August 2021

Carlsberg in court again over collusion in German beer market. This is turning into a never-ending story. On 27 August 2021, Carlsberg will be dragged to court again over price fixing which occurred between 2006 and 2008. The Federal Cartel Office, in early 2014, imposed fines totalling EUR 338 million (USD 450 million) on several breweries, industry associations and senior managers. Most settled with the Cartel Office and paid their fines. Only Carlsberg objected to the fine and its case went to court in 2018. Surprise, surprise: Proceedings were discontinued in April 2019 due to the statute of limitations. In 2020, Germany’s highest court overturned this decision. Therefore, the case is being tried again.

Germany’s Dr Oetker Group will be split in two. Beer and bubbly to go their separate ways.All families quarrel. But none more viciously if a business is involved. The five children from the first and second marriage of Rudolf-August Oetker, grandson of the eponymous founder of a custard powder dynasty, and the three offspring from his third have been at each other’s throats for years. In July, they finally agreed to split the vast conglomerate of 440 companies, which includes interests in food (eg frozen pizza), beer, sparkling wine, hotels, chemicals and logistics, into two. The group, with sales of around EUR 7.3 billion (USD 8.6 billion) in 2020 and 36,000 employees, will be divided across family lines. The siblings from Mr Oetker’s first and second marriage will keep control of the food business, including the Radeberger Group of breweries (eg Radeberger, Jever, Clausthaler), Germany’s largest. The beer group sold 11 million hl beer in 2020, a loss of 4.5 percent over 2019.

What to do with a business unit that spoils your results? Get rid of it. This is what PepsiCo did by selling a 61 percent stake in its juice brands, which includes Tropicana and Naked, to the private equity firm PAI Partners for USD 3.3 billion. The sale is part of the company’s broader efforts to focus on faster-growing beverages as customers increasingly ditch sugary drinks. This was reported on 3 August 2021.

Budget tipplers beware: Brewers and drinks companies want you to trade up. The number two brewer in the US, Molson Coors, said on 30 July 2021 that it will slash 11 economy brands from its portfolio, representing about 100 SKUs. It is following in the footsteps of Constellation Brands, which in 2019 sold a large portfolio of economy wine brands to Gallo winery for more than USD 1 billion. Already in 2018, leading drinks company Diageo had sold several lower-tier spirits brands to distiller Sazerac for USD 550 million.

The reporting season was upon us. Drinks group Diageo beat expectations for full-year sales. On 29 July 2021 it reported net sales of GBP 12.7 billion (USD 17.5 billion) in the year to the end of June, up 8.3 percent on the previous year, but still slightly below 2019 sales which stood at GBP 12.8 billion. It has been a tough year for Diageo, not least because of the shuttering of bars in its second half. Although the strength of the group’s brands means it was able to recoup some of its losses through a huge increase in supermarket trade in some key markets, its beer sales continued to be affected.

Looks like Europe’s spirits firm emerged from covid crisis stronger than expected. Diageo, LVMH and Davide Campari Milano ended July 2021 with their shares at record highs. It must have been champagne all around among investors.

Not so at Boston Beer, whereinvestors are given to violent mood swings. After hitting record stock prices on high hopes for hard seltzers, Boston Beer’s shares dropped 18 percent on 22 July 2021, following the release of the brewer’s second quarter results, which fell short of analysts’ expectations, and the company admitted it had “overestimated the growth of the hard seltzer category”.

CEO Michel Doukeris must have been pleased. AB-InBev drove second-quarter turnover to above pre-pandemic levels and sharply boosted profit as drinkers took advantage of eased restrictions in its major markets. The brewer reported a turnover of USD 13.5 billion, a 27.6 percent jump on an organic basis over the second quarter 2020. It was also up 3.2 percent from 2019.

Dutch Heineken said on 2 August 2021 that its first-half turnover grew by 14 percent to EUR 12 billion (USD 14 billion). But it is still trailing more than 10 percent behind the first half of 2019. Heineken sold almost 10 percent more beer in the first half than a year ago, and CEO Dolf van den Brink said the company would seek to be “assertive” on pricing, having achieved nearly 10 percent higher prices per hl beer in the Americas and Africa/Middle East in the first half. During Heineken’s investor call Mr van den Brink also explained the recent turnaround of its Brazilian business through a portfolio shift and a route to market shift.

There were three takeaways from Coca-Cola’s second quarter 2021, when net turnover grew 42 percent to USD 10 billion: The on-premise, which was pummelled last year, has rebounded. Its core brands performed strongly and its efficient distribution networks played an important role. CEO James Quincey said the Topo Chico hard seltzer brand was growing nicely around the world, but that it makes a big difference to sales if the category exists or does not exist in any particular country.

Things are far from good in Germany, though. Warsteiner Brewery reported a 9.1 percent decline in domestic sales in the first half of 2021, compared to the same period in 2020, when the company had already recorded a decline of 16.4 percent. The brewery did not provide any volume figures. However, observers estimate that sales have dropped to below 900,000 hl beer in the first half of 2021. Warsteiner ranked 7th among Germany’s major beer brands in 2020.

German beer sales were down 2.7 percent or 1.1 million hl in the first half of 2021 compared to the same period in 2020. As the Federal Statistical Office (Destatis) reported on 30 July 2021, German breweries sold around 42 million hl beer in the first half of 2021.