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POSTED MARCH 2017

Australia – The Bible, marriage equality, and Coopers beer

Australian media did not quite know what to make of this: two Liberal MPs discussing marriage equality over a couple of Coopers Premium Light beers while having an open Bible and a TV camera in front of them. The debate was sponsored by the Bible Society Australia and Coopers Brewery.

Titled “Keeping it Light”, the video is part of a joint campaign between the Adelaide brewer and Bible Society Australia “to reach even more Australians with God’s word” and can be viewed at https://vimeo.com/207564550.

Shot in the grounds of Canberra’s Parliament House, it shows Tim Wilson, an openly gay agnostic, and Andrew Hastie, a Christian conservative, debating marriage equality while drinking Coopers Premium Light beer.

The Liberal Party is one of the two major Australian political parties and currently in a coalition government under Prime Minister Malcolm Turnbull. In November 2016 its proposal to hold a plebiscite on legalising same-sex marriage was defeated in the upper house of parliament on the grounds that a plebiscite would be expensive and could unleash a divisive campaign.

In most Australian states same-sex couples can have civil unions or registered relationships but they are not considered married under national law.

Opinion polls indicate that most Australians support same-sex marriage.

The proposal’s defeat in the senate means the issue will be taken off the agenda at least until the next term of parliament.

Media said on 10 March 2017 that, while the video is meant to be light-hearted, with Mr Hastie and Mr Wilson joking about the Bible’s message of loving thy neighbour, it is unusual to see MPs promote a cause with such a heavy commercial influence.

What do they mean? Is it taboo for a brewery to engage in political debate or sponsor an NGO while it is ok to write a cheque for political parties? Read on

 

United Kingdom – All those sin taxes …

It was a day of reckoning for alcohol and soft drinks producers. On 8 March 2017 the UK government said in its Spring Budget that the traditional “sin taxes” on booze and cigarettes would not rise, but a new one is being introduced in the form of the sugar tax.

It is one of the few flagship policies of former Prime Minister David Cameron continued by his successor Theresa May.

Producers and importers of sugar-filled soft drinks will see a tax hike in April 2018 in an attempt to combat rising levels of obesity. Proceeds from the sugar tax will go to the Department for Education (DfE) for school sports. The DfE is expected to receive an extra GBP 1 billion (USD 1.2 billion) from the sugar tax, provided companies do not reduce the amount of sugar in their products to avoid the tax – which they just might.

More imminently and in line with previously planned up-ratings in duty on alcohol, from Monday 13 March 2017 a pint of beer will cost GBP 0.02 more. A bottle of whisky will go up by GBP 0.36, while a bottle of gin will rise by GBP 0.34. Cider will be GBP 0.01 more and still wine GBP 0.10 more. Read on

 

Turkey – Efes’ 2016 results in line with guidance

In the end, 2016 did not turn out quite as bad as feared for Turkish beer and soft drink company Anadolu Efes. Thanks to reporting consolidated sales for both beer and soft drinks, Efes achieved 1.5 percent sales volume growth and 2.1 percent revenue growth in 2016; however, EBITDA margin was flattish.

2016 was especially tough for Efes’ Turkey beer operations. Because of the political and economic situation, Turkish beer sales dropped 10 percent to 6 million hl, while revenues declined 3.1 percent. Read on

 

United Kingdom – Heineken introduces two gateway craft beers

Good tidings that Heineken’s newly launched craft beers will live up to expectations. The world’s number two brewer in March 2017 introduced a Bavarian-style Pilsner and American-style IPA to the market under its Maltsmiths Brewery label.

Heineken says research has revealed that 75 percent of beer drinkers have never tried a “craft beer” and that its new offerings will draw “curious beer drinkers into the category”. There are over 1,500 small and craft breweries in the UK.


