. . . check out this comment from a craft brewer.
Thanks and a tip o' the mug to the always-on-top-of-things Jay Brooks!
(And thank god Harry Schuhmacher has taken the lead and endorsed the use of "ABIB." I've been driving myself batty trying to decide what shorthand to use for the new company. Thank you, Harry!!)
Above all, and directly or indirectly, the InBev/A-B deal will provoke a a shakeup among craft brewers. The gone-to-hell economy alone would have sparked that ripple; the presence of InBev will simply speed up the process. (*1)
As part of their battle with each other, MillerCoors and A-B IB will go after some of the more attractive craft brewers. They’ll either offer a “stake” or they will acquire the craft brewer outright.
Sales of stakes and outright purchases have happened before: Redhook. Widmer. Goose Island. Leinenkugel (an acquisition that surely ranks as THE all-time best deal ever for the smaller guy.)
But in the year or two (or three), we will also see what amount to lateral mergers: A craft brewer will look scan his competition, eye a particularly attractive operation, and think “Hey. I’d be better off with that person/company as a partner.” He or she will make an offer. The two will merge. Nor will these necessarily be "hostile" events.
There's plenty of historical precedent. In the 1880s and 1890s, for example, a number of small beermakers formed mutually agreeable “associations” (in effect, mergers of stock and/or property and/or brands) as a way to insulate themselves from Pabst, Schlitz, A-B, Ehret, Ruppert, and other giants.
So, too, the merger mania of the 1950s, 1960s, 1970s, when middling-sized brewers acquired and otherwise merged with brewers of the same or smaller size. Those were defensive moves.
Indeed, you might say the ball is already rolling. Consider this merger of the afore-mentioned Redhook and Widmer, to create an entity called Craft Brewers Alliance, Inc. (I love that name. It's exactly the kind of no-name name that those "associations came up with back in the 1890s.)
But of course this is craft brewing, not old-style mainstream brewing, and there’s one thing we know for certain: Craft brewers have reinvented not jut the beer, but the industry, too. So we’re already seeing some creative defensive moves.
Example-of-the-Month: The joint “adventure” between Elysian Brewing and New Belgium Brewing. You can read about it here. (But not, interestingly enough, at their respective websites. One of which gets my vote as the single most annoying website on the internet.)
When times get tough, a good defense can be the best offense. Creative or otherwise!
*1: For an overall view, see my earlier five-part blog series "Looking Back At the Future of Brewing."
Hmmmm.... Five parts? God, I'm a windbag....
Craft brewers are smart, ambitious people. I learned that when I was writing my book and interviewed a number of them. I’m telling you: they’re smart.
But you knew that, right? After all, no one creates a major brewing company out of thin air by being stupid. And no one even thinks about doing so unless he/she is ambitious with a capital A.
Craft brewing is full of exceptionally talented people who have created VERY attractive properties. And I don’t mean the brewhouses and other real estate. I’m talking about brands and beer. I’m talking about companies.
I’m even talking about people: If I were a large to medium-sized beermaker, there are several people in brewing that I’d be trying to buy right this minute; those people are that smart, that talented.
So I doubt anyone in craft brewing will roll over and play dead while MillerCoors and A-BIB rip each other’s heads off.
BUT: some of them are gonna get caught in the crossfire. And as I’ve said before, historically speaking, when the giants get restless, the small fry get caught in the crossfire. It’s happened over and over again, particularly when the industry is already facing tough times. (Eg, during the 1950s and the 1970s, when the entire brewing industry struggled to maintain its footing, although for somewhat different reasons than it is now.)
Some of them may even welcome that midnight knock on the door when a Big Boy shows up waving a wad of cash. After all, every beermaker, regardless of size, is getting hammered by high prices for barley and malt. And glass, paper (those labels and six-pack carriers aren’t free....). Fuel and water. Not every beermaker is going to survive the current economy.
On the other hand, the current brewing industry marks a sharp departure from the past in that craft brewers aren’t a one-for-one match with the small brewers of yesteryear.
Still . . . . Craft brewers need to be wary. Anyone who thinks that somehow Inbev has nothing to do with them is in for a rude, perhaps even nasty, awakening. If nothing else, Carlos Brito will flood the American market with imports. And in this country, imported beer still carries clout with consumers.
Back in the 1970s, imports made a serious impact on American drinking habits. (*1) In the 1980s, craft beers were able to take advantage of the groundwork laid by import beers.
Even today, if craft brewers have any direct competition with their “niche,” it’s with imports: Many of the same consumers who will drop Big Bucks for a craft brew regard "imports" and "craft" beers as an interchangeable beverages. (More's the pity, eh?)
So craft brewers ought to be thinking hard about how Mr. Brito will affect their lives. Ought to be thinking about how to position their products -- and, more important, their industry -- against this soon-to-be-tsunami of imports.
More next time.
*1: Import mania, which began in the 1950s and strengthened dramatically in the 1960s and especially the 1970s, was due mainly to “push” factors in Europe: Beer consumption there dropped somewhat because of changes in demographics and the economy. No surprise, European brewers turned to the US market to boost their sales. But of course, as imports took off in the U.S., this country became an even more attractive market, and imports grew and the niche became more viable, etc.
But the key point here is that the strength of that niche in the 1970s provided a boost for the microbrewing movement that emerged in the 1980s.
As I noted last time, for decades American mainstream brewers have targeted their beers/marketing/advertising at a narrow slice of the consumer market: young men.
Every beermaker, regardless of size, has paid a price for that decision, although it's been especially problematic for the mainstream brewers: The strategy works if the core demographic is large, as it was while the baby boomers were young. If that core shrinks in size, as it has since about 1990, brewers are in trouble.
There’s also another problem with targeting beer as the young-guy-beverage -- well, there are two problems, now that I think about it.
First, mainstream brewers have, whether inadvertently or not, infantalized beer and beer drinking. Think about popular beer commercials over the past thirty years: they’re nearly all humorous, but the humor has a . . . locker-room, boys-in-the-schoolyard quality to them.
I mean, we all laughed about the farting Clydesdales and the guy with the beer-fridge-hidden-behind-a-revolving-wall commercials. But they were guy-gags. (Not mind you, that I have anything against guys. I’m married to one.)
The result was that brewers endowed beer with a silly, it’s-for-kids reputation. The vast majority of Americans treat beer as a trivial, almost frivolous beverage.
Yes, I know that the beer geeks who support craft brewing take beer seriously, but those people are in a decided minority. Most Americans, a majority of Americans, haven’t heard of craft beer and don’t drink craft beer, and all they know about beer is that, well, it’s a kid’s drink. (*1)
Second, the more beer is infantalized (and frankly, Americans infantalize not just beer but drinking in general), the less seriously it’s taken, and the more impact the mainstream brewers’ target message has, and the more Americans are inclined to dismiss beer as a serious beverage, and the narrower the audience for beer and the more inclined mainstream brewers are to target their core audience of young men, and -- you get my drift. The result is a vicious cycle.
