Beer Monopoly




    International Reports







Posted July 2013

Germany – AB-InBev turns prime witness against beer cartel

AB-InBev is cooperating with Germany’s anti-monopoly agency to help in its investigation of a dozen major brewers for prize fixing. A spokesperson for AB-InBev Germany, the brewer of Beck’s beer, told media on 6 July that AB-InBev used the leniency provision and turned itself prime witness. Prime witnesses in cartel probes usually receive a pardon or lesser fines.

The spokesperson would not give any more details as the case is still pending. However, it’s expected to close next month. According to rumour, Germany’s brewer Bitburger also assisted the anti-monopoly agency in its probe.

Two years ago the anti-monopoly agency began its investigation, following allegations that brewers illegally clubbed together to simultaneously raise prices of about two dozen major German beer brands. If found guilty, the accused brewers could be faced with fines in the three figure millions.

In a separate probe, the anti-monopoly agency is investigating several breweries in Cologne accused of a similar offence.


Finland - Heineken sells Hartwall business to Royal Unibrew

In February it was only a rumour put out by the UK's Sunday Times that Heineken would dispose of its Finnish unit. But on 11 July 2013 it became a fact when Heineken announced that it has signed an agreement with Danish brewer Royal Unibrew for the sale of its Finnish business Hartwall.

A multi-beverage company with a broad product range, Hartwall is ranked second behind Carlsberg in Finland, says Royal Unibrew. Hartwall is the market leader in the categories of mineral water, cider and Ready To Drink (RTD) and number two in the categories of beer, soft drinks and energy drinks. Non-alcoholic beverages account for 43 percent of revenue, whereas beer, cider and RTDs make up 44 percent. The business unit Hartwa-Trade operates as an agency for a number of international wine and spirits brands and contributes 13 percent of Hartwall's revenue.

Royal Unibrew did not pay as much for Hartwall as many thought it would fetch (EUR 590 million/USD 790 million). In actual fact, Royal Unibrew got Hartwall for EUR 470 million which includes interest, net debt and net debt equivalents assumed by Royal Unibrew.

To fund the acquisition, the stockmarket listed Royal Unibrew will issue shares to the Finnish investment company Hartwall Capital, which is the investment vehicle of the Hartwall family, the founder and owner of the Hartwall Brewery until the merger with Scottish & Newcastle in 2002. The family was a significant shareholder of Scottish & Newcastle until it was sold in 2008 to both Heineken and Carlsberg. Through taking a minority interest in Royal Unibrew, the Hartwall family seems to be making a safe investment decision, but they are also taking a bit of a gamble that Royal Unibrew can raise profit margins in Finland when Heineken could not. Read on


Australia – Coopers brewery sponsors local soccer stadium

Don’t the anti-alcohol watchdogs have anything more serious to worry about? As of July 2013, Hindmarsh Stadium, the 17,000-capacity home of the soccer club Adelaide United, will be known as Coopers Stadium for the next five years.

Coopers now have exclusive naming and pouring rights at the ground. However, this deal is not with the club and will not provide funding to Adelaide United for football, development or anything else.

Still, this sponsorship deal has generated major angst amongst anti-booze forces as it goes against the recent stand of the Football Federation of Australia (FFA) to ban alcohol sponsorship of the sport. Read on


Netherlands - Heineken seeks to tap "silvermarket"

For over a decade, demographers have said that that the 21st century will be ruled by the “New Old”, formerly known as the Baby Boomers - those born in the 1950s and 1960 - who as a cohort are significant on account of their size alone. In many countries, like in the U.S. and Europe, they represent the largest generational segment. But have consumer goods companies woken up to the challenge?

Probably not, since their marketing departments are usually staffed with youngsters who are used to lumping all people over the age of 60 into a grey basket of zimmer frames, comfy shoes and big-buttoned telephones. What is more, advertising's creative types, the people who dream up commercials, are considered ancient by the time they are 35. Finding the right language and imagery to communicate with an older audience, let alone coming up with the right products for the “over 60s”, pose big challenges for them. Read on


Israel - Sales of pomegranate wine surge

French vintners beware - a pomegranate wine from Israel could just be what the doctor recommends. Pomegranate wine is pleasing on the palate and good for the heart. What more can you ask from a drink? On a recent visit to Israel I discovered pomegranate wine, which could easily become my drink of choice because of the above reasons.

My favourite brand is a pomegranate wine by the name of Saba Yair Delicat, produced by Yair Etzioni from the moshav Ram-On, an Israeli-type of cooperative, about 100 km to the north of Tel Aviv.

Made from fermented pomegranates, Saba Yair Delicat has a dark red colour. Yair serves the 9% ABV wine chilled, which immediately made me think that his pomegranate wine bears closer resemblance to a "scrumpy" or a "hard cider" than to a wine, given its alcohol content.

Pomegranate wine is tricky to make and expensive to drink, but has unique health benefits. Because pomegranates have a much lower sugar content than wine grapes, they cannot be effectively fermented. To get around this problem, Yair adds some sugar before fermentation, while some of his competitors allegedly use a new variety of pomegranate, which is sweet enough for wine production.