The beers were developed at the Caledonian Brewery in Edinburgh, Scotland, by “maltsmiths” (not just brewers!), Heineken says. Unlike proper craft beers, these two brands are 4.6% ABV, probably because of excise savings, and are available in 330 ml cans and bottles, as well as on draught. Read on

 

Switzerland – Envy alert: Beer investors among top 10 richest

These days about 7,000 people with a personal wealth of over CHF 30 million (USD 30 million) each call Switzerland home, media reported on 7 March 2017. That’s an increase of more than 5 percent over 2015.

As says the real estate company Knight Frank in its recent Wealth Report, the super-rich like to live in two cities: Geneva (2,500) and Zürich (2,300).

According to “Bilanz”, a business magazine, Jorge Lemann “who made AB-InBev great” ranked second with an estimated wealth of CHF 28 billion. Charlene de Carvalho-Heineken, who controls the Dutch brewer Heineken, ranked eighth thanks to her wealth having risen to CHF 12 billion.

Incidentally, the richest people in Switzerland are the sons of IKEA’s Swedish founder Ingvar Kamprad (CHF 46 billion).

 

Canada – Craft beer association launches scholarships for women

To mark International Women’s day on 8 March 2017, the Ontario Craft Brewers association (OCB) announced up to six scholarships for women to complete Level 1 courses in the internationally recognised Cicerone Certification Programme.

Set up by Ray Daniels in 2007, the Cicerone programmes train beer sommeliers. The Level 1 course has no prerequisites and only costs USD 69 for the exam, which can be taken online. Read on

 

China – After years of decline the beer market looks far from recovering

Chinese beer production fell for a third straight year in 2016. The tardiness of brewers to pursue efficiency gains has stirred speculation that major players may combine.

Beer output dropped to 450 million hl in 2016, according to the National Bureau of Statistics, down 4.4 percent from the previous year. In fact, beer output is down 50 million hl over 2013, the year it peaked.

Some within the industry are optimistic that this year will be better. But brewers still confront headwinds. They have identified (truthfully or not) slower economic growth, the official crackdown on bureaucrats’ extravagance and bad weather. Whatever the reasons, the demand for beer has been in decline.

As if this was not bad enough, domestic beer companies have yet to resolve issues stemming from acquisitions dating to the prior decade. China once had an estimated 800 or more breweries. But since 2000, large players like market leader China Resources Beer and second-ranked Tsingtao Brewery have swallowed up many smaller ones, leaving five companies to control nearly 80 percent of the market. Read on

 

China – AB-InBev buys stake in Shanghai’s Boxing Cat brewery

At first it was a rumour in Chinese media only and as AB-InBev was not available for comment to Brauwelt International, we refused to carry it. But as AB-InBev eventually confirmed it to Forbes magazine, we knew it had to be true.

In early March 2017, AB-InBev bought a stake in Shanghai’s craft brewer Boxing Cat for an undisclosed sum. Founded by the restaurateur Kelley Lee and business partner Lee Tseng in 2008, Boxing Cat’s success has seen two more venues open and its beers on taps in many bars around the city. 

Boxing Cat co-founder Ms Lee explained her excitement over the acquisition to local blogs, saying that, with the access to the “incredible resources” that come with AB-InBev, Boxing Cat will be able to continue to spread the gospel of good quality Chinese craft beer.

Following the acquisition, AB-InBev will assume all brewing operations and management of Boxing Cat’s three venues, it was reported. Read on

 

USA – BrewDog to open crowdfunded beer hotel in Columbus

Not to be outdone by California’s craft brewer Stone and its venturing into to hotel industry, Scottish brewer BrewDog wants to open the world’s first crowdfunded craft beer hotel in Columbus, Ohio.

Just imagine, the USD 7.0 million hotel, appropriately called The DogHouse, will feature 50 rooms, a craft beer spa with beer-based treatments, beer taps in the bedrooms, a hot tub filled with Punk IPA beer, and a beer fridge in the shower.

