The Mahou and its profitable empire brewing

One of the latest initiatives of Mahou-San Miguel, the beer leader in Spain, has been Solana, an online shop in which, in addition to the beers of the firm, it

The Mahou and its profitable empire brewing

One of the latest initiatives of Mahou-San Miguel, the beer leader in Spain, has been Solana, an online shop in which, in addition to the beers of the firm, it sells socks, underwear, umbrellas, backpacks, keychains or aprons. That a brewery sells socks, or that the store will call Solana might seem to be occurrences, but in reality they say a lot about a company that, in the hands of the founding family since 1890, this hotel has a health enviable, and it moves to strengthen its position in Spain and to increase its presence abroad.

Bridget Solana was called the matriarch of the family and founder of the company in 1890. Put the name of her husband, Casimiro Mahou, who had died a few years before, without seeing fulfilled his dream of stand-up in a brewery. The descendants of Bridget and their five children are still today at the head of the company, that in 2018, with the additions of San Miguel (2000), Alhambra (2007), solán de Cabras (2011) or the more recent investments in the u.s. Founders and Avery, the barcelona Nomad and the bilbao Salve, in addition to the Waters of the Valley of la Orotava (Tenerife) with a turnover of almost 1,300 million euros, 3% more than a year before, and earned a profit of 124,4 million, 2.6% less.

The members of the sixth and seventh generation of the family, Mahou, through asset holding companies The Tejoneras (50%), a Company Gala Investments (27,15%) and IPL Gala International (22,69%) own the company 100% and occupy, of course, all the seats on the board of directors, chaired by José Antonio Mahou Herráiz. The successive descendants have been incorporated to the council, to ensure the generational shift.

it Would be more normal to think of disagreements between the various family branches that coexist in the council, but sources from the company claim are the minimum. “Moreover, all decisions (acquisitions, and other strategic moves) are taken by unanimity,” said these sources. The unanimity, that yes, you can delay the decision. “There are dynamics of dialogue until you reach the agreement”, say those sources.

however, this requirement of unanimity has not prevented the company moved much in the last few years, to gain international presence, and to renew the range of products, directing the focus towards the sector of the craft and the premiumización (special beers are more expensive, they help to grow in value if the volume is watertight). As he says Celia Rodriguez, a specialist in beer to Nielsen, the consumption of beer in Spain in 2018 only grew 1.5%, while the business did 5.2%. That is to say, the increase in turnover was due in good part to the increase in prices.

In this sense, Mahou has taken positions on the outside in the last few years. After a cautious, now owns 90% of the brewing the american Founders and the 70% of Avery, also in the united STATES. Has a distribution business in Chile (Mahou Andean) and the manufacture of beer in India (Mahou India), although in both cases the results are still negative, especially in India. It is also to see how the agreement reached in September with Ab InBev, the largest brewery in the world, to produce and distribute some of its brands in Spain, such as Budweiser or Corona. The alliance implies that Mahou will have to distribute among its customers the marks of the giant belgian, which means putting the competition in the same bars and shelves for the own brands. In terms of exports, Mahou-San Miguel sells about 13% of their volume outside of Spain. The stagnation of consumption in Spain, the strategy lies in the increase of the starting outside at least up to 20%.

Perhaps more significant a hole inside. With a share of 32% of the total production of beer in Spain, according to data from the guild Brewers of Spain, the presence of Mahou is very important in the centre, especially in Madrid, but other brands are expanding more aggressively for the rest of the country, and gaining market share. However, it has also extended the networks in the national market, with the purchase of San Miguel, Alhambra, or investments in Nomad, The Hail, or the guadalajara (spain) Brutus, the latter with a clear orientation for the segment, craft or artisan, one of the trends more pronounced in recent years.

“The market is going towards the premiumización, towards the diversification of the portfolio, looking for new varieties to new moments of consumption, beyond the traditional appetizer”, explains Rodríguez, Nielsen. Mahou has responded to this trend with the acquisitions and new products, such as Mahou Barrel, or a Teacher, San Miguel Magna, Alhambra, the Casimiro Mahou... The goal is that the innovations, the varieties with less than five years in the market, more expensive in general, suppose 10% of the sales in 2020. However, you can't lose sight of their traditional versions, because, as Rodriguez explains, a slowdown in economic notary before in the premium, apart from that there was the possibility of an excessive premiumización finish in less consumption occasions.

Caution

Despite all the corporate operations and investments, such as the plant in Alovera (Guadalajara), which has been close to 120 million in the last decade, the group has hardly any debt. At the end of the year 2018, not less than 100 million euros, including the guarantees that are charged to customers by packaging and returned. It is the policy of the company to “maintain a low profile of indebtedness”, and the Mahou carry it to the letter. The company boasts of “the virtue of financial prudence”, which does not exclude recourse to the debt if an operation makes it necessary. “We were already highly indebted in 2000, with the acquisition of San Miguel, but we opted for the quick pay”, remember to company sources, but in general “is the preferred approach to growth with its own resources”. This prudence has served to make muscle and keep voluntary reserves by more than 1,200 million.

Updated Date: 04 January 2020, 10:00

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