Can Macro do Micro?

Discussion in 'Canada' started by Jerk_Store, Mar 30, 2016.

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  1. Jerk_Store

    Jerk_Store Initiate (0) Feb 13, 2015 Canada (QC)

    I've been thinking about this, with the Release of Molson's 1908, why couldn't Molson brew super high quality beer in very limited amounts. They certainly have the ressources.

    The business model has worked wonders for the likes of Nike, with their limited releases creating hype around the brand and keeping it from ever being watered down. Adidas has now followed since landing Kanye West, and, having kept a close eye on that, they're overtaking Nike in terms of hyped up releases and this is doing wonders for the brand overall. All of a sudden it becomes more appealing to athletes who in turn bring credibility to the product etc. Even in our beloved beer community, a quality product released in very limited quantities works extremely well. See how Auval shot out of a cannon last year! Goose Island does it with Bourbon County... Anything that requires work seeking out just does it (some people don't like it, but there's no denying it works).

    So, let's say if Molson we're to release an absolute beauty of a beer, something like Double Sip of Sunshine, a big bold barrel aged stout, something worthy of a 98-100 score on here, and was very limited, not sold at SAQ or LCBO, but small spots that carry crafts, not in every city, would you seek it out?

    And more importantly, as per the thread title, can macro do micro successfully?
     
    Borbly likes this.
  2. LarryAppleton

    LarryAppleton Initiate (0) Dec 1, 2012 Canada (QC)

    Yes, they can, but Im not sure they have any motivation too. What do they have to gain by selling a very limited amount of a beer? They are more likely to follow the inbev model of just buying existing micros, which Im sure they already do.
     
    thehyperduck likes this.
  3. Borbly

    Borbly Crusader (714) Aug 5, 2014 Canada ()

    I actually think they do have quite the motivation to embrace the craft revolution. Looking at batches like 1908, and the Rickard's Red IPA/Session Lager, they definitely seem to be seeking out innovation in beer. I would absolutely seek out more offerings by them, as they produce good quality with a great supply chain that reaches across Canada.
     
  4. thehyperduck

    thehyperduck Poo-Bah (5,226) Feb 26, 2006 Canada (ON)
    Society Trader

    This right here. There is less work and less risk (and likely more profit to be had) when buying up established micros. Buying out a craft brewer gives the macro corporation a library of established brands that already boasts a loyal customer base. The macro corp is simultaneously receiving a new, reliable stream of revenue, AND eliminating a competitor... and as a bonus, they don't have to waste resources trying to come up with a recipe that beer geeks will actually like. It's a win-win-win for them.

    It's not that macros are unable to make decent beer, and products like 1908 only strengthen that assertion. It's just that when you're a giant international umbrella corporation, handing a big burlap sack full of money to people who have already done most of the work for you is a more tempting option than expending the resources (and taking on the risk) involved in coming up with a totally new beer.

    And don't forget, there are plenty of craft beer fans eager to scorn/disparage/avoid anything with a macro name on the label, regardless of whether or not the product inside is decent. But beer geeks who are stubborn and/or 'principled' enough to outright stop purchasing a beer after it is bought out by a macro company? I'm not convinced that they are nearly as numerous, which, again, helps make the invention of new products a bit riskier than just usurping an existing one.
     
    #4 thehyperduck, Mar 31, 2016
    Last edited: Mar 31, 2016
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  5. Jerk_Store

    Jerk_Store Initiate (0) Feb 13, 2015 Canada (QC)

    The advantage I see is adding lots of credibility to the brand, i.e. Molson gets that cool factor that helps their other products flourish. Also, to your point, I don't think Canadians are as disgusted about Molson as the US is to Bud etc. That's why I see an opportunity for them here...

    They would have to be very careful with everything from label art to proper rollout, but I think it could be done. Even if they just release 4 beers a year that create an insane amount of hype, would do wonders.
     
  6. Borbly

    Borbly Crusader (714) Aug 5, 2014 Canada ()

    Absolutely. Personally, I don't even mind Molson beers to begin with, other than some being a bit watery. Improving the product with their own label would have much better effects than in the US, i.e. Rickard's Red IPA is actually pretty good and well-received, but I think people would cringe at Budweiser IPA.
     
