Brookston Beer Bulletin

Jay R. Brooks on Beer

Socialize

The Long Tail of Beer Revisited

By

Chris Anderson is the author of the Long Tail theory and the companion book The Long Tail: Why the Future of Business Is Selling Less of More (and editor of Wired). He did a post last year about Anheuser-Busch’s foray into spirits, a division named Long Tail Libations, which got me thinking about his theory as it applied to craft beer.

Anderson has another post this morning further exploring this connection as it applies to the number of niche products the company has added over the last ten years. This leads him to the most niche (is nicheiest a word?) market going today, gluten-free beers. Check out his blog.

CSBA Expands Board

By

The California Small Brewers Association recently added two new board members, increasing the number from five to seven.

The CSBA Press Release:

The California Small Brewers Association has elected a new and expanded board of Directors. The new Board was elected in December and took their seats on January 1st.

The CSBA Board was expanded from five to seven members.

“The Board was expanded to allow greater representation of the membership,” said Tom McCormick, Executive Director of the association. “It will also allow for more Board involvement as we embark on a new and expanded mission for the future.”

With a new Board at the helm, the association plans to expand and broaden the realm of services for small brewers in 2007.

“For the first time, the CSBA will be conducting work shops to address critical business issues.” McCormick said. “We will also be implementing a new marketing campaign to promote California craft beer in addition to conducting numerous events and meetings to help foster communication and education among our family of brewers.”

The CSBA is a non-profit trade association that as founded in 1989 to protect the political and legislative rights of the small brewers of California.

The new Board of Directors of the CSBA are:

  1. President: Steve Harrison (Sierra Nevada Brewing)
  2. 1st VP: John Martin (Triple Rock Brewery)
  3. 2nd VP: Steve Wagner (Stone Brewing)
  4. Treasurer: John Dannerbeck (Anchor Brewing)
  5. Secretary: Glynn Phillips (Rubicon Brewing)
  6. Board Member: Geno Acevedo (El Toro Brewing)
  7. Board Member: Lee Doxtader (San Diego Brewing)

Proposed Man Law: Stick with Your Advertising

By

In a move reminiscent with all of Miller’s recent ad campaigns, they’ve decided to pull the plug of Man Laws, which debuted last spring. Miller announced last week while I was in London that their latest campaign will be on hiatus, perhaps until football season resumes once more in the fall.

The official reason stated is “that Miller is shifting its strategy to focus more on the qualities that make Miller Lite different from other reduced-calorie beers,” which is, of course, businessspeak for sales of Miller Lite continue to fall and the blame has been put on the advertising.

As AdAge (subscription) put it, “Man Law No. 1: Advertising Must Boost Sales.” This seems to be the way these things go nowadays, in a world that’s increasingly faster paced, where new television shows are cancelled within weeks, movies have very short runs, and nothing is really allowed to find its audience over time. If it doesn’t work immediately, then discard it and try something new, and fast. Was our appetite for the next quick fix created by marketing machines or are they merely playing into our natural tendencies using more sophisticated techniques? It’s worth asking, because I can’t believe an entire society with ADD was inevitable … or desirable.

But this seems to be Miller’s biggest problem with their ad campaigns over the past decade, perhaps longer. They had great success with the “tastes great, less filling” campaign of the 1980s but have never really found anything close to duplicating that success. Every couple of months, a new campaign (by a new agency, in many cases) is trotted out to great fanfare only to die in a fiery ball of collective yawns from their target audience. Either they’re poorly thought out (catfights, “Dick”) or they’re not given much of a chance (like the man laws). So then it’s on to the next one, with the predictably same result.

Anhesuer-Busch, on the other hand, has been far more successful in creating a series of memorable ads. Sales of their Bud Light, along with Coors Light, have seen recent single-digit sales increases.

But even if the Man Law ads haven’t translated directly into sales growth, the concept has been wildly popular, inspiring literally hundreds of thousands of proposed new man laws to the Manlawpedia at the Men of the Square Table website. They’ve obviously managed to capture something that appeals to a great many people, so it seems like a bad idea to abandon it before it has a chance to build more fully.

According to AdAge, the “new spots differentiate Miller Lite from its competitors by noting its spelling (“Lite” vs. the less distinctive but not misspelled “Light” used by A-B and Coors). They are expected to air until new work from Crispin, Porter & Bogusky — a return to the more comparative style of advertising Miller employed during Lite’s 2003-2004 renaissance — replaces them in April.”

Of course, in the end, what they really should do is make a beer with more flavor. Because Man Law #1 honestly should be “No one, man or woman, should ever drink a light — or lite — beer … ever.”

Latrobe Brewery Receives State Grants

By

The Associated Press is reporting that Wisconsin’s City Brewery, the new owners of the Latrobe Brewery, has been awarded state assistance to the tune of over $4.5 million. The Pennsylvania has been closed since early last summer. The grants and loans were announced by Governor Ed Rendell, who also said he believes 250 brewery employees should be back to work by June 1 of this year.

