Brookston Beer Bulletin

Jay R. Brooks on Beer

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Bomonti Beer Factory

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There’s not a lot of beer coming from Turkey. Efes is probably the one most known to us westerners. The first brewery in Turkey was started in 1890 by two brothers from Switzerland, the Bomonti brothers. In 1902 they built a new facility in the southern part of Istanbul which still stands there today. It is situated in the Bomonti district, which of course takes it name from the factory. Beginning in 1938, it was known as the Istanbul Tekel Beer Factory. It was abandoned in 1991, and locals returned to calling it the Bomonti Beer Factory. It’s a beautiful seven-story building.

Earlier this week, Global Investment Holding along with Çelebi Holding announced their intention to turn the building in Turkey’s biggest hotel by 2009, to be operated by Marriott International and known as the Marriott Bomonti Hotel Convention Center.

Today, Turkey’s Culture and Tourism Ministry disclosed they will reject and cancel the offer regarding the 49-year operating lease for the Bomonti Beer Factory because the price was too low. So the factory is once again available. Hopefully, someone will put it too good use. It’s a terrific looking building with great possibilities, not to mention a piece of brewing history.

Anhesuer-Busch Takes Over Marketing & Sales of Kirin

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Anheuser-Busch and Japan’s Kirin Brewery annnounced today that their alliance will be enlarged to include marketing and sales of Kirin beers in the United States. Currently, A-B contract brews all Kirin beers for the domestic market at its Los Angeles brewery. That relationship began ten years ago and included distribution, as well, through A-B’s network of 600 wholesalers. Since 1993, Kirin has been contract brewing Budweiser in Japan for the Japanese market.

August A. Busch IV, president of Anheuser-Busch, was quoted as saying. “American consumers have a great interest in high-end Asian cuisine and culture, including Asian beer.”

Now that’s high-end, klassy with a “k.” Anybody want to venture a guess as to how she’s holding that glass? It looks like it’s glued to her hand or was done with Photoshop.
 

Busch continued. “We are aggressively expanding our range of high-end beers to meet the diverse needs of our consumers. The Kirin beers are of the highest quality and have enormous potential, as the Asian influence is rapidly growing. This new agreement enhances a truly global relationship between our two companies. Now, we also share a deeper commitment to each other’s success.”

But the big three Japanese breweries — Asahi, Kirin and Sapporo — are experiencing the same loss of market share the big U.S. brewers are, and for much the same reasons. Japan’s consumers, mirroring their American counterparts, are demanding more flavorful beers. But at the same time, economic difficulties have led to price wars with so many customers shopping on price alone.

This in turn has led to the rise of cheaper beers made with grains other than barley. Because of oppressive taxes on beer in which over a third of a beer’s cost goes to the government, brewers have been making alternative brews using less than 67% malt by using rice, corn or even soybeans as substitutes. These beers can be sold for half of the all-malt beers. But as for taste, most say you get what you pay for. Long term, this is potentially very damaging to the industry.

As for Kirin’s story, American businessman William Copeland and German brewmaster Herman Heckard founded the Spring Valley Brewery outside Tokyo in 1870. For luck they put a “Kirin” on the label. A “Kirin” (Qilin in Chinese) is a mythical beast that is generally considered a sign of good luck. Though it was not necessarily lucky for the Spring Valley Brewery, which closed in 1884 and became the Japan Brewery Co. a year later under new owners from Yokohama. In 1907, the Mitsubishi family bought the brewery, renaming it the Kirin Brewery. Kirin is currently the best selling beer in Japan.

Grupo Modelo to Distribute Tsingtao in Mexico

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Grupo Modelo, the Mexican brewer who is most famous for making Corona, announced late last week that by the end of the year they will distribute the Chinese beer Tsingtao exclusively throughout Mexico.

Curiously, Anheuser-Busch, who owns half of Modelo (though I understand it’s non-voting stock) also has a 27% stake in the Tsingtao Brewery. With a 13% share of the Chinese beer market, they are the largest brewery there among something like 400 breweries. Yanjing Beer is second and CRE Beer is number three. Less than a decade ago there were over 800 Chinese companies brewing beer, but increasing consolidation has led to the top ten breweries now accounting for 53% of the market vs. 22% in 1996.

