Royal Grolsch NV - Company Profile, Information, Business Description, History, Background Information on Royal Grolsch NV

Brouwerijstraat 1
7523 XC Enschede
The Netherlands

Company Perspectives:

Objectives and strategy: Grolsch has aimed for continuity ever since its formation in 1615. Creation of value for both shareholders and other stakeholders is essential to ensure continuity as a commercial listed company. Grolsch pursues the following strategy for this purpose:

In the Netherlands: Focus on the premium segment; New beers; An ambitious on-trade strategy. International: Focus on key markets; Strategic alliances.

Efficiency and quality are the foundations of the strategy and thereby of the continuity of the business.

History of Royal Grolsch NV

Koninklijke Grolsch BV, or Royal Grolsch NV, is the second largest beer brewer in The Netherlands. Although a bit player in terms of international beer volumes, with sales of just three million hectoliters per year, Grolsch has built a worldwide reputation as a premium beer specialist, particularly for its premium lager, which is sold in bottles using the company's distinctive flip-top cap. In response to shifting consumer tastes, Grolsch has responded with the creation of new beer types, including the fruit-flavored Zinniz brand, launched in 2002. The Netherlands remains the company's core market, with some 55 percent of total sales, while North America and the United Kingdom account for the largest part of Grolsch's international sales. Altogether, the company's beers are sold in some 50 countries. In the United Kingdom, where Grolsch is a top-selling premium lager, the company's beers are brewed through its Grolsch UK joint venture with that country's Six Continents (formerly Bass Plc) beer giant. Grolsch holds 51 percent of that subsidiary. In Poland, the company's beers are brewed under license by Brok SA. In 2002, Grolsch formed a joint venture with Portugal's Sumolis to introduce Grolsch-brewed beers in that country. In that year, also, the company signed a licensing agreement to brew and market Miller Genuine Draft in The Netherlands. Grolsch has begun construction on a new, larger brewing facility expected to open in 2005, where the company will consolidate all of its brewing activities. Grolsch is listed on the Euronext Amsterdam stock exchange. In 2001, the company posted sales of EUR 272.6 million ($241 million).

Making Dutch Beer History in the 17th Century

After several centuries of successive takeovers, the fortified town of Grol (or Grolle, later renamed as Groenlo), in the southeast of The Netherlands near the German border, approached a degree of political and economic stability in the early 17th century. Considered an important site from which to control the surrounding Gelderland region, the town began making brewing history in 1615, when Willem Neerfelt bought a brewery on the city's Kevelderstraat.

Sometime around 1760, Neerfelt turned over the brewery to his son-in-law, Peter Cuyper, a barrel maker's son who had become Neerfelt's apprentice before marrying his daughter. Cuyper went on to gain renown as an important and innovative brewer, refining what became known as the "natural" brewing method. Cuyper's importance to the local brewing industry was later confirmed when he was named "guild master" over all of Grolle's brewers.

The Grol brewery remained in the Cuyper family for more than 200 years, becoming known as Beiersch Bierbrouwerij De Klok. For much of that time, the brewery remained at its Kevelderstraat location. Toward the middle of the 19th century, however, the original brewery became too small as the Grol brewery's beer began to grow in popularity. By then, most of the small breweries had faded away, unable to compete against the rise in popularity of such imported beverages as coffee and tea. The loss of these brewers led to the increasing concentration of the Dutch beer market into just a few, larger-scale producers.

In 1854, the De Klok brewery left the interior of the fortified town to establish a new brewery on Grol's outskirts. The larger facility brought the Cuyper family's business into difficulties, however. In 1897, the family sold the business to the Theo De Groen family. The following year, the De Klok business debuted its "pot-stoppered" or swing-top bottle. Although not an unusual closure for beer bottles, the swing-top nonetheless became an important symbol for the company's beer, especially for its lager, which became known under the Grolsch brand.

