Beer Blog with Roger Protz

Battle for Budweiser

2008-06-17T12:19:00.002+01:00

Anheuser-Busch goes south of the
border to keep free from InBev

Giant American brewer Anheuser-Busch is seeking a merger with Modelo of Mexico in a frantic attempt to keep free of the clutches of the world's biggest brewer, InBev. InBev, itself a merger of Ambev of Brazil and Interbrew of Belgium, has offered $46 billion in a hostile bid for A-B, owner of the world's biggest beer brand, American Budweiser. InBev's rush to buy A-B means it will take on around $40 billion of debt, with vast loans from banks, including Santander of Spain.
A-B already owns 50% of Modelo, best known for the "lime-in-the-neck" lager Corona. Last year, 42% of Modelo's sales came from exports to the United States and A-B says it will use its muscle to grow that share if the companies merge.
In an extraordinary letter, Carlos Brito of InBev wrote to A-B boss August Busch on 15 june, saying: "We have read the recent reports suggesting you may approached Grupo Modelo regarding a possible transaction between A-B and GM. In light of the reports, we believe it is important for you and your board to u dnerstand that our proposal to combine with A-B by means of acquiring all A-B outstanding shares for $65 per share in cash is made on the basis of A-B's current assets, business and capital structure. Accordingly, we would expect that prior to proceeding with any alternative transaction, especially if your shareholders will not be given the opportunity to vote on it, you would first fully explore our offer and the potential adverse consequences any such transaction could have on the ability of your shareholders to receive our premium offer."
There is no velvet glove in site in this takeover battle: it's all bare knuckleduster. Observers in New York say that even if A-B did fully merge with Modelo, this would not stop InBev coming back with an even bigger offer for the enlarged group. InBev is prepared to deepen its borrowing for achieve this.
*It may be brass knuckledusters at the top of the industry but it's tongue-in-cheek lower down the pecking order. Tony Jennings, who runs Budweiser Budvar UK, the London operation for the Czech brewer, has expressed his full support for Anheuser-Busch in the American company's struggle for independence. Bet that made Augie Busch feel a whole lot better in his office in St Louis!

InBev bids for Busch

2008-06-16T10:12:00.001+01:00

Rumours of a planned bid by InBev for Anheuser-Busch have become reality as the world's biggest brewer has tabled a mighty $46 billion/$65 a share hostile takeover of the U.S. producer of the world's biggest brand, Budweiser. Last week, August Busch IV, chief executive of A-B, met two InBev directors in Tampa, Florida, for exploratory talks. The talks were followed by a letter from InBev's chief executive, Carlos Brito, to Busch in which he spoke of the benefits of combining the two beer giants.

"I believe the combination of InBev and A-B would be industry-transforming," Brito added. "It would create an unparalleled opportunity for our two companies."

While August Busch IV is opposed to the takeover, other members of the Busch family are taking a softer line, but the final decision will be taken by independent shareholders. A merger of the two brewers would give them a 25% global market share of the beer business, producing 460 million hectolitres a year.

Battle for Bud

2008-06-04T09:28:00.002+01:00

Giant merger could
help the other Bud

As the struggle for control of Anheuser-Busch gathers pace -- with both InBev and SABMiller considering bids -- the concentration of power among global brewers could ironically be a lifeline for Budweiser Budvar. The small Czech brewery has been locked in a legal dispute with A-B for more than a century over the Budweiser trade mark. A-B is seen as the only logical future owner of Budvar when the state-owned Czech brewery is privatised, as no other other company would want to fight A-B in the courts.
But if A-B is taken over -- and InBev is reported to be prepared to raise its offer to $50 billion -- the legal battle might change dramatically. Neither InBev or SABMiller, if one becomes owner of American Budweiser, would want to pursue a costly legal battle over the trade mark. And any plans for either group to buy Budvar could be thwarted by Czech anti-trust laws. Both InBev and SABMiller are already major players in the Czech brewing industry: InBev owns Prague Breweries, whose leading brand is Staropramen, while SABMiller controls the leading Czech brands Pilsner Urquell, Gambrinus and Velke Popovice (Kozel). It is highly unlikely that the government would allow either group to extend its domination of the brewing industry, especially as the current fragile right-wing coalition is almost certain to be replaced by a left-of-centre regime after the next election.

