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Jay R. Brooks on Beer

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My Visits From A-B

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After my post yesterday afternoon about Wild Hop Lager, Anheuser-Busch’s new foray into craft beer, I felt pretty good about being able to let the cat out of the bag, so to speak. But I also admit I wondered if they would be any reaction from Goliath. After all, another beer blog, Thom’s Beer Blog, was visited by A-B less than two weeks ago, so I knew they were at least monitoring the blogosphere.

This morning I got my answer. I was visited four times in less than an hour beginning around 8:40. The first visit was at least nineteen minutes but one visit lasted at least forty-five minutes. I say at least, because the way my site meter figures how long a visitor stayed at a site has to do with the space in between the arrival and clicking the first link. They can’t tell how long a visit takes place if they only visit one page and then leave. But the total of their four visits is at least longer than an hour. No comment was left, but it will be interesting to see if I get any further contact or more direct contact from them. I have not had many flattering things to say about them lately, but I also can’t imagine the rantings of one insignificant beer writer would cause them any discomfort. Of course, I like that old journalist’s maxim that the media’s job is “to comfort the afflicted and afflict the comfortable.” It should be interesting to see if anything happens next.

Here’s the screen capture of the long visit. Notice the name of their browser is a “brew browser.” I like that.

UPDATE (Mar. 24; 11:53): I got my fifth visit just before noon, but I think this is unrelated to the morning visits because they found me by searching Google’s Blogsearch. Because this is so new, my post is actually the only hit you get when you search for “wild hop lager.” I guess that would be the definition of a scoop. Cool.

UPDATE (Mar. 24; 13:32): Visit number six turned personal, with someone from the company reading my biography and my goals for the blog. So either I’m being paranoid, or A-B is trying to learn more about me for … well, that’s the troubling bit, isn’t it?

UPDATE (Mar. 27; 13:25): Visit number seven was a short one and, so far, the only one after the weekend.

UPDATE (Mar. 28): Visit numbers eight and nine were both short, and as far as I can tell at least one of them was unrelated.

UPDATE (Mar. 29): Visit numbers ten through fourteen were throughout the day.

UPDATE (Mar. 30): Six more vists today, fifteen through twenty, inlcluding one for half an hour.

UPDATE (Mar. 31): Three more vists this morning, numbers twenty-one, twenty-two and twenty-three.

UPDATE (Apr. 3): Visit number twenty-four looked at 19 pages in 8 minutes.

UPDATE (Apr. 4): Visit number twenty-five was the only one today.

UPDATE (Apr. 5): Visit number twenty-six was this morning and twenty-seven this afternoon.

Wild Hop Lager: A Wolf in Sheep’s Clothing

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I’m walking through my local independent grocery store this afternoon, trying to get everything on my list when I realize I’m in the beer aisle. Old habits die hard, so I survey what’s there and notice a beer I’ve not heard of before: Wild Hop Lager. I pick up the six-pack carrier and pull out a bottle. Green Valley Brewing Company? Ever heard of them? Me neither. Now I’m only human but it’s not often that I’m stumped. I don’t usually run into completely new breweries I’ve never heard of. So I take a closer look at the packaging and read everything on the label. It’s supposedly organic certified by the UDSA? But in the back of my head I’m thinking it was a different organization that certified organic status. Didn’t I read that somewhere in connection with Wolaver’s a few years ago? The packaging looks good, almost too good. It’s slick and well done and even uses printed crowns, unusual for a start-up brewery. I’m becoming suspicious, I can’t even say why at this point. There’s a web address on the carrier, but there’s no brewery information on the label. No address, apart from Fairfield, California. Uh-oh. I pull a bottle out of the carrier again and examine it more closely. Only one more clue, but it’s a compelling one. There at the bottom of the bottom, on the left hand side, is a freshness date. That’s also a curious thing for a new brewery to have on their label. I feel like Sherlock Holmes and things aren’t adding up. But I’ve got a hunch, and it’s a pretty good one, too, I think, as I head home to check it out.

When I get home, I type in the website URL and wait for it to load, which doesn’t take too long. It has an age verification check, and it’s feeding my hunch, too. How many small breweries have those? The webpage itself is only one page, with no clickable links anywhere, just a message “Check back soon for more on Wild Hop Lager.”

The entire website consists of a picture of the bottle and the following text:

Let the Good Times Grow

Wild Hop Lager is made with 100% organic barley malt, giving this certified USDA Organic brew a hearty taste that is rich and flavorful. Plus, with every purchase of Wild Hop Lager, a donation will be made to the Organic Farming Research Foundation to improve and educate people on organic farming practices. Together we can set a better example for future generations.

Organic … and they donate to charity. This is getting better and better. So I do a whois search to find out who is the owner of the domain name and — I’m almost giddy when I see it — I’m right. It belongs to Anheuser-Busch of St. Louis, Missouri. I dig a little further and discover the Maltlog on the website for the Missouri Division of Alcohol and Tobacco Control. On February 6, 2006, A-B applied to register “Wild Hop Lager” and “Harbin Lager” and both were granted on February 10. Ohio similarly approved the name on February 14 of this year.

