Paulaner HP USA

It’s not often that companies want their competition to succeed, but Paulaner HP USA has found that the success of the craft beer market has only increased demand for its own product. President and CEO Jeff Coleman became familiar with Paulaner – a brand of beers that began being brewed by monks in the early 1500s, and the leading Munich, Germany Brewery since 1634 – in the 1980s, and became an importer for the brand in 1987. That ended in 2003 when Heineken–Star Brands took over USA marketing and sales. Then in 2009, Paulaner Brewery and Coleman got back together, forming a Paulaner majority-owned joint venture with Coleman’s Distinguished Brands International.

“The timing really couldn’t have been worse,” Coleman recalls. “We started out with the same struggles I was having with Distinguished Brands’ import business – we were really feeling the recession and we were dealing with a very weak dollar, especially against the Euro. But this is when the craft beers came of age – the weakness of the dollar drove up the price of European imports, truly opening the USA specialty beer market to crafts. Crafts’ quality was improving and they got street smart on how to price and distribute themselves.”

Like so many great brands, Paulaner’s strength is its inherent quality – superior quality that was established centuries ago. Paulaner continues to be brewed today in strict accordance with the exacting standard of the Bavarian Purity Law of 1516.

White Hacker-Pschorr and Paulaner remain Paulaner-HP USA’s core brands, but today’s U.S. beer consumers want diversity of selection. “We cater to these consumer tastes and retailer needs by representing seven leading German, Belgian, Italian, English, Irish and U.S. brands,” Coleman says. “Between our seven breweries, we offer 29 different styles of beers and a combined 1,900 years of brewing experience. Our company also represents three Italian vineyards, as well as a specialty spirit brand.

“Nearly all of the breweries we represent have been around for 100-plus years – Paulaner for 379 years, and Hacker-Pschorr for 596 years,” he continues. “Paulaner Salvator, the founding beer of the Paulaner Brewery and the Doppelbock or ‘-ator’ style, was first brewed by the Pauline monks in the early 1500s. We promote ourselves for what we are – the essence of nearly each brewing style. No question, craft beers have become quite trendy, but that, too, develops a more discerning customer. In the end, quality almost always wins out.”

Expanding Capacity
Paulaner Brewery will be 380 years old next year, but such longevity doesn’t come from resting on one’s laurels. Paulaner is tradition with innovation. To meet continued demand while remaining loyal to its Munich origin, Paulaner is constructing a new brewery projected to open in 2016. The new Paulaner Brewery will continue to use its original brewing ingredients including its original Munich brewing water source; yet with state-of-the-art filling, packaging and logistics to meet Paulaner’s global demands. This is important, Coleman explains, because in this day where traditional European brands are increasing brewing in Canada to reduce logistical costs, yet continue to taut their “imported” moniker on U.S. sales, or brew in St. Louis and put “German Sapphire Hops” on their packaging, Paulaner is true to its source.

“Paulaner Brewery today is at its brewing capacity,” Coleman says. “Paulaner is exported to more than 70 countries, and Paulaner demand continues to grow. Most recently Paulaner had to eliminate some of the USA’s softer-moving SKUs to improve efficiencies in meeting global demands. Paulaner is not only growing in Western Europe and in North America, but throughout Asia, Australia and South America – wherever traditional Munich specialty brewing is in appreciated and enjoyed, and that’s everywhere.

“Paulaner is the largest brewery in Munich, and Paulaner’s new Munich brewing facility will assure its Munich presence for decades to come,” he adds. “There is a certain validation, call it romance, of providing a true Munich original that’s actually brewed, bottled and kegged, and shipped exclusively from Munich.”

Introduction and Awareness
Paulaner is seeing some financial challenges, but Coleman is optimistic about the brand going forward. Freight rates are up and craft beers are making their way in the market, but Paulaner still sees “plenty of interest in high-end German beers,” he says. “The company grew slightly in 2012 and outperformed the category, which are good signs. As long as you have quality, you will have consumers seeking you out and remaining Paulaner loyal.”

The company remains focused on on-premise sales, maintaining about four times the national average in draft sales as a percentage of overall volume. Coleman notes that 65 percent of its business is done on-premise in higher-end restaurants, and four- and five-star hotels. On-premise is a more challenging, more price-oriented market, he says, but Paulaner is confident that quality wins out over discounting if distribution is well targeted.

“It’s more like wine sales – you sit with the owner, sample beers from light to dark and do taste comparisons with competitors’ beers,” he says. “We also do training with restaurants’ staffs to help them be more knowledgeable about the beer, to talk food pairings and generally hand-sell Paulaner to their upscale consumers.”