Otherwise, it's bad news all round
On every other front, however, this jousting for control of the world's leading beer brands is bad news. The top five global brewers already account for two-thirds of the world beer market and this could rise to 85% if A-B succumbs.
And that would not be the end of the takeover trail. If InBev is successful in its bid for A-B, SABMiller would want to rival its power and scope. Market analysts are already suggesting that SABMiller would make a bid for giant US-Canadian group Molson Coors.

Misleading recommendations

2008-05-20T10:33:00.002+01:00

Safe drinking units are
based on unsound data

The government's new drive against binge drinking is based on totally unscientific data about "units of alcohol". It has been the "wisdom" since the 1980s that a half pint of beer equals one unit of alcohol and drinkers should restrict themselves to around 20 units a week or run the risk of serious health problems. Yet a few months ago one of the people who drew up the list of units back in the 1980s admitted that the figures have no scientific basis and were "plucked out the air" at the time.
Yet the government's new campaign still uses the same number of units. The recommended number of units are quite useless where beer is concerned: a half pint of Dark Mild at 3% is a different beast to a 8% "head banger" strong lager.
I am all in favour of moderate drinking -- I am renowned as a figure of great moderation -- but if the government wants people to take its campaign seriously then it really need to present us with up-to-date and scientifically-based information about what constitutes "safe drinking" levels.

Scottish & Newcastle

2008-05-01T09:19:00.002+01:00

Blood money as Heineken takes over in Edinburgh

Jeremy Blood has been confirmed as managing director of Heineken's British operations following the takeover on 29 April of the country's biggest brewer by Carlsberg and Heineken. Blood was director of corporate affairs for S&N and he will run the company from the existing offices in Edinburgh. The group will continue to be known as S&N for the time being.
As a result of the takeover, Carlsberg will acquire S&N's 50% stake in Baltic Beverages Holding, the biggest brewing group in Russia, and will also control S&N's investments in China and Vietnam. Carlsberg will further own Kronenbourg in France, the country's biggest beer brand.
In Britain, Kronenbourg, which is brewed under licence, will become a Heineken brand. Jeremy Blood was quick to quash rumours that the brand might disappear as it was seen as a competitor to Heineken. "Kronenbourg has been brewed under licence for 50 years and will continue to be a major brand," he said. He also ended speculation that Heineken would be brewed in Britain and stressed that it would remain an imported brand.
What is missing from Blood's statement is any reference to S&N's ale interests, which are centred on John Smith's in Tadcaster, Yorkshire. John Smith's Bitter, mainly in its "nitro-keg" form, remains a massive brand but the entire Tadcaster operation will have a cloud over it until Heineken makes its intentions clear. The Campaign for Real Ale is seeking urgent talks with Jeremy Blood to discuss Heineken's attitude to its ale brands.

Caledonian Brewery

2008-04-11T10:41:00.002+01:00

S&N buys Deuchars and brewery
will pass to new owner Heineken

Caledonian Brewery has been bought -- lock, stock and barrel -- by Scottish & Newcastle, which means ownership of the Edinburgh brewery will pass eventually to Heineken. In 2004, S&N, which had closed its breweries in both Edinburgh and Newcastle, bought the Caledonian site in Slateford Road and also took a 30% stake in the company. The brewery continued to be run by the Caledonian management led by managing director Steve Crawley while S&N used its enormous muscle to promote the Caley brands in the free trade. Caledonian Deuchars IPA, far and away the biggest brand, is now available nationally as far away as Cornwall.
Steve Crawley will remain at the helm of Caledonian and will oversee a dramatic change of ownership when Heineken moves in. Earlier this year, Carlsberg and Heineken successfully bid for S&N, with Carlsberg taking over S&N's interests in Russia and the Baltic States, and Heineken becoming responsible for S&N's activities in Britain.
The Harviestoun Brewery, a subisidiary of Caledonian, will become independent: Heineken will have no involvement in the company but Steve Crawley will become a non-executive director.
It seems unlikely that Heineken will tinker with a brand as successful as Deuchars IPA, a past winner of CAMRA's Champion Beer of Britain award. The Dutch company might be tempted to cash in on the property potential of the Slateford Road site, on the road to Edinburgh Airport, but wise councils will point out that consumers tend to react against beers when they are moved from their original home : Deuchars brewed in Yorkshire or Manchester would take the gloss of a successful Scottish brand.

