Look Out Craft Breweries - Here Comes BMC...

[Montanaandy]

Not by a longshot. Current craft beer market share is only 4%, not 7%. Thirty percent in the next decade is a pipe dream.

Leinie's is still brewed in the old Leinie's brewery and is more "craft" than Blue Moon is.


BMC is not worried about the craft beer breweries, they are simply moving into a market they can make more profit in. Craft beer is growing at a 100% rate (production) each year on average while industrial beer (BMC) is slowly decreasing. BMC still has 96% of the beer market. I know of no monopoly of market share like that which truly scares the big market holders. No one holding a collective 4% is going to damage BMC in any capacity. AB loses more beer to waste during production than Boston Beer Company (Sam Adams) bottles for sale. You think AB is scared? Not a chance.

*Agreed that the 30% is really out there but that is what some respected industry pundits are predicting. I also believe that they were looking at a 15 year time frame.

* You are correct about market share (I mixed it up). The craft brewing sales share in 2010 was 4.3% by volume and 6.9% by dollars. At this point the numbers are not in for 2011

*Used to drink Leinie's 30+++ years ago in Wisc. Was decent beer but Point Beer out of Stevens Point was much better IMHO.

*InBev is concerned about craft beer because the beer paradigm in this country is shifting (once again). They obviously are not quaking in their boots but they are definitely concerned. Why do you think that they are once again making inroads into the craft world by investing in regional craft breweries and controlling distribution?

It is not the market share (which they obviously control) but the margins that are really the cause for concern. Yes, you can continue to control 96% of the market selling yellow fizzy water, but if you are losing money on each sale and sales are down year, after year, after year (albeit at 2% increments) and your margins (which were razor thin to begin with) are going to be non-existent, shareholders (primarially institutional) will revolt and the stock will plummet. AB is just one piece of the InBev puzzle.

Further, truly the biggest threats to BMC come not from craft beer but from wine and mixed spirits which also continue to grow by double digits each year. Couple this with declining market share & margins in your core and this is a recipe for trouble.

 

[Weizenwerks]

Why do you think that they are once again making inroads into the craft world by investing in regional craft breweries and controlling distribution?

All for profit and none for beer. Industrial beer companies (BMC) are about profit first, beer second. Craft beer companies are beer first, profit second. Both are in business to make profit making and selling beer, let's not mince words about that. The difference is who cares about their product.

I've stated this before on the forum: BMC is exceptionally good at making a particular style of beer very well, very consistently, and marketing the heck out of it to a culture that is susceptible to it like children watching fireworks.

The style of beer they make I don't care for one bit. I don't like their illegal business practices either. But the beer you bought 10 years ago is nearly identical to the beer you would buy today. That consistency in product from lot to lot simply has to be respected. That's the only thing I respect of them. Their brewers are damn good at what they brew.

 

[Montanaandy]

All for profit and none for beer. Industrial beer companies (BMC) are about profit first, beer second.

I don't really understand your response. You are basically preaching to the choir.

You reiterate my central point - that craft brewing generates margins & profit whereas sales of fizzy yellow water are not at this point which is why they want back in in a big way.

 

[BrewMU]

Not bloody likely.

 

[Glossolalia]

I also have an extremely hard time believing this. Where did you get this information? I'd love to see your source(s).

I'll admit it depends how you measure it, but let's look at it this way for a second. All my numbers are coming from the Brewers Association, by the way. I'm only dealing with the numbers that are freely available. Evidently there's more and better data available for those who pay. First of all, the top 10 "craft" breweries in the US account for roughly 49.71% of all craft volume sold! BBC alone constitutes roughly 20% of all craft volume sold. Yes, the total volume of "craft" beer sold has went up from 9,115,635 bbl to 9,951,956 bbl from 2009 to 2010 (+ 9.2%). Of that, so-called "regional crafts" were UP 12.2%, "contract crafts" were DOWN 38.6%, "microbreweries" were UP 7.1%, and "brew pubs" were UP 6.4% by volume sold.

As an aside, it's worth noting that the total beer volume sold in the US actually decreased roughly 1% over the same time period and has been doing so regularly for some time now.

