USA – U.S. beer market achieved turnaround
While most of us were partying
through the holiday season, the experts at beerinsights.com
worked overtime to put together their preliminary data on the
performance of the major U.S. brewers and importers in 2012.
They were released on 14 January 2013 and make fascinating
If beerinsights.com did not get its
numbers wrong – and from past experience we have no reason to
doubt them – the U.S. beer market finally managed its
long-awaited turnaround last year. It returned to growth – 1.5
percent or 3.5 million barrels (4.1 million hl) if you include
tax-free volumes (exports, military, etc) – after three years of
According to beerinsights.com’s
estimates, AB-InBev achieved its first gain in volume since the
purchase of Anheuser-Busch by InBev in 2008. This is probably
due to the success of new products, namely Bud Light Platinum
and Bud Lime-A-Rita. Although AB-InBev sold perhaps 700,000 hl
more beer in 2012, its market share nevertheless slipped 0.5
Poland – Polish beer market declines
The days of seemingly endless growth
in the central and eastern European beer markets are definitely
over. Russia, Poland, the Ukraine are all in decline, albeit for
different reasons. In Russia government interventions threw a
spanner into brewers’ spokes, while in the Ukraine the sorry
state of the economy helped dampen consumer spending. Poland, on
the other hand, did not witness any of the above. It is the only
country in the EU to have avoided a recession. Its economy is
still growing, albeit at a slower rate – 2.1 percent in 2012 –
than in previous years. But there is no doubt about it: Poland
has become a highly mature beer market with per capita
consumption standing at 94 litres in 2011.
So it should not come as too much of
a surprise that in 2012 the market dropped 0.5 percent to 37.8
million hl. As SABMiller’s Polish unit Kompania Piwowarska (KP)
reported on 22 January 2013, the Polish beer industry closed the
calendar year 2012 with weak sales in the second half year after
a strong growth in the first half of the year. The growth of the
Polish beer market lasted only until July 2012, says KP, driven
by favourable weather, the Euro 2012 football championship and
brewers’ efforts to innovate. However, during the last four
months of 2012 sales began to decline, compared with the
previous year on the heels of falling consumer confidence.
Ukraine – Efes grows against market trend
It’s probably small consolation to
Efes executive suite that its Ukrainian unit in 2012 managed to
grow its beer sales volume by 14 percent over 2011, although
beer production in this eastern European country as a whole
declined 1.6 percent over 2011 to 30 million hl.
The Turkish brewer is only a distant
number four player with a market share of about 6.5 percent,
even after the combination with SABMiller, the Kommersant
newspaper reported on 21 January 2013.
Ukraine’s beer market is still
dominated by SUN InBev Ukraine (35% market share), Carlsberg
Ukraine (28%) and locally-owned brewer Obolon (21%).
Already on 14 December 2012,
Carlsberg Ukraine issued a warning, saying that its beer sales
declined 8 percent in volume terms in the January to September
2012 period over the same period in 2011. However, revenues rose
by 2.1 percent mainly due to an increase in beer prices.
Australia – On the madness of supermarket
Is Australia going the way of
Germany or is it the other way round? It does not really matter
as what I saw on a recent trip to Australia signalled to me:
“very bad and worse to come”. When I visited a liquor shop in
Adelaide in early January 2013, I noticed that every other
bottle of wine carried a sticker saying “best offer”. As if this
was not bad enough, there was also an offer for an Australian
white wine at AUD 25 (USD 26 / EUR 19.30), which, by Australian
standards, is not really expensive. What made me gasp for air
was the fact that with the wine came a free six pack of Mexican
Sol beer (owned by FEMSA/Heineken). In a nearby cooler cabinet
the same Sol six-pack was priced at AUD 16 (USD 16.60 / EUR
That a supposedly superpremium-priced
import beer like Sol was given away free was shocking. But what
really threw me was the realisation that these bumper discount
deals are now kind of the norm and NOT the exception in
This made me wonder: what is
actually the real value (or price) of a bottle of wine or a
carton of beer in Australia, if producers and retailers can
afford to put on such massive discounts?