Still, his wine is more bitter than his competitors' as he does not just use the juice but also the pulp, which he says contains all the goodies that are beneficial to your health. Read on


Belgium – No outcry following tax hike on beer

What’s happened to Belgian media? Have they grown tired of complaining against price hikes on beer? Or are they saving the news of an 8 percent tax hike on beer, effective 1 August 2013, for the silly season next month, when brewers will have little choice but to pass the tax increase on to consumers?

The Belgian Brewers’ Association, at least, has reacted immediately and voiced its disapproval of the tax increase on beer, which the Belgian government agreed upon on 1 July 2013.

This is the first time since 1992 that the excise on beer has been raised. The excise on wine and spirits has already been put up by 12 percent in January this year.

At the moment, consumers will have little reason to complain about the price of beer as Alken-Maes has a half-price promotion running for a crate of its beer. Not to be left out, AB-InBev has its products on offer every three weeks, we have been told. Read on


Belgium – AB-InBev wins EU trademark for “Bud”

That’s settled, then. AB-InBev was granted trademark rights throughout the European Union for the word “Bud” on 14 June 2013. The trademark registration follows AB-InBev's victory earlier this year in its long-running trademark clash over the Bud name with Czech brewer Budejovicky Budvar.

As Budvar didn't appeal the January court decision, the Bud trademark registration process went ahead. Read on


South Africa – Political heavyweight leaves SABMiller’s board

How will SABMiller fare without a political fixer par excellence like Cyril Ramaphosa, who decided not to seek re-election to SABMiller's board of directors at the brewer’s up-coming Annual General Meeting on 25 July 2013

Mr Ramaphosa, 61, joined the board of South African Breweries Limited in 1997 as a non-executive director and must be considered one of its more colourful members, being a South African politician, businessman, activist, and trade union leader.

SABMiller must have counted its blessings that Comrade Cyril, as he is known to his African National Congress (ANC) pals and fellow trade unionists, probably used his political clout to protect SABMiller from workers’ militancy, which has already cost mining companies, as the worst affected, and the state billions of rand while savaging South Africa’s reputation as an investment destination.

The official reason for Mr Ramaphosa leaving SABMiller’s board is that he was elected Deputy President of the ANC in December 2012, which many view as a stepping stone to a senior position in South Africa’s government, ahead of the general election due in 2014. This would have led to a conflict of interests, real or perceived. Fortunately, even after his departure Mr Ramaphosa will only be a phone-call away so SABMiller need not worry all that much.

As a director of SABMiller, Mr Ramaphosa received a remuneration package worth USD 130,000, according to the brewer’s latest annual report. His personal net worth Forbes estimated to be USD 675 million, which ranked him 21st on Forbes’ list of wealthiest Africans in 2012. Read on


Canada – Molson Coors wins injunction in spat with Miller

They may be partners with Coors in the U.S., but this did not prevent SABMiller from terminating a licensing agreement with Molson Coors in Canada, to which Molson Coors responded by dragging SABMiller to court.

On 20 June 2013 Molson Coors scored a temporary victory: the Ontario Superior Court granted Molson Coors an injunction that prevents Miller Brewing, SABMiller’s U.S. unit, from ending the agreement before the trial begins, which is scheduled for December this year. Read on


Europe – Passport scan opens Molson’s fridge

The idea isn’t new, but it certainly warrants repeating. In 1998 the songwriter/comic Tony Hawks travelled around Ireland for a month in the company of a fridge and turned his adventures into a bestselling book. In May this year Canadian brewer Molson told its advertising agency Rethink to set up red fridges at various locations around Europe as part of its reactivated campaign “I. Am. Canadian”, which was binned a decade ago.

The fridges were stocked with Molson’s beer. But there was a catch: you needed a Canadian citizen and his passport to open it. If this sounds like a stunt out of Candid Camera to you, well, honi soit qui mal y pense.

The fridges have already made an appearance in Canterbury, London, on the White Cliffs of Dover, in Cassel in northern France, in Brussels, and somewhere in rural Belgium. People quickly took up the search for a tourist who would insert his passport into the fridge, whereupon it would spring open and he could bequeath the beer to the crowd.

The fridge campaign will go further than the TV ads that will air throughout the summer. Molson is exploring bringing fridge to Sochi for the Winter Olympics, as well, Canadian media reported.

Ad industry insiders have already bickered that Molson’s fridge campaign reminds them of Coca-Cola’s Happiness Stunts from a few years back, which often featured fridges that could only be opened if punters performed certain tasks, like embracing the machine.

So what? There are probably more uses for a fridge than you and I can think of.



Spain – Zero tolerance for boozers on Mallorca’s beaches

The city of Palma de Mallorca in Spain is seeking to regain control of its beaches from hordes of unruly tourists who indulge in binge drinking, German media reported.

Mallorca is the largest of the Balearic Islands in the Mediterranean and attracts about 10 million tourists each year who swamp the local island populace of some 780,000 people (nearly half of whom live in the capital of Palma).

The last weekend in June saw the introduction of a curfew on outdoor drinking between 10 pm and 1 am. It will be enforced along Palma’s beachfront between Balneario (beach bars) number 5 and 6.

