Radeberger Gruppe AG - Company Profile, Information, Business Description, History, Background Information on Radeberger Gruppe AG

Darmstadter Landstr 185
Frankfurt am Main

Company Perspectives:

Radeberger relies on strong brands, high product quality, and managem ent continuity. The enterprise does business in accordance with the m otto "margin over volume." Radeberger is market and customer oriented , views itself as a company that produces pure products and is commit ted to conservation and preservation of the environment.

History of Radeberger Gruppe AG

Radeberger Gruppe AG, formerly known as Binding Brauerei, is one of t he largest brewery groups in the highly fragmented German beer market . The company controls a number of top national, regional, and local and "trend" breweries and brands as well as other beverage brands, an d produces a total of more than 9.2 million hectoliters per year. Rad eberger's portfolio is segmented into three categories. National bran ds include company flagship Radeberger Pilsner, one of Germany's olde st and best-selling pilsner beers; Clausthaler, a nonalcoholic beer d eveloped by the company in the 1970s; Schoefferhof Weise, the fourth best-selling wheat beer in Germany; and the mineral water brand Selte rs Mineralwasser. The company's regional brands include Dortmunder Ac tien7-Brauerei in Dortmund, Radeberger Exportbierbrauerei in Radeberg /Dresden, Krostitzer Brauerei in Krostitz/Leipzig, Binding-Brauerei i n Frankfurt am Main, Henninger-Bräu in Frankfurt am Main, Erbach er Brauhaus in Erbach/Odenwald, and Allgäuer Brauhaus in Bavaria . Radeberger also controls Krusovice, a leading beer in the Czech Rep ublic, and Allgäuer Brauhaus (Allgäu District of Bavaria Br ewery) as well as the table water producer Selters Mineralquelle (Sel ters Mineral Spring). In addition to traditional beers, Radeberger pr oduces and distributes a range of Specialty and Trend beers, under br ands such as Berliner Kindl, Carolus der Starke, the low-alcohol Henn inger Radler, Hovels Original Bitterbier, Binding Flavored Lagers, an d, under license, Corona. Once a public company, Radeberger was acqui red by German food giant Oetker Gruppe as a number of foreign brewers began entering the German market and acquiring the country's beer br ands. Following its acquisition by Oetker, Radeberger was delisted fr om the Frankfurt Stock Exchange. In 2004, the company posted revenues of approximately EUR 990 million ($1.03 billion).

German Pilsner Beer Origins in the 19th Century

The Radeberger Gruppe entering the 21st century represented the combi nation of several prominent German breweries, most of which were esta blished in the late 19th century to produce a new beer type, Pilsner, named after the Czech town of Pilsen. Among the most prominent of th e new pilsner beers were Radeberger, brewed in the Dresden suburb in what was later to become East Germany, and Binding, based in Frankfur t.

Pilsner beers arrived in Germany from the then-named Bohemia in the m id-1800s and quickly became popular among German beer drinkers in the nearby Saxony region. The rising success of pilsner beers encouraged a group of brewers to form a new brewery in Radeberg, a suburb of th e city of Dresden, in 1866. The partnership began brewing that year. While production remained small at first, the Radeberg beer attracted a following. By 1872, the group had transformed the brewery into a s hareholding partnership, called Zum Bergkeller.

The so-called German "purity" regulations governing beer production p laced strict geographic limits on the country's brewers. Only beers j udged to be of very high quality were allowed to produce for markets beyond a local level, with deliveries limited to the distance smoke t raveled from a brewery's chimneys. These restrictions were lifted, ho wever, in the case of beers exhibiting high quality and, of importanc e, longer shelf life.

The Radeberg brewery met the high quality specifications by the 1880s . As the company's pilsner beers reached a wider market, the group ch anged its name, becoming Radeberger Exportbrauerei. The Radeberger pi lsner became a favorite among German beer drinkers on a national leve l. By the late 1880s, the company's production neared 300,000 cases p er year. Yet Radeberger also enjoyed strong international success, es pecially in the United States and Canada. There, the German immigrant communities helped spread an appreciation for pilsner-styled beers. By the early years of the 20th century, fully one third of Radeberger 's production was destined for the North American market.

By the outbreak of World War I, Radeberger's production had topped 2. 7 million cases annually. The interwar period also marked a time of s trong growth for the company, and by the end of the 1920s, the compan y's production had reached a peak. Yet the economic crisis at the end of the decade and the turbulence of the 1930s combined to depress th e company's sales. World War II and the firebombing of Dresden furthe r shattered the company's fortunes. Then, at the end of World War II, the Radeberger brewery found itself on the Soviet side of the Iron C urtain.

