AB InBev Switches U.S. Boss as It Struggles With Sales Slump

Discussion in 'Beer News & Releases' started by dauss, Nov 13, 2017.

  1. dauss

    dauss Zealot (581) Aug 9, 2003 Colorado

    WSJ: AB InBev Switches U.S. Boss as It Struggles With Sales Slump

    It has a pay gate, so here's a Reuters version.
    SFACRKnight likes this.
  2. Squire

    Squire Poo-Bah (2,036) Jul 16, 2015 Mississippi
    Premium Trader

    Adept at buying rather than building is more an observation than a complement.
  3. NeroFiddled

    NeroFiddled Poo-Bah (10,352) Jul 8, 2002 Pennsylvania
    Premium Trader

    Maybe it's time for a Budweiser American India Pale Ale.
  4. BeanBump

    BeanBump Disciple (304) Dec 14, 2016 California

    Consumers growing increasingly informed about beer options paired with ABinBev's continuously false experiential marketing efforts, this shouldn't be much of a surprise.
    stevesbeer likes this.
  5. Squire

    Squire Poo-Bah (2,036) Jul 16, 2015 Mississippi
    Premium Trader

    Or a 1950s era Bud.
    nc41, Rollmeaway2loadout and VABA like this.
  6. jesskidden

    jesskidden Meyvn (1,345) Aug 10, 2005 New Jersey

    From the Reuters story:
    I'd don't know, with the current combined market share of AB (43%), MC (25%), Constellation (8.5%), Heineken (4%),Pabst (2.5%), and NAB and Diageo (1% each) equaling ~84% of the US beer market, and the 5000+ small "Craft" brewers with about 13% of the market, can it really be said that US drinkers "tend to choose more unusual craft beers made by smaller producers" ?
  7. steveh

    steveh Poo-Bah (2,107) Oct 8, 2003 Illinois

    Maybe that will come after the '30s era Bud? And the '40s* that should follow? :wink:

    *I can see the marketing on 3 different '40s Buds now: Pre-War, War Era**, Post-War.

    **Maybe even a sub-category of the same recipe brewed for the military -- in repro O.D. cans. The re-enactors (@Bierman9) will snap 'em up! :grin:
  8. rgordon

    rgordon Champion (861) Apr 26, 2012 North Carolina

    Maybe they should reintroduce those conical screw cap cans from the 30s. They were cool looking. I used to find them in old dumps, deep in the woods, with patent medicine bottles, and scads of lovely old milk bottles. Talk about retro!
    Bitterbill, meefmoff and steveh like this.
  9. Oktoberfiesta

    Oktoberfiesta Aspirant (250) Nov 16, 2013 New Mexico

    It just feels like they aren't buying the right breweries up. Sure they are quick sellers and growers, but they seem to be quick sellers for their immediate marketplaces.

    We have no need for Golden Road, or Four Peaks, when we have local contenders. And the local consumers have already been buying some of these beers for 8 plus years.

    Restaurants arent selling some of the AB "craft" lineup cheap enough IMHO. They want to give the illusion that the beer is 'craft' so it gets priced similarly to other craft beers. If some of their beers were priced down, I'd buy them without hesitation. But for now, I think they feel all consumers are dumb and uninformed.
  10. AZBeerDude72

    AZBeerDude72 Meyvn (1,394) Jun 10, 2016 Arizona
    Premium Trader

    Heck no, Budweizer Juicy NEIPA.... LOL
  11. Squire

    Squire Poo-Bah (2,036) Jul 16, 2015 Mississippi
    Premium Trader

    Asked the rep the other day if the 1933 was selling and he said, "sold half dozen six packs including the one you bought. Want some more"?

    I said, "not at $7.99" and he replied "yeah, I tried to tell 'em".
    chrismattlin and VABA like this.
  12. gopens44

    gopens44 Poo-Bah (2,184) Aug 9, 2010 Virginia
    Premium Trader

    Or maybe they were spinning their wheels. Buying up a scant handful of craft brewers that represent a tear in a 13% bucket divied up between 5,000+ seems in retrospect a poor use of capital that could have been put towards modernization or something more effective in seeing an actual ROI. Silver lining, maybe they back off of craft.
    DrivinNCryin likes this.
  13. Oktoberfiesta

    Oktoberfiesta Aspirant (250) Nov 16, 2013 New Mexico

    Bud/BL has always been a higher volume format seller around my parts.

