News U.S. Challenges AB-InBev's Purchase of Grupo Modelo

Discussion in 'Beer News & Releases' started by jesskidden, Jan 31, 2013.

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  1. jesskidden

    jesskidden Meyvn (1,195) Aug 10, 2005 New Jersey

    Pretty surprising - most speculation in the industry and on Wall St. was that the Feds were going to allow the purchase to go through, given the deal to sell the rights to the brands - Corona and others - in the US to the current US importer, Crown (owned by Constellation Brands).

    acevenom, MilkManX and LostTraveler like this.
  2. avalonct

    avalonct Initiate (0) Oct 11, 2012 Michigan

  3. otispdriftwood

    otispdriftwood Crusader (736) Dec 9, 2011 Colorado
    Subscriber Beer Trader

    Perhaps the times they are a changin'. Are there some serious beer drinkers in the Justice Dept. these days?
  4. frazbri

    frazbri Defender (620) Oct 29, 2003 Ohio

    Interesting news. I wonder why the DOJ finally made a move?
  5. Northlax3

    Northlax3 Initiate (85) Aug 19, 2012 New Jersey
    Beer Trader

    I'm glad. Even though I dont buy bud, AB could raise prices of all their brands, as well as eliminate a major competitor. Not good for the industry as a whole.

    IN-BEV is "shopping" for more craft brands as well. Interesting tweet by a Lagunitas rep here:


    I know AB has pressured other brands to go year round and to expand their distribution. Interesting how AB wants even more craft beer under their brand.
    luwak and pghlee like this.
  6. jcb7472

    jcb7472 Devotee (478) Jul 13, 2011 Florida
    Beer Trader

    Interesting that the reason they blocked the deal is to prevent AB InBev from raising beer prices on consumers. If AB InBev raised the prices of their crap beers to US consumers, wouldn't more people just buy craft beer, since it would be even more similar in price? Or do you guys think it would end up raising beer prices across the board? Or is this a bogus assumption that InBev's takeover of Modelo would raise beer prices to the consumer? To me, I'm glad they blocked the deal because I didn't want InBev taking over more of the market, even though I have already been boycotting them and refuse to purchase any brand they own or partially own.
    rafa2298 and Prospero like this.
  7. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    My guess is a settlement will be reached, but it will involve ABInbev getting rid of the right to buy Constellation down the road (10 years?) that was included in the deal to sell them the importation rights to Modelo. I saw something a week or so ago that that might be a sticking point.

    Having a right to purchase down the road "encourages" Constellation to act in a way that makes ABInbev happy.
  8. jacob4999

    jacob4999 Initiate (0) Dec 9, 2008 Michigan

    Was going to post the exact same thing. Bud Light - $9.99 a six pack. lol
    Prospero likes this.
  9. leedorham

    leedorham Defender (696) Apr 27, 2006 Washington

    Cue all the posts saying how much better Lagunitas would be with a big powerful corporation behind them.
    greybeardloon likes this.
  10. jmw

    jmw Initiate (0) Feb 4, 2009 North Carolina

    No, people would just pay more for AB-Inbev products. You make the assumption that the majority of BMC drinkers do so only because it's cheaper, and that's a fallacy. They just prefer it. Non-BMC/craft beer is not an exclusive club that everyone wants into, but only some can afford to join. That's hubris.
    guillemiro and mfdish like this.
  11. leedorham

    leedorham Defender (696) Apr 27, 2006 Washington

    Then how do I join hubris?
  12. jesskidden

    jesskidden Meyvn (1,195) Aug 10, 2005 New Jersey

    Yeah, I saw speculation that the Feds might require dropping that clause, as well as other analysts (well, "speculators") imagining they might also require AB in the US to sell off a brewery or some brands (I thought an appropriate deal would be selling the "Busch" brands to all these Busch family members who are getting their toes wet re-entering the industry with Wm. Busch Brewing Co. or the other one buying into Idaho's Salmon River Brewing Co. ).

    There was even a guess that a "deal breaker" would be requiring AB to sell some modern new HUGE Modelo brewery in Piedras Negras, Nava (10m. hl. capacity) right over the Texas border that was seen as one of prize jewels of buying G.M. in the first place. Of course, they problem with selling breweries or even brands is - Who's going to buy them? Who's got that kind of money?

