Glenboden M & A Originations

'Ciechan' the no.1 craft beer candidate in Poland

Priority Rating priority rating 4
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Origination Status press reports, April 2013
Asset Browar Konstancin Sp. z o.o. (Poland), craft regional brewery
Buyer Browar Gontyniec S.A. (Poland), craft regional brewing group
Seller Mazowieckie Mosty Sp.z o.o., Lager Trade Sp. z o.o.
Buyer Rationale premium brand potential, real estate
Seller Rationale acceptable valuation
NBs Browar Konstancin is owned and managed by a husband-and-wife team
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A consolidation event has occurred in the Polish craft regional beer segment - Gontyniec has acquired Konstancin, a tiny brewery in a premium location. The real craft beer action is elsewhere however - we tip Ciechan as the craft segment's stand-out brand in that country, with the potential to attract acquisition interest from the beer majors.

Browar Konstancin a small gem ...The acquired brewery is run along amateur lines, and owned by a man whose day-job is in the construction industry. It's favourably located in the historic town of Konstancin, the only spa town in the greater Warsaw region.

By contrast Konstancin's acquirer, Gontyniec, is a burgeoning regional beer group whose sales have grown strongly on the back of sub-mainstream segment beer sales to the discount chains in Poland - it's a mass-market beer business with a craft fringe.

Gontyniec's rationale for the deal is to acquire a brand with premium potential. That's fine, but capacity is severely constrained at Konstancin's existing location - to max. 30k hl - so over time production will have to move elsewhere if the brand is to succeed.

.... spotlight on craft landscape ...According to the country's Regional Breweries Association and other insiders, Poland's craft regional beer segment is growing at a double-digit rate, and has exceeded 5% of the total market.

Given that Poland is Europe's third largest beer market, both in absolute terms and per capita (>90 l.), growth in its craft segment appears on the radar screen of many industry observers.

There's a problem in identifying genuine craft beer brands in Poland, because the route to developing brand equity in that segment, a sustained on-trade presence, is thwarted by the oligopoly of the three beer majors in that channel.

... one brand has break-through potentialApart from Gontyniec, other craft brand hopefuls include Cornelius, with its acclaimed wheat beer and grapefruit varieties; Kormoran, with its masculine five-hops offering; and above all Ciechan - the stand-out candidate.

Ciechan's front-man, Marek Jakubiak, learnt what works in craft brewing the hard way, by going out of business with his first venture into that space in the 1990s. The consensus is that Jakubiak has learnt from his mistakes.

In addition to 'Ciechan', Jakubiak has acquired a satellite brand, Lwówek Śląski, and has plans for further acquisitions and investments in the craft beer segment, including building a new brewery in the Polish Baltic coast at Darłowo.

Beer marketers explain that in a culturally homogeneous country like Poland, you only have to get 5% of the people to buy into a new brand - for example whilst on holiday - for its popularity to ripple throughout the country. Maybe Ciechan's bet on a seaside resort brewery can provide that tipping-point ?

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THIS LEAD'S VALUATION
Size (€ mln) 0,5
Sector brewing
Asset Quality craft regional Poland
Seller individuals
Buyer small plc
P/S 1,0
P/Ebitda n/a
Type equity value
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