Look Out Craft Breweries - Here Comes BMC...

[Montanaandy]

From The Wall Street Journal:

"The craft beer industry continues to enjoy considerable growth and U.S. mega-brewers are devoting more attention to a segment that still only owns just 7 percent of the entire beer market.

In an interview with the Wall Street Journal, MillerCoors President Tom Long said his company is a ‘big player in craft,’ citing the Blue Moon and Leinenkugel’s brands as examples.

Long said he plans to grow the company’s craft portfolio 60 percent over the next three years through its craft beer division in Tenth and Blake.

According to Long, craft is an area MillerCoors is most interested – and for good reason. Recent SIG data puts the craft segment up 13.8 percent in volume growth and 17.7 percent in dollar growth for the 52 week period ending November 27th.

When asked about his strategy with respect to craft, Long said he hopes to ‘play really hard in the fastest sector right now, which is craft.’

But what can a large company like MillerCoors have to offer craft brewers? Distribution, among other things, according to Long. He also cited an ‘enormous amount of assets in brewing processes, technology procurement and a back office’ that many craft brewers aren’t fortunate enough to have due to financial limitations.

MillerCoors recently purchased a minority stake (less than 25 percent) in the GA-based craft brewer Terrapin and Long hinted that similar acquisitions could be on the way, telling the WSJ that MillerCoors is ‘in dialogue with lots of companies.’

Long also said he expects to see the overall beer industry down another 1 or 2 percent in 2012."

 

[BigEd]

We've seen this before with things like the Michelob specialty brews and the stout that AB brought out a few years ago. Maybe it will be different this time but in the past AB always seems to dumb down the offerings so that maybe some of their regular core customers will buy it and because it has the AB source most drinkers already consuming craft beer don't want anything to do with it. It's no accident that even though Blue Moon is a Coors' product their name never appears on the label or in ads for it. What is more likely to happen rather than making most of the beer is the already continuing process of AB/InBev buying up control or distribution rights to already established craft breweries. IIRC at one time AB distributors were not allowed to carry any other products. Recently the AB distributor in my area set up a new division strictly for craft beer. They carry a lot of the that AB already had their corporate hands in as well as some other regional beers.

 

[thisgoestoeleven]

[ame="http://www.youtube.com/watch?v=35TbGjt-weA"]My thoughts on this.[/ame]

 

[wailingguitar]

A/B actually had a few decent beers out about ten years ago. Not great, but decent... I actually quite enjoyed their Munchener Lager. Miller had a craft segment too for a while, I don't remember any of their other brews, but a (Cream?) Stout they had was pretty good.... well, pretty good for a Porter! I would drink it and be happy.

So, yeah, it's nothing new... they just like us to THINK they are doing something new. It's all the same smoke and mirrors... "Cold Filtered!", "Triple Hopped!", "Beechwood Aged!" yadda yadda...

 

[Montanaandy]

We've seen this before with things like the Michelob specialty brews and the stout that AB brought out a few years ago. Maybe it will be different this time but in the past AB always seems to dumb down the offerings so that maybe some of their regular core customers will buy it and because it has the AB source most drinkers already consuming craft beer don't want anything to do with it. It's no accident that even though Blue Moon is a Coors' product their name never appears on the label or in ads for it. What is more likely to happen rather than making most of the beer is the already continuing process of AB/InBev buying up control or distribution rights to already established craft breweries. IIRC at one time AB distributors were not allowed to carry any other products. Recently the AB distributor in my area set up a new division strictly for craft beer. They carry a lot of the that AB already had their corporate hands in as well as some other regional beers.

I agree. I think that in the past BMC were more than anything else amused with what was going on in the craft beer segment. They were still gaining market share and were making a sizeable profit. That is no longer the case. The craft brew market is the only beer market that is currently profitable and it is gaining market share by leaps and bounds (some estimate that craft beer could account for 30% of the market by the end of the next decade up from some 7% or so at present). Buying into or buying out established and respected craft brews such as Goose Island (which had a tie with AB/InBev prior to the acquisition) will become the new norm. I personally think that this strategy will not succeed in the long term - I think that the overall trend will be more and more small, local, neighborhood microbreweries, brerwpubs, and gastropubs (depending on your state laws). This is already happening quite a bit out West and is in keeping with the "keep it local" movement that is prevalent.

