Thomas White Global Investing
Belgium Stamp
February 17, 2012
A Postcard from Europe
Belgium: Raising a toast amid the gloom

The famed Belgian beer

The famed “Belgian beer” has become a byword for quality and tastefulness the world over.

Belgium, a small, unassuming country, is in many ways a microcosm of Europe. Hardly a speck on the vast European continent, the country is home to the European Union and the NATO. The country also enjoys the distinction of being the sixth biggest Euro-zone economy, which is also an active trade partner with other EU countries, especially Germany. Still, these accolades mask some of the deep-rooted issues which confront this modern, open economy. Though Belgium was shaken by the financial crisis of 2008-09, the European debt crisis brought home the painful reality that membership in the monetary union also means partaking in the collective burden the group faces. The result has been astronomical levels of public debt, rising unemployment, and slowing economic growth. As the country embarks on a series of tough austerity measures to steer it to safer shores, the country’s thriving beer-making industry could give it a reason or two to cheer about.

Although long known too for its Belgian chocolate confections, it is Belgium’s near complete dominance of the world of beer making for centuries altogether that is widely acknowledged and toasted in pubs across the world. The Belgian love of beer can only be compared to the French passion for wine, and it is clear that there is something that connects Belgians and their national drink.

Much like the country’s favorite tipple, a good mix of water, barley, and hops, many factors have blended together to foster the art of beer making in Belgium. The Economist points out that geographical advantages helped the country transition itself into a nation of brewers. The extreme chilly weather was not found suitable for grape cultivation and hence wine-making was not a feasible option. On the contrary, the availability of high-quality water, together with land that was conducive for growing hops and barley, provided the perfect backdrop for creating the very best brew. The Germans and the Dutch, who held sway over Belgium before it attained independence in 1830, also influenced the country’s great tradition of beer making. Surprisingly, Catholicism too played a part in giving the brew a local habitation and a name, as an Economist article points out. Educated monks, who knew the ABCs of beer making, spearheaded the effort and monasteries started brewing beer primarily for raising some money for the upkeep of their buildings, a tradition that is followed to this day in Belgium.

Significantly, what started off as a pastime in Belgium centuries ago has spurred the rise of an industry whose flagship product goes by the generic name, “Belgian beer.” Small wonder the world’s biggest brewer, Anheuser-Busch InBev, had its humble beginnings in a small town near Brussels in the early part of the 20thcentury. In fact, the company’s growth over the course of several decades into a multinational beer maker is also the story of the famed local brew literally going places. In the 1990s, the company acquired Labatts of Canada and the combined firm later merged with AmBev of Brazil, topping it up with the acquisition of Anheuser-Busch in 2008.

Naturally, Belgium’s beer making industry has also grown in tandem with Anheuser-Busch InBev’s growth, exporting 57% of its produce in 2009, according to statistics provided by the Belgian Brewers Association. In fact, the domestic economy reflects the Belgian love of food and drinks, with Anheuser-Busch InBev and home-grown food retailer Delhaize Group figuring in BEL20, the benchmark stock market index for leading companies in Belgium. Going by its third-quarter results, Anheuser-Busch InBev held its own, even amid the European debt blues, perhaps helped by its relatively small exposure compared to its competitors to trouble-laden Western Europe.

Consumer confidence in Belgium, encouragingly, rebounded in December as the country had a full-fledged government in place after enduring political uncertainty for more than a year. The beleaguered nation got a shot in the arm recently when rating agency Standard & Poor’s affirmed its AA long-term credit rating. Still, with the economy projected to grow at a meager 0.5% this year, the fun-loving Belgians most likely will welcome a gulp or two of cold golden lager beer sitting in a Brussels pub.

Image Credit: Pelican under a Creative Commons license

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