Now, we also had a large number of craft breweries open. Sounds good, right? More breweries and more total volume sold. However, if we divide the volume sold by the total number of breweries in a given category, we observe something interesting. The average volume sold/brewery for "regional craft" brewers between 2009 and 2010 was DOWN 0.4%, for "brewpubs" UP 0.4%, and for microbreweries DOWN 10.9%. So, yes, while the total volume and total number of breweries is going up for craft brewers, the average volume sold/brewery is actually going down for all categories except a modest increase in brewpubs, and it's going down most significantly for those defined as microbrewers, the group that we usually are referring to here when we speak of craft brewing.

One might suggest that we're blowing up a bubble here. The number of breweries opening is happening quicker than individual breweries can grow. Furthermore, total beer consumption is decreasing. This sort of thing happened in the late 1990s both here and in the US, where more microbrewers opened than the market could sustain. I suspect, individual microbrewers will need to increase their prices to maintain profitability if volume sold continues to fall.

 

[thegerm]

if BMC wants to start making beer that's more flavorful in response to a market, or if they want to start pumping huge sums of cash into small brewers who are making good beer, I'd call that a success of capitalism, and I'd be fer it.

 

[Nightbiker]

I guess I don't really care one way or the other. On one hand, if BMC is making a bigger push toward the craft-beer market, it will expose that many more beer drinkers to other varieties of flavor than they were used to in the first place -once they get a taste of fuller-bodied beers, and (if) they find they LIKE more flavor and body in their beer, they will be more open to experiment with other beer styles and or brands -this is a positive for all of us.
Locally, the Publix chain of grocery stores has been stocking a number of craft beer offerings in their beer aisle. At first, there was little evident public interest. NOW you can easily see that those stocked beers have been moving -and at an increasing pace -in response, Publix has started offering even more varieties -its regional, to be sure. AND the prices are competitive.
I think this will be good. I also expect that it won't hurt our homebrew 'market' in any way -and may even help it to expand -as people decide they like the other offerings, may decide they would like to try their hand at it as well. After all, no store ANYWHERE could possibly carry all of the varieties that are available to those of us who brew our own.

 

[Fizzycist]

Not bloody likely.

In regards to your title "McDonald's replace grannies cooking"
Not likely? You kidding? McDonald's definitely is ****, I agree, but it has already replaced grannies cooking, even just mom's cooking, for lots of people. Brewing beer takes time and energy, just like cooking a good meal, and recent generations have been all about time and energy for themselves. They want someone else to do that work, and will trade convenience for quality every time.

 

[bosunbrew]

You'd think the big 3 breweries could produce an amazing beer or two, something on the order of the finest European brews in terms of taste and quality (i.e., not another American pale ale or brown-- we've got plenty of good ones). They obviously have the technology, knowledge, and talent, but it's now spent slaving away producing swill. The big 3 should look at getting some credibility back on the basis of their brews, not simply marketing and brewery take-overs. I realize this will probably never happen.

 

[BrewKnurd]

Now, we also had a large number of craft breweries open. Sounds good, right? More breweries and more total volume sold. However, if we divide the volume sold by the total number of breweries in a given category, we observe something interesting. The average volume sold/brewery for "regional craft" brewers between 2009 and 2010 was DOWN 0.4%, for "brewpubs" UP 0.4%, and for microbreweries DOWN 10.9%. So, yes, while the total volume and total number of breweries is going up for craft brewers, the average volume sold/brewery is actually going down for all categories except a modest increase in brewpubs, and it's going down most significantly for those defined as microbrewers, the group that we usually are referring to here when we speak of craft brewing.

I think that's exactly what I would expect from an industry adding so many new businesses. I would expect that every microbrewery that opened between 2009 and 2010 was smaller than the existing average at the time they opened. So I think using the "average volume" method doesn't paint an accurate picture in a time when you have such a significant increase in number of players. Not surprisingly, the group that showed the biggest drop in volume per brewery was microbreweries, and microbreweries showed by far the largest increase in number of breweries. Micros went from 486 to 603. Almost a 25% increase, and again, almost all of those new micros were probably smaller than "average".

