Luxembourg: Luxembourg's bar owners squeezed by exclusive brewer contracts

Faced with exclusive contracts, rent hikes, and the threat of reprisals, bar owners across Luxembourg describe a market dominated by two major breweries, which the competition authority now accuses of restricting competition, RTL Today reported on October 14.

In mid-September, Luxembourg's competition authority publicly accused two major breweries of dominating and restricting the beer market.

While not officially named by the authority, the breweries in question are understood to be Brasserie de Luxembourg (producer of Diekirch) and Brasserie Nationale (producer of Bofferding). They are alleged to use exclusive contracts that compel bars, restaurants, and hotels to purchase and serve primarily their brands.

According to a 2019 report from the competition authority, cited recently by the Luxemburger Wort, these contracts can require establishments to sell at least 80% of a specific brand. They may also set minimum sales quotas and turnover targets, offering discounts or providing equipment like taps and refrigerators in return.

This dynamic was confirmed by multiple bar owners who spoke anonymously to RTL, citing fear of reprisal from the breweries. "The breweries do whatever they want with us, they set the rules, determine the prices for drinks, and dictate what we're allowed to sell", one owner told the Wort. This sentiment aligns with testimony RTL has gathered in recent months.

The brewers' leverage is often strengthened by their role as the primary tenants for many establishments and their control over a significant portion of the limited alcohol licences. While no official register exists, the Diekirch and K�erjeng breweries are believed to hold more than half of these licences.

Industry sources indicate that the recent merger between beverage distributor Munhowen � owned by Brasserie Nationale shareholder Georges Lentz � and Heintz has further heightened tensions. According to these sources, Brasserie de Luxembourg has become increasingly disgruntled with its bar owners. One owner commented to RTL, "Brasserie de Luxembourg doesn't think monopolies are cool, unless they're the ones profiting from them." Several also reported that the Diekirch brewery had raised their rent and denied requests for repair work.

When contacted for comment, the Bofferding brewery stated it would get back to RTL. Multiple attempts to reach the Diekirch brewery were unsuccessful. Both breweries similarly declined to comment to the Wort three weeks ago.