Big Brewers

Diageo’s Anti-Competitive Bullying Tactics Revealed

by Jay Brooks on May 9, 2012 · 2 comments

in Breweries,Editorial,News,Politics & Law

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Wow! Just wow. Anyone paying attention knows that the corporate world doesn’t like to play fair if they can get away with it, and they usually can. They bigger they are, the more resources they command, the easier it is to bully, cajole and generally get their way. It gives them an unfair advantage, of course, but that’s the way of the world, from the playground bully to the largest multi-national. Obviously, that behavior is not restricted to the alcohol industry, but since that’s the world I’m most familiar with, that’s where I see it the most. From free t-shirts, tickets to the 49ers and even free kegs, it’s been an underlying current in the beer business for at least the twenty years I’ve been paying attention to it, and undoubtedly far longer. It’s one of those things that everybody knows about but few people talk about openly. But this one is pretty hard to ignore.

This past weekend, while much of the beer world was listening to the World Beer Cup awards being announced, over the pond in Glasgow, Scotland, another award show was taking place. This one was the 2012 British Institute of Innkeeping Scotland Annual Awards, which celebrates “success in the license [pub] trade in Scotland.” BrewDog, whose pubs have been making quite a splash, were up for the “Bar Operator of the Year” award. When it came time for the announcement, the award went to another company. But one of the BII judges was seated at the BrewDog table and cried foul. According to BrewDog’s blog, the surprised judge said “this simply cannot be, the independent judging panel voted for BrewDog as clear winners of the award.” When the alternate winner went up on stage to accept the award, they found that “BrewDog” had already been engraved on the award and refused to accept it.

Yesterday, BrewDog received a call from the BII explaining where and how things went awry:

We are all ashamed and embarrassed about what happened. The awards have to be an independent process and BrewDog were the clear winner.

Diageo (the main sponsor) approached us at the start of the meal and said under no circumstances could the award be given to BrewDog. They said if this happened they would pull their sponsorship from all future BII events and their representatives would not present any of the awards on the evening.

We were as gobsmacked as you by Diageo’s behaviour. We made the wrong decision under extreme pressure. We were blackmailed and bullied by Diageo. We should have stuck to our guns and gave the award to BrewDog.

Wow, right? I give credit to the BII for at least admitting what happened and taking whatever consequences will likely come their way. Diageo, on the other hand, is claiming it was a “rogue agent,” an employee who went too far. The makers of Guinness released this statement today:

Diageo has provided the following statement in response to communications from independent brewer, BrewDog, in relation to the British Institute of Innkeeping Scottish Awards on Sunday 6 May 2012.

A Diageo spokesperson: “There was a serious misjudgement by Diageo staff at the awards dinner on Sunday evening in relation to the Bar Operator of the Year Award, which does not reflect in any way Diageo’s corporate values and behaviour.

We would like to apologise unreservedly to BrewDog and to the British Institute of Innkeeping for this error of judgement and we will be contacting both organisations imminently to express our regret for this unfortunate incident.”

So somebody probably had to fall on their sword and be the patsy for what is more likely business as usual. Pete Brown asked Diageo for a statement, and they responded with the same one that now appears on their website. Pete also added the following:

I’ve got more to say about the increasingly shameless bullying and anticompetitive tactics employed by some (but not all) big brewers, but this one really takes the biscuit. Diageo, having been caught red handed, had no option but to blame it on a rogue element, and we must take them at their word. But does this reveal something deeper about the attitudes of some global brewing corporations?

Since he’s closer to the British (and Scottish) beer business than I am, it will be interesting to hear his take on things in the near future as he promised to expound on this incident and talk about the larger issue of institutionalized influence by the global beer companies. But still, I can’t help but shake my head and just keep repeating, “wow.”

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The Top 50 Annotated 2011

by Jay Brooks on April 17, 2012 · 7 comments

in Breweries,Editorial,News

This is my sixth annual annotated list of the Top 50 so you can see who moved up and down, who was new to the list and who dropped off. So here is this year’s list again annotated with how they changed compared to last year.

