May 2022

As if brewers were not suffering enough from supply chain disruptions, shortages and labour markets swept clean, the UK is now reportedly also facing the threat of running out of beer – because of industrial action. More than 200 staff at the Budweiser Brewing Group’s Samlesbury site near Preston in Lancashire are poised to walk out for two days a week from 6 June, having rejected a pay offer of 3 percent for 2022 to 2023 as inadequate. Faced with a cost-of-living crisis and inflation soaring to 9 percent in April, many Britons have cut back on meat and alcohol. The usually sober governor of the Bank of England has warned of “apocalyptic” food prices. If a central banker has to resort to a gonzo superlative, how are brewers to put into words what they are currently going through?

St. Joseph’s Abbey, Spencer Massachusetts (Photo by John Phelan, CC BY-SA 3.0)

The only Trappist abbey brewery in the US is closing. Rumours have been flying around for some time, but on 14 May it became official: the award-winning Spencer Brewery in central Massachusetts is ceasing production after an eight-year run as the first and only Trappist brewery outside Europe.

The monks of St. Joseph’s Abbey are a community of Catholic Cistercian monks who first took root in Spencer, Massachusetts, in 1950. Like other Trappiest abbeys in Belgium, they sought to bring the monastic beer brewing tradition to the US as a means of supporting the operations of the abbey and its charitable works. Before brewing, the monks relied on selling jams, jellies, and marmalades to support the abbey.

After years of preparation, the monks opened the 40,000-barrel Spencer Brewery within the monastery in 2014, to much fanfare as they became the only certified Trappist brewery operating in the United States. Of the 14 Trappist breweries certified to carry the trademark, seven resided in Belgium and one each in Austria, France, Italy, the Netherlands, Spain, the United Kingdom, and the United States.

Spencer’s beer sales would never rise too sharply, though, hovering around 4,000 barrels annually, as the brewery seemed to struggle with marketing itself in a highly competitive US beer market.

Also, in the US, Charlotte’s craft brewer Sycamore and San Diego’s Stone have agreed to end their trademark infringement lawsuit over the phrase “Keep It Juicy”, according to a 13 May court filing. Both Stone and Sycamore Brewing walked away without paying damages but will need to pay their own attorneys’ fees.

According to the newssite, the settlement came shortly after Stone filed a countersuit against Sycamore, calling its legal action a “sham”. Stone claimed that Sycamore neither disclosed to the court – nor to the US Patent and Trademark Office – that Two Roads Brewing of Connecticut has printed “Keep It Juicy” on its IPA beer cans since 2017. Blue Earl Brewing in Delaware and Blue Note Brewing in California also used “Keep It Juicy” in promotions.

That was three years before Sycamore applied to register the tagline as a trademark, which was granted in August 2021. In Stone’s eyes, this raises serious doubts over the validity of Sycamore’s trademark.

As part of the settlement, a nationwide injunction banning Stone from using “Keep It Juicy” was revoked and dissolved. A North Carolina federal judge had granted the preliminary injunction on 21 April and ordered Stone to “sticker over” the phrase on beer boxes already in the marketplace.

The website commented that the original injunction makes it clear that Stone infringed upon a trademark even though no compensation was paid to Sycamore. What makes this story noteworthy, added, is that “Stone Brewing has, for years, represented itself as a craft brewer ready to take on the big breweries on matters of intellectual property, as though it were a paragon of the industry. Instead, Stone Brewery appears to have turned to both trademark trolling and trademark infringer of smaller breweries.” Stone has incurred hundreds of thousands of dollars in legal expenses.

Moving further into Beyond Beer, Molson Coors and AB-InBev have branched out into alternative milk in the United States. Molson Coors’ new Golden Wing barley milk brand joins AB-InBev-backed counterpart Take Two, as they seek growth in the booming alternative milk segment. Where AB-InBev’s presence on store shelves right now is mostly in the form of its investment in start-up Take Two, which is part of ZX Ventures, Molson Coors took the route of developing its own barley milk brand, Golden Wing. Unlike Take Two’s product, which upcycles brewers’ spent grain, Golden Wing uses new grains sourced specifically for the product, media say.