So, you ask, what’s all this got to do with A-BInB or history? Good question.
The core demographic for beer -- young men -- is still relatively small. Over the next five years, it will grow as the Echo Boom
hits age 21. BUT: The Two Big Guys need to do something NOW. Their moment for attack is NOW.
MillerCoors has the advantage because The Other Guy is in disarray (more disarray than MC, which, you remember, also just merged. But MC has had time to get its act together.) The Other Guy knows MC will strike and wants to do something now to fend off an attack on its market share.
What will they do? As I noted earlier, they’ll spend more money on ads and probably engage in some price cutting.
But they’ll both turn their attention to the one beer segment that is healthy, fat, and thriving: the craft beer segment.
Remember: since c. 1990, American beer sales overall have been flat. But during that period, CRAFT beer sales have risen every year, and often by double digits.
Why? Because the craft brewing industry avoided the “let’s target young men” trap. They’ve always promoted beer as an “adult” beverage. They’ve focused on the beer itself, rather than a narrow audience.
As a reulst, their "target" audience cuts across a broad swath of the American consumer audience. Yes, the market for craft brewing is minuscule, but the market is broad rather than narrow.
So craft brewers haven’t been hurt as badly by the shrinking of the young-man-demographic. Moreover, young people who adopted craft beer as a “hip” beer back in the 1990s are now well into adulthood and typically have more money to spend and they’re still buying craft beer. So the aging of the consumer market has not hit craft brewers as hard as it does mainstream brewers.
Result: even as overall beer consumption and sales slump, craft brewers are doing pretty well and craft beer sales are rising.
And that means they’re perfect targets for the Two Big Guys.
A-BInB and MillerCoors will begin making aggressive moves in the craft segment. There are two routes they can take. One, they can introduce their own beers (more on that later), or two, they can start buying shares of craft brewers, or, what is more likely, they can start making offers to buy companies outright.
You’re shuddering at the idea. Never, you say. The pure-and-noble craft brewers will NEVER sell out to the Nasty Big Boys.
Oh? Don’t be too sure.
More next time.
(Really, I’m trying to make these pieces short so that you can read an installment and move on to the next item on your endless list of Things to Do Before the Day Ends. I’m assuming your list is endless. Mine sure as hell is.)
*1: Notice I said “majority.” I didn’t say “all” Americans. Beer geeks, the very people most likely to read this blog and other beer blogs, take beer seriously. But those people -- you -- are in a distinct minority. The craft brewers and the beer geeks spend a lot of time preaching to the converted, to highly receptive audiences, so they -- you -- get fooled into thinking “everyone” drinks craft beer and “everyone” takes beer seriously.
Every time a beer geek says to me “Oh, no one drinks Bud anymore. Everyone drinks craft beer,” I can’t decide whether to escort them to a hospital until the delusions go away, or whether to shake them silly and then show them the numbers. Because “everyone” most decidedly does NOT drink craft beer. Alas.
The University of Wisconsin-Milwaukee has finished processing a large collection of Pabst Brewing Company records and those are now available for use by researchers.
The university received the collection in 2000, just as I started working on my book, but the papers were not processed until 2006. Translation: I was not able to use them (which was, sigh, the story of my life when I was working on the book.)
The vast majority of the records are financial in nature (ledger books, stock records, receipts), but there's also a large scrapbook related to Captain Pabst and the company itself. There are also some "private ledgers," and as I learned from the few scattered ones I found at other libraries, those can yield a great deal of information!
You can see the finding aid here. I hope someone makes use of the collection! Grad students, heed my call!
Today's Wall Street Journal has a comical review/guide to some of InBev's beers. You can read it here.
Quick side note: I’m focusing my on-going discussion of the A-B/InBev merger on American brewing. Yes, I am aware that InBev deal was driven in large part by the demands of the global beer market. Any corporation these days thinks and acts globally (as, indeed, every person ought to do).
But my focus here is on the deal’s implications for the American market.
In Part Two, I predicted that the InBev merger will spark a new beer war, similar to one of the 1970s, with the two parties at war being A-B InBev and MillerCoors.
In the 1970s, A-B and Miller attacked each other in a cutthroat, last-man-standing battle for dominance of American brewing. Their weapons were new products, billions spent on advertising, and price-slashing designed to undercut each other and every other beermaker. (*1)
I suspect we’ll see much of the same in the months ahead -- although I doubt price-cutting will be as effective as it was in the 1970s, when the two giants could slice price to the bone and get away with it. The current (global) shortages of barley and hops have already pushed every beermaker into a corner. There’s not as much leeway on price as there was back in, say, 1979 (even given the horrific inflation of that decade).
InBev -- er, sorry -- A-B InBev will also become more aggressive in the so-called “import” segment of the American market. That’s a no-brainer: InBev owns a lot of global brands and it will want to move some of them into this market.
But this upcoming beer battle will differ from the one of the 1970s because this time, A-B IB and MillerCoors will strike deep into the “craft beer” segment. They don’t have much choice, and here’s why:
For the past fifteen or so years, beer consumption in the U.S. has been flat and some years has even declined. That’s due largely to demographics and to the way the mainstream brewers have sold beer for decades.
From the mid-1930s to about 1960, brewers tried pitching to women, to older, more affluent adults; tried pitching beer as a substitute for coffee and milk at meals. (I might add that the 1950s in particular was a BAD decade for brewers; in my book I called it the near-fatal fifties.)
They didn’t have much luck with those approaches. And then came salvation: Starting about 1960, the first of the baby boomers hit legal drinking age (which was then 18).
Brewers finally found their audience: young people in general, and young men in particular. Beer consumption soared, and so did brewers’ sales. (*3)
Since then, mainstream brewers have opted for the path of least resistance (and who could blame them?) They dumped all their eggs into the young men basket. (Note that I said “mainstream” brewers. I’m not including craft brewers in this asssessment. You’ll see why soon.)
That was great as long as the particular demographic remained large in size. And it did until the 1980s, when, you guessed it, the bulk of the boomers had turned 30. Beer sales slumped.
Problem was, the next demographic to come along, so-called Gen X, was only half the size of the boomer generation. Beermakers weren’t able to replace their core drinking audience of young men.(*2)
This demographic issue has come back to haunt the mainstream brewers (all three of them: A-B, MillerCoors, and Pabst). And it’s why the craft beer segment presents enormous potential for beermakers and why I predict the upcoming beer war between A-B InBev and MillerCoors will have play out amongst the craft brewers.
You guessed it: more next time!