 

[EdWort]

MillerCoors recently purchased a minority stake (less than 25 percent) in the GA-based craft brewer Terrapin and Long hinted that similar acquisitions could be on the way, telling the WSJ that MillerCoors is ‘in dialogue with lots of companies.’"

I tasted a couple of Terrapin brews at a Taco Mac in the Atlanta area last month. There were not worthy of my $5 for a pint IMHO, so I moved on to something better like Bell's Two Hearted Ale and Sweetwater IPA.

Good for Miller. They can have their crappy beer to go along with the rest of their line.

 

[andysim]

From The Wall Street Journal:

"The craft beer industry continues to enjoy considerable growth and U.S. mega-brewers are devoting more attention to a segment that still only owns just 7 percent of the entire beer market.

In an interview with the Wall Street Journal, MillerCoors President Tom Long said his company is a ‘big player in craft,’ citing the Blue Moon and Leinenkugel’s brands as examples.
Long said he plans to grow the company’s craft portfolio 60 percent over the next three years through its craft beer division in Tenth and Blake.

According to Long, craft is an area MillerCoors is most interested – and for good reason. Recent SIG data puts the craft segment up 13.8 percent in volume growth and 17.7 percent in dollar growth for the 52 week period ending November 27th.

When asked about his strategy with respect to craft, Long said he hopes to ‘play really hard in the fastest sector right now, which is craft.’

But what can a large company like MillerCoors have to offer craft brewers? Distribution, among other things, according to Long. He also cited an ‘enormous amount of assets in brewing processes, technology procurement and a back office’ that many craft brewers aren’t fortunate enough to have due to financial limitations.

MillerCoors recently purchased a minority stake (less than 25 percent) in the GA-based craft brewer Terrapin and Long hinted that similar acquisitions could be on the way, telling the WSJ that MillerCoors is ‘in dialogue with lots of companies.’

Long also said he expects to see the overall beer industry down another 1 or 2 percent in 2012."

Blue Moon and Leinenkugels is craft beer? Why am I wasting my money on Three Floyds and Upland?

I don't think the real craft brewers have any thing to worry about from BMC is if more Blue Moon and Leininkugels is all they can come up with.

Is Shocktop craft also?

 

[bob1852]

Craft beer has no legal definition to my knowledge. All beer could be considered craft...

 

[Lunchtime]

93% of the market and BMC can't stand that other small companies are making a living. All of the money in this country apparently is supposed to be in the hands of a dozen or so people...This is why I don't support their evil empires.

 

[luke2080]

From The Wall Street Journal:

"The craft beer industry continues to enjoy considerable growth and U.S. mega-brewers are devoting more attention to a segment that still only owns just 7 percent of the entire beer market.

In an interview with the Wall Street Journal, MillerCoors President Tom Long said his company is a ‘big player in craft,’ citing the Blue Moon and Leinenkugel’s brands as examples.

Long said he plans to grow the company’s craft portfolio 60 percent over the next three years through its craft beer division in Tenth and Blake.

According to Long, craft is an area MillerCoors is most interested – and for good reason. Recent SIG data puts the craft segment up 13.8 percent in volume growth and 17.7 percent in dollar growth for the 52 week period ending November 27th.

When asked about his strategy with respect to craft, Long said he hopes to ‘play really hard in the fastest sector right now, which is craft.’

But what can a large company like MillerCoors have to offer craft brewers? Distribution, among other things, according to Long. He also cited an ‘enormous amount of assets in brewing processes, technology procurement and a back office’ that many craft brewers aren’t fortunate enough to have due to financial limitations.

MillerCoors recently purchased a minority stake (less than 25 percent) in the GA-based craft brewer Terrapin and Long hinted that similar acquisitions could be on the way, telling the WSJ that MillerCoors is ‘in dialogue with lots of companies.’

Long also said he expects to see the overall beer industry down another 1 or 2 percent in 2012."

The distribution piece is the annoying piece for those small craft breweries trying to get their beer on the shelf. While craft beers are on tap in more and more places, I also see plenty of places with 10 taps, and 8 of them are BMC, with 2 for Sam Adams and Sam Seasonal (in Boston). Blue Moon, Shock Top, Bud, BL, ML, Coors, etc etc etc.