The De Groen family built the De Klok brewery into one of the region's leading breweries. In the early decades of the 20th century, the company began to branch out from beer, in part because limited supplies following World War I had forced the company to cut back on beer production. Instead, the company began manufacturing soft drinks, syrups, and similar beverages, under such brand names as De Groen's, Groli, and others. Soft drinks remained an important part of the company's operations until the beginning of the 1970s; the company also began to export its soft drinks, before ending production in 1972. The company continued, however, to produce the Groli-brand flavored syrups into the 1990s.

Regional to National Brewer in the 1980s

Beer remained the company's main occupation. In 1922, the company gained scale when it merged with nearby brewer Enschedesche Bierbrouwerij, in Enschede. The new company was named NV Bierbrouwerij De Klok. At this time, however, the Grolsch brand was adopted as the larger company's primary beer brand. The company maintained both its Groenlo and Enschede brewery operations, dedicating the Enschede facility to its Dutch sales, while the Groenlo brewery became the company's production center for its growing international sales.

The rising popularity of the Grolsch brand led the company to change its name, to Grolsch Bierbrouwerij, in 1954. The company--and its swing-top bottle--increasingly captured the tastebuds of the Netherlands' beer drinker, and by the late 1970s, the company had begun to grow out of its regional status to become the third largest brewer in the country. Part of this growth was due to a highly successful advertising campaign, with the slogan "Vakmanschap is meesterschap" (roughly translated as "Craftsmanship is master's work").

Grolsch remained under the De Groen family's control through most of the 1980s. The death of then company head Theo in 1982, however, had shown the company to be too dependent on the De Groen family for its leadership. At the same time, a growing number of family members began to want to convert their shareholding into cash. In 1984, Andries de Groen was named chairman--a newly created position within the company--and began to lead the company into its post family-controlled era.

Grolsch went public in 1984, listing on the Amsterdam stock exchange's Parallel Market. Two years later, the company placed its shares on the primary market. Following the listing, Andries de Groen stepped down as chairman, and the company's direction was taken over by the first nonmember of the De Groen family in nearly 100 years. By 1989, none of the De Groen family remained in executive position with the company. The family maintained a strong degree of control of Grolsch, however, and continued to hold 36 percent of the company into the next century.

Premium Beer Specialist in the 21st Century

Grolsch's new management immediately set about expanding the company. International expansion became a company priority in the early 1990s, starting in 1990, when Grolsch acquired Düsseldorf, Germany-based brewing group Wickuler. That acquisition doubled Grolsch's production capacity. Two years later, Grolsch turned to the United Kingdom, where its brand, first introduced in 1978, had risen to become one of that country's top three premium lager brands. In 1992, Grolsch bought up Ruddles Brewery Ltd. That company had been established in 1858 and had been bought up from fast-growing drinks group Grand Metropolitan in 1986. Grolsch paid some £35 to £40 million for Ruddles, which offered not only the Ruddles' ale brands but a ready-made distribution network for the company's own Grolsch labels.

Another expansion tack taken by Grolsch was a broadening of its stable of beers. For most of its history, the Grolsch brewery had centered around its core Grolsch lager brand, accompanied only by seasonal variants. In 1988, the company introduced a new brand, the Amsterdam Explorator. The following year, the company introduced an export-specific brand, Grolsch Special Dark. Grolsch also launched its own alcohol-free brand, Stender, which was replaced in 1992 by the label Grolsch Special Malt. Meanwhile, Grolsch backed up its sales with the launch of a new advertising campaign, "Op een dag drink je geen bier meer, maar toch drink je Grolsch" ("One day you won't drink beer anymore, but you'll still drink Grolsch"), designed to attract a more youthful drinking population.

Yet declining beer sales across the company's core Western European market, especially among its newly acquired Ruddles and Wickuler labels, forced the company to make an about-face in the early 1990s. The company abandoned its attempt to expand internationally through acquiring breweries, selling off the Wickuler brewery by 1993. The company sold off its struggling Ruddles operation only in 1997, to U.K. brewer Morland, for £8.4 million.