Germany – How much worse can it get?
In 2012, German beer output is
believed to have fallen 2 percent. That may not seem much given
that sales spectacularly dropped 8 percent in April, 10 percent
in September and 5 percent in December 2012 year-on-year. But if
you bear in mind that beer consumption has declined for almost
20 years now at an annual rate of give or take 2 percent, then
you will immediately understand how bad the situation really is.
So it’s kind of strange that almost all of Germany’s top ten
beer brands showed some volume growth for 2012: Krombacher
(1.4%); Bitburger (1.1%), Veltins (3.6%); Hasseröder (2.6%);
Beck’s (0.2%); Warsteiner (0.5%); Paulaner (3.5%); Erdinger
(0.3%) according to the trade publication INSIDE’s estimates.
The major exceptions were Radeberger
(-2.2 percent) and Oettinger (-5percent). Ottinger, which
happens to be Germany’s major cheap beer brand and is also
Germany’s major brand in terms of volumes at 5.9 million hl in
2012. It will have given its competitors no small amount of
schadenfreude that Oettinger too has been unable to break
through the glass ceiling of 6 million hl domestically. By rule
of thumb 6 million hl is the most any beer brand will ever sell
However, on closer scrutiny, most of
these volume growths were achieved at the price of heavy
promotional activity or multiple brand extensions which have
cannibalised core brands. Already, the top ten beer brands sell
over 70 percent of their annual volumes on promotion, up from 68
percent in 2011 and at a price of under EUR 10 per 10 litres,
says GfK, a market research company.
USA - A-B InBev in
talks with regulators over Modelo deal approval
AB-InBev were highly optimistic when they
announced in June 2012 they expected their Modelo deal to close
in the first quarter of 2013. That was provided the lawyers at
the U.S. Justice Department did not drag their feet. But seven
months later, the anti-trust regulators still seem to be in no
rush to issue their verdict.
According to various media sources, the
Justice Department is seeking "major concessions" before
approving the USD 20 billion deal.
The Justice Department is worried that, when
AB-InBev fully own Modelo, they could control about 52 percent
of the U.S. beer market and be in a position to dictate beer
There have been so many rumours and
statements from “credible sources close to the Justice
Department” that it is difficult to make a realistic assessment
of what the regulators’ demand will be, and which concessions
AB-InBev are willing to make to consummate the deal.
In a clever move to appease the anti-monopoly
watchdogs in the U.S., AB-InBev already in June 2012 agreed to
sell Modelo’s 50 percent stake in the U.S. importer Crown to
wine company Constellation, which has been Modelo’s U.S. partner
The Constellation contract with Modelo
includes predetermined annual price increases – as Constellation
has stated – and this was negotiated so that Modelo couldn’t
just raise prices at will and have Constellation as hostage to
these price damaging pressures. It seems – again, if the various
news outlets have any credibility – that the pricing mechanism
will have to be more strictly adjusted for the Justice
Department to be satisfied.
But this is not all. Another report by
“well-informed sources” said that AB-InBev might have to sell
"production assets" such as breweries to win approval. This, in
fact, would be a mean blow to AB-InBev.
As far as the production of the beer by a
third party in Mexico is concerned – who could that be?
Heineken-owned FEMSA? Or another party buying Modelo’s plant(s),
such as Constellation? - this would reduce AB-InBev’s production
efficiencies in a very BIG way, effectively making their
acquisition scenarios obsolete.
However, if it really comes to that and we
are not ruling anything out, AB-InBev would be well-advised to
seek a third party buyer for the plant(s) in Mexico that will
brew Modelo beers only and only for the U.S., rather than give
FEMSA a HUGE profit centre from which FEMSA could battle Modelo/AB-InBev
in Mexico and AB-InBev in the rest of the world
On another rumour that AB-InBev was planning
to eventually brew Corona themselves in the U.S.: that is out of
the question. The deal with Constellation precludes this.
Seems like patience is the word.
