User:Ejdeutsch/First Kulmbacher Brewery

The First Kulmbach Shares Brewery Inc. (1872-1996) in Kulmbach, was a public limited company and one of the most-famous breweries in Germany, mostly under their beer brand EKU, which is what it is called.

Foundation
The company was founded as the First Culmbacher Shares-Export Beer-Brewery Public Corporation on November 2, 1872, in Dresden by four local businessmen together with the mayor of Kulmbach, Karl Rosenkrantz. The headquarters of the company was based in Dresden, the production facility was located as a branch in Kulmbach. The company was listed on the Stock Exchange (organized market) in Dresden.

They appointed Michael Taeffner from Kulmbach (1834–1900) as their board member. Taeffner was an experienced brewer who had already acquired the Communal Brewery II from the city of Kulmbach in 1869 with eight other shareholders. That brewery was located on Webergasse in Kulmbach, which at that time was still on the outskirts of the city. But as early as 1870, this brewery was too small to just cover the beer needs of its shareholders. Therefore they sold their brewery to the newly founded public limited company in Dresden.

Namensgebung
The shareholders planned to modernize and expand the brewery that had been taken over. They planned to export beer, not just brew beer for local needs. The company is thus the first brewery in the legal form of a stock corporation in Kulmbach and therefore bears the name First Culmbacher Shares-Export Beer-Brewery.

The founding of the stock corporation was a first step towards the industrialization of the brewery industry. In particular, the ice machine developed by Carl von Linde in the 1870s made it possible to cool the beer all year round and thus also to enable the transport of the beer.

The Structure
The brewery was modernized in two construction phases. In the first phase from 1873 to 1875, the renovation of the former communal brewery building, the new construction of a cool warehouse and fermentation cellar building, a storage cellar building and a machine and boiler house, as well as the start of construction for a new malt house took place.

In the second phase of construction, fermentation, storage, and ice cellars were expanded in 1881, an ice machine house was built in 1884, a horse stable was built in 1884-85, the brewery front was redesigned in 1885-86, machines and boiler house were enhanced in 1886, the brewhouse was enhanced in 1890 and the fermentation and storage cellars were expanded as well. The expansion of production capacities led to an ever-greater concentration in the inner-city area. With the exception of two residential buildings, EKU was able to acquire all the land in the district and build on it for the most part.

The development of the brewery up to the year 1900 is impressive. The beer production was 17,700 hL in 1872 and 210,000 hL in 1900. 210 employees were employed. In Bavaria, EKU was one of the largest breweries. In Kulmbach, EKU had the highest beer output. The next largest brewery only reached half of this output.

The beers have received numerous awards. So, with a gold medal in Leipzig 1905. This was a great success for Michael Taeffner, who died on May 14, 1900.

Setbacks
The almost unchecked boom at the end of the 19th century was followed by severe setbacks from 1900 onwards, which affected the entire Kulmbach brewing industry. Beer exports steadily declined and reached an all-time low in 1910. As early as 1900-01, beer sales fell to 176,244 hL. The reason for this was not just the economic situation, but a lawsuit that took place in 1899 and raised a lot of dust because the Kulmbach breweries were accused of violating the Bavarian Purity Law and adulterating food. The reason was the use of burnt starch sugar instead of malt to color the dark beer.

In the year 1906 EKU also produced bottled beer, after previously, beer had only been delivered in kegs. At short intervals, the other breweries in Kulmbach followed. In 1910, it came to other government requirements. The Bavarian State Ministry of the interior ruled that the distance of the fill line from top rim of the beer glass must be two to four centimeters. This was a success of the mutinous beer drinkers against poor pouring.

World War I and Inflation
The company survived World War I with production severely curtailed, down to a seventh of what it was during peacetime. The difficulties in the supply of raw materials continued even after the war years. In the 1922-23 financial year, for the first time in the company's existence, no dividends could be distributed to the shareholders. In the 1923-24 financial year, the balance sheet total was 625,975,86,611,428,253.45 DM due to inflation.

After the end of the First World War and inflation, EKU clearly held the top position in Kulmbach. With the purchase of a bottle cleaning and bottle planting, it assumed a pioneering role in the 1927-28 financial year. Up to this point, the beer was almost exclusively sold in barrels.

Relocation
In 1931 the brewery was relocated from Dresden to Kulmbach. Two years later, the board of directors announced the opening of new sales areas and even the export of beer to the US.

World War II
The Second World War had severe economic consequences for EKU. The difficulties in the supply of raw materials and war damage to the factory facilities led to high production losses. Necessary investments cannot be made. However, EKU was still able to produce to a limited extent but wrote considerable losses in the last two years of the war.

Post-war Period
In 1945, EKU became the “Authorized American Army Brewery.” The first post-war years were also marked by great difficulties. Due to the division of Germany, not only were the material assets in Thuringia and Saxony lost, but above all lost most of the old customers. As a result, the beer output in the 1949-50 financial year was just 60,000 hL.

