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Rivals join forces

27-Aug-2003

The international beer market is a confusing place. Companies which are the fiercest of rivals in some markets are also distribution partners in others, selling their rivals' brands alongside their own in a pragmatic and logical move to maximise their production capacity.

The latest example of just such a move comes in Italy, where Heineken and Anheuser-Busch , two of the world's biggest brewers and fierce competitors elsewhere, have agreed to bury the hatchet and enter into a partnership.

 

Under the terms of the deal, Heineken will brew, market and distribute Anheuser-Busch's flagship brand under the Budweiser and Bud trademarks in Italy, with effect from November. The beer has been available in Italy since 1995, and is well distributed in both the on- and off-trade. It is marketed as a premium beer there.

 

Heineken will replace Birra Peroni as the licence holder for Budweiser in Italy. Peroni was itself recently acquired by SABMiller , the South African group which owns one of A-B's chief rivals in the US, Miller. Budweiser's domestic Italian sales accounted for around 4 per cent of total Peroni volumes in 2002, but the company will hope to replace them with Miller Genuine Draft, which it plans to launch there by the end of 2003.

 

While the world's largest brewer was happy to allow Peroni to brew its beer when it was an independent company, it is clearly less content to hand production over to one of its closest rivals in the US, especially when that company will start selling its own rival beer brand.

 

While Heineken has a substantial presence in the US market, its position there hardly rivals that of A-B, while the two beers have already lived harmoniously together in the Italian market, making it a much safer bet when it comes to licensing production there.

 

"We are delighted with the agreement with Anheuser-Busch allowing us to add Budweiser to our product portfolio, as Italian consumers have shown their appreciation for this beer since its arrival in our country. The power of this brand will further enrich the range of products we offer to our clients," gushed Massimo von Wunster, managing director of Heineken Italia.

 

"Italy continues to be an important market for our company, and we're excited about this new partnership," added Andrew Day, vice president and managing director of Anheuser-Busch Europe.

 

Heineken Italia has been doing business in Italy since 1974, when it bought Birra Dreher. Since then it has added Birra Moretti, acquired in 1996, and currently operates in Italy with six production sites making 5.5 million hectolitres of beer each year. Its Italian sales reached €938.4 million in 2002. A-B did not give sales figures for its brand in Italy.

 

Earlier this year, Belgian group Interbrew terminated an agreement with Heineken Italia regarding the production of the Stella Artois, Hoegaarden, Leffe and Labatt beers after its acquisitions of Beck & Co and Bass Brewers gave it a much stronger distribution network in Italy.

 

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