Munich’s Paulaner to build a new brewery

Finally. The news we have been waiting for. At the end of November 2011 Schörghuber Group, which owns the majority stake (75 percent – the rest is owned by Heineken) in Munich’s Paulaner brewery, announced it would relocate the brewery to a larger outskirts site (190,000 sqm). Ground will be broken in 2012.

The German trade publication Inside estimates the project could run to EUR 300 million, including real estate.

BRAUWELT International thinks this is a modest estimate, considering that the new Paulaner brewery will have a capacity of about 3 million to 5 million hl. At its current site, which has been bursting at the seams, Paulaner produces 2.5 million hl beer annually.

Once the brewery’s inner city site (85,000 sqm) is cleared, Schörghuber Group, which is also into real estate development, will convert it into flats. Construction will start in 2018.

The decision to build a new brewery has largely been real-estate driven, although Schörghuber refused to say how much they think they will make from developing the brewery’s former site. Expect them to make more money on selling the flats than they will have to fork out for the new brewery.

The man pulling the strings behind the scenes is Jobst Kayser-Eichberg (or KE as he is nick-named), who owned the Munich Spaten-Löwenbräu brewery. He sold it to InBev in 2004 for EUR 533 million, excluding the real-estate.

Mr Kayser-Eichberg, who has been InBev’s landlord ever since, then bought an industrial site within the city’s boundaries on which InBev could build a new brewery. Mr Kayser-Eichberg never left any doubt that he wanted InBev to move out so that he himself could develop the Spaten brewery’s site, another piece of valuable inner-city real-estate.

In 2010 InBev announced they would not move, even if it perhaps meant paying a higher rent to Mr Kayser-Eichberg.

Fortunately for him, Mr Kayser-Eichberg next managed to persuade Schörghuber to take the land off his hands.

Insiders reckon that should InBev eventually decide to stop operating the Spaten brewery (think costs) they could have all their Munich beers contract-brewed by Paulaner as the new site is big enough for expansion. In Germany, contract brewing on such a scale would be a first, but not unusual in the rest of the world.