*1: for those who want to know more, there’s a fascinating account of the effects of that battle in the testimony at a 1978 Congressional hearing. You can read it online if you have access to Lexus Nexus Congressional. Use keywords: 95th Congress; Committee on the Judiciary; merger; industrial concentration. Interesting stuff.
*2: Quick numbers:
Baby Boom (c. 1945-1964): 83 million
Generation X (c. 1965-1978): 37 million
Echo Boom (aka Gen Y) (c. 1977-1994): 72 million (Some demographers run this cohort all the way to 2001, which makes this group even larger)
*3: There was no better evidence of that than the CNBC program on Budweiser the other night. Much of the program focused on A-B's advertising over the past thirty years. Didja notice how those ads aimed straight at the guy-humor thing? A-B doesn't market its products at old ladies like me! Those were guy ads filled guys doing guy-things. The women in them functioned as, you guessed it, eye-candy for (young) men.
I almost forgot: today is the first annual International Brewers Day (an idea that originated in the immensely fertile mind of my pal Jay Brooks, the brains behind the Brookston Beer Bulletin).
So -- go hug a brewer!
The perennial, endless debate among, well, people, not just the beer geeks, is "what is good beer"?
Personally, I think it's the one human question whose answer is absolutely relative: A "good" beer is one that you like. My "favorite" beer, for example, is whatever I think will taste best with whatever I'm about to eat (I usually have beer with food.)
And I know my tastebuds are mine and that they "lead" my palate and "good beer" brain in a particular direction. (And so I hereby bequeath my share of the world's IPA's to anyone who wants them, but I retain all rights to my share of the world's malty brown beers.)
Anyway, Charlie Papazian has been pondering the whole "good" beer quandry over at his blog and it's definitely worth taking a look. It's a multi-part series, and I think the most current entry is part six or seven. To find the beginning of his series, follow this link to the blog, and then look at the left side of the screen for links to the whole series. Enjoy!
The past fifty years of American brewing is littered with the remains of other, similar deals in which a large corporation with no particular interest in beermaking acquired a family-owned/operated brewing company.
The most notable example is that of Philip Morris, which acquired Miller Brewing in 1969 and 1970. PM was a global conglomerate that manufactured/distributed/marketed many products (including cigarettes). It was not a “brewing company.” As far as PM was concerned, the beer was just another commodity, and Miller was just another appendage with which to make profit. (*1)
But there are other examples: Rheingold. Ruppert. Schaefer. (You can find more details in my book, especially in chapter six and seven.) (*2)
Historically, such deals have not had happy endings. The acquired company regarded beer as beer and as something special. To the acquiring company, beer was just a thing, something to be bought and sold; interchangeable with widgets, shoes, or cattle.
But, you say, Miller is the second largest beer company in the U.S. (*3) Surely things worked out just fine!
Not exactly. The full story is too long to recount here, but the short version is that PM spent billions to expanding and streamlining Miller’s operations. (It also slashed costs by altering the recipe of Miller High Life). It spent huge sums on marketing. It introduced Miller Lite. And then set out on its stated objective: to destroy Anheuser-Busch.
In that task, the company failed miserably. Since the 1980s, Miller has existed in what I call the dead man’s land of American brewing: a distant second to the giant. (Quick numbers: A-B makes about 100 million barrels of beer a year. Miller makes --- about forty.) As Gus Busch, who ran A-B from the late 1940s to the mid-1970s, once said, “Being second isn’t worth anything.”(*4)
What made the difference -- what took the zip out of Miller (and Rheingold and Ruppert and Schaefer, etc.) -- was the removal of the family presence. Because the family members regarded themselves as BEERMAKERS. The new corporate owners did not.
So as a historian, I don’t see any happy ending to this InBev/A-B story. Over the next few years, the loss of the Busch patina -- the Busch edge -- will result in a gradual erosion of A-B’s power and clout. Sure, InBev is huge and can spend zillions on advertising. Sure, it will try to grab a larger share of the US “import” market by bringing in more of its global brands. (I predict that Stella Artois will be the new Starbucks: there’ll be a bottle on every corner....)
But A-B itself, as I noted in my earlier five-part series, will experience disarray. The InBev slash-the-costs culture will collide with the A-B “spend money to make money” culture. Distributors, already uneasy and discontent, may become more so. Turmoil, in short, lies in the company’s future.
A-B will lose its otherwise (giant-sized) sure footing. It will stumble. And as it does, its only remaining “mainstream” rival, MillerCoors, will finally enjoy something like a level playing field. The people at MillerCoors will grab that opportunity. The result? A beer war of the sort that has not ocurred since the 1970s.
More next time!
*1: Miller’s current parent company is SABMiller, based in London. A few months ago, SABMiller and MolsonCoors (a Candian company) merged their North American operations into a new venture, MillerCoors.
*2: And you’re gonna buy NEW copies of the book, right??? Because, ya know, authors make ZERO dollars on the sale of used books...
*3: “Large” is relative. A-B makes around 100 million barrels of beer a year. Miller makes about 40 million; Coors about 20 million.
*4: Quoted in Ambitious Brew, p. 234.
My buddy David Fahey at the Alcohol and Drugs History Society posed an indirect question the other day at the Society’s blog: namely, what’s my take as a historian on InBev’s acquisition of Anheuser-Busch?
Yes, I recently posted a five part series of blog entries about the future of American brewing, and those posts were inspired by the InBev/A-B deal. But I realize now (thanks to David) that I’ve not addressed the deal itself directly, at least not here at the blog.
Which is pretty funny because for the past four weeks, I’ve done nothing BUT talk about the deal to what feels like fifty bazillion reporters (okay, it’s more like two dozen; but it feels like fifty bazillion...). (Indeed, as my husband will attest, InBev and A-B temporarily took over my life and his....)
Anyway, this is the first of what will likely be two, maybe three, blog entries about this deal from a historical perspective, and what history can tell us about its potential impact on American brewing in general and craft brewing in particular. **
First a bit of background: A-B is a publicly held company and has been for decades. The Busch family does not own controlling shares and has not for decades. That’s largely due to the enormous size of the family itself; various chunks of stock were passed on by inheritance and often sold as part of estates; there was no way to keep control of those shares.
Nonetheless, the Busch family has remained the company’s guiding force. Anheuser-Busch is saturated with this one family’s presence, personality, and ambition. In that sense, it has always functioned as a “family” business. (That, by the way, is a remarkable feat by any standards.)
More to the point, the family regarded its business as making beer. They knew beer. They understood beer. They understood the peculiar demands that the brewing process imposes on a manufacturer-beermaker.***
What about InBev? We can trace its creation to the 2004 merger of two companies: Ambev and Interbrew.
Ambev dates back to 2000, the result of a merger between two South American brewing companies, Brahma and Paulista. Interbev is a bit older, dating to 1988 and the merger of two Belgian companies, Artois (you’ve heard that word before) and Piedboeuf-Interbrew (which was itself the result of earlier mergers.)
