Beer Monopoly





    International Reports











USA – Craft partisans flew “10 Barrel is Not Craft Beer’ banner over San Diego

Great excitement in San Diego, California, as protests against AB-InBev-owned 10 Barrel brewery were taking to the skies.

Coinciding with 10 Barrel’s grand opening of a brewpub on 27 May 2017, a “10 Barrel is Not Craft Beer” banner attached to a plane circled overhead during the party.

Local media say that it all started with a GoFundMe page started by a ‘San Diego Beer Fan’, now known as Richard Esparza, asking for USD 900 dollars in donations to rent a plane and fly the banner for three hours. Any extra funds would go to flying the banner longer, or again on a different day.

The campaign collected about USD 5,000 with some supporters giving as much as USD 200 each.

The Oregon-based craft brewer 10 Barrel was bought by AB-InBev in 2014. Instead of disposing of its brewpubs, AB-InBev decided to open a few more in in cities with notable craft-beer cultures and sales. Today it’s present in Portland, Boise (Idaho), Denver (Colorado) and San Diego.

San Diego’s craft beer community was not amused, calling the venture an intrusion. The city is home to over 130 craft breweries.

10 Barrel’s San Diego brewpub promises to be grand. Despite its name, it actually has a 20-barrel brewhouse. And it will have no guest taps. All 20 taps will be reserved for 10 Barrel beers, including some from 10 Barrel’s headquarters in Bend, Oregon.


UK – Marston’s buys Charles Wells brewery

Consolidation among the mid-tier UK brewers continues as the real ale producer Charles Wells is to sell off its Bedford brewery to Marston’s in a GBP 55 million (USD 70 million) deal. The transaction was reported on 18 May 2017.

Charles Wells’ Eagle brewery is home to the Bombardier, Courage and McEwan’s ale brands. The deal with Marston’s also includes UK distribution rights for Kirin Lager, Estrella Damm, Erdinger and Founders, as well as the exclusive global licence of the Young’s ale brand.

It does not include the chain of more than 200 Charles Wells pubs across the UK and France.

Charles Wells has been operating in Bedford since 1876, with the Eagle brewery built in 1976. Reportedly, it has a capacity to produce more than 1 million hl beer every year, although actual production would have been much lower with contract beers representing a sizeable amount. Read on


Australia – Craft brewers vote to exclude Big Brewers from their association

Australia’s small and independent brewers voted on 18 May 2017 to bar corporate brewers from membership of their trade body. What was the Craft Beer Industry Association will be renamed as the Independent Brewers Association.

Previously the association had allowed membership by companies such as Little Creatures, Malt Shovel (Lion) and Mountain Goat (Asahi), all of which are owned by Big Brewers.

Under the new rules, only craft brewers in which a large brewer has a stake of 20 percent or less are entitled to apply for membership

While Lion had been a member of the old organisation and publically resigned in March 2017 to pre-empt being kicked out, Asahi was never a member. Asahi acquired the Mountain Goat brewery in late 2015.

The chair of the newly-named Independent Brewers Association is

Peta Fielding, who is the chief executive of the Burleigh Brewing Company in Burleigh, a town south of Brisbane. Read on


USA – Coke needs to reinvent itself

In May 2017, James Quincey, an insider, took over as CEO of The Coca-Cola Company. He has his work cut out for him. Not only will he be going to sell Coca-Cola’s vast network of bottlers around the world, which will reduce Coke to a concentrates firm, the question for Mr Quincey is whether Coca-Cola can move beyond Coke. More and more governments see its sugar-laden products as a scourge.

It cannot have helped that in 2016, Americans were drinking more bottled water than soda. After decades-long strong growth, bottled water surpassed carbonated soft drinks to become the largest beverage category by volume in the US in 2016, according to research and consulting firm Beverage Marketing Corp. The shift comes amid widespread concerns about the health effects of sugary beverages. Read on


India – Out-on-bail beer tycoon VJ Mallya has stake in UB seized by investigators

India’s beer and spirits tycoon VJ Mallya may enjoy the spring in London, but back home the Enforcement Directorate (ED), India’s investigating agency for economic crimes, has taken possession of his stake in United Breweries (UB) and also stakes in other listed companies, media said on 22 May 2017.

