Did you guys see that? That jet’s chemtrails totally spelled out my name for a second there. I swear.
Anyways, by now you’ve heard (and are sick of) the news. Blah blah, AB InBev bought Goose Island, and 10-Barrel, and Elysian. It happened. It was no big deal. Or a really big deal. Or sort of bad. Or really good?
Jury’s still out (but not on my case, I’ve been upgraded from “trespassing” to “pending psychological evaluation”).
While news like this always shocks, appearing as if by spontaneous generation from the social media feeds of brewers we’ve long imbibed, it’s an inevitability. AB InBev (and to a slightly lesser extent their conglomerate peers at SABMiller) is losing the beer war one brewery battle at a time. Bud sales continue to roll downhill, and the flat bottom or an upward turn seem impossibly distant. They’ve tried throwing fistfuls of hundreds at the problem, tried marketing, tried gimmicks, tried to tap into a generation that for the most part, doesn’t care at all about their corporate messaging or demographic targeting.
But they’re losing. Slowly maybe, but still losing. And losing money. That has to chap some suit-covered asses.
Every time I think about this situation, my mind wanders back around to the beer itself: if AB InBev concedes ground where it comes down to quality, why don’t they just invest some of their massive resources to brew a beer that appeals to those drinkers cutting into their market? Why not fight fire with fire, dry-hopping with dry-hopping, exotic yeast with exotic yeast? It seems like a no-brainer from the sidelines, and I can never quite lift the baffling fog of why they haven’t at least tried in the modern beer world (we’ll ignore Budweiser American Ale for now because that’s convenient to my argument).
Aside from the obvious image problem AB InBev has with younger drinkers, that’s not how a massive, multinational corporation rolls. Walmart doesn’t really care if Target’s good and services are better, they only care that their prices are cheap enough to get shoppers in the door. TimeWarner doesn’t care if your internet is slow or a jackalope has made a nest in your modem, they only care that it works well enough that you pay your monthly bill. Much the same, AB InBev doesn’t appear to be in the game of making beer people want to drink, they appear to be in the game of making money by producing beer that is 1) “acceptable enough that the consumer buys it” while also being 2) “made as cheaply as possible to meet requirement 1.”
That’s it. They don’t care if we like the beer, they only care if we buy it (as an aside, I think this is the crux of the defintion debate in “craft:” indie brewers let beer drive the money while big brewers let money drive the beer).
Why would they try to compete directly with any of the very highly rated and well-loved breweries in the country when that amounts to a big, risky expenditure of resources and a crap load of work? It’s much easier for them to buy existing large breweries and assimilate their fan base instead, thereby making the previously independent brewery’s success AB InBev’s by managerial association. Way less work, no direct competition with pesky things like “consumer satisfaction,” and all that juicy profit sharing.
But none of this is really news, or part of any conspiracy. It’s Capitalism doing what Capitalism does. No, the conspiracy hides behind the kerfuffle of beer dudes arguing over whether Elysian is still craft or not (guilty as charged), and in clandestine meetings under the cover of public din:
Big beer is buying up large breweries as a smokescreen for changing distribution and manipulating the way beer is sold in this country.
Chris Barnes of I Think About Beer notes that AB InBev spends a pretty penny on lawyers and lobbyist, and have snatched up distributors in the states where it’s legal to do so, all to mold how beer is sold and distributed in various states. While Big Beer purchasing a single brewery might cause that brewery to lose some favor, or (potentially) decline in quality over time as ingredients are (potentially) changed, that’s not the end of the world. Sucks for said brewery and its fans, but that won’t spell the end of independent brewing alone.
But if AB-InBev manages to monopolize the distribution chain, or dramatically change how the three-tier system works, they can then control what beers show up in what bars, what bottles on what shelves, and ultimately, what liquid goes down your, my, and everyone’s gullet. They can stymie the growth of smaller, independent breweries by lobbying to keep barrel threshold caps low, and keep breweries from directly selling to their consumers. They’ll twist and mangle the wreckage of the distribution networks so that local breweries can’t sell anything, anywhere without AB InBev having a hand in their business (and their wallets).
