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Sat Nov 17, 2012, 05:10 PM

The Coming Threat to Your Craft brew

Over at Washington Monthly, Tim Heffernan has an in-depth piece on a topic dear to my heart: the stunning consolidation of the US beer industry. He points out, as I have before, that two vast, globe-spanning companies, SABMliler and Anheuser-Busch InBev, control 80 percent of the US beer market. Heffernan argues that the two companies have essentially hit a wall in getting much bigger here—consolidation is already so extreme that there just isn't much more consolidating to do without provoking the ire of antitrust authorities. To increase their profits, he shows, the companies are moving toward a vertical-integration strategy: gunning for control of the distribution and wholesaling. That way, they can grow by extracting more revenue and profit out of each dollar Americans spend on beer

Heffernan's piece mentions a March 2012 interview in the trade publication Beer Business Daily, in which Anheuser-Busch InBev Vice President Dave Almeida "described in perfect detail how retailers can maximize their profits by replacing craft brews with 'premium' beer—its term for its mass-produced light lager." I looked up the interview, and it is amazing.



Okay, let's unpack this. Craft beer has grown dramatically in popularity, and now makes up 6 percent of the total market. And while no individual craft brewer, not even the largest ones like Sierra Nevada, is big enough to pose a threat to Miller and Bud, the industry as a whole, from national brands like Sierra Nevada to your favorite local brew, are taking shelf space from the Big Two. Newsflash: The Big Two want that shelf space back. The retail jargon "SKUs" stands for "stock-keeping unit," a coding system used by retailers to track inventory. "Too many SKUs" translates to "too many unique products." What the beer exec is saying is that supermarkets and corner stores might think they make more money by finding space on the shelves for independent craft beers, but they actually sell more beer and book more profits by dropping craft beers and sticking with the giants.

If the InBev exec's economic analysis is correct and retailers heed his advice, then we could be on the verge of a hard squeeze on what I consider to be one of the most promising aspects of the US culinary scene: the rise of an incredibly robust, varied, and regionally distributed craft-brew industry. They already struggle to get retail space as the once-independent beer wholesale/distribution falls increasingly under the heel of the giants. But if retailers decide they don't want craft beer, because they make more profit from corporate swill, then it's hard times for craft brewers.
http://www.motherjones.com/tom-philpott/2012/11/coming-threat-your-craft-brew


I only buy from locally owned shops that specialize in craft brews.



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Arrow 24 replies Author Time Post
Reply The Coming Threat to Your Craft brew (Original post)
octoberlib Nov 2012 OP
dionysus Nov 2012 #1
RomneyLies Nov 2012 #13
Viking12 Nov 2012 #17
dionysus Nov 2012 #24
Barack_America Nov 2012 #2
alcibiades_mystery Nov 2012 #4
AndyTiedye Nov 2012 #11
alcibiades_mystery Nov 2012 #3
octoberlib Nov 2012 #6
SheilaT Nov 2012 #5
hatrack Nov 2012 #7
octoberlib Nov 2012 #9
RomneyLies Nov 2012 #15
NutmegYankee Nov 2012 #8
DreamGypsy Nov 2012 #10
octoberlib Nov 2012 #14
RomneyLies Nov 2012 #18
RomneyLies Nov 2012 #12
octoberlib Nov 2012 #19
MadrasT Nov 2012 #16
Kablooie Nov 2012 #23
gravity Nov 2012 #20
cali Nov 2012 #21
Kablooie Nov 2012 #22

Response to octoberlib (Original post)

Sat Nov 17, 2012, 05:13 PM

1. they'll take my DogFish IBA from my cold, dead hands :(

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Response to dionysus (Reply #1)

Sat Nov 17, 2012, 07:24 PM

13. +1,000,000,000,000 n/t

 

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Response to dionysus (Reply #1)

Sat Nov 17, 2012, 07:30 PM

17. Have you tried American Beauty yet?

Looking for a good review before I have my neighborhood store special order...

