What could be the future of Grolsch – or is this the end?

Grolsch is up for sale – that’s no news. Because AB Inbev wants to swallow SAB Miller, they have to sell off loads of brands in order for the deal to be approved by scores of antitrust committees. It involves selling off the share of SAB in Miller-Coors in the US, and – amongst smaller others – Peroni and Grolsch in Europe. But who on earth would want to buy Grolsch? Could this be the brand’s end?

plopSAB Miller bought Grolsch for € 816 million in 2007, after it bought Peroni for around € 560 million some years earlier. They look to sell both for around € 1,5 billion – which they’ll never get. Focusing on Grolsch, chances are it’ll sell for as little as € 200 million, and that may still be too much. Because what are you buying? In name, Grolsch still is one of SAB Miller’s four ‘global brands’ but realistically it isn’t even a European brand. It may not even be a national brand in Holland.

I recall the times when youngsters in England were King of the Schoolyard when they had the famous flip-top braided in their shoelaces. Grolsch once sold more of its lager in the UK than in Holland, and had a brief spell with mixed success in the USA. But with lager as such losing market share in most of the Western world every day and with plenty of better known lager brands around, Grolsch adds – well, uhm, nothing to any market. Seriously, if had the potential of being a real global brand, wouldn’t it have happened by now, in over 400 years of history? It hasn’t and it won’t.

As a producer of “Craft Beer” Grolsch holds a mixed yet terrible track record. They ruled once, with series like ‘The Four Seasons’ and the introduction of their Weizen sent shivers down peoples’ spines. But can you remember Zinniz, the flavored beer they introduced at the beginning of the century? Of course you cannot – it was pulled back from market within a year. Or recently, with Kornuit: a beer aiming at the ‘new, young and hip consumer’ by the looks of the propaganda, but appealing to no-one because it lacks character and, to be honest, flavor. They should have put hops in it, for example, as it simply lacked the ‘balls’ of original Grolsch.

zinnizSo Grolsch is merely a lager brand. Yet even for its home market it’s merely a small player – and that’s because it’s too tasty. Out of the nine dominating lagers in Holland, Grolsch is the biggest mouth-full – something most Dutch lager drinkers do not want. And so all it is, is a brand with a modern brewery and decent distribution. The brewery is now a decade old and cost around € 225 million to build (€ 70 million for the construction and €155 for the brewing installations). Most of that will by now have been written off but you still won’t easily find a similarly modern and large capacity brewery in Europe up for grabs. That’s really the only asset the brand has. Who wants that?

No decently sized lager brewery will want to buy it: Heineken can’t because of anti-trust, Carlsberg has already said ‘no, thanks’ and Molson-Coors won’t: no time because of the hell of a job (re)integrating Miller-Coors in the USA, for which they just paid € 11 billion and so their pockets are empty. Any other lager brewery, hoping to buy access to the Dutch market, will fail miserably because Dutch don’t drink foreign lagers, except when on holiday. Leaves us with Asian breweries, for whom it may be a dirt-cheap production facility as well as decent money machine (Grolsch wrote € 36 million profit on € 300 million turnover). Dutch Bavaria could buy it without anti-trust issues but Brabant and Twente is like having a Welsh family-owned company trying to integrate a Scottish family firm: fun to watch for all by-standers.

jaargetijdenPrivate equity then? Possible, but they usually buy a company to suck it dry and then sell it on. The sucking dry will not be the problem, but trying to sell it on will face the same challenges in five years as today. I guess that’s a no-go. So, that seems like all options then. Bye, bye, Grolsch? I hope not.

The only option in which Grolsch won’t simply disappear (after a sell-out to a Black Widow private equity firm) is for the De Groen family to buy it back and return to running a regional brewery. With local being such an item these days, and the company still being firmly rooted in Twente, Grolsch can indeed be a decent money making machine, brewing decent lager. And since they’re really only buying a decade-old plant, they should be able to scoop it up for between € 150 and € 200 million. A simple return to ‘Craftsmanship is Mastership’.

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