The Soviet-backed East German government took control of Radeberger i n 1946. The company became known as the People's Radeberger Export Br ewery. Backed by its government owners, Radeberger rapidly became the largest selling beer in East Germany. The maintenance of high qualit y standards, and continued investments by the government in modernizi ng the brewery, also led to the beer's return to the export market in 1956. Served by the Communist government at social functions around the world, the brand became especially popular among other Communist bloc countries.

The development of a special export variety of Radeberger, which boas ted a shelf life of at least a year, even in tropical climates, led t o the brand's wider acceptance beyond Eastern Europe. By the end of t he 1960s, half of the brewery's production was destined to the export market, which by then numbered more than 30 countries. Radeberger co ntinued upgrading and expanding its brewery and other facilities thro ugh the 1970s and 1980s. By the end of the 1980s, the Radeberger brew ery had topped a production capacity of 4.7 million cases per year.

Binding with Binding Brauerei: 1990s

The collapse of Soviet control and the reunification of Germany in 19 90 brought a new era for Radeberger. The company now returned to the West German market for the first time in more than 50 years. Demand f or the Radeberger brand surged, in part as West Germans embraced cert ain products of their East German counterparts in the first wave of e nthusiasm following reunification. Yet Radeberger, which had lost its government ownership, and its financial backing, was unable to carry out the necessary expansion and upgrade of its production facilities . For this reason, the company turned to a new partner, Binding Braue rei, which acquired Radeberger in 1990.

Binding's roots also lay in the second half of the 19th century. In 1 870, Conrad Binding purchased a small brewery, Ehrenfried Glock, in t he old section of Frankfurt. Binding had already gained experience as a master brewer, and under his leadership the brewery grew strongly through its first decade. By 1881, Binding was ready to modernize the operation, and the company moved to a new, larger site in Frankfurt. Binding formally incorporated the brewery as Binding Brauerei in 188 4. By then, Binding was the largest in Frankfurt, producing some 45,0 00 hectoliters each year.

Binding was joined by his younger brother Carl, and together they bui lt the business into a major Frankfurt region corporation. Into the n ew century, the company began adding to its portfolio of beers. In 19 02, for example, the Bindings launched a new extra-strong lager, call ed Carolus Doppelbock, named after Charlemagne (called Carolus in Ger man), founder of Frankfurt.

The company expanded in the 1920s through a merger with local rival S choefferhof in 1921. The resulting company adopted a new name, Schoef ferhof Binding Buergerbraeu AG. Soon after, the Binding brothers left the business; Carl Binding died in 1925 and Conrad Binding died in 1 933. During the 1930s, Binding also prepared the launch of another be er brand, Romerpils, which debuted in 1939. In that year, however, th e company's brewery was destroyed during air raids over Frankfurt.

Schoefferhof Binding rebuilt after the war, and expanded during Germa ny's economic recovery. Leading the company in its postwar growth was a new generation of the Binding family, led by Conrad Binding II, th e son of Carl Binding. By the 1960s, the company had drawn up a new e xpansion strategy, and by 1968 had added a new corporate headquarters as well as a bottle filling plant. This resulted in two highly succe ssful launches for the company. By then, Conrad Binding II had retire d, and the control of the company passed to the Oetker family, one of Germany's food production leaders. By the early 1990s, the Oetkers' control of Binding had topped 71 percent.

During the 1970s, the company was particularly active in developing n ew types of beer. The first of these was the introduction of Schoeffe rhof Weise, a wheat beer, which quickly became one of Germany's leade rs in this category. Launched in 1978, Schoefferhof Weise developed i nto a national brand and remained one of the pillars of the group's p ortfolio into the next century.

The second beer represented a true innovation: The 1979 launch of Cla usthaler gave the world the first nonalcoholic beer. The company's re search had succeeded in producing an alcohol-free beer that nonethele ss retained the full flavor of true beer. Clausthaler was an instant success for the company in Germany, and also represented a major new export product. This was especially true in the North American market , where Clausthaler remained more or less the sole nonalcoholic beer for more than a decade.

By the late 1980s, the German government was under pressure to repeal the country's beer purity laws, which shielded the domestic market f rom the arrival of foreign beer brands and companies for the first ti me. In 1989, the European Commission struck a blow at the purity legi slation, demanding that "impure" beers be allowed into the country. T his effectively led to the repeal of the purity legislation, and ushe red in a new era of competition and consolidation for the highly frag mented German market. Indeed, at the beginning of the 1990s, the coun try still counted more than 1,500 breweries.