Refresh UK

2008-04-03T18:13:00.004+01:00

Marstons gobbles up Brakspear and Wychwood

In a deal worth between 10m GBP and 11m GBP, national brewing giant Marston's has bought the leading Oxfordshire-based regional Refresh UK, a drinks company that owns both the Brakspear and Wychwood breweries. Since the turn of the century, Marston's of Burton-on-Trent -- which includes Banks's of Wolverhampton -- has bought Jennings of Cumbria, Ringwood of Hampshire and now Refresh.
Rupert Thompson of Refresh, who will leave the company in six months' time, says the deal will be good for his brands. "In today's highly competitive market, we lack muscle, especially in the pub trade, where we own no outlets. There's a logic in working closely with Marston's because of their strength in the on-trade and our strength in supermarkets."
Wychwood's Hobgoblin strong dark ale is now a leading packaged brand. The merger will mean Marston's will be the biggest seller of premium bottled beers. It will also acquire the top-selling organic beers in Britain, which include Prince Charles's Duchy Originals beers.
Refresh UK was formed in 2000 and last year posted a turnover of 24.9m GBP and pre-tax profits of 1.1m GBP. It owns the Wychwood brewery in Witney and added the former Brakspear plant from Henley-on-Thames when that brewery closed. The plant includes Brakspear's famous "double drop" fermentation process that gives Brakspear Bitter and Special their characteristic aroma and flavour. Refresh UK brews a total of 50,000 barrels a year.
Rupert Thompson admits that while the Wychwood brands have done well, the Brakspear beers have struggled, probably a result of consumer anger with the former owners' decision to stop brewing in Henley and become a pub company. (Considerable confusion is caused by the existence of a Brakspear pub company and an unrelated Brakspear brewery.)
While it is true that Marston's has a good track record of not closing the breweries it has bought, there must be considerable anxiety over the loss of yet another successful regional producer. There may well come a time when Marston's will review its overall production and decide that some of its brands, currently brewed in Cumbria, Hampshire and Oxfordshire, could be transferred to Burton or Wolverhampton.
Rupert Thompson undoubtedly saved the Brakspear brands and unique brewing kit and for that all beer lovers should salute him. But the loss of yet another independent regional brewer is a cause for concern.

Denver brewing centre

2008-03-30T12:18:00.003+01:00

Make your mind up, Coors
-- do you like museums?

The giant American brewer Coors, owner of the former Bass breweries in Burton-on-Trent, plans to axe its visitor centre and brewing museum in the town on the grounds of cost (see previous blog and main website) -- but runs a highly successful brewing museum in Denver, Colorado. A report in the Rocky Mountain News reveals that Coors, based in Golden in Colorado, is updating the brewing museum to use state-of-the-art technology in order to attract even more visitors to the facility.
It seems clear that Coors is more committed to a museum in its home state than to the former Bass Museum it inherited in Burton. The Bass Museum attracted a quarter of a million visitors a year but numbers have fallen to a fraction of that figure as the visitor centre gets little support or promotion.
Coors says it costs £1 million a year to run the visitor centre in Burton. That's small change for a company the size of Coors -- but it's struggling in Britain, along with rivals Carlsberg. InBev and Scottish & Newcastle, as a result of the global brewers' "deep discount" policy with supermarkets. Discounts are so severe that the global brewers make at most 1p in profit from each bottle or can.
A report in the trade paper Morning Advertiser, 27 March, shows to what extent the supermarkets have the brewers by the throat. The paper reports that the multiple retailers will continue to offer cut-price promotions for alcohol in spite of the steep rise in duty imposed in the March Budget.
The paper adds: "One off-licence chain, Bargain Booze, has even written to brewers asking them to absorb the extra costs or face being de-listed from its 600 shops. A letter seen by The Observer said: 'We will have to review the position of any brands where the retail ticket is increased in our business...We reget to say that we cannot absorb the increases in costs that the Budget would seem to demand."
Bargain Booze ask suppliers to help by "absorbing these increases within your own company."
The global brewers should learn the lessons of recent history. In the early 1990s the large regional brewer Charles Wells in Bedford took a decision to phase out production of own-label beer for suupermarkets. Profits on own-label were so low that the company faced severe financial difficulties. Instead Wells built up its own portfolio of brands, including ales and lagers. It has merged with Young's of London to form Wells & Young's. Its Bombardier premium ale is now one of the most successful cask and packaged brands in the country and the company has overtaken Greene King in volume terms.
If the global brewers stood up to the supermarkets and got realistic prices for their beers they wouldn't face financial meltdown -- and Coors could afford to support the Burton visitor centre.

