Beer Monopoly





    International Reports











Brazil – Heineken agrees to buy Kirin’s Brazilian unit

It’s official. Heineken will take over Kirin’s struggling Brazilian subsidiary, the Dutch brewer announced on 13 February 2017. The total consideration to be paid to Kirin for the shares is EUR 664 million (USD 706 million). This corresponds to an estimated enterprise value of EUR 1.0 billion (USD 1.1 billion) for Heineken.

Brasil Kirin, as the subsidiary is called, reported full year results for the year ended 31 December 2016 with revenues of BRL 3.7 billion (USD 1.18 billion) and an operating loss of BRL 262 million (USD 82 million).

That’s a far cry from what Kirin paid in 2011 when it acquired the brewer Schincariol for some USD 3.9 billion.
Read on


Israel – Microbrewery received shitstorm for selling beer from West Bank

As if we did not know it: beer is political. Just ask Israeli craft brewers. Late last year, the non-kosher gastropub Libira in Haifa became the target of a shitstorm which threatened to drive away customers. Why? Because its owners had decided to sell beer of a Palestinian, West Bank-based brewery.

The Libira Brewpub was opened in 2007 by two Jewish expats, Erik Salarov, 44, from Tajikistan, and Leonid Lipkin, 56, from Ukraine. The two had started serving Shepherd’s beer, the second Palestinian craft beer ever made, sold in bottles featuring a herdsman standing underneath a star of Bethlehem.

Founded in 2015, Shepherd’s is brewed by Birzeit Brewery, located in Birzeit, a predominantly Christian town six miles north of Ramallah, which is the administrative capital of the Palestinian Authority government. Read on


India – Ban on beer sales near highways

So Indian drivers don’t just collectively suffer from road rage, many of them actually drive under the influence. Drunk driving on Indian highways is a menace that has largely remained unaffected by measures adopted to ensure road safety.

Therefore, the Supreme Court ordered in December 2017 that as of 1 April 2017 there shall be no liquor shops within 500 metres on either side of national or state highways. Existing shops will have to be closed.

This could affect about half of India’s 66,000 licenced liquor shops, Carlsberg said on 8 February 2017. The Danish brewer fears that beer consumption could decline as well as incomes for the states. To compensate for the volume loss, a logical response would be to raise prices for beer. However, because of the states exercising strict price controls, price hikes are out of the question.

This being India, it all depends however, on how effectively the ban is implemented. Read on


Uzbekistan – After years of troubles Carlsberg sells brewery to CBC

Phew. Carlsberg will probably be glad to turn its back on this venture. After an optimistic start in 2006, when Carlsberg built a 1.0 million hl brewery in the country’s capital Tashkent and subsequently bought out its local partner to fully own the company, things began to turn difficult.

In 2011 Carlsberg was accused of avoiding taxes. After police raids, its Russian CEO decided to leave the country. In its full year 2011 financials, Carlsberg booked impairment losses of DKK 300 million (EUR 40 million) for its Uzbek subsidiary.

Things got a lot worse in 2012 when Carlsberg could not get forex and ran out of raw materials. It was subsequently forced to cease production, sending staff on leave for six months. Already in 2012 Carlsberg was said to be looking for a buyer. Read on


Romania – Carlsberg unloads stake in brewery URBB to CBC

Why did Carlsberg decide to sell its stake in United Romanian Breweries Bereprod (URBB) to its Israeli partner Central Bottling Company (CBC)? According to URBB’s CEO Shachar Shaine, URBB’s turnover in 2017 is to exceed EUR 120 million amid rising exports and local sales. URBB’s sales were nearly 335 million lei (EUR 74.6 million) in 2015. In 2016, URBB’s businesses reportedly increased by around 14 percent in turnover, while profit rose 40 percent.

[In 2016] we gained market share, we have improved our market position and product mix and exports. We do not rely on a growing market, but on market share,” Mr Shaine told Romanian media in February 2017.

Mr Shaine refrained from making a forecast for 2017 as this is the first winter that Romania’s brewers will experience the full effect of the ban on smoking, which was introduced in March 2016. Read on


Denmark – Carlsberg calls 2016 a “good year”

Although Danish brewer Carlsberg on 8 February 2017 reported its third year in a row of falling profits, executives called 2016 a good year for Carlsberg.