Germany – Environmental pressure group wins in court against
Germany’s major brewer Radeberger suffered a
defeat in court over its dodgy bottle deposit dealings with its
Mexican import Corona Extra. On 19 December 2012 a Frankfurt
court told Radeberger it had to pay the claimant, Deutsche
Umwelthilfe (German Environmental Aid DUH), the cease-and-desist
fee of EUR 243,43 (USD 323). As the fine is so small, Radeberger
has no right to appeal against the ruling.
In the summer of 2012, DUH accused Radeberger
(Radeberger, Jever, Schöfferhofer) of falsely declaring the
Corona bottles as returnable and refillable containers. As the
DUH discovered, Radeberger for years had sold Corona beer in
allegedly returnable bottles for which it charged German
consumers EUR 0.08 in deposit, whereas it should have charged
EUR 0.25 per bottle as the bottles were in fact new - and thus
legally speaking, non-returnable. Read on
Turkey - Excise hike and price increase
dampen Efes’ Turkish beer sales
On the face of it, things don't look all that
bad for Efes' beer division. On 15 January 2013 Turkish brewer
Efes reported that total beer sales by volume in 2012 were 28.4
million hl, up 23.5 percent over the previous year, thanks to
the combination with SABMiller in Russia and the Ukraine early
However, organically, Efes’ total beer
volumes declined on a proforma basis by 3.8 percent last year
Austria - Heineken relocates its CEE
headoffice from Vienna to Amsterdam
It’s probably more a case of piqued national
pride than a real loss that has caused an outcry in Austrian
media, following Heineken’s decision on 13 January 2013 to
relocate its central and eastern european (CEE) headquarters
from Vienna to Amsterdam.
But as the decision comes only weeks after
Heineken’s Austrian unit Brau Union announced the sale of its
Pago juice company to its German rival Eckes Granini Group,
Austrians feel miffed.
Ever since Heineken bought the Austrian
brewer Brau Union with subsidiaries in several central European
markets a decade ago, Heineken’s ventures further east have been
steered from Vienna. This clause was part of the original sales
contract. Read on
Japan – Asahi plans to sell more
That’s desperate. In mid-January 2013 Asahi
Breweries said it is aiming to increase beer and beer-like drink
sales in the Japanese market by 0.5 percent this year to the
equivalent of 164 million cases (a case holds 20 bottles of
0.633 litres each). Asahi will aim for the increase by selling
more inexpensive, so-called third-category beer (a non-malt,
carbonated beverage with a beer-like flavour and alcohol
strength of 5% to 6% ABV).
By category, the key unit of Asahi Group
Holdings will seek to maintain sales of regular beer at last
year's level while targeting a 4.9 percent growth for
third-category beer. It expects sales of "happoshu" low-malt
beer to decline 6.5 percent, it was reported. Read on
Kingdom - Lloyds Bank sells 1,100 pubs
It seems the UK taxpayer has taken yet another massive hit. On 4
January 2013 Admiral Taverns, one of the UK’s biggest pub
groups, has been bought by U.S. based private equity group
Cerberus in a fire sale. The Lloyds Banking Group, which had to
be bailed out by the UK g9vernment to the tune of a 40 percent
stake, reportedly received about GBP 50 million in cash for its
pubs. Add to that the GBP 150 million that Cerberus took on in
debt, the transaction is valued at GBP 200 million (USD 323
million) or a little over GBP 180,000 (USD 290,000) per pub.
The sale takes the leased and tenanted pub operator off the
books of Lloyds, three years after it took control in a
The pub group’s senior management team will stay with the
business, it was reported. Read on
Austria – Eckes-Granini Group buys Heineken’s fruit juice
company Pago for an estimated EUR 75 million
Given that Heineken is going to focus on its beer
and cider brands, it was just a matter of time before it would
sell its premium juice brand Pago. On 19 December 2012 the
Heineken-owned Brau Union signed an agreement with Pago’s bigger
German rival Eckes-Granini which will lead Pago to change hands
during the first quarter of 2013.