Now this isn’t the first time Anheuser-Busch has tried to make a microbrew. Anybody remember Pacific Ridge Pale Ale? As far as I know, they’re still making kegs of it at the Fairfield plant and selling it to restaurants and bars as their own private label craft beer. But there’s one distinct difference between Wild Hop Lager and Pacific Ridge. On all the Pacific Ridge packaging, it was clearly disclosed that it was an Anheuser-Busch package. With Wild Hop Lager, no such disclosure is made. In fact, it appears downright designed to appear to be a real craft brewed beer, not that that’s new either. There never was a Plank Road Brewery (it was Miller) or a Blue Moon Brewery (that one was Coors), either.

This is just the latest attempt to regain flagging sales. With good growth in the craft beer segment, it’s hardly surprising that they’d try to make their own craft beer-like product. It’s their modus operandi, after all, to infiltrate any segement of the market they can and either dominate it or shut it down. That this was so clandestine is a little surprising and most consumers, I fear, won’t realize they’re being duped. I’m perfectly okay with Anheuser-Busch making a better beer, but I’d be a lot more comfortable with it if they didn’t go about it in such a way that seems so underhanded and deceitful.

Anheuser-Busch’s new macro-micro on the shelves of my local grocer.

UPDATE: Several people on various forums have commented that they would have liked to see tasting notes for the beer here. While I was unwilling to part with the $8 necessary to provide tasting notes, the San Francisco Chronicle did a blind tasting of the beer as a part of their coverage of this story on March 30.

Underage Drinking: The Albatross of the Industry

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I got a press release today that got me thinking from the National Beer Wholesalers Association (NBWA), a trade group that sometimes represents the same interests as the brewers and sometimes not. The NBWA, of course, represents the interests of the middle man, the beer distributor. A great distributor can do wonderful things for better beer if they care about what they’re selling. There are many instances where this has happened and many regions of the country with a vibrant beer culture owe much to the work of the beer distributors.

On the other hand, there are equally many, if not more, who care only about making a buck or selling only their major brand. Several years ago Anheuser-Busch — why is it always these guys? — instituted a program they called “share of mind” to get their beer distributors to sell only A-B beer and little or nothing else. This was good for them but terrible news for the hundreds of small breweries who also depend on distributors for the distribution of the beer. In many states, the distributor model is institutionalized in ways which leave the brewer no choice but a third-party beer distributor to sell their beers. Most of these laws were set up after prohibition and in many cases the laws themselves were written by big brewery lawyers. So it’s no surprise that most of the alcohol laws in this country favor them: they were after all designed that way. The idea was that it would do away with the violence and fighting that marked the prohibition period and also it would somehow benefit the consumer. How giving territorial monopolies to a business would benefit consumers is a bit of logic that has always been lost to me but that was the rationale, believe it or not. Here in California, for example, one of the ways it was supposed to level the playing field was by forcing the same pricing on all retailers so that larger retailers could not benefit from buying in bulk. Many devious ways have been created to get around these, of course, many of them even almost legal, but I’ll leave that for the moment. Suffice it to say that not all beer distributors are good for the beer community.

Today’s press release concerns a letter from the NBWA to the Surgeon General in response to a request from him regarding the issue of preventing underage drinking. Now the first, and to me most obvious, problem with that is that I don’t understand how underage drinking is a health problem? It’s not like smoking and getting lung cancer. There aren’t teens dying of liver failure, are there? (I know hazing has had its share of drinking related fatalaties but blaming the beer in those cases is like blaming the knife in a stabbing death). My point is that the age of consent for drinking is a policy decision. It was an arbitrary decision to determine at what age a person could legally drink. And the fact that a person can enter the military and die for his or her country but not have a beer is a travesty of the first order. We should at a minimum be willing to give all the rights and privileges of adulthood to anyone willing to lay down his life for us. That we don’t says something profound about our society’s priorities, which in my opinion are screwed up beyond redemption. I remember my three years of military service. We had a soda machine in our day room that dispensed canned beer. But the second we walked off the base, we were treated as children once more, and it was more than a little infuriating.

But I’m at a loss to think of what actual health problems are associated with drinking alcohol at twenty-one versus eighteen years of age. All the usual problems discussed concerning underage drinking are about rebellion, breaking laws and the like. They’re not health issues. So the fact that the Surgeon General is asking the NBWA for advice on underage drinking strikes me as very odd. If the NRA received a similar letter asking their advice about the problem of school shootings, the 2nd Amendment lobby would be up in arms — no pun intended — in protest. But in our puritanical society, fun always takes it on the chin. Anything people are enjoying must be curbed, and usually that’s done through some manufactured concern for the children. There are actually plenty of good arguments why the drinking age should be lowered, but I won’t go into them here. If you want to read more about that debate, here are some good links. [ NYRA / Alcohol Solutions / ASFAR / Both Sides ]

But okay, let’s set aside the ridiculousness of the request and take a look at the NBWA’s response. Here’s the bulk of their letter to the Surgeon General:

On behalf of the 1,800 members of the National Beer Wholesalers Association, I am heartened by the Surgeon General’s request for comments on the very serious issue of underage alcohol consumption.

Beer distributors, as family-owned local businesses, work diligently in their communities to promote moderate consumption and prevent underage drinking. Through, among other things, sponsoring public service announcements, working with law enforcement and school officials, distributing materials to help parents talk to their kids about alcohol consumption and providing retailers with training, signage and age-verification materials, beer distributors devote significant resources to the fight against underage drinking.

