The return of tourism and the reopening of the hospitality industry has raised the Damm brewery above its pre-pandemic levels. The company announced record revenues and profits for the year 2021 in April and established itself as the largest firm in the sector in Spain. In the heat of the recovery, it also increased its valuation and scaled it up to 767 million euros compared to the 648.1 million it stood at in 2019.
The organization chaired by Demetrio Carceller made public the book value of its shares and calculated that each of the 270 million titles is worth 2.84 euros. The figure is 18% more than the 2.4 euros at which each share was valued two years ago.
In this way, the participation of Carceller himself in the firm is valued at around 383.5 million. The executive president adds around 49.5% of the brewery through two companies: Disa Corporación Petrolifera and the Dutch Seegrund BV. The other big name that appears in the shareholding of the company is that of dr. Oetker, the German food conglomerate, holds just over 25% of the shares of the Catalan company.
Damm closed the year 2021 with a profit of 121.3 million and sales of 1,488 million
The upward revision occurs precisely in a year in which the Brand Finance consultancy already rated Estrella Damm as the most valuable beer brand in Spain and number 30 in the world. Mahou was 31 and Cruzcampo 50. In addition, the group closed the 2021 campaign with sales, profits and production volumes higher than those of the Mahou San Miguel conglomerate, something that did not happen before the outbreak of the virus. It earned 121.3 million, turnover reached 1,488 million euros and produced 19.3 million hectoliters of beer.
The 767 million euros are not the price at which Damm would be sold in a hypothetical sale – which is not being contemplated today – it is the book value of the shares. However, this figure already places the brewery above companies in the alcoholic beverages sector that did come onto the market in recent years in Catalonia. Freixenet was valued at 440 million euros when the German Henkell acquired 50% of the capital and Codorníu at 300 million when it was bought by the US fund Carlyle.
Damm’s future: expansion against rising costs
The path of growth goes through internationalization, which still represents 25% of its income. “There is a clear commitment to expand the number of markets in which Damm operates,” he said.
By 2025, the organization wants to reach a turnover of 2,000 million, so it will accelerate expansion and pull acquisitions. He has 450 million in reserve to go shopping. The company not only thinks about brands, it also looks at distributors to make its business more efficient.
With both bets, the marketing group of brands such as Estrella Damm, Voll Damm, Turia or Xibeca intends to increase its volumes from the 18.1 million hectoliters at which it closed 2020 to 26 million hectoliters in 2025.
It remains to be seen how the generalized rise in costs will affect it. More after the war in Ukraine, since the Eastern European country is one of the main exporters of cereal in the world. Spain practically manages to supply itself with barley, so the coup will not be immediate. There will be no shortage, since cereal imports are small. However, with less barley on the market, the price of the available product will rise.
“We are enduring strong pressure on our margins,” admits Carceller
“We are enduring strong pressure on our operating margins,” admitted Carceller. The impact occurs both in the cereals used for brewing and in aluminum cans and electricity. The war in Ukraine has exacerbated a trend that the sector had already suffered for months. “Our forecasts for 2022 have been marked by the inflation context,” he lamented.
Heineken joined the current in the presentation of its annual results, already warning of “a significant impact of inflation and supply chain pressures.”
“We expect our costs per hectoliter to grow in double digits due to the significant increase in the price of raw materials, energy and freight,” he added. There will be no other choice, he will have to compensate “the increase through prices, which can lead to a more moderate consumption of beer.”
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