Published in: 2003
Dryckesbröder is the story of the brothers Jens and Ulf Spendrup and the bankrupt brewery they inherited from their father in 1976. The board as well as the auditor had resigned and there was a guarantee commitment of SEK 30 million for the dilapidated Grängesbergs Bryggeri AB. The brothers were then 32 and 30 years old and were not at all ready to shoulder the role of brewer’s – they thought. Over the next 40 years, they would transform the local brewery into one of the country’s largest and on the way build a net worth of several hundreds of millions SEK.
FOUNDED IN THE 19TH CENTURY. Louis Spendrup trained as a brewmaster and worked at many different breweries before he bought the brewery in 1923. Grängesbergs Bryggeri still has its founding date, 1897, on the brewery transportation vehicles. In Grängesberg, a recession prevailed in the early 1920s. Sales to the 4,000 Grängesberg residents who worked in the mine, at the dynamite factory or in the workshops were crucial because a brewery was not allowed to sell beer further than 30 km from the production site. After Louis, his son Jens Fredrik inherited the brewery, which at his death, at 59 years old, passed it on to Jens and Ulf.
THE ”MELLANÖL” GETS FORBIDDEN. When the brothers took over the company in 1976, the “medium beer” (a beer with around 4% alcohol) debate raged in Sweden. The following year, the medium beer, which had been Sweden’s most popular beer for 12 years, was banned. Beer sales immediately plunged 30% and the country’s ~ 60 breweries were on their knees. The replacement “folk öl” (folk beer) is nicknamed “Fälldinpiss” and “Statspilsner”. During the brothers’ first year, the brewery lost one million kronor and they were forced to draw up a control balance sheet. Property values were increased and they bought themselves additional time to reverse the development. In the 1970s, the state-run Pripps was totally dominant with a market share of 70%. Jens and Ulf offered Pripps to buy Spendrups, but its CEO Kurt Rydé said they could take over the brewery if the brothers paid them four million SEK. With mortgaged homes, continuing the operation was the only way out.
LÖWENBRÄU SAVES THE DAY. In October 1978, Spendrups took over the production of Löwenbräu in Sweden, the market’s most expensive beer. The German producer had neglected the calculation and gave Spendrup almost all the profit margin in the collaboration. The price of Löwenbräus beer was previously high due to transport costs, Vin & Sprits surcharges and high taxes. Spendrup’s did not lower the price despite the fact that it was now manufactured in Grängesberg instead of in Munich – with the difference that what were previously transport costs and Vin & Sprit’s import margin was now Spendrup’s profit margin. In 1977–1979, turnover more than doubled, from SEK 60 to 170 million, and the brewery was one of the most profitable in Sweden.
DISCUSSIONS ON A BEER MONOPOLY. In November 1982, Minister of Finance Kjell-Olof Feldt proposed that the brewing industry should be monopolized into state ownership. The state-owned Brygginvest was developing a program for restructuring the brewing industry, in which the state owned the two competing breweries on the market. When the program becomes public, the criticism was fierce. The tabloid Expressen did campaign articles about the culprit Pripps and the state’s commitment, the debate was high in the parliament and the brothers felt the threat of being swallowed up. The idea of the beer monopoly ultimately stayed on the drawing board.
IPO & EXPANSION. The 1980s was the decade that made the Spendrup brothers a power factor in the brewing industry. Three breweries ran at full capacity every month of the year. In 1983, Spendrups Bryggeri AB was listed on the stock exchange and raised SEK 10 million earmarked for expansion. Sales were around SEK 250 million with an operating profit of SEK 16 million. At the first AGM in Grängesberg, the tenor Ola Falkman sang Carmen and the future looked bright.
DAVID VS. GOLIATH. In 1989, Spendrups suffered the worst disaster since the medium beer ban. KF, which sold the Vårby brewery to Spendrups and was thereafter able to freely choose suppliers, leaved Spendrups for the state-run Pripps. With that, Spendrups lost all volumes to the nationwide consumer associations. Ica and Dagab were furious and protested by throwing out Pripps products (and even Coca-Cola) to completely replace Spendrup’s beers (as well as their Pepsi). This gift from above meant that Spendrups, despite the volume loss to KF, shifted up and could seriously go up against Pripps. With the purchase of the Vårby brewery and the support of Ica and Dagab, Spendrups reached a market share of 18%. Growth during the 1980s was 15% per year and between 1985–1992 more than one billion SEK was invested in Grängesberg.
LBO. In 2001, the brothers considered that the stock exchange valued the company too low, so they borrowed SEK 270 million and took the company private. After taking control, they sold the properties and repaid the loan. Today, 18 years later, Spendrup’s has a turnover of SEK 3.8 billion and has a third of the Swedish beer market (second largest after Carlsberg). The company is controlled and managed by the fourth generation Spendrup through a foundation in Lichtenstein.
THE HISTORY OF BEER. Traces of beer production have been found several thousand years before Christ in Mesopotamia and Egypt. During the Middle Ages, beer was the dominant beverage and it was in the monasteries that production took place. In Gustav Vasa’s time, the Swede drank at least one jug (2.62 liters) of beer per person per day. That the population was so terribly thirsty was connected with the fact that food was either salted or dried and that the medieval bread was rock hard and had to be soaked. The beer was also considered a medicine for various ailments.