Tag Archives: Meantime

Rice, Clogs and Fettuccini

For the third largest global economy, the fourth largest exporter and a population of almost 130 million people, the influence of Japan on global brewing has been slight. It’s been, in broad terms, a follower rather than a leader, perhaps reflecting the influence of other nations on Japanese identity and culture since the nineteenth century.   And as with many beer cultures, which Japan surely is, its brewing scene was (and is) dominated by large national players; and in a similar parallel, only comparatively recently has a new wave of start ups and craft brewers started to make an impact. Despite this the craft scene is slower to emerge and in quantity at least (overall volume, share of market and number of craft breweries) behind other ‘beer nations’.

Part of this is cultural and behavioural: the Japanese are very proud of the achievements of their companies and traditionally the mutual bonds of paternalistic management with the honour and pride of working for these companies strengthens this. When it comes to beer therefore, Sapporo, Kirin and Asahi have been the mainstays on the islands of Japan for many years. And their interests stretch more broadly across drinks, particularly into distilling (whiskey), sake brewing and soft drinks.

Asahi have always intrigued me: for many years they languished behind Kirin as the leading brewer, with beers dating back to the late 1800s (Asahi Gold is one still brewed today). Traditionally, Japanese beers were heavily German inspired and were frequently malt-accented, leaning towards the Bavarian helles style (only maltier) as well as other German styles too, including black lagers and dunkels. But what propelled Asahi forward was their launch of ‘Super Dry’ in 1987. Pernicious whispers suggest that it was actually based on the recipe of an American light beer that they had been partnering with, but in body it is more like a north German pils: not as hop forward as Jever, but extremely well attenuated, flinty and crisp. I’ve never found it a beer that forms and keeps a good head, but in Japan this is not seen as a particular signifier of quality and for Super Dry less so, often drunk from the bottle as it is, or served in a small glass – it’s high carbonation cleansing the palate well when drunk with food – as beer in Japan so often is. So, a fairly typical, mass produced lager then? Well, yes, but also much more – the beer that saved Asahi in fact. Their performance and share had been falling relative to their peers, but Super Dry was an instant hit – so much so that it changed the character of the Japanese beer market,  and Asahi’s competitors struggled to copy it and catch up.

Asahi 1 DickieFor a brief period, I marketed Asahi Super Dry in the UK. Success with the brand was reasonable over here, albeit, it was always more ‘push’ than ‘pull’ and the relationship with the team from Asahi themselves was always an interesting one – a ‘quick dip’ into some of the differences of business conducted Anglo-Saxon style from that conducted Japanese style. The contract, for example, was always used as a guide by the UK team (de facto) – whereas for the Asahi team it was always ‘de jure’. One year, slightly behind the contractual volumes, the Japanese team decided to deliver the remainder to the UK depot anyway, even though it hadn’t been ordered. Twenty trucks rolled into Burton on Trent carrying enough Super Dry to keep shelves stocked for – well – let’s just say, you could over-winter pretty easily on it. But as far as the Asahi team was concerned, we had committed to a given volume in a contract and we had to find a way to sell it (no B&M Bargains in those days).

Overall though, the Japanese have played it close to home with their expansions beyond the shores of Japan. Kirin invested in Australia and New Zealand; Sapporo, in possibly the most ambitious move, bought Sleeman in Canada whilst Asahi opportunistically snaffled up a stake in Tsingtao from Inbev when it sold that company to oil the wheels of the Anheuser-Busch mega deal.

It’s now a mega-mega-deal that sees the first real expansion of Asahi out of Asia. Should it go ahead, one of the wheel greasers for the SAB acquisition by ABI is European crown-jewel selling. To overcome anti trust rules in the US and to free up cash to reduce the borrowing required, ABI put Grolsch, Peroni and Meantime up for sale. There were many suitors apparently, but Asahi were successful. It’s an interesting move: there are no real synergies (efficiencies or cost savings) as Asahi have no European operations. Shepherd Neame will probably have to find another brand to replace the volume they brew for Asahi in time, but other than that Asahi will be operating three stand alone businesses: the second largest in Holland, second largest in Italy and a significant London craft brewer.   And you can forget the Japanese and Anglo-Saxon business culture differences – they’re going to be nothing compared to Dutch vs. Italian approaches. It’ll be a Bitterballen vs Bolognese bun fight.