    But if that's all the Feds wanted - dropping the right to buy Crown after 10 years - you'd think ABI would just agree to it and the deal would go through (similar to deal to sell off Labatt brand in the US when the AB-InBev deal went down). Instead a lawsuit is going to be necessary, costing them time and money.
  13. jacob4999

    jacob4999 Initiate (0) Dec 9, 2008 Michigan

    I'm going to disagree with you just a little bit. I have a lot of customers that come in everyday and buy bud light, natty light, etc.. and I've talked to them about it and most of the responses I get are "I like that good beer but I just can't afford to drink it on a daily basis". Now I'm not saying this is absolute for everyone, maybe just an exception to what you said but it is out there.
  14. jcb7472

    jcb7472 Devotee (478) Jul 13, 2011 Florida
    Beer Trader

    Yeah I think a lot of BMC drinkers prefer Bud, Miller, etc to craft beer and will still keep buying it, even if it costs more. That being said, I think there is a decent amount of BMC drinkers that drink it mostly because it's the cheapest. They might think twice about buying it vs. craft if it's practically the same price. Think college students...when I was in college we drank BMC beers mostly because we could all chip in the least amount of money and get the largest quantity of beer. I preferred the good stuff, but just couldn't afford to buy craft all the time when I was a broke student.
    jacob4999 likes this.
  15. JackHorzempa

    JackHorzempa Poo-Bah (2,686) Dec 15, 2005 Pennsylvania

    Would your customers be willing to drink a PBR at cheap prices if the AB beer went up in price?

  16. leedorham

    leedorham Defender (696) Apr 27, 2006 Washington

    This is the case with many of my friends/coworkers who drink the cheap stuff. They fully acknowledge the beer they buy tastes like shit. They just don't care.
    jacob4999 likes this.
  17. jacob4999

    jacob4999 Initiate (0) Dec 9, 2008 Michigan

    Hell if I know as I don't sell PBR. Like I said this is probably the exception to the rule but just pointing out that's it's out there. All in all if you're a BMC guy, you're poor and you want to drink a beer I'm sure you'll buy whatever you have the money for.
  18. JackHorzempa

    JackHorzempa Poo-Bah (2,686) Dec 15, 2005 Pennsylvania

    “They fully acknowledge the beer they buy tastes like shit.” Is this something that they just say to you or do you really think they think it tastes like shit?

    My personal issue with AAL beers is not so much that they taste ‘bad’ but that they are bland and insipid; it other words they are tasteless vs. tasting ‘bad’.

  19. leedorham

    leedorham Defender (696) Apr 27, 2006 Washington

    A good paraphrase of most of the stuff I hear would be "It tastes like shit, but it gets the job done" so yeah, they are saying that.
  20. JackHorzempa

    JackHorzempa Poo-Bah (2,686) Dec 15, 2005 Pennsylvania

    Weird!?! I would never refer to something that I willingly purchased to drink (or eat) as tasting like shit.

    Mainstream beer drinkers are strange!?!:confused:

  21. jacob4999

    jacob4999 Initiate (0) Dec 9, 2008 Michigan

    Wouldn't say they're strange just that a lot of people don't give a shit what beer tastes like they just buy it for the sole purpose of getting drunk. Why do you think things like four loco, Magnum and Steel Reserve exist? It's not because they taste good.
  22. beerme411

    beerme411 Initiate (0) Sep 28, 2010 California

    I've been reading the comments on the different articles (mainly New York Times and Wall Street Journal) about how they think this is obamacare nanny state stepping into our beer when there are bigger fish to fry. Since they are so many other options even obama has his own beer and the craft breweries are growing so what's the big deal. With other mergers that they failed to block or what not and how AB-Inbev already owns 50%(they only have 43% in modelo group voting so it's non-controlling). Considering the change is from 43% to 46% of the total market that doesn't seem like much, However...

    Considering the three-tiers distribution and the ability of MillerCoors and AB-Inbev to push out the smaller guys is already pretty bad and I fear this just makes it worse and harder for new and existing small breweries to get into and stay viable in the market because they wont be allowed to sell enough product even if there is plenty of demand.

