26 July 2017, it was reported that Brooklyn Brewery has taken minority stakes in both San Francisco’s 21st Amendment Brewery and Fort Collins, Colorado’s Funkwerks.

No financial details were disclosed, but it’s assumed that Brooklyn’s stakes in these two companies is below 25 percent so that they can continue to operate independently. The whole point of the exercise is apparently to create a combined sales team. Read on


USA - Lagunitas buys 20 percent stake in Michigan’s Short’s Brewery

It’s not just AB-InBev Heineken is buying up craft brewers too, albeit indirectly through its subsidiary Lagunitas. In July 2017, Michigan’s Short’s Brewing Company sold a 20 percent stake to Lagunitas, which itself ranked sixth among US craft brewers in 2015 – the year it was part-sold to Heineken.

Short’s Brewing Co., which until last year used the slogan “Michigan only, Michigan forever,” announced on 26 July 2017 that Lagunitas had acquired a 19.99 percent stake in it. Although Lagunitas is nowadays 100 percent owned by Heineken, the size of the stake allows Short’s to remain a craft brewer in accordance with the Brewers Association’s statutes. Read on


USA - Ballast Point expands to Chicago with brewery and restaurant

Never mind that Ballast Point’s parent Constellation Brands wrote down USD 87 million on the value of the brewery in its first quarter 2018 results because Ballast Point (bought for USD 1 billion in November 2015) “has not performed to expectations from a growth standpoint”, its national expansion continues smoothly.

The San Diego-based craft brewer plans to open a 1,200 sqm space with a three-barrel brewing system and a tasting room in Chicago in early 2018, it was announced on 27 July 2017.

The news comes as Ballast Point is putting the finishing touches on a 300,000 hl production brewery in Daleville, Virginia, on the East Coast, which is expected to go on-stream in mid-August. Nearby, Ballast Point has already opened a tasting room with 128 taps. Read on


USA – Beer sales are down, especially among fickle millennials

Blame it on the consumers. In 2017, US beer sales may drop again. Worse still, craft beer’s growth could slow down further. Investment bank Goldman Sachs recently downgraded the stocks of two major brewers - Boston Beer Company, the maker of Sam Adams beer, and Constellation Brands, the third-largest beer company in the US, best known as the importer of Corona Extra and Modelo and the owner of craft brewer Ballast Point - due to sluggish sales.

Apparently, younger consumers are not drinking as much beer as they used to. Goldman’s research suggests a shift away from beer to wine and spirits amongst those aged 35 to 44. Read on


Australia – BrewDog to open a brewery

Think of all the wonderful things you can do with a shot of private equity money in the arm, like building a brewery. In a July entry to their blog, Scottish brewer BrewDog made the promise to their Australian fans: “We are heading down under to build a brewery for you.” Although they do not have a location yet, or a city, for that matter, they are considering options.

We’re after a kick-ass location for our brewhouse, and are narrowing our eyes on two areas on the east coast growing at lightning speed – Newcastle and Brisbane.”

Why they don’t go to Sydney or Melbourne, we don’t know. Maybe it’s to do with real estate prices and red tape? Or, more likely, they are looking for an amenable local council that will help them along.

What we know so far is that BrewDog are looking for a site between 2,000 and 4,000 sqm which should be enough for a large taproom and a brewery doing 50,000 hl beer or more. Read on


USA – AB-InBev takes over energy drinks maker Hiball

The world’s major brewer has expanded its NAB portfolio. AB-InBev has bought the San Francisco-based organic energy drink maker Hiball, media reported on 21 July 2017.

In Latin America, AB-InBev already sells a range of energy drinks, soft drinks and teas. Its latest step toward a similar expansion in the US appears to be a modest one in a segment that is still dominated by Red Bull and Monster.

No financial details of the acquisition have been disclosed. Hiball’s annual revenues are estimated to be around USD 40 million. The transaction is expected to be completed during the third quarter of this year. Read on


Australia – Craft brewer Vale up for a “reluctant sale”

Is this the Wicked Weed effect? In order to avoid a consumer backlash and thus the fate of US craft brewer Wicked Weed, South Australian craft brewer Vale Brewing has decided to disclose the sad circumstances which have forced the owners to seek a sale.

It was confirmed at the Australian Craft Brewers Conference (ACBC) in Adelaide on 26 July 2017 that financial adviser Deloitte is seeking expressions of interest for the sale of a controlling share in Vale Brewing, which is located in the McLaren Vale wine region, south of Adelaide.