According to reports, Mr Mallya owns around 8 percent directly of UB, India’s largest brewer, and another 22 percent through privately held firms. Mr Mallya also directly owns around 7 percent of UB Holdings, and also shares in United Spirits. In the case of UB, nearly the entire direct holding and a little over a quarter of the indirectly held stake are pledged with banks.

Rumour has it that Heineken had recently approached the banks with a proposal to buy out all of Mr Mallya’s shares in UB which are pledged with them. Heineken owns a little over 43 percent in UB, which makes the Kingfisher brand of beer. But, as the ED has now taken possession of Mr Mallya’s stake in UB, Heineken cannot buy it, pundits pointed out. Read on


South Africa – AB-InBev to invest in Africa

AB-InBev seems to have big plans for Africa as it will invest between USD 150 million and USD 200 million in two new production lines in South Africa this year.

In Nigeria, where AB-InBev operates SABMiller’s three breweries at capacity limits, plans are firming to build a new plant, rather than invest in expansions. This could be a costly undertaking, as sites can cost as much as several hundred million dollars, AB-InBev’s Zone President Ricardo Mr Tadeu said recently.


USA – Texas craft brewers lose fight over taproom bill

The sheer hypocrisy is baffling. On 22 May 2017, the Texas Senate passed a law which seeks to limit breweries that grow beyond a certain size or become owned by a larger beer company, from self-distributing. But who is to benefit? Only the distributors, not the craft brewers.

The craft brewers’ guild said as much in a statement published on Facebook shortly after the bill was passed: “This bill will put a ceiling on success for the 200+ craft breweries operating in Texas and will slow the future growth of what has become an important burgeoning manufacturing industry in our state.”

The bill will now head to the governor’s desk to be signed into law. Read on


South Africa – AB-InBev: No hops for independent US craft brewers

Paranoia or what? US craft brewers are complaining that AB-InBev is keeping them away from purchasing coveted South African hops.

The company has owned a South African hop farm since it merged with SABMiller in 2016. But this year, instead of the hops going to independent brewers who previously purchased them, nearly the entire yield is going to AB-InBev owned companies.

In May, AB-InBev released a statement, saying that the decision was based on a shortage of hops. There was no plan to shut out craft beer brewers. Read on


USA – Wicked Weed cancels its annual funky beer festival

Who would have thought that craft brewers would react to the sale of Wicked Weed to AB-InBev in early May with anger, rather than quiet resignation? Wicked Weed is AB-InBev’s tenth acquisition in the US, not its first.

However, this time the repercussions were significant. Two craft breweries publically stepped back from scheduled collaborations while the local brewers’ guild immediately suspended its membership.

Not enough, the outcry forced Wicked Weed to cancel its annual Funkatorium, a sour beer fest, at least for its scheduled date (8 July 2017) and its current form.

Originally launched in 2014, the Funkatorium found its footing by focussing on the less common styles of sour and wild beers. Hosted by Wicked Weed in its home town Asheville, it helped bring out breweries from across the country excited to show off their funky (read sour) creations.

This year’s Funkatorium was scheduled to feature over 70 breweries (admission at USD 100 per person) when Wicked Weed announced on 3 May 2017 that it had been acquired by AB-InBev. By all accounts, almost no one had seen this coming.

Part of the fallout was that breweries immediately began backing out of the festival. By 9 May, nearly 50 breweries had confirmed they would no longer attend. Read on


USA – SAP gets into licensing disputes with AB-InBev

The software giant SAP is suing AB-InBev for USD 600 million claiming it lost out in software licensing fees, media reported on 4 May 2017.

One week after a UK court had favoured SAP in a USD 70 million licensing dispute with drinks company Diageo, the software company took AB-InBev to arbitration in the US, this time seeking damages of over USD 600 million because AB-InBev allegedly “under-licensed”. That’s a funny term which means that an organisation does not have enough licenses to cover the software it has deployed. Read on


UK – Heineken launches purpose-led campaign to promote, well, tolerance

The brand unveiled its new Open Your World campaign at the end of April 2017, which challenges Brits to overcome prejudices and find common ground with others who have opposing views.