Instead of expanding by adding new brands, Grolsch decided to focus on its own core brand name and promote its international growth through its international sales offices, especially through the formation of partnerships with local brewers. Grolsch launched its new strategy in 1994, forming a joint venture partnership, Grolsch UK, with that country's Bass Plc. Grolsch maintained a 51 percent share of the joint venture, while Bass took over distribution and production of the Dutch brand for the U.K. market. The following year, Grolsch moved to Poland, forming the joint venture Brewpole with Polish brewery group Elbrewery and Hevelius. The joint venture, held at 25 percent by Grolsch, took over brewing and distribution of Grolsch beer for the Polish market. That same year, Grolsch strengthened its Netherlands distribution operations, particularly its position in the hotel, bar, and restaurant sector, with the acquisition of Maes BV, part of the Belgian brewing company Alken Maes. That same year, the company acquired a 15 percent stake in another popular Dutch beer brand, Gulpener.

Grolsch sold off its stake in Brewpole in 1998 after it became clear that the company would not be able to gain a majority control of the Polish operation. Brewpole retained its license for the Grolsch brand, even after rival Dutch brewing group Heineken took control of Brewpole. In 2000, however, Grolsch transferred its license to another Polish brewer, Brok SA.

By then, Grolsch had shrugged off a takeover attempt from expanding Belgian brewing group Interbrew, made in 1998. Although the company continued to attract interest from the rapidly consolidating international beer sector, including U.K. partner Bass, Grolsch remained determined to retain its position as independent, premium beer specialist. To ensure its further expansion, the company began making plans to build a new brewery, in Boekelo, near its Enschede location. The company planned to move all of its brewing operations to the new, larger facility in order to increase its operating efficiency. Grolsch's plans met with resistance, however, when its request to build was initially rejected; construction was begun in 2001, however, and the company hoped to have completed its move by 2006.

Grolsch continued to deploy its partnership strategy at the beginning of the new century. In 2001, the company acquired a 20 percent share in Portugal's Cereuro, the beer brewing division of the Sumolis group. The two companies then formed a joint venture operation, rolling out the Grolsch brand in Portugal. Grolsch also began brewing other labels for the Portuguese market under the agreement. That year also, the company reached a licensing agreement with Philip Morris to brew and market that company's Miller Genuine Draft label in The Netherlands and to market and distribute the MGD brand in other European markets, including France and Germany.

Meanwhile, Grolsch continued to expand its own stable of brands. In 2002, the company appeared to have a fresh success in its vat when it launched its new Zinniz brand. The fruit-flavored beer--the company calls the category "fresh beer"--was targeted at the 18- to 35-year age segment, with such labels as Crispy Lime, Tropical Red, and Orange Twist. Yet Grolsch remained committed to its core Grolsch brand, which, after nearly 400 years, continued to capture the taste buds of the world's premium lager drinkers.

Principal Subsidiaries: Grolsche Bierbrouwerij Nederland B.V.; Grolsch International B.V. (100%); Grolsch (UK) Ltd. (51%).

Principal Competitors: Diageo PLC; Anheuser-Busch Companies Inc.; Groupe Danone; Kirin Brewery Co Ltd.; Asahi Breweries Ltd.; Suntory Ltd.; Carlsberg A/S; Orkla ASA; Six Continents PLC; Heineken NV; Interbrew S.A; Sapporo Breweries Ltd; South African Breweries PLC; Fomento Economico Mexicano S.A. de CV; SABMiller Plc; Dr. August Oetker KG; Allied Domecq PLC; Grupo Modelo S.A. de CV; Molson Inc.; Adolph Coors Co.; Cia Cervejaria Brahma; Fraser and Neave Ltd; Amsteel Corporation Bhd.; Carlsberg-Tetley Brewing Ltd.; BBAG Osterreichische Brau-Beteiligungs AG; Quinsa; Pepsi-Gemex S.A. de CV; Holsten-Brauerei AG; Feldschlosschen Getranke AG; Wolverhampton and Dudley Breweries PLC; Binding-Brauerei AG; Lion Nathan Ltd.; Brauerei Beck GmbH und Co.; Hartwall Abp Oyj; Greene King PLC; Cerveceria y Malteria Quilmes S.A.I.C.y G; Greene King PLC.


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