Since Stephen Colbert heard Anheuser-Busch sold itself to a Belgian brewer, he’s been drinking non-stop before those waffle humpers change the formula. Hilarious.

With the recent merger of MillerCoors and the announcement that InBev will buy Anheuser-Busch, power in the brewing industry over resources and access to market are becoming more consolidated than ever before. And that includes lobbying for favorable legislation. But at the same time, neo-prohibitionist groups and anti-alcohol politicians in California are joining forces to raise the tax on beer to help balance the budget. While it’s clear that something needs to be done to fix California’s financial woes, the beer industry did not cause these problems — more than likely politicians did — and it’s patently unfair that brewers and beer drinkers should have to foot the bill to pay for others’ mistakes. In this climate, and with a record number of issues already before the California legislature, the California Small Brewers Association and the political activist group, Support Your Local Brewery, are urging you to sign up to be a Beer Activist. When issues come up in which a letter, e-mail or phone call to your elected official can make a difference in keeping beer prices as low as possible, you’ll simply receive an e-mail with instructions on how you can help. Here’s a recent press release (which I’ve modified) about this from the CSBA:

Those who have sign up online become “Beer Activists.” The Beer Activists signed up in California can be contacted via email “Action Alerts” and asked to notify their legislative representatives when state regulatory initiatives threaten our craft brewing industry here in California. Beer Activists can be contacted in a specific legislative district or statewide. These Action Alerts are a very effective way to generate a letter writing or phone campaign to the legislators at the state Capitol.

Please Take ACTION! The CSBA needs your help to generate more Beer Activists to sign up. The more names we have in the database, the more effective these Action Alerts will be in protecting our industry. We ask you to simply sign up with SYLB. This is an easy yet very important way to help the CSBA help keep craft beer alive and well in California.

To become a member of the SYLB, please take just a few minutes right now and visit the sign-up page and fill in your e-mail, home state and zip code. That’s all there is to it. Thanks for doing your part for California craft beer.

Mere hours after the agreement for InBev to acquire Anhueser-Busch was announced, the St. Louis Post-Dispatch has a lengthy article detailing InBev’s plans for A-B.

InBev will, of course, go forward with A-B’s own “Blue Ocean” plan to layoff workers with “planned buyouts of up to 1,300 salaried employees” and also the “‘elimination of corporate overlapping functions’ which will likely lead to some job losses at A-B’s corporate headquarters in St. Louis.” A-B employees have even set up their own website, Budwatch, to track the issues that will effect their employment, retirement and pension benefits.

One sticky remaining issue to be resolved is the fate of Mexico’s Grupo Modelo, in which A-B owns a 50% non-voting stake in the company. Modelo is reserving its right under its contract for now, including it’s very important “consent right.” So far, Grupo Modelo has said only the following”

“Our agreement with Anheuser-Busch was carefully constructed to ensure we have a definitive say in who our partner is. We are confident that our agreement, which is governed by Mexican law, gives us the right to decide whether or not to consent to the potential acquisition of Anheuser-Busch by InBev. We have a great deal of respect for InBev and look forward to continuing our discussions with them and hope to find a resolution that meets the needs of both companies and their stakeholders.”

While Grupo Modelo has an uneasy alliance with A-B, I can’t see InBev being much better of a partner and it’s clear that Modelo wants at least to be able to control its own destiny, so its hard to see what they might do at this point.

Last last night, August Busch sent out an e-mail to all Budweiser beer distributors, and several people were gracious enough to forward me copies of the e-mail. Here’s an excerpt:

Our business is made up of people who are very proud of what we’ve built together over 150 years, and the name “Anheuser‑Busch” stands for something important to all of us. Now, we have a groundbreaking agreement that honors that hard work and tradition as it takes us in new directions.

