Big Beer’s U.S. Problem Just Got Bigger

[MT2sum]

I'm just wondering if it's the expanding popularity of Homebrewing and Craft Beer sales that are affecting the sales of the alcohol-infused pee-water that they sell .....

https://www.wsj.com/articles/big-beers-u-s-problem-just-got-bigger-1509021939

Weak growth in the world’s most lucrative beer market is punishing global leader Anheuser-Busch InBev

It wouldn't hurt my feelings if they went broke! I'm not happy that they're buying up small craft breweries (Lagunitas, etc.) and homebrew suppliers (Northern Brewer/Midwest, etc.) - not sure if there is a 'devious ulterior motive' or 'just good business' decisions.

I just got back from 3 weeks in Oregon, and the cooler shelves were packed with many, many craft/small brewery offerings, and the 'Big Beer' labels had very little shelf space compared to what they used to have in past years - even a couple of years ago! I think maybe the grocers are realizing that people are buying more of the beers with flavor, than the beer that has almost no flavor at all - as well as the many choices, like IPA's, Stouts, Porters, Hefe's, etc..

 

[triethylborane]

I'm just wondering if it's the expanding popularity of Homebrewing and Craft Beer sales that are affecting the sales of the alcohol-infused pee-water that they sell .....

It wouldn't hurt my feelings if they went broke! I'm not happy that they're buying up small craft breweries (Lagunitas, etc.) and homebrew suppliers (Northern Brewer/Midwest, etc.) - not sure if there is a 'devious ulterior motive' or 'just good business' decisions.

Bud is getting smoked via its NFL sponsorship and horrible marketing choices (Schumer and that fat neck beard slob). The article tries to foist it on hurricanes/natural disasters, yeah, well maybe that is a small part of it, but nah, bad decisions can impact big corps. It took a while before the bad decisions leading to bad products caught up with the Detroit automakers. It got so bad we bailed one out and the other was placed in receivership until FIAT (owned by the Italian govt) bought it. InBev is not immune.

That said 3Q sales look alright rest of world:

InBev has a duty to make decisions that increase share value, so they are making good decisions by diversifying their holdings with craft breweries and suppliers. What does that say about the "solidarity" or integrity of the craft brewers guild, though? Not much. Id take the money too.

archive of the article for non WSJ subscribers:

http://archive.is/xvcmv

 

[day_trippr]

I expect home brew consumption is well below the noise level wrt megamacro annual sales.
Otoh, the market share of craft and "crafty" beers has definitely grown to the low teens - and it was just a few years ago that a 5% share was considered aspirational.

But it's not just non-macro market growth. Wine consumption has been riding a significant up-trend as well.

The net is more people are turning from macros to "other"...

Cheers!

 

[Shwagger]

They bought NB? Don't shop there but won't now for sure

 

[okiedog]

MT2sum, I was not happy with ABIs' acquisition of Northern Brewer and Midwest Supply. What they are doing is buying up their competition, mostly targeting Craft. They must have thought they would cover all their bases by also buying the two largest Home Brew Suppliers in the US. I fully understand maintaining market share and the bottom line. What I object to, is the way ABI is going about. In some cases it seems to be bordering on monopolistic practices.

 

[jalc6927]

Big money gets its way in this country. Distribution laws prove that in a big way

Being a financial planner, I try to think in trends to get better returns rather than resistance, I look for opportunities.

As much as what they are doing hurts the market, we can't stop them nor blame them

What we can do is not support them and look for opportunities to fill the niches they leave behind.

In the end ABInbev will continue to grow or start to implode

 

[radwizard]

They will continue to grow, for sure. As mentioned above, consumers are shifting from macro to other. Hence INBEV's response with the Higher End line. I mean, many of those newly claimed breweries brew really good stuff - The consumer is going to get what he wants - The clasy "other" beer.

IN BEV in the long run is going to adjust to the consumers wants, that is what they are supposed to do. It's funny how it worked out. For years all I heard was macro is crap, micro is great- and as soon as the general public started shifting in this direction, the big macro company started buying them up. All that gospel against big beer really didn't do jack, in this story.

Generally, people in the US, just don't give a crap about these kinda things. That is why INBEV and Walmart are what they are. It's a shame, but it is what it is.