Under the Board of Director Eribert Kattein
After the currency reform, the output was increased to 100,000 hL in the 1952-53 financial year and a steep upward trend began. The chairman of the board, Eribert Kattein, played a decisive role in the continued upswing, who took on this task from 1960 to 1981 and opened new markets for EKU.

Kattein took the decisive step into the future in 1968-69 with the construction of the new brewery "on the green field.” In just 12 months, a plant was built in the Mittelau in Kulmbach, which the trade press described as a technical pioneering achievement for a brewery. The buildings in the city center were demolished.

In the brewing year 1971-72, the EKU generated a profit of 1.5 million Deutsche Mark (DM) with a turnover of 38 million DM.

Lost Business Acquisitions and The Kulmbach Beer War
In 1981 Sandlerbräu was sold in Kulmbach and in 1984 the Mönchshof brewery was up for sale. Through the mediation of the Bayerische Hypotheken- und Wechsel-Bank(Bavarian Mortgage and Exchange Bank), it was not EKU that came into play in both cases, but the Kulmbacher Reichelbräu. This led to the Kulmbach Beer War in 1984.In the beer town of Kulmbach, there was a so-called "Burgfrieden" among the four established breweries. He said that in the home region, you are not allowed to solicit customers from each other, nor are you allowed to undercut the respective list prices. Employees also should not be enticed away from each other.

When Reichelbräu acquired Mönchshof on August 20, 1984, without EKU being given the opportunity to bid, EKU regarded the "Burgfrieden" or the truce as broken. Reischach was so angry that he instructed his field staff to poach inns that were sourced from Mönchshof beer for EKU. The board of Reichelbräu also reacted accordingly and tried to win over restaurants that buy EKU beer. The result was that the hosts who visited were offered discounts of between 10 and 40 Deutsche Mark per hectoliter of beer. In the end, none of the mentioned inns changed their beer suppliers.

Emergence to become a European-wide Beer Company
In 1978, Dr. Carl Reischach took over as CEO and one year later Gebr. März AG acquired most of the shares in EKU. Together with the majority shareholder, Dr. Reischach wanted to create a beer group that would operate throughout Europe. In the following decade, EKU therefore acquired several breweries and beverage distribution companies:

1983


 * Bad Windsheimer Mineral- and Heilquellen GmbH, Bad Windsheim

1985


 * Tucher Bräu AG, Nürnberg,

1985


 * Brauhaus Amberg AG, Amberg,

1987


 * Henninger Bräu AG, Frankfurt, with the Eichbaum-Brauereien AG, Mannheim,
 * Frankenthaler Brauhaus AG, Frankenthal,

1988


 * Bavarian Beverage Sales, Unterföhring,

1989


 * Getränke Pfleghardt GmbH, Fürth,

1990


 * Vereinsbrauerei Greiz GmbH, Greiz,
 * Bavarian Beverage Sales, Riesa,
 * Goldquell Getränkevertrieb, Bad Langensalza,
 * EKU Biervertriebsgesellschaft, Roitzsch,
 * Ursteinquelle, Riesa,

1991


 * Diamant Brauerei GmbH, Magdeburg,
 * Meisterbräu GmbH, Halle,

EKU invested 5-10% of the capital in breweries in the South Seas and concluded licensing agreements.

They were:


 * St. Vincent Brewery Ltd., St. Vincent,
 * Western Samoa Breweries Ltd., Apia, Westsamoa, and
 * Solomon Breweries Ltd., Honiara, Salomon Islands.

EKU also became active overseas: In the USA, the EKU of America Inc. was founded in Wilmington.

The total volume of beverages sold in the affiliated group in 1996 was 6.2 million hectoliters. That corresponded to a turnover of 750 million DM, almost ten times the turnover of the parent company EKU.

The companies were purchased exclusively through bank loans. When the Reischach board took office in 1978 as chairman of the board, EKU's bank debts amounted to 12 million DM. When Reischach retired on January 31, 1992, it amounted to 173 million DM. EKU only survived when Gebr. März AG took over the profits. In 1993-94, 60 million DM were compensated in losses. In 1994-95 it should be 30 million DM. Despite the undesirable development, Reischach was elected chairman of the supervisory board in 1992. By this time, the extent of the casualties was already apparent.

The Descent
Since 1990, EKU once again started selling subsidiaries:


 * 1990 Henninger-Bräu AG, Frankfurt, and Bad Windsheimer Heil- und Mineralquellen GmbH, Bad Windsheim, all went to Gebrüder März AG Rosenheim
 * 1992 Magdeburger Bräu GmbH goes to Bavaria St. Pauli Brauerei AG, Hamburg
 * 1994 Tucher Bräu AG, Nuremberg, goes to Dr. Hans Inselkammer
 * 1995 Unima Malzfabrik GmbH, Kulmbach, goes to Ireks GmbH, Kulmbach

When it came to investments, EKU completely overreached itself. Between 1988 and 1992, around 100 million DM were invested in production and sales capacities. The 50 million DM alone was invested in tangible investments for a new brewhouse, a logistics center and fermenting cellar. This enabled the capacity in the brewhouse to be increased to 1.2 million hL/year. The capacity of the fermenting cellar was even higher. In contrast, beer production in 1995 was only 0.85 million hL.