Anheuser-Busch InBev; #1 last six years, no surprises
MillerCoors; ditto for #2
Pabst Brewing; ditto for #3
D. G. Yuengling and Son; Same as last year
Boston Beer Co.; Same as last year
North American Breweries; 2nd year on the list, up 2 from #8 last year
Sierra Nevada Brewing; Down 1 from #6 last year
New Belgium Brewing; Down 1 from #7 last year
Craft Brewers Alliance; Same as last year, after dipping down 1 the previous two years
Gambrinus Company; Same as last year, though now listed as Gambrinus instead of Spoetzl
Deschutes Brewery; Same as last year
Matt Brewing; Up 1, after moving down 1 last year
Bell’s Brewery; Up 2 from #15 last year
Minhas Craft Brewery; Same as last year, after dropping 2 the prior year
Harpoon Brewery; Up 1 from #16 last year
Lagunitas Brewing; Jumped up 10 from #26 last year, their second such jump in 2 years, having been at #36 two years back
Boulevard Brewing; Same as last year
Stone Brewing; Up 5 from #23 last year
Dogfish Head Craft Brewery; Same as last year, after shooting up 5 from #24 last year, being up 9, 5 and 4 the three previous years
Brooklyn Brewery; Up 5 from #25 last year
Alaskan Brewing; Down 1 from #20 last year
Long Trail Brewing; Down 1 from #21 last year, after leaping up 14 from #35 the previous year
August Schell Brewing; Down 1 from last year
Shipyard Brewing; Up 4 from #28 last year
Abita Brewing; Down 1 from last year
World Brew/Winery Exchange; Up 11 from #37 last year
Great Lakes Brewing; Up 4 from #31 last year
New Glarus Brewing; Up 2 from #30 last year
Full Sail Brewing; Down 2 from #27 last year
Pittsburgh Brewing (fka Iron City); Up 3 from #33 last year
Summit Brewing; Down 2 from #29
Anchor Brewing; Same as last year
Firestone Walker Brewing; Up 3 from #36 last year
Cold Spring Brewing; Jumped up 13 from #47 last year
SweetWater Brewing; Up 3 from #38 last year
Rogue Ales Brewery; Down 1 from #35 last year
Mendocino Brewing; Up 2 from #39 last year
Flying Dog Brewery; Up 2 from #40 last year
Victory Brewing; Up 2 from #41 last year
CraftWorks Breweries & Restaurants (Gordon Biersch/Rock Bottom); Now combined, last year Gordon Biersch brewpubs were #42 and Rock Bottom was #48
Oskar Blues Brewing; Up 8 from #49 last year
Odell Brewing; Up 3 from #45 last year
Stevens Point Brewery; Up 1 from #44 last year
Ninkasi Brewing; Not in Top 50 last year
BJs Restaurant & Brewery; Down 2 from #45 last year
Blue Point Brewing; Not in Top 50 last year
Bear Republic Brewing; Not in Top 50 last year
Goose Island Beer; Plummeted 30 from #18 last year, after selling their production brewery to Anheuser-Busch InBev
Lost Coast Brewery; Not in Top 50 last year
Narragansett Brewing; Not in Top 50 last year

Some new companies made the list, one from a merger — Gordon Biersch and Rock Bottom — now CraftWorks Breweries & Restaurants, along with Bear Republic, Blue Point, Lost Coast (which had been on the list two years ago), Narragansett and Ninkasi.

Off the list was Straub, Independent Brewers United (IBU), which was swallowed up by North American Breweries, Kona Brewing, which was folded into the Craft Brewers Alliance, and individually Gordon Biersch and Rock Bottom were combined into CraftWorks Breweries & Restaurants.

If you want to see the previous annotated lists for comparison, here is 2010, 2009, 2008, 2007 and 2006.