Anheuser-Busch has agreed to combine with InBev to become a new, strong and global company — Anheuser-Busch InBev. The directors thoroughly examined all possible alternatives and ultimately accepted this agreement, which provides additional and certain $70 per share immediate cash to investors. The agreement also combines two companies with a good strategic and geographic fit to form a business able to provide employees, wholesalers and other stakeholders with excellent opportunities for future growth. We have just issued a press release moments ago announcing this, see copy below.

I have a great sense of energy and excitement for the bright prospects of this new company. This will be a truly global brewer with a substantial business base in countries around the world. The global branding this new business can provide for Budweiser will strengthen the business and the brand in all locations.

Our business is based on great brands and great people, and that will not change with this new company. It will be up to us to maintain the loyalty of the consumers, retailers, wholesalers and suppliers we have worked to please over the years. We have attained great momentum with our brands. I know you are a team of professionals who will never let up against competition and will continue to deliver strong sales for the new company, just as you had for Anheuser-Busch.

The new business is best equipped to compete in a global industry. In considering this agreement, the board determined that $70 per share offered our shareholders full and fair value. But I’m pleased we also found a combination that could best protect the Anheuser-Busch business and the many people it touches — our employees, our wholesalers, our communities. To ensure a seamless transition and to reflect our ongoing partnership, InBev has agreed that, the Board of Directors of the combined company will be comprised of the existing directors of the InBev Board, myself, and one other current or former director from the Anheuser-Busch Board.

Let me emphasize that this is a friendly business agreement. I have come to know Carlos Brito over the past several years through our business agreement in the United States and in our previous exploration of joint business opportunities. He is a strong leader with high aspirations for how far we can take our business together. I respect him and he has my firm backing on these plans and in the operation of the future company.

Anheuser-Busch helped build a healthy three-tier wholesaler system in the United States by appointing independent business people, ushering in perpetual ownership, exclusive territories and quality standards that successfully drove long-term growth and value for all parties. The new Anheuser-Busch InBev shares those same core beliefs that wholesaler profitability and growth are critical to the new company’s success.

In addition, an “official” joint press release was issued, too, titled:

InBev and Anheuser-Busch Agree to Combine,
Creating the Global Leader in Beer with Budweiser as its Flagship Brand

With bullet points for the main parts of the contemplated transaction.

1. Combination Will Create One of the World’s Five Largest Consumer Products Companies
2. Company to be Named Anheuser-Busch InBev;
3. Budweiser to Expand Globally
4. Transaction Will Yield Cost Synergies of at Least $1.5 Billion Annually by 2011; Neutral to EPS in 2009 and Accretive Beginning in 2010
5. St. Louis, Missouri will be North American Headquarters and Global Home of Flagship Budweiser Brand
6. Fully Committed to Support Wholesalers and Three-Tier System
7. All U.S. Breweries to Remain Open; Commitment to Communities of Combined Company Maintained

And here’s a portion of the press release:

InBev and Anheuser-Busch today announced an agreement to combine the two companies, forming the world’s leading global brewer. Anheuser-Busch shareholders will receive $70 per share in cash, for an aggregate equity value of $52 billion, in an industry-transforming transaction. The combined company will be called Anheuser-Busch InBev. Both companies’ Boards of Directors have unanimously approved the transaction. InBev has fully committed financing for the purchase of all of Anheuser-Busch’s outstanding shares.

The combination of Anheuser-Busch and InBev will create the global leader in the beer industry and one of the world’s top five consumer products companies. On a pro-forma basis for 2007, the combined company would have generated global volumes of 460 million hectoliters, revenues of $36.4 billion (€26.6 billion) and EBITDA of $10.7 billion (€7.8 billion). Anheuser-Busch and InBev together believe that this transaction is in the best interests of both companies’ shareholders, consumers, employees, wholesalers, business partners and the communities they serve.