But this isn’t a synergy play. This feels quite different and is possibly one of three moves. The first is desperation. It could be that Asahi see the global brewing world consolidating at such a rate of knots that they felt they had to move. An option, but unlikely – these are, after all, wonderful brands and whilst they have paid a premium, they’ve not over paid (about £2bn – chicken feed compared with the £70bn ABI are forking out for SAB). Second, and most likely is that this is an export move. Suddenly, Asahi have a premium portfolio of brands that they can take to most markets: Italian style, Dutch substance and the trendiness of one of the world’s largest brands. Add in, over time, Tsingtao, Meantime and anything else that they can bring to the party, and here is an interesting and powerful range for potential customers. A range that could perhaps nip away at Heineken, or Molson Coors, or even ABI here and there. Thirdly, and the most difficult to gauge is whether this a more strategic growth play. Are we now seeing Asahi build a platform for further consolidation? Will they now use their European base to target mid tier independent brewers (or unloved brands)? Will they use their base to buy into craft brewers (as they have in Australia)?

Whatever transpires, the move will be interesting for the European beer landscape as new morning rays from the rising sun shine down upon it.

© Beer Tinted Spectacles, 2016

Sell out

Crikey – talk about the hissy fit in UK craft beer. Camden Town sell out to ABI, particularly following Meantime falling to SAB and Brewdog, most publically, have a meltdown, kick out Camden products and declare Perpetual Independence.

Let me tell you up front though. I put some money into Camden Town Brewery. This doesn’t make me anti-Brewdog nor pro Camden. In this case, it was an investment, nothing more. I believe now, as I believed when assessing whether to make an investment in them, that they were a sound place to put some hard-earned brass. Here is (was) my rationale:

Firstly, the owners were not the types to be in it for the long term; amongst them Sir John Hegarty. He’s an Advertising Man – he has helped companies build their brands to increase the value of their companies all his working life; he’s also built businesses himself and become a ‘Sir’ as a result. We’re not talking about fighting for a ‘cause’ here like Keith Grossman or Jack McAuliffe or Fritz Maytag were in the 1960s and 1970s USA. Back then, beer was on its knees; behemoth brewers with gargantuan breweries churning out identikit pale ‘lager’. There was something to fight for. London, 2010 – the year Camden Town Brewery was founded? Frankly the craft beer craze was maturing, or accelerating at least. You could well ask 5 years ago, just as much as you could now: do we really need another craft brewery?

IMG_3036

Camden: pops form the bar; instantly recognisable; consistent ‘hellish’ attitude = brand

Well yes, in a way – and here’s my second point. Camden Town was pushing for difference. It built itself around lagered beers, as well as some well brewed specialities – their Wit stands out in particular for me. Most other craft brewers – as much for practical and cost reasons than anything else – stick to ale and top fermentation. So do we really need another craft brewery? No, unless, like Wild Beer Company say, you do something that stands out. You can argue that Camden beers aren’t that different – but in a sea of craft brewed ale, there was little craft brewed lager in 2010; and even accounting for Meantime, still plenty of capacity to push into that space in London alone.

Thirdly, brand. Oh, I know what the purist will argue: the whole point that craft fights against is mass produced brands of non-descript lager: Carlsberg, Carling, Fosters, Stella, Peroni. But that’s an assumption based on a generalisation: that we all want something different. We don’t. Most of us, most of the time, want choices that are reliable and safe. That doesn’t – and I must stress this – doesn’t mean bland, everyday choices – but choices that we feel confident in; that we discovered, found ourselves, trust and that make us feel different. And it doesn’t mean niche. What the team at Camden did brilliantly is screw together an incredible brand: an amazing brand design and identity across the whole range that sings from the bar. A hellishly beautiful tone of voice that unites all their communication. Events, that bring you in to the Camden community and locality, yet which speak to us more widely. These guys didn’t set out to build a brewery, they set out to build a brand and they have done it incredibly.

And whilst I was in it for the long term – looking forward to my ‘Hells Raiser’ annual beer and trips to the AGM – equally, I fully expected Camden to sell; I just wasn’t expecting it to be in the first six months.

