1. The wait is over! Download the BeerAdvocate app on iTunes or Google Play now.
  2. Get 12 issues / year of BeerAdvocate magazine for only $9.99!

Big Beer's response to craft: If you can't beat 'em, join 'em

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

  1. “It is weird that they continue to make this one regional product though.” I concur. As a FWI they have been making this beer since 1995. I am shocked that after the merger with InBev this beer wasn’t discontinued.

    “Also, they don’t advertise it.” That is likely true from a cost perspective but you do see billboards advertising Ziegenbock throughout Texas.

    Cheers!
    hopfenunmaltz likes this.
  2. AB has a few other "regional" beers- Michelob Golden Bock and Michelob Golden Light the best known and they had a SNPA clone called Pacific Ridge or something like that in California (or all west coast?) market. Ziegenbock does pretty well - it outsells other minor AB national brands like Beck's Light, Wild Blue and Boddington's according to the IRI numbers. Not bad for a beer that is only sold in one state- albeit one that accounts for about 10% of US consumption (over 19mbbl in 2010).

    I recall reading an AB exec calling Ziegenbock a "distributor driven" brand (or something like that) which implied to me that local Texas AB houses wanted a beer to offer customers as an alternative to Shiner Bock, and further said that wholesalers in other states have expressed a desire to carry it, but AB won't ship it to them.

    While AB once was known for having few labels (as late as the 1970's they pretty much sold just Michelob and Budweiser nationally - Busch was still regional and they had a "Dark" draught-only beer), InBev itself is not known for culling brands if one looks north to Labatt, or their worldwide brands that they call "local champions". They did get rid of Rolling Rock in the US, but somebody else picked it, though (slipping my mind now who :D).
  3. ERRATUM:
    What do I know? When I worked in Minnesota circa 1990, I drank Schell's Ulmer Lager and Heileman's Special Export.
  4. BeerNDoggerel

    BeerNDoggerel Savant (340) Illinois Mar 13, 2011

    What I'm surprised by is the difference in approach between SABMiller and AB InBev.

    While Miller has Tenth and Blake, with a very popular lead beer (Blue Moon), it's overall a rather tepid commitment to craft beer.

    AB, on the other hand, has its in-house Blue Moon equivalent (Shock Top), but with its purchase of Goose Island and arrangements with the likes of Widmer Brothers, Kona, and Redhook, it has moved aggressively into the heart of the craft market.
  5. I just had a conversation with a local craft brewer who cut his teeth for 9 years at the AB plant in Van Nuys (LA) and recently left to start up his own brewery. He was on the BudLight team that pumped out 150,000 barrels a week (7-8 million per year).

    We talked about potential ABInBev craft beer targets. It was his opinion that they would only really be interested in a brewery that could contribute more than 1 million barrels right away (which limits the field).

    He mentioned that they discussed making craft beer while he was there (pre-InBev). It always came back to the quick calculation that it would be much easier, cheaper and more profitable to grow the current brands by a few percentage points than it would be to buy other breweries or create new products.
  6. “ ..it would be much easier, cheaper and more profitable to grow the current brands by a few percentage points than it would be to buy other breweries or create new products.” There is no denying that this is true. Unfortunately (for AB InBev) the sales of their current brands are declining. So, if you are unable to “grow the current brands” , what are the other options for growth?

    Cheers!
  7. Check the demographics and population forecasts for the next 40 years. Budweiser and BudLight (and their numerous other brands) will have no problem growing along with the population.

    http://www.pewhispanic.org/2008/02/11/us-population-projections-2005-2050/

    http://adage.com/article/hispanic-marketing/beer-battle-moves-bodega-brewers-seek-hispanics/227700/
    cavedave likes this.
  8. I guess so - narrows it down to "3" out of over 2000 - Boston Beer Co., Sierra Nevada and, maybe, New Belgium, none of which seems to be in the market to sell.

    It also ignores the fact that Goose Island was in the 150k bbl. range when they sold out to AB (altho' AB did have connections via their partial ownership of CBA, which owned 40% of GI).
  9. The guy that I was talking to wasn't August Busch III, he was simply a brewer that had some insight about the Van Nuys facility. He is now making 500 bbl per year and hoping to increase it to 1200 with some new equipment. He knows how hard it is to increase meaningful production starting from such a small base.

    His take is that buying a few mid-sized craft breweries to add +/- 1 million bbls wouldn't move the needle for ABInbev. Organic growth would be more efficient. Hell, ShockTop probably outsells 90% of the current craft beer brands by itself.

