Beer Monopoly




    International Reports










Posted December 2016


Belgium – Asahi wins auction for Pilsner Urquell

At long last. After discussions had dragged on for months, Asahi managed to beat its private equity competitors in a final auction round on 12 December 2016 to buy former SABMiller’s brewing assets in five central European countries from AB-InBev for EUR 7.3 billion (USD 7.8 billion).

The jewel in the sale is Plzensky Prazdroj, the number one Czech brewer and owner of the Pilsner Urquell brand. There is also the Polish number one, Kompania Piwowarska, maker of Tyskie and Lech, and Romania’s top brewer, Ursus. Slovakia’s Topvar and Hungary’s Dreher are each number two in their markets.

The downside is that, while Poland is a big beer-drinking market, all these markets are saturated and low-growth with heavy price competition that eats into margins. Read on


United Kingdom – Budweiser and Uber offer free rides

Christmas office parties in the UK are said to be raucous affairs, involving snogging behind the filing cabinets and heavy boozing. To get people home safely afterwards, Budweiser and the ride-hailing app are offering free rides to new users throughout December. Sadly, the offer is limited to the UK.

For AB-InBev, this is a major campaign to alert people to the dangers of drink and drive and coincides with the UK’s Ministry of Transport own “THINK! Christmas drink drive campaign”. It is aimed at young men mostly and uses Facebook, Twitter and Spotify to spread the word.

However, only new users of Uber can take up Budweiser’s offer and there is a cap on the free rides: GBP 15 (USD 19).

It was also reported that Budweiser and Uber still have a surprise in store for 24 December 2016.


Australia – AB-InBev ends labour dispute at CUB

The unions call it a victory. AB-InBev, the new owner of Carlton & United Breweries (CUB) has invited the 55 picketing maintenance workers back to work in their previous positions on union terms and conditions, it was reported on 7 December 2016. According to rumour, the workers’ pay is enormous: each worker earns an estimated AUD 200,000 per annum.

ACTU – the peak union body – said CUB’s new owner AB-InBev recognised that the workers “are an integral part of one of the most successful, productive and profitable breweries in Australia, and deserve every cent of their bargained for wages and conditions”. Celebrating their victory, the unions called off their boycott of CUB products. With Christmas and the New Year right around the corner, supporters will be relieved to hear that CUB is back on the menu. Other CUB employees are not so fortunate. Read on


USA – Brewers and the view from the stock market

What investors think of stock market-listed brewers may just be a narrow-focus snapshot of the brewing industry in general but it would be unwise to ignore it altogether.

This year some brewery stocks have declined while the smallest are growing. The US group Craft Brew Alliance, the owner of craft-beer brands such as Kona, Redhook, and Widmer Brothers, in which AB-InBev owns shares, has enjoyed a banner year. Its stock has soared 86 percent so far, while AB-InBev’s shares are down almost 15 percent year to date.

In an interesting piece on 5 December 2016, the Motley Fool, a website for investors, argued that this mirrors much of what is happening in the US beer market, where overall sales are flat or falling, the volume hikes of the smallest craft brewers notwithstanding. Read on


USA – Over 5,000 craft breweries in 2016 – and rising

All those hopefuls. According to the Brewers Association (BA), there were 5,005 breweries in the US in operation in December 2016, compared to 10,000 wineries. Almost all are small and independent craft brewers.

Perhaps it’s due to this explosion in numbers that growth in the craft beer segment has slowed to 8 percent by mid-year, after enjoying double digit growth for many years.

In terms of craft beer styles, IPAs continue to hop up, now accounting for roughly 25 percent of craft beer volume. More sessionable styles, including golden ales, pilseners and pale lagers, are up 33 percent, totalling nearly 5 percent of the segment, the BA reports. Read on


USA – Brooklyn Brewery looks for a new brewery site

Thanks to Kirin buying a 25 percent stake in Brooklyn Brewery in October 2016, which ranks 12th among US craft brewers, the firm has the funds to build an USD 80 million brewery and warehouse to support the rapid expansion of its iconic brand. While the two-year long search for a site continues, an aspect has come to the fore that should raise a few eyebrows but apparently does not.