The company will make St. Louis, Missouri the headquarters for the North American region and the global home of the flagship Budweiser brand. With about 40% of the combined company’s revenues to be generated in the U.S., the company will draw on the collective expertise of Anheuser-Busch’s dedicated and experienced employees and its culture of quality. Given the limited geographical overlap between the two businesses and the efficiency of Anheuser-Busch’s brewery footprint in the United States, all of Anheuser-Busch’s U.S. breweries will remain open.

InBev CEO Carlos Brito will be chief executive officer of the combined company. The Board of Directors of the combined company will be comprised of the existing directors of the InBev Board, Anheuser-Busch President and CEO August Busch IV and one other current or former director from the Anheuser-Busch Board. In addition, the combined company’s management team will draw from key members of both InBev’s and Anheuser-Busch’s current leadership. Anheuser-Busch will become a wholly owned subsidiary of InBev upon the completion of this transaction.

The expanded company will be geographically diversified, with leading positions in the world’s top five markets — China, U.S., Russia, Brazil and Germany – and balanced exposure to developed and developing markets. A combination of Anheuser-Busch and InBev will result in significant growth opportunities from leveraging the companies’ combined brand portfolio, including the global flagship Budweiser brand and international market leaders such as Stella Artois and Beck’s, maximizing the combination’s unparalleled global distribution network and applying best practices across the new organization. Budweiser and Bud Light are the largest selling beers in the world, and the combined company will have an unmatched portfolio of imports, local premiums and local core brands.

Carlos Brito, CEO of InBev, said, “We are very pleased to announce this historic transaction today, bringing together two great companies that share a rich history of brewing traditions. We are extremely excited about the opportunities that this combination will create for consumers worldwide, as well as our shareholders, employees, business partners and wholesalers. Together, Anheuser-Busch and InBev will be able to accomplish much more than each can on its own. We have been successful business partners for quite some time, and this is the natural next step for us in an increasingly competitive global environment. This combination will create a stronger, more competitive global company with an unrivaled worldwide brand portfolio and distribution network, with great potential for growth all over the world.”

August Busch IV, Anheuser-Busch President and CEO, stated, “Today’s announcement brings new opportunities for Anheuser-Busch and its business, brands and employees. This agreement provides additional and certain value for Anheuser-Busch shareholders, while enhancing global market access for Budweiser, one of America’s true iconic brands. We will leverage our collective strengths to create a truly diversified, global company to sustain long-term growth and profitability. In the United States and Canada, both InBev and Anheuser-Busch have seen significant benefits from our existing relationship and we look forward to replicating this success in other parts of the world.”

Budweiser, together with Stella Artois and Beck’s, will become the combined company’s leading global brands, leveraging InBev’s expansive international footprint. InBev has a history of successfully building brands around the world, which will complement the unparalleled strength of Anheuser-Busch’s brand-building in the U.S. The two companies already have a successful U.S. distribution partnership for InBev’s European premium import brands including Stella Artois, Beck’s and Bass. Anheuser-Busch’s world-class sales and distribution system will continue to support the expansion of these brands in the U.S. market.

Anheuser-Busch’s partners fit very well with InBev’s global franchise. Anheuser-Busch has equity investments in two companies with strong brands in two key markets: Mexico’s Grupo Modelo, which owns Corona Extra, the number five brand globally; and China’s Tsingtao, the leading Chinese premium brewer. In addition, Budweiser is a strong and growing national brand in China, and the two companies’ footprints in China are complementary. InBev’s China business in southeastern China will be enhanced by Anheuser-Busch’s strength in northeastern China.

The transaction creates significant profitability potential both in terms of revenue enhancement and cost savings. The combination will yield cost synergies of at least $1.5 billion annually by 2011 phased in equally over three years. Given the highly complementary footprint of the two businesses, such synergies will largely be driven by sharing best practices, economies of scale and rationalization of overlapping corporate functions. InBev has a strong track record of delivering synergies in past transactions and is confident in its ability to achieve these synergies.