    Maybe the new regime at ABInBev has a totally different attitude.
  10. “Budweiser and BudLight (and their numerous other brands) will have no problem growing along with the population.”

    No problem? So why have sales been declining over the past few year? Sounds like a problem to me.

    Cheers!

  11. “Organic growth would be more efficient.” Again, there is no doubt that organic growth would be more efficient. The problem for AB InBev is that organic growth has not been happening over the past few years.

    Cheers!
  12. :confused: Well, no, I assumed it wasn't (you're the one who quoted him, not me) - III came out of the InBev buyout with nearly half a billion dollars, so if he gets back into the brewing industry (after any "non-compete" period ends) he'll be able to built something more akin to SN's new NC brewery - no carrying bags of malt up rickety portable stairs for him.

    Hell, he could have bought Pabst for cash and still live pretty comfortably on the other half of his AB stock profit. (Well, except on the times he shows up on brewing day and has those uncomfortable meetings with MillerCoors execs.;))

    But AB had a very different philosophy about growth and expansion than ABInBev does. AB buying the Rolling Rock brand in 2006 was the first non-AB created US brand they marketed since the late 1950's when they bought (and subsequently had to sell over a DoJ Anti-Trust ruling) Miami's American Brewing Co' and it's "Royal" brands of beer and ale. Most of their non-American investments were partial purchases (Modelo) or joint ventures/brewed-under-license deals - with Diageo, Labatt, Kirin, Courage, etc. brewing Budweiser for their home markets. Their craft investments, also, were partial deals (CBA and Coastal).

    It wasn't that many years before InBev bought AB that major Wall Street speculation and recommendation (ignored) was that AB should buy Interbrew...

    An interesting BevNet article today on AB's changing philosophy under ABInBev management in the US -
    Budweiser’s Innovation Examination - Can the 'King of Beers' retool its army of brands
    JackHorzempa likes this.
  13. rlcoffey

    rlcoffey Savant (490) Kentucky Apr 20, 2004

    They are having problems with it now, I dont see it getting better. Bud is in free fall. Okay, very slow free fall, but its fallen and cant get up. It may take another 20 years for it to die, but die it will. And Bud Light is probably on a 20 year lag behind Bud.
  14. Crusader

    Crusader Savant (345) Sweden Feb 4, 2011

    On the other hand there's a plan B for Budweiser in becoming a global beer brand alongside Heineken, a process which is already underway. Granted, the fact that slightly more than half of all Budweiser sales now come from outside of the US has been helped by sales falling in the US, but I don't see the brand dying off. If anything Budweiser might be better positioned to become a truly global beer brand than even Heineken given the similar taste profiles of Budweiser and various Asian adjunct lagers.

    http://online.wsj.com/article/SB10001424052970204603004577268623552072702.html
    They started airing this commercial here last year or so, the first time that I can remember that Budweiser has been advertised on Swedish tv:

    I imagine they are airing the same commercial in a whole bunch of countries given the three different buddy groups pictured in the ad, one European, one American and one Asian.
    JackHorzempa likes this.
  15. JK, thanks for the link to the article. It was a very interesting read!

    For some reason I find it fascinating that ABI has a Vice-President of Innovation: Pat McGauley. I am certain that Pat is a marketing guy.

    Some interesting quotes from Pat:

    “The days have to be gone where we sit around the office picking new beers,” said Pat McGauley, ABI’s vice president of innovation. “It has to have a story and historically, we haven’t done that so well.”

    Our philosophy has to be long term and there needs to be consistent investment in what we are putting out,” McGauley said. “We are no longer one-and-done. Obviously we need to continue building long-term brands.”

    So, Pat is stating that their innovation strategy needs to be long term with the idea of building long-term brands. I posted in another thread that I was starting to think that ABI was purposefully following a strategy of introducing ‘flashy’ new beverages with the idea of making money off them in the near term while recognizing that these new introductions would not be long term products, The beverages I had in mind were the ABI malt alternatives of Bud Light Lime-rita and the newly introduced Bud Light Star-ber-rita. Does anybody in ABI really think that people will be drinking these –rita beverages 10 years from now? I truly believe that these beverages will follow the same trajectory of Zima: sell (big?) for a while and then fizzle since they are no longer trendy.

    So, what does Pat really mean by “we need to continue building long-term brands”? Based upon what ABI has done the past few years I have no idea what this means. I guess only the future will tell?

    Cheers!

Share This Page