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Big Beer losing further ground to Craft. Ads less effective

Discussion in 'Beer News' started by Zhiguli, Oct 4, 2013.

  1. Premo88

    Premo88 Advocate (500) Texas Jun 6, 2010

    me too ...

    ... and, sure, craft beer will never overtake B-M-C, and B-M-C will add whatever craft brewery sellouts are available and possibly ruin a percentage of our good beer over time. but my limited experience with the people in breweries, bars and restaurants where the good beer is served would tell me more and more beer drinkers are learning that what B-M-C largely pushes is crap. taste is taste, and Stone's Koch is right: when given an alternative, a measurable percentage of even the dirty, unwashed masses will choose the superior product.

    plus, B-M-C losing just a half a percent of its stranglehold on the market sends their suits into a tizzy of epic proportions ... hell, Miller Lite invented a *SECOND HOLE* on their can just to try to out-manuever good beer! every time I see that commercial, i nearly spit up my Anchor Steam laughing.

    (and, man ... as you read that article, you realize B-M-C really doesn't get it. they're getting their asses kicked by better beer and better products -- not "positioning" or "marketing" but brewing and distilling)
     
    AlienSwineFlu likes this.
  2. As far as I'm concerned, craft and macro are two different markets (with a small % of exceptions). The only reason BMC thinks craft is stealing their market is because they both have "beer" in their name.

    Let's say, arbitrarily, that the "beer market" consists of 500,000 people.
    And let's say that 30 years ago, all 500,000 of those people drank BMC.
    Cue the craft renaissance.
    But I think that almost all of those 500,000 people are still drinking BMC.
    It's just that there is another 250,000 or so that are drinking craft.
    BMC hasn't lost customers; the market has grown. So their "share" has gone down in percentage, but not in number.
     

  3. Like Blue Moon's brewer with a doctorate in brewing from Belgium? That seems to be working well for them. If he really is a full-fledged Belgian brewmaster, I at least hope he has a lot of trouble sleeping at night, or some heavy-duty cognitive dissonances going on.
     
    russpowell and PsilohsaiBiN like this.
  4. So, Redd's is MillerCoors? One more reason to avoid it...
     
    russpowell likes this.
  5. Understanding you state "arbitrarily" but are you really suggesting the number of craft beer drinkers is about half the size of the number of AB and MC drinkers here? Total beer production figures are much easier to find that the number of actual "drinkers", but even assuming that the total average volume of beer consumed by the craft beer drinkers is probably less than that of other beer drinkers, it still seems unlikely that craft drinkers would be that great a number.

    Boston Beer Co. internal research says that while half of all beer drinkers drink craft "occasionally" (defined as two serving a month), that means that those drinkers consume non-craft beer 80% of the time. So, their figures show that there are not two distinct groups of "exclusive" beer drinkers - "BMC" or "craft" - making up the majority of the total beer drinkers. The same research says the "mostly craft beer drinkers" are only about 7% of the total beer market.

    US domestic beer production has been relatively flat, with slightly single digit percentages moves up and more often down, for most of the 21st century. For the first decade or so, 2001-2011 that resulted in the total going from 179.8 million tax paid barrels brewed in the US to 177.9m bbl. It bounced back a bit last year to 180m bbl. Craft's tiny share of the total US beer market (so, the above figure plus imports - which was 207.7m bbl last year) has gone from 2.4% to 6.5% in that same period.
    --- Brewers Almanac 2012
     
  6. Lutter

    Lutter Advocate (650) Texas Jun 30, 2010

    Have we taken into account if any of the BMC CEOs are kitten cats?
     
  7. Yes.
     
  8. Roguer

    Roguer Champion (950) Connecticut Mar 25, 2013

    Related, I've been wondering: why are most of the BMC forays into "crafty" beer still lagers? Black Crown, Third Shift, Batch 19...why?

    I've been led to understand that ales are easier to brew, and can contain more complex flavor profiles. So if they're trying to branch out and snare some craft brewers, why are Blue Moon and Shock Top - their elder statesmen of crafty BMC brews - the only examples I can think of off the top of my head that are ales? Isn't Blue Moon a better seller than any of the lagers I listed above?

    I guess I'm saying that if BMC wants to lure some craft drinkers on over, just putting a different label on a lager and adding some caramel malt isn't going to do it. They should at least TRY to brew the beers we are already drinking. Blue Moon and Shock Top are examples that at least they had the right idea at one point.
     