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Response to Viking12 (Reply #17)

Sat Nov 17, 2012, 09:02 PM

24. OMG NO! I never knew this existed! Try their Miles David Bitches Brew if you can find it, dee-lish!

i have to say my only dissappointment with them ever was the Black & Blue.. yick

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 05:14 PM

2. Nobody who drinks craft beer will go back to their swill.

Besides, I prefer porters, stouts and scotch ales, which these companies don't offer.

No sir, I'd rather take up home-brewing, or skip beer altogether, than drink their swill.

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Response to Barack_America (Reply #2)

Sat Nov 17, 2012, 05:19 PM

4. Indeed

There's a very good chance I will never drink a Budweiser again...and I drink plenty of beer each week.

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Response to alcibiades_mystery (Reply #4)

Sat Nov 17, 2012, 07:13 PM

11. The Only Budweiser that is Drinkable is Made in the Czech Republic

Completely different beer from the swill that goes under that name here.

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 05:18 PM

3. I haven't had a non-craft brew in ages

The majority of the beer I drink (and I drink a lot) is brewed less than two miles from my house in a neighborhood craft brewery.

I'm actually drinking one of their beers right now.

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Response to alcibiades_mystery (Reply #3)

Sat Nov 17, 2012, 05:42 PM

6. Here in Charlotte we have 4 craft breweries

and an awesome independent beer shop that refuses to sell "corporate swill" . So I'm not worried.

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 05:39 PM

5. I don't buy big company beers.

If I can't find one of the craft brews in one outlet, I'll go to another. If every single craft brewery were to go out of business, I'd learn to make my own.

As fond as I am of beer, if I'm at someone's house and they offer me a Bud or a Coors, I say no. Water is preferable any day of the week.

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 05:44 PM

7. Here's an interesting tale from the tap . . .

When InBev took over Anheuser Busch, a lot of people in St. Louis were not happy. Their hometown brewer was now just another faceless international entity.

What happened? Sales of Boulevard, which is brewed in arch-rival Kansas City, began to take off in St. Louis. For years, Boulevard couldn't get arrested in St. Louis, but this was the proverbial straw the broke the beer-drinking camel's back. After hundreds of layoffs, people got pissed off, and they began ordering Boulevard.

It also helps that Boulevard makes damned good beer, but there comes a point at which people have just had enough corporate swill, corporate excuses and corporate tactics.

KANSAS CITY, Mo. -- It's still a tiny bubble to the king of beers, but Boulevard Brewing of Kansas City attributes a surge in St. Louis sales to local frothing over foreign ownership.

In the year since InBev, a Belgian-based brewing company, bought Anheuser-Busch, Boulevard has not only gained bragging rights as Missouri's largest home-based brewery but has seen its grocery sales increase 26 percent in the St. Louis market.

Boulevard also has become welcome in bars and restaurants in metropolitan St. Louis that never poured its product before. "You can't lay off people in a city and expect people to still support you like the local benevolent dictator," said John McDonald, Boulevard's president.

In a statement, Dave Peacock, president of Anheuser-Busch, said his firm was not ceding any ground: "We never take any beer sale for granted, and we work to win over new consumers every day."

http://www.semissourian.com/story/1608998.html

Crown, which mostly peddles Mexican brands just purchased by Anheuser-Busch, has seenn its sales grow 37 percent in Missouri since 2008. Nice, but not as nice as Kansas City craft brewer Boulevard, which had sales roughly double in that time, enabling it to leapfrog Heineken and Diageo (owner of Guinness and Smirnoff Ice) in the state rankings. Schlafly parent St. Louis Brewery also doubled sales from 2008 to 2012, and just last year surpassed craft kingpin Boston Beer Co. in Missouri sales. Rounding out the top ten came Boston Beer (i.e. Sam Adams) and Mike's, both of which reported strong growth here, too.

