The Tin Can and the Increased Competition Between the Swedish and Danish Brewing Industries Since the 1950S

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The Tin Can and the Increased Competition Between the Swedish and Danish Brewing Industries Since the 1950S The pressure of new innovations on transnational cartels and trade organisations: the tin can and the increased competition between the Swedish and Danish brewing industries since the 1950s Peter Sandberg Introduction strong national cartels was threatened by de-regulations and a more liberal In the following article, I will discuss the legislation, whose main purpose was to new opportunities that followed the increase competition and to rationalise institutional changes after the World the structure of the economy. In theory, War II. To be more precise, my aim is to the new institutional framework should create a better understanding of how create more competitive and efficient and why new innovations and innovation companies that in the end would lead to systems threatened the stability of increased competition and raise the national and international cartel agree- industrial output and productivity. In the ments and distribution systems. I shall perspective of Alfred Chandler, the focus on the market integration between development that followed the de- the Danish and the Swedish brewing cartelisation was often characterised by industry during the 1950s until the mid the formation of managerial controlled 1970s, and how a new innovation - the hierarchical combines, which in most tin can - challenged the market stability sectors replaced the old family controlled and opened up alternative means for enterprises.2 However, the new legisla- both production and distribution of bever- tive framework also opened up new ages across the borders. possibilities for innovators and entrepre- neurs who saw new opportunities in a In the aftermath of the war, a new institu- deregulated market. These opportunities, tional framework concerning cartelisation as Schumpeter so rightly stressed, could and increased competition was estab- mean the introductions of new utilities lished in most parts of Western Europe and means of production, but also new as well as in the Nordic countries.1 The markets which were opened up and new old corporate system, characterised by organisational patterns that threatened 68 Journal of the Brewery History Society Figure 1. Beer tapped on tin cans was an important innovation that opened up alternative means of distribution, both domestically and across the boarders. The tin can also paved way for small- er breweries to reach nation wide distribution (by kind permission of the Centre of Business History). the old structure, for example an old presence on the Swedish market. monopoly situation.3 Furthermore, it challenged the corporate nature of the Nordic brewing industries, The changes in the Swedish market since each country's trade association structure after the war paved way for new had a long history of cooperation in busi- domestic breweries to compete with the ness organisations and cartels. bigger combines for greater market shares. But it also had consequences for the trade between Denmark and Context Sweden. In this context, the changes in the retail trade sector and distribution During the interwar years, the Nordic systems are the most important factors brewing industry was organised in nation- which can explain the increased Danish al trade associations and cartels. This Brewery History Number 131 69 organisational structure developed at The Nordic cooperation the beginning of the twentieth century and two years before the First World The Nordic brewing industry cooperation War, the Danish, Norwegian and was established in 1911. It consisted of Swedish trade associations founded the the trade associations from Denmark, Nordic brewing industry cooperation. Norway and Sweden and was for- The study will be directed to the malised as the Scandinavian Brewing changes in the institutional framework Convention. By the time the Finnish trade as well as the importance of entrepre- organisation was invited to become a full neurs who carried innovations such as time member in the mid 1950s, the con- the introduction of beer bottled in tin ventions were replaced by meetings with cans and new distribution systems. The each association's chairman.5 There is institutional changes in the 1950s con- no evidence that the Convention stated cerning legislation to increase competi- any formal multilateral or bilateral cartel tion and the structural changes that fol- agreements, to prove this we need fur- lowed, are the most important factors ther investigations. During the interwar which can explain the abolishment of the years it seems like the high transport Swedish brewing cartel. It also seems costs and the fact that the national distri- quiet clear that after the demise of the bution systems consisted of returnable cartel, foreign breweries, such as the bottles were the main obstacles prevent- Danish, no longer had any organisation- ing any major cross-border competition. al obstacles in competing with the The restricting alcohol policy and the Swedish actors, as the formal agree- liquor-ratio