While these are worthwhile efforts that have helped to reduce and control the problem of underage drinking, the states’ ability to effectively restrict the sale and distribution of alcohol is the key to keeping beverage alcohol out of the hands of our youth.

Effective state regulation is under increasing attack as various economic interests attempt to deregulate alcohol and otherwise weaken the states’ abilities to strictly control alcohol sales. As a result, some states have been forced to open their borders to Internet sales of all alcohol beverages. Such anonymous access presents a major challenge to the states’ fight against underage drinking, as consumers receive deliveries from out-of-state sellers who can not be effectively regulated by the state.

Indeed, in a study released last year, the National Academy of Sciences estimated that 10 percent of all minors have actually obtained alcohol over the Internet. In addition, numerous states have conducted “stings” to determine if kids are able to acquire alcohol online without being required to show photo identification or provide a signature. Time and again those stings unveiled the frightening ease with which a child of any age can easily obtain alcohol – most often, the brown, nondescript packages were simply left at the front door.

The 21st Amendment gives states the explicit authority to regulate alcohol within their borders. This amendment was designed to ensure states have the flexibility to regulate socially sensitive products accordingly to local norms and standards in order to promote responsible and moderate consumption and discourage abuse.

Special interests’ attempts to circumvent state requirements of regulated transactions occurring in licensed retail outlets are eroding a critical system of alcohol beverage control and putting state regulations at risk.

Beer distributors understand that the products they provide, while enjoyed by 90 million American adults, can cause devastating consequences if abused – especially by those under the legal drinking age. We are concerned that economic interests are slowly chipping away at state alcohol controls and the states’ ability to effectively regulate. This could result in long-term damage to the fight against underage drinking and abuse.

For these reasons, we respectfully request that unregulated alcohol sales and attempts to weaken state alcohol control be a central focus of the Surgeon General’s Call to Action regarding underage drinking issues. The states’ authority to regulate alcohol beverages must be reinforced.

In their response, they begin by going through the litany of various things they currently do to stop underage drinking. These typically involve signs, PSAa and talking to schools and educators. Yawn. If any of those really worked, this would have gone away by now. Anyway, most of what they give to retailers and schools were created by the breweries, not by them. I’m pretty sure the beer distributors have to take those steps either by law or for PR purposes. I don’t believe they’d do them if they weren’t required to in some way.

To be fair to them, I don’t even see why it’s their job at all. They sell beer to retailers who in turn sell it to the public. Wouldn’t it make more sense for the burden to be shifted to the retailer, who is actually the one selling it to minors? I know many retailers are also bound to follow strict selling guidelines to insure only adults buy certain products but it’s still usually the big breweries who produce the ad campaigns for them. That it’s the beer industry that preaches responsible drinking when it clearly runs contrary to the pursuit of profit has always seemed strange to me. But it’s largely because of the neo-prohibitionists who want to criminalize anything enjoyable that might be abused. Breweries can’t be seen as encouraging their customers to have more and more of their products because that would somehow mean encouraging abuse and would in turn give too much ammunition to an ever-vigilant minority who doesn’t want me to be able to have a beer after a long, hard day. These people bear watching, they’re dangerous. I see the whole responsible drinking public service campaigns as being the albatross of the industry, holding it down so it’s unable to fly. We should be able to celebrate wonderful beer and the joys of drinking openly without having to worry that if someone goes too far it can ruin things for everybody.

But then the letter turns interesting. The NBWA goes after interstate internet sales of alcohol as the real bogeyman. This is just hilarious. Forget for a second that telling the Surgeon General this is like telling your dentist about the pain in your foot, and look at their agenda. Internet sales are bad because they give kids access to alcohol. It couldn’t possibly be that what they call being “under increasing attack as various economic interests attempt to deregulate alcohol and otherwise weaken the states’ abilities to strictly control alcohol sales” is actually an economic threat to them? Of course it is. They’re pissed off about losing their own monopolies so they decided to make it an issue of underage drinking. This is so reprehensible that I’m almost speechless. Almost. I’ve had disagreements with the NBWA before and I’m sure I will again. Their ultimate interests are different than mine and that’s okay. But this one is just too out there and somebody has to call “bullshit” on them.

Opening up the states to internet shipping of alcohol made it possible for people to get beer from places where it wasn’t practical for it to be sold through regular channels. In many cases, the local beer distributors (NBWA members no doubt) refused to carry products they deemed would not be popular enough to justify the warehouse space for them. This is great news for consumers and for small breweries with niche market demand. It cut out the middle man — the beer distributors — and made it possible for brewers and the people who wanted their beer to get together one on one. You can see why that’s bad for the middle man. He’s left pretty much nowhere with a refrigerated warehouse full of Bud Dry nobody wants to drink. So let’s play the “it’s about the kids” card, but I’m not buying it and neither should you.

