NY Times Article: “What’s Broken in Greece? Ask an Entrepreneur” Profiles Vergina Brewer's Frustration

Yesterday’s Sunday edition of The New York Times published an article titled: “What’s Broken in Greece? Ask an Entrepreneur” by Landon Thomas Jr.  It is a telling piece concerning the confusing and at times unbelievable, challenges of Greece.  It profiles Demetri Politopoulos’ twelve year plight to establish a microbrewery and break into the Dutch controlled Greek beer market.

A native of Greece, Politopoulos moved to America in the early 80’s where he attained a degree in chemical engineering and business at the Stevens Institute of Technology in Hoboken, N.J.  He then worked for his brother’s specialty chemicals company outside Manhattan.  Politopoulos convinced his businessman father and brother to plant their feet in Greece as it: “would be an excellent spot to start up a brewery.” (http://www.nytimes.com/2011/01/30/business/30greek.html?_r=1&pagewanted=2 )  He quit his job and studied brewing in Chicago before purchasing a one-way ticket to Greece in 1995.

However nothing could prepare Politopoulos for the harsh reality that would dampen his family’s dream.  His father and brother invested 11.5 million euros into his company.  He now claims: “Why do you think no one is willing to invest in Greece?…Greek leaders say that welcome business…Yes, they are trying-but they have to back it up”.  (http://www.nytimes.com/2011/01/30/business/30greek.html?pagewanted=1&_r=1)

Politopoulos set up his “Macedonian Thrace Brewery” factory in Komotini.  Unfortunately in Greece, Amstel begin to dominate the market in 1963 through the local Athenian Brewery Company.  Five years later Heineken acquired Amstel, which led to a massive blockade for any entry into the local brewing market.  By the time Politpoulos tried to break into the market, Heineken already controlled almost 90%.  Heineken International now owns 98% of Athenian Brewery which is managed by a Dutchman.  Heineken’s annual report reveals that the company holds a 72% share of the Greek market.  This is the largest share included in the report.

He remembers: “We are going to make a great local beer.”  Locals would respond: “But Greece already has a beer-it’s called Heineken.”  (http://www.nytimes.com/2011/01/30/business/30greek.html?pagewanted=3&_r=1)  He tried to unsuccessfully convince them to try his premium Vergina beer that tastes great and costs less.  The Greeks would reply: “But such a beer does not exist.”  He has now lost over 5.3 million euros.

Politopoulos’ challenges first began when distributors refused to attain Vergina and other brands under his production.  In a 2006 complaint letter to the EU, he referred to offences inflicted upon him and his company.  Threatening calls were placed to his brewery, his tires were slashed, cargo trucks were vandalized, and employees were bribed to quit.  Politopoulos decided to sell his beer at half the price and managed to establish a niche.  Heineken reacted by stating that his accusations were: “ungrounded, slanderous and fabricated”.  (http://www.nytimes.com/2011/01/30/business/30greek.html?pagewanted=3&_r=1)

As “What’s Broken in Greece? Ask an Entrepreneur” states, the Greek economy is plagued by distortions.  For example, the amount of trucking licenses has remained unaltered since 1971.  Greece’s labor cost on average, are 25% higher than in Germany, claimed a recent Variant Perception analysis.  Progressively the nation has become one of Europe’s most closed economies.  Exports amount to only 20% of Greece’s economic output which is approximately half of the eurozone’s average.  Greece has a severely poor foreign investment track record when compared to Turkey.  Bank of America Merrily Lynch released a recent report projecting that the growth rate of Greece will average 1% over the next five years.  The nation’s recent declarations that Greece is open for business has not yet attracted significant numbers of investors.

Politopoulos hopes that outdated laws that restrict business production are eliminated in Greece’s economic reform package by the government and IMF.  Vergina now holds a 5.5% market share.  Yet the brand is rare in major Athenian hotels and restaurants.  His newest and greatest project is to have his brewery create an herbal tea beverage similar to Snapple.  Currently an illogical law mandates that brewers in Greece can only brew beer.  He has tried in vain to convince the Greek government to abolish it over the last year.

Politopoulos once considered giving up on his brewery.  His new tea project has inspired him not to give up in Greece where outdated, senseless laws will hopefully be reversed.  He states: “The ills of the past are crumbling…Greece has no choice to rebuild-and the only way to do it is to roll up our sleeves and start over.” (http://www.nytimes.com/2011/01/30/business/30greek.html?pagewanted=4&_r=1)

To read The New York Times’ “What’s Broken in Greece? Ask an Entrepreneur” article in full by Landon Thomas Jr., please visit: http://www.nytimes.com/2011/01/30/business/30greek.html.  It can also be found in The New York Times’ January 30th New York edition, on page BU1.