BRAUWELT International

The Austrian Federal Competition Authority seeks to fine Dutch Heineken and its Austrian subsidiary Brau Union potentially billions of euros for market abuse and violations of the anti-trust ban. In June, the watchdog submitted a 260-page application for an “appropriate fine” to the cartel court. It had found evidence that the beer market leader Brau Union “cemented” its dominant position by using unlawful methods. In this podcast Ina Verstl and Ernst Faltermeier discuss the case, while drawing attention to Europe's brewers and their previous cartel shenanigans. They wonder why Heineken Austria has been kept on a long leash and allowed to operate a vast number of breweries, while its parent has closed production plants right, left, and centre across the continent.

In January, the Chinese government launched an anti-dumping inquiry into all brandy and cognac imported from the EU. Cognac producers deny the allegation. In reality, they have been caught in the crossfire of a tit-for-tat trade dispute between Brussels and Beijing. By targeting cognac, China is expressing its displeasure not just with the EU's probe into China's subsidies for electric vehicles, but also with the EU Commission's plans to de-risk the bloc's bilateral relations with China. In this podcast Ina Verstl and Ernst Faltermeier look at trade disputes past and present and explain why wines and spirits make for ideal targets in cross-retaliatory measures and punitive tariffs.

The brewer of Modelo Especial, Constellation Brands, struck it lucky twice in the past 30 years: first in 1996, when Mexico's Grupo Modelo awarded them an evergreen contract to import Corona Extra into the US; then in 2013 after trustbusters at the US Department of Justice forced a settlement on AB-InBev during its takeover of Grupo Modelo, which turned Constellation into an independent, fully integrated, and economically viable beer industry competitor. In this podcast Ina Verstl and Ernst Faltermeier lift the fog of history and tell an exciting story.

Given the recent evidence of Russia's President Putin seizing Carlsberg's Baltika breweries and Anheuser-Busch's Bud Light marketing blunder, many observers wonder if brewers' early-warning systems and contingency plans don't need an overhaul in times of rising political and geopolitical risks. The board is supposed to be a company's periscope to spot any danger on the horizon. But, what if brewers' boards still seem to rely on their ability to dive under it?

After Dylan Mulvaney, a transgender actress, on 1 April, shared a video on Instagram for Bud Light with her followers, conservative politicians and celebrities condemned Anheuser-Busch for being a “woke company” and boycotted the brand. Throughout April, Bud Light's sales tanked, which conservative media celebrated as proof that their boycott was working. Observers are scratching their heads: How could Anheuser-Busch's leadership so obviously underestimate the risk of a pushback from consumers?

In 2022 there was a shift in the public discourse around corporate profits. Many suspect that wily corporations had spotted a chance to jack up prices by more than their own costs have increased. Entering into 2023, the conversation has moved away from that sense that profit is always good and hiking profits the essence of doing business. Many wonder: Why is turning a profit suddenly considered a bad thing?

The Big Brewers seem to be pushing brands that half of the world didn't know they needed. But there is a risk to Big Brand thinking: Just because the Big Brewers have the muscle to push brands into a market does not mean that these brands have a unique customer value proposition. The rise and fall of the Foster's beer brand can serve as a warning.

If the moral case against President Putin's attack on his neighbour is undeniable, the business arguments for and against pulling out of Russia can be more complicated. In this episode Ina Verstl and Ernst Faltermeier discuss why brewers balk at leaving Russia.

In June, San Diego's craft brewer Stone was sold to Japan's beer and beverage group Sapporo. This came after Stone's founder, Greg Koch, had touted for years he would never sell and lashed out against those who did. Does this make Stone's Koch a turncoat, who fell for a macro brewer's lucre, or does the deal have wider implications?

Russia's invasion of Ukraine has upended the existing world order: from one that was based on rules to one in which naked power rules. The age of globalisation is coming to a catastrophic close. In the brewing industry it has even gone into reverse as the Big Brewers are exiting a major beer market. No one knows if the fighting will last for weeks, months or years How are brewers to plan ahead?

The Big Brewers issued their 2022 financial outlooks in February. They were remarkable insofar as Carlsberg, Heineken and AB-InBev refrained from commenting on geopolitical risks to their businesses - at a time when all our eyes were turned to Russia and its looming invasion of Ukraine. What can this possibly mean?

