Interview

just the Answer: Krombacher's export & international sales director, Oliver Braun

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Oliver Braun joined German brewer Krombacher almost five years ago from Anheuser-Busch InBev. Today, he is the company's export & international sales director. just-drinks editor Olly Wehring caught up with him last month when he visited London.

Krombacher is the market leader in several segments of Germanys beer market

Krombacher is the market leader in several segments of Germany's beer market

just-drinks: How did you get to where you are today?

Oliver Braun: I started working on the Beck's brand after university. The company was family-owned but management-run then. I then moved to InBev's marketing department, where I was brand manager for Beck's in Germany. After that, I moved to the export department for Beck's.

For a person in the first third of their career, a company that changes so rapidly and dynamically is a fantastic place to be. After ten years, you may want to ask yourself if this is it for the next third, or do you want to try something else. I chose to do that.

j-d: What do you consider to be the main differences between working for a public company like Anheuser-Busch InBev and a family-owned firm like Krombacher?

OB: From a process point of view and from a professional point of view, there is not much difference. Krombacher is not a small company – in some segments in Germany, it is market leader. So, it has everything that the big corporations have as well.

The key differences are the speed in which you get decisions. My boss is the owner of the brewery. If I need a decision, I 'phone him and I get an answer! It's really simple – there's no formal application to one level that has to put in a request to another level and so on.

Also, when it comes to how people matter in the business, what I experienced during my time on Beck's is similar to what I have experienced with Krombacher. Of course, we have targets and KPIs, but we do not forget about the human factor. That is higher today in a family-run company than it is in a corporation. Finally, when you own brands in a corporation, you can do certain things with them to pull consumers towards you that other players cannot do if they do not have such large portfolios. So, it's more about the social and people element that has a higher value for smaller companies.

j-d: When it comes to targeting future growth, how does Krombacher work compared to the larger, public brewers?

OB: Our exports are running at around 200,000 hectolitres per year – this is around 2.5% of the company's total volumes. The ten-year plan is for exports to total 500,000 hectolitres by 2024. The horizons are much longer at a family company – you wouldn't be able to present that sort of target to the board of a large corporation. For Krombacher, this is absolutely fine. The only condition is that the growth is sustainable; anyone can buy volume, but this is not how a family-run company is set up.

j-d: What is Krombacher's current export presence?

OB: Let's take the UK as an example: We have volumes here of around 11,500 hectolitres per year. Our aim is 26,000 hectolitres in the next five years. That's a high dynamic, but the UK is among our six strategic markets. The others are Italy, the US, Russia, Brazil and China.

We don't see our UK targets as being over-ambitious – the imported and craft beer segments are growing. So, we see the aim of going from a relatively low level to 26,000 hectolitres is achievable.

j-d: The markets you are targeting are either well-developed or come with their own set of very specific challenges to brewers. Why have you chosen these countries?

OB: I could simply say that we like challenges, but that's not the true answer. Italy is the single biggest export market for us. We are big there and we want to maintain it. In the UK, we strongly believe that Krombacher does not have its fair share. There are a number of players in the imported German beer segment who are participating more than we are. We believe we are worth 30,000 to 40,000 hectolitres in that market.

The US is a similar situation for us – but also add in the growing craft segment. We believe our share should be 50,000 to 60,000 hectolitres. We have our own people in the US and we expect to finish the year at around 12,000 hectolitres. So, we have a journey ahead of us to build what we feel is our fair share.

Krombacher's export & international sales director, Oliver Braun

Russia is a really tricky one. We have been in Russia for years – our volumes today are around 17,000 hectolitres and this has been helped by a recent change in our partnership there. With this new partner, we feel we have the chance to grow to nearer 50,000 hectolitres. Of course, Russia isn't all sunshine. There are lots of things there that are not going in our favour, but we believe that Russia will get back on track and see growth again. It's a little bit in the valley of darkness right now, but there is hope it will eventually bounce back.

Brazil is a nightmare in terms of complexity. It's taken us six months to draw up a business plan with a route-to-market with which we think we will be successful. We are the first German brewer to set up our own legal entity in the Brazilian market. I think the country is in the same place that the US was ten to 15 years ago: It is dominated by AmBev, and Brazilian consumers have very low brand knowledge. In the US, 15 years ago, consumers started to demand more variety. I see the same happening in Brazil over the next few years. We hope to have first-mover advantage, as the premium segment today accounts for only 6% of the total market. In Germany, for example, it's 31%. There is opportunity there, at least with socio-economic changes. We are set to enter Brazil before the end of this year, and we're aiming for around 13,000 hectolitres per year within five years.

Finally, we are targeting China. It's already the largest beer market in the world, and the growth rates are enormous. These growth rates will continue as a huge emerging group of rich people - who are extremely open to Western brands - come to the fore.

Krombacher is small, it has long horizons: We are not targeting huge growth. If I was still with   A-B InBev, I would be looking at six- to seven-digit numbers for volumes in China. At Krombacher, we're looking at five-digit numbers. If we can build our Chinese business in five years to 30,000 hectolitres, and to 100,000 hectolitres in ten years, then that would really mean something to us. We are a niche player, and that niche is there.

j-d: What shape is the company's portfolio in?

OB: Over the past five to ten years, we have developed a multi-product portfolio. The Krombacher range is made up of Pils, hell (light), wheat, dark and radler. There will be more coming in the future. We are significantly stronger in Pils, but our domestic growth rates for the other products are growing stronger than Pils. In China, however, it's wheat first, then dark second and Pils Hell third. In China, the general lager beer segment is well-supplied.

j-d: Is domestic stagnation driving these ambitious export targets?

OB: Krombacher is facing difficult times ahead in Germany, thanks to a declining market and changing consumer trends. Export is certainly seen as protecting the Krombacher ship. We cannot rely on our domestic market for future growth, but exports are not seen as the sole element for the future. We also need to look to product innovation, stepping into new sub-categories – especially in the non-alcoholic area – and buying distribution partners and wholesalers. Finally, we need to engage financially with on-trade, 'slow food' concepts. This is another area that can help compensate for the attacks on Krombacher in Germany.

j-d: Would a partnership with a large international brewer appeal to Krombacher?

OB: Yes and no. If our aim was to be more than a niche player, then this would probably work. But, we have very moderate growth ambitions. It is good for us if big, international players develop premium and super-premium import segments. 

In the UK, look at what Heineken has done with the radler segment. Krombacher is leading the German radler segment by far, so of course, we love what Heineken is doing: They are explaining to consumers what radler is. Then, we can come along and say that we are the original. Look also at the moves in Africa, which the big players see as being the next Asia. It would be completely senseless for a company of our size to go there and try to teach consumers: No, this is for the big boys. In five to ten years, there will have been a growing premium segment there, that's when we go in.

We have a very strong position in Germany, we are brewed only in Krombach. It's a very strong proposition for the consumers of the future in markets like China and Africa.

For more facts and figures on Krombacher and the wider German beer market, click here.


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