    Also I worry about how the merger will effect the price of ingredients as the larger breweries could be able to increase the price of all beer by messing with this. I'm not sure that will happen but I'm concerned about how this effect Non MC and ABI beers that could be pushed further out of the market by forcing them to have to increase their price through increased distribution costs, ingredient costs, less shelf space, and restricting overall distribution.

    Why don't normal (that doesn't include us) beer drinkers understand that the merger could further hurt small buisnesses in the industry? or perhaps I'm overreacting, which I hope so if the DOJ fails to stop it
  23. JackHorzempa

    JackHorzempa Poo-Bah (2,686) Dec 15, 2005 Pennsylvania

    Well, I don’t know a lot on this topic but I will express my thoughts anyway.

    I have always associated drinks like four loco with stupid teenagers just looking for a buzz.

    I have associated AAL drinkers (my father was an AAL drinker for much of his long life) with just thinking that beer = bland drink and that was OK with them. When my father drank his Piels beer it was not to get plastered. I also don’t think I ever heard my father say “my beer tastes like shit”.

    I was an AAL drinker when I was a teenager and young adult. I didn’t know anything about craft beer (that terminology was not invented yet). I drank Rolling Rock, PBR, Schmidts, etc. I would never have describe those beers as being tasty but I never used the word “shit” to describe those beers either.

    Today I solely drink craft beer and not to sound like a snob or anything but I don’t have friends that drink AAL beers. After participating in the past few posts I don’t know whether I would want to ‘hang out’ with AAL drinkers if there thought process is: I like to drink shit.

  24. jacob4999

    jacob4999 Initiate (0) Dec 9, 2008 Michigan

    I think that in the "mainstream" alcoholic beverages are viewed as "I drink this, I get drunk which makes me feel good and I don't really care what it tastes like". But I also think that, as long as it's not completely vile, if you keep drinking something you're going to train your mind to like it sooner or later. For instance when I first got into good beer years ago I hated Ipa's. Now they are my normal drinking beer and I love them. But on the other hand I completely despise sours and don't think I'll ever like them. And I've tried to, trust me. But just because I think Beatification tastes like shit doesn't mean I'll judge someone that loves it. Different strokes and all that.

    If you've always drank AAL your whole life and have no desire to try anything else then that's what you will stick with no matter how you feel about it's taste. Doesn't make you a bad person. Humans fear change more then death.
  25. JackHorzempa

    JackHorzempa Poo-Bah (2,686) Dec 15, 2005 Pennsylvania

    I understand what you are saying. There is indeed a ‘school of thought’ that people drink AALs because they don’t know any better.

    In a past thread I offered a differing opinion in that I think the beer market is market driven:

    “I think the flooding of mass produced beer altered peoples' taste so they now prefer the mass produced beer, because that's what beer is expected to taste like.”

    Permit me to provide an alternative explanation. The vast majority of beer drinkers actually prefer to drink bland beers. Breweries like Anheuser-Busch and MillerCoors are actually producing product that people prefer to buy and drink.

    Think about the relatively recent development of Light beer. Miller introduced Miller Lite in the 70’s. They had all kinds of interesting advertisements using macho sports figures and the ubiquitous “Tastes Great – Less Filling” ads. Is the American public truly that gullible that they will consume whatever is presented to them or is the real explanation that the vast majority of beer drinkers actually prefer bland products and the BMC companies provide it to them? I believe that the mainstream beer market is a customer driven market and the mega-brewers are going to provide what the masses want to drink.

  26. jacob4999

    jacob4999 Initiate (0) Dec 9, 2008 Michigan

    You hit it on the head 100%. Good conversation Jack!

  27. JackHorzempa

    JackHorzempa Poo-Bah (2,686) Dec 15, 2005 Pennsylvania

    Back atcha!

    jacob4999 likes this.
  28. jesskidden

    jesskidden Meyvn (1,195) Aug 10, 2005 New Jersey

    It was Republican Eisenhower's administration that filed an anti-trust suit against AB's purchase of the American Brewing Co. in Miami (back when AB had under 10% of the US market), and Pabst's merger with Blatz back in the late 1950's. Both deals were eventually knocked down- AB sold the brewery to Carling and Pabst had to sell the Blatz brand to Heileman.