For all interested: Brewers Association | Number of Breweries

 

[COLObrewer]

And the saddest part of all this is:

All the wonderful beers that we cannot enjoy anymore either because they are not going to be produced due to low sales, or they are not what they once were or they were purchased (aquired, consumed, taken over, incorporated) simply to get them off the shelves. I've already seen this and experienced it first hand, sadness.

 

[Clanchief]

You'd think the big 3 breweries could produce an amazing beer or two, something on the order of the finest European brews in terms of taste and quality (i.e., not another American pale ale or brown-- we've got plenty of good ones). They obviously have the technology, knowledge, and talent, but it's now spent slaving away producing swill. The big 3 should look at getting some credibility back on the basis of their brews, not simply marketing and brewery take-overs. I realize this will probably never happen.

The problem which stops that is cost-effectiveness. Look at who BMC markets to - generally speaking the poorer working class and lower middle class in America. People who are generally very cost conscience at the store. College kids - so many of their commercials are clearly targeted at a market of males aged 18-25 - who have very little money and whose only desire is to get drunk. You're never going to make great beers using corn as your primary grain. But because of high government subsidies, it's always going to be much cheaper than barley, thus enabling them to make a consistent, albeit lower quality beer, at a very low cost. That's how they can sell 24 packs for $12 and still make money, whereas a smaller brewer needs to sell a 6-pack for $8.99, and some for even more. Higher quality ingredients make better beer, but also increase cost to consumer. Some (like me) are happy to pay that for something which is better quality. Some simply aren't, and would prefer to just get hammered on Miller Lite or Milwaukee's Best or the like.

 

[PollardsVision]

The problem which stops that is cost-effectiveness. Look at who BMC markets to - generally speaking the poorer working class and lower middle class in America. People who are generally very cost conscience at the store. College kids - so many of their commercials are clearly targeted at a market of males aged 18-25 - who have very little money and whose only desire is to get drunk. You're never going to make great beers using corn as your primary grain. But because of high government subsidies, it's always going to be much cheaper than barley, thus enabling them to make a consistent, albeit lower quality beer, at a very low cost. That's how they can sell 24 packs for $12 and still make money, whereas a smaller brewer needs to sell a 6-pack for $8.99, and some for even more. Higher quality ingredients make better beer, but also increase cost to consumer. Some (like me) are happy to pay that for something which is better quality. Some simply aren't, and would prefer to just get hammered on Miller Lite or Milwaukee's Best or the like.

The crazy part is, the main BMC brands aren't exactly "cheap". What BMC saves on ingredients, they surely spend on marketing.

A $12-pack of Coors Light or Miller Lite still costs about $10-11. That's the exact same price as Yuengling (which I don't personally like, but is a huge step up from BMC obviously).

Heck, I can keep Sierra Nevada well-stocked in the house without ever having to spend more than $15 for a 12-pack.

BMC obviously does quite well with the super cheap crowd, but their marketing budgets also have them doing quite well with people who can afford good beer.

If SN or Sam Adams can get a 12-pack of great beer on the shelf for $15, there's no good reason BMC can't. At this point, though, they don't really need to, if they can get $11 for a box of corn water. Hopefully, this will change somewhat as Americans are slowly, but surely starting to demand better beer.

 

[BrewKnurd]

The crazy part is, the main BMC brands aren't exactly "cheap". What BMC saves on ingredients, they surely spend on marketing.

A $12-pack of Coors Light or Miller Lite still costs about $10-11. That's the exact same price as Yuengling (which I don't personally like, but is a huge step up from BMC obviously).

This is the thing that I think people need to wrap their heads around. People don't buy BMC because its cheap. They buy it because its honestly what they like. Maybe they like it only because they're used to it, but it is really what they like. As bizarre as that may seem to us.

 

[PollardsVision]

This is the thing that I think people need to wrap their heads around. People don't buy BMC because its cheap. They buy it because its honestly what they like. Maybe they like it only because they're used to it, but it is really what they like. As bizarre as that may seem to us.

It's certainly what people are used to.

I guess we're just now getting the point where there are new beer drinkers with fathers that had access to and drank good beer.

For pretty much everybody up to this point, it's probably a near certainty that your father drank a BMC-style lager.