  9. I was recently in a Buehler's Market in Ohio and they had a pretty neat solution to the big companies' attempt to crowd shelf space from craft companies. There was one section for craft beer only (and in a better location too) and a separate location for AALs and pseudo-craft like Leinkugel, Blue Moon, Shock Top etc. Kudos to their beer guy for that one.
     
    jcos, kristougher and craigo19 like this.
  10. So I looked it up, and I am wrong. They all use AB for distribution, and are not at all owned by AB. I clearly misunderstood what I heard, and I am sorry for posting false information.
    With the addition of Lime-A-Rita and all it's offshoots, I think AB agrees with you.
     
  11. Stugotzo

    Stugotzo Savant (495) Florida Jun 13, 2012

    Ding ding ding.... we have a winner, and it's not the first or third post above.

    Good God, what a maroon. :confused:
     
    craigo19, Theniz and KentT like this.
  12. chimneyjim

    chimneyjim Aficionado (230) Oregon Jun 23, 2004

    Not specifically Portland (aka PDX, Stumptown, Rose City, Beervana, etc), but the whole state of Oregon:
    "Roughly 15.8 percent of the 2.712 million barrels of all beer – both bottled and draft – consumed in the state were made in Oregon. For draft beer, that percentage is even higher, with Oregon breweries producing an estimated 42.8 percent of all draft beer consumed in the state."
    http://oregonbeer.org/2012/06/26/oregon-craft-beer-production-numbers-once-again-break-records/
     
    Zhiguli likes this.
  13. chimneyjim

    chimneyjim Aficionado (230) Oregon Jun 23, 2004

    Since 15.8% of all beer consumed in Oregon is made in Oregon -- no megabreweries in the state since Blitz closed -- and since it may be safely assumed that out-of-state "craft" beer also accounts for a significant percentage, it is quite likely that "craft" beer accounts for more than 20% of all beer consumed within the state. In Portland itself that percentage is surely higher.
     
    craigo19 likes this.
  14. zach60614

    zach60614 Savant (300) Illinois May 1, 2012

    What is Oregon, like 1% of the US poulation?
     
  15. By the end of 2013 craft beer is projected to be 17% of beer sales in MA. The article was posted on Beeradvocate a few weeks ago, I'll try to dig it up later.
     
  16. TheodorHerzl

    TheodorHerzl Savant (490) Indiana Mar 30, 2007

    At the end of the day this is a business. As competition gets tighter in the craft space I think you will see consolidation. Not only to the big 3, but potentially other craft brewers through joint operations or buyouts. People have bills to pay and other projects to do. At the end of the day emotion usually wins over rationale. Look at runs on the stock market to see that in action. Money is a big deal to people that are not used to see large sums of it in one siting.

    This is many years away but I wonder about the next generation of beer drinkers. A brewer I know has a 17 year old son that wants nothing to do with the brewery after seeing how hard his dad has worked to scratch out a decent life. My brewer friend is in full support of his son not going into the beer business. I fully believe this brewer will sell his brewery one day.
     
    Zhiguli likes this.
  17. They are trying to hit craft at crafts weakest link ,Lagers. Converting BMC drinkers to IPA's could backfire. Way to many good IPA's for drinkers to try and than move on to.
     
    russpowell likes this.
  18. SN and BBC* may have individual distribution contracts with independently-owned AB houses, or in some cases, a group of AB houses that cover a state or a region of a state (which is hardly unique in the brewery industry), but I don't think they have national distribution deals with Anheuser Busch's wholesale network, the way CBA (partially-owned by AB) or Starr Hill do.

    In New Jersey, for instance, both SN and BBC are distributed by the same MillerCoors or Coors houses (not every Miller and Coors distributor in the state have been forced to merge yet). Those wholesalers also typically carry Yuengling as well in this state, but in other states Yuengling does deal with AB houses.

    Jim Koch has been quoted in interviews as having switched distributors from AB to Miller or Coors houses in some regions during AB's "100% Share of Mind" program, compounded by the fact that the two companies were frequently butting heads over a number of issues in the 90s. Seems very unlikely he would sign a deal with AB for national distribution via their wholesale network, and even more unlikely that it wouldn't be common industry knowledge.

    * No idea about Uinta​

     
  19. Hdredfern

    Hdredfern Savant (395) Texas Feb 16, 2012

    Would probaly be in the trillions
     
  20. dhannes

    dhannes Savant (360) Wisconsin Feb 14, 2010


    At some point, supply of craft beer will exceed demand, and weaker brewers will get pushed out and need to sell.

