June 2024

Diageo exits Nigeria and sells stake in Guinness Nigeria. It is joining other multinationals who are exiting or reducing their exposure. The West African nation is facing its worst cost-of-living crisis in decades. The Singapore-based Tolaram Group agreed to buy Diageo’s 58 percent majority stake in stock market-listed Guinness Nigeria for USD 70 million. Both parties will enter into long-term licence and royalty agreements for the Guinness brand and locally manufactured RTDs and mainstream spirits brands. Bernstein analyst Trevor Stirling asked: “Does this presage an eventual complete exit from beer in Africa?” Mr Stirling has a point: In 2022, Diageo sold both its Meta Abo brewery in Ethiopia and its unit Guinness Cameroon to France’s Castel.

Over in Ireland, C&C Group CEO quit amid accounting errors. Many wonder: What is going on at Irish drinks group C&C, owner of Tennent’s beer and Magners cider? CEO Patrick McMahon stepped down with immediate effect on 7 June, after the company was forced to make retrospective charges totalling EUR 17 million (USD 18 million) to previously reported financial statements. The same day C&C’s shares dropped nearly 8 percent.

It is quite unusual for a CEO to step down over “accounting errors”, finance experts say. For a company with annual revenues of more than EUR 1.6 billion (USD 1.7 billion), the so-called errors are within a range of what might be “normal” operations, like C&C’s apple contracts. More likely, C&C has deeper issues with strategy, and not least its Magners cider in the UK. The company took a EUR 125 million impairment charge on its C&C Brands business.

Boston Beer cannot stop making headlines. A few days after the leak of supposed merger talks between Boston Beer and Japan’s Suntory, which Suntory officially denied, The Wall Street Journal reported on 4 June, that Chairman Jim Koch had received a letter from the CEO of the Canadian cannabis firm Green Thumb Industries on 2 June, proposing a merger. In the letter (posted on X), Green Thumb’s CEO Ben Kovler pitched a vision for the combined company to create a “powerhouse of brands”. As analysts see it, the benefits of a merger would all go to Green Thumb. There are no synergies to speak of. Presently, cannabis firms cannot get a listing on a major US stock exchange because cannabis remains illegal under federal law. Merging with Boston Beer, Green Thumb probably assumes it can sneak into the New York Stock Exchange, where Boston Beer is listed, through the back door.

The Finish parliament has further dismantled its alcohol monopoly. A vote, on 5 June, permits supermarkets to sell fermented alcoholic beverages with up to 8 percent ABV, up from the previous limit of 5.5 percent ABV. The amended law came into effect on 10 June. The limit only applies to fermented beverages, though. Spirits-based canned cocktails, longdrinks and other RTDs already found on supermarket shelves will continue to have their alcohol content capped at 5.5 percent. The Federation of the Brewing and Soft Drinks Industry criticised the bill for distorting competition as it treats drinks with similar alcohol content differently, based on the production method. The retailers, on the other hand, are pleased. The one big looser will be Alko, the state-owned alcohol retailer. Because of the liberalisation of alcohol sales, shoppers will most likely only visit an Alko store now if they want to buy full-strength wines, champagnes, and spirits.

Australia’s Kirin-owned brewer Lion closes the Malt Shovel Brewery in August, bringing nearly four decades of brewing history on the site in Camperdown, an inner-city suburb of Sydney, to a close. Production will be shifted to other Lion-owned breweries. Lion’s managing director, James Brindley, called it a difficult decision to make, and said it came amid declining beer sales and the increasing cost of making and selling beer. “It’s been a tough time for all players in the Australian beer industry – with overall volumes declining by 1 million hl since 2019, continuing a long-term decline in the consumption of beer,” he added.

Lion is not alone in shuttering the homes of craft beer brands. In May, Asahi, the owner of brewer CUB, closed the Matilda Bay brewpub in Healesville near Melbourne, after reviving the dormant brand in 2019 with the help of Phil Sexton, one of the founders of Matilda Bay in 1983.

