Corona and Breweries, Part I

This is part I of a hopefully not too long series of how the corona virus is affecting the world of Dutch breweries. Starting with the breweries, I will also discuss how it influences bars and shops.

It has been over a month now since the bars and restaurants in the entire county closed. Everyone involved with beer has been hit hard. The bars are of course completely closed and they try to make a bit of money by selling beer and food for takeaway. Shops other than supermarkets have in some cases seen losses of 50% or more. But hardest hit seem to be the breweries.

Breweries have lost most, if not all, of their primary sources of income. The bars are completely closed, the sale of kegs down to 0. Sales of bottles have gone down as well to the specialty stores. Only those selling to supermarkets seem to be doing ok but tanks are empty, in many cases for the first time in years.

Times like this ask to be inventive. Many breweries have started selling beer directly at the brewery. Something that in normal times is not allowed but this government has decided not to interfere in most cities and counties. But you can only sell so much, and only to people who really want it. It doesn’t make up for all the other sales. Often it is the only way to generate at least some income. Sure, it might take a tiny bit away from the shops, but most people buy one bottle from a brewery together with bottles from other breweries. Here the brewery can sell a box of beer at once. These small sales though can only recoup about 20% or less or regular sales. Yes, you read that correctly, many breweries have lost 80% of their income.

Government Help

The government is providing some help, but this is not reaching all the breweries. The government works with a list of business that they deem need help in this crisis. Breweries at the start were not on that list. They will get some deferrals for income taxes and the government can pay a large chunk of the salaries if employees cannot work anymore, this up to 90% if a company has lost 100% of its business.. But this is not including other parts of the salaries like labour costs, pensions and paid vacation. These costs keep adding up.

Restaurants and bars are on the list. Brewpubs in most cases are not. If your entry into the Chamber of Commerce mentions a brewery first and a brewpub second, you are not on the list so you don’t get the money a restaurant would get. It was only on the 28th of April that it was decided that businesses could get help (a one time sum of € 4.000) for their second type of business, like a brewpub/restaurant.

Bars and restaurants have closed, meaning nearly 100% of all kegs from breweries are not being sold at the moment. The distributors of this beer are getting government support, breweries luckily now get some as well. But the distributors don’t get paid anymore by the bars, so they cannot pay the brewers, leaving the breweries without money from that side.

Deferral

Income tax has been postponed for a while so breweries don’t have to worry about that just now. But that doesn’t mean that it doesn’t have to be repaid. There’s a big chance this will have to be done again when the bars and restaurants are up and running again. The question for the government now is how the breweries are going to repay it and in what time period. With a looming recession we don’t really know if people will start going to bars and restaurants again like they did before.

The Catch-22 of bank loans

If you were a healthy company before corona hit you can get a loan. But because the economic outlook at the moment is not great they are hesitant to just give you a loan, unless you hook up with a company that offers loan but against staggering interest. And the costs that are not being paid right now (taxes for example) will have to be repaid later, adding another figure of money a brewery won’t be able to pay back. The government is pushing the banks to offer loans, the banks say ‘but they cannot pay it back’. The government and brewers say: ‘yes dear banks, that’s the problem and that’s why they need the loans’. And so the cycle continues. Breweries in most cases also have nothing to put up for the loan, another reason banks are hesitant.

Rent

Big breweries often also lease properties in exchange for their beer being served there. These bars are trying to get discounts on rents. In some cases this has already gone down 50%, in other cases breweries (like Haacht) have decided not to ask for any rent during this period. Smaller craft breweries don’t have constructions like this and will have to pay the rent of the brewery space.  So the small brewers are not helped in this scheme and breweries with brewpubs are doubly hurt.

The brewery landscape in one year

It is undeniably true that some breweries won’t be able to come through this. CRAFT, (the organization where all craft brewers are part of) issued a statement that 50% of all breweries are in grave danger.

Michel Ordeman of Jopen, also the head of CRAFT, says that small breweries provide a lot of work as well. Not only in the breweries but also in the brewpubs and restaurants.

First of all we don’t know yet how long bars and restaurants will be closed. So far until at least May 20, but it could be longer if we as a nation decide to go outside en masse again and not stick to social distancing. And if everything does open again nothing is sure as well. Some breweries are going to offer free beer or heavily discounted beer to bars. This could lead to a new price war and might force some breweries who cannot afford this to fold.

50% of all breweries left after all this is over? A shakeup was bound to happen, but like this? The beer shops, bars and festivals will look very different in a year.

Hardcore UFO

In the southern city of Eindhoven Van Moll has steadily been working over the last few years to become one of Hollands premier breweries. And like any brewery that considers itself a big player they have their own brewpub and festival. This festival has been held for a number of years now. Two years ago I had the honor of being at Van Moll Fest as a participant when I poured beer for Oproer. This year I decided to go both days, as a visitor.

The two day setup really works. The international breweries (from countries like the U.S.A, England, Belgium and more) were there for both days, the Dutch breweries one day only but the same number every day. That meant more breweries and of course even more beers to try.

