Karlsberg Brauerei GmbH & Co KG

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Karlsberg Brauerei GmbH & Co KG

Karlsbergstrasse 62
D-66424 Homburg
Germany
Telephone: (49)(6841)105-0
Fax: (49)(6841)105-269
Web site: http://www.karlsberg.de

Private Company
Incorporated: 1878 as Bayerische Bierbrauerei zum Karlsberg
Employees: 2,353
Sales: DM 1.1 billion ($562 million)(2000)
NAIC: 31212 Breweries; 312111 Soft Drink Manufacturing; 312112 Bottled Water Manufacturing

Karlsberg Brauerei GmbH & Co KG is one of Germany’s top ten beer and beverage producers. The Homburg-based company has a century-long brewing tradition and has developed into a beverage concern with 16 subsidiaries involved in beer and nonalcoholic beverage production, services, and logistics in Germany and France. Karlsberg Brauerei’s core brand “Karlsberg Ur-Pils” and other specialty beers are mainly sold in the westernmost German states. Its export beer brand “Karlsbräu” is shipped to France, Italy, England, and eastern Europe. The company owns the Koblenz-based brewing group Königsbacher Brauerei, Coca-Cola licensee OKKO-GmbH, nonalcoholic beverage producers Merziger, Klindworth, Lindavia, and Dietz. In the services sector, Tiefkühlkost-Zentrale (TKZ) supplies restaurants with frozen produce and ServiPlus stocks food and beverage vending machines. Karlsberg Brauerei also owns a brewery and a fruit juice producer in France, Brasserie de Saverne and Cidou. Karlsberg Brauerei is majority owned by the Weber family.

New Owner for Old Brewery in 1878

In 1878 the biggest brewery in Homburg, a town in the German Saar region with a long beer-brewing tradition, was up for sale. The brewery was built by the Jacoby brothers at the foot of the Karlsberg mountain in 1858 and 1859. On top of the mountain in the Karlsberg castle lived the noble Pfalz-Zweibrückische family, which since the middle of the 18th century had operated the predecessor of the Jacoby brothers’ brewery. Limited raw material and food supplies in the years after the German-French War led to extraordinarily high prices and caused many small businesses to declare bankruptcy. One of them was the Jacoby brothers’ Bayerische Bierbrauerei zum Karlsberg.

On May 28, 1878, the Karlsberg brewery was auctioned off in Carl Cappel’s restaurant. After being outbid a few times in the course of the auction, import goods wholesaler Christian Weber finally won the bidding. The son of a family of farmers from Altstadt-Limbach, Weber had taken over an import goods retail business in Homburg that he had entered as an apprentice ten years earlier. He eventually expanded the store into a wholesale food business. By the age of 38 Weber had accumulated 57,000 Marks, sufficient capital to purchase the brewery. However, that didn’t mean that the new brewer knew anything about brewing beer. And, as the story goes, his master brewer didn’t either! The malt facility was at a different location from the brewery and so the wort, an unfermented mixture of ingredients, had to be transported to the brewing tanks in a bin by oxcart. The contents of the first bin had to be discarded because the master brewer forgot to add hops to the mixture. Despite this early mishap, things went very well after this “dress rehearsal.”

As a result of its rapidly developing reputation for high-quality beer, the Karlsberg Brauerei was soon the most important supplier of beer to Homburg and its environs. While smaller local breweries were struggling and one after the other ceased production, rising demand forced Christian Weber to expand his production facilities. In 1884 the brewery was relocated to a new property with a great deal of cellar and warehouse space. It was renamed the company Bayerische Bierbrauerei zum Karlsberg, von Christian Weber, because it was brewed in a style popular in Bavaria (Bayerische). A new brewhouse was erected between 1883 and 1886, an office building was acquired, and a new machine house was built in 1896. The invention of the “ice machine” solved the main problem facing beer producers—how to keep their product cool during warmer seasons.

From Local Brewery to Regional Brewery After 1897

By the end of the 19th century Karlsberg Brauerei was established locally and ready to expand into bordering territories. These included the industrial centers in the Saar basin, Luxembourg and Lorraine. To finance the expansion of the brewery’s capacity, Christian Weber decided to transform the family business into the then-popular form of an Aktiengesellschaft. The transformation went into effect on January 19, 1897. The company’s name was changed to Bayerische Bierbrauerei zum Karlsberg, vormals Christian Weber Aktiengesellschaft. Nonetheless, although the brewery was a share company, all but 14 of the 1,100 shares were held by Christian Weber. The rest were held by other family members and a few strangers. So in essence, nothing had really changed in terms of who controlled the Karlsberg Brauerei. The single change made was to introduce a new position, commercial director, who dealt with the other shareholders, mainly banks that had given the brewery long-term loans to finance further expansion.