Burton museum to close

2008-03-21T10:42:00.002Z

Coors to axe visitor centre

The giant American brewer Coors will close its visitor centre in Burton-on-Trent in June, leaving Britain without a major museum dedicated to the history of brewing in Britain. The site was first known as the Bass Museum but ownership passed to Coors when Bass left brewing and the American company bought the world-famous breweries.
Coors says the running of the visitor centre costs £1 million a year and, in a declining beer market, it needs to invest that cash into supporting its key brands. It says visitor numbers have declined even though it offers free admission to people who live in the town. But the centre has not been promoted outside Burton.
The museum is a magnificent collection of brewing artefacts. As well as detailing the history of brewing in Burton, famous for its India Pale Ales in the 19th century, the museum also covers the history of brewing world-wide. There is also a collection of old brewing vehicles, including a car shaped like a bottle of Worthington's White Shield, as well as dray horses.
It would be a tragedy if this collection were broken up and lost. The local MP, Janet Dean, will host a meeting in Burton on Wednesday 26 March to discuss ways to save the centre. One idea being floated is to form a trust to run the museum that, unlike Coors, could attract public funds, including Lottery money. When Whitbread left brewing all the material assembled over many years that traced the history of the company from the 18th century was thrown in a skip -- it's vital that this does not happen to the Burton collection.
In the long term, even if the Burton museum can be saved in some form, London is the obvious place to house a major museum dedicated to British brewing and the English pub. The problem is cost. When a group made up of representatives of the London brewers, CAMRA and the trade paper the Morning Advertiser looked at the possibility of opening a museum in London, high rents in the capital made the project impossible. We were offered the basement of the Hop Exchange in Southwark, which would be an ideal site, but the annual rent was £100,000.
The Mayor of London was unable to help but once the Burton issue has been solved -- if it can be solved -- then further attempts will be made to look into the possibility of a museum in London that will celebrate Britain's unique contribution to the world of beer.

The Budget

2008-03-12T13:30:00.002Z

Alistair is no Darling

Chancellor Alistair Darling has hit beer with a swingeing increase of 4p a pint -- action that will heap misery on British pubs, lead to more closures and do nothing to tackle binge drinking and the sale of cheap alcohol by supermarkets.
With around 30 pubs a week closing in Britain, the trade needed help not hindrance. But Darling has been pressurised into this massive price increase as a result of intense media pressure and the absurd claims of bodies such as Alcohol Concern. For a start, a 4p increase will be substantially more by the time beer reaches the bar and wholesalers, retailers and publicans have added extra pennies to maintain their margins. The likely increase will be round 6-8p a pint.
The result will be that pubs will be at an even greater disadvantage to supermarkets and off-licences, which will continue to promote cheap beer and other alcoholic drinks, with beer in particular being sold cheaper than bottled water.
The best way to tackle binge drinking among a minority is to encourage them to use pubs. Pubs are licensed premises. People drink moderately and sensibly in pubs and publicans can lose their licences if they allow unruly and drunken behaviour. Young people learn to drink sensibly in a pub atmosphere by mixing with older and more experienced drinkers.
Darling's price increase will encourage rather than deter excessive drinking on the streets as people forsake the pub for supermarkets. It's black day for pubs and pubgoers while the supermarket bosses will be rubbing their hands with glee.

SIBA - the elephant in the room

2008-03-10T23:29:00.002Z

If you had to tick a box to choose the most influential voice in the brewing industry today would you choose the British Beer and Pub Association, the Independent Family Brewers of Britain – or Siba, the Society of Independent Brewers?

To use a popular phrase of the moment, it's a no-brainer. To extend the cliche, Siba is the elephant in the room. It sets the pace. Powerful people in government and even the giant pubcos sit up and listen when Siba comes calling.

I came away from the organisation's annual conference in York last week reeling at the size and the effectiveness of the organisation. It has around 450 members. They are dedicated and passionate people, with a deep-seated belief in brewing quality beer, most of it in cask-conditioned form.

As well as attracting some top drawer speakers, there were companies falling over themselves to sponsor the conference, the annual brewing awards and many other aspects of Siba's activities.

Maltsters, hop merchants, bottle and cask makers, and manufacturers of brewing equipment had stands all round the conference hall. They recognise that Siba is a powerful force and, against all the odds, is recording increased sales for its beers at a time when bigger brewers are in free fall.

