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RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHBS #0263/01 0261005
ZNR UUUUU ZZH
R 261005Z JAN 07
FM AMEMBASSY BRUSSELS
TO RUEHC/SECSTATE WASHDC 4181
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHBR/AMEMBASSY BRASILIA 0154
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 04 BRUSSELS 000263 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/UBI, EB/CBA AND EB/TPP 
 
E.O. 12958: N/A 
TAGS: ECON EIND EINV ETRD ELAB BE
SUBJECT: ON TAP: BELGIAN BEER BREWS BIG BUSINESS 
 
 
¶1. (U) SUMMARY: Long before it was selected as the capital 
for the European Union in 1958, Belgium was a capital of 
beer.  The rich variety of choices (115 breweries produce 
nearly 500 different beers) makes Belgium a prime destination 
for beer enthusiasts.  The world's biggest brewer is Belgian, 
as are six of the world's seven beer-brewing Trappist 
monasteries.  The industry generated nearly two billion euros 
of sales in 2005, and directly or indirectly employs 6,000 
persons.  Although the number ofBelgian brewers has shrunk 
through a series of mergers, the industry has bucked the tide 
of corporate consolidation and product homogenization that 
has characterized the American beer industry.  So far, 
Belgium has expanded its presence in the world beer market 
without sacrificing the heritage and traditions that 
characterize its humble beginnings.Belgium's beer sector has 
evolved into two very different parts: a few large scale 
breweries dominated by one global powerhouse, and a large 
number of popular small-scale brewers producing specialty 
products.  Fortunately for the consumer, there is room for 
both in the demanding Belgian market.  END SUMMARY 
 
A SHORT HISTORY OF BEER IN BELGIUM 
---------------------------------- 
¶2. (U) The history of beer in what is today Belgium dates 
from Roman times.  While the Romans generally favored wine, 
appreciation for beer arose in the northern reaches of the 
empire where conditions were better for growing barley and 
hops (key ingredients used to make beer) than for grape 
cultivation.  Evidence of brewing can be found in some 
Gallo-Roman villages dating from the third or fourth century 
BC.  After the fall of the Roman Empire, the rise of 
Christendom saw the Church assume control of much of the 
land, its output, and products fermented from grain. 
 
¶3. (U) In Belgium, many cloistered religious communities have 
a centuries-long brewing tradition.  For early monks, beer 
supplemented a fairly plain diet and was the chief beverage 
aside from water and milk.  A brewery was a common feature of 
nearly every abbey in the Low Countries during the Middle 
Ages.  In Belgium's Meuse region, the Grand-Axe monastery is 
mentioned in documents as early as 805.  Villers-la-Ville has 
had a community of monks brewing since 1146.  In addition to 
abbeys, medieval Belgian brewing took place in inns, castles, 
and private homes. 
 
¶4.  (U) Breweries proliferated in response to growing demand 
during the 14th and 15th centuries.  Not only had beer become 
a popular beverage, but it was commonly thought that beer was 
safer to drink than water.  Belgian public health history 
supports this theory: epidemic diseases such as cholera and 
typhoid fever were spread through water, making beer a better 
choice for consumption.  The guilds established during the 
Middle Ages also worked to maintain quality through strict 
guidelines for brewing.  In addition, guilds played an 
advocacy role for their industry, and fostered comerce and 
wealth -- which nobility could tax. By 1696 the Belgian 
brewers guild was wealth enough to establish the "Maison des 
Brassurs" (House of Brewers), in an elegant townhouse on the 
square of the Grand Place in Brussels. Today, the building 
still serves as the headuarters of the Confederation of 
Belgian Brewes. 
 
¶5. (U) Through the 17th and 18th centuries, brewing spread 
across Belgium.  Each Belgian village generally had its own 
brewery, and produced a beer with its own character deriving 
from local ingredients, water quality, and brewing 
techniques.  An economic downturn and the mayhem of the 
Napoleonic Wars in the late 18th century slowed the brewing 
trade, but only temporarily.  Napoleon's reforms of the 
church's role in society meant that by the early 19th 
century, the religious orders had been largely displaced by 
secular brewers as principal purveyors of beer. 
 
