CNN - Don't Let Big Brewers Win Beer Wars

Discussion in 'Beer News' started by pitweasel, Dec 13, 2012.

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  1. pitweasel

    pitweasel Initiate (0) Jun 11, 2007 New York

    http://www.cnn.com/2012/12/12/opinion/hindy-beer-wars/index.html?hpt=hp_bn7 Interesting opinion piece with some pretty sad numbers and information about distribution systems, ownership, etc.

    One line that caught me by surprise..."Both members of the duopoly have wholly owned brands like...Goose Island that are presented as craft brands." Yeah, I know GI is owned by AB-InBev. But to think of Bourbon County Stout as a beer that's "presented" as a craft beer just strikes me in an odd way. I realize "craft" is technically defined by the number of barrels a given brewery sells each year (right?), and if I understand GI's history correctly, their flagship beers seem to have been created by a smaller micro brewery. And if that's the case, I'll still view the brews as craft based on their origin, not their current production means. I may be wrong on the beginnings of Goose Island though, so feel free to set me straight if I'm way off here.

    Any other thoughts on the article? First time I'd seen "silver and blue" or "red" used to designate distributers.
     
  2. jesskidden

    jesskidden Grand Pooh-Bah (3,071) Aug 10, 2005 New Jersey
    Pooh-Bah Society Trader

    Author Steve Hindy (ex-owner, still president of Brooklyn Brewery) is also on the Board of Directors of the Brewers Association, so he's going to use their definition of a "craft beer". Besides yearly barrelage ("under 6m bbl"), the B.A. also says that a "Craft Brewer" must be "Traditional" and "Independent". Once Goose Island came under AB's ownership umbrella (back when Widmer first bought into GI), the Brewers Association stopped considering GI a craft brewery and their beers were no longer "craft".

    The B.A. site used to include a phrase something to the effect of "...craft beer can only come from a craft brewer..." (i.e, even those beers that fit the definition once, are no longer "craft" once ownership changes, even if the recipe doesn't).

    Never heard that, but don't know GI's history very well. Perhaps a reference to GI's actual corporation name being "Fulton Street Brewing Co. LLC"?
     
  3. otispdriftwood

    otispdriftwood Initiate (0) Dec 9, 2011 Colorado

    As long as there are craft beer drinkers, there will be craft beer. If the big brewers are at all successful in curtailing the wide distribution of craft beers, then I imagine craft beer drinkers will be forced to drink locally. I don't imagine Sam Adams or Sierra Nevada would have much of a problem but it's the medium sized brewers who will. This is perhaps a reason why some of the breweries that have chosen to not expand and limit their distribution have done so. The local nanobreweries who just sell from the brewery or the immediate local area will be ok. There will be craft beer even if BMC take over 99% of the market - you just won't have the selection. And personally, there's nothing BMC can do to make me drink their beer. I'd rather switch to liquor.
     
  4. pitweasel

    pitweasel Initiate (0) Jun 11, 2007 New York

    Ah, but this is exactly what concerns me.

    Locally, my options are somewhat limited and a touch on the pricey side. There's nothing that I'd consider "great" that I can get in bottles at a fair price ($7-8 a bomber, ouch), and the reasonably priced offerings aren't much above "okay". So in a theoretical scenario where craft brewing gets knocked back down to a local-only level due to the economics of distribution, my options become:

    1) Suck it up and pay more for beer that I'm really not wild about.
    2) Pay less for beer that I don't actually want to drink (i.e. Bud, Coors, etc).
    3) Buy the beer I do enjoy at a high price - but much, much less of it.

    Now for me, the first two are fairly obvious non-options. Leaving the third - buy less. And if an entire town of drinkers feels the same, then it becomes harder for a craft brewery to exist at even the smallest scale.
     
  5. otispdriftwood

    otispdriftwood Initiate (0) Dec 9, 2011 Colorado


    By where you are located, I guess it depends on what you call "locally".
     