The plant-based milk segment has evolved over time to include different ingredients, beginning with soy, and then moving into nuts followed by oats. This opened the door to other grain-based versions. More than USD 3 billion in revenue are generated annually by milk substitutes in the US, reports. Almond milk leads in sales, followed by oat milk, soy milk, and coconut milk. A variety of other plant-based milks, such as pea, cashew, rice milk, and others, makes up the rest of the US market. Soy milk is expected to see a decline in sales.

Carlsberg’s patent on malting barley upheld. Danish brewer Carlsberg may continue to claim its patent EP2575433 on malting barley. The European Patent Office, on 10 May, overruled an objection submitted by the Munich-based NGO “No patents on seeds”. The NGO called the decision “incomprehensible” and said it will lodge a complaint against the decision. Its chief, Christoph Then, criticized the decision as it will in fact treat a random event, such as the natural mutation of plants, as a technical invention. Last year already, an objection against another Carlsberg patent on malting barley was dismissed. In November last year, however, Carlsberg voluntarily relinquished a further patent.

BrewDog is making headline news again. Not so much for its latest scheme, which will see half of the profit from its bars being shared with its 1,500 bar workers, who can expect to receive an extra GBP 3,000 to GBP 5,000 (USD 6,150) a year in cash. It was BrewDog’s CEO James Watt, who brought a private prosecution against a woman. Mr Watt accused the model and influencer Emili Ziem, 29, at Westminster Magistrates’ Court of fraud and malicious communication.

He claims she provided false information about who was responsible for “malicious” comments made about him on social media last year, when BrewDog was accused by ex-employees of fostering a “toxic culture”. Lawyers for Ms Ziem, a Brazilian and Japanese citizen, indicated that she is preparing to contest the claims and will not comment on the case while proceedings are on-going. She was granted bail with no restrictions.

Mr Watt seems to have decided to play hardball with the media, too. The website, which also reported on the case against Ms Ziem, received a “Cease and Desist” letter from his lawyers. The article had to be removed from the website. But the website seems to run it – for the time being, at least.

(Photo by Sandro Cenni on Unsplash)

Dutch brewer Heineken will create more than 700 jobs across the UK as part of a GBP 42 million (USD 52 million) investment scheme into its pub unit. The brewer also said that 660 venues – or one in four of its Star Pubs & Bars pub company – will be upgraded. Although the Bank of England warned on 7 May that the UK economy was heading for a recession caused by the cost-of-living crisis, with inflation set to top 10 percent in the autumn, the hospitality industry expects a strong recovery this year after two difficult pandemic-ridden years.

Most of the money Heineken will spend on suburban pubs and those on high streets near residential neighbourhoods – think of all those people working remotely. The group also plans to spruce up outdoor seating areas amid a continued increase in demand for alfresco drinking and dining – the UK’s summer weather permitting.

(Photo by James Kern on Unsplash)

Take it as a sign of the times that environmental concerns now trump business plans. US brewer Constellation Brands is getting ready to build a brewery in Mexico’s Veracruz. The company will invest USD 1.3 billion in the southeastern Mexican state over the next four years. The investment is part of the USD 5.5 billion it will spend on its Mexican plants over the same period.

The new plant will add between 25 million and 30 million hl of brewing capacity. Constellation will install equipment originally designed for Mexicali, where Constellation had planned to build a similarly sized brewery to serve its most important market, California. Construction work was at an advanced stage, when NGOs complained that the area is severely water-stressed, and that the new brewery would aggravate the situation.

Therefore, in March 2020, construction at the plant in Mexicali was put on hold. In a referendum, which was promoted by Mexico’s President Andrés Manuel López Obrador, local residents had voted overwhelmingly against the project. Mexico’s president then more or less arm-twisted Constellation to seek a site in the south. Veracruz was a compromise. Even Constellation began to see the strategic advantages of the Veracruz location eventually.

Constellation is not alone in having to redraw plans due to environmental concerns. In Brazil, Heineken will build a USD 360 million new brewery, the firm’s 15th in the country, in the mining town of Passos, in Minas Gerais state. It is scheduled to start operations by 2025 and will employ 350 people.

The city was chosen over Pedro Leopoldo in the metropolitan region of the capital city Belo Horizonte, after construction work in this city was embargoed in September last year. There were fears that Heineken’s water needs would have a strong impact on the groundwater level.