AB-InBev is trying to talk up its share price. It is trading at a significantly lower valuation than every single one of its peers, despite controlling a third of the global beer profit pool. As the economist John Maynard Keynes said: Financial markets are moved by animal spirits, and not by reason. In this podcast Ina Verstl and Ernst Faltermeier discuss if AB-InBev's new strategy, which banks on organic growth, is likely to sway investors in a big way.

In today's climate, political issues have become hotly contested. Activists are dragging business leaders into debates that have little to do with their commerce. But before brewers go and find a soapbox to stand on, they should be aware that whatever they say, they could potentially alienate half of their workforce and consumers. So what are they to do?

From bottle and can shortages to shipping delays and soaring commodity costs, the pandemic has strained brewers' global supply chains. Amid ongoing geopolitical tensions and a toughening of European legislation, brewers will have encountered vulnerabilities in procurement and risks in their production strategies just about everywhere. How can brewers improve their supply chain resilience?

It was a remarkable admission by James Watt, one of the founders of Scottish craft brewer BrewDog: He said that in March 2020 he broke down in tears when the severity of covid-19 became clear: BrewDog had lost almost 70 percent of its revenue overnight, almost all of its 100 bars were closed, most of its export markets stopped ordering. Pivoting its website to prominently feature its online shop proved a way out. BrewDog ended a potentially ruinous year profitably. So what can craft brewers learn from BrewDog's e-commerce model?

The latest deceptive buzzword in the brewing industry is digitalisation. Like all terms it can mean a whole lot of different things. Take the Drizly app. It is a piece of technology which was bought by Uber in February 2021, whereas Flaschenpost (message in a bottle), which was acquired by Germany's major brewer Radeberger in December 2020, is fundamentally an old-economy type of beverage retailer that uses an app where people can order stuff. The world of shopping is undergoing an upheaval. For consumers the benefits are obvious: they will gain greater convenience from being able to shop either physically or virtually. But for retailers and producers the challenges are immense.

Both Coke and Heineken announced they will be launching their hard seltzer brands in Europe this year. Tere are several barriers that any hard seltzer brand will need to overcome in Europe, starting with the fact that “seltzer” is not a word used here. Will consumers over here really fall for the hype of low calories in an alcoholic beverage? Besides, the powers that be in both Germany and the EU are already taking a long hard look at hard seltzers because it could be argued that they are akin to alcopops. Those drinks were taxed nearly out of existence in 2004. If this fate were to befall hard seltzers too, their time in the limelight in Europe could be brief.

For all the hype and hope over sustainability, the market share of organic beers remains small. Is it because consumers do not want to pay more for them? Or is it because other purchasing criteria like flavour, style and support for the community are still more important?

Narratives help us make sense of the world and ourselves. Take globalisation. It was presented to us as an inevitable process, forging global champions in its wake. In the brewing industry, the narrative of “biggest is best” was countered by the craft brewers' own narrative, which was modelled on the biblical story of David and Goliath. These narratives have reached closure. Do we still need a compelling new narrative to maintain a conversation around beer?

Dubbed MegaBrew, the merger between AB-InBev and SABMiller in 2016 combined the world's two largest brewers. In the following years, AB-InBev unwound SABMiller little by little. But its megadebt has proven a headache. Was the whole thing really worth it?

Through dealmaking the Big Brewers could bulk up more quickly than through organic growth. That is how they become global. But not all deals lived up to expectations. Constellation Brands' purchase – and subsequent sale – of US craft brewer Ballast Point can serve as a warning.

The award-winning authors Ina Verstl and Ernst Faltermeier will provide sound reasoning on economic and strategic issues affecting the brewing industry. This time they answer the question: Is brewing beer an essential industry?

BRAUWELT International is hosting a new series of podcasts, which will feature the award-winning authors Ina Verstl and Ernst Faltermeier, whose book The Beer Monopoly was published by Hans Carl in 2016. In their short podcasts the two will provide sound reasoning on economic and strategic issues affecting the brewing industry. You can listen here free of charge. From globalisation itself to craft beer, the brewing industry has witnessed all kinds of disruptions. Even CEOs sought to become disruptors. And now we have the covid-19 pandemic, which has hit the industry unprepared.