Beer writer Greg Kitsock had an interesting piece in the Washington Post recently, in which he tackled trickle-down economics as applied to the beer industry. It’s called Beer: Trickle-Down Economics and examines what’s going on with beer sales during the current recession, a topic I’ve been speculating on frequently myself. It’s worth a read.

KPS Capital Partners (KPS), which manages “a family of private equity limited partnerships with over $1.8 billion of committed capital,” created a new division called North American Breweries, Inc. (NAB). The new division, NAB, was formed to be the umbrella organization directing three new acquisitions by KPS; High Falls Brewing, Labatt USA and a perpetual license to sell Seagram’s Cooler Escapes and Seagram’s Smooth.

The sale of Labatt USA was mandated by the U.S. Department of Justice as a condition of approving InBev’s purchase of Anheuser-Busch last year. The financial terms were not disclosed, but apparently the DOJ has already approved the deal.

As far as I can tell, there’s no website set up yet for NAB, just this NAB page at the KPS website.

From the KPS press release:

Raquel Vargas Palmer, a Partner of KPS, said, “The Labatt USA acquisition completes the foundation of the North American Breweries platform. My partners and I are very pleased that Rich Lozyniak will serve as CEO of the new company, following two exceptional tenures with other KPS portfolio companies. We are confident that Rich and the North American Breweries management team will enhance the company’s value through acquisitions and many other exciting initiatives that drive organic growth of the company and its brands.”

And here’s how they describe their new entity:

About North American Breweries, Inc.

North American Breweries is a national platform for investments and growth in the beer and malt beverage industries. Formed in 2009, North American Breweries owns High Falls Brewing Company, one of the largest and oldest continually operating breweries in the United States, and is the exclusive marketer and seller of Labatt brand beer and Seagram’s Coolers in the United States. The company’s brands include the complete line of Labatt beers, including the flagship pilsner Labatt Blue and Labatt Blue Light; the Genesee line and the Dundee Ales & Lagers family, which includes the Original Honey Brown Lager; and Seagram’s Cooler Escapes and Seagram’s Smooth. It is also America’s exclusive distributor of several imports, including Steinlager from New Zealand, Toohey’s New from Australia, Thwaites from the U.K. and Imperial from Costa Rica; and a manufacturer of beer and other alcoholic and non-alcoholic beverages under contracts on behalf of other companies. North American Breweries is a portfolio company of KPS Capital Partners, LP.</blockquote

 

At the end of last month, the Brewers Association released the calendar year 2008 sales and volume numbers. Craft beer gained 5.8% over 2007 by volume and 10.5% by dollars.

From the Brewers Association press release:

Overall share of the beer category from craft brewers was 4.0 percent of production and 6.3 percent of retail sales. More than 1 million new barrels of beer were sold in 2008, and close to half of those barrels were beer from craft brewers.

“2008 was a historic year for beer with the large brewers consolidating and imports losing share, while the top ten selling beer brands dropped in sales. At the same time, small independent craft brewers continued to gain share and attention,” said Paul Gatza, Director of the Brewers Association.

With total U.S. beer being more than a $100 billion industry, the Brewers Association estimates the actual dollar sales from craft brewers in 2008 were $6.34 billion, up from $5.74 billion in 2007. Taxable barrels of the total beer category was 1,210,018 more in 2008 with craft brewers producing 473,364 of those barrels. Total craft brewer barrels for 2008 was 8,596,971, up from 8,123,607 barrels in 2007.

Beer’s popularity as America’s favorite fermented beverage continued in 2008 with Gallup stating “beer is back to a double-digit lead over wine.” Taking into account the challenges in today’s economy, BevincoNielsen released a survey showing beer was faring better than spirits, with wine lagging. The Brewers Association emphasized trading across from wine and spirits to beer continues, with some of today’s wine drinkers discovering the affordable enjoyment and rewards of craft beer.

These increases in share and barrels for craft brewers come at a time when, according to the Brewers Association, the cost of operating a small brewery increased over 39 percent in the period of November 2007 to November 2008. The Brewers Association states that today’s craft brewers face many challenges including:

• Access to ingredients and raw materials
• Increased pricing for materials and supplies
• Access to market (competition for shelf space at the retail level)

The good news is more breweries again opened than closed in 2008, and far fewer closed in 2008 than the year before. The number of American breweries has finally topped 1,500. In fact, the new total is 1,527, of which 1,483 are considered craft breweries.

On the downside, brewpubs were down 2% and contract beer was down 9%. On the upside, regional breweries were up 10% and microbreweries up 13%. The overall beer market is up 0.4% and accounts for approximately $101 billion.

 
If you’re a sucker for numbers, check out the craft statistics page.

