The New Anderson Valley: A Chat With Trey White

March 18, 2010 By Jay Brooks

anderson-valley
Recently it was announced that Ken Allen, who founded the brewery in 1987, is selling Anderson Valley Brewing to Trey White, a former USB executive. The response on the series of tubes we all know and love as the internet was swift and surprisingly negative. Also, there was quite a lot of speculation that was simply untrue. Even the local Anderson Valley Advertiser detailed some of the negative reactions. So I spoke with Trey White this morning to clear up some of the misinformation swirling around and get to the bottom of what he has planned for his brewery when he takes over next month, after the sale closes.

First, the biggest piece of misinformation, which I didn’t even need to talk to him about to correct. A number of negative comments took the form of “how sad, another case of a big business swallowing up a smaller one.” Wrong. White is a former VP with USB. That means he doesn’t work there any more, and in fact hasn’t for several years. I, and most of the accounts that mentioned his former job did so to show that he brings beer industry experience with him. That’s a good thing. It means he knows how the industry works. As I learned when I spoke with White, the business will be family-owned, just White and his wife. No big company in the background, just a mom and pop operation.

Here’s what else I learned about his plans for the brewery. White first visited the brewery three years ago and immediately fell in love with the place. He and Ken Allen have been discussing the purchase for nearly that long. He’s committed to its success and it wasn’t just a quick flash in the pan decision.

White and his wife currently live in downtown Chicago, ironically walking distance from the Craft Brewers Conference which will take place the first week of April. For the first six months to a year after taking over, the Whites will spend about 75% of their time in northern California. All of the current staff and brewers will remain in place and no changes will be made to any of the recipes. The first year, some of the packaging may be changed and it’s possible some additional styles and/or special releases will be created.

The Boonville Beer Festival will be unchanged and the planning for it will continue apace and it will be held, as scheduled, on May 8. The Disc Golf Course will also remain on the brewery grounds.

While the brewery continues to hum along, White will turn his attention to what he knows best: marketing, merchandising and selling. He’ll immediately begin working to increase distribution and get Anderson valley beers into a greater number of chain locations, making it even easier for fans to find the beer in a wider array of outlets.

Ken will be the first to tell you that his passion for the brewery has not been 100% over the last few years and he’s been looking forward to taking a much needed rest from running the business. Ken had this to say, in the press release:

“I have enjoyed immensely growing the Anderson Valley Brewery from a start-up operating a modest brew pub in Boonville into a world class regional craft brewery. The people and friends I have made in the industry will last a lifetime. I want to thank the many customers and brewery fans who have become key parts of the Anderson Valley Brewery family.
I have looked long and hard for the right person to whom to entrust our legacy and I could not have found a better partner in Trey White. His passion and knowledge of the craft beer industry, coupled with his respect for the brands we have developed, will make him the ideal person to take the Anderson Valley Brewery to the next level within the growing craft beer industry.“

So I can’t help but think this will a positive step for everyone, from Ken Allen, the new owners and fans of the brewery’s beers. In talking with Trey White, he has that passion that can propel the brewery to the next level. He seems sincere in his reverence for the brands Anderson Valley has created over the years and has no plans to alter them in any way. He has the right experience and contacts to grow the business successfully while keeping it true to its roots. Let’s wish Ken a happy retirement and Trey good luck with his new job as a small brewery owner.

allen-white
The changing of the guard: new owner Trey White, at left, with founder Ken Allen in the Anderson Valley brewhouse.

Mergermania & The Global Beer Picture

March 18, 2010 By Jay Brooks

piechart
Yesterday Charlie Papazian had an interesting post about recent production numbers of brewers worldwide and how the top Four brewing companies control 50% of the world’s beer. That’s due to the increasing mergermania in the brewing industry, with the recent purchase of Mexico’s FEMSA by Heineken but not including the announced acquisition of Grupo Modelo by Anheuser-Busch InBev. According to a UK Reuters report, the Top four brewers make up half [the] global beer market. The supporting data comes from a researcher for Plato Logic, a beer industry analyst company in Great Britain that produces their world beer report each October. Presumably his statistics are preliminary, taking into account changes in ownership that have taken place since the last report.

But roughly, here’s what his data shows in a chart I made, using the estimates given for millions of hectoliters produced by the top five beer companies. It shows the relatives sizes of them, and how the top four are so far out in front that it’s almost ridiculous and frankly, you can make that same argument for the top four or the top three. There’s a lot of separation, but one big merger and the deck gets shuffled again.