Confused yet??
Interbev = Artois + Piedboeuf-Interbrew (1988)
Ambev = Brahma + Paulista (2000)
InBev = Interbev + Ambev (2004)
InBev is a Big Deal. It owns breweries and sells beer on six continents, etc. (And I urge readers to visit the InBev site just to get a sense of the company’s scope.)
But I’m not sure it’s a “brewing” company. Yeah, Carlos Brito keeps talking about how InBev has made beer since 1336 or whenever. (One of the Piedboeuf-Interbrew breweries dates back that far.) But -- well, that’s a lot of marketing hooey (or, as my wise pal Jim Koch would say, a lot of marketing smoke and mirrors.)
Stripped to its basics, InBev is a huge corporation cobbled together in a series of mergers and acquisitions. It earns profit by acquiring and operating companies that make beer. Period. It could just as easily consist of shoe factories or widget makers or cattle ranches. Carlos Brito isn’t a beermaker. Indeed, I bet we’d have a tough time finding a single InBev exec that has, ya know, ever made any beer or knows HOW it’s made. (Of course, I could be wrong about that....)
Anyway, InBev isn’t a brewing company in the way that A-B is a brewing company. The people at A-B understand beer. The Busch family understands beer. But to the suits and ties at InBev, beer is just a commodity. The InBev/A-B deal consists of a marketing corporation that specializes in beer acquiring yet another brewing company.
So, what’s this got to do with the history of American brewing? Plenty. More next time!
** And again I remind everyone: I’m not a number-cruncher or economist. I’m also not a “beer person”; I don’t now and never have worked in any capacity in the brewing industry. I’m a historian. I’m an outsider; it’s my job to stand back and survey the Big Picture from the Long View.
*** Yes, I understand that many people loath Budweiser or any other A-B product. To them, it’s not “real” beer. That’s an opinion. My opinion is that A-B makes BEER, and makes a particular KIND of beer, and does so with great skill and talent. They also make a consistent product, day in, day out, year after year. Any beermaker, craft or otherwise, will tell you that it’s incredibly hard to do that. You may not like A-B’s beer, but the company deserves credit for the skill with which it makes the kind of beer it makes. And yes, you’re absolutely entitled to disagree.
Over the next few days, I plan to comment on the InBev/A-B deal and what it means for the future of American brewing. And of course I'll discuss its impact on craft brewing.
But here's one thing I know: craft brewers aren't getting their message out. (If they were, they'd have at least 20% of the market by now.)
How do I know that? Well, see above: they own just a tiny share of the overall market. Yes, it's growing, but the craft brewing is now thirty years old, its share of the consumer market has barely budged since the late 1980s, early 1990s.**
Second, I do a lot of speaking to various groups. The events typically include a beer tasting. I ALWAYS pick local beers made by craft brewers. I try to choose beers made within the state where the event is held, and, if possible, beers made within twenty miles.
And it never fails: almost no one -- sometimes not a single person -- has ever heard of the beers. These are gatherings of smart, educated (and affluent) people. And they've never heard of the beers at the tasting.
But here's more immediate evidence that craft brewers aren't getting their message (or their beers) across. Check out this piece in today's Salon. Or, more specifically, check out the comments that readers have posted about the article.
Read those comments, and you'd never know that there are 1400+ craft breweries in the U.S. You'd never know that the U.S. has the most dynamic, creative brewing culture in the world.
Craft brewers are NOT getting their message across. (More on this over the next few days.)
** (Yes, I am aware that the Brewers Association has a small budget, but.... )
This is quite cool: a new blog about hops farming. VERY interesting with lots of great photos. Check it out.
Thanks and a tip o' the mug to pb_rick at The Confrontation Board, the forum at The Beer Report.
My dear friend Daniel Bradford just sent me this. The relevant bit is right at the beginning. Will only take five minutes to watch.
I am HOWLING. H.O.W.L.I.N.G. And I've actually got laugh-tears streaming down my face.....
WAFFLE-HUMPERS!
In what is a case of either perfect or terrible timing, tomorrow night (July 17), CNBC will air a one-hour documentary about Anheuser-Busch. The program is part of its ongoing series called "American Originals."
CNBC commissioned the film months ago, and production began in February. I flew to Chicago to film my part in it in March? April? Something like that.
So it's been in the works for some time. Even this premiere date of July 17 was set back in May.
I have not seen the finished product, of course, so I have no idea what angle the director took; nor do I know if the production company has added voice-overs to acknowledge the, um, significant development that has unfolded since it wrapped production a few weeks ago.**
Anyway, it airs on CNBC Thursday July 17, 9 pm eastern time. Be there or be square.
** So, you may ask, if she's not seen it, how the heck does she know she's in the program? Maybe she ended up on the cutting room floor. Good question! A few days ago, I had occasion to talk to a producer for one of CNBC's daytime news programs, and she told me that her boss had seen the final cut and that yes, I was in it.
But I hasten to clarify: my role in this documentary is minuscule. I've done a great deal of on-camera work, and my experience is that one hour in front of the camera = one minute of actual air time. For this CNBC program, the director filmed me for two hours, which should translate to two minutes or less of air time.
In a June 28 blog entry titled "InBev/AB Deal = Brewing Industry Tipping Point?", I pondered the possibility that craft brewing could benefit from the nation's current economic upheaval, high gas prices, and an InBev deal.
I suggested that craft brewers launch a campaign urging Americans to "drink local" and thereby save gas, support local businesses, etc.**
I'm not the only person who is thinking this way. The Alstrom brothers, the energy behind beeradvocate.com and its print counterpart, Beeradvocate magazine, have taken a first step with their "A Buck for Beer Advocacy!" campaign. Members of the beeradvocate.com forum have posted comments seconding the motion and outlining their own variations. My pal Jay Brooks just posted a blog entry along the same lines. If I kept hunting around, I’m sure I'd find more online talk about promoting craft beer as local/green beer.
But a truly professional, nationwide, long-term media campaign requires money and lots of it. Ideally, the Brewers Association would step up; perhaps build a partnership with the Alstrom brothers. Maybe one of the bigger craft brewers could pony up some cash.
Or not. Money’s tight everywhere. The BA, for example, is a small operation; I doubt it’s got a lot of extra money to throw at this kind of campaign. (On the other hand, a “drink local” crusade gets right to the heart of what the BA is all about, right?)
Meanwhile, spread the word. When your friends talk about eating “local” or buying “green,” remind them that beer is food. And that going green begins with grassroots!
** If you enjoy drinking spirits, you can also drink local-and-green! To find a local micro-distiller near you, visit the American Distilling Institute, and click on "distilling directory."
(The ADI was founded, by the way, by Bill Owens. Back in the 1980s, he started one of the nation's first brewpubs.)