The campaign video shows a real-life social experiment that puts together two strangers divided by their beliefs meeting for the first time. The pairings include a feminist and anti-feminist, and an environmentalist with a climate change denier. The ad’s message? Tolerance does it. And two bottles of Heineken. Read on


UK – BrewDog on turning ten: more corporate than they like to appear

BrewDog celebrated ten years in the industry with a GBP 213 million (USD 275 million) investment by private equity firm TSG Consumer Partners. Selling a 22 percent stake to outside investors in April 2017 did not quite make BrewDog the pariah of craft brewing – a fate that befell Wicked Weed – but it still made commentators wonder whether BrewDog’s punk behaviour was not more image than essence.

Here’s the answer: Anyone who accepts an MBE from the Queen, as BrewDog did last year, cannot be anti-establishment deep down in their proud little Scottish hearts.

Never mind the crass language and anti-corporate stabs, BrewDog’s founders James Watt and Martin Dickie have always been shrewd businessmen. That’s how they built their beer empire. They would not have been able to gallivant around the world promoting themselves and their beers via an entertaining TV series on Esquire Network (2013 – 2015, three seasons, 27 episodes), if they hadn’t established a robust corporate organisation and hired a PR agency to look after the shop in their absence. Read on


Australia – Dermot O’Donnell celebrates 50 years in the brewing industry

With craft brewers these days garnering all the laurels for being creative, experimental, in short close to geniuses when it comes to designing beers, it’s easily forgotten that the much disparaged Big Brewers have only managed to stay big because their R&D folks too have come up with new beers which sync with consumers.

One such beer designer is Dermot O’Donnell, although he probably prefers the title brewer that he is by training.

Dermot has spent half a century in the brewing industry. He says he was fortunate enough to get a job in the 1960s working for a brewery and has since worked in all aspects of making beer, including research and marketing.

Melbourne born and bred, Dermot has brewed in Melbourne, Sydney and the UK, where he gained Master Brewer qualifications from the University of Birmingham and the Institute of Brewing and Distilling. He is also a Fellow of the IBD.

As he says, he returned to Melbourne and CUB in 1991 “for the footy, the golf and the world’s best beer.” Under Dermot’s leadership the CUB new product development team created Carlton Cold, Foster’s Light Ice, the iconic alcopop Sub Zero, Carlton Midstrength, and Carlton Sterling among others. Dermot also developed the brewing process for low carb beers such as Pure Blonde. He worked with the team at Cascade Brewery in Hobart to develop Cascade First Harvest and seasonal beers, including Summer Blonde, Springfest, Winter Warmer and Autumn Amber.

He is currently employed full time as International Master Brewer for Asahi Premium Beverages and has formulated and brewed the Cricketers Arms range of beers at the Laverton Brewery in Victoria.

That Dermot has worked for all the Big Brewers in Australia (except for Coopers) is at once testament to the rapid consolidation and globalisation of the industry, including its disruptive side-effects, and Dermot’s continuing relevance. His career shows that expertise and experience are closely related to age and staying power.

It’s no surprise that he is highly respected in Australia and Ashai was well-advised to honour Dermot with a big bash (termed luncheon) on 29 March in Melbourne. To mark the occasion, Dermot was presented with a framed list of all the beers he conceived. It was a huge and heavy thing.

Cheers to Dermot and may he come up with many more beers.


USA – Heineken buys remaining 50 percent stake in Lagunitas

No surprise, really. On 4 May 2017, Heineken completed a deal to take full control of Petaluma, California-based Lagunitas. Terms of the transaction were not disclosed.

Lagunitas also has a brewery in Chicago and plans a third in Azusa, Los Angeles, to be opened in 2018, that initially will produce more than 400,000 barrels (470,000 hl) beer a year.

With Heineken in tow, Lagunitas has opened taprooms in Seattle and Charleston, South Carolina, and bought stakes in three US breweries: Austin, Texas’ Independence Brewing; Santa Rosa, California’s Moonlight Brewing; and Southend Brewery & Smokehouse in Charleston, South Carolina, which was rebranded as a Lagunitas brewpub.

Lagunitas reportedly produced 910,000 barrels of beer (1.06 million hl) last year and expects to brew about 1 million barrels in 2017.

Heineken bought the first 50 percent stake in September 2015 for allegedly USD 500 million. Since that first deal occurred, Heineken has helped boost the international presence for Lagunitas, bringing the brand to new markets such as Latin America and Europe. Read on


USA – AB-InBev buys craft brewer Wicked Weed in Asheville

The latest craft brewery sale to AB-InBev has more of a fall-out than usual. Within hours of announcing the deal, Wicked Weed, located in North Carolina’s beer city Asheville, lost its voting rights in its craft beer guild, was publicly evicted from collaborations with two independent breweries and exiled from at least a handful of local craft beer shops and bars.

