Big Brewers

Big Changes At A-B InBev

by Jay Brooks on January 23, 2012 · 8 comments

in Breweries,Editorial,News

ab-inbev
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.

bud-light-platinum-sixer

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coors-light
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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bubble-chart
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.

BeerOwnership
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.
market-share-2010

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.

beershare-2010
You can also explore this one better by using Zoom.It.

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session-the
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 us that write about beer do so with the small independent brewery in mind. Often it is along the lines of Micro brew = Good and Macro brew, anything brewed by the large multinationals is evil and should be destroyed. Well I don’t agree with that, though there may be some that are a little evil….

Anyway I want people to pick a large brewery or corporation that owns a lot of breweries. There are many to chose from. Give thanks to them for something they have done. Maybe they produce a beer you do actually like. Maybe they do great things for the cause of beer in general even if their beer is bland and tasteless but enjoyed by millions every day.

I can think of two right away that I would like to thank (don’t feel the need to limit yourself to one). If you can’t think of any well then here is one quick one. Diageo and Arthur’s Day. At the very least, this is a worldwide celebration of beer. It may be Guinness* orientated but anything that gets people drinking beer and not alcopops is a good thing in my book. If you honestly have nothing good to say about a large brewer, then make something up. Some satire might be nice, It will be a Friday after all.

So put away your poison pen, at least for the day, and wax poetic about a big brewer. Let’s hear your positive vibes for the next Session on Friday, October 7. And yes, that’s this Friday, just three days away.

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pulse-polls
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 are professionals and this is their business, but it’s a little hard to swallow that a survey of 345 people can truthfully speak for 311 million Americans. But here’s what they claim to have learned from the answers to four questions gleaned from those 345 random adults, as reported in the St. Louis Business Journal.

Nearly seven in 10 American beer drinkers are choosing domestic beers over imported ones, while only 22 percent like imported beers more.

However, those people are more evenly divided when it comes to what kind of beer to drink: 49 percent prefer a light beer, while 46 percent prefer a regular one.

When given a choice, 25 percent said say they are most likely to drink Budweiser. Second choice is Miller (19 percent) and third place went to Sam Adams (7 percent). Coors, Heineken, Corona, Pabst and Guinness are next, in descending order, with each garnering between 3 percent and 6 percent. Another percent choose some other brand.

Miller is the top choice of 26 percent of male beer drinkers, while one-out-of-three women prefer a Bud.

Here’s how it shakes out.

  1. Budweiser (25%)
  2. Miller (19%)
  3. Samuel Adams (7%)
  4. Coors
  5. Heineken
  6. Corona
  7. Pabst
  8. Guinness
  9. Other (25%)

But most of the conclusions of this little polls seem odd, almost misleading, given the questions and the way in which they were asked. Here’s what people heard when Pulse phoned potential participants with this survey.

  1. Are you more likely to order a beer in a bar or restaurant or buy it to drink at home?
  2. Are you more likely to drink a domestic beer or an imported beer?
  3. Are you more likely to drink a light beer or a regular beer?
  4. Which brand of beer are you most likely to drink … Budweiser, Miller, Coors, Corona, Heineken, Pabst, Sam Adams or Guinness?

Question one seems fine (51% home; 38% in a bar or restaurant; I don’t know where the other 11% are doing their drinking, maybe both?), but it’s fairly straightforward.

For question two, the language used seems strange. Few people outside the industry use the term “domestic,” I would think, to describe American beer. But within it, it has a very specific meaning. It’s essentially beer made by one of the big brewers, as separate and distinct from craft beer. 69% said they prefer domestic, while 22% said imported, with another 9% holding a least a third choice. But what that really means, given the muddled definitions, is hard to tell.

Question three is simply personally obnoxious, because I utterly hate the very notion of low-calorie light beer. To me it’s an abomination, albeit a very popular one. So the fact that “49% choose a light beer, while 46% prefer a regular one,” is probably right but it’s just sad to me, not to mention a triumph of marketing.

But the last question is quite telling. By giving just eight choices in a multiple choices fashion, the survey leads the people being polled to pick one of the those beers, even if it’s not their favorite. Most people likely chose one from among the eight, as opposed to their favorite among the literally 10,000+ beers brewed or sold in America. That they didn’t even offer an “other” choice further makes this question somewhat misleading, and I can only imagine how a multiple choice question differs from a more open one. But what’s perhaps more interesting is that even trying to pigeonhole the answers to question four, 25% said they’d “choose some other brand.” So while the St. Louis newspaper spins this poll by claiming American’s “top choice is Budweiser” (and curiously omit the percentage number who chose “other”), an equal number prefer “not Budweiser,” that is some other beer not among the limited choices of the poll.

I realize that the macro brewers do continue to hold a commanding market share and in the poll does reflect that. For many years, the Top 5 selling beers in the U.S. have been the following.

  1. Bud Light
  2. Budweiser
  3. Miller Lite
  4. Coors Light
  5. Corona Extra

After that, it changes a little bit from year to year, but usually the bottom five include some combination of Heineken, Busch and Busch Light, Natural Light, Michelob Ultra Light and Miller High Life. Samuel Adams, Guinness and Yuengling usually fall somewhere in the 11-15 rankings. So the poll does reflect beer sales, which is what you’d expect. “Favorite” and “best-selling” are not exactly the same, but I’d argue that sales is how people vote for the favorites. In the real world, outside polls, people vote with their wallets.