Throughout this, Brewdog’s behaviour has been fascinating – and two-faced. Immediately stopping-selling Camden products in their bars, because ‘they don’t sell anything by ABI’ (the small matter that the deal hasn’t gone through yet is a mere trifle) is one thing; but changing their origin story is another. Read their guff; it’s moving; it’s from the heart. But it’s a story. It’s economical with the truth. When Brewdog launched they were quite happy to trade with the mega-breweries they now despise to get their product to market. With Carlsberg. With Molson Coors. With Tesco. With Punch Taverns. I imagine that they still do. They were perfectly happy to buy into the hard work of these companies in building distribution channels and quite happy to grow their brands off the back of them. But that’s been deleted out of their official history now. But the real irony? Brewdog is a lesson in branding. Their beers are fine – nothing more. They’re no better or worse than other craft beers of their styles. The real difference is in the clothes that they wear; their attitude and use of the f-word like a teenager trying to impress his mates. If we truly drunk with our mouths and tastebuds and not our eyes we would all see Brewdog beers for what they are: great brand, average beer.

And there’s an interesting footnote here too: Camden went for about £85m; Meantime about £115m. Molson Coors back in 2010 bought Sharps for £20m… £20m for a larger brewery; in a beautiful location that gives the brand romance, with a leading brand in Doom Bar. Molson Coors must be having a little chortle to themselves now. But it also shows that the money is to be made in great brands – and more interestingly it seems, in lager.

© Beer Tinted Spectacles, 2016

Decisions, decisions

There’s a lot going on in beer at the moment: there’s a daily news narrative on craft beers; stories about old names being revived; people setting up breweries in shipping containers. Proportionately, there’s less about the corporate side: the 90% if you will. But it deserves some attention, particularly at this time. Particularly with the biggest deal in brewing ever being slated. Particularly with one of the biggest corporate deals ever, in fact.

That craft beer narrative is immensely strong. It is more than a story though; it is creating reverberations not just within beer, but across alcoholic drinks, across non-alcoholic drinks and beyond. The craft beer ‘revolution’ is the poster boy of reactionary consumerism; the proof that you can change the food industry not just from within but from the outside too. It is the manifestation of a growing consumer desire for authenticity, transparency, of personal stories over fabricated myths, or small over large – right across the food and drink industry.   There’s a clear argument to be made that ABI buying SAB is a consequence of the rise of craft beer. Certainly if you look at their outputs it is supported: over the last few years ABI have bought ‘breakthrough’ craft breweries: Widmer, Kona, Goose Island amongst others; elsewhere they’ve been copying the rules of craft with brands like ‘Shock Top’. SAB have been concentrating more on strengthening their own brands and now have an incredible portfolio, with brands like Pilsner Urquell, Peroni and Grolsch. They too have bought into craft with the acquisition of London’s Meantime Brewery.

Let’s push beyond the “eazey-news” headlines though. What’s really going on here is polarisation. Yes, craft is growing but it’s growing disproportionately quickly in mature beer markets. Large scale, low growth markets; markets where consumers have had mass marketing rammed down their gullets for decades. But ABI and SAB have their focus elsewhere: to the places and the brands that they can drive long-term shareholder value growth. They’re focus is on central and southern America, India, Asia and Africa. ABI are clear that they want to be the first ‘global brewer’ and this deal gives them an incredible beachhead to push for conquest. As a deal, it will make South America a fortress; it will revolutionise their position in Africa; it will strengthen their footprint in Asia, in particular China, where they will acquire the World’s biggest beer brand, Snow.

Watching this form the side lines, what’s impressive about ABI is their utter commitment to the goal. The newswires yesterday were humming with the revelation that they would be prepared to sell off SAB’s prime assets, notably Peroni and it’s Nastro Azzurro brand. Grolsch too, was mooted as a candidate for sale. They have form here: when InBev acquired Anheuser-Busch they sold off Tsingtao in China – one of the few successful Sino-Anglo Saxon partnerships and a real crown jewel. This tells us a number of things about ABI.  It tells us that they have a clear focus for growth outside North America and Europe where Peroni is notably strong – Peroni is a great brand but in the short term the only thing it is likely to do is give them issues with regulators (plus, the US rights stay with MillerCoors should the deal go ahead).  It tells us that they have a purpose that is unifying and guiding their decisions. It tells us that they are willing to make not just choices but sacrifices – big sacrifices – in order to achieve their vision.  And it tells us too that they believe in their brands – brands that craft beer lovers are generally scathing of (Bud Light, Budweiser, Stella Artois as well as an army of local brands – and they will back them to the hilt in markets outside our (European / North American) frame of daily reference.    Whether you’re comfortable about the size of this deal and the global market share it will leave ABI with, it will be churlish – no, foolish – to ignore the business and brand building lessons that they teach us, again and again.