In her much-anticipated Autumn Budget, on 30 October, UK Chancellor Rachel Reeves announced that alcohol duty on non-draught booze will go up in February in line with the Retail Price Index (RPI). The good news is that the price of a pint of beer or cider in a pub will go down by 1.7 percent. “This means a penny off a pint in the pub.” Her announcement was met with loud cheers from fellow Labour MPs. No wonder, Labour controls two thirds of the seats in the House of Commons. The leading Brexiteer and now Reform UK leader, Nigel Farage was “thrilled” that draught duty changes will save him “over a pound a week” on beer. That’s provided the publicans pass the penny on to consumers, which is highly unlikely.
The Chancellor’s move to raise alcohol duty was branded “a real kick in the teeth” by the wine and spirits sector, following punishing duty increases last year, which saw booze hit with the largest tax rise – 10 percent – in almost 50 years. Currently, more than 70 percent of the price of a bottle of whisky is tax. Ms Reeves also said that “the government will consult on ways to ensure that small brewers can retain and expand their access to pubs and maximise drinkers’ choice, including through provisions to enable more ‘guest beers’.” She did not say which “provisions” that could be. Surely, small brewers will be thrilled to find out eventually.
Sin tax revenues decline as governments need to stuff budget holes. For years, the trio of “sin taxes” – alcohol, cigarettes and fuel – have bolstered state budgets. At the same time, governments were fighting sin. As they all knew: sin taxes lead to lower consumption as people change their behaviour. Now that there is a shortage of sinners, governments need them. How ironic. The UK chancellor, Rachel Reeves, in her Autumn Budget, declined to raise Britain’s fuel levy, fearful of a backlash. However, she increased excise on non-draught alcohol, well aware that last year’s excise hike significantly reduced revenues. The Economist magazine pointed out that receipts from other “questionable” products and activities – alcohol, gambling, tobacco and sugar – have fallen from 4.5 percent of Britain’s tax revenues to 3.2 percent over the past decade.
Sunrise Alliance Beverages, a group backed by several former SABMiller people, is emerging as another roll-up of distressed UK craft breweries. On 30 October, Sunrise acquired Gipsy Hill to prevent the south London brewer from falling into administration. Gipsy Hill, founded in 2014, will join Sunrise’s stable of breweries. It includes St Peter’s Brewery, Wild Beer Co, Curious Brewing and Portobello Road Brewery. Production will continue at Gipsy Hill’s existing site. No financial terms were disclosed. According to The Grocer, a trade magazine, the deal valued Gipsy Hill at GBP 5 million (USD 6.5 million) and was based on a multiple of 0.9x Gipsy Hill’s forecasted revenues for its financial year 2027. During a previous crowdfunder in 2022, Gipsy Hill valued itself at almost GBP 21 million (USD 28 million). Companies House filings show Gipsy Hill has racked up losses of almost GBP 7 million (USD 9 million) since 2014, with losses of GBP 1.3 million reported in 2023.
BrewDog was late in posting its 2023 financials. But it boasted it was “near return to profit”. The firm reported on 15 October that net revenue for the period ending 31 December 2023 rose 12 percent to GBP 280.9 million (USD 365 million), while underlying trading EBITDA losses narrowed to GBP 2.5 million from GBP 12.8 million in 2022. However, pre-tax losses soared to GBP 59 million (USD 77 million), up from GBP 25 million in 2022. This was attributed to “one-off impairment costs related to historic acquisitions and restructuring”. The impairments most likely concern Hawkes Cider and the Draft House pub group, both acquired by BrewDog in 2018.
BrewDog said annual beer and beverages volumes surpassed one million hl for the first time in 2023. Flagship bars in London Waterloo and Las Vegas each had sales in excess of USD 13 million. The firm was also late in reporting its first half 2024 results. It said it had recorded revenue of GBP 137.5 million, which were flat year on year.
SIBA launches “Indie Beer” mark amid craft beer confusion in the UK. Surveys show that many consumers are unaware that previously standalone breweries are now owned by the Big Brewers. In an effort to put this right, the Society of Independent Brewers and Associates (SIBA) has launched the “Indie Beer” mark on 22 October. The mark will be used on beer pump-clips, cans and bottle labels to identify beers as being produced by an independent UK brewery. SIBA’s campaign also includes a new “beer checker” tool via indiebeer.uk, which allows people to check who owns the brewery whose beer they are buying. The Indie Beer mark is supported by the beer consumer group CAMRA. More than 200 of SIBA’s members have already enrolled in the campaign and will be adding the Indie Beer mark to their packaging, with hundreds more expected to join in the coming months.
Coca-Cola’s alcohol strategy: It’s a long game. It has been a while since we have heard comments from The Coca-Cola Company on its beverage alcohol strategy, and it could be a while before we will find out about their ultimate plans. During Coke’s earnings call (23 October) an analyst wanted to know what Coke has learnt from its various forays into alcohol over the past few years, and which opportunities are more scalable globally and could become a meaningful part of the portfolio. James Quincey, Coca-Cola’s Chairman and CEO, replied that it may take Coke seven to ten years to determine if its dabbling in RTDs is scalable. An early learning, after only a few years in the market, is that success will be based on a variety of products, rather than on one single, overwhelmingly successful product. According to Mr Quincey, the question for Coke is: “Can we put together a bundle of products that could be effective, not just in share terms, which I think is possible, but in terms of making RTDs a relevant size category?”