In addition, there are meaningful revenue opportunities through expansion of Budweiser on a global scale: InBev is the number one brewer in 10 markets where Budweiser has a very limited presence, and has a superior footprint in nine markets where Budweiser is already present.

The transaction is expected to be neutral to normalized earnings per-share in 2009 and accretive beginning in 2010, and return on invested capital will exceed weighted average cost of capital during the second year after close.

The transaction is subject to the approval of InBev and Anheuser-Busch shareholders, and other customary regulatory approvals. Shareholders of both companies will have an opportunity to vote on the proposed combination at special shareholder meetings that will be scheduled at a later date. InBev’s controlling shareholder has agreed to vote its shares of InBev in favor of the combination. In light of the limited overlap between the InBev and Anheuser-Busch businesses, the combination should not encounter any significant regulatory issues, and is expected to be completed by the end of 2008.

The next beer dinner of the Beer Chef at the Cathedral Hill Hotel will feature Rich Norgrove’s beers from Bear Republic Brewing Co.. It will be a four-course dinner and well worth the $80 price of admission. It will be held at the Cathedral Hill Hotel on Friday, July 18, 2008, beginning with a reception at 6:30 p.m. Call 415.674.3406 for reservations as soon as possible to insure a seat at the dinner.

The Menu:

Reception: 7:00 PM

Beer Chef’s Hors D’Oeuvre

Beer: Extra Pale Ale

Dinner: 7:30 PM

First Course

Confit of Fresh Gulf Prawns with Avocado, Banana Salsa and Mango Chipotle Sauce

Beer: Belgian Wit

Second Course:

Roasted Baby Chicken with Artichokes, Heirloom Tomatoes, Fingerling Potatoes and Cilantro Aioli

Beer: Racer 5 IPA

Third Course:

Cutlets of Slow Roasted Lamb with Top Shelf Mac N Cheese and Cacao Nib Beurre Rouge

Beer: Black Mamba

Fourth Course:

Poached Honey Crisp Farms White Nectarine with Whipped Mascarpone and Blueberry Compote

Beer: Quadrupel Aged in a Cognac Barrel

At an unknown beer festival with his daughter a few years back.

 
7.18

Dinner with the Brewmaster: Bear Republic Brewery

Cathedral Hill Hotel, 1101 Van Ness Avenue, San Francisco, California
415.674.3406 [ website ]
 

Given the title of this post, you probably thought this was going to be another rant about InBev and Anheuser-Busch. But it’s not. It’s about the latest release commemorating all of Frank Zappa’s albums by Lagunitas Brewing, which will debut next week. This is the fourth Zappa album beer done by Lagunitas, and it commemorates the 40th anniversary of the release of “We’re Only In It For the Money,” which was famous as much for its cover as the music on the record. The artwork consisted of a parody of the Beatles’ Sgt. Pepper’s Lonely Heart’s Club Band. The beer inside the 22 oz. bottles is a Belgian-style Triple Ale. Like the three others before it, it will be available for a limited time and in relatively small quantities.

Click on the label above for a larger view of the label.

Once the takeover of Anheuser-Busch by InBev is completed, a curious thing will happen to the landscape of American brewing. It’s certainly something I never expected to be writing in my lifetime, but it’s true. The Boston Beer Co., who brew the Samuel Adams line of beers, will be the biggest brewer in America.

Once the merger of the two companies is finalized, Anheuser-Busch InBev, will be a Belgian company. MillerCoors consists of MolsonCoors, managed from Canada, and SABMiller, which is either a South African or London-based company, depending on your point of view. That leaves Pabst, the fourth largest beermaker by volume, but they do not own a brewery, instead contracting to have all their beer made at Miller’s breweries. So in terms of actual brewers (that is companies that own and operate a brewery) and who are U.S. owned, the biggest one remaining will be Boston Beer, making Samuel Adams as the undisputed biggest American brewer. Way to go, Jim. It also means Yuengling, America’s oldest brewery, becomes number two and Sierra Nevada comes in third. Amazing, simply amazing!
 