10-graph-1

Though the production numbers aren’t given for the bottom half of the top ten, here they are by rank.

Anheuser-Busch InBev
SAB Miller
Heineken
Carlsberg
Tsingtao
MolsonCoors
Grupo Modelo
Beijing Yanjing Brewery (China)
Kirin
Asahi

Estimating world beer production (it’s not given in the article) from the Beer Institute’s Brewer’s Almanac, I made the chart below to show how the top four do indeed account for just north of half the beer produced in the world.

10-graph-3

And finally, including number five Tsingtao, here’s how the overall picture looks.

10-graph-2

Anderson Valley Brewery Sold

March 17, 2010 By Jay Brooks

anderson-valley-bear
There have been rumors floating around for a few months now, and it’s been no secret that owner Ken Allen has been trying to sell his Anderson Valley Brewery for several years. According to the North Bay Business Journal, it looks like a sale is now official. The terms have not been disclosed, but pending the necessary approvals, a sale is expected to close next month. The buyer is HMB Holdings LLC, a company created for the purchase by Trey White, a former VP with United States Beverage. In addition to the USB portfolio, White has also worked with such brands as Goose Island, SLO and Grolsch. Anderson Valley will continue to be brewed at its present facilities in Boonville, California.

avbc

ABI To Buy Modelo This Year

March 10, 2010 By Jay Brooks

grupo-modelo
Grupo Modelo is the largest beer company in Mexico, and their most popular beer, of course, is Corona. For many years, Anheuser-Busch has owned a non-controlling 50% share of the company, but after the InBev merger they own 50.2% but only 49.3% voting. And I think they’ve been coveting control for a long, long time and now they may finally get it.

Yesterday, Reuters had an item, AB InBev to Buy Modelo This Year, suggesting it’s likely a deal will go through, and will be completed later this year. The price tag looks to be about $10.8 billion. Earlier this year, Heineken bought FEMSA, Mexico’s second largest beer company. So if ABI buys Modelo, the majority of the country’s beer market will be owned by foreign companies, just like in the U.S.

Craft Beer Numbers Up Again For 2009

March 8, 2010 By Jay Brooks

The Brewers Association released the 2009 numbers for craft beer today, and I’m happy to report it’s good news again. While mainstream beer recently reported their largest negative sales period since the 1950s, craft beer in 2009 was up 7.2% by volume and 10.3% by dollars over the previous year. According to the press release, that represents “a growth of 613,992 barrels equal to roughly 8.5 million cases. Overall, U.S. beer sales were down approximately 5 million barrels (31 gallons per U.S. barrel) in 2009.”

From the press release:

In 2009, craft brewers represented 4.3 percent of volume and 6.9 percent of retail dollars for the total U.S. beer category. With the total U.S. beer industry representing an estimated retail dollar value of $101 billion, the Brewers Association estimates the actual dollar sales figure from craft brewers in 2009 was $7 billion, up from $6.3 billion in 2008.
The total number of U.S. craft brewers grew from 1,485 to 1,542 in 2009, and they produced 9,115,635 barrels, up from 8,501,713 barrels in 2008. Overall U.S. beer sales fell from approximately 210.4 million barrels to 205.8 million barrels.

And here’s the BA’s updated fact sheet:

Growth of the craft brewing industry in 2009 was 7.2% by volume and 10.3% by dollars compared to growth in 2008 of 5.9% by volume and 10.1% by dollars.
Craft brewers sold an estimated 9,115,635 barrels of beer in 2009, up from 8,501,713 in 2008.
Overall, US beer sales were down 2.2% in 2009.
Imported beer sales were down 9.8% in 2009, equating to a loss of 2.8 million barrels.
The craft brewing sales share in 2009 was 4.3% by volume and 6.9% by dollars.
Craft brewer retail dollar value in 2009 was an estimated $6.86 billion, up from $6.32 billion in 2008.
1,585 breweries operated for some or all of 2009, the highest total since before Prohibition.

ABIB Restructures The Marketing Departments

March 3, 2010 By Jay Brooks

abib
For those of you following the transformation of Anheuser-Busch into Anheuser-Busch InBev, today’s St. Louis Post-Dispatch had an interesting article about a “shake-up in its marketing department.” Essentially, it “divides responsibility for beer brands along consumer-segment lines and places greater importance on developing new products and reaching multi-cultural consumers.” A few more of the proposed 450 lay-offs will come out of this reorganization of its marketing efforts, but no specifics were disclosed.