Austria: Coke recalls 28 million bottles. What a challenge. Soft drinks giant Coca-Cola HBC is recalling 28 million half-litre plastic bottles across a range of brands, fearing some could contain small pieces of metal after a glitch in one of its bottling plants. Reportedly, a sieve had burst during production. Coca-Cola HBC, on 23 October, announced its largest recall in Austria for at least 25 years as a “precautionary measure”. Consumers can return such a product to Austrian food retail outlets for a refund, even without presenting the receipt. The bulk of Coca-Cola HBC’s beverages for the Austrian market are produced at a bottling plant in Edelstal. Each year the firm sells some 470 million litres of beverages to retailers and on-premise venues.The product recall will cost Coke a small fortune, whilst retailers will be busy for weeks to organise it all.
The Amsterdam District Court, in a milestone ruling on 24 October, has cleared the way for Macedonian Thrace Brewery (MTB) to press home its claim against Heineken NV for more than EUR 160 million (USD 170 million) in damages. The court found that Heineken is liable for competition violations committed by its Greek subsidiary, Athenian Brewery, as far back as the 1990s. The ruling piles further pressure on Heineken’s board and its CEO Dolf van den Brink as it creates a dangerous precedent for Heineken, which faces a near identical claim from Carlsberg for more than EUR 300 million. Heineken, recorded contingencies of EUR 478 million for these cases in its 2023 annual report. The brewer confirmed to the Financial Times that the second follow-up claim had been brought by the Greek subsidiary of its rival Carlsberg, Olympic Brewery. The next steps in the legal procedures will determine whether MTB suffered damages and the extent of the liability. A Heineken spokesperson called the ruling a “technical legal decision”.
Anadolu Efes names new terms for Russian assets deal with AB-InBev, but will the new agreement pass muster with the Russian authorities? They already threw out Anadolu Efes’ proposed deal with AB-InBev in June. Under the new agreement, posted on 23 October, Anadolu Efes will acquire AB-InBev’s stake in the Russian business, and AB-InBev will acquire Anadolu Efes’ stake in the Ukrainian business. Anadolu Efes did not disclosed further details. AB-InBev-Efes is the last of the three largest brewing companies in Russia that is still controlled by foreign entities.
Ethiopian media were running ahead of things when they reported, on 14 October, that Heineken had acquired Ethiopian RTD firm Komari Beverages, the manufacturer of the Arada range of hard seltzers. To date, the transaction has not been made official. When approached by the website just drinks, Heineken refused to comment on the rumour on 15 October. People close to the situation say that the two parties are still in talks. After all, acquiring Komari would make perfect strategic sense for Heineken. Having set its sights on the Beyond Beer category, which led to the purchase of South Africa’s Distell Group (eg Savannah cider) in 2023, Heineken has since upped its stake in ciders and other alcoholic beverages.
Komari (which is an Amharic term for someone who makes alcoholic drinks) was founded in 2017 by seven highly ambitious and experienced professionals with diverse CVs. Several had a background in beverages, either with Diageo or Awash, a major local wine company, in which the Irish singer and philanthropist Bob Geldof used to own a stake. Cleverly, they saw that the market was ready for another type of alcoholic beverage – RTDs and hard seltzers – which their competitors had hitherto ignored.
Now we know: Tilray paid only USD 23 million for Molson Coors’ craft breweries. Craft brewery valuations must be at rock bottom. Tilray’s latest SEC filing (10 October) revealed that, in September, the cannabis firm spent USD 23 million, or USD 120 per barrel, on Molson Coors’ four craft breweries Terrapin, Hop Valley, Revolver, and Atwater. This is a fraction of what Molson Coors must have paid. When Molson Coors bought into Terrapin, Hop Valley and Revolver in 2016, craft beer sales were booming and transaction prices for regional craft breweries had gone through the roof, often hitting USD 1,000 per barrel beer sold. Assuming Molson Coors only paid a fraction of the then going rate, say USD 500 per barrel, it still forked out upwards of USD 85 million for this quartet of breweries. Their combined output, when acquired, stood at an estimated 170,000 barrels. Currently, they sell some 200,000 barrels beer combined, which means they were bought by Tilray for USD 120 per barrel – or less than half of their total annual revenue of USD 60 million.
Carlsberg’s UK “Tour of Destruction” continues. The news that Carlsberg’s unit CMBC will close the iconic Banks’s Brewery in Wolverhampton in late 2025 was “both devastating but predictable”, CAMRA Chairman Ash Corbett-Collins said. “After presiding over the closure of the Jennings brewery, the sale of the Eagle brewery [to Spain’s brewer Damm, known for its Estrella Damm beer] and removing cask beers from bars in Scotland in the last few years, CMBC is now closing another iconic brewery – putting jobs and the cask beers brewed there in jeopardy. This is more often than not the case when a global brewer buys a traditional British cask brewer.” He added: “This also demonstrates the huge pressures that even global brewers are facing from the high taxation of beer, energy and raw material costs. However, CAMRA welcomed the news that Carlsberg is open to offers for purchase of the Banks’s site for continued brewing operations. Whether any brewer will come forward with an offer remains to be seen, though.
Constellation Brands is not worried by higher tariffs after Trump win. Many manufacturers in Europe and China already fret that US President elect, Donald Trump, will honour his campaign promise and impose blanket tariffs as high as 20 percent on imported goods. However, Constellation Brands, the brewer of Modelo beers for the US, already brushed off such concerns. In a TV interview on 4 October, CEO Bill Newlands reminded viewers that “we already had four years of a Trump administration [2017-2021], and our business was up double-digit during that window of time.” Mr Newlands added that “we have a fair amount of our inputs that come from the United States and then are made into beer in Mexico. I highly doubt any perspective on tariffs would really be around: How do you hurt the American farmer?” Mr Newlands stressed that the way the company makes its Mexican beers will not change. “These are authentic Mexican beers. Guess what? You have to make them in Mexico.”