When it comes to raising prices, brewers in many parts of the world have long played a game of “who blinks first, loses”. This is to say, you don’t put them up unless somebody else does, or you’ll be too expensive amid the competition and your sales will decline. Given rising inflation, price increases for consumers are inevitable. To date, consumers have been lucky. Alcohol price hikes still lag behind food prices, which have gone up by more than 30 percent over the past year globally. The question is: when will the Big Brewers barge ahead? They won’t feel significant pain until the first half of next year. So, who is going to be the first to give the bad news to Joe Sixpack?
The average price of a pint of lager could pass GBP 4 (USD 5.45) by Christmas. This is because inflation in the UK is expected to rise above 4 percent by the end of the year. While in areas such as the South East the price of a pint has long been over GBP 4, the figures are based on all the regions, many of which have cheaper beer. But they could rise even higher as publicans will need to pass on the VAT hike. On 1 October 2021, the hospitality sector VAT rate jumped to 12.5 percent from 5 percent, before returning to its full rate of 20 percent in April 2022.
Jim Martin, founder and chairman of the 870-strong pub chain Wetherspoon, has been vociferous about maintaining the 5 percent VAT. He would be: His group announced a pre-tax loss of GBP 155 million (USD 211 million) for the year to the end of July 2021, increasing from a GBP 34 million (USD 46 million) loss in 2020 – which was Wetherspoon’s first non-profitable year since 1984.
So much for Australia’s Big Brewers priding themselves on developing talent within. They got new CEOs. External candidates were preferred. Danny Celoni, the boss of the PepsiCo’s operations in Australasia, has been hired to run Australia’s biggest beer business, Carlton & United Breweries (CUB). CUB is owned by Japanese conglomerate Asahi after an AUD 16 billion (USD 11 billion) buyout in 2019. Mr Celoni would have been no stranger to Asahi, as Asahi Beverages produces Pepsi’s drinks under licence for the local market. Meanwhile, CUB’s major domestic rival, Kirin-owned Lion, is also looking for a new CEO. From what we hear, two long term internal candidates were vying for the role in a long and drawn out process but were not considered.
It’s drink and think for US lawmakers. New Belgium has launched Biere de Queer to mark National Coming Out Day (11 October). Itwas sent to hundreds of members of Congress to persuade them to pass the Equality Act. New Belgium Brewing will be donating USD 1 for every Biere de Queer sold to charities which empower the LGBTQ+ community and allies.
Several breweries declined to attend a Mikkeller beer event over sexism claims. Several ex-employees at Mikkeller alleged sexual harassment and gender bullying at the firm. The by-invitation-only event (22 and 23 October) is renowned for featuring some of the most highly sought-after breweries (usually 100) in the world. Tickets for this year’s festival cost approximately USD 63 for general admission and USD 345 for a “gold” level ticket. “The withdrawals will do nothing to support the brand’s cache as a tastemaker within the beer world,” Kate Bernot of the website goodbeerhunting.com said.
Can you drink history? One of the oldest UK craft breweries, Meantime, is tapping into its heritage, as it “looks to build a deeper connection with consumers” (in marketing lingo). The campaign features two videos. Founded by Alastair Hook in 1999, the brewery was first sold to SABMiller in 2015 for the eye-watering sum of GBP 120 million (USD 185 million). The deal was famously hammered out in merely a week. After AB-InBev purchased SABMiller, Meantime was sold to Asahi in 2016. Incidentally, one of the videos only mentions Mr Hook, 57, without showing a photo.
There is never a dull moment with BrewDog. The punk brewer has appointed a new chairman with a blue-chip reputation. The former Asda boss and City grandee, Allan Leighton, 68, has joined BrewDog as non-executive chairman, in the latest sign that the Scottish craft brewer is serious about dealing with its governance issues. But only weeks later, cyber security analysts identified a flaw in BrewDog’s mobile app, which could have exposed personal information of more than 200,000 Equity for Punks shareholders and customers – as well as letting hackers steal beer, if they so desired. BrewDog said it has since ironed out the glitches.
Sooner than expected hard seltzer sales in the US have fizzled, sendingwaves of concern across the beverage industry. Over the summer, some brands registered slowdowns and others outright declines. Both Boston Beer and Constellation Brands, which produces Corona Hard Seltzer, have admitted they have overestimated consumer demand and would be forced to take write-downs for excess inventory in 2021.
Undeterred, Boston Beer will open a Truly taproom in Los Angeles next year. Err, willpunters really seek out a destination taproom to drink hard seltzers? The taproom will be located on a plot adjacent to the Angel City Brewery which has been owned by Boston Beer since 2012. Perhaps Boston Beer already had a lease on the land and decided to convert it into a taproom rather than, say, an extra parking lot.
Here we go again. AB-InBev is said to explore sale of some of its German beer brands for EUR 1 billion (USD 1.2 billion), asit focuses on growth beyond beer. AB-InBev inherited the German brands from Belgium’s Interbrew, a forerunner of AB-InBev, which had gobbled them up in the early Noughties. In 2018 already, AB-InBev tried to flog some brands. After a long search a buyer was found. Yet he turned out to be severely cash-strapped and the sales process was stopped one year later.
Heineken has offered to buy Namibia Breweries’ stake in Heineken South Africa. Namibia Breweries (NBL)and Heineken are linked through cross-shareholdings and mutual contract brewing arrangements. The big question is: Why would Heineken want to buy out NBL, while it is still discussing a deal with wine and drinks firm Distell in South Africa? And who made the first step?
India’s antitrust watchdog (CCI) imposed a penalty of USD 102 million on Heineken-controlled beer giant United Breweries, and USD 16 million on the local unit of Carlsberg for collusion between 2009 and October 2018. Eleven managers were fined too. AB-InBev was found guilty as well, but was given a 100 percent exemption from penalties, as it had alerted the watchdog to the cartel.
In the never-ending story of Germany’s beer cartel, three Kolsch breweries and two of their managers were acquitted. A spokesman said the Düsseldorf Courtcould not find any evidence of collusion among the breweries Früh, Gaffel and Erzquell. The Federal Cartel Office has already lodged a complaint against the acquittals, which means the case will be dealt with by the Federal Court of Justice. Another German court is currently dealing with Carlsberg’s objection to the fine of EUR 62 million (USD 73 million) imposed on them by the Cartel Office for collusion.
Because consumers don’t know the meaning of “private brewery”, ten Austrian breweries have formed an alliance, calling themselves “independent private breweries”. They launched a seal which says “100 percent independent” on labels. Their motive is easy to explain. Medium-sized and smaller breweries want to differentiate themselves from the market leader Brau Union, a unit of Heineken. Their website www.privatbrauereien.at says: “Already six out of ten beers that are drunk in Austria come from large international corporations. So, it is time to set an example. By buying beers that carry the seal, you strengthen Austrian private breweries that remain independent, and do not allow themselves to be taken over by large international corporations. Since independent private breweries pay 100 percent of their taxes in Austria, you thus support our health system, our schools and our infrastructure.”
Red Bull served a writ to UK gin maker Bullards and threatened it with legal action because there is a “likelihood of confusion” over brand names – both brand names include the term “bull”. The maker of the energy drink Red Bull is opposing an application to register the trademark Bullards before the UK’s Intellectual Property Office. Per the BBC, this is not the first legal dispute that Red Bull has had with a British firm. In 2013, Red Bull threatened the brewery Redwell Brewing with legal action over its name, which starts with “Red” and ends with “ll”, before apparently backing down, saying there was “no dispute”.