Alken Maes’ dilemma
On 19 February 2015 Dutch brewer Heineken pumped EUR 131.5 million into its Belgian subsidiary Alken-Maes. That is the result of an internal liquidation of some inactive distribution companies, and is not the result of operational developments, Belgian media reported.
In book-keeping terms this is merely a transfer of funds from one pocket to another. It is no cash injection.
Nevertheless, it has made some market observers ponder Alken-Maes’ role within the Heineken system. From what we have heard, Belgium’s number two brewer still suffers from overcapacity. From an erstwhile high of 2 million hl beer sales, the brewer is down to an estimated 1.1 million hl.
What is more, Heineken’s Belgian unit has failed to establish the Heineken brand in any significant way. Only an alleged 7,000 hl of Heineken beer are sold in Belgium each year – a far cry from the 20 percent target of total volume sales that Heineken likes to achieve in each of its markets.
Besides, the Belgian pils segment is one where profits are scarce. Take it for granted that AB-InBev’s pils brand Jupiler, which still enjoys a 40 percent share of the pils segment, is profitable because of the brewer’s focus on efficiency. But the same probably cannot be said for the rest, including the Maes pils brand.
If you look at the array of pils brands available in cans in Belgium – cans are huge in the off-premise with about 30 percent of volume sales – consumers can take their pick from any number of beers that sport funny labels. There is one called “Premium” (nothing else), another is called Finkbräu, a third Nobelaner. All of these are sold by retailers like Delhaize and Lidl. Not surprisingly, the supermarket chain Colruyt manages to flog 200,000 hl of its private label brand CaraPils because it is priced at EUR 0.29 per can. This beer is produced in the Netherlands and is the cheapest available in cans. Pils prices range from circa EUR 0.30 per can to EUR 1.04 (for the brand Vedett produced by Duvel Moortgat).
The former Interbrew proved farsighted when in the 1990s it bought specialty beer brands like Hoegaarden and Belvue and developed Leffe to raise its share of the profitable specialty segment from 1 percent to 30 percent within a few years, thus reducing its dependency on pils sales while countering a declining beer market.
True, Alken-Maes offers a portfolio of specialty beer brands, but whether it can compensate the company for its troubled pils sales and its general outlook in Belgium is something only Heineken’s accountants and strategists will know.
