Well bye then, James Watt. The controversial co-founder and CEO of BrewDog has stepped down after 17 years at the helm of the Scottish brewer and bar chain, media reported on 8 May. He will be succeeded by BrewDog’s current COO, James Arrow, who is expected to focus on returning the loss-making company to profit. Mr Watt still owns 21 percent of the business and will transition into a new role of “captain and co-founder”, taking a board seat as a non-executive director.
Although it is not unheard of that the start-up CEO moves on as a business reaches a certain size and scale, Mr Watt’s departure was timely. Mr Arrow will probably want to focus on preparing for a stock market float, which has been long delayed by poor market conditions and the controversies that have embattled Mr Watt in recent years. Mr Watt’s carefully staged antics will have delighted his fans and Equity Punks, but ahead of an IPO, investors will look at the company’s balance sheet rather than its enigmatic “captain”. Such is the way of the world.
In the UK, Heineken is to spend nearly USD 50 million to reopen 62 pubs that were closed in recent years and refurbish some 600 sites, the BBC reported on 6 May. Heineken said the cash injection into its Star Pubs & Bars chain will create more than 1,000 new jobs. Star Pubs & Bars, one of the largest pub companies in the UK, currently operates some 2 400 pubs, down from 2 700 pubs in 2019.
The UK pub industry has been hard hit by closures, both during the covid pandemic and afterwards as cost-of-living pressures weighed on consumer spending. Between 2021 and 2023, pubs have shut at a rate of 500 a year, according to the British Beer and Pub Association (BBPA). The number of pubs has fallen from 47 200 in 2019, before covid, to 45 350 in 2023, data from the BBPA show. However, pub numbers have been declining for some time. In 2013, there were 52 500 in operation which is 7 150 more than 2023.
AB-InBev had a “bruise free” first quarter 2024, indicating that the impact of the ongoing Bud Light boycott in the US is diminishing. Revenues of USD 14.5 billion increased 2.3 percent from the year-ago quarter, in line with expectations, while EBITDA and volumes grew better than forecast, including in North America, its largest region by revenues, analysts said. The numbers are remarkable insofar as they compare with the first quarter 2023, when the Bud Light boycott was still unheard of, which would subsequently knock the brand from the top spot as the best-selling beer by value in the United States. The first quarter 2024 is the fourth quarter affected by Bud Light’s declining sales. The boycott is related to a conservative backlash against a social media promotion with transgender influencer Dylan Mulvaney in April 2023.
Heineken Mexico seeks to add 1 000 outlets to its Six retail chain in 2024. With over 17 000 outlets nationwide, Six offers a variety of products, including snacks, juices, soft drinks, and Heineken’s beers. Competition with the market leader in convenience stores, Oxxo (owned by FEMSA), which had nearly 23 000 outlets in 2023, is set to intensify. After the exclusivity contract between Oxxo and Heineken expired in 2019 and FEMSA divested of its 20 percent stake in Heineken Holding last year, valued at EUR 3.3 billion, the brewer was forced to enlarge the geographical presence of its Six stores.
Munich’s Augustiner creates hype around its new non-alcoholic Helles. As locals swap tips as to how to get hold of the scarce supplies, the commentariat is swooning about the 700-year-old brewery breaking with tradition and brewing a non-alcoholic version of its classic Helles. In keeping with Augustiner’s notorious reticence, there were no pre-launch press releases. Nor were there any billboard posters or newspaper ads when the brewery’s first new product in 40 years hit the market in mid-March. Word-of-mouth was Augustiner’s only communication strategy.
While sales of alcoholic beers have been declining for three decades, sales of non-alcoholic beer have risen significantly. According to the German Brewers’ Association, non-alcoholic beers now account for around 8 percent of the German beer market. Ten years ago, the share was around 5 percent.
Diageo finally gets green light for Irish brewery. The owner of Guinness, may have been a bit overambitious when it announced in 2022 that its new EUR 200 million brewery on the island would be operational this year. Now it looks as if Diageo can call itself lucky to start construction of its “carbon-neutral” brewery project this year as the last objector has withdrawn his proceedings. In terms of size, it will be second largest brewery in Ireland after Diageo’s St James’s Gate. By transferring the production of lagers and ales to the new facility, St James’s Gate will be able to increase the production of Guinness stout to meet global demand.
Cider consumption in the UK has dropped by a third over the past decade, forcing growers to rip some 2 000 acres of apple orchards in recent years. Due to their high tannin levels, cider apples have no alternative use. The UK’s largest cider maker, Heineken, the owner of Bulmers cider, chopped down a 300 acre orchard, the size of 140 football pitches, on the Offa’s Dyke path in Monmouthshire, the BBC reported. The firm blamed a surplus of apples and a slowdown in cider sales for the uprooting of thousands of trees, which were planted in 1997. Environmentalists worry about the effect on migratory bird populations, although Heineken insisted it had acted in accordance with the Wildlife Act.
Orchards in full bloom are a beautiful sight in spring. People just see trees but forget this is land explicitly worked for commercial gain. By removing the trees, Heineken made the land sellable. Perhaps it is only cynics on Reddit who believe that Heineken didn’t do a very good job of promoting and marketing cider and finds more easy money elsewhere?
A private equity roll-up bets on the future of UK craft beer. The market for craft beer is very tough and brewery failures are rising. But the private equity group Breal seems to believe that things will improve eventually and craft beer sales will rise again. Over the course of the past year, Breal has acquired four craft breweries on the cusp of going bust. Breal believes it can turn them around while adding more breweries to its portfolio in order to improve economies of scale. In quick succession, Breal has rolled up breweries, including Black Sheep (May 2023) from Masham, Yorkshire, followed by London’s Brick (June 2023) and Brew By Numbers (August 2023), and most recently, in January, Purity from Great Alne, a village south of Birmingham. All four were in dire straits financially.
Russia hikes duty on beer from “unfriendly” countries. The duty on imported beer from countries officially called “unfriendly” (that is most of Western countries) has risen 2.5 times. If it was RUB 4 per litre before, it is now RUB 10 (USD 0.11), according to data from the Ministry of Industry and Trade. The duty is meant to keep the beer market share of imported beers below 5 percent and provide domestic brewers with a level playing field.
At the end of 2023, the volume of beer imports increased by almost 13 percent over 2022, to reach 3.7 million hl. However, this is still below the “pre-crisis period” of 2021 (an oblique reference to Russia’s invasion of Ukraine in 2022), when it stood at 4.6 million hl. The drop in beer imports was caused by the cessation of supplies from brewers in the UK, USA and Canada, following the invasion.