September 11-15, 2017

Belgium & Beyond

Strolling down the path toward the corporate offices of the Duvel Moortgat Brewery in Breendonk, Belgium, it's impossible not to be taken in by the charm of the brick industrial-age exteriors of some of the buildings on its campus.  

Once you arrive in the main lobby, it's just as impossible not to be floored by the artsy modernity of it all. It looks more like the reception area of a gallery in New York City's SoHo than that of a brewery whose history dates back 140-odd years. 
It's just that sort of split personality that serves as the perfect representation of the dual nature of Belgian–and international–brewing as a whole: a strong connection to yesterday with an eye toward what's relevant to the beer drinkers of today and tomorrow. 
"We are convinced that if you want to be successful in the future, you have to know your history, you have to know where you come from, to know what has been done in the past," says Michel Moortgat, CEO and fourth-generation leader of the brewery that bears his 
family name. 
“Devil” is in the Details
Although the Duvel Moortgat story officially began 14 decades ago, the family's brewing heritage extends as far back as the 16th Century. But 1871 was the year that Jan-Léonard Moortgat and his wife founded the Moortgat brewery after they moved to the town of Breendonk, which today exists as a component of the larger municipality of Puurs. 
The brewery had considerable success leading into the 20th century–when there were some 3,000 breweries throughout the relatively small Western European country (that number now, thanks to a century's worth of consolidation, stands at about 120). But it wasn't until the company was more than 40 years old that the flagship brand for which it is best known was born. During World War I–at which time Jan-Léonard's sons Albert and Victor were running the business–Belgium came into close contact with England and its traditional ales. Albert, who ran the brewing operations, decided he wanted to create a beer based on the English model. 
In 1918, the final year of the Great War, he traveled across Great Britain trying to get his hands on a specific yeast strain. After many near misses, he finally was able to get a sample at a Scottish Brewery. Once the Moortgat brothers perfected the recipe, they released what they called "Victory Ale" to commemorate the end of the devastating conflict. 
However, it was in 1923 that history truly was made for the brewery. As the legend goes, during a tasting session, a local shoemaker was so impressed by the beer's complexity (not to mention strength) that he declared,  "This is a real Duvel," meaning "devil "in the local tongue. Thus born was Duvel, which, to this day has remained the name of the company's flagship strong golden ale. And of course, it also is, along with the Moortgat surname, one of the brewery's two namesakes.  
"We indeed pay much attention to our history," Moortgat notes. "I think it's good that we're not brewers since five years ago, but since many decades, even centuries, ago. On the other hand, we don't only want to look back, we want to look toward the future. We believe in innovation and using the best available technology at the service of the quality of all of our beer. We want people to feel that not only are we an old-school brewery, but a modern, contemporary factory." 
In modern times, Duvel has enhanced its profile as one of four key international specialty Belgian brands, along with AB InBev-owned Leffe and Höegaarden and Aiken Maes brewery group's Grimbergen, according to U.K.-based beverage research group Canadean. 
And as the global beer market continues to consolidate, with multinational giants seemingly scooping up any brewery with a bit of heritage to its name, Duvel Moortgat has managed to maintain its independence by sticking to what it's known for: the specialty segment. 
"The more consolidation there is, the more opportunities there are for niche brewers like us," says Daniel Krug, Duvel Moortgat's chief operating officer. "The more [the larger breweries] consolidate, the more focus they give to their biggest brands because they have to simplify their activities. Whereas with niche products, that's our business." 
The only danger in rapid consolidation, Krug notes, is if it hinders the route to market. "Otherwise," he says, "everything is blocked and it's unhealthy for everybody: for the consumer–definitely because he needs his variety–for the wholesalers and for the beer business." 
Purchasing Power
Over the past decade the company has made a number of acquisitions of its own, not so much to get the competition out of the way, but to ensure that many high-end specialty Belgian brands enjoy the same kind of longevity and regard for heritage that it has. 
