The closely watched Costco decision, which would dismantle the three-tier system in Washington state and would also set the stage to do the same throughout the country, has now been formally appealed by Washington state’s attorney general, Rob McKenna. The Washington Liquor Control Board had earlier indicated that they would appeal, but this now makes it official. Judge Pechman, who made the ruling being appealed, has not yet decided whether to stay her ruling during the appeal process, which could easily take up to two years to wind its way through the legal system.
Bitburger M.I.A.
After the public backlash in Germany over Anhesuer-Busch’s being named the beer sponsor for the World Cup games, A-B eventually bowed to public pressure and worked out a compromise that was supposed to insure that a German beer would also be available at all games. The brand chosen was Bitburger, whose Bit brandname had been deemed too close to Bud so that A-B was told they couldn’t use that name in their advertising. Instead they would have to use Anheuser-Busch Bud, which doesn’t exactly roll off the tongue. So a compromise was worked out. Bitburger could be sold at all World Cup games and A-B could advertise their product as simply “Bud.”
One little hitch, though, is that A-B appears to have reneged on its part of the deal. According to George Parker on AdHurl:
Interesting bit in this weeks Der Spiegel exposing the great Anheuser-Busch beer sham. Apparently in an attempt to placate the Germans, the company agreed to allow German beer to be sold alongside its Bud. But once the fans were inside the stadium… No Bitburger – The reporter was forced to drink Bud… With dreadful consequences. Seems like an incredibly bad piece of PR on the part of Anheuser-Busch. Unless some genius there thought “Oh, once they taste it, they’ll love it.” Listen Busch VI or VIII or whatever, I wouldn’t drink Bud in the US, and I certainly wouldn’t go to Germany to drink it. Dumb arrogant move!
He’s referring to a report in Der Spiegel by Marc Young:
I can now expose the great Anheuser-Busch beer sham. The US brewer bought the sole rights to sell beer in World Cup stadiums before Germany even knew it would host this summer’s tournament. But in an attempt to head off a nasty public backlash, the company cleverly agreed to allow German beer to be sold alongside its Budweiser. This was good PR, but I can report that there appeared to be no Bitburger — the German brewer Anheuser-Busch cut a deal with — to be had anywhere in the stadium. Maybe Bitburger got one stand outside near the security checks or something. But all I could find was Bud on tap.
That’s what you call a perfect strategic move to get what you want and screw everybody else. You placate everybody and difuse a potentially disasterous PR situation. Then you don’t deliver on your part of the bargain and by the time anyone figures out they’ve been had it’s too late to do anything about it. So the ads and signs all read “Bud” instead of “Anheuser-Busch Bud” but there’s still no German beer you can buy. Even if Marc Young missed it somehow, it still shows how difficult they made it even for someone making a particular point of trying to find Bitburger. And once you’re in the stadium there’s not really anything you can do except be pissed off. You can either drink Bud or nothing. A-B sure is showing the Germans — and every other nation represented at the World Cup — where the “ugly” in “ugly American” comes from. Nice job spreading goodwill. Because this isn’t just a black eye for an American corporation, it’s a black eye for America as a whole. Like it or not, America’s corporate image abroad is all most people see of us and so this skewed image of America as a whole is formed at least in part by those interactions with our corporations. When they act like … well, like corporations, they color people’s impressions of you and me, too.
Beer Marketing in Your Underwear?
Yesterday’s World Cup match between the Netherlands and the Ivory Coast must have been quite a spectacle. As widely reported, over a thousand Dutch ticket holders arrived wearing orange lederhosen bearing the name of a Dutch brewery. Read that sentence again. Notice anything strange about it? Because it’s exactly the way this story has been reported by all but one or two news organizations. What’s missing is the name of the brewery, which was Bavaria NV. As revealed by IPKat, “For the record, most media – presumably because they benefit handsomely from Budweiser’s vast advertising budget – coyly refuse to tell us the identity of this Dutch upstart.”
