Big Beer's 5-Point Plan to Crush the Craft Beer Revolution

Discussion in 'Beer News & Releases' started by BBThunderbolt, Oct 16, 2015.

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  1. BigMFDaddy

    BigMFDaddy Initiate (0) Feb 6, 2015 Massachusetts

    The only true threat to Craft companies is the threat of distribution control. I work for a liquor store and unfortunately the top 3 distributors distribute ABI, MC, and Heineken. Regardless if you want a small Brewers beer in store you have to wait until the distributor has enough say Bud ordered by other stores before they actually send out a truck. Some sales reps are gems and will actually go to the warehouse and bring you a beer but those are few and far between.
     
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  2. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania

    May have little to do with Bud or other macros, and much more to do with the economics of delivery costs.
     
  3. jesskidden

    jesskidden Poo-Bah (2,485) Aug 10, 2005 New Jersey
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    These two thoughts are contradictory - A brewery with a wholesale (distributor) license IS self-distribution.

    That's what AB has done with several of their last distributor purchases - they've dropped the non-AB brands from the now-company owned distributor's portfolio and left those breweries to find other distribution deals. And that's what some of these brewers are complaining about, as noted in the Reuters article noted in the OP of other BA thread on this topic.
     
    #43 jesskidden, Oct 17, 2015
    Last edited: Oct 17, 2015
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  4. Bitter_Better

    Bitter_Better Initiate (0) Jul 31, 2015 Oregon

    I have an anology for this very fear in practice:

    I recently attended an Oktoberfest event at my favorite independent brewery. Fest rules were in effect, for business that day, no regular business (taproom "closed" [no fills or bottle purchases] save the special beer menu for the fest). The regulars abided...no growler fills. No problem.

    A couple from San Francisco happened to stop in, w/ two growlers. Per the rules, they were initially denied fills. Upon objection, the employee was overruled & the rules were broken, w/ the added comment to them that "we're working on distribution to SF". Commence the butt-hurt gossip & dejection. The regulars were marginalized in favor of currying business, elsewhere. The spirit of the business "holiday" (b/c it wasn't free) was tarnished by growth potential; I or a few other regulars/staff couldn't care less that the couple "came all the way from SF". We play by the rules...but beer sells & is not gifted.

    Let's not be the butt-hurt. If 20% scares the two giants of the industry into such an action, I say that's a win for independence. Your dollar is your vote, & you are also a constituent of your state's/federal representatives. Rules will be broken, but ultimately, fight for the balance that extends beyond the capital. Be the independence you wish to drink.

    Diversify yo' bonds, [regular]!
     
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  5. NateDyk47

    NateDyk47 Initiate (0) Sep 10, 2015 Michigan

    I don't think it's a big deal. As long as I still get good beer to drink, I don't care who owns it. And there's no way I'll ever drink bud light/miller light etc.
     
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  6. laketang

    laketang Poo-Bah (1,535) Mar 22, 2015 Arizona
    Society

    yeah man, distribution is like the snake oil of beer
     
  7. didgeboy

    didgeboy Initiate (0) Jun 24, 2006 Washington

    God bless you sir. I appreciate people who are willing to go to the mat over things like quality.
     
  8. deleted_user_357747

    deleted_user_357747 Crusader (730) Aug 7, 2009

    I dunno, I think the bit about what "is" craft beer is legit. It's all marketing, and when the consumer has established a connection that craft= small, independent breweries, it is easy to use marketing to fool the customer. There's a reason 75% of people think Blue Moon is craft, and that can increase sales of that beer. It may seem like a small issue, but I think it's just as much a concern as distribution rights are. It's like being able to market your Smart Car as a Mercedes; it's false and the term "craft beer" should, by definition, mean small, independent brewers.
     
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  9. 2beerdogs

    2beerdogs Poo-Bah (3,140) Jan 31, 2005 California
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    Glad to hear their might be some action on the anti-trust front as mentioned in the article under Strategy #4. The distribution system has been manipulated for years IMO.
     
  10. 2beerdogs

    2beerdogs Poo-Bah (3,140) Jan 31, 2005 California
    Society Trader

    I hope...
     
  11. tillmac62

    tillmac62 Poo-Bah (1,830) Oct 2, 2013 South Carolina
    Society

    You missed the qualifier I used - GENERAL distributor (meaning beers other than it's own). Consequently, they are not contradictory. I said all breweries should be allowed to self distribute on a national level. If they own the distributorship, they can only sell their own beer (self distribution). If several breweries chose to ban together and form a distributorship, they would be allowed to sell all the beers of the owner breweries. The key is to open up the system and not allow the macros to dominate it. A non-brewery owned distributor ( a general distributor ) is free to sign contracts with whomever it chooses.
     
