Brookston Beer Bulletin

Jay R. Brooks on Beer

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A Slice Missing

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A regular Bulletin reader (thanks Ben) sent in a link to a short blurb that was in the San Francisco Chronicle on Friday. It was by wine business writer Cyril Penn, who also publishes Wine Business Online. Titled “Regular domestic beer loses its grip on U.S. market” it details another Mintel International research effort. The company does market and consumer research on a large scale around the globe and about big industries. So it’s not surprising they’d leave out an entire sliver of pie in their chart.

The new Mintel study claims that although “American light beers” (low-calorie diet beers) are showing growth, “domestic beers” are not. But by domestic, which should be all beer made within the United States, Mintel means only beers from the large manufacturers, such as Bud, Miller and Coors.

More findings from the Chronicle article:

Volume sales of imported beer have increased 27 percent over the last five years. In contrast, regular (non-light) domestic beer posted a 19 percent decline during the last five years.

According to Mintel’s research, only one quarter of American adults over age 21 drink regular domestic beer, a decrease of 15 percent since 2001.

The Mintel reasearch also found that the “light beer segment is the only domestic segment to gain sales over the last two years, growing 4.8 percent in volume.” Of course, that leaves a bit of the pie chart missing, specifically the craft beer segment, which has shown 11% growth through the first half of last year and 9% for 2005. It may be a small slice, but it is getting bigger. And that means the “light beer segment” is not the only domestic segment growing over the last two years. But that’s the way it is with the business press. Only the big, publicly traded multi-nationals are in their radar. For the craft breweries, the money just isn’t enough for them to talk about, except for a few exceptions like Boston Beer and Sierra Nevada.

And that’s fine if it’s business to business who’s utilzing this information. If one business is looking at this data and using it for their business decisions, then the limitations of the information doesn’t make much of a difference. For example when I was the beer buyer at BevMo, I regularly looked at IRI and Nielsen sales data. In both cases, they collect sales of beer at grocery stores, drug stores, big box stores, convenience stores and other mainstream sellers but ignore direct sales, independent liquor stores, and all sorts of non-chain store sales. That doesn’t make them useless, just incomplete. But knowing their limitations can still give revealing insights and show trends. They give a glimpse of what is happening to a certain portion of the market.

The problem is when that sort of limited research data is reported to the public in a news item without discussing those limitations. It gives the impression that the information is complete, reliable and unbiased. So when Penn’s little piece says that only light beer is growing, he’s not wrong insofar as the Mintel research data he’s reporting on, but that data itself is flawed in that it is not presenting a true picture of reality. It’s not meant to, it’s intention is just to show a very specific snapshot of the major portion of the industry. But as the headline suggests, all American beer is down, losing to imported beer. Maybe I’m not giving the general public enough credit, but how many people know the term “domestic beer” in this context is jargon for just the non-low calorie beers, the regular American light (in color) lagers manufactured by the big and traditional beer companies. They represent just a few handfuls of brands which mostly ignores almost 1,400 craft breweries and thousands of individual beers. And while “domestic beer” represents a large percentage of the total volume for beer sold in the U.S., it’s still not all the beer produced domestically. The stuff I — and hopefully you — love is growing again with wild abandon, and has been for a few years in a row. That’s a much rosier picture than the Chronicle’s piece suggests, at least for fans of the wonderful non-domestic beers made here in America, better known as craft beers.

Bud & Bud: Now They’re Buds?

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+ = ?

I saw this last Monday but was too busy with deadlines for paying gigs to do anything more than drop my jaw in amazement at the news. To say I was surprised would be an understatement. The vigor with which these two companies have battled one another is legendary. For them to unceremoniously bury the hatchet — and not into each other’s back — even in just the U.S. market defies logic. I can see why Anheuser-Busch would want the deal. To have a Bud with flavor and another import that’s been selling well, with even greater potential, is a no brainer for them.

But why Budějovický Budvar would be so eager is an entirely different matter. I have a hard time fathoming that it was simply the profit motive and the tantalizing carrot of making a killing here in the U.S. that drove their decision. Not to mention all of the people this move — along with the earlier InBev agreement — have put on the unemployment line. The very people who built all of these brands into ones that A-B would be interested in poaching are now left out in the cold, all of their hard work for naught. Many of the ones I know personally are great people, too, so it seems remarkably unfair.

I guess I just don’t want to believe that the principles Budvar has been arguing for so vehemently could be set aside so easily just for a wad of cash. There are currently something like 100 lawsuits going on in 30 countries around the globe over the brand names Bud, Budvar and Budweiser. A-B just lost an appeal in Portugal, so the disputes between the two companies are far from over. And generally speaking A-B has been the aggressor in a majority of the cases, at least as far as I’ve seen.