So anyway, over a thousand Dutch fans show up wearing orange lederhosen with the beer brand name Bavaria on them. Dutch soccer fans traditionally don all things orange before games of their beloved “Oranje,” which is the nickname of the Netherlands national team and the distinctive color of their uniforms. So there’s nothing necessarily odd in that, and this is, after all, the biggest soccer tournament on the planet. But officials at the stadium in Stuttgart ordered them to remove their lederhosen or they would not be allowed to enter the stadium to see the game, despite having paid for their tickets. The majority simply removed them and went into the match and watched it in their underwear.
You can buy your own pair of orange lederhosen at the Bavaria online shop. They only cost about eight bucks, plus shipping. Or you can buy a twelve-pack and get a free pair. “The idea is supposed to be a gentle mockery of the Germans’ penchant for real lederhosen during the World Cup period. The lederhosen also feature a tail and a lion motif — the national symbol of Holland. So far over 250,000 pairs of lederhosen have flown off the shelves and they have become a cult item among Dutch soccer fans.”
Given that the lederhosen have long been available from the brewery and they are perfect for the rabid soccer fan, I don’t really see the problem. Go to any football game in the U.S. and you’ll see countless fans wearing their team’s colors in all manner of available merchandising paraphenalia. Is it really that much of a stretch to imagine in a succesful marketing promotion many people wearing the same item to a game. In a stadium the size of Stuttgart’s (seating is 52,000) is a thousand people wearing the same team promotional item really that hard to believe?
Even if it is to hard for you to believe, so what if the brewery gave away the lederhosen or made it very easy to obtain them? Companies have been doing that since Adam Smith first used his invisible hand to avoid a “hand ball” foul. If more of them actually wore them to a game than anticipated, they should be pleased as punch, and FIFA and sponsor Anheuser-Busch should shut the hell up about it. That’s just the market for you.
But that’s not what they did, of course. Instead, they took a different tack.
“Anheuser Busch’s Budweiser is the official beer for the tournament and world soccer’s governing body fiercely protects its sponsors from brands which are not FIFA partners. Markus Siegler, FIFA’s director of communications, said at its daily media briefing yesterday that the governing body was alert to the kind of ‘ambush’ marketing Bavaria had attempted.
From the Yahoo UK article:
“Of course, FIFA has no right to tell an individual fan what to wear at a match, but if thousands of people all turn up wearing the same thing to market a product and to be seen on TV screens then of course we would stop it.
“I don’t know exactly about what happened in Stuttgart, but it seems like an organised attempt to conduct a mass ambush publicity campaign was taking place.”
Peer Swinkels of the Dutch brewery told Reuters by telephone it was “absolutely ridiculous” and “far too extreme” to order the fans to take off their lederhosen and said the brewery had complained to FIFA.
“I understand that FIFA has sponsors but you cannot tell people to strip off their lederhosen and force them to watch a game in their underpants. That is going too far.”
Also from IPKat:
Said FIFA: “Anyone can wear whatever they want, but if a company tries to carry out ambush marketing, FIFA must prevent that happening. In common with the IOC (International Olympic Committee) and UEFA, we do not tell individual supporters what to wear, but … FIFA has already won a court case against a beer manufacturer who tried this sort of thing”.
What this means is “Anyone can wear whatever they want, if FIFA says so”.
American beer Budweiser and Germany’s Bitburger are thus the only beers that can be sold, or even worn by spectators, in the 12 World Cup stadiums. The IPKat wonders what FIFA would have done, had the offending garments been t-shirts worn by thousands of young ladies.
PR Professional John Cass had this to say about how the incident will likely effect Anhesuer-Busch:
I think FIFA just created a public relations disaster for Anheuser-Busch by requiring 1,000 Dutch football supporters to remove their trousers when entering an international football match.
FIFA thought that the bright orange trousers represented a “marketing ambush” tactic. FIFA officials blocked entry to the stadium of any Dutch fans wearing the trousers, rather than miss the game 1,000 fans took off their trousers and watched the match in their underwear.