Personally, I care. I support small business, and local crafts. In the long run it probably doesn't make a difference, but it does to me- Those are my values. Recently, a popular local taproom publicly declared to no longer carry any INBEV products. I took the time to right them my support of their decision, and vowed to support them as best as I could. I have since visited more often, because it is a great place and shares my values.

 

[Lefou]

They bought NB? Don't shop there but won't now for sure

One company I'm watching is New Belgium. It's an employee-owned business with a very interesting past. The two original founders have made their fortunes over time and have decided to pass on the responsibility of operations to others. NB is a great case study. As long as it stays profitable and the management doesn't issue sneaky convertible shares that can be purchased on a public basis, the employees can look forward to a personal profit and some longevity.
I'm definitely not a fan of Lebesch's ex-wife and hope she truly has the best interests of NB's employees at heart. I also hope NB grows and stays out of Big Beer's clutches, but knowing what I know, I won't be buying any Fat Tire, either. Same with Ben and Jerry....their ice cream can melt and run in the street before I'd consider buying it.

 

[lump42]

MT2sum, I was not happy with ABIs' acquisition of Northern Brewer and Midwest Supply. What they are doing is buying up their competition, mostly targeting Craft. They must have thought they would cover all their bases by also buying the two largest Home Brew Suppliers in the US. I fully understand maintaining market share and the bottom line. What I object to, is the way ABI is going about. In some cases it seems to be bordering on monopolistic practices.

The other theory I've heard is that Homebrew trends often precede craft beer trends. So by owning the two largest HBS, they have critical data to stay in front of craft beer trends for their newly acquired breweries.

I've talked with the owner of locally 'large' craft brewer and he was encouraging me to enter their pro/am style competition. I started asking what the brewery got out of the competition and he mentioned among other reasons that they got to see what the current trend of beer styles for their local market.

It wouldn't hurt my feelings if they went broke! I'm not happy that they're buying up small craft breweries (Lagunitas, etc.) and homebrew suppliers (Northern Brewer/Midwest, etc.) - not sure if there is a 'devious ulterior motive' or 'just good business' decisions.

Just as a side note, Lagunitas was sold to Heineken not ABI. Not that it was a more favorable move, just trying to make sure facts are straight.

 

[MT2sum]

Just as a side note, Lagunitas was sold to Heineken not ABI. Not that it was a more favorable move, just trying to make sure facts are straight.

My misteakenzie ;>) ..... somewhere in the dark recesses of my feeble old mind I think I was either told, or had read that it was ABInbev ..... thanks for the correction!

BTW, the only good reason I can see for buying from No.Brew. is their Big-Mouth Bubblers, which I use for fermenters instead of the wife's wine carboys - I love the Glass BMBs, and if any other HBS decides to have some made, No.Brew. won't get my business for more! (We don't do plastics).

 

[MaryB]

Until someone else can ship bulk malt to me as cheap as NB they are my go to for that... BUT they sure did jack the price on Golden Promise in the last year! Even with the higher price they are still cheaper than anyone else once I add shipping...

 

[MT2sum]

MaryB - I've found that Love2brew in NJ, Adventures in Homebrew, and HBX (HomeBrewExchange) in OR sometimes have a reduction special on their shipping that works well for me, although I don't order in large quantities, and that may make the difference - I think my heaviest order was about 40 or 50 lbs. .... just as long as I didn't order a full bag of grains ;>).

 

[NeoBrew]

They bought NB? Don't shop there but won't now for sure

I feel like not enough people know this. I see NB referenced often in here, but hold my tongue because I don't want to be a troll.

I live in Minneapolis/St. Paul. Northern Brewer and Midwest had already merged. They dominate(ed) the local homebrew supply market. To their credit this was because they were really good stores. Unfortunately when they went in with AbInbev, it meant that 90+% of the local market for homebrew supplies was owned by big beer.

 

[cmarshall1087]

One company I'm watching is New Belgium. It's an employee-owned business with a very interesting past. The two original founders have made their fortunes over time and have decided to pass on the responsibility of operations to others. NB is a great case study. As long as it stays profitable and the management doesn't issue sneaky convertible shares that can be purchased on a public basis, the employees can look forward to a personal profit and some longevity.
I'm definitely not a fan of Lebesch's ex-wife and hope she truly has the best interests of NB's employees at heart. I also hope NB grows and stays out of Big Beer's clutches, but knowing what I know, I won't be buying any Fat Tire, either. Same with Ben and Jerry....their ice cream can melt and run in the street before I'd consider buying it.

