Break Up Budweiser. (And Molson Coors too.)

I can't even imagine how many more local and even non-local beers I would see if this was the case!

 

I love my local breweries that self distribute. I love shooting the shit with them and building those good relationships. The product is always guaranteed fresh and held in proper storage. At least in NE Ohio, I have to go through around 20 different distributors to fill the beer and wine shelves of my small department. The self-distro guys are by far the easiest to work with, and I always give them a fuckload of shelf space.

there were some local breweries that switched from self distro to major distro. And shit went haywire. SKUs disappeared, terribly old beer was sent, atrociously handled cans, and their shelf space went from like 6 facings to one or two.

I like the peeps that do it themselves.

 

It is incredibly infuriating to run the beer department at a corporate chain of liquor stores and be forced to dedicate 75 - 90% cooler space to appease a schematic that is bought and reserved for Miller Coors and ABInBev products, knowing full well there are local/independent/self-distributed offerings that sell as well or better than some of the SKUs I'm forced to keep in a cooler.

 

(I don't know - calling Anheuser-Busch "Budweiser" always signals to me a writer who is unfamiliar with the history and the current state of US brewing industry ). But, beyond that, the article also ignores the long history of anti-trust decisions in the post-Repeal Era - in some cases, it was simply the fear of anti-trust investigations by brewers looking to buy or merge with other brewers.

Anheuser-Busch, for one, ran into problems in the late 1950s when they bought the American Brewing Co., Miami, FL and it's Regal brand. AB and Schlitz at the time both had around 21-22% of the Florida market with Schlitz in the lead and Regal, as the largest local brewery (and #3 in the state overall) had about 12% - so, the purchase gave AB one third of Florida's beer market.

The DoJ made AB (which was already building a large 600k/800k bbl Florida brewery in Tampa, near a new Schlitz brewery) sell off the Miami brewery and Regal brand (eventually to Baltimore's National Brewing Co.) and prevented AB from selling their relatively new "Busch Bavarian" popular-priced brand in Florida until six months after selling Regal. They also had to notify the DoJ before purchasing another brewing company.

Ultimately, all that did was change AB's corporate growth strategy to one of building new greenfield, efficient, highly-automated breweries rather than buying existing breweries (often built in the pre-Pro era, "land-locked" in urban areas) and their often dying, popular-priced brands. The national brewers that followed the latter expansion formula would all eventually fail (Associated, Falstaff, Carling-National, Hamm, Heileman and finally, in 1999, Stroh).

Schlitz, by the 1960s, would also abandon that method - closing their old obsolete Kansas City, Brooklyn and Hawaii breweries and building multi-million new facilities in Memphis, New York and North Carolina - which, for a time, allowed them to compete with AB.

But, reviewing the many other buy-outs and mergers that the DoJ prevented, you have to kinda say, "Really? That would have made a difference?"

Pabst had to sell off Blatz which they bought in 1957, at the time Pabst had fallen to #11 and Blatz was #13.

In the mid-60s, Schlitz had to sell the large California brewing company, Burgermeister in San Francisco and their minority share of Canada's Labatt which in turned owned a large portion of another big California brewer, Lucky Lager.

Pabst was prevented from merging with Carling-National in the late 1970s.

Both Pabst and Heileman wanted to take-over the failing Schlitz in the early '80s, but it was eventually bought by the much smaller Stroh - a move that eventually doomed Stroh. By the end of that decade, Stroh and Coors would come close to merging but, again, fear of a DoJ anti-trust suit prevented it.

Mid-80s, Heileman wanted to takeover Pabst (which then owned Olympia/Hamm/Lone Star and Blitz-Weinhard) but instead, out of fear of an anti-trust decision, bought it and spun-off a "New" Pabst, while keeping their newer or geographically desirable breweries (TX, OR, GA) and brands (Lone Star, Henry Weinhard). Pabst never really recovered and was quickly taken over by S&P Corp, operated by Paul Kalmanovitz who had previously overseen the failure of General, Falstaff and Pearl brewing companies.

Well, 15 years ago, in 2005 there were still 3 "big brewers" in the US - the independent AB with 49.7% of the market, Miller (SAB-Miller owned) with 18.7% and Coors (Molson Coors' US division) at 11%. Not just a petty comment re: the year of the MillerCoors merger - the fact that the DoJ allowed the two multinationals to merge their US subsidiaries was based on the believe that the merger would allow them to better compete with AB with it's half of the US beer market. In wire service articles the DoJ's investigation was said to conclude that the deal “...is not likely to lessen competition substantially" and should create a lower-cost and more effective competitor.