Although the transaction price was not disclosed, market
observers estimate that Eckes-Granini paid between EUR 75
million and EUR 100 million for Pago, whose turnover was EUR 92
million (USD 120 million) in 2011.
The transaction makes perfect sense for Eckes-Granini. The
Austrian-based Pago is a producer of premium fruit juices. Pago
has prominent market positions in Austria, Italy, France and
Spain, and a wider geographic presence in over 35 markets. It
also does well in the on-trade – something Eckes-Granini has
failed to achieve on a large scale yet. Read on
Germany – Beer sales drop slightly in the January to November
Beer sales in Germany in November 2012
dropped 2.8 percent year-on-year and reached 7.26 million hl. In
the January to November period, 89.4 million hl beer were sold.
That’s a loss of one percent over the same period in 2011.
Sales of beer mixes (radlers and shandies)
reached 3.59 million hl in the eleven months of 2012 (+13.8
percent), while beer exports came to 11.39 million hl (0.2
percent). Overall, the German beer market in 2012 was considered
Australia – A ban on Ladies Nights
This is political correctness gone too far.
Although several U.S. states have pushed ahead with it, few
would have imagined Australia to follow suite in banning “Ladies
Nights” — a type of bar promotion that provides free or
discounted drinks for female bar patrons — because it represents
After the ban on Ladies Nights, what’s next?
Will there be lawsuits against laundries just because they
charge more for dry-cleaning a blouse than for a man’s shirt as
they have the buttons on the wrong side?
Seriously, in the state of South Australia,
“Ladies Nights” will be outlawed from 18 January 2013 under a
new Code of Practice for pubs and clubs, professedly also aiming
at curbing binge drinking.
Now venues must ensure that free cool
drinking water is available at all times and must have at least
one non-alcoholic beverage for purchase at a price lower than
that of the least expensive alcoholic drink offered.
I am not sure who was being discriminated
against by the “Ladies’ Nights” – the women themselves or the
full-paying male punters. One thing is sure: the ban only serves
to trivialise the need to combat real instances of invidious
Moreover, if the purpose of the ban was to
stop binge drinking, why did the South Australian legislators
not barge ahead and ban every form of price promotion in the on-
and the off-trade?
Bars that are putting on “Ladies Nights” or
“Happy Hours” are engaging in what economists call price
discrimination, the practice of charging different people
different prices for the same good or service. To some, this
might seem scandalous, but it happens all the time and it is
perfectly legal. Shops will sell the same product at two
different prices - a regular price and a discount price for
someone who has registered with the store or clipped a coupon.
In my opinion, a ban on “Ladies' nights” is
neither a great victory for equality nor will it stop binge
drinking. So why bother at all?
Czech Republic – “How much do I have to pay you to give up
That’s the question AB-InBev, the present owner
of the Budweiser beer brand, asked its Czech rival, the
state-owned brewery Budweiser Budvar. The dispute over the
Budweiser trademark has been raging for over 100 years and AB-InBev
seems to have been keen on settling the issue once and for all.
But according to international media Budweiser
Budvar’s asking price was way too much for AB-InBev (or, looked
at differently, AB-InBev offered too little) and talks collapsed
in December 2012.
It must have been a scene to behold: the world’s
brewing goliath, AB-InBev, and its puny competitor Budweiser
Budvar getting together for a “let’s divide the world” meeting.
As in some Cold War movie, they would have stood
around a sandbox of the world’s beer markets. Each would have
been armed with a rake and plenty of flags, ready to place them
where they currently hold the exclusive rights to the Budweiser
It was in 1939 when the two brewers last agreed on a global
settlement. They then formed a pact that gave Anheuser-Busch
sole rights to the name Budweiser in all American territories
north of Panama. However, the accord did not last long as the
two companies expanded exports to new markets.