The extension of the brewery’s market was a challenge to its distribution network. Transportation posed a major problem. At the time horse-drawn coaches were the normal means of transportation. However, the brewery only owned 30 horses, not enough for transporting beer longer distances. Transportation by rail provided the solution. Karlsberg Brauerei acquired their own rail coaches to ship its beer to Luxembourg and Lorraine. Another significant investment was the erection of an new steam-powered brewing facility that doubled the brewery’s capacity.

At first, all these investments resulted in increased sales figures. However, the first decade of the 20th century brought change and new challenges. The brewery’s profits were hurt by steel crises in 1901 and 1902, by rising prices for coal, rising wages for brewery workers, increased taxes, and falling beer prices. Commercial director Louis Göhring was highly successful in expanding Karlsberg Brauerei’s reach; he organized the Vereinigung der pfälzischen Brauereien, a regional trade organization for beer brewers. However, one day Göhring failed to return from a business trip and was never seen again. It was speculated that his mysterious disappearance was connected with irregularities in his sales work.

On December 20, 1912, Christian Weber announced at a company meeting that because of his age—he was 72 years old at that time—he was resigning from the business. His oldest son, Richard Weber, who had studied beer brewing at the Königlich Brautechnische Fakultät in Weihenstephan, became president and technical director. Richard had been involved in the daily business as vice-president since the time he had finished his brewing studies. One of the first changes he made was to purchase a second truck, a decision that was finally approved by the management board after his father had left.

Shaken by Two World Wars

After only two years, Christian Weber returned from retirement at the outbreak of World War I. The war caused shortages in raw material supplies and decreased consumer demand. Most beer consumers and brewery workers were fighting at the front, and barley was being rationed to make solid food, instead of beer. When the war ended, Germany had lost some of its western areas, specifically Luxemburg and Lorraine, which interrupted Karlsberg Brauerei’s westward expansion and cut the brewery off from half of its market in the Pfalz. Despite these obstacles the company turned out growing sales and profits. According to the 1927 edition of the Handbuch der Deutschen Aktiengesellschaften, a handbook of German companies, Karlsberg Brauerei owned 20 automobiles, 25 horses, and three railway wagons and employed 22 white collar and 100 blue collar workers. The upswing lasted until the worldwide economic depression hit the Saar in 1931. The downswing was followed by another temporary economic upturn under the new Nazi regime that promoted new job creation in Germany.

On June 29, 1937, the company was transformed into a Kommanditgesellschaft. This corporate form, which was officially supported by the Nazis, put a higher emphasis on the personal reliability of the owners. The following year the brewery achieved a new production record of about 150,000 hectoliters and installed a modern bottling plant. In September 1939 World War II broke out. Just two months later, while being evacuated, Christian Weber died two and a half months before his 100th birthday.

During the war the entire German economy was administered by the government. For German beer brewers this meant they were required to brew a low-quality beer. At first the basic ingredients were limited to 6 percent, then temporarily raised again after the successful invasion of France, but repeatedly lowered afterwards. At the same time the Nazis massively propagandized the new “light beer” as the new beverage of the German people. Karlsberg Brauerei’s trucks were confiscated and most of its employees were called to the front. Many of them did not return—including the founder’s grandson Richard Weber who was killed at age 30 on November 4, 1941, in the Crimea near Sevastopol, Russia. The young brewing engineer had been actively involved in the company’s top management since 1936. In addition to these losses, the company’s facilities suffered severe damage.

Company Perspectives:

The steady expansion of Karlsberg’s product range is an important part of the company’s corporate strategy. Its goal is to provide a unique beverage for every taste through a decisive strategic development of a variety of different brands.

After repairs to the facilities began, the Karlsberg Brauerei started brewing a 1-percent “near beer.” It was delivered to what customers were left with some old trucks and seven horse-or ox-drawn carts. Malt shortages after the war limited beer brewing again, and eventually a temporary prohibition on brewing was imposed. On November 20, 1947, the Saar basin became part of France. It was cut off from its traditional German customers, but the brewery was at least able to purchase raw materials freely, to replace run-down machinery, and to enjoy the relatively stable French currency. In 1948 the company was allowed to brew beer again and the situation gradually normalized. In 1953, on the occasion of the company’s 75th anniversary, Karlsberg Brauerei brewed 200,000 hectoliters of beer—more than ever before.

