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28/03/2016

Galician lager

  • Estrella Galicia is gaining ground in the beer industry, thanks to a quality microbrew
  • It has a market share of 5% and its objective is to continue to focus on a specific niche and not on massive sales

Vidal Maté. @trigolimpio_VM

Estrella Galicia, founded in 1906 in A Coruña by entrepreneur José María Rivera Corral upon his return from emigrating to Mexico, has been around for 110 years. It had the same pedigree as the other Spanish companies in the sector, which is today dominated by multinationals. Águila dates back to 1900, Mahou is 125 years old and San Miguel was created in the 1890s. However, it was practically yesterday, barely a decade ago, when the Galician group found its place in the market as one of the big players, not only because of its lengthy history, as it had a market share of 5%, increasing its revenues tenfold since 2000 but, above all, because of its distinct image based on quality and a traditional product, diversification, and its efforts to carve out a spot for some of its brands in the Premium segment. Its current CEO, Ignacio Rivera, the family's fourth generation, has very clear intentions. "We don't aspire to have 20% of the market. We have a different playing field. We will continue to grow, but our niche will always be very specific segment, with a quality product made using traditional methods and applying the latest R&D and innovation."

Although the development and growth of the Galician company dates back to the 1970s, with the construction of a new plant at the A Grela industrial park in A Coruña, which meant leaving behind the age-old installations in Cuatro Caminos square, where beermaking continues at present, the big push to advance the group occurred in the 1990s when the fourth generation of the family took the reins, implementing a policy that is still in force today. This growth has been based on two factors.

First, the policy on quality and innovation in the beer industry with the launch of new products and formats (1906 Red Vintage, 1906 Black Coupage, River, HR, etc.), both in Spain and abroad. Second, the diversification policy, mainly in the beverage sector. This policy alone led to more than 100 million euros in capital expenditure in the last 3 years. In the case of beer, which accounts for practically 90% of the group's revenues, sales expanded from 101 million liters in 2009 to over 200 million liters in 2015. In that same period, revenues jumped from 165 million euros to more than 300 million euros in 2015, with EBITDA expanding from 53 to 80 million euros. Today the group provides 900 direct and more than 700 indirect jobs.

It's also worth noting that the group is involved in a low debt activity. The company has remained loyal to its roots and has always operated using its own funds, with a growth strategy that seeks to set itself apart from the competition. Production focuses on the use of artisan methods and just 12 batches are produced each year, based on the hops grown in Galicia, where the company aims to increase the growing area for this crop.

Estrella de Galicia understands that brewing beer takes time. With a longstanding commitment to quality, the group aspires to strengthen its position with a product in the Premium segment. The group is also committed to its promotional policy, which is very focused on sponsoring activities such as motorcycle racing, and choosing young people with experience, with mid-level costs, as it doesn't believe it could ever sponsor top figures given their hefty price tag. Along the same lines, the group has focused heavily on younger people, by supporting music events and alternative musicians.

As part of its internationalization policy, the group currently operates in 35 countries on the five continents, including the US, Japan, China and the rest of the European Union, where it only sells its products, with the exception of Brazil, where it makes beer in a brewery owned by other groups. Sales outside Spain account for 10% of revenues.

In terms of diversification, Estrella Galicia also operates in the water, cider and wine segments.

In 1994, it acquired a stake in Aguas de Cabreiroá, with sales of around 150 million liters. In Asturias, it has access to the Felechosa spring with Aguas de Cuevas, and Fontarel in Granada. It owns the winery Ponte da Boga in Ribeira Sacra in Ourense and Sidrería Gallega in Chantada (Lugo) which produces Maeloc cider.

Going forward, the leadership at Estrella Galicia is committed to continuing the strategies implemented to date based on a distinct quality-centric policy, selling a traditional product and expanding the facilities in Galicia in the short term depending on how the markets develop. A growth strategy—as it has been to date—based on own funds and a family-run company.

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