It was disclosed recently that the company only produces about 20 percent of its beer at its original headquarters in Williamsburg, while 80 percent, including its best-selling Brooklyn Lager, is outsourced to the F.X. Matt Brewery in Utica. Beer Marketer’s Insights, a trade publication, put Brooklyn’s output at 277,000 barrels in 2015. Read on


USA – Punters don’t open their wallets for BrewDog’s US crowdfunder

It does not look like BrewDog’s latest crowdfunding scheme is a hit with US investors. In August this year, Scottish brewer BrewDog launched a USD 50 million campaign to help pay for its new 300,000 hl brewery in Columbus, Ohio, which is slated to go on stream in 2017. The company is also planning to open a brewpub in any American city where at least 500 people invest in the company’s Equity for Punks USA crowdfunding campaign.

This time BrewDog is selling 1,052,632 shares of its Common Stock. The offer is open to anyone who wants to invest, anywhere in the world, as long as it is legal in the investor’s country. Shares cost USD 47.50 each and the minimum investment is two shares (USD 95).

However, after raising USD 1 million during the first three days of its campaign, BrewDog admitted it has managed to secure only USD 3 million of its initial goal to date, according to a press release issued in November 2016. The US crowdfunder is scheduled to run until February 2017. Read on


Obituary: Germain Hansmaennel, Beer Economist and Bon vivant

Meeting Mr Hansmaennel in his hometown of Strasbourg was always a delight. He was a keen listener, a well of knowledge and a man of strong opinions. After hours of heated and passionate discussions he would generously invite us to dinner at his son’s restaurant and offer a very special wine from his own cellar, previously set up by his grandfather and expanded by his father.

When my co-author Ernst Faltermeier and I embarked on our book project The Beer Monopoly last year, he agreed to be our sounding board. We called ourselves fortunate. Trekking to Strasbourg every other month was a bit of a slog for both of us but the rewards – intelligent debates and valuable criticisms – were worth it. Mr Hansmaennel’s comments were a guarantee of wonderfully entertaining insight, unusual turns of phrase and, always, originality and spark.

Never mind that his office – which we never saw – must have been in a state of chaos. Mr Hansmaennel would arrive with a heavy bag full of sheets of data which would spill forth onto the ground when opened. So was his car. He once dragged his Master’s certificate from the University of California at Santa Barbara out from the boot – having just rediscovered it somewhere – because he had remembered that it carried the signature of Ronald Reagan, then the governor of California who would later become US president. Although it filled him with immense pride that Rotary International had sponsored his degree in economics in the US in the 1970s, he retrospectively regarded his MA certificate more of a fun object than a fetish to be put up on a wall.

Mr Hansmaennel certainly knew his wine, but he was passionate about beer. This should not have come as a surprise as he had spent his working life in the brewing industry. He worked for Kronenbourg Brewery as an export director until taking over his family office in 1992. Not being able to let go of the brewing industry, he set up his own beer import business, selling German beer in France. Spotting that there was an opportunity for Tucher beer in the innovative packaging called CoolKeg, he took great satisfaction from the fact that he managed to secure super-premium positions for his import brands in France which were retailing for less than half the price across the river Rhine.

Nonetheless, selling beer was merely something he did instead of having a hobby. He enjoyed being a salesman. Once when we visited a brewpub, we were seated next to a man with whom Mr Hansmaennel immediately struck up a conversation about beer. As it turned out, this man was an insurance salesman. Mr Faltermeier and I placed bets on who would win: would Mr Hansmaennel walk away from the table having bought an insurance policy or would the man be converted to German beer? Most probably the latter.

When leaving his job at Kronenbourg, mergers and acquisitions in the brewing industry were just kicking off. This fascinated him. And as he set his mind to studying the first wave of globalisation, the thought struck him that it closely resembled the Monopoly boardgame: who buys which streets (i.e. countries), who builds hotels (i.e. brands), who has the best chance to win the game.

Not being one to put his observations into writing because he found writing arduous, Mr Hansmaennel designed his own Beer Monopoly boardgame which he updated each year to show where brewers could still clinch deals. Sadly, he never found the time to approach the toy and game company Hasbro to market it and so allow people in the industry to understand what globalisation was really all about.

Fortunately, he found support in the company Barth, which published his first Beer Market Leaders Report in 2002. Mr Hansmaennel went on to release 11 more reports – the last one in 2013. They can still be found on Barth’s website.

At our last meeting in August Mr Hansmaennel had just returned from his holiday home in the French Alps, a place he liked to retreat to in order to meditate over his data.

He was all fired up by his idea that the Beer Monopoly was over – “there is really nothing meaningful left to buy in the world of beer”, he said – and that the rules of the game had changed. Pleased with his own discovery, he argued that brewers were now playing Draughts or Checkers in markets, where they hold leadership positions. The point of this game is to make moves which prevent or block your opponent from making moves.

