Duvel Moortgat looks forward to strong sales in second half of 2021

Belgium | In a rare interview with the press, Michel Moortgat, the CEO of beer group Duvel Moortgat, admitted that its beer sales dropped 12 percent to 1.94 million hl in 2020, but that buoyant sales in the remainder of 2021 could make up for a lot.

How did Duvel Moortgat get through the coronavirus crisis? Not so bad, Mr Moortgat told the Belgian newspaper De Tijd on 29 May 2021. Still, his initial forecast that there would be a drop in turnover and an even greater decrease in profit came true. In 2020, group revenue fell 14 percent to EUR 433 million (USD 526 million), while profit declined 20 percent to EUR 52 million (USD 63 million).

Brewery visits dropped 70 percent

That was mainly due to two income streams being cut: sales to the hospitality sector and brewery visits. “In Belgium we have about 125,000 visitors to our breweries in a normal year and even more in the United States. Last year there were only 35 000 visitors,” Mr Moortgat was quoted as saying. None of the group’s ten breweries were idle, though. Duvel Moortgat owns four breweries in Belgium, three in the US, as well as one each in the Netherlands, Italy and the Czech Republic.

Under the circumstances, the family-owned company was lucky that it brews mostly specialty beers. During the lockdowns, consumers more often reached for specialty beers and strong brands, while confined to their homes, Mr Moortgat explained. However, sales of lager-style beers suffered during the pandemic because of their high dependency on the on-premise.

The only country where Duvel Moortgat grew in 2020 was China. Volume growth was 20 percent over the previous year. China is still a small market for Duvel, with a turnover of several tens of million euros. The US and Belgium are the largest markets for the brewer. The US market, where Duvel owns breweries Firestone Walker, Boulevard and Ommegang, suffered the most, but bounced back quickly. In Belgium, Duvel sold 12 percent less beer and the recovery will be slower.

What is another name for “financial assistance”?

Most noteworthy was Mr Moortgat’s voluntary admission that he “offered operational or temporary financial assistance to two smaller breweries, out of solidarity,” which is probably a polite way of saying that he took the opportunity to clinch two deals on very favourable terms for Duvel. The CEO did not say who the recipients of his “financial assistance” were. It should not be ruled out that in a few years’ time Duvel will up its stakes in them.

Despite the blow to its financial results, Duvel Moortgat is paying a dividend of EUR 22 million (USD 27 million) to its family shareholders. This represents just over 40 percent of profit, in line with the pay-out ratio before and after the company’s 2013 stock market exit, De Tijd said.

Optimistic about second half of 2021

As restriction will relax in the hospitality sector, Mr Moortgat is cautiously optimistic about the second half of the year. “We have a good feeling about the enormous enthusiasm of consumers to support the hospitality industry,” he was quoted as saying. “Most people saved during the pandemic and got richer. There is a willingness to live, to enjoy, to spend. A good summer, a good autumn can make up for a lot. If we can operate normally, I think the coming months will be strong,” he added.