Archive for the ‘Russia’ Category

The Godfather of beer blogging, Alan in Canada, has asked the question:

What beer book which has yet to be written would you like to see published?

And the question is a good one. This is a part of The Session. The Session, a.k.a. Beer Blogging Friday, is an opportunity once a month for beer bloggers from around the world to get together and write from their own unique perspective on a single topic. Each month, a different beer blogger hosts the Session, chooses a topic and creates a round-up listing all of the participants, along with a short pithy critique of each entry.

So the host of Session 95 is Alan, go to his blog to see a round up of all contributions this month.

He also wants to know what books we’d like to write. Well, there might be something happening over here, but it’s early days yet. I’ll let you know if and when things get moving.

So I need more beer books? Well. There are beer books silently staring at med from the shelves. Some have been gifts or review copies, some seemed more promising at amazon or in the bookshop than they turned out to be. So I tend to limit my beer book purchases, and I find it very convenient when I can buy an e-book from Evan Rail, ready to digest in one sitting.

But I digress.  There are many beer books waiting to be written. And I have at least three books I’d like to see published.

First of all, my friend the beer scholar Lars Marius Garshol has done some really impressive writing about farmhouse beers in Norway and in Lithuania. He should be given a scholarship to write about the history of small-scale brewing in The Nordic countries and the Baltic countries, including Finland and Russian Karelia. That’s probably too ambitious. But a book on Norwegian traditional beers would be most welcome. too!


On an even broader scale, I’d like a book on European beer brewing history. Starting with historical and archeological sources, painting the broad strokes of the major players.

  • How empires, was and legislation have given the background for clever entrepreneurs.
  • The contribution of Weihenstephan and other centers of brewery education.
  • The emergence of a science of brewing.
  • Family brewers growing into multinationals. Dreher, Carnegie, Jacobsen, Guinness, Heineken.
  • Did the Russian court really drink stout? If so, where was the beer brewed?
  • European beer in other corners of the world.
  • Intra-European beer trade. How much stout did the czars really drink?

There could be lots of tables and figures in such a book, but I’d prefer the good stories, the anecdotes and how beer history fits into the broader history. And I would like lots of maps, old ads and photos.

But there is another book waiting to be written, too. About the emergence of a company that defied all established wisdom within the industry. A company that has used social media, reached out to bloggers, provoked regulating authorities and getting plenty of press coverage without buying ads.

If I was given some months’ salary and freedom to write a book on a beer related theme, I would write the story of BrewDog. And I’d focus on the beer. Unlike the book by the founders of Brooklyn Brewery. That book is not about beer at all, it could have been a chronicling a chewing gum factory.

The Beer Book for Punks could be sold in pubs and bars, bottle shops – and the bookshops of business schools around the globe. Not to mention airports.

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Longyearbyen. Easy to keep the beer cold.

I’ve written about the northernmost outpost of Europe, Svalbard, before. A few restaurants and pubs, even the odd bottle of BrewDog and Nøgne Ø beers. Due to a separate tax regime. the beers are cheaper than in mainland Norway, despite hight shipping costs. We are talking about a flight time of an hour and a half from Tromsø, and shipping is only possible during the summer season.

The special legislation for Svalbard does not only means no alcohol duty, it also states that the production of alcohol is forbidden. After dragging their feet for quite some time, the Ministry of Health sent out a draft of a new set of health regulations for the territory last year. This proposal means that the  ban on alcohol production will be replaced with a systems with licences.

There is one enthusiast in Longyearbyen, the largest town in Svalbard, who has been applying for a permit to start a micro brewery for quite some time. I guess he will have to wait until the new laws have passed the Parliament, maybe some time next year.

In the meantime, others have beat him to it. The major Russian settlement on the island, Barentsburg, has a population of 400, and I think they to a large extent rely on day trippers from Longyearbyen.

With the help of a Belgian manufacturer, they have established a brewery with a capacity of 500 liters per day  (which should be enough). To comply with current legislation, they have apparently started up with a 2.5% ABV beer, but will brew stronger beers when they are allowed to. I believe the brewery, along with everything else in Barentsburg, is run by a company owned by the Russian government.

As Longyearbyen is slightly to the north of Barentsburg, the Russian brewery will be the world’s northernmost for only a year or so. The Barentsburg brewery is selling beer only on the premises, but I belive the Longyearbyen brewery will also export to the mainland.

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It is interesting to see the contrast between the marketing of two different British beer books published this year.

One follows the old way of doing things, sending out review copies to some old chums writing in media wholly dependent of dead trees.

The other uses the social media, creates a buzz as the book is in the making, sets up a Facebook group, sends review copies to bloggers and tells us all about promotional activities in bookstores, in the media and at beer festivals on twitter.

Roger Protz is an old hand at beer writing. The subtitle of his book, Memoirs from a Life in Beer, is a bit misleading, I’d call it Snapshots from a Life in Beer.  It gives us glimpses from his travels over 3 decades. The book, A Life on the Hop,  is published by CAMRA, heavily promoted through CAMRA channels, but the coverage outside the ranks of the converted seems to be slim. Sure, there is a very positive review in the Westmoreland Gazette, bless them, but the google results for the title is mostly listings in online bookshops.