The modern beer industry in China began in the 1950s when new facilities were built in most major cities throughout the country. But it wasn’t until the 1970s that true growth started and — due at least in part to its vast population — by 2002 China became the world’s largest beer producer, displacing us at the top spot. The beer industry itself is similar to our own 50-to-100 years ago, with most being regional or local, with few national brands. Partly that’s due to China’s size and partly to its economic system at the time. With changes to the Chinese economy, more nationally recognizable brands are having a greater impact today much in the same way things progressed in the U.S. after World War II, though things are definitely moving more quickly.

Part of that growth is fueled by the the influx of large western beer companies, who began investing in China’s beer market beginning in the 1980s. After several missteps, a second wave of investors started in the early part of this decade and so far has been more successful. Instead of importing unfamiliar brands into China, western breweries are instead buying minority shares in existing local and regional breweries already established there. In the last few years breweries such as Anheuser-Busch, Carlsberg, Heineken, InBev and SABMiller have all made investments in Chinese beer.

Previously the market had been price-driven but a growing economy is leading to greater demand for premium brands, much like what the U.S. is experiencing right now, as well.

Tsingtao was founded in 1903 by German settlers in Qingdao and first began importing its beer to the United States in 1972. In 1996 there were four Tsingtao breweries, but today they operate 48 in China. Tsingtao beer is now sold in more than 50 countries worldwide.

Grupo Modelo, whose headquarters are in Mexico City, exports brands including Corona products, Estrella, Leon Negra, Modelo Especial, Pacifico, Negra Modelo and other beer brands to 150 countries. It is also the exclusive importer and distributor of Anheuser-Busch’s products in Mexico.

Sapporo to Buy Canadian Sleeman

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Sleeman Breweries, of course, has had a for sale sign around it since May so this announcement came as no surprise. Only who had an element of surprise to it. Late Friday, the Japanese company Sapporo announced it has offered $17.50 a share in cash, which works out to $400 million (though some reports say $300 million), for the purchase of Sleeman Breweries.

If the sale is approved and completed, the three largest Canadian breweries will be owned by foreign companies. Molson Coors in number one and number two, Labatt’s, is owned by the Belgian company InBev. Sleeman is currently in the number three spot.

 

John Sleeman, CEO of Sleeman Breweries, holding a bottle of Trois Pistoles from Unibroue, the best brewery in Sleeman’s portfolio.

Foster’s Closing Ranks Again

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Back in June, Foster’s announced it was pulling out of its last remaining brewery in China. Now they’re also leaving India and Vietnam. Reportedly, Foster’s wants to concentrate on their domestic beer market and on selling wine.
 

Vietnam

The Vietnam operations are being sold to Asia Pacific Breweries. According to their press release, APB “will be purchasing the Vietnam assets of the Foster’s Group for $105 million. This transaction includes the rights to brew, market and distribute Foster’s Lager, Biere Larue, BGI, Flag and Song Han, in Vietnam.” This acquisition brings APB’s total ownershio to 29 breweries in ten countries.
 

India

Foster’s India is being sold to SABMiller for $120 million.

From the SABMiller press release:

Foster’s India currently operates one brewery based in Aurangabad in the state of Maharashtra with a licenced annual capacity of 350,000 hectolitres. The company produces, distributes and supports Foster’s Lager, Amberro Mild and Amberro Strong beer brands in the Indian market. In the year ended 30 June 2006, total beer sales were 236,000 hectolitres (2005: 209,000 hl) with Foster’s Lager representing 88% of total production and sales (2005: 85%).

India is the third largest market for the Foster’s brand globally and it has achieved a CAGR of 13% since operations commenced in 1998. It has a presence in 19 Indian states and has a substantial share of the mild beer segment in the strategic state of Maharashtra.

SABMiller India will look to extend Foster’s Lager nationally through its network of ten breweries and seek significant cost benefits from brewing and distributing the brand locally. The Aurangabad brewery will also provide additional capacity for SABMiller’s presence in Maharashtra as well as a platform for access to the Mumbai market.

SABMiller India is the subcontinent’s second largest brewer. Its brand portfolio includes Royal Challenge, Haywards 5000, Castle and the recently launched Haywards Black, India’s first stout beer.