They claim that an NSA study showed “10 percent of all minors have actually obtained alcohol over the Internet.” So let’s look at those numbers. According to the 2000 Census data, there were 281,421,906 people in the total population and 196,899,193 who were 21 years of age or older (which is 70%). That leaves a minor population of 84,522,713. Ten percent of that is 8,452,271 minors who have bought alcohol over the internet. Does that figure seem reasonable to anyone? Then let’s also review what’s involved in “obtaining” alcohol over the internet. You’d need internet access, a credit card and a mailing address that matched the credit card (although I suppose you could claim it was a gift and were shipping it elsewhere). So you figure you’ve got to cut out all kids under a certain age, say nine and under, which is just under 4 million kids. Does every household have internet access. Not yet. Then there’s stealing (borrowing) a credit card or perhaps you may actually have your own if you’re college age or have rich parents. Then there’s where to have it shipped, not to mention the amount to be added to cover shipping (and even light beer is heavy when it comes to shipping). You’d have to choose a house where parents wouldn’t be home during delivery times and shipping alcohol requires an adult to sign for it, too, so you’ve got to figure a way around that problem, as well. So yes, a resourceful, motivated teenager could get it done, but it wouldn’t be all that easy and I find it very hard to believe eight and a half million kids pulled it off. Especially when the time-honored tradition of asking an older brother or uncle to buy beer for you is still the bet bet going, and is so much faster and cheaper and less risky that the idea of using the internet in this way becomes laughable.

In the end, using states’ rights to fight even an imagined health problem — it’s not a health problem but that is still implicit from its source — is prima facie ridiculous. In fact, the entire chain of logic in this whole debate seems surreal to me. First, the Surgeon General of the United States, the top “doc” in the country, asks for advice about what is not even a health problem but a societal one to an organization with no ties to health or, in fact, the problem. After all, beer distributors are middle men: they don’t make the beer and they don’t sell it to the public. Then these middle men respond by saying the way to protect our kids from the evils of underage drinking is to return states’ rights to them and allow them to keep their monopolies and not allow you and me to buy Rodenbach Grand Cru from New York State (since I can’t get it in California — there’s no distributor here) because there’s a small chance the kid who lives down the block might try to order beer over the internet for his next party. I confess I’m really quite tired of giving up my rights as an adult so that children will be protected. Not only does it not ever work, but we should not be willing to create a society that’s fit only for kids on the off chance that a child will have access to something we’ve decided he shouldn’t see, or hear or taste. There’s already a mechanism in place to combat those problems and it’s worked pretty well for millennia — it’s called parenting. I’m an adult. I want to live in an adult world. I don’t want anybody telling me or my child what’s good and what’s bad for him. That’s my job. And now what I really want is a bottle of Rodenbach Grand Cru. Please, for the love everything good, somebody send me a bottle before it’s too late.

Propaganda Works: A-B Stocks Upgraded

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In an AP Story today, at least two market analysts upgraded the stock of Anheuser-Busch (BUD) from “Hold” to “Buy.” One analyst citied as his reason that “[e]arly 2006 volume momentum is encouraging and price increases are holding.” The other was “encouraged by recent brand acquisitions and positive volume trends,” specifically stating that A-B’s “sustained push into the U.S. high-end with Grolsch, Harbin and Tiger are small but positive steps.”

I’d laugh if it weren’t so damned sad and predictable. Both of these analysts seized upon information that Anheuser-Busch itself released as part of its thinly veiled propaganda campaign to get the share price up, none of which do anything to really address the trends that people are drinking less of their beer.

From the AP Story:

Shares of Anheuser-Busch Cos. inched up Tuesday after a long slump as two analysts upgraded America’s biggest brewer, one calling the sentiment on the company too negative.

“After 18 months of share price decline, industry volume slump, and price warfare, the sentiment on BUD now appears overly pessimistic relative to a moderated growth outlook,” wrote Deutsche Bank analyst Marc Greenberg in a client note, upgrading the company to “Buy” from “Hold.”

The analyst added he sees a better tone in the market than a year ago this time.

“Early 2006 volume momentum is encouraging and price increases are holding,” he wrote. “Investor sentiment, however, remains fairly cynical, both qualitatively and quantitatively.”

Bear Stearns analyst Carlos Laboy also upgraded the St. Louis, Mo., brewer, saying in a client note he was “encouraged by recent brand acquisitions and positive volume trends.”

The U.S. beer category, which has seen lackluster sales as of late, is rallying, he said, adding “we believe this industry rally will benefit A-B directly.”

Laboy, who upgraded the company to “Peer Perform” from “Underperform,” said the brewer’s move into Russia and its “sustained push into the U.S. high-end with Grolsch, Harbin and Tiger are small but positive steps.”

The second analyst also claims that the “U.S. beer category” (by which he undoubtedly means only the big three players) is “rallying.” Of course, he offers no evidence of any rally, just that he believes it. Now I know our markets are only as strong as our belief in them and that if everybody lost faith in our monetary system or our economic system as a whole then it would, in fact, collapse. But this is just such a blatant case of wishful thinking trying to become a self-fulfilling prophecy that all I can do is shake my head wistfully. First there’s a rally that doesn’t exist and that rally is the basis of optimism that will turn around a huge coporation’s business woes. It’s hard to believe people really do have any faith in this system yet this was reported without any tongues near a cheek (not counting mine).

