The Beer Fine

This beer fine story from Germany is an odd piece, and for an American....it'd take a minute to grasp the whole implication.

First, Germans are fairly picky about pricing and cartels.  You can't sell anything for less than it cost to manufacture and deliver it....there's actually a law on the books for this situation (Wal-Mart discovered that you can't sell Pepsi or Coke for less than what you bought a pallet for, or you suffer court-action in Germany).

Second, Germans are fairly picky about beer.  Certain brands sell very well.  Certain brands don't sell well.  Over the past decade, Germans have been found to drink less beer than two or three decades ago.  Some reports put the drop at twenty-five percent.  Wine and various other five-percent alcohol beverages have taken up some of the business along the way.

So what happened in this case....a couple of major players in the beer industry ( Bitburger, Krombacher, Veltins, Ernst Barre and Warsteiner) had this odd meeting with a couple of guys from Anheuser-Busch.  There's not much talk over why the guys met, the intended discussion, and how this rate thing got brought up.  The end of the meeting....they all kinda agree that between 2006-2008....they'd raise the price of a case (20 German beers) by one Euro ($1.3).  It's not a big rate change and normally....it'd just be accepted.  But in this....they all conspired to do the deal, and by German law....you can't do this.

The fine?  Because Anheuser-Busch came up quickly to admit quilt.....they basically walk away with zero cost on the fine.  The others?  Well....they all get hit with a combined fine of roughly 105M Euro ($140M).  For them, this will amount (by their words) to roughly one year's profits....and sink them into a slight budget issue for 2014.  Raising cost to make up for the loss?  Normally, a budget person would readily agree on this.

So, this brings to the million-Euro question....was this all rigged up by Anheuser-Busch.....to punish the five German beer brands (Krombach, Ernst Barre, Warsteiner, Veltins, and Bitburger)?  It's an odd deal....you suddenly show up at some German office, admit guilt in something, and you escape punishment....while the other players who stayed quiet are punished.

Can the five survive this punishment?  A decade or two ago....I would say yes.  This 105 million Euro....is a tough thing to accept.  It puts them into some severe problems in terms of growth, discounts, and future business operations for the rest of 2014, and will likely have continuing issues into 2015/2016 as well.  Each will borrow from the bank to cover the fine, and have to deal with costs over the fine later (the anticipated solution).

How did the six brewers come to meet?  No one has said.  Why would they meet?  No one has said.  Why would Anheuser-Busch come to suggest this one Euro price on a case?  No one has said.  Why did the executives of Anheuser-Busch suddenly find ethics to admit this?  No one has said.

German news journalists are kinda like American journalists.  They will see a story....tell the basic story, and then walk away.  In my book, there's fifty percent of the story left to tell.  Would the Bild folks, or Focus, or ZDF news accept a challenge.....and dig into what really happened here?  No.  It'll just fall to the side.

That's the beer fine story....really just half a story in my book, but it's the only story you can tell so far.