Anheuser links with Courage

BY JOHN SHEPHERD

Another chapter was opened yesterdayin the long history of The Stag brewery at Mortlake, west London, as the American Anheuser-Busch, the world's largest brewer, formed a joint venture with Courage.

The site, which started producing ale when Henry VII was on the throne in 1487, will consolidate Anheuser's position in Britain and help it push into Europe with its best-selling Budweiser, the premium lager promoted as the "king of beers".

Courage, which is owned by Foster's Brewing of Australia and may soon become controlled by Scottish & Newcastle Breweries, has brewed Budweiser on the site since 1986 and packaged the beer at its brewery in Reading. Yesterday's deal will consolidate the brewing and packaging of Budweiser at the 11-acre Mortlake site, which has the capacity to produce 288 million pints of beer a year.

The deal holds two distinct and important implications for the brewing industry. It helps clear the way for S&N to buy Courage - an announcement is expected soon - and provides a solid platform for Anheuser, based in St Louis, Missouri, to stamp the Budweiser name indelibly on the map of Europe.

From almost nowhere in 1986, Budweiser recently displaced Holsten Pils as the biggest-selling premium packaged lager in Britain. Its share of the sector is13.8 per cent, equal to almost 1.4 per cent of the total annual beer market of 10.4 billion pints in the UK.

Anheuser has the power of veto over the sale of its partner's stake in the joint venture, to be called The Stag Brewing Company, should Courage be taken over.In the meantime, Courage will pocket an undisclosed amount of rent on a 10-year lease that can be renewed from the joint venture company.

Anheuser-Busch European Trade, a subsidiary of the American company, will hold the balance of power in the venture's boardroom, with three seats against Courage's two.

The Courage representatives are Andrew Mallett,finance director, and Chris Pavlosky, director of operations. Anheuser's team will be headed by Christopher Stainow, managing director of Anheuser-Busch European Trade.

Anheuser was scant on the detail about its plans for growing sales of Budweiser, and did not say whether Mortlake would brew other brands in its portfolio such as Budweiser Dry, Budweiser Light and Michelob.

"Budweiser is now the fastest-growing brand in its category, and we are committed to supporting that growth over the long term. The joint venture will assure us access to an established brewing infrastructure in which we can invest capital to support further development of the brand," the company said.

Premium packaged lagers, which are high-strength and generate high profit margins, reallycame of age in the UK in the 1980s, led by Becks, brewed only in Germany.

Many brands have come and gone, but somesuch as Grolsch, Sol,Stella Artois and Foster's Ice have done well.

Carving out a larger slice of European markets, however, will be more difficult for Anheuser because of its century-old and litigious trademark dispute with Budejovicky Budvar, the Czech Republic's most famous brewing company, over rights to the Budweiser name.

The dispute began in the 1880s when Adolphus Busch, a US citizen of German extraction, called his beer Budweiser.

Britain is one of few countrieswhere both Budweiser beers can be sold. The wrangle has kept Anheuser out of Germany, which has the second-highest per-capita consumption in the world after the Czech Republic.