Spade and Franciscan now "Made in Russia".  How this could happen - WORLD

Spade and Franciscan now “Made in Russia”. How this could happen – WORLD

DGerman beer is a bestseller in Russia. In any case, the Federal Republic was the most important foreign supplier country in 2021. The outbreak of the Ukraine war changed everything. Well-known brands such as Krombacher, Bitburger, Radeberger or Veltins no longer export to the Putin empire.

Nevertheless, Russian beer lovers can still occasionally buy German brands. For example spades and franciscans. Because these two beers are now brewed locally in Russia.

The producer is ABInbev Efes, a joint venture between the major Turkish brewer Anadolu Efes and Anheuser-BuschInbev, by far the world’s largest brewery group, in which both suppliers have bundled their activities in Russia and Ukraine.

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“The company has decided to produce two German brands in its existing facilities in Russia,” ABInbev said in a statement to . At the same time, a spokesman makes it clear that this decision was apparently not made jointly. “ABInbev Efes is a joint venture in which ABInbev does not hold a majority stake.”

According to the company, the fact that the brand names can still be used is due to existing license agreements. Spaten and Franziskaner, both centuries-old brands from Bavaria, have belonged to world market leader ABInbev since 2003.

In addition, the portfolio in Germany includes other well-known names such as Becks, Löwenbräu, Hasseröder, Diebels and Haake-Beck. However, these beer brands are not brewed in Russia.

In any case, ABInbev is now trying to sever its ties there and, with a retreat, to follow the line of its biggest global competitors, Carlsberg and Heineken. “We are currently in talks with Anadolu Efes about selling our stake in the joint venture,” reports the spokesman.

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According to reports, it is also about suspending the sales licenses for ABInbev products. But these conversations drag on. In any case, they were recorded back in April. At that time, ABInbev also announced directly that write-downs of around 1.1 billion euros would be incurred. And that you waive any financial benefits from the joint venture.

Two million hectoliters for Russia

ABInbev Efes is the market leader in Russia. The group includes eleven breweries there with 3,500 employees. And this intense commitment is no coincidence. After all, with an output volume of a good 82 million hectoliters last year, Russia is the sixth largest beer market in the world behind China, the USA, Brazil, Mexico and Germany, as the current BarthHaas report shows.

At the same time, Russia is also an increasingly important export destination for breweries from other countries. In any case, the German brewing industry has greatly expanded its activities in recent years – with the result that in 2021 Russia was the second most important export country for Germany’s breweries after Italy.

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Around two million hectoliters were exported there, reports the German Brewers’ Association (DBB). This corresponds to a share of almost 13 percent of all beer exports from Germany in the past year.

At the moment the situation is completely different. However, not because beer is now on the European Union (EU) sanctions list. Because the delivery ban anchored in Regulation 2022/1269 has no effect in practice – because beer is classified as a luxury good and, according to Article 3h, can only no longer be exported if “the value exceeds 300 euros per piece”.

It is not defined in more detail whether bottles or barrels are meant as a sales unit. “But neither a bottle nor a keg comes close to this price level,” says Rodger Wegner, Managing Director of the Association of Export Breweries in North, West and Southwest Germany (VAB). “In the beer sector, the EU sanctions have no legal relevance.”

Nevertheless, most breweries from Germany have long since created facts themselves. “Although the Russian market has so far been one of the foreign markets with great future potential for us, we immediately stopped all investments in this market due to current developments,” said Bitburger on behalf of the company.

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And this attitude is now reflected in the numbers. According to the VAB, 626,000 hectoliters of alcoholic beer were sold to Russia in the first half of the year. That is 37 percent less than in the previous year. While there was still strong growth in the first two months of the year, i.e. before the war, export volumes fell significantly in the months that followed,” says expert Wegner. “In June the minus was already over 60 percent.”

The loss of the Russian market is a heavy blow for the German breweries. Because the industry is already in a sales crisis after two years of the corona pandemic with lockdowns and the ban on numerous festivals and celebrations. And now consumer sentiment has plummeted due to inflation and the energy crisis.

At the same time, the costs for the companies themselves are exploding. “The situation is very tense,” says Holger Eichele, the general manager of the German Brewers’ Association. “The corona pandemic has triggered an unprecedented sales crisis, the consequences of which many breweries are far from over.”

Relief at the Oktoberfest

In any case, the industry is a long way from the pre-crisis level – and there is no recovery in sight in view of the current challenges, says Eichele. The DBB boss has long been warning of plant closures if politicians do not provide quick help.

“The massively rising costs as a result of the war against Ukraine will leave deep scars in the brewing industry. More and more medium-sized companies are on their knees, supply chains are on the verge of collapse.” There is also a deep concern about a blackout. “Without gas, the shelves remain empty.”

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Despite sophisticated sustainability concepts and investments in state-of-the-art technology, it is currently impossible to replace gas as the most important energy source. “After the chemical industry, the food industry is the sector with the second highest gas consumption. And it is absolutely dependent on upstream suppliers – in our case, for example, these are the malt houses or the manufacturers of returnable bottles.”

In the Spaten home, at least the Munich Oktoberfest promises a little relief, which is taking place again for the first time after a two-year forced break. Because the ABInbev brand with the Russia theme is one of only six Munich breweries that are allowed to supply the beer for the world’s largest folk festival.

Spaten, which was the first brewery to bring the Helles beer onto the market in 1894, is served, for example in the “Schottenhamel” festival tent, where the annual Oktoberfest opening and tapping of the barrel by the Mayor of Munich takes place, but also in the Ochsenbraterei, at the Glöckle Wirt and in the Golden Rooster. Franziskaner, on the other hand, are available at the Wiesn in Feisinger’s Kas- and Weinstubn.

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