EDIT

http://www.stltoday.com/business/columns/lager-heads/a-b-still-the-king-in-mo-but-changes-are/article_f43811b8-d28f-11e1-bf95-001a4bcf6878.html

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Response to hatrack (Reply #7)

Sat Nov 17, 2012, 05:55 PM

9. This is interesting . Thanks for sharing!

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Response to hatrack (Reply #7)

Sat Nov 17, 2012, 07:29 PM

15. The saddest thing about InBev is what's happened to Belgian brewing

 

So many incredible Belgian beers have disappeared since InBev went huge.

You cannot get any of the original Lambics any more. The style has all but disappeared in Belgium.

Lambics not only ferment with yeast but also with specific bacterium that help produce the fruitiness and dryness of a true Lambic.

The way these ancient breweries achieved this is to reuse the same barrels. Barrels that are more than 100 years old were used to produce these truly exceptional beers.

InBev drove them out of business. Now, the only way to achieve these types of flavors is to brew it yourself. Fortunately, White Labs and Wyeast have saved the bacteria used in fermentation and offer them to home brewers.

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 05:47 PM

8. Not going to happen.

The craft beer industry rules the New England market.

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 06:29 PM

10. Oregon will not succumb to brewers of Corporate swill!

We are ranked 3rd nationally in craft breweries per capita.

From Wikipedia (not necessarily current data):

Large producers

The largest producers in Oregon, all of which are high-volume American breweries, are (per production quantity):

Widmer Brothers Brewery, Portland, 450,000 barrels
Deschutes Brewery, Bend, 225,000 barrels
Full Sail Brewing Company, Hood River, 130,000 barrels (in 2007)
BridgePort Brewing Company, Portland, 100,000+ barrels (2007)
Rogue Ales, Newport, 66,000 barrels
Ninkasi Brewing Company, Eugene, 50,000 barrels



I am not a brewer myself, but our farm supplies the blueberries for Cascade Brewing Company's Blueberry Ale

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Response to DreamGypsy (Reply #10)

Sat Nov 17, 2012, 07:27 PM

14. I love Rogue Ale's Mocha Porter

It's my new favorite winter beer. And blueberry ale sounds yummy!

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Response to DreamGypsy (Reply #10)

Sat Nov 17, 2012, 07:32 PM

18. My goal is to retire from consulting and open a Pub/Microbrewery.

 

I could retire donig nothing but serving good food and brewing good beer.

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 07:23 PM

12. Their data is skewed, obviously.

 

I buy beer from Whole Foods and they stock NO "Premium Beer". Buttwiper gets NO shelf space.

In fact, I avoid buying beer from any retailer who would be so stupid as to stock Buttwiper.

Beyond that, I homebrew.

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Response to RomneyLies (Reply #12)

Sat Nov 17, 2012, 07:43 PM

19. Whole Foods just opened a location here

I'll have to keep that in mind.

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 07:30 PM

16. No way.

Arrogant Bastard or Victory or one of many other yummy independent craft favorites is all that comes into my house.

I would drink warm tap water before I would drink the mass produced swill pisswater they call "beer".

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Response to MadrasT (Reply #16)

Sat Nov 17, 2012, 08:05 PM

23. I like Boddingtons. A classic, rich English beer.

Arrogant Bastard's too intense for me.

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 07:48 PM

20. It is never going to work

People are not buying craft beers because of shelf space. They buy it because of taste.

If Budweiser actually does produce a good tasting lager, they will be more likely competing with imports instead of craft beer.

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 07:50 PM

21. I'm so lucky. I live just down the road from this place

the much lauded Hill Farmstead Brewery.

http://www.hillfarmstead.com/main/

Vermont has more craft breweries and more gourmet cheese makers per capita than anywhere else in the country.

Great beer and fantastic cheese. What more could you want?

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Response to octoberlib (Original post)

Sat Nov 17, 2012, 08:00 PM

22. Researching this I found that Stella Artois is a Busch beer.

I thought is was supposed to be a good, European beer but I've never liked it.
It seemed bland and empty tasting.
Now I know why.

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