Germany: AB InBev considers sale of German beer brands

AB InBev is exploring the sale of its German beer brands Franziskaner, Spaten and Hasseröder, according to report by Bloomberg. The news services cites people familiar with the matter who said that the world’s leading brewer asks for a sales price of EUR 1 billion (USD 1.2bn).

A potential sale would help new CEO Michel Doukeris to reduce the debt left by his predecessor, Carlos Brito, from the USD 100 billion-plus purchase of SAB Miller in 2016.(, 28.9.2016)

Obviously Doukeris, who has only been in office for 3 months, (, 6.5.2021) wants to make the company more profitable and sell low-margin brands and breweries. According to experts, the breweries are almost impossible to sell. The beer giant has not enjoyed its German business for a long time.

Franziskaner, Spaten and Löwenbräu (a brand which is not mentioned in the Bloomberg report) account together for about 2 million hectoliters and are brewed in a brewery in the center of Munich. The property still belongs to the former owners of the brewery. Since 2015, 15 years after the purchase of the brewery by Interbrew, the predecessor company of AB InBev, the yearly lease of the property has increased tenfold to EUR 6.5 million (USD 7.5m). An option to buy a property on the outskirts of the Bavarian capital and to relocate production, which was also agreed at the time of sale was refused by AB InBev. Instead, rival Paulaner, part-owned by Heineken has taken this one-time opportunity and built a totally new and more efficient brewery which was even enlarged by an additional logistics area in 2017. (, 2.6.2017)

Whoever is going to buy the Munich beer brands from AB InBev will either have to build a new brewery within the boundaries of the city of Munich, or lose the rights to serve the beer at the prestigious Oktoberfest which is the oldest and largest beer festival in the world. Even contract brewing in one of the other Munich breweries (Paulaner, Augustiner, Hofbräu München) is probably not possible or very costly and is not advisable since AB InBev's Munich brands, which are already centuries old, would lose their authenticity.

2018, the sale of AB InBev’s German breweries Hasseröder and Diebels which account together also for more than two million hectoliters failed because no buyer could be found. (, 20.3.2019) AB InBev had initially asked for EUR 400 million (USD 464m) and in the end there was only one dubious private investor left over who won the bid for EUR 200 (USD 232m). But when he was unable to pay even this ridiculously low price, the purchase was stopped and the breweries and brands remained in the portfolio.

The German beer market appears attractive due to its size of 71 million hectoliters in 2021. However, beer consumption is declining for decades and has lost about one third of its sales volume in the last 30 year. The market is still dominated by small and medium-sized family breweries, in which families are willing to live with small margins for a long time in order to keep the family tradition alive, often several hundred years old and passed on in the fifth or sixth generation.

Many foreign brewers, like Stone Brewing from California and its charismatic founder Greg Koch have failed in the German beer market (, 5.4.2019), and even brewery giants like Carlsberg or now AB InBev have reduced with a few exceptions their presence rather than expanded it.

Only Heineken is more successful in Germany, as they have resisted the temptation to buy a German brewery and the associated physical presence on the market in the last years. A minority share in Paulaner Group from Munich stemming from 2002, was reduced in 2017 (, 10.2.2017) and the influence of Heineken in day-to-day business of Paulaner is largely excluded.

Instead, Heineken successfully imports its beer from its breweries in the neighboring countries Netherlands and Austria and does not pretend to be a German brand. The German consumer, who has been taught the benefits of the German Purity Law for beer for centuries, is very sensitive to authentic and honest products.

When asked about a potential sale of its German breweries, a spokesperson for Belgium-based AB InBev told Bloomberg in an emailed statement “We continuously assess our options to optimize our business and drive growth.”

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