Pete Brown has two beer books under his belt, but he has been a very profiled beer writer for several years with articles turning up all over the place. He used his blog and his Facebook community around the project to promote his project about travelling halfway around the world with a barrel of beer.  Investing some of his time in the social media has then made it possible to use this network for promoting the book, Hops and Glory, when finished.

Both the books are well written and have a similarity in showing the clear voice of the author, giving  personal views without masquerading them as facts. I think A Life at the Hop could have benefited from an editor outside CAMRA headquarters with a little more critical distance. Some more general political remarks an asides on vegetarian menu options could, for example, have been weeded out, as they don’t add much to the tale. I expected more on the history of British beer culture over the last 30 years, too, but I suspect that is another book in the making.

But don’t think of that as a major objection. Both the books on my desk should appeal to roughly the same audience if you subtract the packaging and marketing. 

I assume both of these books will have some shelf life, and perhaps beer books are more suited for fireside reading when the nights grow longer. But the sales numbers so far are quite brutal if you look outside CAMRA at the more general market. Pete Brown is at #5 in amazon.co.uk sales ranking of beer books, while Roger Protz is at #73.

If you look at the beer blogs, you’d find a similar ranking. As printed beer magazines are few and far between those days, there are dozens of high quality beer blogs. That is the main scene today for discussing beer and anything beery.

Pete Browns publishers evidently sent out a fair number of review copies to beer bloggers around the world. And guess what – they (we) wrote about it. That’s what beer bloggers do. All with their own unique perspective.

And it’s not as if CAMRA books are not selling outside their own ranks. Ironically, the Good Beer Guide, edited by none other than Roger Protz is number two in the ranking.

I politely asked for review copies of both books. No prize for guessing which one I got. The other publisher didn’t even bother to answer my e-mail…

This is not rocket science. A similar way of building a core of online followers is done by BrewDog, beermerchants and others. They have video blogs, online competitions, twittering accounts and so on. And they, on occation, send out a box of beer to a friendly blogger. We are easy to please.

Though I never heard again from the guy who offered to send me some bottles of the new watered down version of Stella in hope of a review. Maybe he, after the initial approach, scrolled a bit further down my blog than the contact details. Come to think of it, I haven’t seen it praised on any other blogs either.

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Yes, it’s been a while. I’ve been in Dublin again, and I have some stuff to attend to both at work and at home. But you’re not forgotten.

The weekly business magazine of Danish daily Berlingske Tidende has a major article (available online, but in Danish) on Carlsberg’s strategy following the acquisition of Scottish and Newcastle. Carlsberg is now established as one of the five major players in the global beer scene, and Berlingske Nyhetsmagasin has interviewed the CEO, Jørgen Buhl Rasmussen, who talks quite openly about their four pillar strategy for how to earn money after spending a fortune on the latest acquisition.

The four value drivers are Eastern Europe, Western Europe, Asia and properties. They will not look at totally new markets, and do not envisage a move into, say, South America, even in a ten to fifteen year term.

The key factor in Eastern Europe is, naturally, Baltic Beverage Holdings, which was a joint venture between Carlsberg and S&N. BBH has a market share in Russia that has grown from 20 to 37 per cent in ten years, and is far in front of the four global competitors. The  BBH brand Baltika is the second fastest growing beer brand globally – and has a very high profit margin.

An independent analyst is quoted saying that BBH’s current market in Russia and the former Soviet republics will grow by 54 million hectoliters by 2011 – this expansion is bigger than the total British market.

The Western European market does not allow for such an expansion, so here it is more a matter of cutting costs and running the operations better. The overheads are being cut, as they have been higher then for the competition. They are closing down breweries, even the historical Copenhagen brewery is winding down. Nine or ten of 21 breweries in Western Europe are facing closure. (Including two Norwegian ones, I presume! Ed.)

There are limits to what can be done in Western Europe, but the hopes are very high in Asia, where Carlsberg is going for an expansion similar to the one in Russia. They have been present for some years in mature markets like Malaysia, Singapore and Hong Kong. The expansion now will happen in China, Vietnam and India.

Developing properties is the last part of the four pillar strategy. The development of the old Tuborg brewery area is almost finished, and the Carlsberg brewery in Valby, Copenhagen is next. They also have some very attractive real estate in cities like Leeds and Hamburg. An estiamate prices their real estate at about a thousand million Euros – serious money if you want to reduce your debt.


Expect more beer and less beer industry next. I’m getting thirsty! But no Baltika, thank you!

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The official press release:

Scottish & Newcastle plc (“S&N” or the “Company”) and Carlsberg A/S (“Carlsberg”) and Heineken N.V. (“Heineken”) (together the “Consortium”), confirm that they have entered into discussions in relation to a possible recommended offer for S&N at 800 pence per share. The Consortium’s proposal is subject to certain pre-conditions, including satisfactory completion of limited due diligence. The parties have approached the Panel to request a short extension to the Put up or Shut up deadline to 12 noon on 24 January 2008, to enable the Consortium to complete its due diligence.

