Up for grabs ...

... but will anybody go for it? HypoVereinsbank, one of Germany’s leading banks, has officially put its 55 percent stake in the beer and beverage group Brau und Brunnen on the market. Rumour had it that the bank was already holding talks with Interbrew and Scottish & Newcastle. Interbrew immediately denied the story, stating that it was not interested at all in Brau und Brunnen as it did not fit into its portfolio ... and geography one might add. Brau and Brunnen’s core market is in the northern part of Germany where Interbrew is already very well represented thanks to the acquisitions of Diebels, Beck’s and Gilde. With sales of EUR687 million in 2001, Brau und Brunnen is Germany’s number 4 brewer. Its market capitalisation was EUR 285 million at the end of March 2003.

Parting ways

At the end of March, Axel Meermann, the Chairman of the Munich brewer Paulaner, was given the sack according to German media reports. It was rumoured that Heineken would not support Meermann’s international strategy for the eponymous wheat beer brand Paulaner, which led to Meermann chucking it all in. By all accounts, Meermann had hoped to double Paulaner’s world-wide sales following Heineken’s 2001 acquisition of a 49 percent stake in Bayerische BrauHolding which in turn owns Paulaner. Meermann is succeeded by Wolfgang Salewski, who is also chairman of Bayerische Brau-Holding. Paulaner sold 2.7 million hl beer and had a turnover of EUR 275 million.

Trouble down south

There seems to be a consensus that there is little opportunity for Carlsberg to be acquired or to participate in the consolidation of the global beer market. Which may be fine by Carlsberg. Because some of the figures released for 2002 were below expectations.
Carlsberg Group reported that in the financial year 2002 its net revenue rose by 3 percent to DKK 35.5 billion. Operating profit (EBITA) was 15 percent higher and amounted to DKK 3.8 billion. Profit before amortisation and write-down of goodwill totalled DKK 2.1 billion. It was announced that adjusted for one-off items, profit was DKK 2.1 billion - an increase of 8 percent. The brewer’s share of the profit was reported as DKK 1.01 billion. Adjusted for one-off items, the share of profit amounted to DKK 1.0 billion (+10%)..

The Battle of the Bud

The fight for the Budweiser name took three more twists in late winter, writes Lyle Frink from Prague, when the Czech Budweiser-Budvar won rounds in Switzerland and the United Kingdom while the American Anheuser Busch (A-B) won in Sweden.
The dispute reminds one of a line in an old American song "you say potato, and I say potato" where pronunciation differences threaten a relationship. Although both Budvar and A-B pronounce Budweiser the same way, there is almost nothing else they agree on. While the two are now fighting in about 40 lawsuits pending and another 40 administrative proceedings, the current dispute seems to be framed by the Czech Republic’s accession to the European Union in 2004 - and both sides solidifying their positions beforehand. Back in 2001, A-B said it sold 1....

Woe begone

In February 2003, Scottish & Newcastle announced that the implementation of the supply chain reorganisation in Scottish Courage, its UK beer division, had resulted in greater than expected disruption costs and delays in the realisation of cost savings.
At its interim results statement in December 2002, S&N said that its UK supply chain is being reorganised which has resulted in greater than expected disruption costs and delays in the realisation of cost savings. Since then, it admitted having suffered from significant drop in productivity and "double running" costs as the new regional distribution centres come up to speed. S&N Retail, with a quality estate in strong sectors, continues to perform well.63 in December to GBP 3.60 (11 February 2003)..

Breakthrough

At the beginning of February 2003 a Stockholm law court binned a 24-year-old legislation banning the advertising of alcohol products. The decision is viewed as a severe blow to the government which has always pursued very strict alcohol policies. What had initiated the legal battle in Sweden was an initiative by the European Court of Justice declaring Swedish alcohol legislation as unjust because it made the entry of foreign brewers into the Swedish market difficult. A year ago, a regional Stockholm law court had declared the legislation too far-reaching and ineffective. The Office of Consumer Rights expressed its regrets over the decision.

Early spring-cleaning

In an effort to fill its coffers - and get out of not so profitable foreign investments - Germany’s Radeberger Group has sold an 98.8 percent equity interest in Browar Dojlidy Sp. z o.o. (Dojlidy) and an outstanding shareholder loan to SABMiller’s Polish subsidiary, Kompania Piwowarska S.A. (KP) for a cash consideration of EUR 35.15 million (approx. US$37.89 million). The acquisition is conditional upon the satisfactory completion of a due diligence review by KP and the approval of the Polish Office for Protection of Competition and Consumers and the Ministry of Interior."
Dojlidy has one brewery, located in Bialystok in the north east of Poland, some 200 kilometres from Warsaw. The company currently has an annual capacity of some 900,000 hl and annual sales of 734,000 hl.5 billion..

Let’s take another look at them

With many potential buyers queuing outside its door, Germany’s Eckes concern, which produces fruit juices and spirits, has postponed the sale of its spirits division until March or April this year to have more time for negotiations. The Big Three of the spirits industry - Diageo, Allied Domecq and Pernod Ricard – are believed to be among the bidders. Although founded as a spirits company in the 19th century, the family-controlled Eckes generated only half of its profits in the spirits segment in 2001. Its turnover was EUR1.25 billion and its profits EUR 42.9 million. Eckes, which employs 2,500 people, would like to use the proceeds of the sale to increase its fruit juice market share in Germany and in Europe, where the consolidation of this beverage segment has picked up speed.

Can I park here?

Question: How do German banks make a profit these days? Answer: By flogging off the family silver. Deutsche Bank has done it, so has HypoVereinsbank. Officially it’s called "portfolio adjustment" but between you and me it’s the same old thing. In February 2003, Hypo-Vereinsbank sold its 32.1 percent stake in the southern German brewer Allgäuer Brauhaus (130,000 hl) to the majority-owner Radeberger Group (8.8 m hl in 2001) which already controlled 57.3 percent. The value of the transaction was not disclosed. That leaves HypoVereinsbank with a 55 percent stake in the 7.4 million-hl-brewing group Brau + Brunnen (Jever, Berliner Pilsner etc.), which it has been keen to sell for some time but without any luck.6 billion. Does Haindl want to become a brewer? Highly unlikely. Stay tuned..

The year that was

And what a year it was. In the end it was not as bad as feared. Despite a wet summer - remember those floods? - German brewers only had to put up with 0.1 percent of a decline in sales. But if you look at the list of Germany’s top beer brands, which all have gained ground or volume rather, except for War-steiner, you do not have to be a rocket scientist to work out that someone has lost big way.
Worst affected were those mid-tier brewers that have to compete against the national brands on their turf and have very little going for themselves. Interestingly, beer mixes did well again. Given that those drinks took off from a very small base, their success appears more dramatic than it was. This is not to belittle their impact. Thank you.
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