Getting shelf/tap space, to get craft beer to the consumer, will be tough. Thankfully there are also stores opening and being more dedicated to real craft brew.

 

[Lunchtime]

Craft beer has no legal definition to my knowledge. All beer could be considered craft...

I believe it has to do with barrels sold...at least that is what the owner of the local brewery told me. Sam Adams is tech. the largest craft brewer.

 

[danorocks17]

I have a friend who is an excise cop, and according to him the law in Indiana allows for brewery's who are under a certain size to be their own distributor. I"m not sure how other state laws stack up, but this is certainly something that allows smaller breweries to compete locally, and I like that.

 

[Lunchtime]

hmm from everything I heard, it was a federal law that made it so a brewer couldn't distribute themselves...I'll have to look into that.

 

[danorocks17]

hmm from everything I heard, it was a federal law that made it so a brewer couldn't distribute themselves...I'll have to look into that.

hmm, maybe it is a federal law. but he was almost sure if a brewery is under a certain size they can do it themselves

 

[wailingguitar]

hmm from everything I heard, it was a federal law that made it so a brewer couldn't distribute themselves...I'll have to look into that.

It is definitely not federal. It varies from state to state.

 

[msarro]

What craft brewers should expect is their logistics are going to get much harder to play with. Most regional distributors are already largely aligned with either InBev or MillerCoors (SABC?). All those big guys have to do is put some pressure on, and they can start making it much more difficult for craft brewers to get their beers out there. That will most likely happen around the same time as headhunters from the big conglomerates going out to craft brewers and mentioning that if they sold a controlling stake in their companies their logistics problems will magically go away. At least if I was an evil bastard like the folks who run those companies, that's how I'd do it. It'll be interesting to see what happens.

 

[msarro]

It is definitely not federal. It varies from state to state.

It is federal, however some states chose to do things a little differently by monopolizing one or more of the tiers. They still fit roughly in the three tier system.
http://en.wikipedia.org/wiki/Three-tier_(alcohol_distribution)

 

[Lunchtime]

You are right...Did some research and it does fall to the state.

 

[bob1852]

I believe it has to do with barrels sold...at least that is what the owner of the local brewery told me. Sam Adams is tech. the largest craft brewer.

Sure, but once Sam Adams broke that threshold, they changed the definition so they were still considered 'craft.' Which is why I said it's not really defined.

 

[nukinfuts29]

I tasted a couple of Terrapin brews at a Taco Mac in the Atlanta area last month. There were not worthy of my $5 for a pint IMHO, so I moved on to something better like Bell's Two Hearted Ale and Sweetwater IPA.

Good for Miller. They can have their crappy beer to go along with the rest of their line.

 

[MMBB]

One more reason to keep on top of what company is owned by who! I don't need any more of my money going to them. If I am somewhere that doesn't have a few decent craft beers I'll grab a Yuengling.

 

[Glossolalia]

The definition of "craft beer" is a bit of a joke really. The Brewer's Association defines it as small (<6 million barrels/year), independent (<25% ownership by alcohol beverage industry that is not craft themselves), and traditional (flagship beer must be all or has at least 50% of its volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor). Who here really thinks 6 million barrels/year is small? Who here accepts 24% ownership by InBev as still independent? And the ultimate definition of traditional comes down to completely subjective criteria: "use adjuncts to enhance rather than lighten flavor."

If we go back to the old microbrew designation (am I dating myself here), we defined small as < 15,000 barrels/year. This eliminates Boston Beer, Sierra Nevada, New Belgium, Widmer, Deschutes, Magic Hat, Bells, Goose Island, Alaskan, Stone, Brooklyn, New Glarus, and a whole host of others. If you simply eliminate the top 10 craft breweries, who are not small by any reasonable definition of the word, you've eliminated the growth in craft beer. We are seeing less a boom in craft beer than we are seeing a boom in sales and volume by several rather large breweries that simply aren't Anheuser-Busch, MillerCoors, or Pabst.