    More gas stations and grocery stores see 6 to 12 pack sales (which are priced at $7.99 to $14) than the larger format sales (which only happen at select few retailers with space larger enough for a 24 or 30 pack. I think more than anything people are set in their ways. There is no doubt they are dropping $8 for a sixer of bud light. But that's what they know. Why not drop $8.50 for 1933 or $9 for a "craft" option, which may even include craftie options.
    15-30 packs are the only true values around here for your BL type beers, and those arent exactly in every point of sale. I would wager to guess that BL sees six pack and 12 pack sales as a big part of their profits, and that's why the 1933 chose to be in that smaller format initially.

    Then we have these places who have $3.50 bottle sales on BL etc. at restaurants or pubs. People buy those up

    @gopens44 True. They appeared to go after the highest and fastest growing craft breweries so that they could funnel any new growth back at themselves. A siphoning of sorts. I am interested to know of that 13%, what was or is AB owned currently or in the past. Knocking out the PHX areas biggest grower in Four Peaks, and LAs biggest mover in Golden Road can definitely skew some figures. 13% seems more like 10 after AB INBEV takes over the faster movers in every region. Theyd rather earn anything back than give it up to others. It's smart. it's diversifying. But at some time, you have to produce something of quality again, or your share holders wont be happy with plateaued growth. Or theyll buy someone else that is fast moving. Bottom line, there is even very little need for Bell's around my parks. They just entered NM. We aren't quite seeing a bubble on the local brewery front. But everyone else. It's a mashing of all similar beers. I think every new brewery, including AB, hopes theirs sticks with consumers over the competition.
  14. jmdrpi

    jmdrpi Poo-Bah (5,316) Dec 11, 2008 Pennsylvania

    Is there any data about what % of AB's business is from the High End brands?

    Interesting that you can't even find a list of those brands on AB's website, they are totally missing from this page:
  15. rgordon

    rgordon Champion (861) Apr 26, 2012 North Carolina

    The best move for them may be to further eliminate redundancies in upper management.
    Squire likes this.
  16. jmdrpi

    jmdrpi Poo-Bah (5,316) Dec 11, 2008 Pennsylvania

    The 13% is using the Brewers Assoc definition of "Craft" which would not include any AB owned brands.

    Compare the Top 50 Craft list to Top 50 Overall list
    all the footnotes are defined here:
    #16 jmdrpi, Nov 13, 2017
    Last edited: Nov 13, 2017
    Oktoberfiesta likes this.
  17. Uniobrew31

    Uniobrew31 Zealot (503) Jan 16, 2012 Pennsylvania

    44.1 % of the beer market even if it is a decline is still a ridiculously large share of the market…Maybe they're just greedy.
  18. Oktoberfiesta

    Oktoberfiesta Aspirant (250) Nov 16, 2013 New Mexico

    Thanks.. What % share did they actually buy with all these buyouts? 13% assuredly used to be 15%, right? Even just 1% of 15% is a solid 6% market share grab almost instantly
  19. oldbean

    oldbean Aspirant (272) Jun 30, 2005 Massachusetts

    Maybe just make a 2020 era Bud that's actually good. So crazy it might actually work.

    (Don't @ me, macro rice lager apologists.)
    chrismattlin likes this.
  20. jmdrpi

    jmdrpi Poo-Bah (5,316) Dec 11, 2008 Pennsylvania

    Hard to say - hence my question to @jesskidden . Goose Island was between Boulevard and DFH on the 2010 list when they were still listed separately.

    But they have definitely grown the GI footprint being pushed by AB into every sports bar and beer store. The others like Elysian, Four Peaks, Blue Point, 10 Barrel, Devils Backbone, Wicked Weed, Golden Road, Breckenridge were smaller when bought as well.

