As expected, the U.S. Justice Department has approved the merger between Anheuser-Busch InBev and SAB Miller. However, MarketWatch.com’s Jason Notte reports that the Brewers Association, which represents craft brewers, won major concessions from the government:
- A-B, which sells 10 percent of beer through company-owned distributors, can’t acquire any more distributors.
- A-B can’t require independent distributors to drop competing brands, and can’t offer incentives that would reward distributors for giving A-B brands preferential.
- Any future craft brewery acquisitions by A-B must first receive Justice Department approval.
Notte attributes the craft brewers’ win to the Brewers Association’s paying more attention to government relations. The BA has hired a full-time lobbyist in Washington; and, earlier this year, it flew craft brewery executives to the capital to ask members of Congress for tax relief.
According to Notte, state capitals will become the next battleground, now that states–even thouse as small as North Dakota–have enough craft brewers to form a trade association. Some of the issues these associations will raise include bars selling tap handles to the highest bidders, supermarkets putting distributors in charge of choosing their inventory, and limits on the number of liquor licenses.
It’s Thanksgiving weekend, which means that Ludwig, our beer-drinking lion, is spending quality time with his pride. His first stop is, of course, the Detroit Lions game at Ford Field. Then, after he and the other lions feast (on zebra and all the trimmings, of course), he’s going to take a long nap. He’ll be back next Friday with the regular edition of…
We begin in Chelsea, Massachusetts, where The Field hosted its annual Pub Debate over whether marijuana should be legalized. The debate was conducted under British parliamentary rules, and both drinking and heckling were encouraged.
Chris Bosh of the NBA’s Miami Heat hosted a block party for his neighborhood. Bosh, an avid homebrewer, included a growler of his beer with each invitation.
Sierra Nevada Brewing Company has launched the Alpha Hops Society. For a $250 annual fee, members will receive a quarterly release of small-batch experimental brews.
Last month’s mega-merger between Anheuser-Busch InBev and SABMiller has put midsize brands such as Carlsberg and Heineken in a squeeze between a goliath with one-third of the industry’s market share and a growing craft sector.
The “Flux Capacitor” is back from the future. Treadwell Park, a beer hall in Manhattan has installed the device, which lets bartenders control the carbonation and temperature of each beer.
Here’s evidence that beer pong can be educational. Alex, from QuickSolar.com, hosts a two-minute video in which he uses the game to explain the solar photovoltaic effect.
Finally, beer, then whiskey. Rhonda Kallman, co-founder of the Boston Beer Company and a craft beer legend, has started a new venture, the Boston Harbor Distillery. It makes whiskey out of—you guessed it—Sam Adams beer.
The mega-merger between Anheuser-Busch InBev and SABMiller will give the combined business a 30-percent share of the world’s beer market and control of eight of America’s top ten brands. And, according to Time magazine correspondent Brad Tuttle, it will pose a serious threat to the growing craft beer sector. The big brewers’ campaign against craft is being waged on several fronts.
Big Beer’s first line of attack on craft brewers is “crafty” beers such as Blue Moon and Shock Top. Critics call these products “crafty” because many, if not most, consumers are unaware that they’re made by big breweries.
The big breweries are also buying craft breweries whose products have a following, such as Goose Island, Elysian, 10 Barrel, Golden Road, and Blue Point. Even though there are 4,000 breweries in the U.S., Tuttle points out that strategic acquisitions of key craft breweries make it much more difficult for other craft brewers to succeed.
Advertising is another weapon in the mega-brewers’ arsenal. The craft-bashing Budweiser commercial that ran during the last Super Bowl, poking fun at hipsters who fuss over pumpkin peach ale, is the most notorious.
The big brands still dominate distribution, and the three-tier system isn’t going away anytime soon. In some states, such as Colorado, A-B InBev has bought distributors outright—a practice that may lead to antitrust investigation by the Justice Department.
Finally, consolidation helps offset the big brands’ sagging sales growth by cutting costs. Advertising is one such cost. A-B InBev and SABMiller spend billions on sports sponsorships to promote their brands. Now that the two companies are no longer competing, they’ll have more negotiating power with the sports industry and will demand lower fees for their “official sponsorship” status.
Yesterday, it was reported that Anheuser-Busch InBev is working to acquire SABMiller. Paul Gatza, the head of the Brewers Association, issued a statement about the proposed deal.
If acquisition goes through, Gatza believes the federal government would order the combined business to divest itself of Miller brands in the United States. The brands, which are profitable, could be bought by MolsonCoors, or possibly Constellation Brands, Heineken, or Carlsberg. The acquisition would also have an effect on the ten-year joint venture between Miller and Coors, which runs until 2018. It’s unclear what will happen to the Leinenkugel family of beers, currently owned by Miller.