The more I follow this, the more and more desperate it all appears. With each new step taken, the Emperor’s clothes are looking increasingly threadbare. I really hope the craft brew industry can seize upon what is looking like a marvelous opportunity to build some momentum that actually has a chance of reaching that magical tipping point. Every small brewery whose business is posting terrific gains should be hounding their local press to have their story told. All the local newspapers and television news shows should be actively looking for positive business stories to persuade their audience that the economy is doing fine, despite all evidence to the contrary. Let’s give it to them. If you’re a craft brewer who’s doing well, start crowing.

Beer: “Official Drink of Knuckleheads”

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At the annual Nightclub & Bar Show held — where else — in Las Vegas, Miller Brewing CEO Norman Adami made some surprising admissions in a speech he gave last night. Perhaps they weren’t that remarkable when you consider that he was speaking to a group that consisted primarily of bar owners and it was reported by MarketWatch, a trade magazine that is read almost exclusively by the same people. If you want to know what’s really going on, a good place to start is to read what business people are saying to one another in the business press. There they generally speak with a great deal more candor because their audience is almost exclusively the business community. Since there’s less need to spin the news for the general populace of consumers, you can therefore often find some excellent nuggets of uncommon honesty.

Adami followed the line of reasoning Anheuser-Busch has recently taken that beer drinkers are switching to wine and spirits as they are “significantly outpacing the growth of beer.” He did, at least, acknowledge that craft beer and imported beers “continue to grow at a good clip.” A reasonable person at this point might look to the taste and more flavorful character of craft beers and many imports and conclude that perhaps it was time to stop making bland, flavorless mockeries of beer. Silly you. It’s the fault of marketing. It can’t be the product, it must be the way it’s presented. Adami said that in the mid-1990s, “brewers fell into a pattern of sameness in message, sameness in look and sameness in our products.” Oh, that must be it. He continued. “We were promoting sameness and increasingly going lowbrow. It is as if we were promoting beer as the official beverage of the knuckleheads.” He claimed the consumer “was looking for more diversity and style.” Diversity and style, huh? That sure sounds like a cry for flavor to me. Since the bland American-style pilsners that the big breweries continue to churn out like a bad science project gone awry are the very opposite of diversity and literally have no real style, wouldn’t the logical conclusion be to take a look at the products you’re offering?

Nobody says the big breweries can’t make a decent beer, which is why it’s all the sadder that they no longer do. There’s almost no one left alive who can remember what big brewery beer tasted like before World War Two. That’s when the slide toward mediocrity really began. The U.S. government asked the breweries to make watered-down versions of their beer because they didn’t want soldiers to be drunk while bullets were whizzing all around them, which is quite sensible. Of course, not drinking at all might have also made sense but those were different times and attidtudes were also different, to be sure. But the unfortunate result was that when the soldiers returned many of them also brought back a preference for the blander beers they had in the war. And every brewery was happy to oblige them since a watered-down beer is also a cheaper beer to make, which means more profits. So what began innocently, continued for decades of slowly making beer more and more bland until it reached its zenith in the early 1980s with the popularity of light beers. It’s hard not to see the ensuing microbrewery revolution of that same time period as a backlash to the bland beers of the day.

But as if you needed more proof that profit is king, Miller will not be improving the taste of its beer by the reintroduction of flavor to fight this crisis. Instead they will be “overhauling the packaging and marketing of its big domestic brands, including Lite, Genuine Draft and High Life, while heavily promoting imports including Pilsner Urquell and Peroni.” Well that ought to do it. Whew, dodged a bullet there. That should keep the shareholders happy.

He concluded by commenting that there are signs of “a reawakening in the American beer business. I believe the industry is going to get its marketing mojo back.” Well, what a bold prediction. That’s just what the American beer business needs: better commercials, better billboards, better sports sponsorships, better methods of selling but decidedly NOT better beer. If there was ever a better opportunity for craft beer to step in and fill the public demand for “diversity and style,” this is it.

Amazing A-B Turnaround! Wow, That Was Fast!

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Wow, these guys are good. Just a few weeks ago A-B was talking about their earnings dip like the sky was falling, running around doing anything they could think of. “Pick up more imports” (Grolsch), try to buy up some microbreweries, “create an ad campaign to celebrate beer” (Here’s to Beer), and “introduce new products” (Michelob Ultra Amber). Well I guess it was all worth it because yesterday it was anounced that Anheuser-Busch was “restoring sales and earnings momentum.” Whew, I’m glad that’s over and we can all relax.

Of course, I can’t help but wonder what “Restoring Sales And Earnings Momentum” actually means. Just on a purely semantic basis, how can you restore momentum? Merriam-Webster defines momentum as “strength or force gained by motion or through the development of events.” Is it even possible to “restore” so quickly something that by definition takes time. Momemtum must be gained slowly, it’s not like a race car weaving through the business landscape. But that’s propaganda for you. Frame something in a positive light and the facts or common sense hardly matter.

Frankly, if I were a shareholder I’d be concerned about these wide swings. First we’re up, then we’re down, now we’re up again all in the space of a few months. You’d think people would be more concerned with fixing any problems (not that any have been admitted, it’s always someone else’s fault) on a long term basis so they wouldn’t resurface. But shareholders are apparently a finicky bunch afflicted with a economic form of ADD. They want growth and earnings and they want it now dammit, or they’re selling. It’s the adult equivilent of play-my-way-or-I’m-taking-my-ball-and-going-home. They’re not in it for the long haul. So it’s not terribly surprising to see A-B float some small positive numbers and then spin it so they’re magically back on the road to recovery. Nothing will really change, but the share price goes up and everybody’s happy.

