U.S. Challenges AB-InBev's Purchase of Grupo Modelo

Most people that I know drink BMC because of the price and a perception that craft beer is dark and bitter. I've converted a few guys with light, refreshing craft brews. If I give them an American Pale Wheat or a Witbier, they are usually surprised at how smooth and refreshing that beer is. At that point they realize beer can have positive flavors and craft isn't necessarily bitter. After the lighter crafts I'll sneak in a low bitterness brew, like a Williamsburg Coffeehouse Stout or a Chocolate Yeti. Usually they are hooked and shocked that dark, bitter beer can be so good.

 

They have deep pockets and perhaps the math supports their fight. ROI and all that.

 

Patrik, There is a ‘regular’ Schlitz beer and a totally separate beer that is labeled as “1960’s formula”. If you go to the Schlitz website there is no longer any mention of the beer labeled “1960’s formula”: www.schlitzgusto.com

Interestingly in the History & Advertising tab they still list:

“2007: The ‘Classic 60’s Formula’, the one that made Schlitz the most popular beer in the country in the 1950s and 1960s, is back.

“2008: The ‘Classic 60’s Formula’ of Schlitz, in traditional brown glass bottles, returns to its birthplace, Milwaukee, Wisconsin.”

Below is something I posted previously:

I bought a case of Schlitz 1960’s formula beer last summer and I was pleasantly surprised!

First off, the case cost less than $20.00 including tax. As I paid for the beer I thought to myself: I can’t remember the last time I paid less than 20 bucks for a case of beer.

Now, Schlitz 1960’s formula beer is not ‘earth shattering’ but it is indeed more flavorful than a typical BMC beer. They utilize a bit more hops (bittering and flavor/aroma) then present day BMC beers so it has more hop presence. They still use adjuncts in this beer (corn) but at a lower level; they use 30% adjunct in making this beer.

What they were going for in making this beer is just as the label say: 1960’s formula. This means a bit more hops and less adjuncts then present day beers. I thought this was a very tasty and pleasant beer given that it is an American Adjunct Lager.

Cheers!

 

So let me understand this. On one hand, we have government regulating the beer industry to ensure AB-Inbev majority market share. On the other hand, government wants to prevent an acquisition to ensure beer industry competition. The irony just baffles me.

Maybe the "Justice" Department ought to spearhead a task force aimed to eliminate all favorable legislation for any brewery.

 

That's not a just a rep that's the owner! That was an awesome string of tweets though. He's one person who isn't shy about speaking his mind that's for sure.

 

This is an interesting article about how the Department of Justice is blocking the sale of Grupo Modelo to AB-Inbev. Heard about the possible sale a while ago, and this is just surfacing. Definitely good news, although it isn't final.

http://www.huffingtonpost.com/2013/02/01/budweiser-corona-deal_n_2599341.html

 

Great article. Go David!

 

It's definitely nice to see Goliath fail from time to time... although I guess it's bound to happen when all they can do is buy out David and still completely suck in the eyes of craft drinkers pretty much everywhere.

 

Hopefully more people like us will join and fight the GOOD fight. There's always hope even if it is micro sized.

 

“We must slow the volume trend of High End Segment and cannot let the industry transform,” AB InBev
said in internal strategy documents obtained by the Justice Department, referring to the threat posed by
imports and craft beers.

http://www.huffingtonpost.com/2013/02/01/budweiser-corona-deal_n_2599341.html

Nice.

 

I wonder if AB was still 'Merican would the DOJ intervene....

 

Seems like the entire landscape that brought forth the 3 tier system has changed, from a highly competitive market with several major players post-prohibition to the near duopoly of today with one clear dominant player which wants to become even more dominant. Add to that distributor consolidation and the 3 tier system looks like less and less of a hindrance for ABInbev, they're achieving ecnomies of scale in all three tiers: brewing, distributor and retail with the clout that comes from offering the most popular brands in bulk at good prices for the distributor and retailer, and in the end the consumer. This whilst also incrementally increasing prices for the consumer who is getting less and less of a deal as the years go by, with price increases above simply inflation, since the competitive forces which used to force the brewers to show restraint in pricing is no more. AB-Inbev communicates their intent to raise prices and MillerCoors follows suit.

Then again it's difficult to achieve a stable equillibrium where several major players are more or less equally successful and able to compete against one another in a way which doesn't end up with one of them on top, or with several of them going out of business with the end result being the same. The most realistic best case scenario is perhaps one where the craft breweries continue to do well despite the best efforts of ABInbev and MillerCoors, and despite the market dynamics above, where they continue to win more market share and grow in value sales and become a formidable opponent to the big brewers.

 

I just watched CBS news video on this. The anchor at the end of the story said "it could mean increased prices for everybody at home". I would propose a slight change to, "it could mean increased quality for everybody at home".
This just points to the perception of beer as a commodity with no differentiation.

 

http://www.huffingtonpost.com/2013/02/01/budweiser-corona-deal_n_2599341.html

"“We must slow the volume trend of High End Segment and cannot let the industry transform,” AB InBev said in internal strategy documents obtained by the Justice Department, referring to the threat posed by imports and craft beers."

That pretty much says it all right there.... cannot let the industry transform.

 

Assclowns.

 

Hopefully this is all the Justice Department needs to stop the Modelo acquisition.

 

They better be scared I just wish I could convince everyone to drink good beer...

 

Hey, they gotta protect their swill and should be allowed to do whatever they want. (where is that sarcasm icon?)
Honestly, they are talking out both sides of their asses or did they not notice their own attempts to penetrate the high end beer segment with tweaked versions of the same old dreck they've been shilling for decades?
It's like the auto companies complaining about the inclusion of light trucks in the fuel avg. ratings because they don't want to make fuel-efficient trucks. Maybe AB-InBev should start advertising something other than Bud & Bud Light.

 

In terms of putting a stop to the acquisition, having that in writing on their internal documents is a million times more effective then petty hearsay. Reminds me of the quote "Say it and forget it. Write it and regret it."