Raise a toast to Jim Koch, whose Boston Beer Co. will soon be the biggest American brewer.

Having a wife, friends and family who are all attorneys, along with my own eight years working in a law office, I just found my new favorite quote. Interviewed in today’s St. Louis Post-Dispatch, Carlos Brito — InBev’s CEO — responded to a question asking “what about the nasty rhetoric in the lawsuits?” The question was referring, of course, to the multiple lawsuits filed by InBev and A-B against one another and the aggressive arguments advanced and language used in them. Since the initial June 11 takeover bid by InBev to acquire Anheuser-Busch, relations between the two have become increasingly rancorous as the takeover bid grew more and more hostile. But Brito brushed aside all that ill-will with four beautifully concise little words. You can all but see him waving his hand as you read his words.

“Eggh — written by lawyers,” he said.

That’s just wonderful. He distilled more than a month’s worth of gamesmanship down to its essence. This whole public charade has been nothing more than the parries of two giant corporations locked in battle over the price of their deal. My earlier Godzilla analogy never seemed more accurate than in Brito’s words.

The big news, of course, was InBev’s Friday morning increase in the purchase price from $65 a share to $70. As the weekend winds down, speculation continues that the two parties are and have been meeting, and that an agreement may even be reached before the weekend is over, meaning literally at any moment now. Financial analysts are near unanimous in their belief that A-B will now accept the deal — under some terms — at the new, higher price.

Saturday evening, the London Financial Times was reporting that the two remaining issues on the table were “how InBev would honor Anheuser-Busch’s commitments to its employees and beer wholesalers” and “the roles of Anheuser-Busch’s executives in the merged company.” If the deal goes through, the merged InBusch will leapfrog over SABMiller into first place as the world’s biggest brewing company. It would mean worldwide, one out of every four beers sold would be one of their brands, giving InBusch “an unprecedented collection of beer brands and power over suppliers.”

But my other favorite quote from the St. Louis Post-Dispatch article, about the machinations of this deal, was expressed by Stuart Greenbaum, formerly with Washington University’s Olin Business School.

“It’s like a ritual mating dance.”

Now that’s quite a mental image. One, in fact, which makes me think of Monty Python. To wit:

 
The ritual of corporate negotiations in the modern world, as represented by Monty Python’s The Fish Slapping Dance.
 
UPDATE: As of around 5:00 p.m. PDT, Reuters is reporting that a deal announcement could be coming this evening and that the issues of executive roles, board make-up and price have all been resolved. The parties are meeting at the Spirit of St. Louis airport in the St. Louis suburb of Chesterfield and a final vote is expected this evening, barring any new hitches.
 

Having lost my own mother to breast cancer when I was only 21 (and she was 42), I try to attend Marin’s Breast Fest, officially know as “‘Fermenting Change’ Microbreweries Battling Breast Cancer.” It was held this afternoon, and while I thought I might miss it this year, I did manage to get down to the festival for a few glorious hours. Held behind Marin Brewing in the shopping center at Larkspur, across the street from the ferry landing, every year it seems more and more people attend this festival. And why not, it’s a great cause with free music and plenty of terrific beer. I certainly had a great time.

Host brewers Arne Johnson, from Marin Brewing, and Denise Jones, from Moylan’s.

Glynn Phillips (Rubicon), Brendan Moylan (Marin/Moylan’s), Alec Moss (Half Moon Bay), Brian Hunt (Moonlight), Rodger Davis (Triple Rock) and Josh Minor (Drake’s).

For more photos from this year’s Breast Fest, visit the photo gallery.
 