There are high stakes here, but with the Russian market the only one expanding in Europe, it may be worth it for Carlsberg. They are the ones putting up the last 20 p per share in addition to the last offer. I’m not sure that the deal is as rosy for Heineken.

Some additional reporting in the Guardian:

Under the proposed takeover, Carlsberg would raise its interest in BBH from 50% to 100% as well as taking on S&N’s underperforming French business and its operations in Greece and China. The Danish brewer is believed to be funding 55-65% of the proposed bid.

Heineken, the junior bid partner, is to take control of S&N’s operations in Ireland, Portugal, Finland and Belgium as well as its market-leading operation in the UK.

UK beer sales have been steadily slipping for more than a decade and the rate of decline has steepened in the past three years, with the introduction last July of a nationwide ban on smoking in public places further hitting beer sales.

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 From the Morning Advertiser:

Scottish & Newcastle (S&N) has rejected a revised bid of 780p a share from Carlsberg and Heineken.

Newcastle Brown Ale sixpackBut S&N said it would be willing to talk if a bid of 800p a share was made by the Consortium.

The revised offer values the British brewer at £7.6bn.

S&N said that it had considered the improved proposal carefully but felt that it still failed to reflect the “unique strengths and markets positions” of the group, and failed to be “competitive with the alternatives the company can pursue for delivering value to its shareholders”.

Jean-François van Boxmeer, chairman of the executive board of Heineken said: “It is decision time for S&N shareholders. Without the S&N Board’s co-operation there will no offer by the Consortium.

“Our increased 780p proposal is the only deliverable opportunity today for shareholders to realise a material premium to the independent value of S&N.”

Jørgen Buhl Rasmussen, president and chief executive of Carlsberg, said: “The Consortium’s increased proposal represents a very generous proposition to S&N shareholders by any measure.

Seems to me they are getting closer to an agreement. This would mean the most for Carlsberg, with the Russian market being the only part of Europe where there is any growth to speak of. I think there are limits to what Heineken will pay for a share of the falling British market.

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The Danish business weekly Berlingske Nyhedsmagasin has an analysis on why the attempted takeover of Scottish & Newcastle is necessary for Carlsberg:

Carlsberg has not been active in the game of consolidation that has been going on for decades among the global breweries.

But that is a thing of the past. Carlsberg has, together with Heineken, entered a hostile bid for their partner Scottish & Newcastle to take over the Russian golden egg  Baltic Beverages Holding, BBH.

The Russian beer market grew by six per cent in 2005, ten per cent in 2006 og 17 per cent during the first nine months of 2007. BBH has not only followed this growth, but it has expanded its share of the market. At the same time earnings are up from  20 % in 2005 to 24 5 this year. This is something completely different from the low margins on the largely contracting European markets where both Carlsberg and S&N mainly operate.

This is what has led to Carlsberg and Heineken bidding for S&N – assisted by rumours about the giant SAB Miller being interested in S&N. And this is what can explain the current bid on the level of their earnings over the next 14 years.

BBH is central for both Carlsberg and S&N. For both it is the Russian activity that gives growth. If you remove BBH from the accounts,  the turnover of both Carlsberg and S&N is stagnating. 

For Carlsberg the Russian brewery represents a quarter of the company’s total turnover – but when it comes to earnings, it represents 40 per cent.

If the gamble pays off, leaving Carlsberg as the sole owner of BBH, the growth comet will contribute almost 40 % of Carlsberg’s total turnover and almost 60% of its earnings.

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European beer giants Heineken and Carlsberg are discussing to join forces to take over Scottish & Newcastle. This does not mean a merger between the Danes and the Dutch, however, they intend to split the spoils:

A statement from Carlsberg said: “An offer, if made, is likely to be in cash. It is currently intended that Carlsberg will ultimately acquire Scottish & Newcastle’s interest in Baltic Beverage Holdings, France and Greece and that Heineken will ultimately assume control of Scottish & Newcastle’s business in the UK and other European markets.”

This will give Carlsberg full control over BBH, which has a forty per cent market share in the rapidly expanding Russian market. Carlsberg has much better profits in Russia than in Western Europe for the time being.

Sources: Morning Advertiser, Politiken

Update: Scottish & Newcastle follows the British principle of keeping a stiff upper lip in times of attack:

The proposed break-up bid from Heineken and Carlsberg, the company’s joint
venture partner in BBH, is unsolicited and unwelcome.

S&N is confident in its future as an independent group with a combination of
strong growth in emerging markets and cash generation in developed markets.

S&N strongly urges shareholders to take no action at this time. A further
announcement will be made if appropriate.

Seeing the beer range they choose to promote on their web site, I would not want to buy their beers, let alone their breweries. Kronenbourg 1664, Fosters, Baltika, Grimbergen (OK, maybe a bottle..) and Newcastle Brown Ale. Nothing very Scottish about that list!

But I love their wording.  A further announcement will be made if appropriate.

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