  12. jesskidden

    jesskidden Poo-Bah (2,485) Aug 10, 2005 New Jersey
    Society Trader

    OK. Have never seen that terminology used before and Google turns up nothing, either (well, except for General Distributors, Inc of Oregon City, OR ---- which is a MillerCoors house :wink:). Since most licensed wholesale beer distributors are not brewery-owned, I guess it's not a commonly used term - I'd call them simply "independent" distributors (which is what the NBWA uses).

    The problem with that concept is the fact that it'd take a Constitutional Amendment (or maybe just a SCOTUS decision?) since Section 2 of the 21st Amendment which repeal Prohibition has been interpreted as giving the states "broad regulatory power" over alcoholic beverages within their jurisdiction:
     
  13. bubseymour

    bubseymour Poo-Bah (3,435) Oct 30, 2010 Maryland
    Society Trader

    I think that the distribution #4 issue actually could mostly harm the bigger craft companies mentioned above. I think the regional and national/international craft brewers will either be gobbled up or get hit hard. I envision a future where most all the national distributed craft players will be owned by macro, and the 3000+ nano's popping up everywhere will support mostly the local area markets. Macro won't be interested in hitting them, but could squeeze them by further lowering the pricepoint of well made regional/national craft brands. The ones that will survive will be the one's that have a good business model, make good product or have a good pricepoint on some of the flagship brews.
     
  14. Blazer06

    Blazer06 Initiate (0) Jun 30, 2008 Florida

    Funny how #4 is getting all the attention but craft brewers are fighting to change laws that would allow #4 to expand to more states. AB can only self distribute in states that allow it so as more states change laws to allow for self distribution then the more AB will buy up their distributors. I guess the best ally for craft brewers lobbying to change self distribution laws would be the AB lobbyist.
     
  15. 5thOhio

    5thOhio Initiate (0) May 13, 2007 South Carolina

    I'm often surprised how many people don't understand how economies work.

    Although I'm no expert in economics, I do know that economies are dynamic, not static. Should Big Beer expand its grip on distribution, small craft breweries will continue to flourish and find ways around such difficulties, as they did in the last few decades when big Beer had what appeared to be a choke hold on the market.

    Same as arguments about shelf space, limited hops supplies, etc etc. If individuals see a market opportunity, they'll respond, as small farmers have already done growing hops for local breweries, stores have done by expanding shelf space and retailers have done by opening craft-only bottle shops.

    I can pull off the top of my head, and I'm sure most BAs can also, plenty of brewpubs that only sell on site and are doing just fine, thank you, with no distribution issues because they don't distribute. If a brewery's business plan is to distribute and become a big regional or even national player, then the Big Beer Corporations attempt to squeeze them may become a problem. But if a brewery owner is happy to produce good beer for in-house purchase, this won't be an issue, and there seem to be plenty of breweries that are doing just that.

    The only way craft beer will die is if people stop drinking it, and that's not going to happen.
     
    #55 5thOhio, Oct 19, 2015
    Last edited: Oct 19, 2015
  16. rgordon

    rgordon Meyvn (1,270) Apr 26, 2012 North Carolina

    Yes indeed. But a distribution system needs to exist. I did this for years and most contracts were verbal and always adhered to.
     
  17. jcos

    jcos Aspirant (212) Nov 23, 2009 Maryland

    I think it is interesting how beyond buying other breweries, none of their stragies involve actually making a better product.

    If they were to "smash" craft beer...then I simply wouldn't drink beer anymore. Definitely a sad day, I don't routinely drink things I don't like.
     
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  18. Homers_Beer_Odyssey

    Homers_Beer_Odyssey Initiate (0) Jun 17, 2014 New York

    Ever notice that the "Craft Beer Revolution" never had a 5-Point Plan to Crush Big Beer? Maybe that's why it's happening. Craft brewers just make better beer, and people want to drink it. No plan at all. Just a commitment to quality.
     
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  19. rgordon

    rgordon Meyvn (1,270) Apr 26, 2012 North Carolina

    I helped two guys older than me yesterday find some "different" kind of beer. They wanted to branch out a bit. This is happening more and more and will continue. They bought Sam Adams Boston Lager and Sierra Nevada Oktoberfest. I do not fear that both of these breweries are controlled by big beer houses. All boats will rise with good beer awareness.
     
  20. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania

    I'm not sure I understand what you are saying here. Which big beer houses are you referring to, Ken Grossman and Jim Koch? Also, big relative to what? Neither are particularly big even compared to AB back before InBev got involved. Could you go into a bit more detail? Thanks.
     