¶6. (U) Innovations during the 19th century kept Belgium in 
the forefront of beer brewing.  Pasteurization led to 
improved quality, and different types of yeast used in the 
brewing process yielded different flavors.  Private 
innovation and investment led to a boom of breweries, and by 
1900, there were 3,223 registered in Belgium. 
 
¶7.  (U) The onset of the First World War saw a massive 
reduction in the number of Belgian breweries, however, as raw 
materials and human capital were shifted into the war effort. 
 By 1920, the number of breweries had fallen to 2,103 (for a 
country of 8 million).  The economic depression of the 1930s 
followed by World War Two further diminished the number of 
operating brewers; by 1946, "only" 755 independent breweries 
remained in Belgium.  Pressure for economies of scale and 
 
BRUSSELS 00000263  002 OF 004 
 
 
high investment costs forced a wave of mergers in the 
post-war decades.  By 1983 just 134 separate breweries were 
registered in Belgium. 
 
500 BEERS TO CHOOSE FROM 
------------------------ 
¶8.  (U) Today, small and medium-sized breweries are enjoying 
a somewhat of a renaissance.  Consumers appear to value the 
specialized, even obscure, brews appearing.  Some artisanal 
beers are brewed in such limited quantities that consumers 
wait for months to buy them.  Much sought-after brews include 
the Saint Sixtus Westfleteren, judged best beer in the world 
in a recent international professional tasting.  In 2007, 
there are approximately 115 independent breweries active in 
Belgium, which together produce nearly 500 different beers, 
some of them only for export. 
 
¶9.  (U) In Brussels, among the numerous cafes and museums 
dedicated to beer are the Delirium Cafe, with a pink elephant 
as its symbol, serving 2,004 varieties of beer including its 
own brew, and "Mort Subite" (Sudden Death), a popular cafe 
serving its own fruit-flavored brews.  Beer features on both 
domestic and international tourism circuits. 
 
¶10. (U) Immense variety and high quality distinguish Belgian 
beer, and some types are only brewed in this country. 
Lambic, Geuze, and Kriek are varieties of Belgian beer 
protected by a 1998 European Commission regulation ((EC) 
954/98) regarding the "specific character" of the beer.  This 
regulation counters imitation by protecting the name and 
prohibiting production of the beer outside of Belgium. 
Belgians thus defend the rules-of-origin of their beer, no 
less than the French do for their champagne.  One American 
brewer, for example, was required to change the description 
on his label from "Belgian white beer" to "Belgian-style 
white beer". 
 
¶11. (U) The most common types of beer brewed in Belgium 
include: 
 
-- Brown beers: Maturing for several months, these beers are 
characterized by caramel-like malty sweetness and sourness. 
An example is Goudenband. 
 
-- Golden or blonde beers: Akin to Pilsner lagers, very pale 
malts and hops are used with ale yeasts.  Duvel is an example. 
 
-- Lambic: This variety is one of the most well-known Belgian 
beers.  It is a non-malted wheat beer that is naturally 
fermented by wild airborne yeasts.  Its production is 
prohibited beyond a small area in and around 
Brussels.  Faro is a sweetened, lighter variety of Lambic. 
 
-- Geuze: Involving secondary fermentation, this is a blended 
sparkling beer, combining two or more Lambics. 
 
-- Kriek: A Lambic beer, Kriek relies upon the additions of 
cherries or raspberries for more fermentation and a fruity 
taste. 
 
-- Red beers: Red barley gives color and body to these beers, 
which are often aged in oak barrels.  Rodenbach is an example. 
 
-- White beers: The beers, sometimes called wheat beers, are 
light and cloudy, often served with a slice of lemon. 
Hoegaarden brews a classic example. 
 