Using a twisted phrase worthy of Yoda, A-B launched the “Born On Date” in September of 1996 and with it, their advertising began including the self-evident tagline “fresh beer tastes better.” They were nothing, if not fastidious, in enforcing it and their efficient distributor network pulled any product that was older than 110 days.

Over the last decade plus, A-B has used that policy as a way to criticize every other big brewer not doing likewise, which is pretty much everyone else. But early last month, Anheuser-Busch suddenly announced that they would be abandoning the cherished “born on date” for a number of brands, including Bud Ice along with Honey Lager, Pale Ale and Porter under the Michelob brand. Effectively it’s all the “new and niche beers” that will stay on the shelves longer, at least 180 days. The born on date will continue to be used on the flagship Budweiser and Bud Light, and also Bud Select, Busch and Natty Light.

As most people knew, the product at that age was most likely still drinkable, and as a result who knows how much money was lost. Well, the new overlords at A-B InBev are not A-B, and they’re loathe to throw money away if they can possibly help it, any money, no matter what. Frugal is the kind word for their penchant for implementing cost-cutting measures, so it comes as no surprise that they would discontinue what was obviously a wasteful, albeit P.R. savvy, program. But to save face and try to convince the public that the change is good, despite what they’ve been saying for over ten years about anyone not doing what they did, the spin machine has been turned up to overdrive.

So, assuming that’s true — a doubtful assumption at best — then why aren’t they abandoning the “born on date” for all their products? Can it be possible that after inventing these so-called new and improved “processes and packaging” that they decided not to use them on their best-selling products? You tell me, does that make any sense? Or is it more likely that’s the spin to avoid making it seem like they’re going back on the self-aggrandizing commitment that they’ve been using over ten years to proselytize brand loyalty and make their products seem fresher than their competitors, which of course isn’t remotely true.

We’re certainly seeing some remarkable changes since the new rulers arrived in St. Louis; layoffs, new policies to pay suppliers more slowly and abandoning the “born on date” for several of their brands. These are all measures taken to cut costs, save money and pay of the debt incurred from buying A-B. Undoubtedly, there will be more of these. What’s next? Only time will tell.

I’ve been swamped with work lately — not that I’m complaining — but between SF Beer Week, personal issues and deadlines I’ve gotten behind on almost everything, including some Bulletin posts I’d been hoping to do. So over the next few days you may see some news that’s not really as newsy anymore, as I try to catch up. Case in point is an item about lowering the drinking age that aired on 60 Minutes in late February. I have to give CBS some credit, if for no other reason than they at least were willing to do a story that wasn’t completely one-sided, as is so often the case. Lesley Stahl’s piece did seem to approach the Choose Responsibility ideas with an air of skepticism, while appearing, at least to me, more accepting of MADD and other critics’ arguments. And naturally, the New Drys used the opportunity to continue spreading false information. Choose Responsibility — the organization advocating for lowering the drinking age to 18 created by former college dead John McCardell — was the focus of the 60 Minutes piece, and so also took the brunt of the New Drys’ attacks. They put up a rebuttal on their website to the misleading propaganda that aired during the piece. You can watch the original segment below, at Choose Responsibility or at CBS, where they also have a transcript available. Then check out Choose Responsibility’s rebuttal to get the full story, and also get a glimpse of how the New Drys use propaganda to further their ends.

Watch CBS Videos Online

Earlier this month our Session was about Lager Love, and it looks like the English have fully embraced them.

If you’re a fan of British ales, there’s little to wave the flag about concerning the results of a recent survey, released Tuesday by Ciao, an online consumer review website. The online community complied data from reviews and comments from “2.61 million unique visitors” to create a list of the top ten most popular beers in England.

Take a look at the list below, and weep.

1. Kronenbourg 1664 Lager
2. Guinness Draught Stout
3. Stella Artois Premium Lager
4. Hoegaarden White
5. Grolsch Premium Lager
6. Carling Black Label Lager
7. Heineken Export Lager
8. John Smith’s Extra Smooth Bitter
9. Foster’s Lager
10. Budweiser Lager

You’ll probably notice right away that there’s only one British beer brand listed — John Smith’s — which, sadly, is owned by Heineken. Seven lagers, two ales and a hybrid. Three are InBev brands. Not one is brewed by an independent company that’s either not ginormous or owned by a larger parent company. Pathetic. At this rate, Americans may actually drink more ales than England. Somebody should look into that. I’d like to know that statistic.

Curiously, they state that number eleven is Carlsberg Special Brew Lager, which they claim makes it the “nation’s least favourite,” as if there are only 11 brands of beer in England. I’m not sure I understand that rationale at all, unless somebody there just wasn’t thinking or perhaps is a complete moron.

On a related, and equally disturbing note, somebody’s put up a website entitled The Campaign For Real Lager, apparently spoofing CAMRA, which I guess is fitting given the current state of beer in the UK. That’s assuming it is a spoof, I must confess I’m not 100% sure, nor was the Brit who sent me the link (thanks Glenn).

