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Weber: “Beer market changes – changes in supply”

It wasn't actually part of his life plan, three or four years ago, to join the Karlsberg brewery, Germany. "I reconsidered when it went back to being a 100% family company. I thought, the time is right, I'll have fun - so go ahead", explains Christian Weber, member of the management team.

The decision was made in 2009, after Karlsberg International Brand (KHI) of the Saarland, and Brau Holding International (BHI), which had had a 45% equity interest since 2003, had again gone separate ways. The "next generation" effectively joined the company through Christian Weber and his innovative ideas.

There's little time in the beer industry for sentimentality, because the competition is tough and demands complete concentration. There's therefore no trace of pain left from the separation of former partners Karlsberg, Brau Holding International and Heineken. "Business as usual", even. The merger gig was terminated, to be sure, but partner-like cooperation continues. For example, wheat beer producer Paulaner, a successful brand of former partner BHI, makes use of the synergies, and uses Karlsberg Brauerei as a distribution partner for the Saarland region.

There are also tight alliances with the marketing departments of the Mixery division at Karlsberg and Desperados at Paulaner. Christian Weber concludes, "You enter an international structure like this with similar expectations. Then it emerges that the expectations diverge, not least because further business development changes the market." The 32 year old manager explains, "In the end, you have to say that if it's not working out together, you need to amicably go your separate ways. And we get it right."

From Christian Weber's point of view, the time for consolidation in a heterogenous German market is not yet over. However, the collaboration between companies will change. Classic mergers are out, and innovative, intelligent cooperation models that are not necessarily based on equity interests are in. Modern structures are primarily based on the use of existing synergies. Collaborative work is conceivable, for example, perhaps in distribution or market cultivation. "That's admittedly difficult to push through, continue and maintain in our market with high competitive pressure. But I think that the old takeover model is slowly coming to an end", says Christian Weber. Looking into the future, distribution channels will also change, or rather, they are already in the process of changing.

A key reason for this is that it's ever more difficult to sell products in the typical beverage market. Retail groups are instead bringing more and more beverages into the product portfolio. This in turn means that logistics handling and market cultivation concepts need to change. "We're still way behind in market cultivation compared to the snack sector, for example", is Christian Weber's assessment of his industry. "Point of sale marketing work is still far ahead of us in this segment. At some point, it's important to break with patterns learned."

This assessment also applies to the area of packaging. There is still a lot of catching up to do regarding product presentation in new distribution channels. In Christian Weber's opinion, beer brewers still need to catch up to suppliers of juices, candies and snacks. "We need to try to find new category structures, in order to launch new products. We feel that we're having preliminary success in the area of cans. Mixery is very successful in the area of cans, because it facilitates the idea of convenience."

Since the "classic beer market" has been steadily declining by 1% to 2% in recent years, it's particularly vital for regional beer brands to bring new products to the market. Karlsberg is actively pushing ahead with the development of innovative products, and primarily places them right on the doorstep, in the regional or national German market. The identification with the product rooted in the homeland plays a key role for marketing. "In the classic beer segment, we banked on regionalism for both marketing and the choice of ingredients. The biggest new product we introduced last year was Karlsberg Weizen, which we produce ourselves and which became a big success in the region. We implemented a similar concept on the French side with the Licorne Elsass beer, which has an unmistakable flavor that's full of character. The ingredients are 100% Alsatian."

Karlsberg is likewise operating successfully on the national beer market, where the Saarlanders are on the move with the Mixery product line, which rounds out the substantial brand portfolio. The name is the program, because Mixery is a mixed beer beverage in various flavors.

The youngest mixed beer beverage offspring is the Mixery Iced Version Cola. This is a 5% alcohol mixed beer beverage based on cola, which is also offered in small four-packs in pint format (70% beer, 30% caffeinated soft drink with iced cola flavor). "The market should be consolidated. That's why we think we need to handle it properly", says Christian Weber about the strategic line of approach. "At the moment, I'd say that in Germany, a maximum of three or four mixed beer brands will survive. With Mixery, we're the market leader, and we'll try to consistently expand this market leadership." Karlsberg Brauerei commands a market share of 18.8% of the relevant mixed beer beverage markets (Nielsen).

