Is Efes eyeing up a German brewery?

The one million dollar question is: will Germany’s Turks rank patriotic concerns over image? In other words, will they go for an Efes because it’s a Turkish beer brand or would they rather drink Beck’s Green Lemon because it’s fashionable?

Should the recent experience by a Turkish entrepreneur be a measure of success, then the answer to the above question is a firm “no”. The allegedly Turkish beer brand “Bey” which was launched two years ago, folded last October. And this was despite the fact that “Bey” had announced plans to build a brewery in Dortmund.

Apparently, Turkish brewer Efes believes that Germany’s Turkish community is still an untapped consumer group. After years spent on the sidelines, the brand Efes Pilsen is now being brewed in Germany by Einbecker Brewery which allows Efes to join Germany’s returnable and refillable beer bottle system.

It was the tightening of Germany’s packaging legislation a decade ago which more or less killed Efes’ beer exports to Europe’s major beer market. Subsequent talks with Beck’s to distribute Efes came to nothing.

Since then Efes has had to rely on about 10,000 Turkish supermarkets (Nielsen estimates) and an unknown number of Turkish bakeries plus fast food outlets to bring the beer into the market.

Estimates vary widely how much volume Efes has sold in Germany per year. However, pundits believe it cannot have been more than 20,000 hl.

If we acknowledge that Einbecker’s spare capacity is about 200,000 hl to 300,000 hl, Efes could ultimately aim for a per capita consumption of 15 litres among Germany’s Turks. That is provided Turkish beer lovers will switch to Efes.

Let’s assume Efes got their market research right and their pricing. Pricing in particular will prove decisive. If Efes intends to push volume, a 10 litre crate of Efes should not retail for more than EUR 10. Currently, Efes Pilsen sells for EUR 12.99 per crate.

In Germany, Efes is distributed by Drinks&Food, the German unit of Dutch spirits company Koninklijke Distilleerderij M. Dirkzwager B.V. Holding.

Although Einbecker is a publically listed company, management has preferred to keep shtum on targets and future plans.

But shareholders would love to see the contract-brewing deal between Einbecker and Efes evolve into an outright takeover.

At the moment this is idle speculation. There are still plenty of breweries with excess capacity in Germany Efes could take production to in case they need to expand.

Anadolu Efes’ rise among the world’s brewing groups was stalled last year. In 2009, Efes Brewing International (EBI), which got a separate listing in 2004 and operates in southeast Europe, Central Asia and Russia, was hit hard by the economic meltdown. EBI saw volumes decline 3.1 percent to 13.6 million hl and net sales revenues drop 17.4 percent to USD 857 million.

At the end of March 2010, Anadolu Efes raised its stake in EBI by 26 percent to 99 percent for USD 187 million. Further, Anadolu Efes intends to make an all cash offer as soon as reasonably practical to acquire all outstanding shares in EBI.