Gatza believes the takeover would have little impact on what American craft breweries will produce, or their acceptance by the nation’s beer drinkers. He also believes beer distribution won’t change much. He’s less sure of what effect the takeover will have on the wave of mergers and acquisitions in the craft brewing industry, or whether consumers will view craft beer as less of a reflection of the brewers’ “personal passion.” About this he says, “Time will tell all.”
Giant breweries such as SABMiller and Diageo PLC have invested heavily in African farmland as part of their effort to use more locally-sourced material—such as sorghum, cassava, and yams—in their beer. The good news is that the breweries are guaranteeing small farmers a guaranteed market for their crops, and that beer made from local crops is as much as 40 percent cheaper.
However, not all the news is good. With farmers growing more sorghum, they’re growing less food crops. Shrinking food supplies, in turn, mean higher prices, putting staples out of the reach of many families’ budgets.
The Most Interesting Man in the World has competition. Michel de Carvalho, the son of a Brazilian father and and a British mother, is an MBA from Harvard, a three-time Olympic competitor, and a high-ranking investment banker at Citigroup.
So why is he being mentioned on this blog? Because he married Charlene Heineken, the only child of beer baron Freddy Heineken and 25-percent owner of Heineken International. Her shares make the couple worth an estimated $11 billion.
Earlier this year, the brewery contacted Patricia Sellers of Fortune magazine, and proposed that she interview the de Carvalhos. Even though Charlene has been publicity-shy, she saw Heineken’s 150th birthday as an opportunity to talk about her life and her family business.
One interesting story involves Anheuser-Busch. After Freddy Heineken died, August Busch III–the Busches and de Carvalhos were friendly rivals—suggested that the two companies help one other expand their distribution. A Heineken-Busch joint venture is one of the industry’s more intriguing historical “what-ifs.”
In September, Charlene rejected an unsolicited bid by SABMiller. Meanwhile, Michel is trying to grow Heineken in a rapidly-consolidating industry. Michel feels the heavy responsibility that goes with being part of a family business. He said to Sellers, “One of the things that drives me is the thought that one guy [Freddy] is constantly looking down and wondering whether we’re going to **** it up.”
On this day in 1492, Christopher Columbus became the first European to set foot on the island of Hispaniola. December is celebrated as Discovery Day on the island’s two countries, Haiti and the Dominican Republic.
And now….The Mash!
We begin in Loudoun County, Virginia, where beer tourism is stimulating the local economy. The county has eight breweries, with 16 more in the planning stages.
Black Friday has become the number-one day for beer releases. As you’ve probably figured out, most of these beers are stouts and many of them are barrel-aged.
SABMiller, the world’s second-largest brewing company, still lacks a global brand. Its launch of Pilsner Urquell was a flop, and Heineken said no to a takeover offer.
Bottles and Cans, a liquor store in Chicago, is offering an adults-only Advent calendar. It contains 25 beers, each of them to be enjoyed on the weekdays leading up to Christmas.
European Union officials want Japan to open its market to imported beers. Arcane Japanese rules, such as a ban on ingredients like coriander seeds, act as “non-tariff barriers.”
Minnesota’s Excelsior Brewing Company has brewed a saison beer with pondweed and zebra mussels. The brewery insists that “minuscule” amounts of the invasive species were added.
Finally, Shoes & Brews, a runners’ gear store in Colorado, offers an incentive to get into shape. The store, which has a liquor license and 20 taps, bases the price of your first beer on your time in an 800-meter time trial.
On this day in 1968, Intel Corporation—Intel is short for “Integrated Electronics”—was founded in Mountain View, California. Today, it is one of the world’s largest and emiconductor chip manufacturers. Chances are, your personal computer has “Intel inside.”
And now….The Mash!
Appropriately, we begin in California’s Silicon Valley. Levi’s Stadium, the new home of the San Francisco 49ers, will offer fans a wide selection of local micros to choose from.
Cigar City Brewing Company has signed an agreement to pour its beers aboard Carnival Cruise Lines’ ships. Carnival also offers its own private label draft beer, ThirstyFrog Red.
This was bound to happen. Oregon’s Full Sail Brewery has sued Atlanta-based Sessions Law Firm, alleging that the law firm copied its trademark for Session Premium Lager.
Kirin, once the undisputed number-one brand in Japan, has dropped to second place behind Asahi. The chief reason for Kirin’s downfall was not entering the fast-growing premium beer market.
Grand Rapids’ Founders Brewing Company made BrandInnovators.com’s list of Top 10 American-Made Brands to Watch. Founders is joined on that list by Sonoma Cider Company.
Rumor has it that Anheuser-Busch InBev will merge with SABMiller. The combined company would own 80 percent of the world’s leading brands and control 30 percent of the world’s beer market.
Finally, Brasserie Cantillon is aging its beers inside a bomb shelter. No, the brewery isn’t expecting another invasion. It simply ran out of space; and fortunately, the city of Brussels found them a new subterranean location.