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12.2005

Massachusetts Beverage Business

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Article By: Lew Bryson

How did that happen? Carlsberg is currently the fifth-largest brewing group in the world, and Carlsberg beer is sold in 154 countries. They are the brewers that put brewing on a true scientific basis, and who continue to contribute to brewing science on a high level. The rest of the world knows Carlsberg as readily as it knows Heineken. Why is it that Americans are largely unfamiliar with the beer?

"Carlsberg is by far the largest brand in the world that has such a small presence in the US," admitted Mike Mitaro, president of Carlsberg USA, the import arm of the brewery. "In various forms and ways, Carlsberg has been in the US since the 195Os, but it was never really marketed properly."

It hasn't helped that Carlsberg's import history is a bit ragged as the brand was passed around. Anheuser-Busch picked it up in the 198Os, a marriage that just didn't work out. "A-B is a great company," Mitaro was quick to point out, "but expectations weren't met." Those who have followed the business for a while may remember those days, when the brand went through an awkward image change.

After that, the brand was picked up by Labatt USA, a relationship that turned uncomfortable when the importer's Canadian parent brewery was bought by InBev (then Interbrew), a global competitor of Carlsberg. This was just not going to work, and after a certain amount of groundwork and deal-making, Carlsberg went solo on May 1, 2OO4, with the creation of Carlsberg USA.

But that's only the US history of the brand. The history of the brewery is much richer and makes for a great selling point. It's tied right in with the history of the little country where Carlsberg lives, and makes an essential contribution - one of the most important known - to brewing science and history.

Carslberg was founded in 1847, during a time when Denmark was coming to terms with radical changes in national outlook and options. Denmark's host of small islands (the country lies on 4O5 islands, many uninhabited) was a natural home for the Viking hordes that ravaged coastal Europe, raiders who ranged from Newfoundland to Constantinople, terrorizing shore-bound populations with their quick, violent attacks to kill, capture and sack. Denmark's early history is one of conquest and dominance.

That all fell apart in a little over 2OO years. Danish armies fell under the power of Swedish arms (it feels as odd to type that as it does to read it, believe me) in the 16OOs. They lost more power in the Napoleonic wars of the early 18OOs, partly thanks to the near-total destruction of their navy at the hands of Admiral Nelson, and lost the provinces of Schleswig-Holstein (a name that shows up occasionally in pretentious humor) to the Germans in the 186Os.

Denmark was faced with a tininess and loss of importance that was no less shocking for having occurred over 2OO years. Once the giant of Scandinavia, Denmark was now some island-based farms by the Baltic and a good port, Copenhagen. The Danes responded by recognizing their new situation, and developed a new national motto: "outward losses must be compensated by inward gains." The wave of industrialization this brought on lifted the Carlsberg brewery into existence.

The brewery was founded by Jacob Christian Jacobsen (note the spelling; the "-sen" ending is a sure-fire clue to Danish ancestry, like Hans Christian Andersen). Jacobsen's father was also a brewer, and JC, as he became known, was fascinated by advances in brewing science. Eventually this fascination led to his apprenticeship under one of the true greats of brewing, Gabriel Sedlmayer II, owner/brewer of the Spaten Brewery in Munich.

Sedlmayer was creating the body of knowledge that would become the precepts of lager brewing. Among these were the paramount importance of the yeast, an idea that Sedlmayer grasped intuitively. When JC had learned what he could, he left for home with a valuable gift from Sedlmayer: lager yeast.

Yeast, of course, was every bit as much a living, vulnerable thing then as it is now. JC knew he had to keep it alive through 6OO miles of coach travel, north to Copenhagen. The Carlsberg legend is that he kept the yeast covered by his tall hat all through the weeks-long journey, cooling the hat and the yeast with water from roadside streams.

A story like that might make today's yeast microbiologists shudder, but JC evidently got away with it. He brewed a successful test batch as soon as he got home (company legend has it that he used his mother's washtub), then scaled it up at his father's brewery. He soon built a new brewery in Valby, just outside of Copenhagen, where a lone hill peaks up out of the flat countryside. JC dug lagering cellars into the hill, built the brewery on top, and named it Carlsberg, Danish for "Carl's Hill", after his five-year-old son, Carl. The year was 1847.

JC built his brewery on the solid success of his lager beer, but he never lost his desire to experiment and learn. He founded the Carlsberg Laboratories to further brewing science - laboratories that would also support wide-ranging scientific research in the future. It was here that in 1883 the discovery was made that would, more than any other except perhaps that of the thermometer, make brewing a science more than an art.