The organisation has come a long way from 1980 when a handful of micro-brewers, spearheaded by Carola Brown at Ballards in Hampshire, launched the Small Independent Brewers Association, as it was first known. With the exception of Camra (the Campaign for Real Ale), who recognised a kindred spirit, not many people took Siba seriously.

The regional brewers in particular were either patronising or downright rude. There were mutterings about “beer in a bucket merchants” and poor quality. The main attitude was simple: ignore Siba and it will pack its tiny tent and disappear.

But the tent has turned into large marquee. The number of regional brewers has more than halved. Many of them didn't have the bottle to take on the national brewers and gave up the ghost.

Siba doesn't lack bottle – even though most of its product comes in cask form. Today it's a large, impressive and remarkably professional body. And it has two key successes that have helped transform not just the brewing industry but have also impacted on consumers as a result of increased choice in pubs.

The first success – and it was a Siba hobby horse from its inception – was Progressive Beer Duty (PBD). The demand was simple: smaller brewers were at a disadvantage as they paid the same levels of excise duty as even the giant national producers who enjoyed “economies of scale” thanks to sophisticated and computer-controlled equipment.

After years of lobbying, PBD was introduced in 2002. At first he benefits went only to brewers who produced not more than 18,000 barrels a year. That was increased a couple of years later to 30,000 barrels.

The results have been spectacular. Many new brewers have entered the industry while existing craft brewers have been able to invest in new equipment and even buy pubs as showcases for their products.

The second success has been Siba's Direct Delivery Scheme (DDS). This was the brainchild of Nick Stafford of Hambleton Ales in North Yorkshire. The scheme was the result of craft brewers finding it impossible to get their beers into pubco outlets.

They were told that, on top of discounts, they would have to drive long distances to depots to drop beer off, then return to pick up the empties. There was no profit to be made,

DDS allows the brewers to deal direct with individual pubs. It has been such a success, with giant pubco Enterprise Inns part of the scheme, that it is now a subsidiary company within Siba, with a database of pubs throughout the country.

The winners have been not only Siba members but also publicans and drinkers. There is now greater choice in pubs. Drinkers are no longer confronted by national brands but can choose from a wide variety of beer styles.

Siba is a great British success story. It's good to know, in the age of global giants, that occasionally the small guys can win.

Dorothy Goodbody

2008-02-27T16:59:00.003Z

Alcohol Concern should lie down in

a dark room and keep taking the Pils

The key question of the day is : Is Alcohol Concern stark, raving bonkers? The organisation reported the Wye Valley Brewery in Herefordshire to the Portman Group on the grounds that labels and pumpclips for Dorothy Goodbody's Wholesome Stout were "sexually explicit". It always helps in life to have a good sense of humour but the killjoys at Alcohol Concern couldn't raise a smile. This is the same group of nutters who last year recommended that parents who give alcohol to their children in their privacy of their homes should be reported to the police. Bring on the police state.

I am against sexism in all its manifestations and would oppose using sex to promote and sell alcohol. But Dorothy Goodbody is a joke. She is a cartoon character, the type of curvy blonde that American airmen should to paint on their planes in World War Two. She is the mythical daughter of the equally mythical former head brewer at Wye Valley whose brewing recipes she found in a drawer. The beers that carry her name have won many awards, including a recent one for packaging! Yet the killjoys at AC, who would like alcohol to be so severely taxed that only the super-rich could afford it, can't see the humour behind the label.

The Portman Group, the brewing industry watchdog that oversees promotions for alcohol, had to convene an independent panel to consider the complaint. What a waste of time and money.

Brewers have enough problems to face -- a media onslaught against "24-hour drinking" and massive increases in the costs of barley and hops -- without the added nonsense of fatuous complaints from Alcohol Concern.

The organisation is a charity. Who on earth funds these freaks?