    It seems that many coastal brewers will be at a bit of a disadvantage in going national with their brands, as shipping a New England beer to San Francisco would add so much freight costs that the price will have to be higher than local offerings...and local offerings already have an edge in that they have been around in the market longer and have greater awareness, trial and brand acceptance/loyalty. I think you'll see craft brewers form marketing agreements with brewers in other parts of the country and "cross brew" each other's brands, e.g. Sierra Nevada would brew Founder's for the west coast, while Founder's will brew Sierra Nevada for the midwest, etc....
     
    bozodogbreath likes this.
  21. dhannes

    dhannes Savant (360) Wisconsin Feb 14, 2010


    As long as they are making money, there is less incentive to sell.

    But if the economy tanks, or someone brews a better beer in their area, or they don't watch their overhead...a brewer could easily lose money for a few quarters and need to sell to pay off debt.
     
  22. That's already happening, just look at the date codes of many "craft" beers at most any retailer with a large inventory. Sure, some individual beers sell out quickly, but even among the largest and/or "hottest" brewers, they all have beers that just sit. Taken as a whole, there is no current shortage of "craft beer".

    Why would it be that shipping east to west is any more disadvantageous or expensive than shipping west to east? West coast breweries like Anchor, Stone, Sierra Nevada and Lagunitas all ship to the northeast and sell at competitive prices and, in the case of the latter two, they often sell for less than local brands. While transportation costs are obviously significant, for most brewers they do not dominant the distribution decisions and that is probably particularly true given the much higher retail prices of craft beer.

    Essentially, that's simply contract-brewing or brewing under license, and has been around since before the craft era. While some very successful brewers have used that model (most notably BBC), many others have eventually flamed-out. In the case of the two brewers you use as an example, both are brewing to capacity and have been constantly expanding their facility and, in SN's case, building a new east coast brewery. The contract/licensing model by its very definition requires a "contractor brewer" with excess capacity, otherwise they have little incentive to brew beer for other companies rather than their own brands.
     
  23. rlcoffey

    rlcoffey Savant (490) Kentucky Apr 20, 2004

    IIRC, Portland is about 30%. No where near 50% yet.
     
  24. rlcoffey

    rlcoffey Savant (490) Kentucky Apr 20, 2004

    Yuengling is 4 (soon to be 5) generations in without selling out and they are the largest of the non big boys (although not craft. Boston, while public, has 100% of the controlling shares owned by a single guy.

    Thats the two biggest boys outside the big boys that havent sold out.
     
    Roguer likes this.
  25. rlcoffey

    rlcoffey Savant (490) Kentucky Apr 20, 2004

    You cant do a hostile takeover of a company that is owned entirely by one person.
     
  26. azorie

    azorie Advocate (725) Florida Mar 18, 2006

    well you can but its slightly illegal. ie threaten to kill someone they love...again slightly illegal.:eek:
     
    Roguer and stevegoz like this.
  27. Isn't this why Sierra Nevada and Oskar Blues are setting up shop in North Carolina?
     
    kristougher likes this.
  28. While there are plenty of people that started drinking beer with craft beer, or never liked beer until they eventually tried a craft beer, I can assure you that there are a staggering amount of people that used to drink shitty beer before they were aware of craft beer, and now are in that mostly craft beer drinking segment on converts. I'm one of them and I can't even count how many others like me I've met or converted myself. Not to sound rude, but to think otherwise is somewhat narrow minded. BMC is literally losing customers and there's a wealth of data out there to support that claim.
     
    Roguer and Andrew041180 like this.
  29. Zhiguli

    Zhiguli Aficionado (245) California Jul 12, 2012

    And also more fun beer wise than 99% of the US
     
    TheBungyo, chimneyjim and Roguer like this.
  30. Zhiguli

    Zhiguli Aficionado (245) California Jul 12, 2012

    They just want to use their existing equipment rather than change things? I'm guessing completely
     
  31. jucifer1818

    jucifer1818 Savant (410) Florida May 15, 2011

    Id say its more along the fact that the beer market is contracting than any single big competitor pushing their sales down. Craft brewing markets can NEVER properly compete with the national brands, mostly because their Extremely different products.

    they, by definition, do not compete with one another, at least not directly.

    Its like comparing cheap cigarettes to expensive Cigars. I doubt that a retraction of market of cheap cigarettes is due to competition of Cigars stealing their market share.

    More likely its a result of a real increase in national income, and thus, a reduced consumption of the Macro brands as a result of their products being inferior goods (meaning that their would be a reduction in quantity demanded as income rises), and would also help to explain the increase in consumption of craft beer, a normal good.

