Disdaneful of Competition

With sales of its smooth light Pilsner beer expanding nicely, Denmark's Carlsberg Brewery this summer is pushing completion of a 12,000-ton-capacity barley silo at its plant in the Copenhagen suburb of Valby. Nobody keeps a more interested eye on the project than Carlsberg's competitor, United Breweries, which produces Tuborg. But the watchful eye is not at all due to envy. On the contrary: Tuborg is paying half of the silo's cost and hopes that the facility pays off.

Joint Meeting. To the Danes, there is nothing strange about this situation. After all, when Tuborg last year constructed a new main office building at its plant at Hellerup, Carlsberg paid half the price of the project.

All year long, the two breweries, which together put out 85% of all Danish beer, carry on a spirited competition at home and abroad. Then, at year's end, the two firms hold a traditional joint meeting. A special board composed of seven executives from each company adds up the profits, divides them down the middle. Elsewhere, this might be legally subject to all sorts of restraint-of-trade prosecution, but the Danes regard it as friendly competition and their alternative to what they disdainfully call "illoyal competition."

Carlsberg has been brewing beer since 1847 and Tuborg since 1873, but the working arrangement did not begin until 1895. By that time, Carlsberg was in difficulty: the company was selling plenty of suds to beer-loving Danes, but Owner Carl Jacobsen, son of the founder, had spent most of the profits on art acquisitions and a personal hobby of scientific experiments. Carlsberg's managers proposed a truce to Tuborg: both firms would cease such common practices as bribing bartenders or lending to clients to push their brands. Instead, both would concentrate on brewing and selling quality beer.

Until the Year 2000. Tuborg went along, and the idea worked so well that eight years later, when the truce was due to expire, it was Tuborg that suggested its extension. The two companies agreed that until the year 2000, they would meet once a year and split profits. Last year Carlsberg grossed $89 million on sales of 596 million bottles of beer, and Tuborg grossed $72 million on sales of 468 million bottles.

In Denmark, which wags have described as a constitutional monarchy in which the legislative power rests with the Parliament and the executive power with the breweries, the government goes along with the split. It ought to. Danish beer is taxed at home more heavily than any other beer in Europe, and last year, before the profits were divided, the government took its own share of $90 million. Above all, the friendly competition has helped Carlsberg and Tuborg build up the exports that the country vitally needs.

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