The Foster’s Brand

First brewed in 1888 by the Foster brothers in Melbourne, Australia, Foster’s Lager is one of the world’s best beers. As one of only a handful of truly global beer brands, Foster’s in now available in over 150 countries. Foster’s is one of the fastest growing international premium beer brands in the world and has enjoyed international growth of 40% since 1997. Foster’s is brewed in 12 countries, at 17 locations with over 100 million cases of Foster’s sold annually.

Fal Allen’s Archipelago Brewery Opens

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Last year, my friend Fal Allen left for Singapore to open an American-style craft brewery for Asia Pacific Breweries. Archipelago Brewery originally opened in 1931 but by 1941 was sold to Malayan Breweries (which today is Asia Pacific Breweries). Closed since then, it finally reopened July 24 with three craft beers created and brewed by Fal: Traveller’s Wheat, Straits Pale Ale and Trader’s Ale, which is made with “a touch of Gula Melaka (palm sugar) and ginger.”

From the press release:

Combining the best of Western beer brewing techniques and exotic Asian spices, Archipelago draught beers will be created in small, unpasteurised batches to obtain the freshest beers that complement the region’s weather and food – perfectly.

“We wanted to create a craft brew that is distinctly Asian with a strong heritage. With the use of special Asian spices in our beers, the distinctive taste of Archipelago will undoubtedly appeal to beer connoisseurs in Singapore”, said Ms Andrea Teo, General Manager of Archipelago Brewery Company. “With the refined drinker in mind, the signature tastes of the Archipelago Beer range promises both pleasure and adventure with every drinking experience. By introducing specialty craft beer to the market, we also hope to educate the public about the finer points of beer appreciation and beer-food pairing.”

Brewed and crafted in Singapore to ensure maximum freshness and optimal product quality, the new Archipelago Brewery Company is devoted to the art of brewing and the enjoyment of flavour with a unique blend of East and West. Launching the brand are three main variants, Traveller’s Wheat, Straits Pale and Trader’s Ale. All three combine the credibility of Western brewing techniques with Asian ingredients such as lemon grass, tamarind and Gula Melaka, to create what is arguably the first Asian conceptualised craft beer with Asian characteristics.

I can’t wait to get over there and try them for myself. But Fal will be in Denver for GABF in late September. Perhaps he’ll bring some of his new beers with him for us to sample.

Fal at the brewery opening.

Work, work, work.

OB Blue

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Oriental Brewery, more commonly known as simply “OB,” is the second largest brewery and sells the third most popular brand in South Korea and is probably the best known outside of Korea. Purchased by InBev in 2003, their OB Lager was renamed just OB. A re-tooled version of OB Beer, the original formulation created in 1948, which was before the brewery was even called OB, is being released today under the brand name “OB Blue.”

Foster’s Retreats from China

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Foster’s has sold its last remaining Chinese brewery, in Shanghai, to the Japanese Suntory for an estimated $15 million. Like Lion Nathan a few years earlier, also abandoned the Chinese market, which is the second larget beer market in the world.

According to the Sydney Morning Herald:

ABN Amro analyst David Cooke said Foster’s and Lion Nathan’s exit from China was largely a result of the two being out-muscled – and out-capitalised – in the race for Chinese beer drinkers by brewers such as Anheuser-Busch, SABMiller and Heineken.

“Foster’s and Lion Nathan didn’t have the deep pockets that the other players had,” Mr Cooke said.

The Shanghai sale came seven years after Foster’s signalled its first retreat from China with the sale of its Tianjin and Guangzhou brewing businesses. The sale also comes one month after Foster’s announced the sale of the Foster’s brand in Europe to Scottish & Newcastle for $750 million.

Foster’s said it would continue to market its flagship beer brands in China, pointing out that 90 per cent of the beer shipped from its Shanghai brewery were local Chinese brands. However, there is speculation Foster’s may even sell the licensing rights for its brands in Asia. The company ranks its flagship brand as the seventh highest selling “premium brand” in the world, with 100 slabs being consumed in 150 countries annually.