    Like someone else said, the argument that craft are hurting the Macro brands wont be valid until domestic craft beer consists of 15-20+% of the market share, and imports another 15-20+% of the market share.

    then the big brewers would have a serrious problem, as their business is built on very large production to meet minimum scale efficiency. if they can no longer SELL that level of beer to maintain profits, then their business model would collapse and it would require an expensive reorganization of their brewing process.

    But as I said, that day is nowhere near today. but it is certainly a possibility in the distant future.
     
  32. Chaz

    Chaz Champion (840) Minnesota Feb 3, 2002

    Well, you might just want to check out the "Archived" listings here at BeerAdvocate, but there have been a number of ales brewed (and mostly panned by beer hobbyists) by Anheuser and Busch*, Miller, and Coors, respectively.

    Also, if I recall correctly Blue Moon is technically a lager.

    * A massive flop, and Anheuser and Busch brewed a whole slew of ales under the Michelob family, and the still-extant Shock Top family seems to be comprised mostly of wheat-based ales, lately.
     
  33. jucifer1818

    jucifer1818 Savant (410) Florida May 15, 2011


    Couldn't had put it better myself.
    In addition to that, Jim own's about 100% of the voting stock (Class B common stock), so a hostile takeover of Boston Brewing Companyis virtually impossible, unlike what happened to AB, which was taken over by force by InBev.
     
  34. I'd say none of those 3 beers really fall into the "craft-y" category (See B.A.'s - Craft vs. Crafty). Black Crown and Batch 19 because they are both branded with the flagship name of the two brewers' best known beers- Budweiser and Coors - so there's no deception as to who owns the brand. And both beers are pretty much in the tradition of US super-premiums that both brewers have often released.

    And, while Third Shift does use the "Band of Brewers" dba, their initial beer* is pretty clearly aimed at the middle ground between the macro adjunct lagers and lights and craft beer that is represented by beers like Yuengling Traditional Lager and Shiner Bock.
    (* I believe MillerCoors does intend to release other beers under the Third Shift brand).​
     
  35. Hdredfern

    Hdredfern Savant (395) Texas Feb 16, 2012

    Besides your smart ass comment, most of the time people are in the business of making money so if they were made an offer that they couldn't refuse they would take it.
     
  36. StuartCarter

    StuartCarter Savant (425) Alabama Apr 25, 2006

    How much would you bid for a small brewery making under 1000bbl per year? Bear in mind that for AB et al they generally will not greenlight a product that will sell less than ONE MILLION (puts pinkie to mouth) barrels per year. What is the point?

    And I was trying to make the point - for a lot of the craft brewers that I know personally (my anecdata, let me show you it) their businesses are not businesses. It's a way for them to do something they LOVE, passionately, and the fact that they can make an OK income out of it is a bonus. The business is more a part of their family than it is a business... so what is the incentive to sell? If someone turned up at your doorstep with a van painted with "Bloggs and Son, furriers" would you sell them your pet dog for $1,000? How about $5,000? what about $20,000? If someone in an AB van turned up in front of my hypothetical brewery, why would I sell something I care about that deeply to a company I suspect would eventually gut it and leave it bleeding?

    Come on, people. You're acting like craft beer is just another business. For some it is, for most it isn't.
     
  37. Hdredfern

    Hdredfern Savant (395) Texas Feb 16, 2012

    And i think you over sentimentalizing it. Maybe with your new found money you can create another brewery or retire completely (as long as there is not an no-compete clause). With that money you could still brew at home, for your friends and family and be richer than you were before. And I doubt anybody would offer money on a brewery that was losing money or staying flat to begin with but I think they would attempt to purchase some of the medium sized breweries that are being successful.

    EDIT

    You are also comparing beer to living things, I love beer but I also know that IT IS JUST BEER.
     
  38. Jess, you might be interested in this article which states that Third Shift Lager is based upon a Sandlot Brewing beer that was called Flor Hosen (it is a Marzen beer).

    http://blogs.westword.com/cafesociety/2013/02/third_shift_amber_lager_a_new.php

    Cheers!
     
  39. I was going to say something very similar. I think I went through close to 30 of "name-your-favorite-lite-AAL" here each week during college and maybe half of that the first couple years out. I may have purchased a 12 pack of Bud Light sometime in the past 5 years, but I can't really say that for sure.
     
  40. Domingo

    Domingo Champion (945) Colorado Apr 23, 2005

    The thing that stood out to me the most is this:

    "MillerCoors next year will launch Miller Fortune at 6.9% alcohol by volume (compared with 4.2% for most light beers)"

    That's either not going to be a light beer or it will be an absolute marvel of brew engineering.
     
    Hdredfern likes this.

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