Elysian and co. will see some increased distribution to fuel their volume growth. But where does this come from? With 3,000 breweries in operation and 2,000 more coming on line, available store and bar space certainly isn’t keeping pace. AB-InBev isn’t acquiring craft brands because it believes in the segment’s quality. They’re buying out craft breweries to capture shelf space and profits. Big Red is down and continuing to slide in sales. Coors Light is gaining market share on Bud Light and even out sells it in Oregon. AB-InBev’s former imports are in a steep decline. AB-InBev is losing valuable shelf real-estate. It needs some way to stem the flow; so they’re picking up brands they can take to stores and bars to capture their lost business. That business has to come from somewhere: the competition.The problem, of course, is that over the long term, the only way the new owners can keep such duplicative efforts rolling is to eventually slash staff and cut corners, with long-term consequences for the quality of the suds. (The author points to Goose Island's mainline product as an example of lowered standards.) And it's here that the comparison to dog food kicks in, because Mars alone is responsible for no fewer than eighteen brands of pet food (and rumored last December to be finalizing a purchase of Blue Buffalo), many of which were purchased for exactly the same reasons: the demand for shelf space. Of course, the arguments about quality are probably less compelling in this space — it's broadly lower to begin with, with the Friday night recall dump aimed at suppressing broad dissemination among the target PR outlets that might not get to it until Monday. But the pressures driving reduced cost and quality ingredients are identical.
The more brands AB-InBev has to take before retailers; the easier it is for them to decide against smaller and independent brands. And let’s face it, retailers don’t really want to deal with a million different vendors so if someone can bring them a whole host of products that will fulfill their needs, why should they care if they’re only supplied by one mega-conglomeration. Each brand AB-InBev can present is tap or shelf space they’re denying an independent competitor. Distributors and breweries are in a state of constant war when it comes to beer sets and tap handles; and the more weapons you have the more territory you can conquer.
Thursday, April 2, 2015
Why Craft Beer Is Like Dog Food
My friend Scott Templeman today mentioned that Yuengling is now the top craft beer in the US, which can be the case thanks to a relaxing of standards for what qualifies as "beer". Yuengling, which is still privately owned, cracked the top spot despite using corn and other "fillers" thanks to a relaxed definition from the Brewers Association. That got me going on a discussion about the relevance of ownership; Anheuser-Busch, whose signature Budweiser has never appealed to me (except in relation to even worse beers, e.g. Iron City), is now a part of the InBev monster based in Belgium. Thereupon I found this excellent rant on the topic from I Think About Beer, which I wanted highlight for an odd parallel in the dog world. It's no secret that Budweiser's market share is in decline, possibly terminally; last year, more Americans drank craft beer than Budweiser, and wine and spirits are eroding beer's popularity. To fight back, InBev has been obliged to buy every craft brewer it can get its mitts on. The hook for the independent craft beer brewer, as ever, is the ease of distribution once they get bought by the powerhouse, but ...