Fortunately, beer-infused three-course breakfasts, lunches, and dinners will also be served, paired with artisanal craft beers.

BrewDog plans to part fund the hotel through a crowdfunding campaign on Indiegogo. The aim is to raise USD 75,000 (or 1 percent of the total outlay) by early April 2017.

It was reported that those who back the project will get free nights at the hotel, and will exclusively receive the first five releases from the sour beer brewery, which the project will also fund. Those who contribute over USD 30,000 will also be able to host an all-night event, such as a wedding or a birthday, at the hotel. Read on

 

Belgium – Brazil brews trouble for AB-InBev

AB-InBev has had a poor fourth quarter 2016. The world’s number one brewer missed analysts’ forecasts for sales, underlying profits and organic volume. In the fourth quarter, volumes dropped 3.3 percent, revenue was flat, while EBITDA declined 3.6 percent compared with the fourth quarter 2015. This was reported on 2 March 2017.

For the full year AB-InBev reported a volume drop of 2.0 percent to 500 million hl, a slight revenue increase of 2.4 percent to USD 45.5 billion, yet a decrease in EBITDA of 0.1 percent to USD 16.7 billion.

Analysts were not amused. This was the first time in many years that AB-InBev had failed to achieve a hike in EBITDA, its chosen measure of success. Read on

 

Germany – Craft beer festival in Munich: take six

Perhaps Munich’s craft beer lovers felt the seven-year itch one year earlier than usual. Or why did visitors of Braukunst live 2017, the annual craft beer festival that was held in Munich for the sixth time from 10 to 12 February, get the impresson that there was less of a throng than in previous years? Still, there were about 100 exhibitors and reportedly 9,000 visitors (the same number as in 2016).

To mark the occasion, Stone from Berlin had brewed a collab beer for the festival, the German Welde brewery had brought along a rye lager, called “First tRye” produced in collaboration the Dutch Jopen brewery (adding rye to a top-fermenting beer is ok with the Reinheitsgebot, a rye lager is not) and there was a tasting of really rare brews.

But the excitement of previous years, when exhibitors and visitors could indulge in the feeling of being at the forefront of something massive and new, was seemingly gone. This did underline the fact that real craft is still a very small niche in Germany.

Could it be that the self-afflicted curse of craft has already befallen this gem of a beer festival: innovate or bromide?

 

USA – Sam Adams hit by increased competition in craft beer segment

The Boston Beer Company, which ranks as the number two craft brewer in the US, saw volumes drop 6 percent in 2016 over 2015. This reflected lower sales for its flagship brand Samuel Adams, and seasonal Samuel Adams products, as well as its hard cider Angry Orchard.

Net revenue declined to USD 906 million from USD 960 million in 2015, the company reported on 22 February 2017, with operating profits (EBIT) falling to USD 138 million from USD 156 million in 2015.

Boston Beer believes that its volume decrease is due to too much competition among craft brewers. Commenting on a shakedown in the craft brewing industry, Jim Koch, the founder and chairman of Boston Beer, also suggested that the slowdown has come sooner than expected.

The shakeout is going to take a couple of years. And we intend to continue appropriate levels of support for Sam Adams, so that we emerge from this transition period with the strongest - or one of the strongest - brands in the craft industry,” he said. Read on

 

United Kingdom – Kraft’s botched bid for Unilever: it does not hurt to ask

Were investors Lemann and Buffett only testing the water? On 17 February 2017, their giant company Kraft Heinz made a surprise USD 143 billion bid for rival Unilever, only to revoke it a few days later.

Mr Buffett’s Berkshire Hathaway owns about 27 percent of Kraft Heinz, and Mr Lemann’s private equity firm 3G holds about 24 percent. Mr Lemann is a major shareholder of AB-InBev.

While there has been a persistent rumour that Mr Lemann would strike another headline-making bid this year, few industry watchers had Unilever on the radar.

