The Holsten Knight?

by ~fcl

Carlsberg – blazing Knight or unscrupulous Assassin?

Holsten - for 125 years this breweries name and its symbol, a knight on a horse, have been synonymous with Hamburg and have had a strong local connection. But since the buy-out by the Carlsberg Group nothing is like it was before and many more is to change in the near future. But is Carlsberg really the shiny and blazing knight that saves Holsten from bankruptcy?

For many years Holsten had been one of Germanys big players in the beer business – owning Holsten, Astra, König Pilsener, Lübzer Pils and many regional and specialty breweries the group seemed to have a strong standing in all the different parts of the german beer market. But last year changed the face of the whole market when many of the smaller breweries in Germany were bought by international big players like Interbrew, SAB-Miller, Heineken or Carlsberg. The whole concentration process on the fragmented market started with Interbrew buying Beck’s and integrating it as both a ‘global power brand’ and the agglomeration point for a strong standing on the german beer market.

Opportunities for the big foreign companies seemed to be too good to be actually true: the second largest market of the world, no company that controlled more than 10% of the market share and more than 1,500 breweries. Excellent conditions for big companies to start a massive buy-out of small breweries in order to gain a controlling share of the market.

Hence Holsten saw the need to react - if one would like to survive in this new competition and because the profit margin in the brewery business correlates directly with the market share there seemed to be no choice but to grow. For more than 120 years Holsten had seen a slow but steady growth which made it the largest german brewery in 2002 with a market share of 9.8%. But compared to the big players of this business Holsten was still very small, partially due to the regional image the products of the brewery had gained throughout the years. The main product, Holsten Lager, was and still is a beer which is mostly drunk in Hamburg and north Germany, other products like Astra or Licher have similar regional borders and made it hard for the concern to get a good standing in the whole of Germany.

It was therefore obvious that new ways of financing the business and the expansion had to be made accessible, the necessity for an international partner was urgent. The new year of 2004 then brought a change in the shareholders when Christian Eisenbeiss sold his share of the stocks to Carlsberg which gained control over the Holsten group in this process.

But when the company was sold many of the employees, the public and the german press wondered what Carlsbergs plans for Holsten would be. So far Holsten had tried to position itself in the mediocre to premium region, a place which the concern now reserved for the Carlsberg lager, pressing Holsten into the role Lübzer and Astra had played so far – a regional beer. Holsten now is regionally narrowed to north and east Germany and even has a competitor among it own ranks with Lübzer which might take the lead in this region if the sales figures keep on going down for Holsten beer – and in this case the question of whether Carlsberg was the rescuing knight or the slayer from behind would be finitely answered.

For Carlsberg there remain two option, they could strengthen the Holsten brand and try to improve its standing in the northern and east Germany – which could lead to a very strong regional brand which would actually be what Holsten used to be – or they could give away a brand and a beer with a long history for near-term increases in the shareholder value.

For Holsten to survive there remains only one option as all attempts to position it as a premium and export beer have shown by failing: To stay a typical bitter lager from north Germany – a beer from Hamburg for Hamburg. Hopefully the ‘Knight’ will be able to face the feared enemy of all german breweries in these days: Closure.