Foreign adventures

In 1970, the biggest UK brewing groups were amongst the largest in Europe. Yet they made remarkably few inroads in Europe. Eventually being overtaken by brewers like Heineken and Carlsberg, who had been far smaller in size. Why did UK brewers end up mostly concentrating on the UK market?

Difficult to say. Though one problem may well have been the kind of beer they were trying to sell. Lager was king in continental Europe. But that wasn't what UK brewers were trying to sell abroad.

Allied, with their purchase of two decent-sized Dutch breweries, seemed to have taken a more progressive approach. Especially as it gave them a genuine Dutch Lager brand to compete with Whitbread=brewed Heineken.

Allied find going Dutch does pay
This month. the Rotterdam Brewery of Breda-Oranjeboom N.V., the Dutch concern owned by Britain's Allied Breweries. are to increase their total fermentation capacity by 16,000 hl. with the installation of 12 Ziemann stainless steel combi-tanks of 1,500 hl. capacity. These new fermenters are to be equipped with in-place cleaning and temperature control.

Forming the second stage of work at the brewery, the move follows increased output of 50 per cent from the brewhouse, which consists of a four-vessel Steinecker plant operational since April, 1969. Later on in the year, silos will be installed in the old brewhouse which has virtually been gutted.

For future expansion in production the company can look to their recent purchase from Heineken-Amstel, Holland's largest brewing group. Situated at Helmond, near the German border, it is a 30-acre site — quite a handy acquisition when one considers that this is almost twice the area available at Breda and Rotterdam. At the time of purchase, the plant had no brewhouse but with the company’s current annual capital expenditure running at £l.5m. developments there seem more than likely.

But this is mere speculation on future trends. At present the bare facts are that in its first year of operation the Dutch group made a pre-tax profit of £500,000, after allowing for the cost of loans carrying high interest rates. Mr. Nicholas Herald, the Allied Breweries vice-chairman in charge of the International operations in Holland, also predicts an increase in that figure during the current year.

But this is mere speculation on future trends. At present the bare facts are that in its first year of operation the Dutch group made a pre-tax profit of £500,000, after allowing for the cost of loans carry-high interest rates. Mr. Nicholas raid, the Allied Breweries vice-chairman in charge of the International operations in Holland, also predicts an increase in that figure during the current year.

In the Dutch market the Breda-Oranjeboom grouping claims 20 per cent of the market while Heineken-Amstel have cornered a 55 per cent share. The only other brewery having a sizeable market share is Grolsch Bierbrouwerij, who claim 10 per cent. On the home market, Allied say that per capita beer consumption in Holland has more than doubled in the last ten years — from 41 pints in 1960 to 90 pints in 1969. The picture is just as rosy on the export front. Of last year’s production of l.5m. hl., 13 per cent went to 80 countries.

In the U.K., however, Oranjeboom has not been particularly in evidence. True, Allied did cease sales of Skol 2000 and put the Dutch beer in its place but they have, perhaps, not pushed the beer too much. In 1968, their first year of ownership, £1,312 was spent on advertising Oranjeboom compared with £64,946 on the already established Skol Lager.

But the beer flow is not all one way. Double Diamond is being sold through its namesake's pub in Rotterdam and it is proving extremely popular with the locals. In fact, it accounts for a little under 25 per cent of beer sales through the particular outlet, although it costs more than the ordinary Dutch beers sold there.

When questioned on the reason for Allied success in Holland, despite gloomy forecasts made by some pundits Mr. Herald pointed to the splendid cooperation between the merged breweries which had previously been competitors. The companies they had taken over were sound, he said, and Allied had taken a good, long look at them before making any move. And when they had he, he continued, the deal had been a fair one for both sides. From then on much of the credit goes to the Dutch team who worked together in complete harmony from the start. Draught beer was now bring produced at one brewery, while bottled beers were the sole domain of the other.

Beer is not the only side to Allied trading in the Netherlands. They also acquired Warninks, the well-known advocaat producers, and both Breda and Oranjeboom have large soft drink holdings. In fact, Breda say that 30 per cent of their revenue comes from this sector. Oranjeboom own C P. Fabrieken, fruit juice, mineral and syrups manufacture who in turn control North Netherlands Bottling Co., a company holding the Coca Cola franchise in the three northern provinces of Holland.

All in all the Dutch affair has developed into a strong and growing combine forming a solid base for any further expansion into Europe, should opportunity arise.
Brewers' Guardian, Volume 99, June 1970, page 34.

You can see they were still trying to flog English Pale Ale, in the form of Double Diamond, to Europe. Longterm, Oranjeboom would fare far better in the UK market.