The Netherlands: The Dutch beer market declined by around 2% in 2004 but will probably stabilize in 2005, the managing director of Gulpener Brewery said on Friday, January 21, according to Reuters. "The worst is behind us," managing director John Halmans said in an interview. "Both in retail and in the bars and restaurants there are positive signs."

With a supermarket price war raging since October 2003, Halmans said retailers would want to distinguish themselves again with a wider variety of products than just plain pilsner and seek other brands to sell next to the Netherlands' biggest brewer Heineken.

Gulpener Brewery, established in 1825, in the southern tip of Limburg province in the Netherlands, is one of the last remaining independent brewers. While almost all the rest have fallen prey to Heineken or InBev, this small firm aims to remain its own master. It makes a small profit despite difficult market conditions. Halmans, in his post since 2003, said he is approached several times a year by "foreign brewers" interested in a buy-out. "For them, this brewery is worth a lot because it is one of the last breweries left in the country and it would give them a brand and a (logistical) platform in one go," he said.

"It is very difficult to build that up from scratch." Gulpener is owned by the Rutten family, while rival Grolsch has a 12.5 percent stake. "We have a pleasant relationship with Grolsch. They sell our white beer (Korenwolf) in their pubs because they do not make a white beer themselves," said Halmans.

With the backing of the family, Halmans is now busy reducing debt and building capital reserves for a big investment expected in five to six years to upgrade the brewery. Meanwhile, the small brewer is carving out a market niche with traditionally-brewed beer from environmentally sound raw materials from its Limburg home base. Under a "people, planet, profit" program, Gulpener gets its water from local sources, buys barley from local farmers who get a higher price for meeting environmental and quality standards and the brewery has also started growing its own hops.

"The costs are higher than otherwise, with the hops we pay a lot more. But I see it as an investment. In the end we will have a better product and consumers will recognize that," he said. One-third of the Gulpener production is sold in the Limburg province, where the brewery has a strong presence in pubs. In the rest of the Netherlands the beer is not so widely available but the company is raising its profile with national television commercials underscoring its Limburg roots.

But the beer goes further than that. "We decided that selling beer to Germany or Belgium was like carrying water to the sea, but we are exporting to Britain, France and Italy. In Britain, Gulpener is sold in association with Coors.

So why the fear of being taken over when the firm already deals with Coors and Grolsch? "What has happened with all the other breweries in Limburg is that they have become brands and no more. In the end, the beer is made somewhere else."

And if there was a sudden need for capital, Halmans aims to organize a "Limburg Ltd" raising funds among local partners in some kind of equity-fund financing, but not the share market. "Short-term profit is not everything," he said.

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