Net revenue was DKK 62.6 billion/USD 8.9 billion (2015: DKK 65.3 billion), EBITDA stood at DKK 13.0 billion/USD 1.9 billion (2015: DKK 13.2 billion) and EBIT at DKK 8.2 billion/USD 1.2 billion (2015: DKK 8.5 billion).

In 2016, Carlsberg did not leave any stones unturned. It reduced its headcount by 2,280 people globally, changed most of its regional and country leadership and closed or sold 17 breweries in China. Not enough, several now called non-core assets were disposed of, such as the Danish Malting Group, the unit in Malawi and, at the beginning of this year, the subsidiaries in Romania and Uzbekistan. Read on


Russia – 2017 will be another tough year

Just when you think you see the light at the end of the tunnel – uh-oh. Investors in Carlsberg were in for a big surprise when Carlsberg reported its full year 2016 results on 8 February 2017. Although Carlsberg said that the decline in the Russian beer market has possibly flattened out, the Danish brewer nevertheless forecast a 5 percent drop in volumes for 2017.

The same day Carlsberg’s shares fell sharply in the opening hour of trading, wiping out most of their three month gain.

The Russian beer market declined by an estimated 1 to 2 percent for the full year and an estimated 4 percent in the fourth quarter. The market development during the second half of the year was helped by very warm weather in the third quarter,” the company said. “Although some macro indicators have started to show improvement in 2016, the market remains impacted by the ongoing macroeconomic challenges in the country.”

In fact, while Russia’s general economy seems to have improved a bit, Carlsberg remains cautious if this will translate into a more optimistic consumer sentiment and hence higher beer sales. Read on


USA – Budweiser’s Super Bowl ad creates unintended controversy

Who would have thought that a beer ad, whose themes are hope, ambition, hard work and self-reliance, could be interpreted as a jibe against President Trump’s policies? Well, it’s all to do with timing.

The 60-seconds-spot, called “Born the hard way”, tells the story of Adolphus Busch making the arduous journey from Germany to St Louis, where he shares a beer with businessman Eberhard Anheuser. The two will eventually launch their eponymous brewing company in the 19th century, which grew to become the largest brewer in the United States.

Although AB-InBev, the owner of Anheuser-Busch, could not have planned it this way, timing totally changed the ad’s message. A year ago, the commercial would have been seen as cashing in on the brewer’s history and heritage, today it’s seen as taking a stand against President Trump, whose order to temporarily ban refugees and immigrants from seven mostly Muslim-dominated countries as part of his national security policies, raised a national firestorm.

Budweiser is known for its controversial Super Bowl advertising. Last year its spot “Brewed the hard way” poked fun of snobbish craft beer lovers and was discussed the world over. Read on


Australia – Wine industry joins the fight for TPP

Here today, gone tomorrow. President Trump’s decision not to ratify the Trans-Pacific Partnership Agreement (TPP), a regional free trade agreement of unprecedented scope and ambition which was his predecessor’s pet project, has Australia’s wine industry worried.

The 12 countries that negotiated the TPP – Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam – represent around 40 percent of the global economy and a quarter of world trade, it was reported.

In 2014, the 12 signatory countries accounted for 45 percent of Australia’s wine exports – or AUD 837 million (USD 638 million) out of the total AUD 1.9 billion wine export value.

Expectations were such that, once the import tariffs were scrapped over the course of several years, Australia’s wine exports would surge. Read on


USA – Walmart and other retailers team up to fight Trump’s border tax

A group of more than 120 retailers and trade associations, including Walmart, Target and Best Buy, launched a coalition on 1 February 2017. The coalition, called “Americans for Affordable Products”, is pushing back against the proposed “Border-Adjustment Tax” (BAT) which would subject imports to US taxes. The coalition fears it will increase the cost of clothing, food, medicine, gas, and other essential items that Americans rely on.

The BAT is a part of the Republican tax reform proposal which would impose a 20 percent levy on imported goods. The tax, which aims in part to finance President Trump’s proposed wall along the Mexican border, could be particularly painful for retailers. Some 97 percent of all clothing and footwear sold in the US, and more than 90 percent of electronics, are imported. Items like sugar, coffee, beer and many foods could also be hit, it was reported. Read on


USA – Proposed border tax could hurt Mexican and EU beer imports

In the war of words over President Trump’s proposed 20 percent border tax for goods from Mexico, the fact that the tariff could eventually be applied to all countries with which the U.S. has a trade deficit went somewhat unnoticed.