    Bigger loses for "Craft beer" market share that are not AB related are Lagunitas, Ballast Point, Founders which would all be Top 10 if still on the Craft list. Same with parts of NAB (Magic Hat, Pyramid, etc) and CBA (Kona, Red Hook, Widmer).
  21. gopens44

    gopens44 Poo-Bah (2,184) Aug 9, 2010 Virginia
    Premium Trader

    Didn't they already go on a RIF ride a fee years back? Thought I read as much about the sales side, as if I recall, they slashed redundancy by letting the majority of the craft folks go, brilliant move when trying to grow craft. But you are still correct - I can assure you they could cut 1/3 of the brass and still get it done. Production and sales are so KPI driven that a drug dealing, chain smoking monkey could hold business units accountable.
    rgordon likes this.
  22. jesskidden

    jesskidden Meyvn (1,345) Aug 10, 2005 New Jersey

    Brewers Association's estimates of AB's barrelage of their High End brands for 2016 was 1.8m bbl. (which includes 600k of Shock Top, so it's only about 2/3 "ex-craft" brands) out of a total of 96.2 million barrels sold in the US by AB.

    Down to around their circa 1993 barrelage and share.... back when there were still 5 US-based "macro" competitors (Coors, Pabst, Stroh, Heileman and Miller) rather than only one.
  23. BeerPugz

    BeerPugz Initiate (84) Dec 4, 2016 Wisconsin

    Make me the boss. I couldn't do any worse.
  24. Brolo75

    Brolo75 Initiate (0) Aug 10, 2013 California

    I work for an ABInBev distributor and yes, our sales in our local market are down. The biggest hit we are taking is in the on-premise market, restaurants and bars, where I've heard we are down about 30% (it's a rumor as top management at our local branch will not and never have truly told us how bad sales are down). Also, overall I've heard we are down about 12% overall, but again, we're never really told how bad sales are down.
    We just had a shakeup in management about 2-3 months ago, there were some moves and a few managers were fired. I've heard that the corporate office has set high standards for the coming year and heads will roll if those numbers are not made.
    VABA likes this.
  25. Zorro

    Zorro Poo-Bah (4,341) Dec 25, 2003 California

    Here is a crazy idea. Make better beer as the American taste in beer becomes more acclimated to the good stuff?

    Not saying you go directly to IPA, but the standard lagers that sell in Germany might be the next step up.
    johnnybgood1999, oldbean and Squire like this.
  26. jesskidden

    jesskidden Meyvn (1,345) Aug 10, 2005 New Jersey

    No - As noted, other than Goose Island, the breweries bought by AB in the US were small, with an insignificant share of "Craft". And Goose Island was not considered "Craft" under Brewers Association definition when purchased in 2011 (since it was ~40% owned by CBA at the time), so that buyout did not affect the B.A.'s "Craft" stats, which have not seen a decrease in their market share.
    "Good Stuff?" That sort of ignores the fact that two of the best selling beers among the Top 10 in the US last year were Corona and Modelo Especial, up 7.8% and 18.5% respectively - and 2 of only 3 Top Ten beer that were up. The 3rd - Michelob Ultra (over 17%).

    AB already brews Becks (formerly the #1 German beer in the US) here, and imports St. Pauli Girl (new #1) and Spaten. And the Top 20 beer with the largest increase in market share - over 20% - last year in the US was ABI's Stella Artois (obviously not "German" but in the same market segment as the standard German lagers and Heineken).
    DovGibor, jmdrpi, steveh and 2 others like this.
  27. bbtkd

    bbtkd Poo-Bah (2,113) Sep 20, 2015 South Dakota
    Premium Trader

    It's really odd to be hearing that craft, along with wine and spirits, are hurting big-beer when I am also reading and hearing from store owners that craft sales are off. If both are true, I'm thinking that folks are drinking more craft at breweries/taprooms, hurting both big-beer and packaged craft sales.
  28. jesskidden

    jesskidden Meyvn (1,345) Aug 10, 2005 New Jersey

    The Brewers Association estimates the notable increase in what they are calling "own premise" sales (both on- and off-premise sales at the brewery) are "...about 1% of overall U.S. beer sales volume." Even with the total beer market itself shrinking, not sure "Big Beer" is being hurt significantly by that 1% as much as other craft may be.
    bbtkd likes this.
  29. MJS08

    MJS08 Aspirant (280) Jul 29, 2014 Florida

    I would be interested in Bud's market share and volume at sports venues, including sports themed bars. I also wonder if they somehow share in the incredible markups at those places.
  30. jesskidden

    jesskidden Meyvn (1,345) Aug 10, 2005 New Jersey

    Those exclusive and/or "Official beer of ..." venue sponsorship deals cost the brewing companies. The beer itself is sold to the venues' concessionaires by the local distributors. Many states regulate wholesale prices so that all retailers are charged the same price and must be offered the same quantity discounts. Likely the large sports venues selling in huge volumes qualify for discounts that local bars could never take advantage of.
    MJS08 likes this.
  31. Rollmeaway2loadout

