Carlsberg plans to build a new brewery in Hamburg
Carlsberg plans to build a new brewery in Hamburg
To all appearances Carlsberg’s German unit Holsten will vacate its present inner city site in Hamburg and build a new brewery south of the river Elbe. There it has found a spot in an industrial area under lease from the city of Hamburg. Officially, Carlsberg Germany plans to move to its new site during the first quarter of 2018, estimating that it will only take it 70 weeks to plan and build a brewery.
But the brewer has already said that, in case it misses this target, it will postpone relocating by a year and might shift production elsewhere, at least temporarily.
Carlsberg Germany currently employs 450 people in Hamburg. 200 admin and sales jobs will remain at the inner city site. Redundancies in production have already been announced which might amount to EUR 12 million (USD 13 million) in severance payments, according to insiders.
At the present site, the former Holsten brewery, Carlsberg has a production capacity of 3.5 million hl, which is in excess of its requirements. The new brewery will have a capacity of 1.0 million hl, it was reported.
Allegedly, Carlsberg will receive EUR 150 million (USD 166 million) from the sale of its old site to a real estate developer.
As the Carlsberg Group continues to struggle in Russia and China, Carlsberg’s CEO Cees ‘t Hart has implemented a severe cost-cutting programme, announcing 2,000 redundancies in November 2015.
In view of the general situation at the Group, many observers find it puzzling that Carlsberg is pushing ahead with a new brewery in Germany.
Germany does not suffer from lots of red tape, but the projected 70 weeks appear excessively optimistic, if not downright impossible.
Moreover, building a new brewery might cost Carlsberg around EUR 125 million, which would leave the group with very little profits from the sale of its Hamburg real estate. Even if it were to use equipment from its disused breweries in Russia, costs would still be sizeable and it might take far longer to get the plant up and running because of mis-matched kit.
Observers also point out that Carlsberg could easily buy a one million hl brewery in Germany for USD 25 to USD 35 million that fits its capacity requirements. By rule of thumb, if investors were to buy a brewery in low-margin markets like Germany, China and Russia, they would need to fork out about USD 30 to USD 35 per hl beer sold, minus “investment black holes”, minus pension provisions, minus redundancy payments. Except perhaps for its cultish Astra brand, none of Carlsberg’s other brands are tied to Hamburg. Already Carlsberg produces the Holsten brand at its brewery in Lübz, a small town 150 km to the east of Hamburg, and under contract elsewhere.
All said, observers find Carlsberg’s plans for a new brewery in Hamburg confusing.