That’s where their financial power and underhanded business practices start to get scary. They don’t even plan to fight “good” beer head-to-head, because they know they’ll lose in terms of taste and consumer interest. Instead they’re changing the battlefield, methodically working to make sure consumers can’t even buy “good” beer through wanton destruction of competition. But at the same time, they’re not stupid, and recognize a growing number of people won’t buy Bud, even if it’s the only option. They’ll buy up enough breweries to keep the 10% “craft portion” sedated with a heavy dose of hops, and then do everything in their power to wrestle back the market share they’ve lost by making sure that when any person buys a beer, their only option is to buy an AB InBev beer.
So while we squabble and wail at the defilement of our culture, the gears clunk and shift in the background. We’re being fleeced by the cool and calm Carlos Brito, lead to believe this is a war of philosophy and ethics, of “us vs. them” binaries, when it’s really a war of preserving our freedom of choice. It’s about one player controlling the whole board, but convincing you that Park Place and Boardwalk are still great places to visit while they line their pockets with all those fat tourism dollars.
Pass me my tinfoil hat (it’s over there, next to that cast of the Sasquatch foot I paid $1000 for on eBay because it’s totally legit); I’ll whirl us even further down Alice’s LSD spiked rabbit hole of Dystopian beer future.
If this trend continues, and AB-InBev gets its way, we’ll see a “Walmartization” of all American beer, where the few products they sling are so affordable and so readily available (but just tasty enough) that most people buy them out of laziness and cheapness. We’ll see large, chained, retail stores that sell AB InBev products and nothing else, and they’ll be so successful that any small breweries who want to compete will have to “pay-to-play” to get on the shelves. And then, as we’re all still bickering on Twitter, the beer industry will slip back to the post-Prohibition number of breweries because no little guy can compete, and eventually, given enough time and market control, degrade to a situation where all beer is generic, cheaply made barley-identifiable-as-beer liquid that sells really well because no one knows any better but still want to get drunk.
Wait a second…
Oh, no, we’re OK. I thought I those chemtrails were making death threats.
The next time AB InBev buys up a brewery (and they will buy others), take a look at what else they’re doing. I wouldn’t be shocked if oh so coincidentally, at the very same time, bills were being voted on, people were being elected, or policy was being reviewed. Even if they start to posture, put out commercials that claim they care about beer, remember that in the Brito bubble, beer = money. Don’t be fooled into thinking that AB InBev is going to fight chivalrously. If they ever show up to duel, it’ll be with poisoned spear tips and snipers in the crowds.
Now if you’ll excuse me, I need to go clean a Jackalope nest out of my modem.
Tagged: ab inbev, beer, big beer, brewing, budweiser, chemtrails, conspiracy, corporations, craft beer, distribution, humor, jackalope, monopoly, shelf space
Very well said.
Thanks for reading!
Will A-B’s distribution practices form a pseudo-tied house system? To be honest, I don’t see them taking over the whole thing. At the moment, to many breweries and craft beer bars around here live off of no (or little) distribution and variety (respectively). So I believe there will always be places you can go to get variety. But in the future could you walk into a bar with the A-B Eagle on a tile hanging above the door? Interesting to think about.
That’s why I always couch these as “conspiracies;” I can’t say it’s going to happen, or it’s even likely, only that the paranoid fear snuck into my brain and I wrote it down.
Perhaps I just read way too much Dystopian science fiction and as a result assume every corporation will eventually take over much to the detriment of the poor, oppressed citizenry 🙂
Noted with interest AB advertised on the Super Bowl that they brewed just good old beer. Not sure who they were trying to reach. They did mock a craft brewery by a quick visual, so I’m not sure they were going after the new beer consumers. If they are doing nostalgia then their customer base is dying out.
Yea, the impetus of that commercial seemed to be, “don’t think, just drink” which is sort of an indirect acknowledgement that their beer doesn’t match up well against more flavorful “craft” beer.
I took it more as AB finally adding their voice to the argument that has been dominated by the likes of me and my peers for too long. It was a very confusing voice with no real aim, but a voice nonetheless.
