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Nov 04 2008

SABMiller plots ‘market share grab’ in Germany

Published by at 11:17 am under Companies,Top Stories

SABMiller wants to double its beer sales in Germany within a few years and intends using Grolsch as its big “weapon of attack”.

A publication of the German media group Georg von Holtzbrinck carried the following report today (I translated in full):

SABMiller wants to massively grow its market share in Germany. It wants to double its beer sales to 300,000 hektoliter within a few years, Tiarnan Bergin, German boss of SABMiller, told the national business daily newspaper Handelsblatt.

To achieve this ambitious goal, SABMiller will (mostly) rely on its Dutch brand Grolsch. “In Germany we want to grow our Grolsch sales within a few years from 20,000 to over 70,000 hektoliter and push Heineken from the position as leading imported brand from the Netherlands,” said the 36-year-old born Irishman, who learnt his trade at the Irish competitor Guinness (Diageo). 

In the most recent financial year SABMiller achieved a turnover of €16.7 billion and now wants to also build sales of Grolsch in other regions. It had to fork out a lot of money when it bought Grislch at the end of last year. The CEO Graham Mackay handed over a total of about €820 million to the Grolsch family and other shareholders. That equalled roughly 15 times the last gross profit (Ebitda) of the tradition-rich company founded back in 1615. In comparison: In 2001 the competitor Inbev paid 13 times Ebitda for the Bremer-based brewer Beck & Co, owner of the world brand Becks. That was the “record” – until the Grolsch deal came around.  

“Since acquiring the brand, we have introduced it to the South African market. We also see chances in Latin-America, Africa, Asia and in a number of European markets,” said Bergin, the SABMiller boss in Germany for the past two years.

This is SABMiller’s reaction to the acquisition of the Belgian-Brasilian competitor Inbev of US brewer Anheuser-Busch. With this acquisition (which has not yet been completely concluded) Inbev pushed SABMiller from the position as the world’s biggest beer brewer.  

Instead of making more expensive acquisition, SABMiller now wants to score marketshare in Germany with its wide-ranging portfolio of brands. To help it get there, the advertising budget has been increased by 20%. (Even after this increase, the budget is still smaller than €10 million, and can thus not handle a TV campaign.)

Apart from Grolsch, the Czech brand Pilsener Urquell will play a central role in the growth plans for Germany. In the past year SABMiller sold 200,000 hektoliter of this brand in Germany, which was more than the brands Budweiser and Breznak (both also of Czech origin) achieved, said market researcher AC Nielsen. This made Pilsener Urquell the number one imported beer in Germany.  

While competitor Budweiser Budvar and the SAB brand Pilsner Urquell both lie in the premium price bracket, Breznak (imported by Drinks Union) is a typical “consumer beer” selling below €10 per case, making it especially popular in eastern Germany. In future Grolsch will continue to sell for €13 per case. 

Another premium product which Bergin now wants to bring to Germany, is the Italian leader Peroni Nastro Azurro. “We want to sell this brand exclusively at Italian restaurants, positioned as a life style product,” said Bergin, who doesn’t fear the competition from wine. Bergin sees its beer moving on the same level as the liqueur brand Ramazotti, or upmarket water brand San Pellegrino. 

Local brewers, such as Veltins, thinks the potential is low: “The German beer market is known as the lion den – and with justification. Most foreign players fail after just a short while on the market, while the volume expectations were simply too high,” said Volker Kuhl, marketing and sales head of Sauerländer Brauerei. 

But, Grolsch already has a good name among German tourists to the Netherlands – most coming from the neighbouring state Nordrhein-Westfalen. Furthermore, the German state with the densest population per square kilometer, lies quite close to the modern Grolsch brewery in the Dutch town of Enschede, which currently only utilises about 85% of its annual capacity of almost four million hektoliter.

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