Here in the U.S., and other countries where A-B has prevailed in court decisions, Budvar, Budweis and Budweiser are labeled Czechvar, conveying none of the heritage of a beer brewed in the town of České Budějovice, which in German is Budweis. A-B has publicly acknowledged countless times that it was their inspiration for the beer they named Budweiser in 1876. Disputes began a century ago and have not subsided up through the present time. Even A-B’s press release acknowledges as much.

After nearly a century of disagreements in certain parts of the world over rights to the Budweiser name for their beers, Anheuser-Busch and Czech brewer Budejovicky Budvar have formed a historic alliance in which Anheuser-Busch will become the U.S. importer of Czechvar Premium Czech Lager, the two brewers jointly announced today.

The agreement gives Czechvar, currently sold in 30 states, access to Anheuser-Busch’s marketing and sales expertise and wide-reaching U.S. distribution network. It gives Anheuser-Busch another European import as part of an aggressive push into high-end beer categories that has led to alliances with Grolsch, Tiger, Kirin and most recently InBev, which added Stella Artois, Beck’s, Bass Pale Ale and other beers to its import portfolio.

The agreement does not impact existing litigation or trademark disputes between the two brewers in other countries, and they have agreed the partnership cannot be used to support either side in any trademark cases.

“After years of differences, this is a meaningful step for two great brewers to form a relationship that is good for both of our businesses,” said August A. Busch IV, president and chief executive officer of Anheuser-Busch Cos. Inc. “For Anheuser-Busch, it also represents an opportunity to enhance our import portfolio with a super-premium Czech import. Working with our family of wholesalers, we look forward to introducing Czechvar to a new audience of beer lovers.”

“At the same time, the agreement represents a historical turning point between our companies. We have managed to move away from discussions between lawyers and toward a practical dialog, which is going to be beneficial to both sides. Our corporation has therefore gained the best importer in the USA,” added Budejovicky Budvar’s CEO, Jiří Boček.

The agreement was effective Jan. 5. Terms were not disclosed.

Hmm. When a brewery with so much reason to feel a deep-seated animosity toward the world’s largest beer company can make nice for a fistful of ducats, what does that mean for the rest of the world’s breweries trying to sell their products here. Between the InBev brands (like Stella Artois), Grolsch, Tiger, Kirin, and now what many people refer to as “the real Budweiser,” Czechvar, this will make it increasingly difficult for other imported beers — and especially the smaller brands — to find a willing distributor to carry their products. Certainly no Bud distributor who wants to stay in Augie’s good graces would carry a non-A-B import. And that clutters the remaining distributors, especially where there’s only one other house that carries both Coors and Miller. Few distributors can carry everything presented them and that means less diversity in their territories, more so in states where it’s difficult or impossible for companies to self-distribute.

As usual, the losers will be you and me when we try to find that obscure import like Westmalle Tripel or Urthel Hop-It. Every time the highly efficient behemoth A-B distribution network adds another “official” beer to its portfolio, the available beers across the country become increasingly the same. If it keeps up like this, the only remaining diversity you’ll see at the local grocery store will be completely illusory. They’ll all be owned or have exclusive distribution agreements with a very small number of companies. And that will make it nearly impossible for a newcomer, whether an imported brewery or a local craft brewer, to find a spot on the shelf.

Bulgarian Boza for Bigger Breasts

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There are probably as many early forms of beer as there are people who made them. Every nomadic tribe and early civilization had their own at one point or another. A few of them are even still around today, having changed little, making up an important tradition in pockets of the world. Most use varied and locally available ingredients, rarely hops and are an important part of their heritage.

One of these malt beverages is “Boza,” originally brewed in Babylonia and Egypt 5-6,000-years ago and in Mesopotamia as long ago as 8-9,000-years ago. There is also speculation that our word “booze” comes from this drink. Traditionally, Boza is made with millet but local variations also use maize (Turkey), wheat (Ethiopia), rice meal (Turkmenistan) or flour (Albania). In Bulgaria they use millet, one of the earliest used cereal grains and the one used in the original Bozas. Today, it is wildly popular throughout Eastern Europe and the Ottoman areas. It’s also quite low in alcohol, around 1% abv.

It appears to be fairly easy to make at home, too. There are several links on preparing homemade Boza, such as at Yogurtland, My Bulgaria, and Bulgarian Food.

But a story in Ananova, a news service for mobile phone delivery, is decidely more titillating. Apparently Bulgaria’s recent membership in the EU brings welcome tax relief on customs duties on Boza. Hundreds and thousands of establishments all over Europe are now starting to stock Boza, at least in part because Boza is believed to make women’s breasts grow. I couldn’t make this up if I wanted to. According to Ananova, “European men are flocking to Bulgaria to buy ‘breast-boosting beer’ after EU accession led to customs duties on the drink being abolished.”