The curfew is to run until 1 September this year. But worse is to come: next year, the city council plans to implement a 24 hour curfew on outdoor drinking across the whole town, following complaints from residents about noise and disorderly behaviour.

A further measure will be to ban serving alcohol in buckets. Yes, you read correctly. Twenty years ago in the district known as Balneario number 6, the “bucket and straw” was invented. In the local bars groups of holidaymakers were presented with a mix of spirits and fruit juices served in a large metal or plastic bucket together with long drinking straws so that they could imbibe the cocktail communally.

The council hopes that by prohibiting outdoor drinking the city will attract a better quality of tourists. In the past tanked-up tourists were a sight to behold, vomiting in front of other visitors, and leaving rubbish, cigarette ends and beer bottles strewn around on the sand.

According to UK media, the major culprits are not British. Strange, but true. Austrians top the list as worst offenders, followed by Germans with the British in third place


Israel – If there’s no arak, let them drink cognac

The Finance Ministry said it will seek ways to re-examine alcohol prices, following an outcry over its decision to raise alcohol taxes six months earlier and higher than planned.

On 1 July 2013 many popular spirits, such as arak and vodka, saw price increases of 100 percent or more per bottle. For example,

1. Perfect Vodka Classic – was NIS 40 and is now NIS 104

2. Elite Arak – was NIS 37.50 and is now NIS 81.50

3. Azim Arak – was NIS 30 and is now NIS 60

Incidentally, imported whiskies and cognacs became cheaper.

Johnny Walker Gold – was NIS 955 and is now NIS 692

Remy Martin XO was NIS 1,871 and is now NIS 1,142

(NIS 100 = USD 28 / EUR 22)

The thinking behind the change in the alcohol excise regime was to tax products with a higher alcohol content at higher rates; another reason was to limit the “social damage” caused by alcohol - a reference to youth drinking.

Israeli media commented that for those who can afford big name imports, boozing will become less expensive, but for the poor guy, drinking arak “a l’chaim” will be a thing of the past. Read on


United Kingdom – SABMiller’s Graham Mackay receives GBP 14 million pay cheque

The convalescing former boss of SABMiller, Graham Mackay, is one of the best-paid bosses in Britain, UK media reported at the end of June 2013.

According to the company’s annual report, Mr Mackay’s total remuneration reached GBP 13.9 million (USD 21 million) and included shares that vested under long-term incentive plans. His total remuneration the previous year was GBP 5.9 million (USD 8.9 million).

Mr Mackay, who served as CEO for 13 years, was SABMiller’s Executive Chairman until April, when the company announced that he had undergone surgery for a brain tumour. Alan Clark, SABMiller’s former Chief Operating Officer, took over from him.

Last year Mr Mackay was paid GBP 2.8 million in basic salary, benefits and annual cash bonus, less than the GBP 3 million he was awarded for the previous 12 months. Read on

Sweden – SABMiller signs cooperation agreement with Kopparberg

If you don’t own one, buy one. This seems to be SABMiller’s policy when it comes to cider brands. In an effort to better compete against the popular Swedish cider brand Rekorderlig in Australia, SABMiller and the Swedish Kopparberg Brewery have entered into an agreement for the long term licensing of Kopparberg cider products in selected markets. The deal was announced on 18 June 2013.

As part of a broader deal with SABMiller, Australia’s brewer CUB (owned by SABMiller) has secured distribution of Kopparberg cider in Australia effective from 1 October this year. Read on


United Kingdom – Is it a beer? Is it a cider?

Cider may be a very lose definition applying to all kinds of alcoholic beverages. But it remains to be seen if it is as elastic to include Diageo’s Jeremiah Weed brand, which was recently been rebranded as a “Kentucky style cider brew”. What’s that? Exactly.

The Jeremiah Weed products have been around for a while. There’s a Root Brew with a ginger flavour and there’s a Sour Mash with a Bourbon flavour.

All of this sounds “beer-ish” and “whiskey-ish” to me, although these drinks were touted at their 2010 UK launch as “sweet tea-based liqueurs”. To make matters even more confusing, these products are to be considered ciders as of now because they are made from cider, spirits and flavourings. However, according to UK media, the liquid is the same despite the rebrand. Read on


United Kingdom – Let there be beer

Faced with falling beer sales in UK pubs, which were down by almost 50 million pints in the first quarter of 2013, compared to the same period last year, the UK’s major brewers decided to plough millions of pounds into a joint TV campaign which was launched at the end of June 2013.

The 60 second TV ad “Let there be beer” was first shown on 29 June 2013 and features people on the verge of a nervous breakdown: a party organizer who slaves away at the barbeque while his guests are frolicking about in the sun; a young man who meets the doting father of his beloved for the first time; and a woman who is inundated with a literal mountain of work on a late Friday afternoon. But just before their nerves snap, the tide turns for the better - thanks to a well-deserved beer.

The TV ad is part of a bigger campaign which is to run for three years and originated from a meeting between the CEOs of AB-InBev, Heineken, Molson Coors, Carlsberg and SABMiller 18 months ago in which they discussed how to reignite the beer category in key markets such as the UK.  Read on



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