    The Reagan administration prevented the Heileman-Schlitz and the Pabst-Heileman merger attempts in the early '80's, and fear that Busch I's administration would probably oppose a rumored Coors-Stroh merger in the late '80's that nixed that one.
  29. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    You know how I know you spend too much time commenting on beer?
  30. Crusader

    Crusader Initiate (185) Feb 4, 2011 Sweden

    Granted I haven't had more than a handful of the American macros and AALs, Bud, MGD, PBR and Coors light, but none of them strike me as foul tasting. This saturday I had the three regular beers that are sold here and what striked me about them was their muted flavor, not the presence of any foulness. I had all three at room temperature as well, something which can be a problem with some of the Swedish macro pale lagers that start to display obvious diacetyl-notes unless drunk ice cold. That's the one thing I can say for the AALs I've had, I don't get any bad flavors out of them. There could be worse ones sold in the US of course since I've had mostly the "premium" brands. The cheaper pale lager brands here tend to display more off-flavors although it's more dependent on the brewery if anything (the smaller macro breweries here are focused on selling budget beers which are major sellers via the monopoly, and alot of their beers tend to have either weird musty notes or diacetyl notes to them). We get alot of Danish imports via "informal channels" (mostly via personal cross-border shopping), the basic Danish import is a corn adjunct lager of a low IBU and higher than average abv around 5.8% (basically what you would call malt liquor) that can be rather nasty tasting, at best they are mild and inoffensive with a watery taste and some sweetness.

    So those are my reference points that I compare against when drinking AALs. I don't find it strange that people in the US would enjoy drinking AALs if all they want is a cold beverage that is refreshing and mildly alcoholic. There are some people who dislike beer but drink it anyway, I had a friend a few years back who hated beer but forced himself to drink it until he eventually "liked it". But mostly I come across people who have a clear preference for certain pale lager brands, perhaps combined with a disdain for other pale lager brands. Which I understand since they don't all taste the same, there are over a hundred different pale lager brands sold via the monopoly here and I must have had upwards of a 100 or more, with the exception of the extra strong beer brands at 7% and above that I have no interest in, over the course of my beer drinking years. There is quite a bit of difference inbetween the different brands if one looks at it from a style perspective, and so I fully understand why people end up having favorite brands within this style of beer, and why they dislike some of them intensly (there are maybe a handful of brands among those 100 that I will not pay money for again and would turn down if offered to me).

    I would say though that there are more noticable differences in taste between different European lagers than I have encountered among the albeit small sample of American adjunct lagers. Perhaps if more of the regional breweries had survived and had continued to produce their version of AALs, and I had the opportunity to try them, I might come away with a different point of view in this respect.
  31. jesskidden

    jesskidden Meyvn (1,195) Aug 10, 2005 New Jersey

    :eek: You know, that did look funny but I just chalked it up to usually hearing the 41st President called that rather than seeing it in print. ;) That's right, "Bush" - like the beans, not like the beer.
  32. UCLABrewN84

    UCLABrewN84 Poo-Bah (11,912) Mar 18, 2010 California

    Was Goose Island viewed as a brewery that would never sell out? Lagunitas seems like it to me but you never know.
  33. JackHorzempa

    JackHorzempa Poo-Bah (2,686) Dec 15, 2005 Pennsylvania

    “That's the one thing I can say for the AALs I've had, I don't get any bad flavors out of them. There could be worse ones sold in the US of course since I've had mostly the "premium" brands.”

    Patrik, this is going to make me sound like a beer snob but it has been a loooooong time since I had a ‘regular’ AAL. I did post to hopfenunmaltz very recently concerning Rolling Rock:

    “Jeff, that is too funny. Rolling Rock was my beer of choice prior to jumping into the craft beer pool. When I drank it I didn’t know that if was a ‘faulty’ beer with all of that DMS. For me it was a tasty beer simply because it was different. When I started homebrewing I had a ‘deal’ with my father where he would drink Rolling Rock out of returnable bottles and he would save the bottle for me. I still have a lot of Rolling Rock returnable bottles that I use for bottling my homebrews.

    Have you had a Rolling Rock recently? I was at a party either last summer (or two summers ago) and somebody brought Rolling Rock to the party. I decided to drink one for ‘old times’. That beer was a disappointment. I am unsure whether it is because I have ‘moved on’ or whether the AB brewing of this beer is sub-par.”