I think the FIFA officials have lost sight of the boundaries between business and common decency. As for Anheuser-Busch, I would not want to be the PR Manager today. This sort of protection of Anheuser-Busch’s sponsorship by FIFA surely cannot be endorsed by the company, otherwise Anheuser-Busch will be remembered this World Cup as company that took 1,000 Dutchmen’s pants away from them.
FIFA might be right that the Dutch company’s marketing tactic ambushed the World Cup stadium. But in the end what matters most in marketing terms is how a company’s brand it perceived through its marketing efforts. I’ve been searching through the web this evening, and it’s not looking good for Anheuser-Busch. Most comments are from Europe, and the majority of the posts are either incredulous or negative about the incident, for Anheuser-Busch:
I say “tough luck corporate sponsors”, money shouldn’t be able to buy the right to subject people to this kind of indignity. At the very least these people should have been offered alternative netherwear. In fact I think they should sue the sponsor who insisted on this and campaign to boycott their wares. So watch out Budweiser, I’m off Bud now (Nouslife Blog).
Where’s all this World Cup goodwill?
… and I always thought it wasn’t the winning that was important, but the taking part (No Offence Intended).
The PR disaster that is Budweiser’s sponsorship of the World Cup gets worse (CMM News).
The Netherlands beat Ivory Coast 2-1. I think I’ll be rooting for them in their next match, which of course I’ll be watching wearing nothing but my underwear with a nice cold Bavaria Beer by my side.
CAMRA Unhappy About Greene King Takeover
On Friday, the UK’s Guardian Unlimited that CAMRA and other consumer advocacy groups are already angered by Greene King’s takeover big to buy Hardys & Hansons, after which they believe “Hardys & Hansons will be chewed up and spat out like so many before it,” according to Camra’s chief executive, Mike Benner. Hardys & Hansons also includes the pub Ye Olde Trip to Jerusalem in Nottingham, believed to be the oldest pub in Great Britain. The pub is literally carved into the sandstone under Nottingham castle, although Wikipedia indicates that perhaps nineteen other pubs have similar claims to the title “oldest in Britain.” Greene King’s bid has thus far included no information about the fate of the pub, the brewery or their employees.
From CAMRA’s press release:
The Campaign for Real Ale today called on shareholders of Hardys & Hansons to reject the takeover offer from Greene King and draw a line in the sand on behalf of beer consumers.
The offer to buy Nottingham based Hardys & Hansons is the latest in a series of acquisitions that has seen Greene King devour ten rivals in ten years.
CAMRA Chief Executive Mike Benner said: “If this deal goes through, history has shown us that Hardys & Hansons’ brewery and beers will not be in safe hands. Now is the time for the shareholders who truly care about this excellent brewery with more than 174 years of history to make a stand and reject this offer.
“Today’s announcement made scant reference to the future of the beers, the brewery or the staff. We believe if the shareholders don’t block this now, Hardys & Hansons will be chewed up and spat out like so many before it.”
CAMRA is concerned that the acquisition of Hardys & Hansons 268 strong pub estate would take the number of pubs owned by Greene King and selling its beers to around 2680 nationwide. Having such a massive presence can only be damaging to consumer choice.
Mike Benner continued: “In 2002 CAMRA warned the Government that the abolition of the Guest Beer Right would result in a series of mergers and takeovers that would undermine competition and consumer choice. Do we want to find ourselves in a situation where every other pub sells only Greene King IPA? The Guest Beer Right must be reintroduced before it is too late so that licensees can sell a beer of their choice to preserve the future for independent breweries.”
Here’s a history of buyouts undertaken by Greene King over the last ten years:
- 1996: Magic Pub Company (This pub group included the Hungry Horse concept which is now one of the Greene King’s pub brands)
- 1999: Morlands Brewery (closed the brewery and Ruddles beer brands acquired at the same time)
- 2001: Old English Inns (the pub estate integrated into the GK pub estate)
- 2002: Acquired the Morrells Pub company (pubs integrated with the GK pub estate)
- 2004: Laurel Pub Company (pubs integrated with the GK pub estate)
- 2005: Ridleys Brewery (brewery closed)
- 2005: Belhaven Brewery (brewery still open)
It’s Good to Be the King: Greene King Takeover Bid for Hardys & Hansons
Greene King, the pub and Brewery conglomerate, has made a takeover bid of just under a half million dollars for Hardys and Hansons. It looks like it’s all but a done deal, as Hardys family shareholders control about 50% of the voting stock and support the deal. Hardys and Hansons owns 268 pubs which will bring the Greene Total to over 2,400 pubs.
