NY Times: "Monopolizing Beer"

You brought up an interesting topic. Thanks for your contribution.

The Wal-Mart comparsion has a lot of complexities. I don't shop there regularly but I see the appeal because for much of what I do buy there is EXACTLY what I would have bought elsewhere, and of course at higher prices elsewhere. Same reputable brand names, same product, just a lot cheaper for the exact same thing. I don't see Goose Island much differently. I drank a lot of Goose Island in the late 90's and I'll always have a soft spot, whether it is only when visiting Chicago as it used to be, or now where I can buy most of their lineup here in AZ for much cheaper than most craft beers. Sorry if I let you down, but I enjoy the latter situation. It's the same beer, as far as I'm concerned. And while people in some zip codes can plausibly choose their local based on taste over the widely distributed and well known names, not all of us have that luxury. For me the ideal across this country is very wide distribution of the best breweries, and only the best locals who can compete are on the shelves. I'm just an advocate of drinking best, what you like best that is, regardless of where it is from and what sort of entity owns that brewery. Drink best. Not necessarily local. Not necessarily family owned, etc. Just best. Cheers.

 

Whether or not the big boys go after regional breweries depends on the price they are willing to pay. After all, there is no passion to what the big boys do other than the passion for profit. And if they overpay for a brewery, they don't make as much profit, so if a brewery wants to sell, they'll set a price the big boys are willing to pay. If a brewery is approached by the big boys and doesn't want to sell, they set an astronomical price and if they big boys want it that bad, they'll pay an inflated price. But if the acquistion doesn't turn a quick profit, it will be sold and if it loses money, it will be abandoned. Having a favorite brewery taken over and then abandoned is what we should be concerned about - after all, up to now, InBev has only increased production and distribution of Goose Island so it follows that a big brewer wouldn't mess too much with the product, only with the operation so as to maximize profits.

 

Don't buy Goose Island.

 

Here, here, especially don't buy any of the coffee BCBS, or any of the other BCBS variants, buying those in particular really means you are selling out to the man.

 

Nice try

 

Although I have more concern about how media control has dramatically consolidated over time, the beer market is also an interesting case. As far as "the man" - didn't Jack Black (as Dewey Finn in "School of Rock") describe the one problem with "sticking it to the man" is that sometimes "you become the man". What about "regional" outfits like NAB becoming "the man". Considering that when CCR bought them two years ago it was for 388 million in cash it seems that money might not be too much of an issue. The dough they've poured into the Rochester brewery is evidence of this.

What about Sierra Nevada, New Belgium and even Deschutes, Lagunitas, etc becoming "the man"? Once you're over 200K bbls per year you are hardly "small" (and in the case of S-N approaching a million if they haven't already hit it). These guys could certainly contribute to consolidation and no one would blink (except probably the DOJ) at a craft brewer buying another.

 

I bet many brewers wish someone would "come after them." Many people start businesses in the hopes of being brought out. The NY Times had quite a monopoly on the news for a great while- before being forced to sell of newspapers and radio stations.

 

The traditional barrelage milestone for US breweries that signified they'd reached the top has always been 1 million barrels a year. Pabst, Schlitz and AB all did it in the decades before Prohibition (and, needless to say, in a much smaller total US market of 70-90 million barrels).

Of the nearly 10,000 or so US breweries that have ever existed only several dozen have ever reached a million barrels. (I keep meaning to list them all one day...).

When the US brewing industry convinced the Feds to create a "Reduced Excise Tax Rate" for "small" breweries in the mid-1970s (and, so, before the "craft era") they picked 2 million as the cutoff point to divide small and large - at the time, there were 12 "large" brewers (2m bbl. or more, topped by AB's 29m bbl.) and only about 37 "small" ones left (and that number would continue to shrink for a couple more years). 2 million barrels in 1976 was around 1¼% of the US market.

I agree that the industry has long needed a couple more middle tiers for "Mid-Size" breweries - at this point with only AB and MC left as truly "large" breweries (by B.A. definition, if not the FET), seems there should be mid-size tiers of, say, 250k to 1m, and then 1m to 10m bbl. The Brewers Association's current middle tier of "regional breweries" being 15k-6m just makes little sense.

But 200k bbl/yr, especially in the current US market of 200 million barrels a year, is hardly "large" either. Looking backward (in a smaller market), no one would have considered some now all-but-forgotten local/regional breweries of 200 bbl./yr like Gulf, Esslingers, Blitz-Weinhard, Geyer Brothers, etc., "Large", either.

When NAB was created, Genesee sales were down to around 500k according to some reports (they, of course, were doing a lot of contract brewing at the time, including a good percentage of BBC's Samuel Adams). But NAB today - even with the addition of the IBU breweries (Magic Hat, Pyramid, Portland) and the imported and domestically-brewed Labatt brands it owns in the US - is smaller (@ 2.9m bbl/yr.) than Genesee was at it's peak around 1981 at 3.6m bbl/yr.

 

When Genesee "dumped" their name and became the "High Falls Brewery" in 2000, I actually thought they were walking dead and published a tribute to them on my website - and was surprised at some of the emails I got at the time. I know they were down to 705k total in 2005 and I thought solidly in a death spiral. I was certainly heartened when they became part of NAB in 2009 and thrilled when CCR bought them in 2012. I certainly agree that in today's beer market 200K isn't "big" but again not "small". I found some stats from 1958/1957 and there were 22 breweries over 1,000,000 bbls. I could actually see outfits like Sierra Nevada, Stone, Dechutes, Lagunitas, Bells, New Belgium, etc to eventually contribute to a similar situation - maybe not 22 but at least a dozen - with Boston and NAB and maybe of couple previously mentioned becoming the "medium" breweries.

As they lose market share I expect ABI and MC (or should I say ABIMC) to fight as hard as they can to slow down the craft beer revolution. In the words of Sylvester Stallone in "Cobra" (sort of) "I used everything I had".

 

I'm a little surprised it is only 30%.

 

Thank you for reminding me that the man is still around. Now he'll be popping up all over the place, at least for me.

 

Australia is the ACCC (Australian competition and consumer commission)

 

30% world wide is high. what industries are you talking about?

 

I feel lucky to live where I have a choice of supporting micro/small/macro/monster sized businesses for any of my free-will spending. I doubt there will ever come a day when there's only one producer (monopoly) of any product, especially alcohol.

 

I keep trying to monopolize beer, but I can't drink it fast enough.

 

I don't see lobbying efforts restricting the growth of an expanding part of any market, including beer, working. The name of the game is to stay relevant. The big boys can all cannibalize themselves but at the end of the day if they want to survive they'll need to adapt, not get bigger.

 

InBev wants to buy MillerCoors?? that's insane!

 

No, ABInBev supposedly wants to buy SABMiller, which owns 58% of MillerCoors.

Even if they succeed in buying SABMiller, there is no chance the DoJ in the US would allow ABInBev to own any part of MillerCoors - having the merger approved in the US would no doubt mean selling or otherwise spinning off SABMiller's US holdings.

 

I was thinking the same thing. Getting the DoJ to allow it would almost certainly require major divestitures. And if they chose to fight it in court rather than reach an agreement with the DoJ, I have trouble believing they would succeed.