¶12. (U) Trappist beer is a special type of beer that is 
almost exclusively Belgian.  Since Medieval times, Trappist 
beer has been brewed by or under the close control of 
Trappist monks.  In 1997, Trappist abbeys formed the 
International Trappist Association ITA) to protect the 
Trappist name from increasing abuse and imitation.  All 
authentic Trappist beers carry a distinctive logo.  The 
monastic community has a great deal of freedom in terms of 
what and how much to produce, but the economic purpose of the 
brewery is aimed toward charitable assistance rather than 
profit.  In 2005 there were 171 Trappist monasteries 
throughout the world; just seven produce beer, six of them in 
Belgium. 
 
BEER BY NUMBERS 
--------------- 
¶13.  (U) PRODUCTION, EXPORTS, AND IMPORTS: The 115 Belgian 
breweries produced 456,210,354 gallons of beer in 2005, a 
slight increase over production in 2004.  About half of 
Belgium's production (232,787,009 gallons) was exported. 
The main destination countries for Belgian beer in 2005 were: 
 
BRUSSELS 00000263  003 OF 004 
 
 
France, the Netherlands, Germany, the United Kingdom, and the 
United States.  The U.S. imported 3,739,203 gallons, equal to 
nearly 40 million 12 ounce bottles.  Pils-style beer, e.g. 
Stella Artois, was by far the most popular.  Belgium imports 
beer as well: in 2005 imports rose two percent over the 
previous year, with more than 26 million gallons imported, 
mainly from the Netherlands and Germany.  Unlike some other 
European beer-producing countries, such as Germany, Belgium 
has no barriers limiting the import of foreign beer.  Some 
Belgian brewers, however, complain about difficulty in 
gaining access to the U.S. market. 
 
¶14.  (U) CONSUMPTION: Among European countries, Belgium 
consistently ranks near the top in beer consumption.  In 
2005, annual consumption averaged about 24 gallons of beer 
per person, slightly more than the U.S. average of 22 gallons 
per person.  Beer consumption in Belgium has fallen slightly 
during the past two decades, attributable in part to health 
concerns and to the increasing popularity of non-alcoholic 
drinks.  Other EU countries report similar trends.  In 2004, 
there were nearly 46,000 bars or restaurants serving beer in 
Belgium; the country's 18,000 cafes alone sold over a billion 
euros worth of beverages. 
 
¶15.  (U) TAXES AND TOTAL EARNINGS: As in previous centuries, 
taxes remain an inevitable part of the industry.  Belgian 
excise taxes collected on beer in 2005 totaled 193 million 
euros.  Combined with the Valued-Added Tax (VAT) and 
reimbursed costs related to packing, the Belgian state earned 
more than 940 million euros in 2005 from the national beer 
industry.  As a whole, breweries make up nearly six percent 
of Belgium's "industrial food" sector, which earned more than 
1.83 billion euros in 2005. 
 
INBEV: THE BELGIAN GIANT 
------------------------ 
¶16.  (U) Belgium-based InBev is the world's largest beer 
brewer by volume, and of one the most profitable.  Worldwide, 
it employs 85,000.  InBev can trace its roots back to 1366, 
to the Den Horen brewery that operated in Leuven, Belgium, 
which is still where the company is headquartered.  The 
company's modern history dates from a 
1987 merger between the first and second largest Belgian 
brewers, Brasseries Piedboeuf and Brasseries Artois, to 
create Interbrew.  In 2004, Interbrew joined AmBev, a 
Brazilian-American company, to form InBev.  InBev continues 
its aggressive growth strategy, buying major brewers in 
India, Brazil, and China during the past year. 
 
