The Changing Face of American Beer

Unfiltered by | Sep 2008 | Issue #20

The King is dead, long live the king.

Illustration by Chi-Yun Lau

After more than a year of rumors, analyst whispers and convenient press leaks, corporate brewing giant InBev finally made its move on America’s largest brewery. Founded as a small St. Louis brewing operation in 1860 by a German immigrant, the Anheuser-Busch Brewing Company would, in less than a century, grow to become the country’s dominant brewing business and one of its most iconic brands.

In the days following InBev’s offer for A-B, even otherwise detached Joe Six-Packs tipped their recliners forward and took notice of history being made before their damp eyes. The unthinkable had occurred: the American eagle had fallen prey to a foreign hunter. Once laying claim to nearly half of the American beer market, A-B has long served as a national monolith, imposing its “100-percent share of mind” campaign from coast to coast. The brewery’s television ads dominated the airwaves, its brands omnipresent on the taps of every neighborhood bar and in the cooler at the corner gas station.

A-B’s executives, including the recently installed August Busch IV, tried to put a brave face on a fight they knew they would lose. Wielding xenophobic appeals and feeble court actions, the tough, “not on my watch” rhetoric quickly crumbled in the face of their stagnant stock price, their failure to embrace international expansion, and a tumbling dollar that made the giant brewing company affordable.

What happens after this anticlimactic, first-round knockout is anyone’s guess. While InBev has publicly stated that it will not immediately sink its cost-cutting teeth into A-B’s bloat, including its 12 American breweries, this pledge rings hollow for the long term. Ironically, America’s loss may very well turn out to be the world’s gain, as Budweiser is now set to become the combined brewery’s international flagship brand. Dethroned as America’s “King of Beer” by sibling Bud Light and then later, by Miller Lite, Bud will enjoy a renewed spotlight in a bevy of new markets around the globe. Cousin Stella Artois will inevitably take a backseat to an international icon known even in the world’s smallest villages.

The bigger (and less understood) concern is how the deal, which will create the world’s largest brewery, will affect smaller outfits. We know that Pabst and the Boston Beer Company are left to fight over which brewery is now the country’s largest American-owned brewery, but the toll on craft breweries is difficult to determine. While Anheuser-Busch InBev will undoubtedly continue to wield considerable distribution power, better beer fans can rejoice that this deal happened in 2008 and not 1998. A decade ago, craft brewers fought fruitless daily battles for the attention of wholesalers. Today, many craft brewers can’t find the time to field calls from people lined up to bring their flavorful and well-priced beers to new markets.

While hardcore beer geeks would argue the contrary, the loss of Anheuser-Busch should also be seen as a setback to the cause of better beer. Driven by the success of craft brewers, A-B has been a high-profile advocate of quality beer in recent years. Through its highs and lows, A-B’s attempt to elevate and enhance beer’s public image with its “Here’s to Beer” campaign was a welcome addition to the good-beer-praising craft chorus. And while this campaign was scheduled to end within the next year, it’s difficult to picture InBev replicating the promotion in the future. We can also expect the company to reconsider the future prospects of A-B’s newly formed Michelob Brewing Company and its line of flavorful beers.

One final consequence of the deal, assuming it survives regulatory review, is that breweries such as Old Dominion, Widmer Brothers, Redhook and Goose Island will become distant members of the global InBev family. With InBev’s drive to focus on its core brands, these historic craft brands may find a cool reception in the boardrooms of Louvain, Belgium.