With other things on our agenda we did not elaborate on his ideas but agreed to discuss them next time we would meet. It never came to that. Mr Hansmaennel died unexpectedly from a heart attack on a business trip to Nuremberg two months later, just when our book was going into print.

Rüdiger Ruoss, the founder and organiser of the World Beer and Drinks Forum in Munich called Mr Hansmaennel an exceptional and very loveable person.

Germain Hansmaennel passed away on 25 October 2016, aged 70. He is survived by his two sons and his partner Beatrice.

Germain Hansmaennel, Beer Economist and inventor of the Beer World Monopoly game.


USA – Beer versus weed cont.

Could it be that the Big Brewers are spooked by weed without firm evidence? According to US media, the investment bank Cowen recently asserted that legal marijuana is driving down beer sales. Drawing on data from the states of Colorado, Washington and Oregon, where weed has already been legalised and enjoys a proper retail infrastructure, Cowen’s analysts argue that beer there has “underperformed” during the past two years.

Cowen’s report notes that sales of AB-InBev’s and Molson Coors’ cheap beers (Busch, Miller High Life) in these three states are down 2.4 percent over the past two years, while premium domestic beers (Budweiser, Coors Light) are down 4.4 percent in those states.

What was not mentioned in the report is the fact that beer sales in the US have been in decline since 2009. According to the Beer Institute, beer sales by volume have slipped from a high of 213.3 million barrels (250 million hl) in 2009 to 206.3 million barrels in 2015. Beer Marketer’s Insights notes that light beer brands have taken a beating across the board in recent years.

Funnily, the bank’s report also claims that the craft beer markets in Colorado, Washington and Oregon have slowed, implicitly pointing the finger at weed, while failing to take into account that these three states turned into mature craft beer markets long before marijuana became legal. Read on


United Kingdom – AB-InBev to open first Goose Island pub in London

Those who thought that AB-InBev will have no truck with the pubs that came with their US craft beer acquisitions will need to think again. The maker of Budweiser will move into the UK’s pub-restaurant sector with a Goose Island site to open in London before year end, media reported.

The world’s number one brewer seems to have understood that an on-premise presence is the prerequisite for growing its craft beer sales. Hence, it will roll out a chain of pubs across Europe, based on its popular US craft beer brand Goose Island. After London, the chain’s next stop is Belgium. All pubs will offer food inspired by American smokehouses. Read on


United Kingdom – Ex-SABMiller CEO Clark was “best-value boss”

Best value for whom? In an interesting piece of gushing adulation, SABMiller’s last CEO Alan Clark, 57, was lauded as the best-value-for-money boss on the FTSE 100, meaning he had made shareholders very rich by selling the brewer to AB-InBev for GBP 80 billion (USD 102 billion) in September. The sale of SABMiller was the biggest ever takeover of a British-listed company.

For every pound paid to Clark in the past four years, shareholders have received GBP 5,984 (USD 7,642) in return”, said remuneration consultant Pearl Meyer, whose finding was reported by The Sunday Times on 13 November 2016.

Reportedly, Mr Clark’s total pay in 2015 was GBP 5.9 million (USD 7.5 million). He was also in line for a GBP 55 million (USD 70 million) payout from the deal through share awards and options amassed during his 26 years at the company.

The paper acknowledged that Mr Clark’s performance was “somewhat inflated by the year-long bid battle for SAB, which saw the brewer’s shares rise more than 50 percent.”

Alas, this style of statistics conveniently ignores that Mr Clark could only sell such a prized asset because it had been cleverly put together by his predecessor Graham Mackay, who passed away in 2013.

What’s more, this value judgement does not take into account that many former SABMiller employees now face redundancy to help AB-InBev pay down its debts from the acquisition.


Belgium – Beer added to UNESCO cultural heritage list

Cheers to Belgium: the United Nation’s cultural arm, UNESCO, in November 2016 added Belgian beer to its list of Intangible Cultural Heritage of Humanity. This accolade is more symbolic than pecuniary.

Belgian beer is known throughout the world for its wide array of tastes, from extremely sour to bitter, and is brewed in numerous cities, towns and villages across the country of 11 million people. Read on


Ivory Coast – Heineken hits market with cheaper priced beer

How to break into Castel’s moat? Well, you undercut its prices. This seems to be Heineken’s strategy in Ivory Coast, where the Dutch brewer opened its first brewery near the capital of Abidjan in November 2016.