In recent years, numerous national and regional breweries have sought economic salvation in newly developed mixed beer beverages. It can be seen by now that they are increasingly pulling marketing budgets out of their new mixed products and using them for new products for the alcohol-free beer market.

When it comes to alcohol-free beers, the Karlsberg company is one step ahead of its competition. "With Gr?ndel's alcohol-free, we've had a successful product here in the region for a very long time", explains Christian Weber. "It was even one of the first alcohol-free beers on the German market. We further developed the product as Gr?ndis fresh, an alcohol-free beer mixed beverage, which combines flavor, sports and joy of living. It's somewhat outside of the classic beer pattern, because it's a soft drink that dispatches the quality of an alcohol-free beer."

Karlsberg regional – in Quebec

In spite of its regional orientation toward the German home market, Karlsberg, the family company from Saarland, is still an international player. Karlsberg products end up in shopping baskets in Western European countries, just as they do in Middle Eastern shopping baskets. Karlsberg is even drunk in Canada, and recently even from the local Karlsberg brewery. In Montreal, Karlsberg conveys the working concept of regional identification and entrenchment in the Canadian region. "We opened a small mini-brewery in the Quebec region, where we are positioning ourselves in the market with a regional product, and we are number one and number two in this particular market. It's a mixture of beers, coolers and mixed beer beverages. That is a product for Quebec, for the Canadian market. We're not obsessed with the goal of becoming number one on the global market with our products. Instead, we choose the markets in which we operate, in which we grow, and say, we want to join in here. We can be the best in the market here."

Weber sees a clear difference here between Karlsberg Brauerei and international brands that market a product the same way in all countries, be it England, the USA, Thailand or Australia. "Global players certainly have the funds available to do this. A smaller brewery, however, needs to know what local consumers want and fill this need, which, again, is a long-term and difficult task."

From energy drink to energy beer

With regard to innovative product trends, Weber sees "his company", Karlsberg, as being optimally equipped, and currently sees himself as "committed" above all to the trendy energy drink generation. They grew up with the flavor of energy drinks, whose taste has entrenched itself over the years on the tongues of the target group. In House Karlsberg, the solution is therefore called Mixery-Bier Plus Energy. The beer, with an alcohol content of 4% to 5%, accommodates the lifestyle taste, and offers young people a familiar flavor with the quality of beer. "We need to see to it that we get on trend bandwagons and develop them", says Weber.

The Karlsberg product developers, in their search for innovative ideas, hit paydirt time and again in Asia, where, for example, energy drinks enhanced with fruit flavors are being successfully offered. This will carry powerfully over to malt beverages, malt lemonades and malt-based soft drinks. "These products have existed for years in the Middle East, in Japan and in Asia. We can learn from the production processes, the manufacturing methods or the communication."

However, Karlsberg has itself succeeded in exporting a smash hit to Asia: a malt beer with added vitamins, which is exported to Thailand. The Saarlanders explain the success by, among other things, the combination of German quality and the reputation as a health-oriented, high performance product. "This linkage of concepts will catch on. Nobody would have believed, twenty years ago, that young people would eat raw fish on rice."

Investments in innovative production projects

Taking new strategic paths and developing new products - Christian Weber feels comfortable as an innovative entrepreneur at Karlsberg Brauerei. His future-oriented projects demand 100% from him. Ten million euros were recently invested in the Karlsberg fermentation and storage cellars. Moreover, investments in the company's sustainability are flowing to all locations. Energy recovery, energy efficiency structures, biogas usage and better utilization of energy are the major themes of the future that the committed and innovative entrepreneur now wants to tackle. "We assume that energy costs will increase significantly in the next few years. To be sure, we already operate our own power station on location, but we always need to become stronger and more efficient." (vs/jn/bmg)

21 Oct. 2011

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