Yesterday, July 10, the highly anticipated first bottling run of the popular Pliny the Elder took place at Russian River Brewing‘s new production brewery in Santa Rosa, California. I was on hand to help out for the eight hours it took to do the run, emptying nearly three pallets of 16.9 oz. bottles onto the line and making hundreds of case boxes — my particular jobs — while Vinnie and team attended to the other details. Before we were even done with the bottling run, the first pallet was loaded in the van and whisking its way to area retail stores, but only accounts that agreed to store and display the beer cold. Suggested retail is $3.99, though you can also buy bottles at Russian River’s brewpub for $4.50, which is more in line with their pint pricing of $4.25. While we were still there bottling, both Vinnie and I got e-mails from friends saying they’d already bought bottles of Pliny at Ledger’s in Berkeley, which was fun. It was a long, exhausting day (I’m glad I don’t have to work that hard every day) but also very satisfying, too. The day before, Russian River also bottled several pallets of Blind Pig IPA.

The very first bottle of Pliny the Elder coming off the bottling line.

The new label.

A happy and tired Vinnie Cilurzo, after a day of bottling his Pliny the Elder Imperial IPA.
 

For more photos from the first bottling run of Pliny the Elder, visit the photo gallery.
 

Political pundit George Will, in his most recent column — Survival of the Sudsiest — took issue with Investor’s Business Daily considering beer to be a non-essential during hard economic times. And he was quite right to do so, as statistical data tends to suggest that beer is all but recession-proof. One would have thought somebody at IBD would have known that — or looked it up? — instead of just winging it with statements like the beer “industry’s continued growth, however slight, has been a surprise to those who figured that when the economy turned south, consumers would cut back on nonessential items like beer.” I don’t know who “those” people are, but I don’t think I want to take my financial advice from people who would ignore decades of historical data and go with their gut. Obviously, those guts are not filled with beer.

But perhaps the most interesting part of Will’s column was something he read in a 2006 book by Steven Johnson entitled The Ghost Map: The Story of London’s Most Terrifying Epidemic — and How It Changed Science, Cities, and the Modern World. In Johnson’s book, he discusses how at the dawn of civilization, survival often depended on how a person’s body reacted to and could tolerate the beer that was generally safer to drink than water. Over time, only people who were genetically predisposed with the ability to drink large quantities of beer survived, passing that trait down to their children so that perhaps today most of us have such an ancestor as evidenced simply by the fact that we’re here. As Will (and Johnson) explains.

The gene pools of human settlements became progressively dominated by the survivors — by those genetically disposed to, well, drink beer. “Most of the world’s population today,” Johnson writes, “is made up of descendants of those early beer drinkers, and we have largely inherited their genetic tolerance for alcohol.”

There’s a curious side consequence to this idea. I wonder how neo-prohibitionists will feel knowing that it may have been beer that made it possible for them to be alive today, complaining that beer is inherently evil and destructive of society. If indeed, as Johnson argues, beer may have saved civilization by offering those who could tolerate it a safer alternative to the disease-laden water of ancient times, then it becomes harder to defend the position that beer destroys society.

Last year, I got a particularly venomous, hate-filled comment, by a person calling himself the “savagist,” to one of my posts about hunter-gathers and early beer-making. It was one of those screaming screeds claiming I had no archeological evidence (but offering none of their own) and calling me and the ideas I was writing about all sorts of names. His attack was quite personal and very verbally savage (pun intended) which was all the more surprising since one of his points appeared to be that a society with alcohol created “imperialistic, druken (sic) goofs who create warrior classes.” I would have thought the opposite of such people might reasonably be expected to communicate their disagreements a bit more gently than the drunken warrior class that I — apparently — belong to.

No matter, Johnson is saying essentially what I was last year, but with even more authority, research, evidence and science. Between his book, and the wealth of historical record and scientific research, it seems to me pretty well settled that beer and wine had a very positive impact on early civilization’s growth. That most of us are here today as a direct result of alcohol, is just the icing on the cake, or perhaps more appropriately, the head on our beer. Survival of sudsiest, indeed.