Not quite 99 emerging market beers on the wall

August 14, 2009

Should emerging market investors set aside their spreadsheets and crack open a cold one?

Their markets have zoomed higher from the March lows, with MSCI’s emerging markets stock index up 81 percent. Are they heading for a fall? Will investors soon be crying in their beer? And if so what kind?

Broker Auerbach Grayson held a rooftop fete this week showcasing emerging market versus developed market beers, with nary a Yankee brew in sight.

With the adventurous spirit and dedicated work ethic that can be found in all experienced emerging markets correspondents, I set in sampling the emerging brews first. No sip, swish and spit here, so the descriptions may get a bit more fuzzy as you read through the list.

It started with Argentina’s Barba Roja Aged Red Ale, the strongest of the evening at 9 percent alcohol. Not the one to slake your thirst on a hot August night, but it certainly can make your head spin faster than you can say “devaluation.” The smell is powerful, picking up deep scents of caramel. The taste is sweet as most extra-strong brews tend to be, but the finish is mild on the back of the palate. If only the Argentine government and its debt holdouts could settle up as gracefully.

Next up was another dark beer, this time from Brazil. The Xingu Black Beer from the Cervejaria Sul Brasileira is based on the traditional black beers made by indigenous populations in the Amazon. It is rich and sweet, with an overwhelming chocolate flavor that gets diluted by some bitterness from the hops after it sits on the tongue. It’s akin to drinking liquid bread, no butter necessary. Much like Brazil’s economy (and its president, left), this beer is complex, with a myriad of flavors hitting you all at once.

The emerging market beer that surprised the most was the BeerLao Dark from the Lao Brewery Company. Again, this was more suitable for a hot night — a light brew with plenty of body. It did not have any kind of nose to it but the dark amber color were deceptive, full of caramels and roasted malts. “Under the hand of a Russian-trained female brewmaster, their beers have become refined Laotian versions of old European beer styles,” according to the tasting notes. Communist Laos has said it wants to open a stock market in 2010 with help from South Korea and Thailand. They’ve got the right beer for the right climate, so maybe they’re onto something with the new bourse.

Kenya’s Tusker Premium from East African breweries was in my mind the “hit and run” beer of the evening. It was crisp and light with an earthy bite of the tongue at first sip, but faded extremely quickly to its watery base. One can detect echoes in the Nairobi stock market, which is up 38 percent from the March low but has faded since July.

Carib Brewery’s Royal Extra Stout from Trinidad was the Caribbean entry with a hefty alcohol content of 7.2 percent. It smelled of burnt oats, was dark and very sweet with a heavy aftertaste. Perhaps that is why the tasting notes say it pairs well with desserts. In any case it was a sweet week for state-owned energy company Petrotrin. Low oil prices forced the company to come to the  market seeking funds to pay for infrastructure upgrades, but it managed to sell $850 million in debt albeit at a discount.

On the developed markets side, some well known entries plus a new arrival. But the buzz is brewing here so bullet points below.

  • Cooper’s Sparkling Ale from Australia was crisp and light but had body to it, lingering on the palate with a slightly bitter aftertaste.
  • St. Bernardus Wit from Brouwerij St. Bernardus – Traditional Belgian wheat beer style. Slight effervescence brings an immediate smile.  Very balanced and satisfying without overpowering.
  • Czechvar from Budweiser-Budvar (Czech Republic a developed market? Well, maybe as far as brew masters go.) Meets the expectations from a great beer drinking making nation. Crisp but with heft, unlike the American version. Imagine downing one with cooked meats on a bone for dinner with three feet of snow outside. Oh Prague!
  • Spaten Optimator from the Spaten-Franziskaner Brewery in Munich. Another liquid bread entry created by monks 800 years or so ago. Smelled like a loaf of rye. Intense sweetness, more than most other dark beers.
  • Asahi Black from Asahi Breweries of Japan.  Dark beer that was actually quite light on the palate, with caramels and roasted malts. I have to agree with the notes: it was silky. Apparently only in the U.S. in the last month.

In investing as in beer, the emerging versus developed market battle depends on your location, climate and proclivities. Both sides had broad range and depth. Indulge too much and your adventurous spirit might just get you in too deep, so do everyone around a favor: Drink (and invest) responsibly.

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