 

[Nightbiker]

I think you both hit it pretty squarely on the head. BMC is what they LIKE, and its ALSO what they're USED TO. I remember my grandfather (my earliest memories of him when I was a little boy) THOROUGHLY ENJOYED 'Old Milwaukee' -he burned through those cans like they were soda pop. Personally, I was completely disgusted by the odor of the stuff -not to mention the smell the cans made after sitting in a pile for a few days. I can STILL smell that...
He certainly could afford better (though in truth, there really wasn't a lot of variety in those days -certainly nothing along the lines we enjoy today) -he also enjoyed single-malt whiskey. He drank that beer because that was what he genuinely wanted (there were cheaper as well as more expensive brands available).
But then, this is also the same guy who literally made home-made wine in an old bathtub or drum in the barn, and drank that as well (and we won't get into what used to have to be scooped out of the batch from time to time).
IF he were alive today, he really would have had no use for the craft brews most of us (on this site) enjoy. We could go in circles figuring out why he actually liked Old Mil, but it would make little difference if it was simply what he was used to for lack of other choices, or because thats what he had always consumed, or because he genuinely enjoyed the taste -or a combination of the above. It really isn't relevant. The fact of the matter is that there is a huge market for BMC -nevermind that its sold in all of the finer refueling establishments, its also extremely consistent -BMC tastes the same no matter WHERE you purchase it. Every time. We all can make good (even great) beer, but most of us aren't going to be so consistent, and for a consistently lower price -and those are two things that the masses expect, period.
I used to go over to my old fire-chiefs' house to knock back longnecks every weekend. I'd often bring a sixpack of a craft brew (or some of my own) for him to try. He would try them, but he always went back to Bud -that was what he enjoyed.
It may make some feel good to turn their nose up at the 'general beer' but the fact of the matter is that it sells, and it sells because it is consistent, relatively inexpensive, and what the masses will drink -for WHATEVER reason. My point is, they aren't likely to go away anytime soon. Be grateful that you brew what YOU like, and that you DO have an ever-increasing access to an every-growing variety of other beers.

 

[Nightbiker]

I would like to add that the local 'big grocery chain' (Publix which has stores throughout the state, and some of the other southeast states) has taken to stocking a reasonably diverse collection of craft brew labels -one of my old favorites, Warsteiner (especially their dunkel) is kept as well -and some of the brands or beers change from time to time, but none of them seem to sit on the shelf for very long -the stock is always reasonably fresh (as much as could be expected for beers that come from other countries), so there is definitely a growing market for the better class of brews -if there weren't, BMC wouldn't be taking a hard look at some of the smaller brewing companies. I wouldn't say BMC is scared or worried, just that they are acknowledging that there IS more to the market than the 'old standby' blander beers.

 

[Montanaandy]

Whether BMC is "scared" "concerned" "interested" "not worried" you can take your pick. The economic and business fact of the matter is a shift is occurring at generational levels and in the general public at large where taste, ingredients, who made something, where it came from are becoming more & more important every day. I call it the "Whole Food Effect" which I am not going to get into at this point but you can catch my drift. Many individuals (families) are willing to pay more for products that meet the aforementioned criteria in their eyes (& mouths). Craft beer is a part of this wave.

 

[Nightbiker]

can't argue that. All I have to wonder is wheather it will continue -or will it become yet another passing fad? Regardless, I'll still be brewing my own. But I do enjoy having a growing (so far) vairety to choose from.

 

[DannPM]

I don't know about these arguments about college kids. I'm 25 now but I started drinking craft beer in high school and continued through college. I never really liked mass market lagers.

 

[Nightbiker]

I don't know about these arguments about college kids. I'm 25 now but I started drinking craft beer in high school and continued through college. I never really liked mass market lagers.

If you took a hard look at those around you, you would probably admit that you weren't in line with the 'average' beer drinker -especially in that crowd. Of course, THESE days, its 'trendy' to drink those kinds of brews -but just as the 'yuppie driven' trends, that sort of thing changes with time.

 

[Montanaandy]

If you took a hard look at those around you, you would probably admit that you weren't in line with the 'average' beer drinker -especially in that crowd. Of course, THESE days, its 'trendy' to drink those kinds of brews -but just as the 'yuppie driven' trends, that sort of thing changes with time.