BB & A-B: The Unlikeliest of Unlikelihoods?

By

+ = ??

The rumor of Anhesuer-Busch in talks with Boston Beer left a foul taste in my mouth, and a few short weeks ago would not have given the idea a moment’s thought. The feud between Jim Koch’s Boston Beer Co. and Augie Busch’s little company is, though considerably shorter than Budvar’s, just as legendary. The production company “Ducks In A Row Entertainment Corporation” is supposedly even making a film about their famous feud with the tentative title “Beer Wars.” Last I heard, it was in the editing stage but that was some time ago. The point is, these are two companies that do not feel a great deal of affection for one another.

So my first reaction to this rumor would under normal circumstances be, “no F’ing way.” But that was before A-B inked deals with both InBev and longtime rival Budvar. With those deals, the Earth is already spinning off its axis, so why not Samuel Adams, too?

This particular rumor comes courtesy of Miller’s Brew Blog, who got it from the only other source to mention it so far, Beer Business Daily, a subscription-based beer news service. BBD reported that they have “been fielding about a half dozen inquiries a day from readers with the latest rumor du jour making the rounds out there: A-B and Boston Beer hooking up.” To no one’s surprise, neither side would comment on the rumors. But that was the same as the InBev rumors, at least, so who knows?

I’ve heard Jim Koch speak personally about his feelings concerning A-B and their business practices and given that, and all of the trouble they’ve tried to cause him over the years, it just seems incredibly unlikely that he’d entertain any offers from them. But at the risk of repeating myself, I keep coming back to how often the seemingly impossible has been happening these days.

Faux Canada

By

According to an article in today’s Montreal Gazette, Canadians are increasingly looking to buy better tasting beer. And like their American cousins, the big Canadian breweries are flooding the market with faux or stealth microbrews in order to compete with craft brewers. With these faux craft beers, they’re trying to fool customers into thinking they’re getting just want they want, a beer that’s been hand-crafted to taste great.

Labatt has a line called Alexander Keith, named for an early brewer in Nova Scotia. MolsonCoors, likewise, has Rickard’s family of brands. Both Rickard’s and Keith’s are listed on their respective company websites and acknowledged as their brands. Alexander Keith’s own website does disclose that it’s a Labatt brand, but only in the legal stuff like “terms of use.” They certainly don’t go out of their way to associate themselves with the parent company.

An interesting parallel, though the article goes on to discuss tarrifs between provinces and what their removal will mean for small players. I don.t know enough about the market to form an opinion, but it’s an interesting read.

Alexander Keith’s IPA, owned by Labatt; and Rickard’s Red, owned by MolsonCoors.

Crazy Dave Calling It Quits?

By

Dave Heist, better know in the brewing community as “Crazy Dave,” has been threatening to sell or quit, and hightail it to southern California for at least a couple of years. But he may really be serious this time, because now it’s in print. According to an article sent to me by two Bulletin readers, the Sunday Contra Costa Times is reporting Hoptown will close in two months.

Heist, along with a small group of investors is planning a new venture, in a larger location — possibly near Livermore — that will begin sometime with the year. It will be interesting to see what Crazy Dave does next. His beers are never boring and usually some of the tastiest around.

“Crazy Dave” Heist, owner of HopTown Brewing Co. in Pleasanton, California, along with fellow brewer Melissa Myers, currently at Drake’s Brewing. This was taken at GABF in 2002.

A Slice Missing

By

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?

By

+ = ?

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.

New California Casino Brewery?

By

I want to stress that this is only guesswork, but it appears that one of the Native American casinos in Northern California may be building a new casino brewery. My sister-in-law sent me a classified job listing she noticed in the Santa Rosa Press-Democrat. The job listing is for a full time brewmaster with three years experience to handle “all aspects of brewing operations, purchasing, packaging, brewing of main line & specialty beers.” The listing also states that preference will be given to a Native American applicant, which made me curious. The number listed is associated with the Lake Miwok Indian Nation of the Middletown Rancheria. The tribe operates the Twin Pine Casino along Highway 29 in Middletown, California, about 35 miles north of Santa Rosa.

My guess is that the casino is planning a brewery on-site, but this is the first I’ve heard anything. But that seems the most logical reason for the tribe seeking a brewer. I know there are several casino breweries in Las Vegas, but are there any other breweries in Native American casinos? If not, this may be the first. Does anybody else know? The California Nations Indian Gaming Association has a list of all tribal casinos in California.

An alert reader did point out that Mount St. Helena Brewery [no website] is also in Middletown, but if that’s the case why post a fax machine number to a Native American tribe that operates a casino and list a preference for a Native American in the position?

Twin Pine Casino, site of a new brewpub?

UPDATE 1.27: Turns out that the Mount St. Helena Brewery is owned by the Middletown Rancheria of Pomo Indians of California. Here is their ABC License. So my speculation was wrong, after all. Thanks to Vinnie for pointing this out.