  6. marquis

    marquis Pooh-Bah (2,301) Nov 20, 2005 England
    Pooh-Bah Society

    I sometimes get pasted for by cynicism of the expression "craft beer" but this situation may arise.
    A superb brewery recognised as the best in the country is bought up by say InBev.No changes are made, the brewery runs totally independently and beer quality is unaltered.But it ceases to be a craft brewery and presumably the beer is no longer craft beer.
     
  7. youbrewidrink

    youbrewidrink Initiate (0) Apr 9, 2009 Vermont
    Deactivated

    If local craft brewers make good beer, I don't see a problem. It's like any local product, I personally don't mind paying a premium to support a local business.

    If large craft brewers grow to the point that they have huge distribution issues, why should I fight their distribution battles, they are the ones making the money off it.

    I'm happy trading my great local craft beer with BA's offering up their local craft beers.
     
  8. pitweasel

    pitweasel Initiate (0) Jun 11, 2007 New York

    Well, if a brewery can't get distribution and their beers can only be sold at the brewery, to me "locally" would mean something within about a half hour drive. My current city (which I haven't even been in for four months) is an hour from Victory, for example. Storm King? Delicious beer. Would I drive two hours round trip to get it? Absolutely not.

    Spring House sells some great stuff, and they're about 25 minutes away. I'd buy it more, except last I knew, they bottled a very limited number of their offerings. And when they do put their good limited run stuff in bombers, it ended up being something like $9 each - way too much for my budget, unfortunately. And growlers? Not for me; yes, I really am that much of a lightweight.
     
  9. frazbri

    frazbri Initiate (0) Oct 29, 2003 Ohio

    "Given this, I am baffled by the state of the U.S. brewing industry. How did we ever get to a situation where two companies control 80%? And how can we allow them to control more?"

    And this is the heart of the matter not the craft/crafty noise. ABInbev is starting to assert control over it's distributors in a manner that should concern us all. Unfortunately, most of us won't notice until our favorite brewer's wares disappear from the shelves due to changes in the distribution network.
     
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  10. coreyfmcdonald

    coreyfmcdonald Initiate (0) Nov 13, 2008 Georgia

    ...and it may be even more subtle than that. Less start-ups, slower expansion, etc.
     
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  11. otispdriftwood

    otispdriftwood Initiate (0) Dec 9, 2011 Colorado

    Lightweight? Are you referring to 64 oz. growlers? If so, I'm a lightweight as well. I go for 32 oz. And as far as locally, mine starts at an hour's drive and would go to 2 hours if it's worth it. How about Troeg's in Hershey?
     
  12. steveh

    steveh Grand Pooh-Bah (4,030) Oct 8, 2003 Illinois
    Pooh-Bah Society

    If you mean when they were first formulated, they were brewed at their pub at 1800 N. Clybourn in Chicago. It was the popularity of the pub that spawned the micro on Fulton St. and bottling production -- and ultimately, the likes of the specialty beers such as Bourbon County Stout.
     
  13. Brew33

    Brew33 Initiate (0) Oct 24, 2007 Ohio

    I don't even know why I read this stuff anymore..... The same tired ass arguments and accusations over and over and over again.
     
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  14. epk

    epk Pundit (813) Jun 10, 2008 New Jersey

    Yes, this is the point. Not quality or types of beers or who likes to drink what. Considering they are both international conglomerates, how do US antitrust laws apply? I can make an educated guess that their team of lawyers makes sure they aren't caught up in such matters.

    This is actually a thread where posts from our law advocates are applicable.
     
  15. jesskidden

    jesskidden Grand Pooh-Bah (3,071) Aug 10, 2005 New Jersey
    Pooh-Bah Society Trader

    The DoJ made InBev sell off the rights of the Labatt brand and made the new owner (NAB) commit to finding another brewer for the brand other than ABInBev, as a condition of that merger. Currently, the purchase of 50% of Grupo Modelo they don't already own is under review of the DoJ, even after ABInBev had announced that they would sell the US rights to the brand (as well as the other half of the import company) to Crown. There some speculation that ABInBev might have to do more - sell some of their minor US brands (Michelob - Busch- but who's got the money to buy them?) or even some US or Mexican breweries (ditto).