This ignores the numerous states, more than 2/3's of them, which allow self-distribution by some or all breweries, so while the Three Tier system exists everywhere in the US, the laws vary greatly and it is not mandatory in over 30 states. The author even mentions it further down in the article when quoting the B.A.'s Bart Watson.

That is a factor of each state's Franchise laws, which were not initially part of most Three Tier state regulations, but typically enacted after the 1970s during the era of the Big Six and before the rise of the tiny "craft" breweries - when a local distributor typically carried one main brewer's brands (and maybe a few others) and loss of that one main brewery would bankrupt the company.

Brewing industry legal expert (recently hired by the B.A.) Marc Sorini had a good review of Franchise laws.

InBev ownership did change some of the then-current practices of AB (needless to say) but AB, like a number of other national and large regional brewers, always owned some of their wholesale operations in states where it was legal (it was typically the states without a brewing industry that made the Three Tier System mandatory - in order to protect the locally owned distributors).

In 1988, according to AB's Annual Report, they operated what they today call WOD's (wholly-owned distributorships) in Boston, MA, Newark. NJ, Louisville, KY, Chicago, IL New Orleans, LA, Tulsa, OK, Denver, CO and 3 in California, as well as having "investments" in another dozen and a half in those states and others.

It does kinda strike me as somewhat hypocritical of some "pro-Craft" folks to both demand self-distribution for breweries (which does have some financial disadvantages once a brewery gets to a certain barrelage - it probably contributed to the demise of a number of large regionals) AND then attack Anheuser-Busch for owning some of their own distributorships where legal.

I don't know - I've been following the industry since the start of the "Craft Era" and from what I saw, those large grocery chains had little to no influence on the initial popularity or distribution of small brewers' beers - for many years they were way behind the curve and the worst place to find good beer.

This statement links to an Op Ed from Boston Beer's Jim Koch - not exactly an uninvolved observer - as its source for that fact. AB in recent years has claimed to have "with more than 500 independent wholesalers..." (down from "more than 900" in the 1980s and 1990s - mostly reduced by mergers, often due to pressure from AB). Miller and Coors at the time of their merger both also had an estimated 500-550 distributors, but many already carried both brewers' brands and MC also "encouraged" mergers among them, so that most sources state the current number of Molson Coors US distributors at between 500-600.

The National Beer Wholesalers Association's 2018-19 Annual Report claims they represent "...America’s more than 3,000 beer distributors" - that would leave nearly 2,000 licensed beer distributors (in some states, also wine-spirits wholesalers) that are not affiliated with either AB or MC.

"Almost entirely", except for the brands of Heineken-owned Cervecería Cuauhtémoc Moctezuma - Carta Blanca, Bohemia, Dos Equis, Tecate and Sol (the latter brand is now imported by Molson Coors).

Kinda weird comment given the anti-AB attitude of the article. According to AB's US website Tap Into Your Beer, they market well over 125 different brands, domestic and imported, from "Bass Ale" to "Zeigenbock".

 

Don't worry, no one will even remember what Budweiser and Molson were once Amazon moves into the brewing industry...

 

That might be the scariest thing ever said on here...

 

Well, many of the self-distribution states allow out-of-state brewers to get wholesale licenses - that's how AB currently has WOD's in 9 or 10 states (last I checked). The only "craft" brewery that owned a wholesale license in another state that I recall was Brooklyn in Massachusetts (since sold).

AB has in recent years under InBev ownership, been buying and selling distributors - in some cases (Kentucky, IIRC) because the state changed the law. By agreement with the DoJ (maybe after buying Modelo?) they also agreed to keep/maintain the percentage of their own beer they distribute to around 10%.

(P. Ballantine & Sons, during their period as a Top Ten US brewery, owned wholesale operations, typically called "Branches" within the industry at the time, up and down the east coast, as far west as California.)

Coors has owned a handful of wholesalers over the years (CA, ID, WA a few others) - I think they're down to only one locally in CO.

But craft brewers who once were distributed via indie AB houses that were later bought by AB complained about being kicked out of wholesaler.