Following a decade-long civil war that ended in 2011, the west African country has emerged as the continent’s fastest growing economy, according to the International Monetary Fund. Consequently, beer consumption has gone up in the cocoa producing country of 23 million people. Read on


USA – Altria’s luxury problem

What will tobacco firm Altria do with its cash windfall from the SABMiller sale is a question that has irked analysts for some time. As part of its deal with AB-InBev, Altria received a greater-than-expected amount of cash – USD 5.3 billion. Actually, and this is the really juicy bit of info, the tobacco company had to work hard to negotiate an alternative to receiving cash only in exchange for its 27 percent stake in SABMiller stake.

According to the Motley Fool, a website for investors, AB-InBev wanted to pay off Altria and not offer stock.

But receiving cash only would have created a substantial capital gains tax problem for Altria back in the US and so Altria had to negotiate a tax-free exchange of SABMiller stock for AB-InBev stock. Read on


Canada – The impact of legalised weed on beer consumption

As the Canadian government plans to bring forth laws to decriminalise and regulate recreational weed in the spring of 2017, brewer Molson is looking to the US state of Colorado for insight on the possible effects that the legalisation of marijuana could have on its beer sales.

In an analyst call in November 2016 Stewart Glendinning, CEO of Molson Coors International, said: “Cannabis is something we are thinking very carefully about, not only as a business but also as an industry.” Read on


Russia – AB-InBev and Efes reportedly to combine operations

It’s a rumour still but it would make perfect sense. Russian media reported on 16 November 2016 that Turkey’s Anadolu Efes and AB-InBev, currently ranked second and third brewer in Russia respectively, “can join their efforts”.

After the purchase of SABMiller, AB-InBev became the largest shareholder in the beer and soft drink firm Anadolu Efes, when they took over SABMiller’s 24 percent stake, which the South Africans had obtained in 2011 in exchange for their assets in Russia and Ukraine.

Throwing in their lots with each other in Russia would save both brewers a lot of headaches. Together they operate 11 breweries (Efes 6, AB-InBev 5), probably far too many in this declining market even after the closure of several plants. Efes alone has shut down three breweries in the past few years, among them the 4 million hl plant in Moscow, which was only built in 1999. Read on


Turkey – Efes CEO departs

Big changes afoot at Anadolu Efes. The beer and soft drink group announced on 21 November 2016 that Robin Michael Goetzsche, 55, who has served as its President and CEO since November 2015, will be leaving his position as of 31 December 2016. According to the statement, Mr Goetzsche resigned for personal reasons. 

A member of the South African Goetzsche family, which merged its Coke bottling operations with SABMiller’s in 2014, Mr Goetzsche is a SABMiller veteran. Joining SAB in 1989, he held various positions, including Managing Director of Tanzania Breweries (SABMiller) between 2009 and 2014, before spending a year as Managing Director of Efes Russia Beer Group. Read on


China – Workers strike over Coke selling out to local companies

Workers at Coca-Cola bottling plants in three Chinese cities went on strike after the US soft drinks company announced it was selling its bottling interests in the country to its local partners, media reported on 25 November 2016. Coke workers fear they will lose their jobs or pay under the state-owned employer

The soft drink company said on 17 November 2016 that it is selling all its bottling assets in mainland China to Hong Kong conglomerate Swire Beverage Holdings and COFCO Corporation, one of China’s state-owned food giants, for about USD 1 billion. This divestment is part of Coke’s broader strategy to focus on its more profitable concentrate-making business. Read on


USA – Molson Coors’ CFO resigns

After only six months on the job, Mauricio Restrepo, Chief Financial Officer of brewer Molson Coors resigned on 17 November 2016 with immediate effect “because of matters regarding personal conduct” not related to its business. The company didn’t offer more details about the issues that led to Mr Restrepo’s departure. Read on


Australia – Beer and wine don’t mix

Australia’s number two brewer Lion has sold its Australian premium wine business to Accolade Wines for reportedly close to AUD 100 million (USD 75 million), thus ending a costly expansion into wine which began in the early Noughties.
Read on


Ireland - Heineken will not face sanctions over fake craft beer scandal

Some relief. Heineken will face no sanctions after some of its products were mislabelled and sold as craft beer in a small number of pubs around Ireland, according to the Food Safety Authority of Ireland, which released its finding on 21 November 2016.

The malpractice was discovered in September 2016. Although it is thought that only the Heineken-owned brands Beamish, Murphy’s and Foster’s were sold under craft beer-style names in Cork and Kerry, pubs around the country were found to be selling the same beers as “house” brews.

Heineken Ireland previously commented that the practice of mislabelling beers was not its policy and that this practice has been stopped.



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