Just curious, whats the problem with Ben and Jerry's Ice cream?

 

[jalc6927]

Purchased by Japanese company and they agreed to uphold same standard then didn't

I thought this was resolved but then again who knows

They have the best ice cream ever, that I do know

 

[auburntsts]

I feel like not enough people know this. I see NB referenced often in here, but hold my tongue because I don't want to be a troll.

I live in Minneapolis/St. Paul. Northern Brewer and Midwest had already merged. They dominate(ed) the local homebrew supply market. To their credit this was because they were really good stores. Unfortunately when they went in with AbInbev, it meant that 90+% of the local market for homebrew supplies was owned by big beer.

Trying to understand what the issue here is. If they keep the stores open (keeping folks employed and thereby contributing the local economy) and maintain quality service, does it really matter who the owner is? Or is this just a principle thing? No right or wrong answer here, but being new to brewing I'm just not sure I get the angst of the situation.

 

[Shwagger]

Purchased by Japanese company and they agreed to uphold same standard then didn't

I thought this was resolved but then again who knows

They have the best ice cream ever, that I do know

I'd propose telenti does, but they were bought by Unilever. The ingredients went from about 5 things to about 10.

Money always wins in the end.

On topic, I use lhbs which are just OK, and ABS lately to buy supplies

 

[johnmac22]

Trying to understand what the issue here is. If they keep the stores open (keeping folks employed and thereby contributing the local economy) and maintain quality service, does it really matter who the owner is? Or is this just a principle thing? No right or wrong answer here, but being new to brewing I'm just not sure I get the angst of the situation.

I never purchase BMC or the likes, but I continue to support 10Barrel (Boise) even though they were bought out. The money I spend there may not stay in the community, but the place hasn't changed at all since they were acquired and it is still as busy as ever. I definitely think some folks on here are just naysayers to BMC and big business. From my point of view, you aren't going to get away from BMC/big business, so why not pick and choose your battles? I choose to spend my money at 10Barrel but won't buy BMC branded products. To each their own, I guess.

 

[NeoBrew]

Trying to understand what the issue here is. If they keep the stores open (keeping folks employed and thereby contributing the local economy) and maintain quality service, does it really matter who the owner is? Or is this just a principle thing? No right or wrong answer here, but being new to brewing I'm just not sure I get the angst of the situation.

I'm sure others here would have a more accurate story about how big beer came to be than me. But the basic story is like any monopoly. Start consolidating and buying up the competition, then when you get big enough start using your influence to box out the competition. No competition means no variety and innovation.

The issue is less about the buying of one homebrew store. It's about applying the same marketing and monopolistic principles that they have exhibited in the rest of their markets to homebrewing. Nobody knows what their plans for NB are. But if they are willing to buy the largest homebrew distributor, wouldn't it be a reasonable assumption that they intend to grow their market share? What happens when they buy out Morebeer too? Adventures in Homebrewing? Love2Brew? Great Fermentations? At what point does it start to become concerning to everybody?

This starts to get into "tin foil hat" territory fast. Everything that ever went wrong in the world started with that first step. Whether or not this is that step? ...who knows?

 

[MT2sum]

Trying to understand what the issue here is. If they keep the stores open (keeping folks employed and thereby contributing the local economy) and maintain quality service, does it really matter who the owner is? Or is this just a principle thing? No right or wrong answer here, but being new to brewing I'm just not sure I get the angst of the situation.

Since I don't see some of the previously familiar names, I think they sacked some of the original employees (maybe they didn't want to be associated with the sellout), I just don't like the idea of supporting a conglomerate who is gobbling up everything in sight ..... as has already been said, to each his/her own!

 

[DarkStarNJ]

Its also a matter of distribution lines. Many places the Only craft brew on Tap is Goose Island. If the restaurant thinks they have craft availailbe via GOose they might not feal the need to use other distributors where small breweries can get their product out. For the most part Ive stopped drinking Goose Island because of this.