    The DoJ did allow SABMiller and MolsonCoors to merge their US subsidiaries into one company, MillerCoors - mostly because it was seen as the last chance for giving AB in the US some competition. Miller had shot to #2 in the '70's (thanks to parent Philip Morris' money) but had been pretty stagnant as far as market share by the late 80's, as AB continued to grow and take most of the share as Pabst, Heileman and Stroh died in the '90s.

    But, in general, the history of anti-trust regulations in the US brewing didn't really slow down the oligopolization of the industry which resulted in that 90% of the beer brewed here is from two companies. Indeed, there are some who feel that some of the anti-trust moves actually contributed to it.

    In particular, a DoJ ruling back in the late '50's when A-B bought the small American Brewing Co. of Miami, Fl. A-B itself, though again the #1 brewery in the US (after a few years of Schlitz at the top again), had under 10% of the US market but was larger in the local FL market. AB had to sell the brands (Regal) and the brewery (bought by National) and was prohibited from buying other brands or breweries without pre-approval from the DoJ.

    This had the opposite effect that desired, in retrospect, because what it meant is that AB then grew by building it's own brands and building nice new modern, efficient, automated greenfield breweries while their major national competition of the era (Schlitz, Falstaff, Carling... and later companies like International, Heileman, Associated, Stroh) grew by buying old, urban inefficient labor-intensive breweries and often also continuing to brew the local/regional brands rather than creating strong national ones. Slowly, AB pulled away from the pack, with their superior efficiencies and other advantages.

    Going back and looking at the last half of the twentieth century at some of anti-trust decisions for other mergers, they're almost laughable now in what little effect they had. Pabst had to sell off Blatz after buying them in the late '50's, Schlitz got into legal trouble buying Burgermeister and Lucky Lager (General Brewing) in California (as well as Lucky's parent, Labatt) in the mid-60's.

    In the '80's, the DoJ didn't allow a proposed Heileman-Schlitz (#3 at the time) merger instead allowing Stroh to buy Schlitz yet allowed Heileman to buy Pabst (#3), keep their hottest brands (Henry Weinhard, Lone Star) and a couple of their breweries in regions of the US where Heileman was weak (OR, TX, GA) and then spun-off a "new" Pabst- so weak that it was gobbled up a few years later by the Paul Kalmanovitz's S&P (Falstaff, General, Pearl).
     
  16. NickMunford

    NickMunford Pooh-Bah (2,094) Oct 2, 2006 Wyoming
    Pooh-Bah Society

    There's a 4th option. Brew your own. If you're in a place where that's legal.
     
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  17. epk

    epk Pundit (813) Jun 10, 2008 New Jersey

    Thank you for that Jess. Always a wealth of information. So in other words, left in the DoJ's hands, we're all doomed. :stuck_out_tongue:
     
  18. savagewhisky

    savagewhisky Initiate (0) Aug 8, 2007 Virginia

    I'm with those who say there will always be craft breweries where there is demand.

    It seems to me if the macros did pressure their distributors into dropping craft beers, there'd be a lot of demand for a distributor of craft beers. I don't have a PhD in economics or anything, but it seems to me that what we have here is a simply supply and demand problem: obviously craft breweries want and need more distributors...that demand isn't being met now let alone if AB pressures their distributors into dropping other brands. So what we should really be worried about isn't AB's power over the current distributors that built their biz on AB's products, we should be thinking about what is stopping new distributors from getting into the market. I honestly don't have the answer to that, yet.
     
  19. epk

    epk Pundit (813) Jun 10, 2008 New Jersey

    Seriously though, at what point does a multi-billion dollar corporation decide they have enough? Maybe I just can't understand from this side of the looking glass. Maybe they need to start donating more to the public they get drunk.
     
  20. hopfenunmaltz

    hopfenunmaltz Pooh-Bah (2,611) Jun 8, 2005 Michigan
    Pooh-Bah Society

    It is legal in 48 States. The 2 where it is not legal are Mississippi and Alabama.
     
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