In actual fact, amongst its major trading partners, the US has a trade deficit with Canada, Mexico, the EU and China. However, when highlighting the potential implications of a border tax, US media immediately latched on to beer. The cover of the New York Post on 27 January 2017 accused Mr Trump of wanting to “Tax Coronas To Pay For Wall.” Read on


Australia – Hawthorn and Mildura craft breweries sold

If a hospitality group and a decidedly non-craft brewery snap up two craft brewers it can only mean one thing: craft beer is hot. In early February 2017, Dixon Hospitality Group, Australia's largest non-gaming pub group, bought the Hawthorn Brewing Company for an undisclosed sum.

Hawthorn was founded 2009 by three entrepreneurs from Melbourne and has operated as a contract business since. It sells some 10,000 hl beer.

This is the latest acquisition for Dixon, which only late last year bought six pubs in Sydney from the receiver Ferrier Hodgson on behalf of Keystone Group, which had gone under year after not being able to refinance an AUD 80 million (USD 61 million) debt to private equity firms KKR and Olympus Capital. Founded by a father-and-son-duo, Dixon was established in 2012, currently operates 37 venues and is said to be pursuing a stock market listing.

This is where Broo, an AUD 50 million (USD 38 million) beer company, already is. Broo was launched by Kent Grogan in 2009. In 2011 he offered shares in the business to anyone who bought a slab of his beer. Last year, the business, which boasts a kangaroo on its logo, successfully raised AUD 10.5 million (USD 8 million) via the issuing of 52.5 million shares before listing on the Australian stock exchange.

Some of the proceeds must have gone into buying Mildura brewery, a well-known Australian craft brewery which was founded in 2004. In 2012 it was bought by the well-known chef and TV personality Stefano di Pieri. Reportedly, it was put on the market last year and was sold to Broo for AUD 1 million (USD 760,000).

With an estimated capacity of 10,000 hl, Mildura produces a range of beers and serves as a contract brewer for several others. It has a 25 hl brewhouse and a bottling line. Considering its size and equipment, AUD 1 million seems like a steal. But apparently, the brands are struggling and Mr di Pieri has been trying to sell the business for a while. With more than 300 craft breweries fighting over a small beer market share of perhaps 6 percent, there is lots of competition in Australian craft beer these days.

Media say that Broo has made remaining 100 percent Australian owned part of its publicity campaign and, having added the Australian Draught brand to its original Broo Premium Lager, has looked to highlight the foreign ownership of mainstream brands produced by the likes of Lion and CUB.


USA – Diageo plans to build a Guinness brewery in Baltimore

Funny they should say that. The maker of Guinness stout, Johnnie Walker and Smirnoff, on 31 January 2017 announced that it wants to build a brewery and taproom at its former whiskey bottling plant near Relay in southern Baltimore County. It would be Guinness’ first US brewery in more than 60 years.

The first in over 60 years? Well, according to our archives, Diageo had a brewery in the US until 2007, when it sold the former F&M Schaefer Brewery in Lehigh Valley, Pennsylvania, to Boston Beer for USD 55 million. Perhaps the 1.9 million hl plant did not qualify as a brewery any longer as Diageo had used it to produce the flavoured malt drink Smirnoff Ice since 2001. Read on


USA – AB-InBev + Coke: the heat is on

Good grief! Has Wall Street fallen prey to superstition, or are investors just desperate for a deal? At the end of January 2017 several business media reported that it was time for Jorge Paulo Lemann to get back in the hunt. Mr Lemann, 77, is one of the owners of 3G Capital, which also controls a large chunk of AB-InBev.

The billionaire has been doing blockbuster deals roughly every two years. In 2013, he persuaded the investor Warren Buffett to team up on H.J. Heinz. Then, in 2015, they orchestrated the USD 55 billion merger of Heinz and Kraft Foods.

It’s logical (sic) that this would be the year,” David Palmer, a food industry analyst at RBC Capital, was quoted as saying.

Whether it’s logical or not, the question of who Mr Lemann might go after in 2017 has just about everyone grasping for leads. Besides the snack company Mondelez (brands include Oreo and Cadbury), some other names include General Mills, Kellogg and Campbell Soup. There is also renewed talk that Mr Buffett’s beloved Coca-Cola could be in play. Read on


Russia – Trump politics: potential impact on brewers has analyst guessing

Looks like things are brightening up for Russia’s brewers. In 2016, beer sales in Russia declined only between 1 and 2 percent estimates Frans Hoyer, an analyst with Denmark’s Jyske Bank, who has been following the brewer for the past 40 years.