German Warsteiner brewery pivots towards contract brewing. But is this the way forward? Warsteiner seeks to expand its contract brewing business this year. It already brews the Polish beer brand Tyskie (Asahi) at its main plant in Warstein and hopes to add some more. Warsteiner, which is privately-owned by Haus Cramer Group, thus concedes that its brewery is at best utilising 30 percent of its capacity with its core brands. In Warstein, where 6.5 million hl beer of the eponymous brand were brewed some 30 years ago, Haus Cramer is desperately looking to increase production, given that its own brand has since tumbled to 2 million hl (2023), according to estimates. Its two other breweries in Herford (200,000 hl) and Paderborn (600,000 hl) are also underutilised, which must be a strain on profitability (if there is any). Over the past three decades, German beer sales have declined from 115 million hl to below 85 million hl. 

Hop firm BarthHaas estimates that the beer output of the world’s 40 largest breweries fell by 2.2 percent to around 1.62 billion hl in 2023. Still, they controlled a staggering 86 percent of global beer production. It is also striking how concentrated global beer production is: The top 3 brewers alone – AB-InBev, Heineken and China Resources Snow Breweries – account for more than half of the top 40’s output.

Anchor brewery was bought by Hamdi Ulukaya, the founder of yoghurt brand Chibani. After Anchor’s previous owner, Japan’s Sapporo, shut down the 127-year-old but lossmaking brewery in July 2023, the plan was to auction Anchor’s assets in three lots: the intellectual property (brands etc), the real estate and the brewery kit. But the auction dragged on as other potential buyers – local investors and a former workers’ co-op among them – bowed out. In the end, Mr Ulukaya’s family office took over the whole lot for an undisclosed sum. Observers say he could have paid up to USD 50 million since the real estate alone was valued at USD 40 million.

Mr Ulukaya hopes to restart beer production as quickly as possible, to be ready when Anchor re-launches its popular Christmas ale, aka Our Special Ale, for the 2024 holidays, which was intended to be the 50th anniversary of that iconic brand.

Carlsberg, Heineken and AB-InBev set up India’s brewers association. Exasperated with India’s byzantine regulations and bureaucracies, United Breweries (controlled by Heineken), AB-InBev and Carlsberg, who between them account for about 85 percent of the country’s beer sales, established the Brewers Association of India. Formed in partnership with the World Brewing Alliance (a global industry body), their purpose is “to grow the beer category in India and to drive innovation, moderation, and sustainability”. The new body, headed by Director General Vinod Giri, is open to all brewers in the country.

The association’s first action has been to lobby the national government in Delhi about how beer is taxed in India, a factor which has caused Indian beer consumption to stagnate at around 30 million hl a year (or 2 litres per capita), despite its vast growth potential (1.4 billion people).

AB-InBev has begun brewing its flagship brand Corona at its Hasseröder brewery in Germany. Apparently, the brand’s estimated sales of 340 000 hl in Germany (2023) warranted the relocation from Leuven, Belgium. The momentous decision – AB-InBev was granted an exemption from the Purity Law – hardly raised eyebrows. Hasseröder’s staff will be relieved, though. Together with colleagues from AB-InBev’s three other German sites they had protested outside Beck’s in Bremen against what they regard as AB-InBev’s wilful neglect of its German brands. Last year, AB-InBev axed some 60 jobs at the alt beer brewery Diebels, which had seen sales drop to 250,000 hl, from 1.6 million hl during AB-InBev’s two decades of ownership. The popular value brand Hasseröder has also witnessed a decline to 1.6 million hl beer (2023), from 2.3 million hl in 2002 when it was acquired. Take it as a sign of AB-InBev’s dissatisfaction with its German business that it sought to sell the two breweries in 2017 – an attempt which failed spectacularly in 2019. No doubt, the newfound Corona volume will improve AB-InBev’s German balance sheet. But will it brighten the overall mood?

Heineken shutters Lagunitas taproom and brewery in Chicago. A decade after Lagunitas’ founder Tony McGee opened the Chicago brewery and taproom, all production will return to Lagunitas’ original brewery in Petaluma, California, on 1 August. According to the website Good Beer Hunting, Lagunitas saw beer volumes decline by 20 percent between 2019 and 2022, from 1.07 million barrels to 860,000 barrels. In 2023, the company laid off roughly 20 percent of sales staff, including longtime employees.

That was not what founder Tony McGee had envisioned in 2014. The Chicago brewhouse could produce more than 500,000 barrels of beer per year, and had a capacity to brew and ship 1 million barrels a year. In 2015, Heineken purchased a 50 percent stake in the company for an estimated USD 500 million, and in 2017, it acquired the remaining shares of Lagunitas.