On May 23, I posted a blog piece titled "As the Cosmos Tilts..." (You can find it by clicking on "InBev/A-B deal" index link to the right.)
Well ---- indeed. The cosmos has tilted.
According to Reuters, the deal is official. You can find more info anywhere on the internet, but see this and this.
When the moon rises tonight, I expect it to be green or blue, and located in the wrong quadrant of the sky.
More later.
Me? In preparation for this moment, I've had a six-pack of Bud bottles in my fridge. I plan to pour one for my husband and one for me, and we will toast six generations of a remarkable family.
A few last-minute odds and ends as this weeks gallops to a close.
First, reader Tracy Mehan sent me a link to a short piece he wrote for the American Spectator. I suspect many people share his memories. (And in the spirit of Jeff Alworth at Beervana, we're keepin' politics out of it!) (See his blog entry of July 10 titled "Beer Is Not Political.)
Second, another reader posted a comment to Part Five of my (probably too long) series about the future of brewing. He asked a GREAT question, one that I'd not even thought of. (See? This is why I'm not in charge....)
He asked: assuming the Busch family sells the company, what do they do next?
Great question. (Wish I'd thought of it.) And the answer is -- you tell me!
What do you all think August IV will or should do next? He's only in his forties, and he's got plenty of dough.The floor is open!
Finally, my sincere thanks to everyone who responded this week to the op-ed piece in the Washington Post, to my blog entries about the future of brewing, and to the online discussion at the Post's website.** (That, by the way, was a total blast. As exhilarating as any live talk I've ever given.)
** You can read the discussion transcript here. You have to scroll down a bit to find the start of the discussion.
So much for getting my hopes up (they soared earlier this week on the news that A-B had returned InBev's dump-the-board move with a lawsuit of its own).
I'm sad to learn this.
And there's more here at the Wall Street Journal.
But as always, I'm pragmatic. Time to look ahead at the impact on brewing, which, oh! Right! I just did in five easy blog entries.....
First, a few caveats. I’ve never met Dick Yuengling. (I interviewed him at length by phone for the book.) I have no connection to his company. Heck, I can’t even drink his beer because it’s not sold here in Iowa (which is part of his genius....)
But I know generally what he’s been doing for the past twenty-odd years, and I can make some educated guesses about why it’s worked.
Since the early 1980s, he’s built a solid regional market for his beer. The emphasis here is on the word “regional”: Yuengling is only available in a handful of eastern states. The combination of limited sales, narrow territory, and genuine affection have bestowed on the brand a priceless cachet and mystique. (The same was true, by the way, of Coors in the 1960s and 1970s.)
Dick Yuengling is no dummy. Indeed, he may be the smartest guy in American brewing today. I’m certain that he knows that the value of his brand stems from that intangible mystique.
I suspect that’s why he’s not veered from his game plan. He’s not trying to transform regional mystique and cachet into a national market. As far as I know, he’s not planning a run for glory that would, most likely, destroy the company. (Again, the classic example unfolded in the 1970s when Coors tried to turn its regional mystique into national sales. But there are dozens of other examples. Olympia, anyone?)
BUT: If ever there was a moment when Dick could make a run for the top, this is it. A-B’s distributors are restless. My guess is that some of them are begging him to expand his sales territory. I’m also guessing that the current stratospheric prices for barley and hops will force some beermakers out of business or into merger. In the next few years, he might be able to snap up a few cheap brewvats. (That happened all the time between 1950 and 1980.)
The question is: Will he do it? Or will he stay low on the radar, but safe -- and healthy -- in his account books?
Will the nation’s craft brewers emulate his current game plan?
Will some of them eye the industry’s current anxiety and the InBev/A-B upheaval into their own run for the Big Time, knowing that it might spark a series of price wars, failures, mergers, and the like.
Or are craft brewers truly different and are they in the process of rewriting the rules of American brewing?
I don’t know. Time will tell. But it’s worth pondering. Over a beer, of course.
And you thought all of this was going to lead to some great, grand conclusion . . . .
Prior to 1980, American beermakers, whether Big Guys or Little Guys, sold essentially the same kind of beer: American-style lagers brewed with barley plus an adjunct like corn or rice. That’s not a criticism, by the way; just a statement of fact. (Yes, many of the small brewers, including Fritz Maytag, made an all-malt brew, but their markets were minuscule.)
So when brewers squared off against each other in, say, 1960 or 1970, they were all selling more or less the same beer and competing for the same audience of drinkers.
But in the 1980s, in a weird coincidence, two unrelated factors collided.
First, most of the remaining small mainstream brewers players fell by the wayside (thanks to a devastating battle between Miller and Anheuser-Busch). Second, a new wing of brewing emerged. The “craft” beermakers (or micro-brewers, as they were called then) were small and they wanted to make different kinds of beer, like ale, porter, stout. Even their lagers were different: the micro-brewers used malt only; no adjuncts.
Put another way, the new guys aimed at a different audience of beer drinkers, and beer was no longer interchangeable.
The industry structure didn’t change, nor has it since then. It still consists of a tiny number of giant brewers and a giant number of tiny brewers. A-B still sells most of the beer in the US and most beer sold is still made with adjuncts.
But that single difference between now and then -- varied beer styles -- makes it hard to predict how the InBev acquisition will affect American brewing.
Yes, space is available on some distributors’ trucks. Yes, some craft brewers will seize the moment and try to parlay that space into bigger markets, higher sales, bigger brewvats.
But when they do, they’ll butt heads with other craft brewers making the same move. And things could get, well, ugly.
“Nah,” you say. “Won’t happen. Those craft brewers are nice guys. They share recipes and hang out together. Craft brewing is one big love fest.”
Maybe. Maybe not. But it’s worth noting that back in the ‘60s and /70s, that what “small brewers” used to say about themselves. And then came Merger Mania and some of those Little Guys became Big Guys and, hey, all of a sudden the Little Guys were mourning the loss of the good ol’ days when beermakers were one happy family and whatever happened to industry collegiality and isn’t it a shame?
So back to where I started: Is the craft brewing fundamentally different from its historical predecessors? Has the “craft” industry altered brewing’s dynamics? Are old historical patterns irrelevant?
I don’t know. But here’s a thought: Dick Yuengling might be the smartest guy in brewing, and it’s possible that his success can tell us about where the industry is going.
More next time.
I've been saying this for YEARS. Not the gene-argument, but that alcohol has functioned as a necessity.
Not, of course, sigh, that anyone listens to me. But surely they'll listen to George Will.
Thanks and a tip o' the mug to my buddy Tom Strodtbeck of the NBIA for alerting me to Will's piece.
The scenario I described in my previous blog entry played out repeatedly between 1950 and 1980.