Greene King also owns Abbot Ales, Belhaven, Old Speckled Hen and Ruddles. According to the BBC, “Greene King will continue to brew Hardys beers although the future of the brewery has not been disclosed.”
Latrobe Rumor Mill
On Tuesday I heard that the buyer for the Latrobe Brewery was rumored to be D.G. Yuengling & Son of Pottsville, Pennsylvania. Recent news reports from local Pittsburgh media discuss that possibility plus address other potential buyers.
Sierra Nevada Brewing:
Steve Harrison, vice president of the Chico, California, brewer, said his company was not interested in the plant.
Ken Grossman, president of Sierra Nevada Brewing, said yesterday his firm was initially contacted by InBev after the sale.
“We had some casual interest when it first came on the market, but the facility is way too large for us to consider,” Grossman said, “and without a brand, well, it just doesn’t fit into our plans.”
Sierra Nevada produces 600,000 barrels a year of its own beer and does not do contract brewing for other beer companies. Latrobe Brewing produces 825,000 barrels annually but has capacity for 1.3 million.
Boston Beer Company:
Boston Beer Co. had conversations with Pennsylvania Governor Ed Rendell and because of opposition to its plans to build a brewery in Freetown, Massachusetts were considered a good candidate. “However, voters in Freetown on Monday approved a lucrative tax-increment financing proposal, an agreement that will give Boston Beer tax breaks averaging 33 percent for 20 years, said John S. Ashley, chairman of the Board of Selectmen in Freetown.”
“In addition to building a plant, Boston Beer Co. purchased a brewer in Cincinnati, Ohio, last year and spent $11 million on improvements. The company sold more than 1.3 million barrels of beer last year, according to its annual report.”
Boston Beer Company is “too far down the line” with plans to construct the new brewery in Massachusetts to be a serious contender for Latrobe.
D.G. Yuengling & Son:
The “chief operating officer for D.G. Yuengling & Son of Pottsville, Schuylkill County, said yesterday it already operates three breweries and is not actively seeking to add beer-making capacity.”
“It’s not us who is moving close to a deal. We already have a lot on our plate. But we never say never,” said David A. Casinelli, who pointed out the company operates two breweries in Pottsville and bought a former Stroh’s plant in Tampa, Florida, in 1999.
Further, “the governor said Yuengling did not express interest in the plant, to his knowledge.”
This had been the strongest contender in my mind because I’d heard their name from a friend who’d heard it from an industry insider. So either these news sources are smoke and mirrors or in fact Yuengling is not the potential buyer.
Pittsburgh Brewing Company:
Pittsburgh Brewing was an early name mentioned in reports but being in a Chapter 11 bankruptcy made that possibility more remote. They have not been seriously mentioned as a potential buyer for a couple of weeks now.
Conclusions:
Governor Rendell said there has been interest in purchasing the Latrobe Brewing plant from two brewers and four or five investor groups, but the investors were unable to come up with financing. As to who they are and who ultimately buys the Latrobe Brewery, if anyone, will still have to wait for an official pronouncement. Until then, it’s anybody’s guess.
Yuengling Rumored Buyer of Latrobe Brewery?
A colleague of mine today heard from an industry insider that the new buyer of the Latrobe Brewery may be D.G. Yuengling & Son Brewery of Pottsville, Pennsylvania. Yuengling is the sixth largest brewer in the United States, having greatly increased their sales over the last several years. They also recently purchased the old Stroh’s Brewery in Tampa, Florida and built an additional facility in their hometown of Pottsville. By all accounts this expansion has been wonderful for their business and would give them both sufficient cash and the motivation to purchase another brewery to service the western part of the state and perhaps even expand into Ohio and West Virginia. So the rumor makes a lot of sense but only time will tell if it’s true or not.