 

[wailingguitar]

Well Gloss, I worked at Bell's when they were brewing in 40gal Groen soup kettles... which was a huge step up from the 15 gal kettles Larry started with. I know Larry, I know John Mallett, these guys are serious about beer... as are Geoff and Marcy Larson (a couple of damned nice folks right there) of Alaskan. To suggest that they are "rather large breweries that simply aren't Anheuser-Busch, MillerCoors, or Pabst" is pretty damned insulting. Larry Bell, the Larsons, Ken Grossman and the folks at Sierra Nevada were there at the start of this thing and made the industry what it is today. We all owe them a debt of gratitude... don't belittle them for their success!

 

[EdWort]

The definition of "craft beer" is a bit of a joke really.

So true.

My definition of craft beer regardless of the production quantity is beer that tastes good enough that I am willing buy it.

I don't buy Bud, Miller, Coors, etc..

I don't buy Independence, Circle Brewing, Terrapin, etc. as well simply because I don't care for their beers. They are not up to par with homebrew IMHO and don't merit my purchase.

 

[gr8shandini]

I think a little perspective is in order here. Of course the BMCs want to increase their presence in the "craft" segment. It's one of the only growth areas in this economy and it also allows them to charge more than bargain-basement prices for their beer. It's not evil, it's just good business sense. And I don't think anyone is forcing the likes of Terrapin to sell part of their operation to them (also, while I'm not a huge fan, I think it's unfair to call their beer "crappy." Their rye pale ale is pretty nice at least).

I'd rather see it this way: We're winning the war on tasteless beer. Granted, Blue Moon isn't much of a brew, but you have to admit that it's head and shoulders above Miller Lite. Who knows, within 10 years, maybe decent quality beers will be in every 7-11 across the country and the good stuff will still be where it's at for those who know to look for it. Not the worst thing in my book.

 

[mitchar19]

I have to defend Terrapin a little. I've been to the brewery several times and I've had some great beers there. Monk's Revenge, Hopsecutioner when fresh, Rye Pale Ale when fresh, Bid Daddy Vlady RIS just to name a few. Taste is personal but I think their beers stand up to many other great breweries out there. It sucks they had to sell a portion of their company to Miller but it's my understanding Terrapin will still have creative control and it will allow for expansion of their distribution.

 

[Teromous]

The distribution piece is the annoying piece for those small craft breweries trying to get their beer on the shelf. While craft beers are on tap in more and more places, I also see plenty of places with 10 taps, and 8 of them are BMC, with 2 for Sam Adams and Sam Seasonal (in Boston). Blue Moon, Shock Top, Bud, BL, ML, Coors, etc etc etc.

Getting shelf/tap space, to get craft beer to the consumer, will be tough. Thankfully there are also stores opening and being more dedicated to real craft brew.

This is exactly what I was thinking while reading the post. When I go to non-specialty stores to buy beer, they always put craft beer on one side and regular beer on the other. BMC craft beer already takes a large portion of the shelf space, and adding another 2-3 beers will crowd out the remaining competition. Only large craft distributors, such as Sierra Nevada and Dogfish Head (and others), will be able to compete. Chances of getting non-regional beers will become harder and harder.

 

[Steelers77]

I for one will not be purchasing Terrapin from here on out (I actually like their beers). It's the same as when Goose Island got bought out, I quit buying form them too.

It's not really because MillerCooors bought them but it more about MC's lack of creativity and their need for more. This is just a way for them to legitimize themselves and push their way into a segment of the industry that they can&#8217;t get to themselves because they forgot what good beer is and how to make it. I know, I know producing that swill is difficult and yada yada but let&#8217;s face it, it is crap.

They are starting to realize they need to do something to either stop the momentum of the "craft" industry or to just hijack the train and become part of it. I'm pretty sure they just thought this was a fad and it would soon go away, but it hasn't.

I truly believe we will never go back to the days when there was only 82 breweries in the U.S. and the big three are worried about this. Just wait until the next generation comes along growing up in a house where beer was produced. They will be taught to respect and enjoy it, and not to go out and drink 20 light beers on a Friday. It will take some time but we are getting there and every time we see another "craft" brewer be bought out just know BMC is getting more and more worried.

Drink Local!

Sorry for the rant,

Brew on!

 

[Zamial]

I do not care is a topless supermodel offered me a BMC I still would not drink it.

 

[Brickout]

On one hand I think it's great that BMC want's to start producing beer that is of higher quality. It's about time they realized that most of what they produce is lake water.

One the other hand I don't want to see smaller brewery's loose market share or get pushed out of business.