In theory, that scenario ought to repeat itself now, especially because, as I noted way back at the beginning, A-B’s distributors are restless. And prices for barley and hops are at record high levels. Many brewers are struggling.
That means there’s uncertainty in the industry. The InBev deal adds to that uncertainty, but it also presents opportunities.
If InBev succeeds, the value of A-B will likely plunge. After all, InBev will remove the Busch family, and its valuable presence. (I gather that economists can place monetary value on things like family stability.) Also, the A-B distribution system, which is rock solid and even more valuable, may tumble into disarray under InBev.
All of that adds up to opportunities for other beermakers. Miller/Coors may have a chance to grab a larger share of markets. But so will the smaller, more aggressive craft brewers.
Put simply, the weaker position of A-B will translate into opportunity and turmoil among other beermakers.
But what if the InBev takeover attempt fails? What if A-B retains its independence?
That, too, will translate into upheaval. A-B will return as a leaner and, dare I say it?, meaner machine. It will work hard to repair bad relations with its distributors. It will do whatever it takes to elevate its stock price.
How will it do that? By becoming even more aggressive in the craft brewing segment. It will roll out its own “craft” beers (which it’s been working on for some time). BUT: It will become more aggressive within the craft segment. Right now, A-B owns shares in four craft breweries (Old Dominion, Goose Island, Widmer, and Redhook). (Unless I’ve lost count and missed one.) It will go after others, and likely buy some outright.
Remember: it’s a good time to do so. Many small brewers are struggling to manage their costs at at time when prices for materials and fuel are in the stratosphere. Not all of them will survive. A weak beermaker represents opportunity.
That’s what history tells us OUGHT to happen. Both those scenarios played out repeatedly from about 1960 to 1980. But this time, history may not repeat itself. Here’s why: the beer itself has changed.
More next time. (No, I’m not trying to drive readers batty by making them return the next day for the next segment. I’m just being sensitive to how busy all of us are. We’ve got ten minutes and then we gotta move on to the next item on the list.)
Beer writer/journalist Rick Lyke is one of the nicest guys I know. So I'm glad to support -- and hope you will, too -- Pints for Prostates.
Nope, that's not a joke. It's (deadly) serious, and you can read about it at Rick's blog and here.
Is there a man in your life? Show your love by urging him to have regular prostate exams.
In my previous entry, I posed two questions about the future of brewing. In order to think about them, we need a little historical background.
Let’s pretend it’s, oh, 1960.
Bob Beermaker, owner of Acme General Brewing, sells beer in ten states. He’s doing okay, but he wants more.
Bob learns that a fellow beermaker in an adjacent region of the country is going belly up. Bob doesn’t sell beer in that market, but he wants to do so. He persuades the other guy’s distributor to carry his beer.
Bob now enjoys access to a new retail market. Of course this means that he must square off against a new set of competitors. Among them is Harry Hops. Harry’s operation isn’t as big or as financially stable as Bob’s.
Bob strikes first. He dumps much of his entire advertising budget into the new market. He slashes his prices for a month. (But does so carefully. He knows that pricing practices are governed by state and federal laws.)
Customers grab the cheaper beer. They decide they like it (or maybe they like Bob’s advertising). They stick with Bob’s brand, even when the price goes back up.
Harry Hops is in trouble. He can’t afford to lower his prices, and he can’t afford more advertising. His sales drop.
The local distributor eyes the situation, calculates his profit -- and makes a decision: He’s going to start carrying even more of Bob’s beer.
But if he carries more of Bob’s beer, he’ll have to stop carrying someone else’s. “Sorry, Harry,” the distributor says. “I’m going to drop your beer.”
Harry can’t recover. He puts the brewery up for sale. Maybe Bob Beermaker buys it because it’s a cheap way to gain more brewing capacity.
Now Bob is selling beer in fifteen states. His sales increase; he earns more profit, which he plows back into the company.
“Hmmm,” he thinks. “Now I can afford to make a run at a bigger market.” Bob uses his clout to cut deals with distributors in eight more states. He marches into battle in the new territory, but this time he collides with Marvin Malt, a much larger, stronger beermaker with an even bigger advertising budget.
This time the tables are turned. Marvin trounces Bob. Bob’s sales slide. His distributors lose interest. Bob limps into a sunset of hostile merger or even bankruptcy.
But even as he limps away, other small brewers smell opportunity. They decide it’s time to make their own run for The Big Time. They figure they’re smarter than Bob and they won’t make the same mistakes he made. They’re not worried about the threat posed by Marvin Malt.
The process starts over again.
Will that history repeat itself in the next few years? And what’s this got to do with craft brewing?
More next time.
First, a brief recap:
I oppose the InBev takeover of Anheuser-Busch.**
I don’t want to see the company sold. I also think Carlos Brito is in for a shockeroo a few years down the road: Removing the Busch family from the A-B equation will destroy the very thing that makes the company valuable.
But I also don’t see how anyone can stop Brito and InBev. (Today, for example, InBev announced it's forging ahead with its plan to force a removal of A-B's entire board of directors.)
So, assuming this is a done deal, what’s next? How will this affect American brewing? Can we predict brewing’s future based on old historical patterns? Or has the emergence of craft brewing fundamentally altered the dynamics of the brewing industry?
Over the next few days, I’m going to examine these questions from my perspective as a historian. (Which, I remind everyone, is what I am. I’m not employed in the brewing industry and never have been.) (Yes, I know what you're thinking. History? BOHHH-ring. But I love my work!)
In an earlier blog entry (“InBev/A-B Deal = Brewing Industry Tipping Point” posted June 28), I argued that an InBev/A-B merger could mark a tipping point for craft brewing: Americans will discover the joys of local beer; craft brewing will become mainstream; we’ll all walk hand-in-hand into the sunset.
Sounds great. But there’s another side to that scenario: Craft brewing’s stroll into the sunset could turn into a brawl. Here’s why:
Brewers sell their beer through distributors who, in turn, sell it to retail outlets, like grocery stores and bars.
Without distributors, brewers are screwed. They can make beer until they’re blue in the face, but they can't sell that beer unless they have distribution deals that will put the beer into customers’ hands.
Typically, big brewers like A-B and Miller/Coors, have solid distribution systems. Small brewers have a harder time establishing and holding onto those systems. After all, distributors have a finite amount of warehouse and truck space. They can only handle so much beer.
During the 1950s and 1960s, many brewers tried to increase their sales territory in part by taking over ("merging") with weaker beermakers or by "stealing" other brewer's distributors. I detailed this process in my book.
That same scenario could unfold again over the next few years. Rising prices for barley and hops are hurting every brewer, but particularly ones that are financially shaky.
But, the nation's distributors are also experiencing turmoil because some of the distributors who carry Anheuser-Busch products have become restless. They’re unhappy with A-B’s sagging sales and want to distribute a wider variety of brands. You can read about it here.