The deal reported on 3 May 2017 between AB-InBev’s High End division and Wicked Weed drew a lot of criticism although Wicked Weed’s co-founder Walt Dickinson tried very hard to contain the damage.

Our consumers are very, very passionate consumers,” Mr Dickinson was quoted as saying. “They feel passionate about the brand. I’m respectful of their feelings. It’s going to be our job going forward to win them back and show them that we’re the exact same people.”

However, craft beer lovers seem to take the sale of Wicked Weed harder than other recent deals, said Paul Gatza, Director of the Brewers Association. He believes that could be because of Wicked Weed’s reputation for creativity, particularly sour beers.

Founded in Asheville in 2012 by Walt and Luke Dickinson and their friends Ryan, Rick and Denise Guthy, the brewery had already become a local institution.

Media say that there has been interest from larger companies about an acquisition in recent years, but Wicked Weed didn’t reach out to The High End until January. Read on


USA – Taproom sales rise to over 2.7 million hl in 2016

No wonder, distributors across the US are rallying behind state legislators to limit taproom sales at craft breweries. As the Brewers Association reported at its annual industry gathering, the Craft Brewers Conference, which was held in Washington, DC, from 10 to 13 April 2017, “at the brewery sales” rose to around 2.3 million barrels (2.7 million hl) in 2016.

That’s roughly 10 percent of total craft beer sales which stood at 24.6 million barrels last year. Whether this estimate is correct or too low (in our view) is beside the point here.

Considering that craft brewers on average make between USD 700 and USD 800 (that’s USD 1,000 per barrel minus taxes and costs) on a barrel of beer in their taprooms, this easily adds up to nearly USD 1.8 billion in profits going straight to the brewers. Unsurprisingly distributors are not amused by this as a lot of beer and even more profits seem to pass them by each year.

Craft brewers are reluctant to disclose their taproom volumes. But any visit to Asheville, North Carolina, a city of 88,000 people that sports 22 local and three national craft breweries - Sierra Nevada, New Belgium and Oscar Blues – will drive home the point that they must be sizeable. And this is despite the fact that several don’t even do food. Instead, like New Belgium, they have an independently operated food truck parked outside where punters can buy their snacks to eat inside. Read on


Belgium – AB-InBev cautiously optimistic about Brazil

AB-InBev reported a sharp rise in net profit during its first quarter 2017 but said it continued to struggle in the US and Brazil, its two largest markets.

The maker of Budweiser, Stella Artois and Corona reported on 4 May 2017 that net profit surged to USD 1.41 billion in the three months to the end of March from USD 132 million a year earlier, when it was hit by funding costs linked to the purchase of rival SABMiller. Read on


Belgium – AB-InBev’s corporate culture criticised

That backfired. At AB-InBev’s AGM on 26 April 2017, a representative from NN, a large Dutch insurer, complained to AB-InBev’s board that at AB-InBev “we see little diversity, insufficiently independent directors and especially a bonus culture for employees and managers that are not in line with international standards.”

Countering the accusation, AB-InBev’s Chairman Olivier Goudet reportedly said that officially only three of the fifteen directors are independent. But after the takeover of SABMiller, Mr Goudet explained, three representatives joined the board [SABMiller’s largest shareholders] who are not part of AB-InBev’s original reference shareholders [the Belgians and the Brazilians]. Referring to Altria and the Santo Domingos, Mr Goudet said that “those are people with experiences in large companies. They are open-minded. I can assure you of that.” Read on


Denmark - Eastern Europe boosts first quarter for Carlsberg

A stronger ruble and consumers switching to more expensive beer options have benefited Carlsberg in the first quarter. As the Danish brewer reported on 4 May 2017, volumes in Russia and Ukraine declined 2 percent in the quarter, but net revenue in eastern Europe region grew 10 percent organically to DKK 2.3 billion (USD 340 million) thanks to consumers buying smaller but pricier smaller pack sizes following the ban on 1.5 litre PET bottles for beer.

