Issue Issue 2 2010
Brews up a reputation
Mack Bryggeri is the world’s northernmost brewery but its strong local reputation is giving it the opportunity to expand
Mack Bryggeri is based in the Norwegian city of Tromsø. It was founded in 1877 by Ludvig Mack and has remained with the Mack family since, though managing director Harald Bredrup is the only Mack family member currently within the company.
Tromsø is a remote settlement in north Norway, 1200 kilometres north of Trondheim and just 2000 kilometres south of the North Pole. Harald explains why his predecessor began the brewery in such an unlikely location: “My great-great-grandfather was a baker but there were a lot of social problems with spirits at the time. There was no beer and no wine in this area so he wanted to start a brewery that offered a product with lower alcohol content.” Harald considers that the brewery’s distant location is, in fact, one of its strengths: “The strongest point is our location because the next production facility is in Trondheim. In this instance the geography is our best asset.” The biggest benefit this lends the company is the loyalty of local consumers.
Local support is important, as Harald explains: “Because we are in a rural area really far away from Oslo, it is important for us to keep loyalty in our home market. That’s why we are involved in activities locally. We want to build up confidence so that we have a network around us.” He goes on to explain how this cultivating of local suppliers helps the brewery continue: “That’s also important for maintaining loyalty because, to survive, we need a high market share in the home market. Otherwise it is going to be quite difficult to be competitive elsewhere as it is so marginal a market.”
The brewery understands that people are very loyal to brands of beer and it hopes to encourage loyalty through creating appealing label designs and introducing new beers into the market. Today Mack has over 15 different varieties of beer available, many of which began life being tested in local pubs and supermarkets. This range includes strong 7.5 per cent ABV beers and special flavoured beers. Although the brewery has below a four per cent share of the Norwegian beer market, its popularity in the region has seen it remain a steady business for over 130 years.
For many years the company has made more than just beer. It has been involved in the production of bottled water and, more significantly, soft drinks since the 1890s, and in 1963 Mack received a franchising offer from the Coca-Cola Company. Harald summarises the partnership between the two companies:
“Until 1998 Mack had a franchise agreement with the Coca-Cola Company, but from 1998 we have had a toll filling agreement doing some of their production and distribution. They are selling their own products but we are producing most of it.”
The company’s current facility, at the heart of Tromsø, is the same site Mack has used since the brewery began and, as Harald explains, this has become increasingly difficult to work with: “It is very difficult to be efficient in facilities that have been evolving since 1877. We are still using some of the buildings from that era and there are constraints regarding walls and internal logistics.” To overcome this problem Mack is building a new factory 70 kilometres south of the city, allowing Mack to remain local to its traditional area whilst giving the chance for it to grow further.
This purpose-made brewery and warehouse is estimated to cost 300 million NOK and will offer the company multiple benefits, as Harald highlights: “Of course, we will be more efficient with the activities that we are doing today, and we will also be more flexible regarding packaging. We want to provide multipacks and combinations of packaging because we are seeing that is one of the drivers of the market at the moment.” On whether its greater efficiency and capabilities will give Mack a chance to widen its market geographically, Harald is cautious but optimistic: “I think we have to consolidate first. It’s going to be a very challenging project and a heavy investment for a small company, 97but of course it makes foundations for future business development.” The warehouse is to be completed in 2011 and the production facility itself is expected for 2012.
Harald adds that, to help finance this move, Mack will be involved in the transformation of its old factory into a place for public use: “Some of it is going to be used for cultural purposes, like the Custard Factory in Birmingham. The biggest part though will be a shopping centre. For this development we have a 50 per cent partner that is competent in property development because it is not our core business.”
Harald concludes with an insight into the company’s shrewd approach to the future of this old company: “We are the world’s northernmost brewery and we have products that can, with the right entrance, make an impact on the market. However we need to have a strong base. Growth is not a short term project, it’s about making the foundation strong and sustainable.”