Its most recent purchase was the venerable De Koninck brand, a staple of the Antwerp beer scene whose origins predate the Moortgat brewery's by nearly 40 years, having first been made commercially available in 1833. Duvel Moortgat bought it in 2010 from the Van den Bogaert family, which had been a part of the business since shortly after the close of the First World War. Like Duvel, the glass in which De Koninck amber ale is traditionally served–called a bolleke–is about as famous as the brand itself. 
"We acquired [De Koninck] because we believe it's a beautiful brand with a lot of potential," says Krug. "It had been decreasing, so we have to change that negative spiral and ensure a top-quality brand. When the owner signed the contract, he said, `I'm very happy I can entrust it to you to develop it.'" 
Other reasons factored in to the acquisition as well. Real estate was one of them. "They have some very interesting key locations, bars," Krug explains. "And they have a distribution company as well." 
The De Koninck purchase closed out a decade marked by strategic investments and outright acquisitions for the brewery. 
In 2001, it bought a 50 percent stake in Czech Republic-based Bernard, brewer of the eponymous pilsner. In early 2003 it took a significant step into the U.S. market by buying the remaining stake–it had been an investor–in Cooperstown, N.Y.-based Brewery Ommegang, known for its Belgian-style ales like its eponymous abbey-style ale, Hennepin, Witte, Rare Vos and Three Philosophers. Ommegang also serves as Duvel's U.S. importation arm. In 2006 the company set its sights back on its home market for its next acquisition: Brasserie d'Achouffe, known for its blond La Chouffe and its dark Mc Chouffe–an ale that marries the brewing traditions of Belgium with those of Scotland–and Houblon Chouffe, a Belgian riff on an India Pale Ale. It's perhaps even better known for its iconic gnome. 
"It's a beautiful product taste-wise and a beautiful brand with the gnome image," notes Krug. "Fantasy is still very, very appealing. It is located in the Belgian Ardennes and it's a brand that is very natural, very much about nature. And we preserved that. Whenever we make an acquisition, we preserve the brand's heritage–we even invest to preserve it."
That investment seems to have paid off, as Krug reports that in just over five years since the acquisition, the company has tripled d'Achouffe's volume to between 75,000 and 80,000 hectoliters, from about 25,000 hectoliters in 2006. 
Two years after the Brasserie d'Achouffe purchase, the company's next acquisition target was the brand that had built something of a cult following in Belgium and among specialty beer lovers abroad–over the course of its three-centuries-plus existence. That was Liefmans, known for its blended beers, particularly its cherry (kriek, in the local tongue) brew. 
But the latter years of the brewery's history had taken its toll on Liefmans and by the time Moorgat stepped in in 2008, it wasn't so much an acquisition as a rescue.  
"Liefmans was indeed very different from other breweries because it was bankrupt," Krug recalls. "When you buy something that is bankrupt, the customers disappear; they can't purchase the beer anymore. So in terms of sales, there was nothing anymore."
That begs the question: Why buy it? 
"We believe very strongly in Liefmans," Krug offers. "It's a very unique beer and we were fascinated by it."
The flagship Liefmans cherry brew blends brown beer with cherries that have macerated for as long as three years. The brewery also offers Liefmans Goudenband, which it calls "the masterpiece of blending." 
The first thing Duvel Moortgat did when it acquired Liefmans was to invest in upgrades to its brewing facility in Oudenaarde, Belgium–equipment, as well as quality control. "We invested again just a few months ago to increase capacity," Krug adds.
To distinguish its kriek from other cherry beers produced in the country, the new owners changed its name from simply Liefmans Kriek to Liefmans Cuvee Brut. 
It also launched a new brand, Fruitesse, designed to appeal to a broader audience. 
"Six months to a year after we acquired Liefmans, we launched a new beer with different fruits in it–with cherry, but with raspberry, blackberry and other fruits as well–that's a completely different way of drinking beer," says Krug. "You can drink it in a wine glass or a mojito glass, and you do it on the rocks. All of a sudden we're talking to people who might not like beer, more like the wine or Champagne drinker."