Rising prices for barley, fuel, etc. will continue to ripple through the brewing industry. But an InBev takeover of A-B will cause even more anxiety among A-B's distributors. They don’t know how InBev will affect the American market; don’t know what impact InBev ownership will have on A-B’s sales.
If history is any guide, some small brewers will seize upon that anxiety and try to persuade those restless distributors to carry their beers. And that’s when things may get, um, a bit ugly. Or at least even more uncertain.
Next time, I’ll explain why by taking you on a (brief) trip through American brewing between 1950 and 1980.
** I’m on record about my opposition on this blog; on the Stewart Varney program on Fox Business Network***, and, for example, here) about it. (Not, mind you, that Carlos Brito gives a rat’s ass what I think.)
*** Here's a link to FBN and Varney, but nothing I've said on air has been streamed (or whatever it's called) to the internet.
Today's Washington Post contains an op-ed piece I wrote. You can read it here.
Tomorrow (Monday, July 7), I'll be "live" at washingtonpost.com answering readers' questions. And every day this week, I'll be blogging about the impact of the InBev/Anheuser-Busch deal on the craft brewing industry.
Thanks for reading!
This is the kind of stuff I love. The American embassy in Berlin will celebrate the 4th of July with -- fife-and-drumroll please -- American craft beer. Very cool.
You can read about it at Charlie Papazian's blog at examiner.com.
And if you don't know who Charlie is, well, he's this guy.
In my previous blog entry, I contemplated the potential impact of the InBev/A-B deal on craft brewing.
For another take on that angle, see this piece by Jeremiah McWilliams of the St. Louis Post-Dispatch.
Jeremiah's coverage of the InBev/A-B deal has been terrific. He's one of the two best reporters covering this story. The other is David Kesmodel at the Wall Street Journal. (Among others, his article of May 27 is one best pieces of beer journalism written in the past fifty years.)
(How do I know that? I've read every significant piece of beer journalism written in the past fifty years.) (That's what we historians do.)
InBev will likely succeed in buying Anheuser-Busch.*
So -- what’s next? As always, I view that question from my perspective as a historian, which is to say I take the Long View of the Big Picture.
In the short run (say, the next year or so), the takeover won’t make much difference: Sales of A-B’s products will slide as the distributors scramble to find a more secure bet in what will feel, to them, like an uncertain market. Miller/Coors may benefit temporarily as well. (By the way, over the past year or so, many A-B distributors have engaged in various acts of rebellion. The sale to InBev will accelerate that trend.)
But the greatest impact will unfold over the long haul and will likely have the greatest impact on the craft brewing segment of the industry.**
Why? Two reasons.
First, much of the hoo-ha unfolding over the sale of A-B comes from people who resent the “loss” of an “American icon.”***
Let’s call this the “we don’t need no stinkin’ foreigners” element of this drama. (The idea, by the way, is, um, a bit unrealistic. We live in a global economy. We all need to accept that fact.)
How will “no stinkin’ foreigners” play out?
Beer drinkers may start asking questions about the origins of the beer they drink. Something along the lines of: “Damn it! I’m not gonna drink Bud if it’s owned by a foreign company. So what should I drink? What beers are American?”
If craft brewers are smart, they’ll seize that sentiment and use it to launch an industry campaign promoting craft brewing as an “American” industry, and craft beer as “American.” That kind of campaign requires big bucks, of course, and I’m not sure how the craft brewers could pay for it.
The second reason stems from the first:
The InBev deal coincides with what appears to be a tipping point in American consumer habits. People who never thought about that box of Cheerios before are now thinking about organic alternatives or are trying to “eat local.”****
The tipping point isn’t solid yet; not quite mainstream -- not everyone hangs on every word of the Bobos (see David Brook’s book Bobos in Paradise) or the New York Times. But in the past year, I’ve been surprised at how many people I know are talking about what they eat and where they buy it.
Lots of other factors play into this, of course: E-coli scares. Deadly tomatoes. Slaughterhouse horror stories. Concern about global warming.
And of course, the real biggie: gas prices that are forcing millions to think about how they move from Point A to Point B on a daily basis.
Those concerns may prompt many beer drinkers to deposit “beer” into the mental same category as other food items, like meat, milk, and bread. (Beer isn’t in that category now.)
Put briefly, because I’m likely testing your patience and attention span (I HATE reading stuff on a computer screen) (thank you for reading this far):
The InBev deal may push craft brewing to the place that has otherwise eluded it for the past thirty years: the mainstream, where it can command more like forty percent of the market instead of the seven or eight percent it has now.
I also think that over the long run, the InBev deal will (inadvertently) foster and enourage another positive and historically significant trend: what I call the “Dick Yuengling model of brewing.”
But that’s for another blog entry. You’ve put up with enough for today!
* More accurately, InBev will get Budweiser. That’s what it yearns for. Not the buildings in St. Louis. Not the tradition, the history, the blah blah blah. It wants Budweiser.
** American brewing consists of two “arms”: A relatively few but gigantic mainstream brewers like Anheuser-Busch, Miller/Coors, and Pabst who account for something like 93% of American beer sales; and the “craft brewers,” whose numbers are larger but who brew smaller quantities of beer for a (mostly) local market. (For more information, visit the website of the Brewers Association.)
*** I’m sad about this sale, but not because of the “stinkin’ foreigners” factor. A-B and Bud have been global entities for decades. I’m bereft over the demise of Busch family stewardship. Love the Busch family or hate it, you gotta admire the way they've stuck to their legacy.
**** Well, it’s not exactly a coincidence: American properties like A-B are bargain basement opportunities for foreign investors. That’s in part because Americans and the US government have gone deeply in debt to support our car-based, petrochemically dependent economy and lifestyle.
Earlier this month, the Wall Street Journal ran this article about rising beer prices and the "smaller pint" (translation: instead of raising prices, many bar owners are pouring shorter glasses.) Jeff Alworth initially raised the issue at his blog, where he has also launched the "Honest Pint Project." (He has a post about this today. Then use his index for the original post. The HPP links are on the right side of his page.)
Anyway, today while working, which in my case means reading newspapers written a century ago, I ran across an article that appeared in the New York Times in October 1907.
The short piece informed readers that because of rising prices for barley and hops, St. Louis brewers would raise the price of a barrel of beer from six dollars to seven.
In response, retailers (which, back then, mostly meant saloon owners) announced that they would "reduce the size of the glass without raising the price 'per glass.'"**
Translation: less beer for the same money.
So: ain't nuthin' new under the sun.
** Source: "Beer Takes A Jump," New York Times, October 10, 1907, p. 14.
As I've noted here before, I'm a bit of a fanatic when it comes to neo-temperance. I believe that the anti-alcohol people like those who belong to MADD aren't solving a problem. They ARE the problem. We Americans demonize alcohol and infantilize drinking. We have only ourselves to blame for "problems" like "underage drinking" and "binge drinking."
