Friday, 31 July 2009

British lager in turmoil

Global giants are axing plants
as craft brewers' sector booms

The British lager market is in turmoil. A beer style that seemed unstoppable has suddenly crashed into the buffers.
The crisis – falling demand and sales – is best seen by the activities of the world’s brewing giant AB InBev. Earlier this year, it announced it planned to close the Stag Brewery in Mortlake, south-west London. It’s an historic site, owned for many decades by the Watneys group. More recently it has brewed Budweiser for the American giant Anheuser Busch, now merged with InBev.
This month the group reported that it planned to withdraw Castlemaine XXXX from the British market. It said it had decided not to renew its distribution deal with the Australian brewer Lion Nathan, owner of the brand, as a result of “challenging market conditions” here.
And now comes the news that AB InBev may close the Tennent’s lager brewery in Glasgow. This is truly ground-shaking. Tennent’s accounts for 60% of the Scottish lager market – and the Scots drink a lot of lager.
AB InBev refused to comment on the media speculation, but as the story first surfaced in the Times – not a paper given to idle speculation – we have to assume it’s true. According to the newspaper, the brewer has appointed investment bankers Lazards to dispose of the Wellpark site in Glasgow to help the group reduce its debts.
Tennents holds an important role in the history of brewing in Britain. It was brewing lager as early as 1888 and is thought to be the first company to make beer by the system of cold fermentation. According to a contemporary report, by 1906 “a new brewery complete in all details has arisen occupying the whole north-east portion of the site of the Brewery, and devoted to the manufacture of Lager, Munich and Pilsener beer”.
Tennents became the Scottish arm of the Bass group. When Bass left brewing in 2000, it sold its brewing interests to the Belgian group Interbrew, which in turn merged with Ambev of Brazil to become InBev. InBev swallowed Anheuser Busch last year, the greatest merger in world brewing history, making it the biggest manufacturer of beer on the planet.
The mergers have come at a heavy price. Not only is InBev loaded with debt as a result of buying AB but it finds that a decreasing number of drinkers want to consume its products. It shifts vast amounts of liquid through supermarkets but there is little profit in that sector of the market as a result of massive discounts demanded by the high street retailers.
The decline of the brewing giants stands in stark contrast to the success of the craft brewing end of the market. There are now 668 breweries operating in Britain, more than at any time in living history. Some 160 breweries have come on stream in the past three years and, while not yet complete, the new edition of the Good Beer Guide will list a further 50 or 60.
It’s a standing joke among giant global brewers that they spill more beer than the craft brewers produce. But that’s not the point. Consumers are voting with their feet, forsaking the bland liquids of the globals and switching to beers with flavour.
AB InBev is not alone in closing breweries. Heineken, which owns both Beamish and Murphy’s in Cork, has announced it will close Beamish and concentrate the production of stout at Murphy’s. Last week, the Dutch giant said it would close the massive Fischer brewery in Lille in northern France.
Back home, Carlsberg will close the historic Tetley’s plant in Leeds while S&N – owned by our friends at Heineken – has already closed its Bristol, Edinburgh and Newcastle plants and now has its axe is poised over Reading.
In the 1970s, a leading British economist called E.F. Schumacher wrote a book called Small is Beautiful. It was a best-seller in its day and it urgently needs to be republished.
Schumacher’s argument was a simple one: big businesses are inherently inefficient and even chaotic. They dehumanise the people they employ as a result of their sheer size and remoteness. And they frequently produce goods and consumables that are over-hyped, expensive and rapidly rejected by consumers.
Forty years on, it’s an argument with great resonance for global brewers. Drinkers are increasingly tired of bland, fizzy liquids. Concerned about global warming, they want beer that is brewed with locally-grown ingredients and sold in pubs close to the brewery, not trunked around the planet.
Many of the new wave of British beers will be on show next week at the Great British Beer Festival in London’s Earl’s Court (see www.camra.org.uk). Be there – and buy me a beer.

4 Comments:

Blogger The Beer Nut said...

Yep, Beamish is already gone: the gates closed on 1st July. Miller production is now at the Grolsch plant, but Heineken have taken Foster's under their wing at the Murphy Brewery.

31 July 2009 at 21:34  
Anonymous Fatman said...

I'm not entirely convinced about this statement:

"Concerned about global warming, they want beer that is brewed with locally-grown ingredients and sold in pubs close to the brewery, not trunked around the planet."

Certainly, my neighbours aren't going to change their drinking habits to save the planet. However, what they will do is chose the tastiest beer on offer, and that so often means the freshest, which in turn means a short, direct supply chain, which often means the local brewery. Couple that with their new found desire to be adventurous and surely only small business can sate their yearnings?

That said, is it not inevitable that the mass produced will rise again one day, in a cyclic type of way?

1 August 2009 at 09:40  
Blogger Johnny Norfolk said...

I think it is good news when a factory brewery closes. There are more fantastic local brews than ever so its bound to happen. Most of this global brand beer is horrible to my taste, I will miss none of it.
Look whats happened to Newcastle brown, brewed in a factory and it is not anyway near the same as it was.

1 August 2009 at 14:26  
Anonymous Lindsey said...

Nice post which And now comes the news that AB InBev may close the Tennent’s lager brewery in Glasgow. This is truly ground-shaking. Tennent’s accounts for 60% of the Scottish lager market – and the Scots drink a lot of lager.
AB InBev refused to comment on the media speculation, but as the story first surfaced in the Times not a paper given to idle speculation we have to assume it’s true.Thanks a lot for posting this article.

27 May 2012 at 17:06  

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