I agree that most college students prefer quantity over quality and I was certainly one of them for years. Fortunately though I was in a place where there was a place/room for good beer and a young population that was willing to try something different than BMC. Further, I was attending college in Denver in the late 70's and had friends who worked with Coors in brewing, product development, etc. One of them brought a six pack that they had taken (smuggled) out of R&D - Killians Red Ale. It was the actual recipe of Killians in Ireland and it was unlike anything that I had tasted before. Another friend was involved in importing Warsteiner, a popular German beer that was unknown in the USA. Another revelation. I was hooked and never looked back. Being from the South Side of Chicago, I hardly qualified as a yuppie, but I knew that I enjoyed what I was drinking much more than what I had drank before (Point Beer from Stevens Point WI being the exception). I believe that the craft beer movement is a shift and not a passing fad. I was also into health foods in a big way in the 70's and what started out as part of the lunatic fringe is now not only mainstream but is front and center in our society.

 

[Nightbiker]

I have to admit that I was well into my 30s before I tried something that wasn't brewed and bottled by one of the BMC giants. I gave the red lagers a try when they were (initially) popular, and enjoyed Killians, but didn't recognize it as anything special. My youngest brother brought some mini-kegs from some craft brewery he lived near (along with a few bottles of his homebrew) to my dads' wedding. After I'd set up the domestic kegs with taps, my brother brought out these minis, and after tasting them, I declared they were too good for the guests, and I plumbed them, leaving a picnic tap behind the bottled beers in the keg-chiller. We would snake out the tap to fill our mugs, and push it back again to keep it safe. Do I feel guilty for this subterfuge?
No. Not really. They all had a great time enjoying miller, WE had a GREAT time enjoying something with far more flavor! After that, I was completely hooked, and ordered up my first homebrew equipment kit the next day.

 

[Nightbiker]

Being from the South Side of Chicago, I hardly qualified as a yuppie, but I knew that I enjoyed what I was drinking much more than what I had drank before (Point Beer from Stevens Point WI being the exception). I believe that the craft beer movement is a shift and not a passing fad. I was also into health foods in a big way in the 70's and what started out as part of the lunatic fringe is now not only mainstream but is front and center in our society.

You're right, and it caught on so well, they've made many improvements to those foods over time. I don't know where craft brewing is headed, but I don't see it disappearing -just don't know if its popularity has peaked, or will continue to grow. Either way, so long as I can get these offerings, I'll buy 'em -just as I will continue to brew as long as I can get the ingredients to do so.

 

[noodledancer77]

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.

Gotta disagree with Edwort on this one. I had no idea that Terrapin was part owned by MillerCoors, but so far that's beside the point. Especially when they are still mostly owned by other entities. My taste buds thought that Terrapin had some very tasty beers last time I tried them. I hope they don't lose their flavor over time. IF they continue to make good beer, I don't care who owns them.

 

[Grossy]

If you want to watch a great movie on this subject, especially how BMC controls "distribution", then I highly recommend the movie: "Beer Wars".

It is a documentary available from Netflix.

 

[Cambone]

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

You sir, do not have your priorities straight.

 

[hedge_87]

You sir, do not have your priorities straight.

Second that!!! It could be opened and set out for three days and I still would probably drink it

 

[Formito]

If you want to watch a great movie on this subject, especially how BMC controls "distribution", then I highly recommend the movie: "Beer Wars".

It is a documentary available from Netflix.

I totally agree, I think that this movie also mentions how BMC makes cheap imitations of craft brews, sells these similar, cheaper, and usually more bland imitations side by side with craft beers, then essentially turn off new customers to craft beer with an inferior product.

 

[Zamial]

You sir, do not have your priorities straight.

[ame=http://www.youtube.com/watch?v=Xh2oDdTHXQU&feature=related]I am a Craft Beer Drinker - YouTube[/ame]

I disagree. I do not support BMC in anyway. Do what you want. I am a craft beer drinker.


Beer Wars is a 1 sided movie that stretches a lot of truths. I do not like BMC but it has nothing to do with that movie.