The website describes itself like this, with language that cries out as tongue in cheeky:

The Campaign for Real Lager (CAMRL) is an independent, voluntary, consumer organisation whose main aim is to promote and ensure the healthy future of lager beer, and maintain Britain’s greatly renowned lager culture.

CAMRL campaigns to make the big lager brands bigger and keep the great lager pubs great, we seek to quell the worrying rise of the newly fashionable “Real Ale” culture that is leading to the damaging promotion of warm, flat, insipid ‘beers’ ahead of cold, clean, crisp lagers.

Perhaps more unsettling is just how well it’s done; crisp layout, colorful graphics, and punchy copy combine to make the humor wry, dry and appropriately British. Funny and frightening all at the same time. That’s hard to do. The domain is registered to a Matthew Hall of Worcester, which is northwest of London with the closest big city being Birmingham.

On a more serious note, to which CAMRL seems like a kick in the teeth, there’s an article in today’s London Times entitled Beer Today, Gone Tomorrow? whose headline states that “[a]t the current rate of closures, Britain’s last pub will call time in 2037,” asking the ultimate question of whether or not there’s any “light at the bottom of the glass?”

In the article, it is reveled just how dire things are for the British pub:

According to startling figures from the British Beer and Pub Association (BBPA) released last week, there are now 39 pubs closing in Britain each week. Were the closures to continue at that rate, last orders in Britain’s last pub would be called for the final time one evening in June 2037.

It’s a long article, but worth your time reading, at least in my opinion. The reason it’s relevant is that several states are currently attempting to raise the tax on beer in the U.S. — notably California and Oregon, two states with large craft beer industries, which will be placed at risk should the new higher taxes be implemented. Back in the Great Britain, the British Beer and Pub Association also estimates that a “record 2,000 pubs have now closed since the Chancellor increased beer tax in the 2008 Budget, resulting in 20,000 job losses over the last year.” That’s exactly what would happen here, too. Yet shortsighted moralists and neo-prohibitionists continue to beat the drum for higher taxes, an outrageously dangerous ploy during our economic recession. The one thing not to do in a depression is put more people out of work or force popular consumer goods to rise sharply in price. Either or both will not help the U.S. economy but in fact will harm it even further. What would help is if both countries started drinking a lot of beer that was brewed locally. That’s a trend we should all get behind before there’s no small breweries or pubs left.

The next Session, a.k.a. Beer Blogging Friday, will take place April 3, and will be hosted by Lew Bryson, who’s just chosen his topic for next month. The April theme will be Smoke ‘Em If You Got ‘Em, by which Lew means rauchbiers and other assorted smoked beers. Lew wants us to join him behind the barn for this tasting, but I confess I’m a little nervous about that prospect so I’ll hope you’ll join us for next month’s Session. In other words, please don’t leave me alone with Lew in the back of the barn. Who knows what might happen? All I know is that it somehow involves string .. and trying to push it somewhere. Strange. We’ll probably burn it down if we’re not careful.

But here’s how Lew describes it:

There may be more smoked beers than are dreamed of in your philosophy, Horatio; it’s not just rauchbier lagers from Franconia. Within the last year, I’ve had a strange smoked wheat beer, light and tart, that local brewers insisted was a re-creation of a Polish grodziski beer; a lichtenhainer, another light smoked wheat beer; several smoked porters; the odd Schlenkerla unsmoked helles that tastes pretty damned smokey; and, yeah, several types of smoked lagers. You’ve got three weeks, is what I’m saying: go find a smoked beer.

Because I’m not going to tell you that you have to like them, how you have to drink them, or whether you can have an expensive one or where it has to be from. But I do insist that if you blog on this Session, that you drink a smoked beer that day.

If you need to get annoyingly pumped up for a tasting of Smoked Beer, click here. Don’t say I didn’t warn you.
 

A few months ago, with my 50th birthday approaching, I’d fixated on having a Hawaii 5-0 Party because I love puns so much. Plus, I love Hawaii and Hawaiian shirts, so I figured why not celebrate the half-century mark doing something I like. As you know, I also love beer, so I asked my good friend Dave Keene if I could have my party at his bar, the best pub in San Francisco — The Toronado. So on Saturday night, March 7, I had a Hawaii 5-0 brouhaha at the Toronado, which we dubbed “Toronado 5-0.” I had a lot of fun, and a number of friends and family were in attendance. I posted some photos from the party, but it’s not technically a beer event or necessarily an appropriate post subject, but what the hell. If you feel like looking at my birthday party snaps, who am I to deny you.

Click arrow below to get in the mood.

With my kids, Porter and Alice.

For more photos from my 50th birthday party, Toronado 5-0, visit the photo gallery.