From the press release:

Through a number of new sales initiatives, the company restored its domestic beer volume and market share growth in the second half of 2005. Anheuser-Busch’s wholesalers’ sales-to-retailers increased 0.8 percent in the second half and grew 2.7 percent in the fourth quarter (both on a comparable selling day adjusted basis). Anheuser-Busch brands gained six-tenths of a share point at the consumer level in both the third and fourth quarters, according to IRI supermarket data. The company’s sales momentum has carried over into 2006, with wholesalers’ sales-to-retailers up 2.9 percent through mid-February.

Watch out any time you hear the euphemistic “new sales initiatives” which most likely means lowering prices. Most beer companies already do this a bit more in January and February, because they are traditionally the slowest months for beer sales. But lowering prices also has the curious effect of raising volume but lowering profit, and wasn’t that A-B’s problem in the first place?

And check out these numbers they’re crowing about. People tend to read headlines and maybe the first paragraph, studies have shown. So it’s no surprise the actual numbers that indicate restoring of momentum are in paragraph two, where it’s finally revealed that “wholesalers’ sales-to-retailers increased 0.8%” and “grew 2.7 percent in the fourth quarter (both on a comparable selling day adjusted basis).” Woo hoo. Now I know in terms of dollar amounts, because A-B so large, that even small percentage gains probably equal millions, it’s still not exactly the sort of numbers you expect people to start sending out press releases about. But also look at the paranthetical information. “Comparable selling day adjusted” is basically a trick to compare periods of time that have different numbers of days in them, that is it’s another way to potentially lie with statistics or at least show things in the most favorable light possible.

More from the press release:

Restoring cost stability is expected to take longer than restoring volume and pricing. Over the last three years, the domestic beer company has experienced substantial increases in commodity costs, most recently from aluminum, glass and energy. Commodity cost pressures continue in 2006. Commodity costs tend to be cyclical over the long-term and the company is actively working on a number of productivity initiatives to improve the cost outlook.

Just as an aside, I love the language that corporations use. Craft brewers use ingredients, supplies, etc. A-B uses “commodities.” Small brewers pay higher electric bills, big corporations experience substantial increases in commodity energy. That just cracks me up.

Normally, when supply costs go up you’d expect that prices to consumers would also rise. And while there have been modest increases, A-B and to some extent the other big breweries (because they’ve had to align their pricing with A-B to stay competitive) have minimized these as much as possible due to perceived consumer resistence to paying more for beer. Over the years this has kept big beer prices relatively low, especially compared with craft beer (which is generally much more expensive to produce). So their complaints about costs seems more like whining to me. They could raise prices to a percentage of actual supply costs anytime they wanted, but over the years they’ve trained their customers to expect low prices and now this strategy is starting to backfire. Plus, of course, profits would also suffer further indignities.

The other effect of keeping their prices artificially low is that the gap between a six-pack of Bud and a six-pack of something with flavor is necessarily higher. This has been a bone of contention of mine for quite some time. If A-B’s pricing reflected the same markup as craft brewers then the difference between their beer and something worth drinking would be substantially lower, making it much more possible for craft brewers to persuade consumers to trade up to their beers. But any consumer that is driven by price alone needs a lot more education about what he’s buying before he’ll be willing to change his buying patterns.

But the general meaning of this latest missive from Anheuser-Busch is, I think, yet another attempt to change their recent fortunes. When I wrote earlier that big companies will do anything to get the share price up, this is one of those “anythings.” I think we’ll see a lot more of these smiley face upbeat press releases over the next few months. We just have to remember to take them for what they really are: propaganda.

Craft Beer Up 9%, Leads All Adult Beverages for 2nd Consecutive Year

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We’d been hearing the rumors for a couple of weeks now but today the Brewers Association made it official. They announced today that the craft beer industry is showing excellent growth for the second consecutive year. This on the heels of Anheuser-Busch’s announcement of 4th quarter revenue having fallen 54.7% (before taxes) on February 1. Unnamed sources had previously told me the 9% figure was primarily in regional players and there was uncertainty how the smaller local brewers had fared. It appears now that these brewpubs and local brewers had another good year, as well, at least based on these numbers. This is excellent news for the industry and further signs that it has truly become a mature, stable industry.

From the press release:

Boulder, CO — February 16, 2005 – America’s craft brewers sold 9.0 percent more barrels of beer in 2005 versus 2004 making craft beer the fastest growing segment of the US beverage alcohol industry for the second consecutive year, according to the Brewers Association, the Boulder, CO-based trade association for US craft brewers.

“Craft beer volume growth far exceeded that of large brewers, wine and spirits in 2005,” said Paul Gatza, Director of the Brewers Association. “And even though imported beer grew nicely in 2005, craft beer grew at a faster rate.”

The Brewers Association estimates 2005 sales by craft brewers at 7,112,886 31-gallon barrels up from an adjusted total of 6,526,809 barrels in 2004, an increase of 586,077 barrels or 8.1 million case-equivalents.