    Rollmeaway2loadout Aspirant (241) Jan 30, 2016 Illinois

    They do a good job of doing this. For the Superbowl commercial they could show all their beers
    They could try something new and post on Indeed and others-- seeking craft beer brewmasters.
  32. surfcaster

    surfcaster Crusader (744) Apr 20, 2013 North Carolina
    Premium Trader

    "At the same time, its profits have increased. North America is the biggest profit contributor for AB InBev, with the U.S. and Canada contributing about a third of profits, according to analysts."

    Seems like they are adapting pretty well to me.
  33. surfcaster

    surfcaster Crusader (744) Apr 20, 2013 North Carolina
    Premium Trader

    A buddy of mine (AB distributer in a nearby county) told me that when the first contract for beer at the Panther's stadium (1980s) was up for bidding that AB was out bid by Miller and he said that amount would never be recouped in stadium sales for the duration of that contract. It was advertising. Those contracts have been renegotiated many time since.
  34. nc41

    nc41 Poo-Bah (1,636) Sep 25, 2008 North Carolina

    It's about marketing when your dealing with most beer drinkers, and I agree, put that into 1950 era bottles and have a go. This despite I hate the 1933 stuff, IMO that's a miss.
  35. rgordon

    rgordon Champion (861) Apr 26, 2012 North Carolina

    Blame it on weed, whiskey, and wine. In my conversations with old wholesale and retail friends, beer does seem to be somewhat stalled. The Budweiser guys may think they have the right portfolio mix, across all distribution points, but I see huge amounts of multiple package options (in large retail outlets) that often seem untouched. They have the clout to dominate the beer sets, but pushing it out the door is tougher than ever. I think young folks now are drinking less than folks who were young a few years back.
    Squire likes this.
  36. SFACRKnight

    SFACRKnight Meyvn (1,246) Jan 20, 2012 Colorado

    I think AbInbev's idea of buying up breweries is a long term plan that is going to work well for them. I went into a restaurant earlier this week, they had six taps on. Hoeegarden, Stella, two Breckenridge taps, Goose Island IPA and bud light. Six taps, all owned by In Bev, with options that appeal to import and craft fans? Watch out...
    meefmoff likes this.
  37. HeilanCoo

    HeilanCoo Initiate (0) Sep 11, 2014 North Carolina

    "AB InBev has been unable to arrest a nearly two-decade decline in Budweiser sales, even as it has moved aggressively to expand Budweiser distribution around the globe.
    At the same time, its profits have increased."

    How could this happen if they aren't encroaching on a more-than-premium or borderline 'craft' price point?
  38. pat61

    pat61 Poo-Bah (5,148) Dec 29, 2010 Minnesota

    AB has big muscle but I don't think craft breweries are their main target. They lose more money to mice and rats around their breweries than they do to craft brewers. The American craft brewery market is something they think about while they play angry birds while waiting for an airplane on their way to take over Asia and Africa. A couple of years ago I was talking to a guy in bar who used to sell office furniture to AB - he said after the buyout, everything was farmed out and nobody in St. Louis could make a decision. They are like a brontosaurus - they are too big, ungainly, and uncoordinated. By the time the brain figures out to send a message to the tail, its too late. AB distributors are a threat to package brewers that distribute regionally and they have considerable political clout. Small craft brewers who might distribute city-wide are a pain to the AB distributors because they are taking up shelf space and tap handles but AB itself will only pay fleeting attention to this to stop their distributors from whining.
    drtth likes this.
  39. drtth

    drtth Poo-Bah (3,656) Nov 25, 2007 Pennsylvania

    Streamlining management levels that have “just growed” and contain jobs that used to be making a contribution but have since become like an appendix.

    Eliminating perqs such as corporate jets for travel.

    Reversing 100 year old decisions that may have once seemed important but that such things as modern technology have made unnecessary.

    HeilanCoo, Squire and pat61 like this.
  40. drtth

    drtth Poo-Bah (3,656) Nov 25, 2007 Pennsylvania

    Decrease in craft sales can be looked at in two ways, overall sales and slowing of growth of market share. As your figure shows market share has not declined but that figure also seems to show slowing of growth of market share.
    pat61 likes this.