Monday, 19 October 2015

Strange Brew: beer patents under the microscope

"Strange Brew: beer patents under the microscope" is the title of the latest Aistemos IP Analytics feature to be included in an IAM Weekly update.  For those readers who didn't read it last week via IAM, we are pleased to post this analysis in full below.

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The annual Munich Oktoberfest is not just the world’s best-known beer festival; it is a magnet for economists too, as evidenced by features published by the Wall Street Journal and the Harvard Business School.  Curiously, it has attracted little attention in terms of the impact of intellectual property.  This being so, it is plainly time to examine the beer industry through the eyes of patent analytics.

The first surprise is that, while patenting in the beer industry is actively pursued, only a small percentage of patents held by leaders in the brewing industry relate to the drink itself: packaging, beverage dispensers and manufacturing processes are far more likely to be patented. Table 1 below illustrates this:  while Japanese brewer and distributor Kirin, with 310 beer-related families, is well ahead of the pack, this holding accounts for just 20% of its patent portfolio. 
Table 1 - Beer producers, beer related patent families 
Company
Beer related patent families
% of total portfolio
Total portfolio
Kirin
310
20%
1,529
Suntory
248
19%
1,317
Asahi
226
40%
564
Sapporo
208
53%
389
Heineken
26
21%
124
AB Inbev
23
19%
121
Carlsberg
20
29%
68
Tsingtao
10
16%
62
SABMiller
9
90%
10
Yanjing
8
6%
130
Erdinger
3
100%
3
Warsteiner
3
50%
6
Boston Beer
2
25%
8
Grolsch
1
20%
5
Paulaner
1
13%
8
CR Snow
0
0%
13

Source: Cipher and Thomson Reuters
 
Kirin’s portfolio is echoed by the practices of its Japanese competitors, which tend to own significantly larger patent portfolios than either European or US brewers. The four top positions in the patent-owning table are held by Suntory, Asahi and Sapporo, which itself holds exactly eight times as many beer-related patents as the highest-placed non-Japanese company, AB Inbev.

Anyone thinking of investing in a beer producer will want to know not just what its market share and trade mark portfolio look like but also about its prospects for expansion into new markets and different products, and this is where patents come in.  A beer brand (think Budweiser or Heineken) may have a zero chance of succeeding on a whisky, an aperitif or a soft drink, but technologies relating to bottling, packaging, storage and maintaining the shelf-life of active ingredients may have commercial applicability way beyond the original beer product base. So let us take a look at the clusters of patents held by Kirin, Heineken, AB Inbev and Tsingtao respectively:
Source: Cipher and Thomson Reuters

Source: Cipher and Thomson Reuters

Source: Cipher and Thomson Reuters

Source: Cipher and Thomson Reuters
These tables show a more even spread among Kirin’s holdings, where patents for derivatives, active ingredients, acids, agents and other innovations which may well have applications which lie well beyond the company’s core activities are a clear strength, while Heineken appears to have concentrated its innovation in fields relating to pressure, valves, containers and the like.   Tsingtao, as befits an enterprise based in the world’s main manufacturing zone, focuses on the manufacturing process itself.  AB Inbev is the only one of the four to look beyond processing a product, engaging consumers and beer consumption by devoting 6% of its portfolio of patent families to “user/social accounts”.

Will the current Japanese patent hegemony continue? Figure 1, illustrates patent families filed since 1995 and growth in patenting since over the last three years. They suggest that a shift in the geographical balance of power in the beer industry is already happening. Although Japanese companies have been dominant and are likely to remain so for some time, it appears as if they are slowing down and others might be closing the enormous gap in patenting we can see over the last decades, with the strongest growth is found among Chinese companies.
Source: Cipher and Thomson Reuters
Curiously, given that beer is a commodity that is consumed in most of the world’s markets, the tendency towards a global or at least regional strategy when it comes to brand protection through trade mark registration does not appear to be closely mirrored by patent filing.  This is because the Asian companies appear to have adopted a patent filing policy that most closely fits the footprint of their local markets, while the European and US companies appear to have opted for a wider patenting strategy.  Figure 2 illustrates this well: China’s Tsingtao brewery is focused only on China; likewise Asahi patents in Japan alone.  Heineken and AB Inbev have however spread their portfolios more widely across the board.
Source: Cipher
Aside from the analytics, one point should be emphatically made.  The beer industry is one of the most competitive in the world. Barriers to market entry are extremely low, there is little industry regulation and the incentives to enter the market and compete in it attract both the giants of the sector and the continued growth of micro-breweries suggests that this is one of the easiest product markets for a start-up to enter (see here).   This competitiveness does not appear to have been harmed or hampered by the large number of patents, trade marks and other registered rights that abound; rather, the opposite: protection of investment in innovation makes it all the more worthwhile for those who would improve their product, its presentation or its production.

1 comment:

  1. Cheers! said...
    This post puts an interesting perspective on the AB InBev-SABMiller merger announced last week http://www.bbc.co.uk/news/business-34513520

    What are SAB Miller's patents like?

    ReplyDelete