Big brewers lock up restaurant market

Big brewers are accused of cornering the restaurant market Keystone

Switzerland’s price watchdog has launched an investigation into exclusive contracts signed between the nation’s big brewers and restaurant owners.

This content was published on February 16, 2004 minutes

Smaller beer producers have complained that their larger rivals are shutting them out of a lucrative market.

The competition commission has confirmed that an investigation of industry practices is underway and it expects the inquiry to be completed by the end of the year.

“The contracts between the brewers and restaurants are part of that investigation,” commission spokesman Patrick Ducrey told swissinfo.

Officially, Switzerland’s beer cartel was broken up 1991. Brewers should, in theory, be able to sell their beer to whoever they want.

But small and microbreweries are finding it hard to get a foot in the restaurant door.

“The big brewers have grabbed the market with their exclusive contracts,” said Jérôme Rebetez, the owner of the Franches-Montagnes Brewery.

Closed shop

Two global brewing giants dominate the Swiss market: Heineken and Carlsberg. These two heavyweights sell nearly two-thirds of all the beer consumed in Switzerland.

The Swiss brewer, Feldschlösschen, which is owned by the Carlsberg group, admits to signing special contracts with restaurant and café owners.

These can involve preferential loans of money or material to those starting out on the trade.

“In return, the restaurant owner agrees to sell only our products,” added Feldschlösschen spokesman Stefan Kaspar.

The volume of beer to be sold and the length of contract are negotiable. The contracts are worth hundreds of millions of Swiss francs to Feldschlösschen, according to Kaspar.

Checking the small print

The competition watchdog is now taking a closer look at the specifics of these contracts.

“There are many ways a brewer can hold sway over a restaurant owner,” said Ducrey. “Loans, credits and supplying equipment are just a few of them, and we have to decide if this is legal.”

Smaller brewers argue that these contracts are just another way of setting up a cartel. Dominique Suchet, a microbrewer from Geneva, says restaurateurs are afraid to sell other beers.

“They are usually interested in what I have to sell, but they can’t buy anything because of their contracts with the big brewers,” he said.

No arm-twisting

Kaspar insists that no one is being coerced to sign exclusive contracts. And some restaurant owners admit that brewery loans are welcome at a time when the banks are less forthcoming.

“The restaurant business is considered risky by banks,” said Laurent Terlinchamp, president of the Geneva restaurant owners’ association. “We have to find other solutions and these contracts are one of them.”

“They [the big brewers] are helping a business sector that is hurting,” he added. “These contracts are necessary for many of us to survive. It’s just a business deal where everyone gets what he wants.”

The Swiss brewers’ association, which represents most of the country’s biggest producers, says there is nothing untoward about the agreements between brewers and restaurateurs.

According to the association, these contracts are also common in Germany and the Netherlands.

swissinfo with agencies

Key facts

Beer production in Europe: 320 million hectolitres.
In Switzerland: 4.3 million hectolitres.
Beer consumption per person in Switzerland: 58 litres in 2003.
Wine consumption: 41 litres.
Carlsberg and Heineken have 65 per cent market share in Switzerland.
Ther are 105 Swiss breweries.

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In brief

Switzerland's beer cartel was abolished in 1991.

The country's cartel law first came into force in 1995, and its latest version will go into effect in April 2004.

The competition commission will be able to impose sanctions against companies that limit competition.

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