Anheuser-Busch in Dirty Water
According to yesterday’s Worcester Telegram (Massachusetts), the Sixties band The Standells are suing Anhueser-Busch for copyright infringement. Apparently A-B used their 1966 hit Dirty Water in advertising without first obtaining the band’s permission. Dirty Water is usually assosciated with the Boston Red Sox because the song is played at Fenway Park every time the Red Sox win. The Standells filed a federal lawsuit on May 31 claiming that Anheuser-Busch used their song Dirty Water “without permission in commercials to try to tap into the song’s connection to the team.”
Fowl Ball?: Widmer Buys a Piece of Goose Island
Well this one certainly came out of left field. I’m not quite sure what to think about it. I really like Kurt and Rob Widmer. I like them a lot, in fact, both personally and professionally. They pioneered American-style hefeweizen, in fact invented the style. They co-founded the Oregon Brewers Festival to support and promote the craft beer industry as a whole. They brew many great beers — their potato beer is still the best of its type I’ve ever had — in many diverse styles. And they’re both very affable and down to earth people who make the beer community a better place for their having been a part of it. So I originally greeted the news of their arrangement with Anheuser-Busch somewhat suspiciously. But in the end they’ve been able to make it work for them, a trick few have been able to pull off. Which makes Widmer Brothers all the more impressive for having been able to walk that fine line between craft and business so successfully.
So does buying a minority interest in Goose Island Brewing of Chicago make sense? In some ways, yes it does. From a distribution point of view, it seems to make very good sense for both parties. If each begins making the other’s beer for their own markets, that too makes good business sense. So why does it give me pause? I’m not sure, but I think it has something to do with A-B buying a 35% stake in Goose Island and then Widmer buying a presumably much smaller piece, when they themselves are are part-owned by A-B (39.5%). I can’t put my finger on what bothers me about this, perhaps it is just simple paranoia on my part. For now, I’ll try to concentrate on the positive aspects of this and try to silence that voice in the back of my head and wish Kurt, Rob and John and Greg Hall all the best.
Senate Votes Against Abolishing Estate Tax
I realize this is not, strictly speaking, beer news, but given the NBWA’s unrelenting efforts to help their rich members avoid paying taxes, and my diatribe about it two days ago, I wanted to update the story. Today, the Senate voted to “reject a Republican effort to abolish taxes on inherited estates during an election year with control of Congress at stake,” according today’s San Francisco Chronicle. The vote was three short of the votes needed to advance the bill.
Also from the Chronicle article:
“The estate tax is an extremely costly tax for a wealthy few that comes at the expense of every other American born and yet to be born for decades to come,” said Senate Minority Leader Harry Reid, D-Nev.
Under current law this year, the first $2 million of a person’s estate or $4 million of a couple’s, escapes taxation. The remainder can be taxed at rates up to 46 percent.
According to the most recent statistics available from the Internal Revenue Service, 1.17 percent of people who died in 2002 left a taxable estate.
“Repealing the estate tax during this time of fiscal crisis would be incredibly irresponsible and intellectually dishonest,” Sen. George Voinovich (R) of Ohio said.
Unsurprisingly, the NBWA wasted no time expressing their displeasure with the Senate vote. From their press release:
“We are disappointed about today’s vote regarding a permanent solution to the death tax which hurts small family-owned businesses. Make no mistake about it. Those Senators who previously supported death tax repeal and today opposed this effort to proceed to H.R. 8 are standing in the way of a permanent solution. Those Senators that voted “no” on cloture have essentially voted “yes” to increase the death tax to 55 percent in 2011.
“On behalf of America’s beer distributors, we will continue to work with Congress on a permanent solution to the death tax that will allow small business owners to plan for the continuation of their businesses with certainty and without fear of a looming death tax threat that could mean the death of the family business.”
Oh, those poor rich families. They may be family-owned, but small they’re not. But I guess money makes people do and say crazy things. So the spin machine is again in high gear. I’m sure we haven’t heard the last of this issue.