¶17.  (U) In 2005 InBev brewed more than 5.3 billion gallons 
of beer worldwide, nearly 14 percent of the world beer 
market.  It holds the number one or number two position in 
more than 20 key markets and boasts more than 200 brands of 
lagers, premium beers and specialty brews.  Well-known labels 
include: Labatt, Beck's, Stella Artois, Bass Ale, Hoegaarden, 
Leffe, and Rolling Rock.  InBev's annual profits dwarf other 
Belgian brewers: through the third quarter of 2006, it reaped 
nearly 1.3 billion euros, with a global sales turnover of six 
billion euros.  In addition to higher returns for its 
shareholders, the company invests some of its profits in 
research and development.  In November 2006, InBev opened a 
Global Innovation and Technology Center at its Leuven 
headquarters.  The new facility, with a price tag of 500 
million euros, will support research, innovation, packaging, 
and new product development. 
 
¶18.  (U) InBev's size and increasingly international 
character draws criticism from Belgian employees, consumers, 
restaurant and cafe owners, and even politicians.  The prime 
concern is job losses.  Among the 13 positions in InBev's 
management structure, only five are held by Belgians.  A 
Brazilian, Carlos Brito, replaced American John Brock as 
InBev's CEO in December 2005.  In February 2006, almost 400 
jobs in Belgium were lost in company restructuring, while 295 
new jobs (mostly administrative) were to be created in 
Hungary and the Czech Republic.  This news came the same day 
the company announced its 2005 net profit of 904 million 
euros, poor timing that led to strikes in protest. 
 
¶19.  (U) InBev's size draws government attention too.  In 
April of 2006, Belgian Federal Economy Minister Marc 
Verwilghen requested that Belgian competition authorities 
investigate InBev for possible abuse of dominant market 
position.  InBev accounts for about 57 percent of the Belgian 
market.  The company,s reputation with InBev purveyors 
suffered when InBev raised domestic prices an average of 
three percent twice within seven months, and then ordered the 
use of larger glassware, increasing the size from 25 to 27 
 
BRUSSELS 00000263  004 OF 004 
 
 
centiliters, for cafes serving InBev brands.  Stuck between 
the company mandate and a cost-conscious public, bar and 
restaurant owners were forced to absorb the loss resulting 
from serving an extra two centiliters of beer for the same 
price. 
 
THE POLITICS OF BREWING: BIG VS. SMALL 
-------------------------------------- 
¶20.  (U) Harkening back to the medieval guild, the 
Confederation of Belgian Brewers (CBB) is an advocate for the 
industry.  Its stated objectives are to maintain quality, to 
protect brewers from unreasonable regulation, and to promote 
the beer sector in Belgium and beyond.  Located on the Grand 
Place in Brussels since 1696, the CBB represents 77 of the 
115 Belgian brewers.  Some smaller brewers have chosen not to 
join, finding the CBB to be dominated by what they see as 
profit-thirsty industry giants.  Indeed, the six largest 
members of the CBB account for about 82 percent of Belgian 
beer production by volume, and because membership dues are 
scaled to company profits, the larger members wield 
considerable influence and have dominated policy on issues 
such as labeling and content standards.  Officials at InBev, 
the CBB's largest member accounting for nearly two-thirds of 
the Confederation's operating budget, have expressed 
frustration that the CBB has not done more to put Belgium on 
the world beer map, and have even threatened to leave the 
organization. 
 
BELGIAN BEER IN A GLOBALIZED WORLD 
---------------------------------- 
¶21. (U) Two types of brewers characterize Belgium's diverse 
beer marketplace.  The large-scale sector is dominated by one 
global powerhouse.  A key challenge for InBev will be playing 
its role as a profitable global multinational without losing 
sight of its humble beginnings and purveyor of a national 
drink.  For example, InBev has tried to highlight its link to 
the 18th century Artois brewery, and has invested 
significantly in managing its image. Meanwhile, scores of 
small artisanal brewers jockey for the specialty brews niche, 
fostering a growing international appreciation for the sheer 
variety and artistry of Belgian beer.  Their main challenge 
is remaining afloat in the face of global competition. 
 
KOROLOGOS 
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