  21. rgordon

    rgordon Meyvn (1,270) Apr 26, 2012 North Carolina

    They control local distribution of the brands, not ownership. Sometimes it bothers me me a bit, but SNPA at a bargain price works well. Sorry for not being more clear. Does that clear it up?
     
  22. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania

    Thanks, but there's still something I'm not understanding (probably for lack of background knowledge). You mean BBC and SN control local distribution of brands? Seems like that would apply to folks like Stone and Russian River as well and RR is not particularly big in the scheme of things.
     
  23. rgordon

    rgordon Meyvn (1,270) Apr 26, 2012 North Carolina

    No, the big local boys control SN and BBC and distribution through the region. We don't have RR here, but Stone is distributed by an outstanding group. All I'm saying is that Sierra Nevada and Sam Adams are regionally sold by huge companies, and I still support them. I am purely pro business.
     
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  24. Thirstygoat

    Thirstygoat Defender (640) Nov 22, 2012 Illinois
    Trader

    I am not worried because I have so much beer in the basement that if the stores ran out of craft beer next week I'd be set for five years or more. By then we would have adapted.
     
  25. Bitter_Better

    Bitter_Better Initiate (0) Jul 31, 2015 Oregon

    Lest y'all forget, Big Craft got national & stays cheaper (to this day) on the distribution channels of Big Beer. Hell, in a cursory check on Sierra's distribution in MI, a Bud house services two counties. Can't flay Big Beer for good business.

    I view most beer like liquid bread; are you really wanting stale, expensive beer made thousands of miles away? Would you want a loaf of Scala bread from across the country, at a premium, because you think it's better than the local mom & pop offering?
    I'm elated to see Big Craft open satellite breweries, just as Koch did, & Ken is. THAT'S keeping it fresh(er).
     
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  26. bubseymour

    bubseymour Poo-Bah (3,435) Oct 30, 2010 Maryland
    Society Trader

    Big Beers "5 point plan"? Did their VP that came up with this title/strategy watch "Fast Times at Ridgemont High" on cable the night before the big sales pitch briefing or something? WTF.
     
  27. charlzm

    charlzm Poo-Bah (2,464) Sep 3, 2007 California
    Society

    What's amusing is that Smart Cars are Mercedes Benzes.

    https://en.wikipedia.org/wiki/Smart_(automobile)
     
  28. deleted_user_357747

    deleted_user_357747 Crusader (730) Aug 7, 2009

    Right, that was my point. If you can call it something else by slick, logic-defying wordplay, than that is misleading the consumer. A Smart Car is not a Mercedes-Benz just because MB is the parent company. Likewise (sort of inversely), you can't call it a craft brew if the parent company is a large-scale, publicly-owned beer corporation.
     
  29. tsauce2

    tsauce2 Zealot (564) Oct 12, 2011 Indiana
    Trader

    Just like Rock n' Roll, craft beer will NEVER die!!!
     
  30. GregoryVII

    GregoryVII Initiate (0) Jan 30, 2006 Michigan

    I don't think it is contradictory at all for someone to be opposed to the three tier system in addition to Budweiser buying out distributors. The entire reason the three tier system came about was to curb the power of large breweries selling directly to smaller retailers. This made sense in the context of big time brewers. Not so much for the little guys, where the distributors are often larger than the craft breweries. Craft brewers, like Larry Bell, have often had to fight for fair treatment within the context of this system.

    You can argue for self distribution, but that is not at all the same thing as AB buying their own distributors. That's an unfair competitive advantage over brewers who can not afford to do so. There's self distribution, and there's having deep enough pockets to buy out distributors within the framework of 3 tier distribution--which many beer geeks hate contradiction free.
     
  31. Blazer06

    Blazer06 Initiate (0) Jun 30, 2008 Florida

    Once AB buys their distributor in an area then they are self-distributing. Whether they buy their current distributor or start something from scratch, the end result is the same. Of course they have complete US coverage so starting a distributor from scratch typically isn't an option due a current contract with the independent distributor in that area. AB can only buy a distributor in states that allow self distribution. As self distribution laws change and aging distributor ownership looking to sell to retire, then AB's wholly-owned distribution network will continue to grow.

    If AB owns a distributor somewhere then that means the craft breweries can self distribute there so it will be hard to argue lack of access to market since it actually is completely accessible with no barrier of a mandatory three tier system.
     
  32. rgordon

    rgordon Meyvn (1,270) Apr 26, 2012 North Carolina

    What is the barrier exerted by a three tier system? It's like health care, how would you do it? I operated within these legal constraints for years, knew the laws, and brought good beer to the public. Until someone can explain to me what is intrinsically wrong with most distribution networks- Three Tier System- I'll just continue to understand it to be the law. Being against something has nothing to do with a better solution. Beer is very regulated, expensive to ship, and controlled politically. Free shipping would be an utter disaster. I do not like franchise laws, old boy groups, and marginalizing small distributors. Truth is, this is how we get our beer. It is all political and takes time.
     