Emil Hansen, a Carlsberg Laboratories scientist, isolated the first single-cell brewing yeast strain, a pure strain without any other yeasts, a strain that would make consistently clean and pure lager beer. Hansen named the strain Saccharomyces carlsbergensis. It was the father of modern yeast strains. More important than the strain itself, though, was the technique that Hansen developed, a painstaking approach to singling out identical yeast strains. It is the reason Carlsberg beers maintain their distinctive flavor and cleanness to this day.

JC's dedication to the sciences was matched by Carl's dedication to the arts, and Carl made sure the brewery would contribute to both; an example of "outward losses must be compensated by inward gains" in action. He founded the Carlsberg Foundation, a philanthropic organization that supports both arts and science. It also makes the brewery practically immune to takeover in the consolidation-happy European beer market: the Foundation owns 51% of the company.

"They are a hunter, not the hunted," Mitaro confirmed. "They cannot be eaten up because they are owned by the Foundation. Under CEO Nils Andersen, their main focus has been building and acquiring breweries in eastern Europe and Asia."

Carlsberg is indeed in expansion mode, according to European business sources. It has snapped up Hamburg's Holsten brewery (and four other German regionals) and has interests in Poland's Okocim brewery and Norway's Ringnes brewery - Carlsberg also owns former Danish rival Tuborg. The brewery is developing a relationship with Scottish & Newcastle through a joint venture in a technical services company in the UK. It's a complicated world in the brewing industry, but Carlsberg is proving to be an adept player, after a somewhat slow and unsure start.

"Carlsberg does business in 154 companies," he emphasized, "a truly global beer. Their company slogan is 'Drink with a world of friends', and it's true. Anyone who's traveled outside the US has had Carlsberg. They've seen the ads, they've had the beer, they've seen the soccer or golf sponsorships, or the sponsorship of the World Cup in skiing."

That's a focus that has served Carlsberg well in their global market, and it's how Carlsberg USA plans to proceed here in America. "Carlsberg is putting a significant investment behind the brand in the US," Mitaro said. "We are advertising on ESPN, and are distributed in almost all 5O states."

Tim Burke, at Burke Distributing, backed up the sports focus of Carlsberg's marketing in the US. "They are definitely making an effort in the market," he said. "They have ads on ESPN, and are heavily going after the Irish soccer bars. They're trying to build a base from there to work forward."

Burke also owned up to one of the things that hurt Carlsberg, just as it hurt Lowenbrau: the brand had been brewed under license in Canada. "It was made in Canada under license for quite a while," he said. "But it's the Danish stuff now, and it's excellent. It's probably one of my favorites in the house."

What is Carlsberg like? "It's not highly bitter," said Burke. "More like a Stella, more sweet than it is bitter. It doesn't give you that pilsner bite. It's an easier tasting beer, easier on the palate."

"Carlsberg is a lager beer," Mitaro said emphatically, when asked what made his beer different from other European imports. "It's primary difference is the yeast it is brewed with. The founder of Carlsberg developed this yeast strain: all lager beers use yeast that comes from that strain. It's drinkable, but has a good European taste. We encourage people to compare it to any other beer and make their own decision."

Burke sees that working in the targeted Irish bars. "It sells best in the Irish bars," he said. "It's traditionally a European beer, so any bar with an international flavor will do well with it."

Draft is the primary focus for Carlsberg USA at this point, but they are following draft success closely with bottles. How do you translate that to off-premise sales? "Emphasize the quality," Burke said. "It's a great beer. And the history of the brand is deep. This brand has so much culture behind it: 51% of the brewery is owned by the trust, and that money goes straight back to the arts and sciences. That's something no other brewery I can think of does."

Mitaro encourages store owners to give the brand a little room to breathe. "Display the product in the front of the store!" he said. "Make it available and visible. If it's hard to find, you might miss a high-profit sale. It is one of the largest-selling, most widely distributed brands in the world. People have seen it if they've traveled.

"The Northeast is our largest market," said Mitaro, "strongest in New York. But we're growing rapidly in Boston and in the Southeast. The West Coast has some strong markets. It follows the pattern of other European beers: the large cosmopolitan cities are where we sell the most beer."

Apparently the time for outward losses compensated by inward gains is over, and its time to look outward again. The most promising thing about Carlsberg's move into the US is that they're serious, as proven by the creation of Carlsberg USA. They're a big enough company - more than big enough - to put a real push behind it. They're no Vikings anymore, but a solidly-based company with a good future.

"Carlsberg is growing very nicely in the US," said Mitaro. "They're in it for the long-term, they're looking for long-term profitable growth. They're serious about it, and that's why we're doing it ourselves."

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