From Regional Brewery to National Brewery After 1953

At the end of the postwar years of reconstruction, Karlsberg Brauerei entered a period of dynamic growth. As the demand for beer rose, the company initiated several improvements in its technological base between 1953 and 1956. Warehouse and cellar space was extended, the power station modernized, and new brewing equipment installed. Another novelty Karlsberg introduced was beer in cans. Karlsberg Brauerei had started putting beer in bottles before the Second World War, and, by the early 1950s, 60 percent of beer being produced was in bottles. When a new bottling plant was built to replace the old one, the company decided to transform the older plant into a canning facility. The company started selling canned beer in 1953.

Major changes also occurred in the brewery’s distribution network in the 1950s. An influential distribution partner was found in Hofbräubierzentrale GmbH Saarbrücken. Karlsberg Brauerei signed a 20-year contract with the distributor who guaranteed to buy at least 20,000 hectoliters of beer annually. The brewery’s own distribution center in Saarlouis was closed down and another exclusive contract signed with a local distributor for that area. When another regional brewery, Walsheimbrauerei AG, was liquidated, its major shareholder, French bank Credit Commercial de France, contracted with Karlsberg Brauerei to deliver beer for export to France under the “Walsheim” brand.

The export of canned beer to France and its colonies in Africa and Indochina contributed significantly to the brewery’s total output growth to 420,000 hectoliters by 1958.

When the Saarland joined the Federal Republic of Germany in July 1959, Karlsberg Brauerei was the leading beer brewer of the state. The sudden exposure to the tough German competition resulted in Karlsberg’s beer output dropping by 12 percent. However, an agreement with France guaranteed the toll-free export of as much beer as the brewery had exported in 1955. To make the state’s integration into the German economy easier, businesses in the Saarland were also subsidized with 5 percent of their products’ sales price and through special tax breaks.

In April 1962 Richard Weber’s son, Dr. Paul Weber, became Karlsberg Brauerei’s new CEO and a young management team replaced the old one. In the early 1960s larger breweries in the Saarland began buying up smaller ones that were struggling to stay in business. In this way, Karlsberg Brauerei acquired Ottweiler-based Simon AG and a 10-percent stake in Saarfürst-Brauerei AG based in Merzig. It acquired the sport hotel at the foot of the hill in its hometown Homburg, which had replaced a restaurant in 1971. In business year 1972–73 the company passed the one-million hectoliter mark in production for the first time in its history.

From Family Business to Family of Businesses After 1974

By 1975 Karlsberg Brauerei was among Germany’s leading breweries and the fourth largest private beer brewer of the country with a total annual output of 1.37 million hectoliters. The company exported about 8 percent of its total production to France, Austria, Switzerland, and Italy. Dr. Paul Weber’s son Richard entered the company at the end of 1974, at a time when the beer and beverage markets were experiencing a downturn. However, Karlsberg Brauerei went on expanding and modernizing its production facilities. Brewing capacity was doubled once again and the entire brewing process, from the mixture of the first ingredients until the final brew was completed, was fully automated. Under director for exports Richard Weber, the brewery expanded its reach throughout Germany, as well as into 24 countries around the world.

Key Dates:

1878:: Wholesaler Christian Weber acquires Bayerische Bierbrauerei zum Karlsberg.
1912:: Richard Weber takes over as president and technical director.
1937:: The company is transformed into a Kommanditgesellschaft (KG).
1947:: The Saar basin, where the brewery is located, becomes part of France.
1953:: Karlsberg Brauerei starts selling beer in cans.
1959:: Saarland joins the Federal Republic of Germany.
1962:: Dr. Paul Weber takes over as CEO.
1979:: Karlsberg Brauerei acquires majority share in Saarfürst-Brauerei AG.
1983:: The company buys a 60 percent share in OKKO Getränke GmbH.
1984:: Karlsberg Brauerei takes over Merziger Süßmosterei and founds Tiefkühlkost-Zentrale (TKZ).
1989:: The brewery takes over Becker Brauerei, including French brewery Brasserie de Saverne.
1992:: The company takes over Königsbacher Brauerei AG.
1996:: Karlsberg Brauerei GmbH & Co KG becomes management holding.
1999:: Karlsberg Brauerei introduces beer in plastic bottles.

Besides expanding internationally Karlsberg Brauerei utilized two other strategies to establish a basis for future growth: acquisitions of other breweries and expansion into new markets, mainly alcohol-free beverages, services, and logistics. In 1979 Karlsberg Brauerei increased its share in Saarfürst-Brauerei to 81 percent. Between 1986 and 1989 the company acquired four more breweries, in Riegelsberg, Neunkirchen, and Metz, France, and acquired shares in Löwenbrauerei Trier J. Mendgen GmbH & Co. The largest among them was Saarland’s second biggest brewery Becker GmbH & Co KG based in St. Ingbert, which also owned Brasserie de Saverne, a brewery in France. The largest deal of that period followed in 1992 when Karlsberg Brauerei took over 85 percent of Königsbacher Brauerei AG after two years of working together. This Koblenz-based regional brewing operation owned several breweries in big cities such as Cologne, Dusseldorf, Nassau, and Eisenach, as well as produced bottled water, and also owned advertising companies and distribution firms.