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Top 50 Breweries For 2011

by Jay Brooks on April 17, 2012 · 0 comments

in Breweries,News

The Brewers Association has also just announced the top 50 breweries in the U.S. based on sales, by volume, for 2011. This includes all breweries, regardless of size or other parameters. Here is the new list:

Anheuser-Busch InBev; St Louis MO
MillerCoors; Chicago IL
Pabst Brewing; Woodridge IL
D. G. Yuengling and Son; Pottsville PA
Boston Beer Co.; Boston MA
North American Breweries; Rochester, NY
Sierra Nevada Brewing; Chico CA
New Belgium Brewing; Fort Collins CO
Craft Brewers Alliance, Inc.; Portland, OR
Gambrinus Company; San Antonio TX
Deschutes Brewery; Bend OR
Matt Brewing; Utica NY
Bell’s Brewery; Galesburg MI
Minhas Craft Brewery; Monroe WI
Harpoon Brewery; Boston, MA
Lagunitas Brewing; Petaluma CA
Boulevard Brewing; Kansas City MO
Stone Brewing; Escondido CA
Dogfish Head Craft Brewery; Lewes DE
Brooklyn Brewery; Brooklyn NY
Alaskan Brewing; Juneau AK
Long Trail Brewing; Burlington VT
August Schell Brewing; New Ulm MN
Shipyard Brewing; Portland ME
Abita Brewing; New Orleans LA
World Brews/Winery Exchange; Novato CA
Great Lakes Brewing; Cleveland OH
New Glarus Brewing; New Glarus WI
Full Sail Brewing; Hood River OR
Pittsburgh Brewing; Pittsburgh PA
Summit Brewing; Saint Paul MN
Anchor Brewing; San Francisco CA
Firestone Walker Brewing; Paso Robles CA
Cold Spring Brewing; Cold Spring MN
SweetWater Brewing; Atlanta GA
Rogue Ales Brewery; Newport OR
Mendocino Brewing; Ukiah CA
Flying Dog Brewery; Frederick MD
Victory Brewing; Downington PA
CraftWorks Breweries & Restaurants (Gordon Biersch/Rock Bottom); Chattanooga TN/Louisville KY
Oskar Blues Brewery; Longmont CO
Odell Brewing; Fort Collins CO
Stevens Point Brewery; Stevens Point WI
Ninkasi Brewing; Eugene OR
BJs Restaurant & Brewery; Huntington Beach CA
Blue Point Brewing; Patchogue NY
Bear Republic Brewing; Cloverdale CA
Goose Island Beer; Chicago IL
Lost Coast Brewery; Eureka CA
Narragansett Brewing; Providence RI

Here is this year’s press release.

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Big Changes At A-B InBev

by Jay Brooks on January 23, 2012 · 8 comments

in Breweries,Editorial,News

Wow, there’s a lot going over at Anheuser-Busch InBev, and besides the slip in sales of their core brands. Last week, rumors abounded that ABI was planning to roll out some version of 100% Share of Mind, which had been the “unofficial” policy until a few years ago, when it became unworkable. I wrote about it four years ago as it started to wane in Losing Their Share of Mind, and you can get the history and background of the policy there, assuming you’re unfamiliar with it. In a nutshell, A-B insisted that their distributors focus ONLY on A-B and A-B-related brands, and there were ways they had for dealing with those distributors that didn’t toe the line. And it worked well enough while A-B brands were selling well, but when they began to slip, it became harder to enforce and harder for distributors to remain profitable without taking on non-A-B brands, especially craft brands.

According to Beer Business Daily, ABI “is again turning up the leverage with Sales Opportunity Teams starting next week.” Apparently “Sales Opportunity Teams” (SOT) is the new buzzword for it this time around. They continued:

The SOTs, which A-B chief Dave Peacock has repeatedly said are not punitive in nature, will certainly be uncomfortable for distributors with growing competing brands in the house, as they try to explain this or that competing display or tap handle on the floor.

It’s got to be even harder this time, with craft beer riding a wave, with great growth, higher rings and consequently more profits. Sell less, make more. Hard to walk away from that, but of course having the best-selling brands is also pretty attractive, too. So what’s a distributor to do?

Today, the other shoe dropped, as Anheuser-Busch President Dave Peacock — and the last of the pre-InBev top executives — resigned effective today. According to ProBrewer

Peacock was one of the few remaining high-level holdovers who had stayed with the company after it was acquired in 2008 by InBev. He was only one of two non-Busch family members to hold the title of CEO.

Peacock is well liked by wholesalers and is known as reasonable, fair and an advocate for the second tier. The latest pressure on wholesalers by InBevAB may certainly have prompted Peacocks departure.

