Kaltenberg beer distributed nationally
In June the long-expected roll-out of HRH Prince Luitpold´s Kaltenberg beer by Russia´s number three brewer Ochakovo began.
In December last year Ochakovo signed a deal with König Ludwig Schlossbrauerei Kaltenberg to brew one of its beer brands in Russia under license. Kaltenberg beer is a brand owned by His Royal Highness Prince Luitpold of Bavaria, whose family was been brewing beer for about 700 years.
Prince Luitpold, who has been in the beer business for more than 30 years, has relentlessly promoted his Kaltenberg beer brand as a licensed beer brand in many European countries. Knowing full well that the world today is short of interesting brands, he has had partners brewing his beer from Italy in the south of Europe to Sweden in the north and the United Kingdom in the west.
What distinguishes Kaltenberg beer (named after Prince Luitpold´s castle to the west of Munich) from other beer brands is its long tradition which nevertheless still manages to strike a chord with today´s consumers. Kaltenberg beer reflects Prince Luitpold´s family history. His family has been brewing beer for 700 years. His ancestors introduced the Reinheitsgebot, they founded the brewing university of Weihenstephan and for 200 years held the monopoly to brew top-fermenting wheat beers in Bavaria.
In effect, there are probably few brands on the market that represent an authentic history and can automatically demand a premium positioning like his. While other beer brands have to spend millions of dollars in advertising to communicate their values – Anheuser-Busch is said to dish out some USD 500 million annually on advertising – Prince Luitpold believes that most consumers the world over have a rough idea what a royal beer from Bavaria is and what it means.
Going international with the help of licensed production has been an option fraught with some risks, though, for Prince Luitpold. Several successful ventures in the past were brought to a sudden end when the local brewer was sold to an international brewer. This is what happened to Kaltenberg in Italy when its licensee Peroni was bought by SABMiller. The same happened in India, when Kaltenberg´s partner in Delhi decided to sell out to Carlsberg.
The same is happening in the Ukraine right now as SABMiller takes over one of the Sarmat group of breweries (see below). As a consequence of market consolidation Kaltenberg´s initial Ukrainian partner got swallowed up by Sarmat some years back. However, Prince Luitpold decided to remain with Sarmat. Now that SABMiller is poised to take over one of Sarmat´s breweries in Donetsk, Prince Luitpold thinks it is only a matter of time before the licensing contract will be terminated as SABMiller itself has several international lager brands in its portfolio and will not need the Kaltenberg brand to cover all market niches.
Prince Luitpold has only partnered with privately owned brewing companies to date. He knows as well as they do that a brewer´s portfolio today requires an international premium lager brand. Just check out Heineken´s, Carlsberg´s, SABMiller´s or InBev´s brand portfolio. There you will find an international lager beer, some international specialities, a German beer, a Belgian beer, an English beer right next to a host of local brands. Brewing groups that work international markets try to occupy niches too. For independent local brewers this means that they have to find an international brand without tying themselves too closely to an international brewer who might like to swallow them at some stage.
Kaltenberg offers an alternative. Behind Kaltenberg says Prince Luitpold, lies a network of local brewers, a system based on cooperation rather than on domination.
This is what has attracted Russian brewer Ochakovo to Kaltenberg. Ochakovo is one of the few major Russian brewers without a foreign shareholder, and despite its Moscow base is keen to expand into the more remote regions of the country, where beer´s potential is yet to be completely realised. It already has three regional breweries: one in Penza, to the east of Moscow, one in Krasnodar, down on the Black Sea and one in the Siberian city of Tumen. Ochakovo was founded just before the Moscow Olympic Games to provide the Games with soft drinks. It has been refurbished since and modernised and expanded into the regions to secure national distribution for its beer and kvas brands. It brews about 10 million hl of beer and 15 million hl of kvas, a traditional fermented mildly alcoholic beverage made from rye. Apart from beer and kvas, Ochakovo sells wines, sparkling wines, vodka and a mead beverage.
In Russia, Kaltenberg will be available in bottles, cans and kegs. It will not be sold in Russia´s popular large-size PET bottles as PET´s budet price image does not go with Kaltenberg´s premium positioning.
Ochakovo, says Prince Luitpold, will benefit from Kaltenberg not just brand-wise but also technologically. Kaltenberg´s team of itinerant brewers is known for its expertise.
Currently, Kaltenberg is brewed under license in the UK and Sweden, in Croatia, Bulgaria and Belarus, the Ukraine and Russia.
