A mighty struggle has broken out for control of Britain’s best-known brewing group, Bass. As reported in AAB last year, the Belgian group Interbrew—best known for Stella Artois and Labatts lagers—bought both Whitbread’s and then Bass’s brewing capacities.
The Whitbread acquisition went ahead but the British government intervened to investigate the 2.3 billion sale of the Bass plants to Interbrew on the grounds of the impact on competition and choice for consumers. Most observers thought the government would cave in to Interbrew, but in January, the Trade and Industry Secretary of State, Stephen Byers, announced that he was blocking the takeover.
He said that if Interbrew owned both Bass and Whitbread, it would mean that two companies, Interbrew and Scottish Courage, would control more than 60 percent of brewing in Britain. Interbrew was outraged, and the Belgian government, through a minister with the splendid name of Monsieur Picque, called on the British government to rethink its position.
This Fit of Picque has so far had no impact. Interbrews public relations was a disaster, with the company stating that it was not unusual in Europe for a handful of breweries to dominate domestic markets. Interbrew cited the likes of Belgium, France and the Netherlands but conveniently left out Germany, which has 1,200 breweries and no national brands.
In February Interbrew adopted a cleverer tactic. It told the British government it was seeking a judicial review of Byers decision. As it will take a couple of years to conduct such a review through the British courts, Interbrew knows that, even if it loses, it can prepare the market for a sell-off that will recover most of the 2.3 billion it has spent: industry experts reckon that if Interbrew had to sell Bass now, it would lose around 800 million.
Interbrew, with or without a judicial review, may in the end get to own a slimmed-down Bass. British Prime Minister Tony Blair will not want to be on bad terms with Belgium, one of the few countries that regularly backs Britain during tricky negotiations at European Union summits. Blair may well have the ear of Stephen Byers and tell him to soften his attitude.
One way for Interbrew to have a smaller market share would be to sell the Bass subsidiary in Scotland, Tennent Caledonian, to its management. Industry whispers suggest that Interbrew might also be prepared to shed Bass’s biggest-selling brand, Carling Black Label.
If the Interbrew deal does fall through, there is no shortage of overseas buyers waiting in line to snap up Bass. Likely bidders would be Anheuser-Busch, Heineken and South African Breweries. A-B has had a strong presence in Britain for several years now and has thrown millions of dollars at building sales of Budweiser here.
Heineken is deeply unhappy that the British-brewed versions of its lagers are now controlled by archrival Interbrew, which picked them up when it bought Whitbread. When the contract runs out in a couple of years, Heineken will want to continue to brew and sell its beers in Britain but it will need a brewery of its own.
SAB is now a global giant, owns Pilsner Urquell, and has moved its headquarters from South Africa to London. It has the financial muscle to buy Bass but its faced with the problem of a low presence and appreciation of its beers in Britain.
The worry for beer connoisseurs is what will become of Bass’s cask ales, in particular, Draught Bass, the biggest-selling premium real ale in Britain. A-B makes a few ales for the specialty US market but, in common with Heineken and SAB, has little or no understanding of the mass ale market in Britain. None of the three will have much interest in cask-conditioned ales that reach maturity in pubs and return lower profits than processed beers.
In February, Anheuser-Busch UK suffered a major setback when it withdrew a bid to sponsor England’s top soccer league, the Premiership. Carling Black Label, after nearly a decade of sponsorship, decided not to renew and A-B seemed certain to take over.
But A-B’s demands, including a ban on all perimeter advertising from other companies, wasn’t acceptable to the soccer bosses. Suggestions, however, that A-B wanted soccer to be played with an oval ball should be discounted.