Compared to craft beer volume growth of 9.0 percent, spirits volume increased at 3.3 percent in 2005 and wine volume was up 2.9 percent. The import segment of the beer industry rose 7.2 percent in 2005 while non-craft domestic beer volume declined slightly for the year. This establishes craft beer as the fastest growing segment of the US beverage alcohol business for the second year in a row.

“Consumer enjoyment of the flavor and diversity of craft beer continues to fuel healthy, steady growth in this segment,” said Ray Daniels, Director of Craft Beer Marketing for the Brewers Association. “Small brewers lead the entire industry by offering flavorful, interesting beers.”

The craft beer segment includes more than 1300 small, traditional and independent breweries which produce primarily all-malt beers. It includes both brewpubs which sell beer primarily at their own pub or restaurant and packaging breweries that distribute beer in kegs, cans and bottles to a wide range of retail outlets. The Brewers Association has tabulated industry growth data for these breweries annually since 1985.

One year ago, the Brewers Association reported craft segment growth of 7.2 percent for 2004, a year in which wine (2.7%), spirits (3.1%), imported beer (1.4%) and non-craft domestic beer (0.5%) all reported substantially smaller growth rates.

“The strong growth by craft beer in 2005 is especially impressive because it comes on top of strong performance in 2004,” said Gatza. For each of the last two years, craft beer growth has been stronger than in any year since 1996. He also noted that 2005 is the third year craft beer growth rates were stronger than those for imports. “Craft beer clearly leads the beer industry in consumer appeal.”

Not to rain on the parade just as the marching band strikes up the first tune (Roll Out the Barrel, no doubt), but I do feel compelled to point out that while this is great news and worth celebrating, by the numbers the craft beer industry is still just a drop in the kettle compared to overall domestic beer production.

I mention this simply to remind myself — and everyone else — that while we may have won a nice victory, the war still rages on. Anheuser-Busch has already been showing concern about the craft beer industry, despite our small overall numbers. Big corporations cannot accept any erosion of their market share or profits, so even our small gains they consider a taking from them. And believe me, this is not just about their pathetic “Here’s to Beer” campaign. There have been recent persistent rumors that A-B is approaching (or in some cases having their distributors approach) a large number of regional and local breweries about acquiring them. Let that sink in. Bud is looking to buy up a bunch of breweries, and is starting perhaps with the biggest and most influential. That would be a catastrophic event for the fledgling craft beer industry. (I know I just suggested it was mature and stable, but not as compared to the giant 100-plus-year old corporations.) If they are successful in waving carrots in front of enough beleaguered, overworked brewery owners then the jig could well and truly be up. And A-B has bigger, deeper carrots than all of the craft beer industry combined (I confess I made that last statistic up, but intuitively it feels right).

I’m reminded at this point of New Belgium Brewing co-founder Kim Jordan’s impassioned keynote speech at the New Orleans Craft Brewers Convention several years ago where she argued for solidarity among the industry to reach the lofty goal of 10% of the market. And while I may have concerns about New Belgium’s own business practices in this regard, I think her words resonate just as strongly today. This is exactly what we need to do. We need to close ranks right now. For those of you who are fans of American football, think about all of the post-victory locker room speeches. It doesn’t matter what team, the coach makes the exact same speech. Enjoy this moment, your win, but don’t rest on your laurels. Take tomorrow off, but then it’s back to work the next. This is just one victory, there’s another battle next week. And that’s true here, too. Let’s enjoy this moment. I for one will open a special beer tonight. But let’s also remember the war is hardly over and there is much to do. But for now, congratulations to all the brewers and breweries.

Stampede Light: Because Beer Just Isn’t Healthy Enough

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Stampede Light, the brainchild of Lawrence Schwartz of Dallas, Texas, is a light beer enhanced with extra vitamins, besides the many already naturally occurring in beer. Created last year with the help of light beer guru Joe Owades (Owades passed away in December of 2005), is marketing itself as the first “vitamin” beer, whatever that means. It seems to play on the perception that most people hold, which is that beer is unhealthful. While it may be that the product churned out by the big breweries — which is loaded with many of several dozen chemicals approved by the FDA for use in beer production — is not as healthy as beer ought to be, most craft beer is made using all-natural ingredients and use very few, if any, chemical additives. Beer made in this traditional way returns beer to a time when it was considered “liquid bread” and preferable to water, since it had more nutritional value and avoided any problems with sanitation that were common in centuries past. But the perception of beer as unhealthy is a very recent phenomenon, fueled by prohibitionists, neo-prohibitionists like MADD and others, and ironically by the big breweries themselves with their questionable propaganda techniques that show their type of beer in a less than flattering light.

In recent years, all types of foods and beverages have been enhanced with herbs, patent-like medicines and the like all in an effort to market them as “health foods” or “smart foods” that are better for you than the originals. Most marketing is, of course, utter nonsense, thinly disguised propaganda whose sole mission is to separate you from your money. And to say that the science of propaganda has become more sophisticated and effective in recent decades is an understatement of immense proportions. We live in an age where propaganda is used to sell everything from toilet paper to the latest war without most people even realizing that it is indeed propaganda.