Peacock began his career at A-B in 1992 and was promoted to president in 2008 in the wake of the acquisition after serving as VP-marketing since late 2007. Many U.S. executives departed after the InBev takeover, but Peacock was handpicked by the new owners to lead the U.S. operation.

Harry Schuhmacher, in his Beer Business Daily, broke the news this morning, calling it “a watershed moment in the history of A-B since its acquisition by InBev.”

Coincidence? Hard to imagine the two developments are completely unrelated, especially since Beer Business Daily, presumably working from a press release, states he’s leaving “to spend more time with his family and pursue other business interests.” I’m always more than a little suspicious when that’s the official reason for leaving, as it so often is in circumstances like this one.

Peacock is succeeded by Luiz Fernando Edmond, who until today was the Zone President of North America. Oh, and Bud Light Platinum is coming soon, in the cobalt blue bottle, and should be on store shelves as early as this week. They’re calling it a “game changer,” but I tend to think these other two developments will change the beer landscape far more than a Bud Light line extension.

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Coors Light: Now The Avis Of Beers

by Jay Brooks on January 14, 2012 · 2 comments

in Beers,Breweries,Just For Fun,News

I’m not exactly sure why this appears to be such big news, but it seems to be everywhere. Beer Marketer’s Insights is reporting that, based upon estimated numbers for 2011, Coors Light has overtaken Budweiser to become the 2nd best-selling beer in America. According to the report, “[t]his is the first time in almost 20 years, since 1993, that AB didn’t have top 2 brands.” But I note that according to IRI data, Miller Lite held the #2 spot at least as recently as 2007. Though to be fair, it’s true that Bud Light and Budweiser have enjoyed the top two spots, if off and on, for quite some time.

But the story isn’t so much about Coors Light being up (they were, but only 0.8%). What’s more interesting is that Budweiser was down 4.6%, which had more to do with the switch in positions. InBev seems to be struggling with the A-B core brands ever since they took over Anheuser-Busch. It can’t help that they’ve laid off countless employes, bullied suppliers and lost a great deal of goodwill through their cost-cutting way of doing business. They don’t seem to have the same relationship with consumers that the company did when it was run by the Busch family. And while the big breweries are losing ground to craft beer overall, ABI seems to losing more. So it makes sense that another brand would pick up the slack, catapulting Coors Light into the number two position, a spot Avis once upon a time used to great effect in their advertising. Maybe we’ll see Coors do something similar. “Coors Light is No. 2 in beer. We try harder.“

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Ownership Of Beer Brands & Varieties 2010

by Jay Brooks on December 18, 2011 · 0 comments

in Beers,Breweries,Just For Fun

A couple of years ago, shortly after Anat Baron released her film Beer Wars, people kept asking her which big beer companies owned which beer brands. In December 2009, she put together a list of Who owns what? That inspired to me took take a closer look myself, and that produced my own list, The Bigs Brewers’ Brands. At the time, I had hoped to keep it current, but that’s proved too time-consuming a task and it hasn’t been updated since December 4, 2009.

Now Philip H. Howard, an assistant professor at Michigan State University, in the Department of Community, Agriculture, Recreation and Resource Studies, has created an infographic on the Concentration in the US Beer Industry. The bubble chart seeks to show the major companies selling beer in the U.S. — domestic and imports — and also uses different lines to show arrangements of distribution and partial ownership, where applicable.

You can see more detail on the full size image, which can be seen here. You can also zoom in using Zoom.It. Howards also notes “that the graphic above focuses on the top 13 firms, and excludes varieties of malt liquor and non-alcoholic beers.”

His write-up also includes the following:

AB InBev owns, co-owns or distributes more than 36 brands, for example, while MillerCoors controls at least 24 more. MillerCoors also brews Metropoulos & Company’s products under contract (thus the company that controls Pabst and 21 other brands is a “virtual” beer company).

Increasing Concentration after World War II

In 1959 the 10th largest brewery in the country (Pabst) acquired the 18th largest brewery (Blatz), resulting in a combined national market share of 4.5%. Seven years later the US Supreme Court reversed the merger, noting that:

If not stopped, this decline in the number of separate competitors and this rise in the share of the market controlled by the larger beer manufacturers are bound to lead to greater and greater concentration of the beer industry into fewer and fewer hands. [Justice Hugo Black in U.S. v. PABST BREWING CO., 384 U.S. 546 (1966)].

