New Belgian Beers Take on InBev Goliath
If any place in the world epitomises the David and Goliath battle that is upending the global beer industry it is Belgium, home to both the world’s largest brewer, Anheuser-Busch InBev , and arguably the famous small-scale “craft” beers, the trappist ales made and distributed by monks.
For AB InBev , maker of the Budweiser and Stella Artois brands, the trends have been less than favourable.
Beer drinkers in western Europe and North America have been consuming less for years and sales volumes in both regions have been dropping.
Last year, the brewer, based in the Flemish town of Leuven just outside Brussels, saw its volumes drop 4.9 per cent in Europe and 2 per cent in North America, according to Bank Degroof.
At the same time, Belgium’s smaller brewers have begun to benefit from the shift of western tastes towards richer, more complex beers by capitalising on a brand that has become hot in the beer-drinking world: Belgium itself.
“The cachet of Belgian beer is similar to French and Italian wines in the postwar era,” says Tim Webb, author of Good Beer Guide Belgium. “If you put the word Belgian on the label, you’re implying that it’s good quality.”
Five years ago, more beer was exported from Belgium than consumed there for the first time in Belgium’s storied beer-making history, and last year the amount sent overseas topped 57 per cent, according to the Belgian Brewers Association.
Yvan De Baets can testify to the newly found cachet. Seven years ago, he and business partner Bernard LeBoucq founded Brasserie de la Senne, only the second brewery now based in Brussels – and the first to be set up in the capital in more than a century.
After only two years in business, Mr De Baets says that the company could no longer keep up with exporters’ demand and began to look for a larger facility near the centre of town.
It now sells 20 per cent of its beers overseas, but Mr De Baets says that he expects it will soon account for half of all production.
“It’s easy for us to sell beer because we’re based in Belgium,” Mr De Baets says, sitting in his cavernous new facility in Brussels’ scruffy western neighbourhoods.
“Consumers want to be a bit special, but nobody can be special while drinking Stella, because you can find it everywhere.”
Not so long ago Belgium’s speciality beer industry was expected to fade into oblivion; beer consumption in the country has fallen by 20 per cent over the past decade.
By the 1970s, breweries were being shuttered and some of Belgium’s most distinctive recipes disappeared from drink lists.
The rediscovery of Belgian beers began almost 20 years ago, as food writers such as Briton Michael Jackson began spreading their gospel in books and articles.
Even through the ongoing recession, they have continued to grow, gaining market share from the larger, global brands.
“As consumers grow richer, they want to differentiate themselves from the masses. So they move away from the lager everyone knows,” says Gerard Rijk, a food and beverage analyst at ING.
“They are trying new beers, which increases consumer sophistication,” he continues.
But Goliath is not taking the challenge lying down. In the 1980s, InBev acquired two highly regarded Belgian brews, Hoegaarden and Leffe.
But in recent years, it has used its global distribution system – made significantly larger when it acquired the US’s Anheuser-Busch two years ago – to get the brands in front of the same discriminating drinkers who have been imbibing independent beers.
Although AB InBev does not break out sales by brand, the company says Leffe, which can trace its lineage back to the 13th century, had its “best year ever” in 2009, while Hoegaarden is described as one of the company’s “fastest growing brands”.
Both are rated among the top three beers by Belgian consumers and are exported to more than 60 countries worldwide.
“Leffe and Hoegaarden are two great speciality beers in our portfolio that reach far back in history,” says Andreas Hilger, AB InBev’s vice-president of marketing for western Europe.
“Due to the fact that they are traditional specialities, they have a lot of appeal in markets even outside Belgium.”