So I suppose it was inevitable that a new age “enhanced” beer would come to light, so to speak. As reported on a local television station in central Florida, WKMG Channel 6, “Schwartz said the federal government told him that he cannot claim the beer is good for drinkers and can’t list vitamins on the labels because it would be an implied health claim.” Curiously, the website also lists the calories in a bottle of Stampede Light at 112, which is actually slightly higher than Bud Light. Slashfood also had a piece today about Stampede Light, in which they also mention that regular beer already had several alphabet vitamins as well as niacin.

Here are small sampling of more places to read about beer’s health benefits:

Stampede Light’s approach appears to be aimed at young, health-conscious 20-30-somethings who don’t know much about what beer tastes like nor its history. Photos on the website’s gallery show attractive men and women in clubs or on the street with a bottle in their hand. (apparently you can’t be ugly and drink this beer, or perhaps the beer itself will make you more attractive?) Mercifully, the beer is currently only available in north Texas, around the Dallas area. Enough with the new light beers, already.

Beer Institute vs. Advertising Complaints

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The folks at the Beer Institute, themselves now essentially advertisers of beer, have created the Code Compliance Review Board (CCRB) to review complaints by consumers about beer ads, whether the ad itself or the appropriateness of its placement, that have not been satisfactorily resolved by the offending brewery.

From the press release:

Jeff Becker, president of the Beer Institute, announced today the implementation of an independent review board to assess complaints filed with the Beer Institute about the content or placement of beer advertisements. The board will address situations where the proponent of a complaint is not satisfied with the response received directly from the brewer that sponsored an ad. The decisions of the board will be based on the Beer Institute’s Advertising and Marketing Code.

The press release blathers on about self-regulation which, in my opinion, has never, ever worked. No business in the history of mankind has ever intentionally disciplined itself or found itself guilty of any wrongdoing beyond that which required a slap on the wrist. To me, the real question here is what kind of complaints cannot be resolved by the brewery? Who’s being stubborn? I’m not being rhetorical, I really want to know. Are the unresolvable complaints coming from neo-prohibitionists who won’t be satisfied until alcohol is illegal again? (Their motto: if if it didn”t work before, try it again.) Or are the breweries the unreasonable party here, putting up billboards across the street from schools or creating mascots like Joe Camel that appeal primarily to children? I’m sure both of these strategies have been employed, and not just by breweries but by companies selling tobacco, liquor, etc.

So I’m not quite sure what the angle here is, though I’m sure one will emerge. The press release is vaguely silent about what the CCRB will actually do to resolve compaints or what authority it has, especially if the complaint is regarding a non-member brewery. Are they just trying to assuage hardcore complainers with an axe to grind or do they really want to change how beer is advertised and reduce the number of complaints before they occur. Is that even possible? Or desirable? I honestly don’t know. It will certainly be interesting to see what develops.

Michelob Ultra Amber: Are You Kidding Me?

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I didn’t start this blog to rail against Anheuser-Busch. Really I didn’t. You’ll just have to take my word for it. Until recently, I hadn’t been paying as close attention to the daily derring do of the brewing world as I used to. I had taken a little over a year off from watching the industry that closely in order to care for my autistic son Porter and his little sister Alice. When I became a stay-at-home father I gave up my job as GM of the Celebrator Beer News and I decided not to watch the world of brewing quite as closely. But this January I decided to jump back in and see what I could do writing more seriously from home and it feels a bit as if I’ve just woken from a long nap. I’m still a little groggy and when I look around I feel disoriented. And every other day it seems it seems like Anheuser-Busch is doing something to make me wish I hadn’t woken up.

Today’s head scratcher is a dark light beer, Michelob Ultra Amber. Now I realize that to A-B a dark beer is really just a beer with a little color, an amber beer. Something on the order of 6-9 lovibonds, I suspect. Budweiser is 2 although Michelob Dark is around 18. Your average Guinness is 40, which is the upper end of the scale. So calling this dark is more than a little bit of a stretch.

But I have to be fair here about who should really take the blame for it being characterized as a dark beer. And a close look at the official press release reveals that they never refer to the new beer as a dark beer. In fact, the word is used only twice in reference to the use of “dark-roasted specialty malts” and in mentioning “using darker roasted malts to increase the flavor.” So much as I’d like to, I can’t fault A-B on this one. The blame falls squarely on the mass media who decided a catchy headline like “dark light beer” is better than accuracy. The AP story seems to have been the first to use this dark-light fallacy in their headline. This in turn was echoed all over the media that uses AP wire stories. So chalk up yet another example of the short shrift beer gets in the mainstream press. The author, one Jim Salter, appears to write about everything from business to sports. So he can’t expected to know anything about what he’s writing. The facts just don’t matter in today’s entertainment journalism.

This is a very frustrating situation for most beer writers I know. Any of us would happily fact check a beer article for almost any journalist just to insure the public is not told another ridiculous falsehood which will take a lot of work to undo. People tend to believe their daily paper and discount what they read in the free brewspaper they pick up at their local bar even though it’s generally the opposite. Most news outlets, if they cover beer at all, assign it to a wine or food writer who generally could care less about beer itself and any attendant accuracy. There are exceptions, of course. But sadly, not too many.

However, I can’t let Anheuser-Busch off the hook completely. They are still rolling out another pointless beer. An amber colored light beer is, after all, another light beer. And heaven knows we don’t need any of those. But as long as they’re the only beer category showing growth, I don’t think they’ll be disappearing any time soon.