Coors Distributing Co. of Denver - "We are an LLC of Molson Coors Beverage Company" - OTOH distributes numerous other brewers' brands.

Again, that's usually based on the state's Franchise Laws (and, often, not even spelled out in the actual contract). Sorini's study discusses the changes many states are making to carve out exceptions for the small craft brewers. For instance, New York State law now allows:

Granted "compensation" is always gonna be a sticking point but it's worked the in the opposite direction for indie or MC distributors who once had the rights to AB's "captured craft brands". AB, however, has deep pockets.

 

Oh... I don't know. I could get used to next day or 2 day delivery (assuming the monopoly on distributor chokeholds disappeared).

 

I was thinking the only beer choices left would be Amazon Light or Amazon Ultra.

 

Where is there a "monopoly" of beer distribution? All a company's got to do is apply for a Federal Wholesaler License from the TTB and from their state's ABC - New York's for example. It's possible some states limit the number of licenses (the way some states or municipalities do for retailer licenses) but I've never heard of it.

And, as noted in posts above, over 30 states allow licensed breweries to self-distribute.

 

I might be a minority of one, in how I view this, but these big conglomerates were building thru their customers long before Diagio and the like showed their face, or craft brewers were even a thing. There’s other brewers now defunct or bought up into the umbrella that started on more or less equal footing long before I was born. They were successful, people liked their products and they voted with their wallets, and now they have the ability to control things more-so to their benefit. They can do this because they sell more beer and make more money than anyone else right now. Sure they can demand space and taps, but it’s not like they cheated in the beginning to get to this point, it took a hell of a lot of time and effort, and there’s a reason why Schaefer or Pabst isn’t in the drivers seats, they had the same opportunity back in the day when they were all equal and independently owned. Walmart destroyed small businesses, CVS destroyed smaller independent pharmacies, but we still use them, Amazon is destroying businesses as well, see it, buy it, in two days it’s on your doorstep. I’ve got no beef with AB or MC, but I’ve got no skin in the game either, but I rarely buy their products, and only because there are other options.

 

You’re definitely not in the minority. If you were, AB and MC wouldn’t be so powerful. You’re in the majority mate.

 

There's so many pieces of that puzzle that, if one were removed, would open things up to craft brewers.
- The part where a distribution agreement is permanent for the brewer, but the distro can drop at any time, or just sit on the brewer.
- the part where AB etc can own their own distros.
- the category captain
- laws against self-distro (at least locally, to get cross country you need someone somewhere else.)
- allowuing the AB INbev / SabMiller Coors merger in the first place,
I suppose I could keep going...

 

The way I view it is, it's one thing to have a large and successful business, it's another thing to then use that business to disadvantage the competition.

 

But Diageo, created when Grand Met and Guinness PLC merged in 1997, is older than either Molson Coors (merged in 2005) or AB-InBev (2008).

In the early 1960s, the F. & M. Schaefer Brewing Co., which self-distributed in NYC and much of the metro region* contracted with Anheuser-Busch to distribute Budweiser and Michelob in all the boroughs of the city (except for Staten Island) plus Nassau and Suffolk counties. Said Rudy Schaefer:

But, gee, Rudy, maybe their might be some drawback, even if you get to profit from the sale of AB beers, share transportation expenses and get a insider's view of their market?
.

 

Well, which is it?

• Legalize Self-Distribution
• Prohibit brewers from owning distributorships

There was no "AB INbev / SabMiller Coors" merger in the US. By previous agreement, SABMiller had to offer Molson Coors the ability to buy the portion of their joint venture US subsidiary MillerCoors that Molson Coors did not already own, which is what happened. ABInBev gained nothing in the US by puchasing SABMiller.

In addition, Molson Coors got permanent import rights to SABMiller's foreign brands, which in many cases they continue to own even after ABInBev had to sell off the breweries/brands to meet the regulators in other countries. For example, Molson Coors still imports Pilsner Urquell, even tho' ABInBev sold the brewery (along with numerous others like Tyskie, Kozel, Peroni and Grolsch) to the Japanese brewer, Asahi.

 

Why? If they do it better why should they be forced to do things that are not? They have share holders. It’s up to other businesses to up their game to compete. The competition is slanted now, but the original brewers who set their companies in business 140 years ago all started out equal with equal chances for success. There reward came thru customers making them successful, far from an overnight success.