Thailand: No light at the end of the tunnel for craft brewers. The onset of covid-19 led to a strong fall in on-premise volume sales of beer in 2020, due to a temporary ban on sales of alcohol, the closure of entertainment venues and the decimation of tourism. Off-premise sales also contracted as consumers switched to spirits. Thailand’s total beer market was close to 20 million hl in 2019. It was estimated that beer sales declined to 18 million hl in 2020 and 17 million hl in 2021 because of the pandemic. How craft brewers made it through the two years of the pandemic is anybody’s guess. There were an estimated 50 to 80 craft brewers in Thailand before covid hit. Many craft brewers operate illicitly, as Thailand’s laws regarding alcohol production prevent them from becoming legal. Obtaining a licence is almost impossible, reports say. Current laws restrict brewing licences to manufacturers that have a registered capital of at least 10 million baht (USD 295,000). Not enough, brewpubs must produce at least 1,000 hl beer a year, and can only serve their beer on their premises.

And here we go again. Thai Beverage (ThaiBev) is looking to raise as much as USD 1 billion through the revived Singapore Initial Public Offering (IPO). It could be held later this year. ThaiBev’s regional beer unit, BeerCo, which comprises Thai Bev’s brewing operations in Thailand and Vietnam, had initially planned a listing in early 2020. It had to be postponed twice – the first time because of the lockdown, the second time in 2021 because of a spike in covid infections in Thailand. BeerCo has three breweries in Thailand and a network of 26 breweries in Vietnam, selling the Chang and Bia Saigon brands. It is believed that ThaiBev would look to sell up to a 20 percent stake in BeerCo, which might raise between USD 800 million and USD 1 billion.

The size of the potential fund-raising has been halved from a year ago because of the impact of the covid pandemic on beer markets, which delivered a blow to BeerCo’s valuation. In 2021, BeerCo was valued at USD 10 billion. This year it seems to be down to just USD 5 billion.

(Photo by cal gao on Unsplash

China’s brewing industry benefits from premiumisation. During the first year of the covid pandemic, domestic beer sales suffered a sharp decline. The on-premise was hit hardest, due to nationwide lockdowns and the cancellation of social and festival gatherings. Beer sales, which had remained stable from 2016 to 2020 at around 450 million hl, dropped 7 percent to 427 million hl. The market recovered somewhat in 2021 in terms of volume sales. But not enough to explain why brewers still reported bumper profits in 2021.

Domestic market leader China Resources Beer (Holdings), known for its Snow brand, booked its highest annual sales and net profit since the company began reporting results in yuan terms in 2016. Tsingtao Brewery reported a 43 percent jump in net profit to a record 3.1 billion yuan (USD 486 million) in 2021, with a 9 percent rise in sales to 30.1 billion yuan.

The explanation is premiumisation. Chinese consumers may be drinking a lot less, but they are willing to splash out on a beer. Beer is now more expensive than ever in China, the website reported on 17 May. Most new launches cost more than 8 yuan (USD 1.17) per bottle, which is now the going rate for a standard macro beer brand in China.

Coke’s U-turn: Australian craft brewer Feral will not be sold. How to explain Coca Cola Europacific Partners’ strategy swings? Only in October 2021 had CCEP announced its exit from beer and cider, which included the sale of its stand-alone craft brewer Feral. The Coke bottler had concluded that achieving scale in beer and cider would require significant investment. While Coca Cola Europacific Partners (CCEP) has since largely exited the alcohol space, not least by selling its stake in the Australian Beer Co. venture to wine firm Casella (with brands like Yellow Tail, Peter Lehmann Wines), it has recently done a U-turn on Feral.

Feral, which was founded in 2002, was bought by Coca-Cola Amatil in 2017. Coca-Cola Amatil (CCA) itself was acquired by Coca-Cola Europe in April 2021 for AUD 9.8 billion (USD 7.7 billion) and the name was changed to Coca-Cola Europacific Partners. That was when the decision was taken to slim down the alcohol portfolio. CCA’s share of the beer market was marginal. Even Feral, which had maintained its strong brand position in Western Australia under CCA, did not manage to generate much growth on the east coast, Australia’s biggest market.

So, what made CCEP change its mind? Most likely, CCEP could not find a buyer. In 2021, Feral was valued between AUD 50 million and AUD 60 million (USD 44 million). This must have been too much for other craft brewers and outside investors, given that Australia’s brewing and hospitality industries are still reeling from the effects of the pandemic. Australia’s 700 or so craft brewers had a beer market share (by value) of 14 percent. On average, craft brewers produce 1,000 hl beer per year.