SIBA

2008-02-25T13:25:00.002Z

Craft brewers say the pub is the
best way to tackle binge drinking

The Society of Independent Brewers (SIBA) says the best way to tackle the problem of binge drinking is to encourage young people to drink in the controlled environment of the pub. SIBA chairman Peter Amor told the BBC Radio 4 Today programme today (25 February) that his members concentrate on cask beer and that can only be consumed on pub premises.
SIBA has called up the images of Hogarth's celebrated 18th century drawings of Gin Alley and Beer Lane to stress the healthy aspects of beer drinking compared to cheap spirits. Evidence shows that many young people who engage in binge drinking often consume cheap supermarket vodka before going out to continue drinking.
Peter Amor -- who founded the Wye Valley Brewery and runs the Barrels pub in Hereford -- stressed in the interview that pub drinking is quite different to consuming alcohol in the streets bought from corner shops or supermarkets. In pubs, young people will mix with older and more experienced drinkers who consume moderate amounts of alcohol. Publicans also have a duty to maintain their pubs in a legal manner and cannot allow drunken behaviour for fear of losing their licences.
The SIBA campaign comes at a time when both sections of the media, politicians and doctors are whipping up a campaign to increase the duty on alcohol in this year's Budget and to curtail what is called "24-hour drinking". Even the lofty British Medical Association last week called for both higher duty rates and a review of 24-hour drinking. The Independent on Sunday newspaper (24 February) said 24-hour pub licensing had proved to be a failure even though there is no such thing. The new licensing laws, introduced in 2006, allows pub owners to vary their hours within a 24-hour cycle but must register them with the licensing authorities. Scarcely any pubs in the country are open for 24 hours: it is mainly hotels and supermarkets that serve alcohol round the clock.
SIBA is to be congratulated for putting its collective head above the parapet and challenging the bandwagon that would penalise the overwhelming majority of sensible drinkers as a result of the behaviour of a tiny minority.

Craft brewers' boom

2008-02-10T14:31:00.001Z

Craft brewers' boom
meets media silence

Britain's craft brewers, represented by SIBA, the Society of Independent Brewers, has announced an average 10.7% increase in retail sales for each member in the past year. This stunning success story -- at a time when giant global brewers are reporting a sharp downturn in sales in Britain -- has been met by a resounding silence by the media.
Sales of SIBA members amount to £320 million a year -- and that means a sizeable contribution to the government in terms of tax and duty. This remarkable boom in sales should make media headlines but the report has been met by a total news blackout.
Michael Hardman, SIBA's press officer, says: "This is a great British success story -- but nobody wants to know." The reason is not hard to understand: the media is obsessed with "24-hour" drinking" and "binge drinking" and doesn't want to write about a good beer story. As Hardman adds, "If you substituted 'beer' in the report with the word 'wine', the media would be falling over themselves to write glowing stories."
There is another positive side to the report. As SIBA's chief executive, Julian Grocock, says in his introduction, the success of his members is due to increasing concern by consumers about the quality of the food and drink they buy. They are concerned by localism and provenance -- they want to know that the beers they drink are made close to them and use natural ingredients grown in Britain. They are increasingly turning away from mass-marketed global brands that use inferior malts and hops.
Again, this is a positive message the media should be reporting. But even such intelligent outlets as the BBC's Radio 4 Today programme and the Guardian newspaper still prefer to endlessly talk about 24-hour drinking when no such thing exists.
Fortunately, even with no support from the press and broadcasting, craft brewers are bucking the trend, reporting booming sales, and proving that in the end quality and taste will win through.

Heineken to control S&N

2008-01-31T13:06:00.000Z

Update: Heineken to control S&N in Britain

The dust has settled on the Carlsberg and Heineken takeover of Scottish & Newcastle and the picture becomes clear. S&N's British business will not be divided between the Danes and the Dutch but will be wholly controlled by Heineken. This means the Dutch group will be in competition with Carlsberg in the British market and Tetley brands will not be moved to John Smith's brewery in Tadcaster. However, the long-term future of Tetley must be in doubt as it has to vacate its Leeds city centre site.
Heineken is delighted by its stake in Britain. The Dutch group at present accounts for only 1% of the British market but this will grow considerably as a result of the takeover. The chief executive of Heineken, Jean-Francois van Boxmeer, will sell both Heineken and Kronenbourg in Britain (as well as Foster's) and believes there is growth in the British lager market. Most observers -- including this writer -- think this is ill-conceived. The demand for premium lagers produced by global brewers is in sharp decline. Van Boxmeer is viewing the British lager sector through the prism of his imported Heineken, which is doing well in Britain but only because it replaced the risible 3.5% version brewed under licence here for decades.
Van Boxmeer is excited by the potential of the cider sector -- he will own Bulmer's -- but after an explosion of sales in recent years there are signs that demand for Bulmer's and Magner's "over ice" is beginning to slow.
There are still many questions hanging over the deal. All the John Smith's Bitter brewed at Tadcaster is keg. The cask version is now contract brewed. Will Heineken have any interest in cask beer, of which it has no experience? The knock-on from this is the future of S&N distribution company, Waverley TBS, which is a major wholesaler of cask beers. Without the company, many smaller cask beer brewers would find it hard to get their beers to market.
Heineken will now pick up S&N's 30% stake in the Caledonian Brewing Company in Edinburgh, which makes the successful cask beer Deuchars IPA. Already, there are City rumours that Heineken will off-load its ale brands, including John Smith's, which might be of interest to Greene King and Marstons. The situation will be of concern to Theakston's in North Yorkshire: its Best Bitter is brewed by John Smith's.
The big winner in the takeover is Carlsberg. It now owns the Kronenbourg end of the business in France, where the lager is the biggest brand in the market, and is now the sole owner of Baltic Beverages Holding, the biggest brewer in Russia and the Baltic States.