Additional information from the Foster’s Group press release:

Foster’s Group in China

Foster’s Group entered the Chinese market in 1993, acquiring majority stakes in the Shanghai, Guangdong and Tianjin breweries, Foster’s Group sold the Guangdong and Tianjin breweries in 1999.

The Foster’s Shanghai brewery was originally built in 1935 and has undergone two significant capacity and technology upgrades, the first in 1987 and the second in 1997. With production capacity of 1 million hectolitres, the brewery produces the Shanghai Lager, Guangming, Qing Yi, Yi Hao and has been brewing the Foster’s Lager brand since 1997.

The Foster’s Brand

First brewed in 1888 by the Foster brothers in Melbourne, Australia, Foster’s Lager is one of the world’s best beers. As one of only a handful of truly global beer brands, Foster’s in now available in over 150 countries. Foster’s is one of the fastest growing international premium beer brands in the world and has enjoyed international growth of 40% since 1997. Foster’s is brewed in 12 countries, at 17 locations with over 100 million cases of Foster’s sold annually.

Suntory in China

In 1984, Suntory established China Jiangsu Suntory Foods Co., Ltd. in Lianyungang, Jiangsu Province, as the first foreign company to become a joint venture brewer in China. The company entered the fast growing beer market in Shanghai in 1995 and achieved the number one position in Shanghai in 1999. Suntory Shanghai has maintained a steady growth and produced and sold the first draft beer in the region. In 2005, Suntory acquired the Shanghai Donghai Brewery, and now holds a 54% market share in Shanghai

Anheuser-Busch Picks Up Another Import

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Anheuser-Busch announced today that they would be extending their portfolio of imports to include Singapore’s Tiger Beer, a product of Asia Pacific Breweries. This is the scond such announcement in less than a month, when in late February A-B also announced distribution of the Dutch beer Grolsch.

From the press release:

Anheuser-Busch will become the U.S. importer of Tiger Beer, a leading premium brew from Singapore, expanding the American brewer’s portfolio in the growing U.S. import category, the two brewers jointly announced today.

The agreement gives Tiger Beer access to Anheuser-Busch’s broad marketing and sales expertise and to its wide-reaching U.S. distribution network, which is considered the best in the industry. The deal follows the recent announcement of a similar partnership with the Dutch brewer, Grolsch, continuing an aggressive push by Anheuser-Busch into the high-end beer category.

“Tiger Beer is recognized as one of Asia’s finest beer exports,” said August A. Busch IV, president of Anheuser-Busch Inc. “Tiger Beer is a high-quality, premium brand that is a perfect complement to our growing portfolio of import beers.”

….

Imported beers represent approximately 12.4 percent of the total U.S. beer market, selling 25.6 million barrels in 2005.* The segment grew about 7.2 percent in 2005* and has experienced an average growth rate of 5 percent over the past five years, making it one of the fastest-growing segments of the U.S. beer market.

* Department of Commerce Data provided by the Beer Institute [who we already know cannot be trusted — editor’s note. See my previous rant about the Beer Institute’s being in thrall to A-B via the Here’s to Beer ad campaign.]

The agreement will be effective May 1, 2006. Terms were not disclosed. The imported Tiger Beer will continue to be brewed at Asia Pacific Breweries’ Singapore brewery for export to the United States.

Anheuser-Busch is focused on expanding its participation in the import and high-end beer categories as a key growth strategy for its U.S. business. Anheuser-Busch brews and sells two of Japanese brewer Kirin Brewery’s beer brands in the United States – Kirin Ichiban and Kirin Light. In some areas of the country, Anheuser-Busch wholesalers carry Corona and the other beer brands of Mexican brewer Grupo Modelo.

So if you’ve been following along, this is just the latest by an increasingly desperate looking Anheuser-Busch. It’s not that Tiger Beer is bad — it really isn’t — but taken together with all the mischief the King of (Flavorless) Beers has been up to lately to get revenue and the share price back up after a truly disastrous 4th quarter last year, it’s just becoming more and more painful to watch. In my fantasies I’d like to believe this is their death rattle, but I know better. They’re not only not going away any time soon, they’ll be around long after I shake off my mortal boil. But that doesn’t change the true enjoyment out of watching them squirm and struggle, even if it’s only a very little bit.