Another German brewery bought
Danish brewer Carlsberg announced that it would take controlling interest in northern German brewer Holsten-Brauerei AG, with a million dollar plus deal. As the beer market contracts, foreign brewers have been eager to buy in Germany, where there are still a number of independent beer makers. Carlsberg plans to sell off some of Holsten's lesser brands and its mineral water business to help finance the deal.
In the dwindling number of beer giants, Carlsberg has been in a precarious position. Its US sales fall far short of other import brands like Heinken's, Bass, and Beck's, its ventures in Russia are not paying off, and its chief competitors Interbrew, SAB Miller, and Heineken are growing fast. Add to that the fact the German beer market has been losing sales over the last few years, and the purchase may be a big mistake.
That's the opinion expressed in the Wall Street Journal ("Carlsberg to Buy Holsten," 1/21/2004). The article states, "With the purchase of the German brewer, the Danish company would finally join the rest of the industry in overpaying for acquisitions. Even after selling half of Holsten's assets and driving cost and revenue synergies, Carlsberg will struggle to make a decent return."
This is a clearly a case to trying to keep up with the big boys. Carlsberg clearly wants to build up bulk to end up as one of the survivors in the world beer market, which is rapidly contracting. The pressure to get big quick, as with other companies, takes precedence of rational short-term reasoning. Various reports quote Carlsberg as eager to acquire more breweries in Germany, Eastern Europe, and Asia and the company has around $3 billion more to spend on acquisitions.
Recent German beer deals