  7. Jerk_Store

    Jerk_Store Initiate (0) Feb 13, 2015 Canada (QC)

    Exactly. I think they're so engrained in the Canadian fabric that it would actually be very welcomed by most.

    As for a previous comment on how the operation could be costly and not generate as much revenue, I agree, however, this investment should almost be considered as marketing costs. There's not better marketing for a brand than having people lining up and waiting for your product. So while it may not generate revenues and have you in the black at first, what it would do for the brand, its image and position in the market would be simply amazing.

    I hope someone at Molson is forward thinking enough for something like this. Just had a brief chat with someone in their marketing department and all he's telling me about is a Miller acquisition... Nice for the bottom line, not so much for the brand.
     
  8. westcoastbeergeek

    westcoastbeergeek Initiate (0) Sep 16, 2015 Canada (BC)

    Molson own's Granville Island Brewing, who also still brews craft beer locally in their on site brewery and it's decent stuff. They also brew the main line up at one of their regular breweries, so they have investments in craft that they can expand.
     
    Mlkluther likes this.
  9. Powers30

    Powers30 Initiate (0) Sep 1, 2014 Canada (NB)

    Here in Atlantic Canada we saw this with Moosehead boundary. It was not a limited brew but they really tried to make a mirco brew with macro resources.

    My biggest issue will always be the ingredients from the macro breweries. Beer does not need rice, corn, or preservatives. If they can move away from shelf life mindset they might be able to do some damage.
     
  10. BakaGaijin

    BakaGaijin Aspirant (275) May 20, 2014 Canada (ON)

    There is a great post on this matter in the AB Inbev buys Birra del Borgo thread. Here is the post:

    If this was truly how big business was able to operate, we'd live in a very very different world. I'm not sure I'm going to be able to explain this fully in the short time I have at the moment, but I'll try my best...

    Large, publicly traded commodity businesses operate under a very very different business model than smaller entrepreneurial companies. If for no other reason than because they must. They have a fiduciary duty to maximize shareholder value. Fail, and you're at the receiving end of shareholder lawsuits, and the leaders of the company don't get their bonuses...or even get the ax.

    Chasing share prices and quarterly earnings reports are a part of the business. One of the principle things of measurement is EBTDA and margins. Commodity is a high margin business (cheap to make, and sells for a pretty decent price...with a lot of marketing dedicated to consumer shaping perception in order to justify that price). Artisan businesses can often be lower margin business. They are not (generally) at risk of shareholder lawsuits, and operate on a pretty different plane of existence. They cannot ignore margins, but are not totally driven by them.

    Famously (well documented) once AB was acquired costs were slashed dramatically. This wasn't just in cutting out private jets, but also in productions costs. Overall volume has gone down. Overall profit has gone up. This was done by increasing margins.

    When you have a product on the corporate books that is low margin, it sticks out like a sore thumb. Managers are incentivized to fix it. They are incentivized with some kind of romantic notion to keep a brand "as good as it was." That's the job for the marketing department, not production. Production focuses on making it as cheaply as possible, and marketing focuses on telling you its as good as it ever was.

    I have a 15 year old half tube of Toms of Maine toothpaste (pre buyout) that I discovered when I helped my mother move recently. I still use the brand today. I thought the current stuff wasn't all that bad. Then I tried the 15 year old tube, and it is light years better than the current stuff. So much so I'm hoarding that blast from the past. I was surprised how far the current version had declined. It was difficult for me to be able to notice...boiling frog scenario.

    It's really really romantic to think that big companies even have the choice to "keep things as they were...because, you know, they'd be stupid not to." It's not one of the options available to that system as brand manager switches to another one and another one over the years, marketing comes up with ideas, production and accounting work to get margins in line, etc. etc.

    There's a reason why small entrepreneurial companies in just about ANY consumer product or service make the "good stuff." They have that choice. Big companies by and large do not.

    Homework assignment: Name a consumer product that was acquired 10 years ago that's "just as good as it always was." It's a challenge. If you think you know one, I ask: Are you sure? You sure that product had sorbitol on its ingredient list before it was bought by the big company? The boiling frog scenario doesn't just fool frogs. (It actually doesn't fool frogs at all, as they jump out, but it does fool people. Even me!)

    Cheers!
     
    PaulQuinn likes this.
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