This time the sandbox would have been awash in Budvar flags as
the Czech Budweiser, in the meantime, has managed to obtain
exclusive rights in 68 countries, mostly in Europe, but also in
eleven Asian countries, Japan, Korea, China and Vietnam among
them, thus preventing AB-InBev from entering them with its
AB-InBev’s goal in this meeting would have been – and I am not
imagining anything extravagant – to persuade Budvar to get
completely out of the sandbox or at least decamp in
Asia-Pacific. Read on
Kazakhstan - Heineken and Efes end their partnerships in
Kazakhstan and Serbia
They probably call it an amicable separation. In late December
2012 Heineken and Efes terminated their partnerships in
Kazakhstan and Serbia. The divorce did not come unexpectedly.
Following the tie-up between Efes and SABMiller in 2011, it was
just a matter of time before Heineken would walk away from this
marriage of convenience with Turkey's brewer Efes.
Dutch Heineken rightfully worried that, as a consequence of
Efes's new corporate marriage with SABMiller, Efes would lose
interest in their four year old liaison.
It was in 2008, when Heineken and Efes thought it best to
overcome their disadvantageous positions in these two markets by
throwing their lots in with each other. Putting economic sense
before corporate pride they decided that by clubbing together
they would stand a better chance of conquering these two
As per agreement signed by the two brewers in December 2012,
Heineken will sell its 28 percent stake in Efes Kazakhstan to
Efes Brewing International (EBI), while Heineken will acquire
EBI's 28 percent stake in Central Europe Beverages (CEB), the
holding company for the Serbian operations, thereby obtaining
Selling the minority cross-holdings to each other will result in
a consideration to be paid by EBI to Heineken of USD 161
That Efes has to buy out Heineken indicates that Kazakhstan is a
far more lucrative market than Serbia. Its 16 million people
consumed just under 40 litres of beer per capita in 2011 says
Efes. When Heineken and EBI formed their partnership in
Kazakhstan, EBI ranked second with 25 percent of the market,
while Heineken ranked fifth with 5 percent. Today EBI is the
leading brewer in this Central Asian country, having overtaken
It's an altogether different picture in Serbia, a Balkan country
of 7.4 million people. Between 2005 and 2011, the domestic beer
market has shrunk by 14 percent because of the country's
economic woes. Per capita beer consumption has dropped to 66
litres in 2011 from 77 liters in 2005.
In Serbia, today, the Efes/Heineken partnership is a distant
third as the former InBev-, then StarBev- and now Molson
Coors-owned brewer Apatin has over 50 percent of the market and
Carlsberg around 28 percent according to estimates.
Incidentally, Carlsberg Serbia is the only brewer to have
increased its market share to 28 percent in 2011 from 18 percent
in 2005, it was reported.
Looks like Efes got a far better deal in the end than Heineken.
United Kingdom - Diageo walks away from deal with Jose Cuervo
You win some, you lose some. Diageo, the
world's number one drinks company, may have been successful at
clinching a USD 2.1 billion deal for a majority stake in India's
largest spirits company, United Spirits, in November 2012, but
ultimately failed to secure a takeover of Jose Cuervo, the
world’s top-selling tequila brand, which is to stay with its
Mexican owners, the Beckmann family.
Apparently, the two sides failed to agree on
a price. The Cuervo brand reportedly carried a price tag of over
USD 3 billion - too high for Diageo.
The collapse of discussions with the
Beckmanns in December 2012 leaves Diageo without a tequila brand
as of July 2013, when the distribution agreement between the two
comes to a close after 27 years, and the Beckmanns without a
distributor for Jose Cuervo outside its home market of Mexico.
Profit-wise, Diageo will not be hit too hard.
Analysts say that the Cuervo brand only accounted for about 3
percent of Diageo's revenues and 2 percent of profits. Cuervo
generated GBP 300 million (USD 482 million) of net sales this
past fiscal year, a decline of 3 percent, according to Diageo.
Its largest markets are the U.S., Canada, Spain, Greece and the
But the appeal of the brand was strong,
thanks to tequila’s growing popularity in the U.S. market and
Cuervo’s leading position there. Its volumes in recent years
were nearly double those of its nearest competitor, says the
Armchair strategists have already pointed out
that the Beckmanns may now link up with France's drinks group
Pernod sells small, high-end tequila
brands, but like Diageo, does not have a mass-market brand in
2009 december ·