    So, to your comment/question on whether there are “worse” AALs I am very unsure how to respond. I would guess that there are “worse” AALs but I really can’t name names. Most of what I post about AALs is based upon past history (the majority of my AAL drinking days are decades ago). I do recall having a Coors Light about 3-4 years ago when I was eating Buffalo Chicken Wings (which are spicy). I guess I could have just ordered a glass of water but I ordered a bottle of Coors Light instead; some BAs would say that I did order a water with that bottle of Coors Light.

    Maybe some other better informed BAs can comment on the “worse” AAL aspect.

  34. Crusader

    Crusader Initiate (185) Feb 4, 2011 Sweden

    That's perfectly fine by me :p . I'm of the sentiment that people should drink what they enjoy and I don't see the conflict inbetween macro lagers and craft beer. I simply see craft beer as an alternative, a necessary alternative which alot of people prefer, and we're all better off for it since we now have more choices and options to choose from, even if most people only make use of this diversity sparingly or not at all. At least it's out there and available to them if they change their mind. I know I enjoy them both.

    Well my post was mostly in response to the "it tastes like shit" sentiment which I'm similarly surprised to see people having encountered, considering the mild taste and absence of foulness which I have experienced in AALs. But I channeled it via your post which made it seem as though I was positing myself in contrast to your post I guess.
  35. JackHorzempa

    JackHorzempa Poo-Bah (2,686) Dec 15, 2005 Pennsylvania

    Patrik, I forgot that I bought a case of Schlitz 1960’s Formula beer a couple of summers ago. It is technically an AAL but is was quite tasty for an AAL. It is brewed based upon how Schlitz beer was made circa 1960. It is more heavily hopped than a present day AAL and it has less adjunct than a present day AAL. I have not seen this beer at beer stores in ages (over a year). I am guessing that Pabst is no longer brewing this beer. What a shame since it is an AAL that is actually enjoyable to drink.


  36. herrburgess

    herrburgess Savant (999) Nov 4, 2009 South Carolina
    Industry Beer Trader

    And the flavor they most likely are objecting to? I'd wager bitterness. Or do you think it's the DMS/maize that they're picking up?
  37. cavedave

    cavedave Poo-Bah (2,113) Mar 12, 2009 New York
    Beer Trader

    I know it's been mentioned by others but I also am one of the folks who really enjoys Batch 19, and I don't usually enjoy American Lagers nowadays. Wish that had been around when I was younger drinking Bud.

    I predict American brewed better beer will plateau at about 12% of beer drinkers by sales, by volume maybe 10%. There are many many folks who love all that there is to love about AAL's, not just in USA, but globally. Just is.
  38. Frankinstiener

    Frankinstiener Initiate (0) Jul 28, 2009 Illinois
    Beer Trader

    BUD share dipped 6% today. I might snag a few in the morning if it goes any lower, then sell them when it gets back towards the top of it's envelope most likely when earnings are released.
  39. Crusader

    Crusader Initiate (185) Feb 4, 2011 Sweden

    The Swedish importer of PBR Export also carries "Schlitz Premium Lager" (both at 4.5% instead of their original strenghts to be able to win a monopoly tender, since PBR is high gravity brewed I guess that means that both are simply watered down a bit more to reach the required abv), the latter didn't win a place on the shelves but is available if one orders a full case. I've been tempted to get it, and perhaps I should make a move rather soon if there is a risk that they will stop brewing it due to poor sales. I haven't read about it becoming the kind of underground sales-hit that PBR has (due in part to a different target audience perhaps, the nostalgic buyers rather than the hip/young market).
  40. jesskidden

    jesskidden Meyvn (1,195) Aug 10, 2005 New Jersey

    Widmer bought into Goose Island in 2006 - at the time, AB owned about 40% of Widmer. So, GI and AB had business connections half a decade before the 100% outright purchase.

    Once Widmer and Redhook merged to form Craft Brewers Alliance, CBA was said to own 40% of GI, which is why it was no longer considered "craft" under the Brewers Association definition. When AB bought GI, they purchased both CBA's and Hall's portions of he company (giving CBA some nice pocket change).
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