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  33. Blazer06

    Blazer06 Initiate (0) Jun 30, 2008 Florida

    Don't disagree with you about the need for distribution networks. But from the article, craft brewers are saying that if AB buys out their distributors then they have one less way to get product to market and this is creating a barrier for them. My point is that if AB can self distribute somewhere then so could the craft brewer. This means even if all the distributors in that area say no to distributing a product then that brewer can just do it themselves if they have to. I know another article mentioned regulators looking into these AB distributor purchases at the request of craft brewers because they feel it would restrict their access to market but in actuality they have more freedom to access the market than a brewery in a mandatory three tier state. In a mandatory three tier state if all distributors tell a brewer no to carrying their beer then how can the brewer enter that market?

    Distribution is a tough business, not just beer distribution.
     
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  34. Providence

    Providence Champion (801) Feb 24, 2010 Rhode Island
    Trader

    I completely agree with your last sentence. However, I would be weary of pointing to the economic success of craft beer in general, or specific brewhouses that are doing well, as examples that BMC is losing/can't win in the long run. Craft is absolutely killing it these days, no doubt, but it's hard to speculate just how much better they'd be doing if BMC weren't fighting them every step of the way. There's nothing wrong with them fighting them every step of the way, per se, as that's, as they say, "just business," but I think some BAs are taking the "Craft's been doing well and will do well as long as the demand is there" argument a little too far. Some seem to be ignoring how much better craft could be doing in the present and in the future if some of the tactics BMC utilizes weren't done at all, or were regulated in some way.
     
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  35. offthelevel_bytheplumb

    offthelevel_bytheplumb Devotee (402) Aug 19, 2013 Illinois

    Kind of like calling all smaller scale, independently owned breweries "craft" breweries.
     
  36. TH28

    TH28 Defender (643) May 19, 2015 Florida

    It's pretty clear the author of this article has no clue how this industry works, especially in the US.
    1. Blue Moon has been around since 1995, long before the thousands of new breweries that have started the latest explosion of craft. A Blue Moon drinker is completely different than a hardcore craft drinker.
    2. While this is true for ABI, the true impact is minimal. There are thousands of breweries out there. If ABI owns a handful there are still thousands of independent breweries that will thrive in their marketplace.
    3. One ABI ad does not mean that all "big beer" is bashing craft. ABI is the only one taking that position... And we all know that ABI's ad only galvanized craft drinkers into standing up for their beers.
    4. Another point that is solely ABI. Most craft brands are actually in MC distributor houses, and MC is not actively buying out distributors. And the opposite argument could be made here. The economics and scale that distributors have because of "big beer" have allowed them to take on and distribute a much wider offering of breweries. Without the $$$ and infrastructure created by carrying the larger brands, distributors would not have the reach that they have today.
    5. The most laughable point of them all. ABI-SAB merger would have no impact in the US. Miller and Coors in the US are not part of SAB, it's an independent company. Once that merger goes down the brands go to Molson Coors and business goes on as usual. Molson Coors would be making sponsorship decisions, not ABI.
     
  37. jesskidden

    jesskidden Poo-Bah (2,485) Aug 10, 2005 New Jersey
    Society Trader

    Since ABInBev is actively buying "craft" breweries and, in some cases, brewing some of their brands in AB US breweries, I'd say it is only the division within their marketing department in charge of the "Budweiser" brand in the US that is "bashing" craft in ads.

    SABMiller is the majority owner of the MillerCoors US joint venture.

    That's the likely outcome (supposedly, by contract, MolsonCoors has the right of first refusal) but until the deal is completed - sometime in 2017 it is now estimated - and, in the US, the DoJ signs off on it, no one knows what the actual agreement will be re: the former Miller brands and breweries.
     
    #77 jesskidden, Nov 7, 2015
    Last edited: Nov 7, 2015
  38. jvgoor3786

    jvgoor3786 Poo-Bah (2,310) May 28, 2015 Arkansas
    Society Trader

    Or liquor or wine. Whisky would become my drink of choice before Bud Light.
     
  39. AngryDutchman

    AngryDutchman Initiate (0) Aug 8, 2015 Pennsylvania

    Come to the brewpub and we'll talk about it.
     
  40. charlzm

    charlzm Poo-Bah (2,464) Sep 3, 2007 California
    Society

    I don't really like hard liquor or wine myself, hence my choice. More power to ya.
     
    jvgoor3786 likes this.
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