So in a somewhat accurate poll that reflects current market share patterns, one in four respondents eschewed the eight choices given them (which wasn’t even an option) and chose a beer not on the list, which was equal to the top vote getter, Budweiser. It seems to me the headline should have been more along the lines of “Equal Number of Americans Prefer A Beer Other Than Bud As Pick Budweiser As Their Favorite.” Or even better, as suggested by James Wright, “35% of Americans prefer NOT Bud, NOT Miller and NOT Coors.” Alright, they’re both a little unwieldy, but to me that’s the biggest takeaway from this poll.

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The Top 50 Annotated 2010

by Jay Brooks on April 13, 2011 · 9 comments

in Beers,Editorial,News

ba
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.

  1. Anheuser-Busch InBev; #1 last five years, no surprises
  2. MillerCoors; ditto for #2
  3. Pabst Brewing; ditto for #3
  4. D. G. Yuengling and Son; Same as last year
  5. Boston Beer Co.; Same as last year
  6. Sierra Nevada Brewing; Same as last year
  7. New Belgium Brewing; Same as last year
  8. North American Breweries; new entity
  9. Craft Brewers Alliance; Moved down 1 for 2nd straight year
  10. Spoetzl Brewery (Gambrinus); Moved down 1
  11. Deschutes Brewery; Up 2
  12. Independent Brewers United (IBU); Same as last year, with a new name
  13. F.X. Matt Brewing; Moved down 1, after moving up 1 last year
  14. Minhas Craft Brewery; Down 2 over last year
  15. Bell’s Brewery; Up 4 from #19 last year
  16. Harpoon Brewery; Up 1 from #17 last year
  17. Boulevard Brewing; Down 1 from #16 last year
  18. Goose Island Beer; Up 2, for 2nd straight year, from #20 last year
  19. Dogfish Head Craft Brewery; Shot up 5 from #24, after being up 9, 5 and 4 the three previous years
  20. Alaskan Brewing; Down 2 from #18 last year
  21. Long Trail Brewing; Leapt up 14 from #35 last year
  22. August Schell Brewing; Up 4 from last year
  23. Stone Brewing; Same as last year, though they were up 5 each of last two years
  24. Abita Brewing; Up 4 from #28 last year
  25. Brooklyn Brewery; Up 2 from #27 last year
  26. Lagunitas Brewing; Jumped up 10 from #36 last year
  27. Full Sail Brewing; Down 5 for the 2nd straight year
  28. Shipyard Brewing; Down 3 from #31 last year
  29. Summit Brewing; Same as last year
  30. New Glarus Brewing; Up 2 from #32 last year
  31. Great Lakes Brewing; Up 2 from #31 last year
  32. Anchor Brewing; Down 2 from #30
  33. Iron City Brewing; Down 8, after dropping 12 last year, after a Chapter 11 bankruptcy and moving production out of Pittsburgh
  34. Kona Brewing; Fell 13 after being up 2 last year, and 14 the previous year
  35. Rogue Ales/Oregon Brewing; Down 1, after being up 2 last year, canceling being down 2 the previous year, and up 2 the year before that, essentially hovering
  36. Firestone Walker Brewing; Up 4 from #40 last year
  37. Winery Exchange Inc. / World Brew; Novato CA; new to the list this year
  38. Sweetwater Brewing; Up 1 from #39 last year
  39. Mendocino Brewing; Down 2 from #7 last year, after falling 8 the previous year
  40. Flying Dog Brewery; Up 2 from #42 last year
  41. Victory Brewing; Same as last year
  42. Gordon Biersch Brewing; Down 4 from #38 last year
  43. BJs Restaurant & Brewery; Down 1 from #43 last year
  44. Stevens Point Brewery; Up 6 from #50 last year
  45. Odell Brewing; Down 1 from #44 last year
  46. BridgePort Brewing (Gambrinus); Up 1 from #47 last year
  47. Cold Spring Brewing; Not in Top 50 last year
  48. Rock Bottom Brewery Restaurants; Down 3 from #45 last year
  49. Oskar Blues Brewing; Not in Top 50 last year
  50. Straub Brewery; Down 3 from #46 last year

Some new companies made the list, two from mergers — North American Breweries and Independent Brewers United — along with Winery Exchange Inc. as a result of doing a contract private label beer for the Walgreen’s pharmacy chain, Big Flats.

Two breweries are new to the list this year, Oskar Blues and Cold Spring Brewing again, who fell off last year but had been on the list the year before that under their former name, Gluek Brewing. Two more are off the list, Big Sky Brewing and Lost Coast Brewing, who had just cracked the list last year.

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

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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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Heineken Redesigns Bottles, Reduces Number Of Sizes

December 7, 2010

Heineken announced at the beginning of December that next year they’ll be launching redesigned bottles and cans along with a big reduction in the number of sizes they’ll be selling worldwide. The packaging redesign is cosmetic, but the package size reduction is more worrying. According to the press release, “[t]he restyling aims to streamline the [...]

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ABI Suing Baseball Over Exclusive Beer Rights

November 12, 2010

Today in U.S. District Court, for the Southern District of New York, Anheuser-Busch InBev filed a lawsuit asking for a declaratory judgment against Major League Baseball. In “Anheuser-Busch, Inc. v. Major League Baseball Properties, Inc.,” ABI alleges that MLB “reneged on a renewal of its beer sponsorship rights this year and demanded ‘exponentially higher’ fees.” [...]

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Busch Jumps On Cold Indicator Label Bandwagon

October 19, 2010

For many years, Coors has been the brewery obsessed with cold. But that may be changing, as Anheuser-Busch InBev is debuting their own cold-activated labels on bottles of Busch Light. ABI is calling their version of the cold-activated label an “ice-cold easy indicator.” According to an article today by AdAge: An “ice-cold easy indicator” thermometer [...]

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