In Carlsberg’s biggest market, western Europe, turnover went up 2 percent to DKK 7.8 billion (USD 1.15 billion) as volumes rose 2 percent. Analysts touted this as yet another indication that Old Europe is having a comeback as a stable beer market after years of decline. Read on


USA – Lyn Kruger to retire from the Siebel Institute

In a personal email sent out on 8 May 2017, Lyn Kruger said that after 21 ½ years of association with the Siebel Institute of Technology (the last 17 years as President and COO) she has decided that it is time for her to take retirement. Her last day at Siebel will be 31 May 2017.

Lyn wrote: “This is bittersweet for me as I will miss the friends and colleagues that I have worked with but I am looking forward to a new chapter in my life. I have had an amazing time with Siebel Institute and have had the honor and privilege of working with a truly amazing team.”

She added: “I have also had the honor of meeting and interacting with the very unique brewing industry professionals. It has been a pleasure to get to know and work with these awesome people.”

In order to ensure continuity John Hannafan, who has been working as Director of Education under her guidance for three years, has accepted to be acting-President until her replacement is appointed.


Brazil – Brewer Petropolis in sale speculation as owner is embroiled in corruption scandal

You bet that Heineken will jump at the opportunity should Brazil’s brewer Petropolis be sold. Analysts have suggested that increasing pressure on the Brazilian beer-to-beverage group could lead it to seek a merger with a global brewer in order to remain competitive.

The acquisition of Brasil Kirin by Heineken earlier this year is a cause of the growing pressure, as it raises Heineken’s beer market share from 9 percent to 17.4 percent, ahead of the 14.1 percent market share held by Petropolis, whilst market leader AmBev holds a 67 percent share.

Although patching up with Heineken would seem logical, as Petropolis operates six plants and owns its own distribution, making it a very attractive target, there are no indications that Petropolis is currently willing to sell.

Beer industry veteran Walter Faria bought Grupo Petropolis in 1998 and transformed it into one of Brazil’s largest beer-and-beverage companies. Mr Faria had previously worked as a distributor for Schincariol, a Brazilian brewer that Japan’s Kirin bought in 2012 and then sold to Heineken. Reportedly, Petropolis’ Itaipava beer is the country’s second-biggest brand behind Skol, which is brewed by AmBev.

However, never say never. According to rumour Mr Faria had already been in sales talks with SABMiller, following their distribution deal for Brazil which was signed in 2014. Read on


USA – Outlook for beer sales in 2017: down 0.5 percent or flat

Brewers will hope that Michael Bellas, Chairman and CEO of the Beverage Marketing Corporation, got his forecast wrong. At the Beverage Forum in Chicago (27 – 28 April 2017) he said that this year’s beer sales in the US could drop by 0.5 percent or, at best, stay flat.

Cider, which used to be a boom segment until a few years ago, could witness volume declines of between 4 and 6 percent, whereas spirits and wine would grow their sales.

This is largely in sync with recent consumption trends. Read on


USA – Import segment still larger than craft beer

Given the general consternation over craft beer’s slower growth – only 6 percent in volume in 2016 – the fact that the craft beer category was outgrown by imports – 7 percent – almost went unnoticed. What’s more, imports are still a bigger segment than craft.

According to data by the Brewers Association, 33 million barrels (38.6 million hl) of imported beers (17 percent market share) were sold in the US in 2016, compared with 24 million barrels of craft beer (or 12.3 percent). Read on


United Kingdom – Supermarket chain Tesco expands its craft beer range

Considering the skimpy margins at British retailers, it was no surprise really that Britain’s leading supermarket chain Tesco has increased its craft beer range by almost a third, to over 70 brands drawn from 30 UK and international brewers.

Tesco said that this was in response to consumer demand as sales of craft beer have risen by 40 percent. But one should not rule out Tesco’s pecuniary concerns either.

In order to create some space on its beer shelves, someone had to give way. Spectacularly, it was Britain’s major brewer Heineken, which saw the number of its listed SKUs fall from 53 to 22. Among them would have been brands whose margins were not as good as those enjoyed by craft beer. Read on


Netherlands – The end to Old Europe’s beer woes

The most remarkable news coming out of Old Europe, courtesy of Heineken, is this: our ageing population trend seems to have stalled. Or it does seem as if our demographics are improving and beer consumption, after years of decline, has bottomed out.

Reporting on its first quarter performance on 21 April 2017, Heineken said it saw an organic rise in beer volumes of 0.5 percent in Europe and 5.4 percent in Asia Pacific. Read on



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