He bases his estimates on ruble strength and improved consumer confidence. In this respect Mr Hoyer is slightly more optimistic than Turkish Efes, the number two brewer in Russia, who said in January 2017 that the beer market declined in the low to mid-single digit. Read on

South Africa – AB-InBev offers SAB’s managers severance packages

Following its takeover of SABMiller, AB-InBev has embarked on its ambitious cost-cutting programme. One of its more public measures is offering managers at South African Breweries (SAB) voluntary severance packages.

Under the agreement with South Africa’s competition authorities, AB-InBev cannot make any forced retrenchments and there may be no voluntary separation arrangements for employees at the bargaining unit level until 2021, it was reported.

However, South African media were leaked an internal memo in January 2017 which says that the brewer had offered more than 1,000 managers in South Africa voluntary severance.

Of course, it is still uncertain how many people may opt for the voluntary offer. But who will have the strength and the wisdom to turn it down if they know that their jobs are already considered superfluous? Read on

Spain – Molson Coors and AB-InBev buy two craft breweries

Hola! AB-InBev and Molson Coors want to get in on the action early before prices go through the roof.

Since 2011 Spain has seen a boom in craft breweries, rising from nearly none to 450 in May 2016. Most are really nanobreweries, including Madrid’s la Virgen (Virgin), a 4,000 hl beer company, which was snatched up by AB-InBev’s venture capital unit, ZX Ventures, in early January 2017.

Financial details were not disclosed. However, AB InBev confirmed that it has acquired all the shares of La Virgen, a company founded in 2011 by a group of young entrepreneurs, it was reported

The purchase follows AB-InBev’s acquisition of craft brewers outside the US, including Italy’s Birra del Borgo (2016), London’s Camden Town Brewery (2015), Colombia’s Bogota Beer (2015) as well as Brazil’s Colorado and Wäls (2015).

Not to be outdone, a few days later Molson Coors announced it had bought a majority stake in Cervezas La Sagra, based in Toledo, which was also set up in 2011 and brewed some 4,000 hl beer in 2016.

While AB-InBev took over La Virgen outright, as it tends to, Molson Coors stuck to its own policy of only buying a stake.

Spain’s beer industry is dominated by Mahou, Heineken and Estrella Damm, with Mahou narrowly leading over Heineken. Beer consumption was 37 million hl in 2015, up 2.5 percent, with per capita consumption reaching 82 litres. Local craft brewers had a market share of less than 1 percent.

United Kingdom – Diageo’s profits boosted by Brexit and Scotch sales

Isn’t it ironic that one of the most vocal “Remainers” in the Brexit debate, Diageo’s CEO Ivan Menezes, had to disclose to media that the drinks company has actually profited from the Brexit vote. Diageo has seen rising profits thanks to a triple boost from a weakened sterling, robust Scotch sales and a strong US performance.

The maker of Johnnie Walker Scotch and Guinness beer saw operating profits jump 28 percent to GBP 2.1 billion (USD 2.6 billion) in the six months to the end of December 2016. Net sales beat expectations, rising 4.4 percent, it was reported on 27 January 2017. Read on

China – Asahi to sell stake in Tsingtao?

Analysts seem to be crowding in on Japan’s brewer Asahi to sell its stake in China’s number two brewer Tsingtao, media reported on 27 January 2017.

Asahi bought the stake in 2009 from AB-InBev after competition authorities in China decreed that AB-InBev dispose of this stake following InBev’s combination with Anheuser-Busch in 2008. Read on

Germany – Retailer Edeka and AB-InBev shadowboxing over listings

The German beer cartel was not just a horizontal one, involving several brewers, it was also a vertical one including large German retailers.

In December 2016, the German trustbusters fined retailers Edeka, Metro and others a total of EUR 112 million for collusion between 2006 and 2009. This comes after several German brewers were fined a total of EUR 340 million in 2014 for price fixing.

In both cases, AB-InBev acted as whistle-blower. In exchange for not getting penalized, AB-InBev told the authorities that it had also coordinated price increases for its beers among retailers, thus preventing them from launching bargain prices over a pre-agreed period of time. The authorities said this meant that consumers had to pay more for their beer than would have been necessary had price competition not been disabled. Read on


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