InBev buries Bock

2008-01-27T13:41:00.000Z

InBev buries Bock

InBev, the world's biggest brewer, has axed Artois Bock after just three years' production.
Back in 2005 the strong 6.2% lager was launched with a great deal of hoopla and media excitement. Several beer writers seemed to put their critical faculties into cold storage as they wrote adulatory pieces about the beer. Even the late Michael Jackson somewhat surprisingly penned an enthusiastic piece in Beers of the World. When I told another beer writer that I thought it was a poor beer, he sneered and said: "You must have got a bottle from a bad batch
-- I think it's superb". Is it conceivable that a giant company such as InBev would allow a bad batch to reach beer shops and supermarkets?
Now it's gone to the great Saloon Bar in the Sky. It's a curious decision, as only a few months ago InBev relaunched its brands as the "Artois Family". This was done to mask the fact that sales of Stella Artois are falling and that other beers from the same stable are also available -- including Bock.
InBev really is in a bit of pickle. It has made a complete mess of Hoegaarden, the delicious Belgian white beer. With astonishing insensitivity, the group closed the original brewery in Dutch-speaking Hoegaarden and moved it to the Jupiler factory in the French-speaking region of Liege. That didn't work, as Jupiler brews only lagers while Hoegaarden is warm-fermented, so it moved the white beer back to Hoegaarden.
Now it has axed Artois Bock but says it will be adding "classic Artois brews to the range from time to time." As Stella Artois is not known to have brewed a Bock in its long history, I wonder what new beer InBev will conjure from the mythical past to replace Bock.

S&N succumbs to a giant takeover

2008-01-25T08:40:00.000Z

Where will the axe fall as S&N
succumbs to a giant takeover?

Scottish & Newcastle, the only remaining British-owned national brewer, has fallen to a takeover bid worth £7.8bn from a consortium of Carlsberg and Heineken. What is the future for the S&N breweries in Britain? The Danes and the Dutch said at the outset of their bid that they would breakup S&N's British operation, so the future is bleak for breweries in Gateshead, Manchester, Reading and Tadcaster. The fact that Carlsberg, which has long experience of the British beer market, has opted to run S&N's French Kronenbourg operation, does not augur well for the British breweries. They will be run by Heineken, which has never brewed in Britain. Its beer was brewed under contract by Whitbread and now all Heineken sold in Britain is imported from the Netherlands.
Surely not all the lager brands owned by S&N -- including Foster's, Kronenbourg and McEwan's -- can survive at a time when sales of premium lagers are in decline. Of particular interest will be the fate of the Tetley brewery in Leeds. Tetley will now join a group that includes John Smith's, which means Heineken will control the two leading British keg beer brands. As Tetley has to leave its Leeds city centre site it could mean either the end of the brands or the ignominy of being brewed at John Smith's in Tadcaster.
But the takeover was never really about the British market. S&N has been a major player in the rapidly expanding Russian and Baltic States markets. In a consortium with Carlsberg, it owns Baltic Beverages Holding (BBH), which produces the top-selling Baltika beers. Heineken has been slow to move into Russia, which is why it has been keen to force through the takeover in order to outst S&N from BBH.
The takeover is a victory for global brewing, with scant regard for the interests of consumers, who are likely to see a sharp fall in the number of beer brands brewed by S&N in Britain.
Of immediate concern will the future of two independents with strong links to S&N. Theakston's in Yorkshire was owned by S&N for many years but was sold back to the Theakston family in 2003. It has flourished since then but, due to lack of capacity, the brewery's main brand, Theakston Best Bitter, is brewed under licence at John Smith's plant in Tadcaster. If Heineken consolidates ale brewing and even moves Tetley brands to Tadcaster, Theakston may have to look for a new home.
In Scotland, while the Caledonian Brewing Company owns such brands as Deuchars IPA and Caledonian 80 Shilling, the buildings and plant in Slateford Road, Edinburgh, are owned by S&N. Heineken might be keen to cash in on the potential of a site on the road to Edinburgh airport. Caledonian also owns the Harviestoun brewery near Dollar and may need to expand that site if Slateford Road falls to property developers.