The launch was the second prong of its twofold strategy for growing the Liefmans brand: Focus on perfecting the existing portfolio to appeal to the seasoned beer drinker and take some occasions from wine and Champagne with a new light, refreshing innovation– an approachable ABV of 4.2 percent–that brings new drinkers into the beer category. 
Beyond the brands it acquired, Duvel Moortgat also is the commercial brewer behind the Maredsous line of abbey beers. The company has had a licensing deal with the Benedictine brothers at the Maredsous Abbey in Denée, Belgium for nearly 50 years. 
A decade's worth of strategic acquisitions has enabled the company to rely less on its flagship brand and on its home market for growth. In 2000, 85 percent of its business came from Duvel and an equal percentage came from sales in Belgium. Today, sales of the flagship brand account for about 59 percent of its revenue while its home country represents about 55 percent of its overall revenue, with the rest coming from outside its borders. Its second largest market is the U.S. where it generates about 13 percent of its revenue, followed by the Netherlands, France and the Czech Republic. The company's annual revenue is about €140 million (roughly $180 million), a jump of about 84 percent over its sales of just five years prior. 
"The company has consolidated its opposition in the Belgian specialty sector, through the acquisition of Brasserie d'Achouffe and Liefmans," says Kevin Baker, Canadean's account director, alcoholic beverages. "The development of a strong portfolio of Belgian specialty brands puts Duvel Moortgat in a strong position in the rapidly growing international specialty beer market." 
The Mature Approach
In its drive for global growth, Duvel Moortgat's approach is virtually antithetical to that of its much larger counterparts. Where the multinational brewing giants are putting much of their expansion focus on emerging markets around the world, Duvel Moortgat actually is concentrating on established ones. 
"We've chosen the specific strategy where we want to focus on mature markets, on markets where people tend to drink less quantity, 
but more quality," explains Moortgat. "
In addition to its team at Brewery Ommegang–which, from an import and marketing standpoint, also serves as Duvel Moortgat USA–Duvel has its own sales teams in France, the Netherlands and the United Kingdom. China technically still is considered an emerging market as far as beer is concerned–the largest of the four BRIC countries–but it's been growing and maturing rapidly. That's why for nearly five years Duvel has had a sales team–now numbering  20–in China.   
"Developing specialty beers takes time," explains Krug. "You've got to explain a lot of things and I can say that the beginning [phase] is very pioneering. You explain why a specific glass is needed and sometimes you explain things that are very interesting and necessary, but not always appreciated. A bar doesn't always want all of those specific glasses. Now they understand that it's needed and even interesting for the consumer."
The growth of Duvel Moortgat's portfolio in the United States has benefited from the trajectory of the U.S. craft beer boom over the past decade, more so in the latter half. The company struck when the iron was hot when it acquired Ommegang and was able to methodically expand from state to state. "We go to the right bars, the right shops, we do the necessary tastings, we talk about the foam, the product, etc.," says Krug. "So step by step we grow in one state, in two states and so on. You cannot run before you walk, but it grows steadily." 
Knowing when to walk before it runs has helped Duvel Moortgat nearly triple its business in the pass dozen years. But it's the balance the company has found between being publicly traded and continuing to operate as a family business that really has facilitated its expansion, according to Moortgat. The founding family still owns nearly three-quarters of the business. That's enabled the family to transcend the quarter-to-quarter mentality that often pervades public companies, he says. 
"Although we are publicly listed we are family owned," Moortgat says. "Family businesses generally have a more long-term approach. We don't have to take a short-term view. We are willing to have less-good figures in the short term if we are convinced that what we are doing is a good move in the long term."
For example, the agricultural nature of brewing ingredients often means wild fluctuations in raw material costs from year to year. "Sometimes the harvest is good, sometimes it's weaker," Moortgat says, "but we always have to ensure that the brewer always delivers the same kind of beer, the same quality."
In other words you–quite literally–reap what you sow.    
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