Today, just two firms control more than three-quarters of all sales.

Howard also quotes Stephen G. Hannaford, writing in 2007, in Market Domination!: The Impact of Industry Consolidation on Competition, Innovation and Consumer Choice. “The beer industry is not only dominated by two firms, it is dominated by a small number of varieties — just six account for more than half of all sales. The result is an ‘oligopoly within the oligopoly’” Howard demonstrates this relationship with another chart.

You can also explore this one better by using Zoom.It.

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Next Session Thanks The Big Boys

October 4, 2011

Our 56th Session is a nod of the head, acknowledging the positive aspects of the big, multinational brewers that we so often admonish and criticize. Our host, Reuben Gray at Tale of the Ale, calls his topic Thanks to the Big Boys, which he describes as follows: What I’m looking for is this. Most of [...]

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Americans Choose Bud As Favorite Beer In National Poll

May 5, 2011

According to a new poll taken on behalf of the Rasmussen Reports by Pulse Opinion Research, When Americans Drink Beer, They Go Domestic, or as the St. Louis Business Journal spun it, America’s Favorite Beer is Bud. (And thanks to James L. for sending me the story.) I’m sure the poll is statistically accurate, they [...]

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The Top 50 Annotated 2010

April 13, 2011

This is my fifth annual annotated list of the Top 50 so you can see who moved up and down, who was new to the list and who dropped off. So here is this year’s list again annotated with how they changed compared to last year. Anheuser-Busch InBev; #1 last five years, no surprises MillerCoors; [...]

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Top 50 Breweries For 2010

April 13, 2011

The Brewers Association has also just announced the top 50 breweries in the U.S. based on sales, by volume, for 2010. This includes all breweries, regardless of size or other parameters. Here is the new list: Anheuser-Busch InBev; St Louis MO MillerCoors; Chicago IL Pabst Brewing; Woodridge IL D. G. Yuengling and Son; Pottsville PA [...]

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More On The Possibility Of An ABI / SABMiller Merger

February 9, 2011

You’ll no doubt recall the Interwebs were lit up last week with the idea of an Anheuser-Busch InBev merger with SABMiller, which was started by Credit Suisse analysts engaging in speculation. While there were some reports to the contrary, the two mega-beer companies were not in talks. Yesterday, apparently Credit Suisse followed-up their report by [...]

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Rumors Of An Anheuser-Busch InBev & SABMiller Merger?

February 2, 2011

Wow. This rumor is just mind-boggling. It makes the hairs on the back of my neck stand up. But could it be true? According to Harry Schuhmacher at Beer Business Daily, it’s not only being discussed but is considered “likely and lucrative.” Harry’s quoting analysts at Credit Suisse who believe “‘SABMiller selling to ABI would [...]

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The Clydesdales in California

January 30, 2011

The iconic Budweiser Clydesdales debuted on April 7, 1933 and have a big promotional part of Anheuser-Busch ever since. Most come from Grant’s Farm in St. Louis. Today there are six teams of Clydesdales. One is headquartered in St. Louis and the other five travel the country. On Saturday, one team — or “hitch” — [...]

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ABI To Include Stella Artois In Super Bowl Ads

January 21, 2011

Anheuser-Busch traditionally pulls out all the tops for the Super Bowl, one of the most-watched television events of the year, especially for their core demographic. And that looks to be true for this year’s game, as well. But according to a report from Advertising Age yesterday, they’ll be trying something new this year. The biggest [...]

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The BeerNet Power 20

January 6, 2011

Harry Schuhmacher’s Beer Business Daily earlier today published the results of their BeerNet Power 20. Essentially they polled his many beer business subscribers and asked them to vote for the most powerful people in the beer business. It’s the beer equivalent of Entertainment Weekly’s annual power issue. They cut off the voting last night at [...]

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WSJ Reviews “Dethroning The King”

December 9, 2010

I got a review copy of the new book, Dethroning the King, which is all about the hostile takeover of Anheuser-Busch by InBev, a few weeks ago but haven’t had a chance to read it yet. It looks fascinating and I’m looking forward to devouring it as soon as I can. For now, I’ll have [...]

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