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Europe/Russia

25 August 2021

Dr Oetker split in two: beer and bubbly go their separate ways

Germany | All families quarrel. But none more viciously if a business is involved. The five children from the first and second marriage of Rudolf-August Oetker, grandson of the eponymous founder of a custard powder dynasty, and the three offspring from his third have been at each other’s throats for years.

In July, they finally agreed to split the vast conglomerate of 440 companies, which includes interests in food (eg frozen pizza), beer, sparkling wine, hotels, chemicals and logistics, into two, following disagreement between shareholder groups over the future strategy of the business.

Who gets what

The group, with sales of around EUR 7.3 billion (USD 8.6 billion) in 2020 (it does not report profits) and 36,000 employees, will be divided across family lines. The siblings from Mr Oetker’s first and second marriage will keep control of the food business, including the Radeberger group of breweries (including Radeberger, Jever, Clausthaler), Germany’s largest, and will retain the company name of “Dr. Oetker”.

The three children from the patriarch's third marriage founded Oetker KG. Their portfolio includes the sparkling wine and spirits manufacturers Henkell and Freixenet, as well as the Oetker Hotel Management Company (OHMC), which operates under the brand name “Oetker Collection”.

The patriarch Rudolf-August Oetker, who died in 2007 aged 90, had left a stake of 12.5 percent to each of his children and made sure in his will that the five elder ones could not outvote the younger ones. However, they failed to agree on many issues and the group ended up being paralysed.

A lot of cash to share

The beauty of a conglomerate is that risk is spread across several industries. In 2020, Dr Oetker’s turnover only dropped marginally to EUR 7.3 billion from EUR 7.4 billion in 2019, because its food business hiked revenues by 6.5 percent to EUR 4.1 billion, while the beer and soft drink business had to stomach a decline in turnover of 9.3 percent to EUR 1.6 billion (USD 1.9 billion). Radeberger still managed to sell 11 million hl beer in 2020, a loss of 4.5 percent over 2019.

Henkell Freixenet, reportedly the world’s largest producer of sparkling wines, saw its turnover dwindle by 7.9 percent. Revenue fell below EUR 1 billion. Oetker’s luxury hotels suffered too, as lockdowns reduced their turnover by 70 percent to EUR 118 million.

When times were good, the Oetker Group had a turnover of EUR 12 billion. But that was before it had to sell off its shipping line to Danish Maersk in 2017 for EUR 3.7 billion because the two warring factions could not agree on a strategy.

This sale left the firm cashed up. Insiders wonder how the spoils will be shared by the rival parties.