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Business

Interbrew Has Big Plans for German Market

With its takeover of German brewery Beck, Interbrew acquired a new flagship brand for its international expansion. But the Belgian brewing giant's designs on the German market do not end there.

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The famous Beck logo

"Interbrew clearly has an interest in acquiring critical mass in Germany," said Ammer in an interview with Handelsblatt, adding that he sees no sign that the Belgian group lacks the finances to make more acquisitions.

Talks on the development of a common strategy for Beck and the rest of the Interbrew group are set to begin in February. But Ammer said his understanding of the matter is that Interbrew is set to buy more breweries – possibly relatively large players with a nationwide presence, and possibly smaller players with a regional presence.

The respective product ranges would come together in a product portfolio that Beck's, as a premium-priced, strongly branded product, would expect to head up.

Ammer said he could see a lot of sense in the idea of a collaboration between Beck and Düsseldorf-based brewery Diebels, which Interbrew bought last summer. "That would offer much in the way of synergies, " he said, noting that Diebels is very strong in its regional market of North Rhine-Westphalia – just where Bremen-based Beck is relatively weak.

Conversely, Beck would be able to take Diebels, the leading producer of the distinctive dark Altbier, into its own core markets. According to insiders, a tie-up with Beck would be equally welcome at Diebels. Here too, there's a strong expectation that Interbrew will vigorously pursue its goal of becoming the German market leader.

Interbrew's arrival on the hitherto fragmented German beer market coincides with that of Dutch brewer Heineken NV, which last year took a 49.9% stake in a newly set up joint venture with Bayerische BrauHolding AG, a unit of the Schörghuber Corporate Group. Under the deal, Brau's premium brand Paulaner Weiss beer will gain access to Heineken's sales and distribution network.

Ammer said the changes at Paulaner don't look too radical. And he's not expecting the arrival of the Belgian and Dutch giants to lead to the outbreak of a beer war on the German market. "A positive development is that the market will finally open up."

In the view of Frank Spitzhüttel, marketing director at German brand leader Warsteiner, one is now seeing the start of a long overdue restructuring of the German market

On top of that, Germans are consuming decreasing amounts of beer. Over the past five years, sales volumes have declined by 1–2% annually.

Last year, Beck's went it alone in instituting a price increase. And it saw its global sales volume decline by around 300,000 hl in its 2000/2001 business year from the previous year's figure of 5.74 million hl.

The decline came about almost exclusively on the German market, where its sales volume fell to 1.5 million hl. But it also came close to restoring its market share to 1999 levels, meaning that the price hike appears to have been the right move.

Right now, Beck's has a strong position on the British and US markets. But Ammer sees growth opportunities on other markets where Interbrew has a presence.

The Belgian group has in recent years built itself up to the world's number-two player on the back of a series of targeted acquisitions. "We are firmly expecting Interbrew to put its muscle into developing Beck's," he said.

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