Beer Monopoly




    International Reports







Posted January 2013


USA – U.S. beer market achieved turnaround in 2012

While most of us were partying through the holiday season, the experts at 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 reading.

If 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 decline.

According to’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 percent. Read on


Poland – Polish beer market declines slightly

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. Read on


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. Read on


Australia – On the madness of supermarket discounts

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 12.50).

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 Australian retailing.

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? Read on


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 in Germany.

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. Read on

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 prices.

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 for years.

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 brewer Radeberger

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 last year.

However, organically, Efes’ total beer volumes declined on a proforma basis by 3.8 percent last year over 2011.   Read on


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 inexpensive beer

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


United 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 debt-for-equity deal.

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 period 2012

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 stable.


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 gender discrimination.

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 discrimination.

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 your rights?”

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 brand.

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 Budweiser brand.

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 markets.

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 full ownership.

Selling the minority cross-holdings to each other will result in a consideration to be paid by EBI to Heineken of USD 161 million.

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 BBH/Carlsberg since.

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 United Kingdom.

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 Financial Times.

Armchair strategists have already pointed out that the Beckmanns may now link up with France's drinks group Pernod Ricard. Pernod sells small, high-end tequila brands, but like Diageo, does not have a mass-market brand in its portfolio. Read on



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