As the blog Australian Brews News has the story, Vale was established about ten years ago and has cemented its presence in Australia’s booming craft beer industry.

The brewery’s brand with the iconic vine logo is one of the most recognisable independent craft beer brands in Australia.

Vale became family-owned in 2015 when the Collin brothers bought out the other shareholders in the business. Director Tim Collin told Brews News that the reluctant sale is due to a change in family circumstances.

My younger brother spent 2016 battling a brain tumour and as a result of that he is no longer allowed to drink alcohol for the rest of his life, which has severely taken the shine off owning a craft brewery,” he was quoted as saying. This has led to the decision to seek a partial or full exit from the business.

While these are certainly very sad circumstances, it’s even more sad that the Collins family felt compelled to share them with the public.

But insiders suspect that this is not the real reason for the disposal. They suspect that Vale’s sales have peaked and that the family wants out. This is alluded to by Mr Collin, who also said that while the company has lost some volume overall in recent years, improvements to its margin mix have kept its bottom line in good stead. Read on


Germany – Greg Koch of Stone Brewing likes a Sisyphus challenge

Why would a US craft brewer invest USD 25 million in a brewery in Berlin? Good question. In an interview with the Rochester Democrat and Chronicle, published on 18 July 2017, Greg Koch explains why.

The chairman of the ninth ranking US craft brewer Stone Brewing and the developer of such offerings as Arrogant Bastard confessed that he is “a glutton for punishment.” As he went on to clarify, “when we opened in San Diego 21 years ago, nobody was lining up and asking for our beer. It’s the exact same thing in Berlin. The local populace is generally uninterested in our beer. Right now, it’s just the weirdos like us who drink craft beer. Everybody else just thinks it’s kind of strange.”

When asked if he just wanted to be the first American craft brewery to operate in Berlin, he replied that the old phrase, “Why do things the easy way, when you can do them the hard way?” fully applies to him. Read on


Australia – IBD Asia Pacific convention 2018: call for papers

The IBD Convention will be held from 19 to 23 March 2018 in Wellington, New Zealand. The Convention Chairman will be Chris O’Leary of Emerson’s Brewery New Zealand and the Convention Organisers will again be ETM.

Registration for the Convention will open in August.

The final date for submission of Abstracts has been extended to 11 August 2017. Should you wish to present and may not be able to meet this deadline, please contact the Editor to discuss.

Further information at >>


Austria – “Bierbusiness” by Conrad Seidl and Werner Beutelmeyer: book review

It was just as well that in the momentous year 2016, when SABMiller finally disappeared in AB-InBev’s embrace and the world’s major brewer snapped up a string of craft breweries, the Austrian beer writer Conrad Seidl and the market researcher Werner Beutelmeyer got together again and did a market survey among beer industry stakeholders in Germany, Austria and Switzerland to find out what the industry thinks.

Not only is their survey most timely and free of charge (you only need to buy the book), its findings are also robust.

Addressing about 12,000 people, over 3,000 returned the lengthy questionnaire. While brewmasters, journalists, politicians, sommeliers, publicans, beverage producers, suppliers and retailers were the most obvious targets, one third of the respondents were consumers, equally split between women and men.

Having conducted a similar survey in 1997, the 2016 findings are very revealing not least by comparison. When it comes to consumer motivations, the survey underlines - if you did not know it already - that beer drinkers continue to be a funny contradictory lot. Although they value regionality over ecology, habits over curiosity, they still like to try a craft beer, the authors say.

Since 2016 was also the year German brewers celebrated the 500th anniversary of the Purity Law, they may be interested to learn that nearly three in four respondents said that the purity law was no guarantee that the beer tastes nice.

Among brewmasters, there seems to be widespread agreement that styles like IPA, Pale Ale, alcohol-free wheat beer, and barrel-aged beers will play a greater role in the future.

That there is cloud hanging over the whole industry was driven home by the politicians’ responses. Irrespective of their party affiliation, those consulted said that they expect alcohol policies to turn much more restrictive in the years to come. One in three replied that children (like in England) should not be admitted to pubs (a clash with Germany’s and Austria’s beer cultures) while one in two advocated a general increase of the legal drinking age to 18 years.

What makes for fascinating reading are the several interviews with industry personalities, eg brewmasters, retailers and publicans that form the closing chapters.

There is only one reservation: the book is in German. If you don’t read German, tough. Perhaps it’s an idea to include a summary in English when the book is up for a re-edition.

Bierbusiness: Was die Branche denkt”
by Werner Beutelmeyer and Conrad Seidl is published by medianet, Vienna, at € 24.90.


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