A declining beer market also led to non-negligible sales losses at EKU. In Bavaria alone, beer sales fell by 5% in 1994. In contrast, the EKU has disproportionately lost sales. In the 1994-95 financial year, they had to cope with a drop in volume of 9%. In addition, there is a shift in sales towards cheap beers on the one hand and premium beers on the other. With its mid-price segment, EKU is among the losers.

EKU by itself only achieved sales of 93.8 million DM in the 1995 financial year and reported a balance sheet loss of 30.3 million DM. 325 workers were employed.

The Bankruptcy
The trigger for EKU's bankruptcy proceedings was the claim for the opening of a court settlement proceedings by the parent company, Gebr. März AG, on March 8, 1996, at the Rosenheim District Court. As a result, the obligations from the concluded profit and loss transfer agreement could no longer be met and the parent company can no longer compensate EKU's losses. EKU expected a loss compensation payment of 14 million DM for the 1994-95 financial year, which Gebr. März AG did not meet. As a result, EKU was insolvent and forced to file bankruptcy.

On March 18, 1996, the Executive Board of EKU filed to the District Court of Bayreuth for bankruptcy proceedings to be opened. However, bankruptcy proceedings were not opened until April 30, 1996. To the bankruptcy administrator was the Stuttgart lawyer, Dr. Volker Grub, who was summoned.

Failed Takeover Attempt
Grub continued the takeover negotiations with the Kulmbacher Brewery AG, which the EKU board member, Jochen Weber, had already initiated in 1995. The loss of 30.3 million DM in 1995 had to be taken over by Gbr. März based on the profit and loss transfer agreement. Gbr. März AG had then already made a down payment of 16.1 million DM. However, the final payment of 14.2 million DM was outstanding. It was to be settled in March 1996. Assuming that this payment would still be made, a sales agreement was concluded on February 14, 1996, between Gbr. März AG, represented by its CEO Dieter Jünemann, and Reichelbräu AG for all EKU shares. The acquisition was planned for April 29, 1996, the date of an EKU general meeting.

The purchase agreement failed because Gebr. März AG was unable to fulfill the obligation arising from the profit and loss transfer agreement due to its bankruptcy proceedings.

Sale by the Liquidator
The bankruptcy administrator Grub immediately started talks with Reichelbräu AG and offered to sell EKU's business activities as part of an asset deal. This meant that assets of the brewery, not the EKU shares, were only to be transferred. The latter would have required apologizing to the EKU, a process whose success would have been questionable and would have been prolonged for months.

The board member of Reichelbräu AG, Gert Langer, feared that many customers would then end their contractual agreements with EKU and look for other beer suppliers if the negotiations were to drag on for a longer period.

Until then, Reichelbräu was only known as a regional brand. The aim was to change their company name to Kulmbacher Brewery. Due to a historical agreement between the four major Kulmbacher breweries, Erste Kulmbacher, Actienbrauerei AG, Reichelbräu AG, Mönchhofsbräu GmbH, and Sandlerbräu GmbH, they had not been possible until now. The four breweries had agreed to not use the Kulmbach name by itself. After Reichelbräu had already taken over Mönchshofsbräu GmbH and Sandlerbräu, the acquisition of EKU gave Reichelbräu its first opportunity to create a "Kulmbacher Bier" brand. Studies had shown that Kulmbach is a well-known beer town in Germany, which should be valued higher than the individual brands from Kulmbach. Reichelbräu AG was therefore interested in concluding the contract quickly and was supported by its majority shareholder, Schörghuber-Holding-GmbH in Munich.

As early as May 1, 1996, Grub concluded a sales agreement with Reichelbräu AG for EKU's operational assets, which also includes the minority shareholdings in the three overseas breweries. The purchase price was 68 million DM, and the delivery took place on April 1, 1996. 106 employees of the EKU were brought on.

EKU becomes E.K. Aktienbrauerei AG

According to the sales agreement, Grub was obliged to change the company name Erste Kulmbacher Actienbrauerei AG. In the future, it will be E.K. Aktienbrauerei AG. Reichelbräu will then operate under the name of Kulmbacher Brauerei AG.

End of the Bankruptcy
Grub ran the Greiz Brewery until July 30, 1997, and sold it to the entrepreneur Richard Wagner from Frankfurt.

The bankruptcy proceedings were not fully completed until 2011, as the legal dispute was still being waged against EKU.

EKU's bankruptcy creditors, with claims totaling 70 million DM, received a payment ratio of 51%. Five banks were secured with their loans amounting to 51.2 million DM with residential property charges and security charges which were then fully settled.

Weblinks

 * Early documents and newspaper articles on the First Kulmbacher Brewery in the historical press archives of the ZBW