I simply went, “huh?” after it aired
Good post as always. If the three tier system came down, your beer market would probably start look like ours in Australia, which is to say it wouldn’t be the end of the world.
Something like 85-90% of beer sold comes from two vertically integrated behemoths in Lion (Kirin) and Carlton & United (Fosters/SABMiller). They have their own distribution networks, craft brewery brands and most pubs and bars around the country would have some or all tied taps, to the point that some recently opened craft (ugh) beer bars still have Lion-tied taps as a hangover from the previous business.
While the independent beer scene here is years behind parts of the States and its growth is probably handicapped by the massive advantage handed to the first two, it’s still growing and the marketshare of the big boys is declining. Stone & Wood, perhaps the local equivalent of Sierra Nevada, is managing to thrive in this environment. Many breweries do their own distribution, although it tends to become too expensive to send it outside their home town for smaller guys. There are also independent distributors which are small (<10 employees nationwide, few of which would be full time) and while they might have a decent margin, on such little volume it's not worth the big boys paying any attention. So good beer still gets out there because demand for it still exists – the market finds a way. It might get more expensive for you though – we don't notice here because beer is already mindbendingly expensive.
Interestingly, and probably something that won't happen in the US, is that a large majority of liquor retailing is controlled by the two biggest supermarket chains in this country. Their purchasing power is enough to get cases of Corona on the retail shelf for less than other wholesalers can sell it for. One of the big box retailers has a pretty decent, if poorly kept, range of beer which makes me think that there's either decent money in selling the stuff or they're expecting it to be the next big thing.
Another interesting thought is the power of Coca-Cola. I heard one story locally that they bundle the supply of post mix to pubs with their own brands to distribute (basically cheap soft drink in exchange for a tap). While they've decided to do their own brands here, there's no reason they couldn't run with non-BMC beer in the States.
(The above would obviously vary depending on how states implement their distribution laws)
You just blew my mind with the Coca-cola thing. They already have the infrastructure and logistics…
I think I know the topic of my next conspiracy post!
(Thanks for reading 🙂 How much IS beer in Australia?)
I don’t think it’s made as huge an impact as it could because they’ve gone by the book and some of their choices have been a bit dubious – there was disappointment when they announced they were bringing Coors in last year (not top tier enough). Not sure if that’s management failing to understand the industry or insufficient “good” brands available for marketing. That said, Coors does seem to be making some in-roads.
(A few years ago with the exchange rate at AU$1 = US$1.05, US$21 to US$26 for a six pack of local independent beer. That’d be cheaper now in US$ terms since the currency’s dropped 30% but nominal price in AUD has stayed the same at $20 – $25)
Hmmm. I wonder if the possibility is there though. I’m going to try to track down some additional information before jumping to any crazy conclusions.
And holy crap; how does anyone afford beer? I don’t even want to know what spirits and wine costs, I’m already having heart palpitations.
Wine is cheaper on a per drink basis – you could get a decent bottle for $10-$20. Spirits start at $35 for a 700mL bottle and go up from there. Taxation is driver of alcohol pricing in Australia. Speaking of spirits, I’m wondering if Coke’s more traditional ties to spirits (rum and coke, bourbon and coke, etc) is perhaps why we don’t see Coke getting involved in the booze industry more?
Ugh. I’m already tired of the WalMartization of Beer.
As I read the last paragraph of this, all I could picture is that scene from “The Matrix” wherein the crew of the Nebuchadnezzar are eating “breakfast” or…whatever that slop is. Where all food has been consolidated or simplified to be a sloppy bowl of amino acids, vitamins, minerals, etc. (the beer version of this being a glass of something bubbly that resembles hops and barley water)…
“How do the machines know what tasty wheat tasted like…maybe they got it wrong. Maybe what I think tasty wheat tasted like really tasted like oatmeal or tuna fish…”
A terrifying future indeed if one is left to their own creative/imaginative devices
So much to think about! If the worst case scenario happens and there’s nothing but Bud on the shelves, I’ll do what I did before I discovered the whole Craft Beer thing: I’ll drink something else. Life’s too short to drink swill!
As usual, great read!