book system in Sweden were ments between the two countries trade also great barriers preventing any serious associations no longer existed. market integration.6 There were changes in the institutional framework (especially the competition The Danish and Swedish market laws) in both countries, but the outcome development was different. As late as 1993, the Organisation for Economic Co-operation In 1946 the Swedish brewery association and Development (O.E.C.D.) criticised Svenska Bryggareföreningen (S.B.F.) the Danish system for its inability to con- and the Danish counterpart Bryggeri- trol trusts and price regulation. While the foreningen (B.F.) had a meeting in Swedish brewing industry (or at least the Sweden. During the negotiations both big actor Pripps Brewery) concentrated parties formally agreed on paper that the their effort trying to secure its home mar- distribution of beer on each others home ket, the biggest combines in Denmark markets should be restricted to Corps Carlsberg and Tuborg (Df.B) could Diplomatique only. A fixed minimum price expand throughout the world.4 on duty free ship's provision was also 70 Journal of the Brewery History Society 71 Brewery History Number 131 Figure 2. Münchenbryggeriet (The München brewery) was established in the mid 19th century. In 1910 Stockholm United Breweries (Stockholms Förenade Bryggerier) bought it and it became the combine's largest production plant. By the early 70's the beer production moved to a new modern brewery at the outskirts of Stockholm and Münchenbryggeriet was closed down. The old brewery building is still an important landmark by the seaside in southern Stockholm (by kind permission of The Centre for Business History). agreed upon. In case of any special the Danish local breweries concentrated needs for a Danish or Swedish brewery their efforts on the home market, to export limited quantities of beer, it Carlsberg and Tuborg could expand should be approved by both countries throughout the world at the same time trade associations.7 These bilateral cartel as they maintained their strong position agreements were effective as long as at home (80% of the domestic market Swedish beer stronger than 3.2% of alco- between them). As the export expanded hol was prohibited. When the Swedish there was no significant growth in alcohol policy became more liberalised in import. Two factors have been put forward 1955 and the so called ‘strong beer’ to explain this limited foreign competi- (class III) was introduced for sale through tion. The Danish consumers were the government controlled retailer extremely loyal to local brands, but the Systembolaget, the first step to increased most important factor was the high competition and market integration was costs to enter the Danish market, since taken.8 Another important factor was the domestic breweries had their own the demise of the Swedish cartel distribution system and there was no Bryggeriidkareförbundet (a subsidiary of wholesale dealers trying to compete with S.B.F.) in January 1956, which had the the wholesale monopoly.10 It is also effect that the majority of the local or important to stress the long-lived limited regional monopolies had no possibilities competition in the Danish brewing indus- to survive.9 But there was still a major try: obstacle for foreign breweries to enter the Swedish market, especially the restriction In May 1987 the monopoly authorities pub- to distribute beer stronger than 3.2% lished a detailed investigation of the brewery alcohol to the private retail trade sector. industry concluding that the price agreements The consequence was that foreign and the distribution system limited competi- breweries had to produce a special tion and caused a high degree of concentra- quality compatible for the Swedish mar- tion on the market.11 ket. Furthermore, the private retail trade sector (mainly grocery stores) still had The situation for the Swedish breweries close connections with the local brew- was in many ways the opposite of the eries, since they had monopoly on the Danish development during the 1950s wholesale distribution. and 1960s. The demise of the cartel and the changes in both the retail trade At the same time as the Swedish bever- structure and the wholesale sector led to age market was liberalised, the Danish a dual development process. Even breweries, especially Carlsberg and though the cartel formally had ceased to Tuborg, launched an attack on foreign exist, the restricted rules of competition markets, focusing on Great Britain, were informally maintained. In the end, Belgium and not at least Sweden. While this path-dependent behaviour paved 72 Journal of the Brewery History Society way for the two biggest combines consol- home market the competition increased, idation; Pripp & Lyckholm (P. & L.) in but only for a short while. In late 1963 Göteborg and Stockholms Förenade St.B. and P & L merged, and together Bryggerier (St.B.). They were able to they formed Pripps, a combine with a expand without hardly any competition 60% market share. Besides the benefits from the breweries who still managed to in production and distribution of scale, survive as local independent companies.
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