Beer Birthday: Lester Jones

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Today is also the 47th birthday of Lester Jones. Lester is the economist for the Beer Institute, the man who crunches all the numbers, including the great resource Beer Serves America. As a big fan of the dismal science, I’ve gotten to know Lester over the last several years and appreciate all that he does to help promote beer. He’s one of the good guys. Join me in wishing Lester a very happy birthday.

Lester Jones, of the Beer Institute & George Reisch, of Anheuser-Busch @ GABF Saturday
Lester with George Reisch, from ABI, at GABF in 2009.

Who Exports Beer?

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Today’s infographic is an interesting treemap created by the Observatory of Economic Complexity, a collaboration between M.I.T. and Harvard. This one, contrasting yesterday’s, shows the amount of beer exported by the nations of the world, with the size of their relative amount of exporting shown by the size of the rectangle.

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Click here to see the treemap full size.

Who Imports Beer?

world-map
Today’s infographic is an interesting treemap created by the Observatory of Economic Complexity, a collaboration between M.I.T. and Harvard. This one shows the amount of beer imported by the nations of the world, with the size of their relative amount of importing shown by the size of the rectangle.

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Click here to see the treemap full size.

The High Life: A Tower of Beer For Your Retirement

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Today’s infographic is a funny one, created by Roth IRA to show just how much beer you could sock away if you “save just $1 per day starting at age 25.” I guess my tower would be significantly shorter. Called The Awesome Tower of Beer, which by age 70 would be 5,736 feet tall.

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Click here to see the infographic full size.

Pine Street Brewery Needs Your Help

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One of San Francisco’s newest beer companies, Pine Street Brewery, is building its own brewery and trying to expand its business. One of things they’re in desperate need of is tap handles and kegs. So they’ve turned to Indiegogo (a crowdfunding website similar to Kickstarter) to help raise the funds they need to grow. They’re offering various tchotchkes for different levels of financial support, as detailed in the Indigogo Pine Street Brewery web page.

With our recipes perfected and a commercial brewing space secured, we need tap handles and kegs to keep up with growing demand in San Francisco! With your help we can provide our city with enough green PSB handles to have our beer in every neighborhood.

We’ve brainstormed hard to come up with great incentives for your donations – just a small token of how much we appreciate your generosity. (Check the gallery for photos of the prizes: http://www.indiegogo.com/projects/pine-street-b…). Your contributions will help us establish our presence in the city, and we hope you’ll be proud to say you helped make it happen!

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The Pine Street Brewery founders.

The Pine Street Brewery Story

Our Story – Pine Street Brewery from Pine Street Brewery on Vimeo.

Beer Taxes By Lester Jones Of The Beer Institute

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A couple of months ago, the Tax Foundation interviewed Lester Jones, who’s the economist for the Beer Institute in Washington, DC. As I am a great fan of the dismal science, Lester’s become a good friend over the years and is a great asset to the beer industry. Tax Foundation host Richard Morrison describes the podcast interview. “Beer Institute Chief Economist Lester Jones explains the tangled web of federal, state, and local taxes that get applied to the beer we drink.”

If that doesn’t work, try listening to it directly on the web.

Lester Jones, of the Beer Institute & George Reisch, of Anheuser-Busch @ GABF Saturday
Lester Jones, at GABF a few years ago, with George Reisch of ABI.

The Alcohol Industry

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Today’s infographic is about the Alcohol Industry, and whether or not it’s recession-proof. It was created by Total DUI’s Check Points blog. I’m not sure what their angle was, but they pretty much came to the same conclusion most analysts did, which is that it’s more recession-resistant than recession-proof.

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Click here to see the infographic full size.

Ignoring Economies of Scale

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As the news keeps swirling around the possible — I say inevitable — buyout of Grupo Modelo by Anheuser Busch-InBev in a breathless “will they, won’t they” kind of coverage, I’m utterly fascinated by the theater of it all. It’s especially interesting to see the many “business experts” weighing in with no real understanding of the history of the brewing industry or how it all works. These “instant experts” all seem to assume that general economics or business principles apply equally well to every scenario, yet fail to grasp that alcohol has always navigated a different path through the economic world, with extra layers of taxation, legislation and law, its moral or anti-alcohol critics, and has to abide by at least 51 sets of laws (federal laws plus one for each state). I brought this up last month in The Beer Monopoly, but this morning an economics reporter from the New York Times, Adam Davidson, weighed in with his own take on the shenanigans.