Binding played a prominent role in leading a partial consolidation of the market, making a number of significant acquisitions at the end o f the 1980s. These included the 1988 acquisition of 87 percent of Ber liner Kindl Brauerei, with whom Binding had already developed a close working relationship. The company further added to its interests in the Berlin market with the purchase of Getranke Hoffmann GmbH in 1989 , giving it a network of more than 100 wholesale outlets. In that yea r, as well, the company launched construction of an entirely new brew ery in Erbach.

Grouping Around Radeberger in the 2000s

A more significant moment for the company came with the toppling of t he Berlin wall and the reunification of Germany. The company's recent Berlin purchases gave it a strong foothold from which to enter the n ewly liberated East German market, which proved highly receptive to t he company's brands. Berliner Kindl, for example, saw a 40 percent ri se in sales in that year alone.

Berliner Kindl also led Binding's first acquisition incursion into th e former East Germany, buying up Brauerei Potsdam GmbH in 1990. Soon after, Binding deepened its interests in the region, acquiring Krosti tz Brauerei, a brewer of Ur-Krostitzer pilsner near Leipzig. Then, in November 1990, the company acquired Radeberger, the largest brewer i n East Germany.

Following the Radeberger acquisition, Oetker, which also controlled D AB (Dortmunder Actien-Brauerei) and Andreas Brauerei, restructured it s brewery holdings, transferring the minority shares of both DAB and Andreas to Binding. Binding invested heavily in Radeberger, nearly tr ipling its production by the end of the 1990s. Radeberger quickly bec ame Binding's national and international flagship brand. The company also added a number of other brands to its portfolio, including a lic ense to brew and distribute Pilsner Urquel, the Czech beer, for parts of the German market, and later an exclusive German franchise for Me xico's Corona. In 1994, Binding went looking for expansion outside of Germany, and purchased its first foreign holding, Krusovice, in the Czech Republic.

For much of the 1990s, German brewers remained more or less safe from foreign competition, in part because of the strong German preference for German-style beers. The market shifted dramatically at the end o f the 1990s, however, as a number of foreign players, such as Belgium 's Interbrew, The Netherlands' Heineken, and the United States' Budwe iser, began buying up a number of Germany's national and regional bra nds.

Binding responded to the new challenge to its home market in two ways . The first came in 2002, and led the company through a restructuring , creating a new holding company, called Radeberger Gruppe, in order to regroup the company's portfolio under this strong, nationally and internationally recognized identity. The company also moved to consol idate its operations, including merging its various marketing and dis tribution subsidiaries (which, attached each to its own brewery, had worked independently of one another) into a single corporate-wide uni t.

Then in 2004, in an effort to preserve Radeberger Gruppe from the pot ential threat of a takeover by a foreign company, Oetker bought out t he group's minority shareholders. Radeberger then delisted from the s tock exchange, becoming a private company. Soon after, Oetker became Germany's leading brewery group through the purchase of a controlling stake in another brewer, Brau und Brunner, based in Dortmund.

In 2005, Radeberger itself entered the consolidation drive, buying up a 50 percent share of Stuttgarter Hofbraeu. As part of that purchase , Radeberger also acquired the option to take full control of Stuttga rter in the future. Radeberger Gruppe's strong brand portfolio and ge ographic reach gave it confidence that it would remain a German beer leader into the new century.

Principal Subsidiaries: Allgäuer Brauhaus AG; Andreas Bra uerei KG; Bärenbier Vertrieb GmbH; Bayerische Brauerei-Schuck-Ja enisch GmbH; Berliner Kindl Brauerei AG; Binding-Brauerei AG; Binding -Brauerei USA Inc.; Brauerei Potsdam GmbH; Brauerei Thier GmbH; Braue rei Wittenberge GmbH; DAB Gaststätten GmbH; DAB Italia S.p.A.; D ortmunder Actien-Brauerei AG; Erbacher Brauhaus J. Wörner & Söhne KG; Erbacher Premium Pils Brau GmbH; Getränke Hoffman n GmbH; Henninger-Bräu AG; Královsk y Pivovar Krusovice A .S. (Czech Republic); Kronen Privatbrauerei Dortmund GmbH; Krostitzer Brauerei GmbH; Radeberger Exportbierbrauerei GmbH; Schöfferhofe r Weizenbier GmbH; Selters Mineralquelle Augusta Victoria GmbH; Victo ria Brauerei GmbH.

Principal Competitors: Carlton and United Beverages; Ochakovo Beer and Soft Drinks Joint Stock Co.; Dreher Sorgyarak Rt; Pivovary S taropramen A.S.; Groupe Danone; Fulger S.A.; SABMiller PLC; Heineken Holding N.V.; Budejovicky Mestansky Pivovar A.S.; Carlsberg A/S; Alli ed Domecq PLC; Interbrew S.A.


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