The article continues:

They are said to be keen for their wives and girlfriends to benefit from its reported ability to make women’s breasts grow.

Constantin Barbu crossed the Danube from Romania to buy Boza in the Bulgarian border town of Ruse.

He said: “I’ve bought a case for my wife to try out. I really hope I see an improvement.”

Given our nation’s obsession with large breasts, I’m surprised it’s not available here. It’s got to be cheaper than silicon implants.

Portland’s New Name

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Portland has had many nicknames. While the “City of Roses” is perhaps the most well-known, it’s also been called Beervana, Bridgetown, PDX, Puddletown, Rip City, River City and Stumptown. And apparently President George I used to refer to Portland as “Little Beirut” because protesters dogged his visits there, but so far that one hasn’t really stuck.

But now add one more to the list. Yesterday, Mayor Tom Potter officially declared Portland “Beertown.” He kicked off the naming ceremony by pouring the first pint of BridgePort Brewing’s new seasonal, Beertown Brown. Whether the whole event was one elaborate publicity stunt certainly seems possible, even probable, but even so what a great coup for them. Unlike Seattle, Portland’s official tourism website features quite a lot of positive information about beer and Portland’s beer scene.

Also, no word as to how the Brewers Association feels about Portland appropriating their domain name. Their website address is beertown.org.

Wine Enthusiast Enthuses Over Dogfish Head

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Well, not exactly. Author Gregg Glaser is squarely in our camp, being the Editor of Yankee Brew News and the News Editor of All About Beer. But it was still terrific seeing his article in a wine magazine, which covers primarily wine, of course, but also spirits. A quick search of their archives and it’s clear Wine Enthusiast does ocassionally write about beer, at least a few times year anyway. The article, Extreme Beer Dinners: Big beer, big food and lots of both, is part of the “Best of 2006” issue and is an overview of some of the unusual beers Sam Calgione makes at Delaware’s Dogfish Head Craft Brewed Ales. It also mentions his new book, Extreme Brewing, and the many beer dinners Sam has done across the country, including the one he did in San Francisco last November.

This was the label featured in Glaser’s article but I’m running it here again because I love Tara McPherson‘s artwork.

Widmer & Redhook Discuss Possible Merger

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The Oregonian is reporting today that merger talks between Portland’s Widmer Bros. Brewing, the largest craft brewer in Oregon, and Seattle’s Redhook Ale Brewery were disclosed on Wednesday through a mandatory regulatory filing by both Redhook and Anheuser-Busch — who owns almost 40% of Widmer and just over one-third of Redhook.

Although Widmer is probably the healthier company, Redhook (because it is traded on NASDAQ) will likely be the buyer in the deal. Rob Widmer reportedly has said that because it involves a public company that much more will be in the open due to regulatory disclosure requirements. He also stated that it is much too early in the negotiations to say when or even if anything will come of the talks.

The Seattle Times also has a more in-depth article on the talks.

Southern California Distributor Shakeup

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Harbor Distributing (One of five regional beer distributors owned by beverage giant Reyes Holdings) is one of the largest in Southern California, distributing throughout Los Angeles and all of Orange County. And it just got bigger. I got an anonymous tip today that Harbor bought Gate City Distributing. Effective March 1, Harbor will be taking over the territory previously serviced by Gate City, which includes Riverside and much of the Inland Empire area. Harbor is one of the biggest Miller distributors and also carries several other popular brands such as Coors, Corona, Heineken, Guinness, Labatt’s, Newcastle, and Sierra Nevada. Consolidation is rarely a good thing for the small craft brewers.

Strange Brew: My Beer Predictions for 2007

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To Beer or Not to Beer. As Strange Brew was a loose parody of Hamlet, I thought I’d peer crazily into the skull of poor Yorick, and try to divine the future. Let’s see if anything that happened last year can be used to predict what might happen in the beer industry in 2007. Here are five things I think will happen this year. Let’s see how I do a year from now. What are your predictions?

 
Craft beer growth will hit double digits for 2006 and also will continue to rise through 2007.

 
Price wars among the large domestic producers and the popular import brands will heat up again beginning in spring or early summer.

 
Mainstream media attention will increase and will actually begin to improve.

 
A-B’s Here’s to Beer PR campaign will either quietly disappear or if the website remains up will not have any new content added now that Bob Lachky is no longer in charge of the effort.

 
Gluten-Free beer made for the growing number of people with Celiac disease will surprise most predictions and become a bigger niche than expected.