Not only is Unilever (USD 131 billion) bigger than Kraft (USD 113 billion) in terms of market capitalisation, it is also a strange breed of a corporation, consisting of a British and a Dutch company with separate listings, which were amalgamated (not combined) in 1929 for tax purposes.

Still, if successful, Kraft Heinz’s approach would have created the second-largest packaged foods business globally after Nestle.

Although Unilever immediately responded by saying “no” and “never”, it only won a six-month reprieve. That’s how long Kraft is prevented from making another bid under the UK’s takeover rules. Read on

 

USA – Boston Beer’s CEO Martin Roper to retire

After 17 years at the helm of brewer Boston Beer, President and CEO Martin Roper has announced he will retire in 2018. A search committee for his replacement has already been convened and the company has hired recruiting firm Korn Ferry International to conduct the search. The move comes as no surprise to the company’s board of directors, who have known for over a year that Mr Roper would be looking to step down. Read on

 

United Kingdom – Beer sales down one percent in 2016

Sales of beer declined slightly in 2016, prompting renewed calls from the industry for a one penny cut in beer duty in the Budget on 8 March 2017. The drop still means that 78 million fewer pints of beer were sold in 2016 compared with the previous year, according to figures released by the British Beer & Pub Association (BBPA), an industry body.

Overall, however, sales in the past three years have stabilised after years of sharp decline, says the BBPA, a trend which was greatly helped by three cuts of one penny each in beer duty from 2013 to 2015, and a freeze last year. Read on

 

USA – Walmart’s craft beer “wholesale fiction”?

Why did he bother? In early February 2017, news spread quickly on social media that Matthew Adam of Cincinnati had filed a lawsuit against retailer Walmart, alleging its craft beers under the Trouble Brewing label fail to meet the qualifications for craft beer.

Defendant’s craft beer has never been a ‘craft beer’, nor has it been produced by a craft brewery,” the lawsuit says. “Rather, it is a wholesale fiction created by the defendant that was designed to deceive consumers into purchasing the craft beer at a higher, inflated price.”

Reportedly, Mr Adams requests an injunction to prevent Walmart from advertising its brews as craft beer and that the company pay unspecified punitive damages.

In our view, there are two bizarre aspects to this story. For one, why did Mr Adam wait until 2017 to file his suit? After all, the beers have been around for about year and are stocked at more than 3,000 Walmart stores in 45 states across the US. Read on

 

United Kingdom – Heineken’s takeover of pubs faces regulator’s scrutiny

Heineken’s acquisition of almost 2,000 pubs from British chain Punch Taverns is to be investigated by the UK’s competition watchdog, it was reported on 16 February 2017.

Late last year, Heineken agreed a deal alongside investment firm Patron Capital that would see them buy Punch for GBP 403 million (USD 502 million). Heineken is contributing GBP 305 million for 1,900 pubs out of the 3,350-strong Punch Taverns estate. Heineken already owns about 1,000 leased and tenanted pubs throughout Britain.

The deal, which has received approval from Punch’s shareholders, would make the brewer the UK’s third-largest pub group, after Enterprise Inns (5,000) and Greene King (3,000).

But the move will now be scrutinised by the Competition and Markets Authority (CMA), which will “assess whether the deal could reduce competition and choice for customers”. The first phase of the investigation is scheduled to last until 24 April 2017. Read on

 

Netherlands – Heineken reports revenue and profit growth in 2016

Dutch brewer Heineken on 14 February 2017 reported a rise in full-year operating earnings and revenue and said it will continue to improve profit margins this year, despite volatile markets and unfavourable currency movements. The world’s number two brewer said operating profit was EUR 3.54 billion (USD 3.75 billion) in 2016, a 5 percent increase compared with the previous year.

Revenue grew 1.4 percent to EUR 20.79 billion, largely driven by strong sales in Mexico and Vietnam. Net profit was EUR 1.54 billion, a 19 percent drop from the previous year when results were lifted by an asset sale. Read on


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