The location is the same, under the shadow of a huge flying saucer looking building in Eindhoven called the Evoluon. This building was built in the early 1960’s to showcase technological advancement, with Phillips at the forefront. This Dutch multinational has had a huge part in shaping Eindhoven as it is today. It is no longer a museum but a building where congresses are held. And beer festivals.

Holding this beer festival at the Evoluon is fitting. Van Moll has been on the forefront of the new wave of Dutch brewing and has never shied away from innovation itself. And the breweries that were invited are cut from the same cloth. Forget your Belgian triple and blonde brewers. Beautiful stouts, IPA’s and maybe the best lineup of wild ales and sours that I have seen lately.

The entire Evoluon area is closed off by a moat and a fence, which mean that there was a lot of space to walk and sit. Something other festivals often lack. Even though this weekend the country was again hit by a heatwave, the third one this summer. There was enough water and people seemed to take it easy. 

The cream of the crop of Dutch brewing was present: De Molen, Jopen, Kompaan, Nevel, Oersoep and Het Uiltje to name just a few. Special mention though for De Moersleutel. During the days of my former blog they weren’t around yet so I never had a chance then to mention that this brewery from Alkmaar is my new favorite. They surprise you with stouts like De Molen once did. Their IPA’s and sours are also world class. And some local pride for me that two breweries from Amsterdam (Walhalla and Butcher’s Tears) and two from Utrecht (Kromme Haring and VandeStreek) were present.

Some of the best from the UK were here as well. Like previous years Wiper and True and Siren were here. But of all the newcomers for me extra praise for the beers of Central Waters. I had been chasing their beers for a while now and was happy to see more of them in bars and shops here. But to taste their XX stout was a moment of pure bliss and their other beers were world class every single time as well. 

With the great lineup of breweries and it being a two day event you cannot help yourself to compare it with Borefts. If I had the option of only going to one of them the room at Van Mollfest and the fact that is it held on Saturday and Sunday make me choose a trip to Eindhoven, even if Bodegraven is right around the corner from me. See you next time you weird huge UFO!

a magnificent Central Waters stout

Heineken’s Stake in Oedipus, Part of Something Larger?

Lately I have been doing some research on Heineken’s increasing influence in the world of Dutch beer. OK, I am going to say it once for those who don’t understand what I mean: craft beer. A term that I try to avoid as much as possible. This influence isn’t immediately visible but is happening in small, incremental steps.

Or so it seemed until this week when Oedipus announced that Heineken was going to be a minority stakeholder in this brewery. This has been the most open and blatant move from Heineken into previously uncharted territory in the Netherlands. They have already taken an interest in Lagunitas from the USA and Beavertown in the UK but now they have set their sight on their homecountry.

I will still post the articles I have been working on so let this be a short introduction of what’s to come.

Beerwulf

This online retailer was started a few years ago by Heineken employees and backed by Heineken money. A good looking website, great selection of beer and fancy television ads made this site popular in a very short time. They put the brewers center stage and don’t have excessive prices. They also claim not to be influenced by Heineken. But a massive investment is just that. It gets real Black Mirror-y when you think of the massive amount of data Heineken has their hands on now. Very similar to InBev buying RateBeer.

Heineken Local

When Groningen based brewery Punt won an award at the Dutch Beer Challenge it was as a Heineken beer. This raised some suspicions. A short investigation showed that Punt, and some other breweries including Van Vollenhoven and Oudaen were also operating under the banner of Heineken Local beers. The small breweries on this last have a very small impact so it is as of yet mysterious why Heineken did this. This is worth investigating more.

Heineken in Africa

Looming over all of this is Heineken’s less than decent handlings in Africa and Asia. This has best been documented in Olivier van Beemen’s book Heineken in Africa. Government meddling, bribes, writing legislation about alcohol, fueling the genocide in Rwanda, using girls/prostitutes to try sell the beer, it is all part of it. The latter has made banks like ASN in Holland decide to kick them out of their investment portfolio for example. More about this later as well.

And it’s especially this that makes Oedipus’ choice for Heineken uncomfortable to say the least. I appreciate that in the current way the brewing world works the next stop for a larger brewery is some sort of cooperation with a larger brewery. Lagunitas and Beavertown are good examples of breweries who were lured by the big ole sack of money in front of their nose.

Oedipus has always struck me as a brewery that took a stand against discrimination, racism and other kinds of inequality. Yet now they are working together with a multinational that used sex to sell beers in Asia and Africa and did not nothing to stop genocide. This is a brewery whose first released beer was called ‘Mannenliefde’ (love between men), a common term for gay love. A type of love that in many African countries is a death sentence. Countries Heineken actively invests in.

For now it is a minority stake and Oedipus will keep doing its own thing. But as most examples from USA and GB have shown us this will not be the case in 2 to 3 years.

Heineken has been slowly setting the chess pieces into position for a strike. Their stake in Oedipus is their biggest step yet. In the second half of the 20th century they bought all the smaller breweries in the Netherlands to close them. I don’t think this will happen again but I am curious to see what their next steps will be. We know this was coming, but happy about it we are not.

What will Heineken’s next step be?