UK Craft Paralleling US Craft Market

February 22, 2010 By Jay Brooks

siba
For several years now — maybe a decade? — craft beer has been growing at a faster rate than the older, big breweries. Naturally, they’re so big that even small percentage growth adds up to big dollars while craft beer, for the most part, with a smaller base has far more room to grow. As a result, this has been happening year after year without changing the overall landscape of the American beer market very much. It is changing, but very, very slowly (or at least slower than I’d like).

Perhaps more importantly, this sustained growth in the craft segment while the mainstream market continues to slip suggests a broader trend and what the future might hold, at least eventually. It certainly has worried the big brewers to some extent as they continue to test market micro-like products, niche products, buy into existing craft brewers and other actions calculated to take back some of the market share lost to the craft segment, no matter how small. It’s nothing sinister, just the way corporations operate. Perpetual growth sets the share price, and they must answer to the shareholders when sales goals are not met.

As our economy tanked this trend continued, with growth slowing in both big and small segments of the industry. While beer narrowly upheld its status as “recession-proof,” it did slow somewhat. Big beer went negative while craft continues to grow, but at a slower rate, at least in terms of volume of sales. In dollars, growth remained strong, but mostly because of higher prices. Of course, I also think that craft beer can sustain higher margins than big beer, whose drive to increase volume has seen price wars for decades. That gives craft another advantage, I think, because reaching a sustainable, profitable business model doesn’t have to involve going public, huge growth or answering to shareholders. Anchor Brewery is an excellent example of growing big enough and then sustaining that level while remaining profitable. Anchor has no desire to grow larger, and their future is entirely positive. It’s the opposite of the corporate model, and the one employed by most craft brewers. And I think it bodes well for the future of craft beer.

Today, the Society of Independent Brewers (SIBA) released a report about the state of things in the UK beer market, and there are some interesting parallels between the two markets.

Some key findings:

Local brewers achieved a 3.75% increase in volume sales in 2009, while the overall beer market fell 4.2%
Three-quarters of all local brewers recorded volume growth in 2009
On average, they achieved a 17% increase in sales turnover
Pubs continue to close, but local cask ale volumes rise by 1.27%
Local bottled beer production up by 16%

The entire report is available as a pdf at the bottom of the article about it in today’s Morning Advertiser. Another interesting stat not mentioned is that 22%, the highest percentage, of independent beer is sold to the consumer directly by the brewery in their shops or via their website. Second was Supermarkets (21%) and third was through independent pubs (19%).

Ouch, ABIB Begans New Round Of Layoffs

February 19, 2010 By Jay Brooks

abib
Ouch, according to St. Louis Today, Anheuser Busch InBev has announced layoffs of 90 key people, including four vice-presidents. Some of the people let go “included workers responsible for handling every facet of the brewer’s national sales.” Though the layoffs were spread among 25 states, HQ in Missouri lost the most — 17 — and California lost 12, the second highest number by state. An inside source told the St. Louis newspaper they believe about 450 U.S. jobs will be cut over the next few months. Current President, Dave Peacock, told reporters that the cuts were designed to make ABIB “optimally organized and as efficient as possible,” as meaningless a bit of gobbledygook business-speak as I’ve heard in quite some time. Wasn’t this exactly what InBev said they would not do when they were courting the sale? But cost-cutting is classic InBev behavior, as we saw before the sale and have continued to see afterward, too. It comes as no surprise to anyone who’s been paying attention to their actions, and not their homilies, for the last several years. Now, with more cuts coming, you have a workforce that’s scared for their own jobs, not exactly the work environment anyone would enjoy. Maybe it will make some perform better, work harder, to save their livelihoods but in the end all it does is breed resentment and will likely be ABIB’s ultimate undoing, at least until the next bigger corporation swoops in and buys them.

Beck’s Sale Called Off

November 28, 2009 By Jay Brooks

becks-white
Reuters is reporting that the impending sale of Beck’s by Anheuser-Busch InBev has been scuttled, by ABIB. According to the weekly German magazine WirtschaftsWoche, the 1.7 billion Euro ($2.54 billion) contract was ready to be sign by purchaser U.S. buyout firm Bain Capital when ABIB walked away from the deal. WirtschaftsWoche is speculating that the earlier “sale of 13 eastern European breweries for 2.2 billion euros in October eased Anheuser-Busch InBev’s debt burden enough for the brewing giant to call off the Beck’s deal.” That’s all that’s known so far, but I’m, sure we’ll learn more on Monday.

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