Budvar records increased sales

2008-01-18T09:57:00.000Z

Budvar records increased
sales at home and abroad

The notion that state-owned companies can't compete successfully in the private sector has been scotched by the success of Budweiser Budvar in the Czech Republic. The brewery -- the last to remain in state hands since the fall of the old communist regime -- has posted a 9% increase in domestic sales and a 3% rise in exports.
Budvar's success is all the more remarkable when you consider that the Czech beer market is dominated by two global giants. SABMiller, which owns Pilsner Urquell and Gambrinus, and InBev, the world's biggest brewing group, which owns Prague Breweries, have invested massively in their brands. They have built branded pubs and restaurants, and discounted their beers heavily.
Budvar suffered as a result for a few years but has now bounced back in the most encouraging manner. For from being hidebound or conservative -- the usual charges made against nationalised companies -- it has been innovative and has introduced new brands, including the acclaimed Budvar Dark.
And year after year it tops the poll in the annual awards -- chosen by beer lovers -- in the competition organised by the newspaper Pivni Kyry (Beer Courier).
It seems plans to privatise Budvar are on hold. The current Czech government, a right-of-centre coalitition, announced last year it would turn the brewery into a Joint Stock Company, the first step towards a sell-off. But it now says it won't be able to privatise the company until 2010, by which time there will have been a general election. The experience since the restoration of democracy is that a right-of-centre government is always followed by a left-of-centre one, which is unlikely to privatise Budvar.

Scottish & Newcastle heads east?

2008-01-17T12:33:00.001Z

Crunch time – 24 January – is fast approaching. It's the day when the takeover authorities will demand a decision over the future of Britain's biggest brewer, Scottish & Newcastle (S&N), which is the subject of a hostile and protracted bid from Carlsberg and Heineken.

The bid has little to do with the British market and everything to do with the fast-growing markets in Russia and the Baltic states. Carlsberg and S&N jointly own Baltic Beverages Holding (BBH), which is far and away the biggest brewer in that vast region, where it owns the Baltika brands and breweries. While beer sales are stagnant or falling in western countries, most of the post-Soviet nations are seeing an explosion of demand for beer. Young drinkers in particular see beer as a “cool”, western drink compared to wine and vodka. As a result, all the global brewers are anxious to move into these burgeoning markets.

Heineken has recently bought a major brewery in St Petersburg, Stepan Raizin, and wants to expand its influence in Russia. Rather than investing heavily in modern equipment, it would prefer to work with Carlsberg on the existing Baltika plants. For its part, Carlsberg, which is seeing falling sales of its own brands, would dearly love to own Kronenbourg, currently an S&N brand, which is far and away the biggest seller in France.

The dispiriting aspect of the battle is that Carlsberg and Heineken openly admit their aim is to “break up” S&N. That's bad news for consumers. The two brewers don't want to improve the S&N product range or introduce new beers. They simply want to smash the company and run off with the swag.

Should we care? After all, Scottish & Newcastle is a bit of a joke. In spite of its name, it no longer owns breweries in either Scotland or Newcastle, and has hived off production of the cask-conditioned version of John Smith's Bitter to Burtonwood Brewery near Warrington. But better the devil you know than the devil you only half know. Carlsberg may own Tetley in Britain but it has little interest in the ale sector. Heineken has even less interest in ale. At least consumers can put pressure on the British-based S&N, whereas the Danes and the Dutch are out of sight and out of touch.

Perhaps some good will come out of this, with the Tetley brewery sold to people with a genuine interest in ale. But don't hold your breath. Rumours suggest S&N is talking to Anheuser-Busch, American owner of Budweiser, with a view to a merger to thwart Carlsberg and Heineken. Suicide pill, anyone?

BREAKING NEWS: 17 January -- S&N has announced it has agreed to talks with Carlsberg and Heineken. It seems serious talks about a takeover will start soon.