Karlsberg Brauerei’s massive venture into alcohol-free beverages started in 1983 when it bought a 60 percent share in OKKO Getränke GmbH, one of Germany’s largest Coca-Cola licensees. A year later the brewery purchased a majority share in alcohol-free fruit beverage maker Merziger Süßmosterei GmbH & Co KG. In 1992 Karlsberg Brauerei acquired Saar-Pfalz-Erfrischungsgetränke GmbH, a regional producer of soft drinks, to which all of the company’s alcohol-free beverage production was transferred. The brewery took its first steps into services and logistics in 1975 when it founded a company that provided a rental service for tents and other large-scale party and catering equipment and supplies. In 1984 the company set up a new subsidiary, Tiefkuhlkost-Zentrale GmbH, St. Ingbert (TKZ), which supplied regional restaurants with frozen produce. In 1990 Saarbrücken-based ServiPlus GmbH was set up along with a French subsidiary to market food and beverage vending machines and their goods. In 1991 Karlsberg Brauerei acquired French carrier Saverne Transports S.à.r.l. to expand its distribution network for French customers.

From Brewery Concern to Beverage Concern After 1995

After an unprecedented shopping spree, in the second half of the 1990s Karlsberg Brauerei focused on reorganizing its business and integrating its new companies into the group. In 1996 the brewery Karlsberg Brauerei KG Weber became the core operating company of the conglomerate’s beer business division run by an independent management team. All subsidiaries were made part of the Karlsberg-Verbund, which was managed by the holding company Karlsberg Brauerei GmbH & Co KG.

For most of the 1990s the German economy was sluggish, unemployment rose, consumers became more conscious of their spending, and the overall beer market stagnated. Karlsberg Brauerei strengthened its brands, introduced new products and expanded its nonalcoholic beverage division. Production of Karlsberg Brauerei’s major domestic brand “Karlsberg Ur-Pils” passed the 1 million hectoliter mark for the first time in 1994. That same year the company also introduced “Karlsbräu,” its successful export brand, to the German market. By then, exports accounted for about 15 percent of the company’s total sales; its foreign markets extended beyond France as far as Italy, England, and eastern Europe. To combat the declining beer market, the company introduced new beer beverages for younger target groups, including “Mixery,” a mixture of beer and Cola, “Desperados,” a beer with tequila aroma, and “Joy’s,” a mixture of beer and apple juice. Other innovations included the two heavy beer brands “Ballermann” and “8,8.”

In addition to these product innovations, in the fall of 1999 Karlsberg Brauerei became the first German brewery to fill beer into plastic (PET) bottles. Although at first considered unusual and the target of criticism in the media, the company saw several advantages in this approach. PET bottles are ultralight weighing only 30 grams; they hardly ever break, which made it possible to sell bottled beer in stadiums where glass bottles were banned for security reasons; beer in PET bottles holds its car-bonation longer, and the beer stays fresh and cool longer, according to the brewery.

In 1998 and 1999 Karlsberg Brauerei acquired three more fruit juice producers, one of which was located in France. The group’s fruit juice businesses were organized under the Merziger Fruchtsaftverbund in 1999. By 1994 alcohol-free beverages represented 28 percent of Karlsberg Brauerei’s total output. In 1999 they reached 40 percent and the company aimed at a long-term boost to 60 percent. Ultimately, the company’s vision was to be able to supply its customers with whatever beverage they wanted.

Principal Subsidiaries

Karlsberg Brauerei KG Weber (Germany); Königsbacher Brauerei AG (Germany); Brauerei Becker GmbH & Co. KG (Germany); Löwenbrauerei Trier GmbH & Co. (Germany); Brasserie de Saverne S.A. (France); OKKO Getränke GmbH (Germany); Merziger Fruchtsaftgetränke GmbH & Co. KG (Germany); Danuer Sprudel GmbH (Germany); TKZ Tiefkuhlkostzentrale GmbH (Germany); ServiPlus - Getränke und Versorgungsautomatenservice GmbH (Germany); St. Ingberter Transport - und Speditionsgesellschaft mbH (Germany); Karlsberg Freizeitservice GmbH (Germany); SWG Südwest Getränke Plus GmbH (Germany); Saverne Transports S.à.r.l. (France).