In his It’s the Economy column published today, Are We in Danger of a Beer Monopoly?, he gives his own version of reality. In his world, where there are nearly 2,400 American breweries, he at least admits many of them are “tiny,” but goes on to claim that a few “have become large national brands.” National, yes, but “large” is a somewhat relative term. They’re large compared to a tiny nanobrewery or even an average sized brewpub, but the volumes of beer manufactured by ABI and SABMIller are in another class altogether. All 2,398 of the other breweries represent much less than 10% of the total beer produced in the U.S., meaning there’s a fairly wide chasm between the two groups, even if “a handful” of them have been successful. Measured against the domination of the biggest two, even the most successful seem modest by comparison.

But this is an argument that many economists seem to make, and indeed it’s the same argument that ABI always makes when they’re trying to buy another global company. How can there be a monopoly with so much competition? Just walk down the beer set in an average grocery store and, if you know who owns or controls what, you’ll easily see who’s winning the beer wars. The power wielded by ABI and SABMiller is so far above that of any smaller brewer, or even the total of all of the smaller ones, that it really is a true David and Goliath relationship. Sure, the big guys throw a few crumbs to the little guys nipping at their heels, but they don’t feel seriously threatened by them. Lately, they’ve been paying closer attention because they’re losing incremental marketshare, but they’ll respond to any such loss, because it hurts the share price. But saying they’re on equal footing is the economic equivalent of pretending that employees and employers have equal bargaining power, as most economic textbooks continue to insist.

But here’s Davidson’s takeaway from recent events as ABI tries to win approval for buying Grupo Modelo. “So I was surprised to learn that the Justice Department is worried that Anheuser-Busch InBev, the conglomerate that owns Bud, is on the cusp of becoming an abusive monopoly.” That’s almost spit take worthy. “On the cusp?” ABI has been a de facto monopoly with one or two others for decades, all but controlling the marketplace, not that anybody has been particularly concerned in the business world.

Anyone who hasn’t had their head buried deep in the sand for last few decades has to have noticed that we live in a society utterly dominated by business interests. Business power is the only power that matters. Political power takes a back seat to it and the will of the people is something politicians invoke only when they’re trying to get elected. How else can you explain that corporations have all the benefits of being a person, with none of the responsibilities or consequences? How else can money be considered free speech to influence politics? How else can you explain the many businesses deemed too big to fail while the same individuals those corporations ruined are left swinging in the wind, with no life raft for the ordinary flesh and blood person.

Davidson goes on to give a flawed history of the brewery business, and seems to think that mergers are a relatively new phenomenon. Of course, brewery mergers and acquisitions have been going on in brewing since the late 19th century, and stopped only briefly for about thirteen years, during Prohibition. Then he says we’re “still in the very early stages of what appears to be a global version of the scale-based consolidation we’ve seen in the United States over the past century.” I can’t tell if that’s a joke? The global beer world has been dominated by an ever-shrinking group of very large conglomerates for at least the last three or four decades. It’s hardly a new thing. In 2010, the four largest beer companies accounted for over half of all beer worldwide, and according to another source the Top 5 were about half. Heineken, Carlsberg, and a few others are very large companies, indeed, and they, too, have been gobbling up breweries around the world for many, many years.

It’s probably not a coincidence that Davidson has his own S.H.A.M.E. profile. Why the New York Times continues to let him shill for big business, well’s that’s a whole other discussion, but it’s obvious he’s defending the pro-business position. It’s also clear that he’s part of the theater that will ultimately end in the DOJ’s approval of the deal between ABI and Grupo Modelo. Here’s my prediction of what will happen next. As always happens, the two parties will hammer out a compromise that was probably the deal everybody wanted in the first place, but this way both parties look good in the public eye. The DOJ will look like they’re being tough on big business and are protecting the public while ABI will look good because they were able to get the deal done, and their share price will shoot up. Everybody wins. As Shakespeare observed, “all the world’s a stage.” And we’re the audience. I just wish they’d stop pretending we’re all idiots.

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