So I'm astounded that editors at a mainstream magazine like Time had the balls to run this article. Astounded.
Hey, maybe there's hope!
And in response to the question posed by the article's author: Yes. You SHOULD drink with your kids.
Today's New York Times contains what I can only describe as a snarky piece about the A-B/InBev deal. Snarky because of the reporter’s decision to travel the easy, but low, road. To judge August Busch IV now on his youthful past -- and find him wanting.
You can read the piece for yourself, but it mentions two of Four's encounters with the police more than two decades ago. Hints that, as a young man, Four was a bit, um, dissolute. Wild. Prone to making stupid decisions. Etc.
Hey, whaddya know! I’ve got something in common with August Busch IV!
I drank my way through my twenties, and when I wasn't drinking, I was ingesting every drug known to humankind. I've done every dumb thing a dumb kid can do (many of them illegal). By all rights, I shouldn’t even be here, because this was the kind of stupid shit that leaves less lucky people dead.
Surprised? Most people are. Because those who know me now know me as a totally average, upright citizen who works hard, obeys the law, and, ya know, lives an ordinary (read: dull) life.
Most people who know me judge me as I am, not as I was.
But back to this Times piece: According to the reporter, “it is perhaps not surprising” that A-B is "struggling" because of Four's "party-boy history."
It’s hard to get past the sheer stupidity of that causal chain: There’s not now and never will be a causal link between Four's youthful stupidity and the company’s stagnant/slumping stock price, which stems from corporate decisions made back in the 1990s and a fifteen-year-pattern of stagnant national beer consumption (thanks to birth rates and demographics) (over which, I’m certain, Four has no control...)
But hey, it makes better newspaper copy if you can paint a CEO as a scoundrel and wastrel and a human being incapable of change.
So here’s an idea: let’s take a little tour through A-B history, shall we?
Let’s start with August Busch, Sr. (1865-1934), son of Adolphus Busch and the man who steered the company through the nightmare of Prohibition.
As a young man “Gussie,” as many people called him, wasn’t much interested in the company business. Wanted to be a cowboy, he did. So after a wrangle with his father Adolphus, he headed west and worked on a ranch. Eventually grew tired of what was, he discovered, a very tough life, and returned to St. Louis, still less-than-interested in working for his imperious, willful father.
But then his older brother and the brewery’s heir apparent, Adolphus Busch, Jr. (1867-1898), died young and unexpectedly. The only other surviving brother, Peter (1869-1905), had dedicated himself to living the life of a ne’er-do-well playboy of the first order. (Father Adolphus, Sr. disowned him).
That left Gussie as the new, but reluctant, heir apparent.
And guess what? He shook off his youth and resistance and marched into the job. Grew up fast. Learned how to run one of the world’s largest breweries. He saved the company during Prohibition, and in the 1920s, reinvented it so that the brewery could survive the new demands of a changed consumer market once Prohibition ended. Not bad for a playboy with cowboy ambitions.
How about his son, Gus Busch, Jr. (1899-1989)? (Also known by some as Gussie.)
As a young man, Gus was a typical rich boy: Prone to play. Allergic to work. Fond of women and drink. Nominally he was the brewery manager in the ‘20s and 30s’, but he didn’t take the company or his job too seriously. He left the heavy lifting to his brother Adolphus III ((1891-1946).
But when brother Adolphus died unexpectedly in 1946, Gus ended up in the president’s office. By his own admission, it took him several years to grow up and into the job. To gain command of the company and its many problems. (And in the 1950s, there were problems galore, not least of which was the fact that national beer sales had plunged after WWII and showed no signs of going anywhere but deeper into a rut.)
He made mistakes. And apologized publicly for them to his employees and his shareholders.
But by god, he turned the lemon of the fifties into highly profitable lemonade in the sixties and beyond.
So before we all get carried away with our assumptions that the August Busch IV of age forty-four is the same man as he was at twenty-one. . . . well, how ‘bout we ponder this bit of company history.
And then let’s all stand in front of a mirror and think about the kind of people we were twenty years ago.
My guess is there'll be a whole lotta cringin' goin’ on.
And maybe a bit more compassion for a guy who has five* generations of family legacy sitting on his shoulders.
*He is the sixth generation to serve as head of the brewery; I'm including his maternal great-great-great grandfather, Eberhard Anheuser.
My buddy Jay Brooks has weighed in on the InBev/A-B deal with his usual panache and intelligence. Worth reading. (It's his entry for June 12 titled "American Politics and the InBev Takeover Bid.")
But to his comments: I would reply that the difference here is not that A-B is an American company, but that the same family has maintained stewardship, and that's a LOT different that another corporate-owned company going foreign.
Eg, SAB bought Miller from a huge global conglomerate, Philip Morris. Similarly, A-B bought Latrobe from Labatt, which was itself owned by InBev.
Put another way, at the time of the sale, Latrobe had long since ceased to be an "American" brewing company. Ditto Miller. Moreover, both had long since lost "family" stewardship.
So there is a special circumstance surrounding the possible A-B sale: No, the Busch family does not hold controlling shares, but for 140+ years, with only one or two brief exceptions*, the family has maintained a hold on the leadership.
That alone speaks volumes about the way in which A-B is imbued and endowed with the heart and soul of that family. Indeed, I would argue that it's the company's most valuable asset. (And of course, I would be told I'm nuts by most industry analysts....)
* In the early 1970s, Richard Meyer served briefly as president, the first non-Busch to do so. I think that since then, there's been one other non-Busch in the office.
... Your family's company, Anheuser-Busch, has embodied the American dream and proved a remarkable study in ambition, business savvy, and entrepreneurship. . . "
Okay. No, I won't be sending August Busch IV any such letter. And yes, that's a riff off the letter sent to him by the Carlos Brito of InBev.
And yeah, okay, it's all business and I'm a sentimental sap. And you can read all about InBev's proposed offer today just about any place on the web, including here at the New York Times.
But if I could say something to Four [and his father Three], I'd say: DON'T DO IT. (And if I could say something to the family members that want the deal, it would be: "Short-term gain isn't all it's cracked up to be. Just ask the Millers and Uihleins.")
But that's not how business works.
Sigh.
Anyway, for this first post-vacation blog entry, I had planned to mention that I'm back home after several weeks on the road and isn't it weird to be back and have access to a computer after being off-line for the better part of a month and I'm tired from traveling but also because I have pneumonia [the perfect vacation companion] . . . Blah, blah, blah.
But the hell with it. I'm home. I'm sick (and hoping that the antibiotics kick in soon...)
I'm just in time to watch The Deal Go Down.
Today's Wall Street Journal has a number of follow-up pieces on the possible InBev takeover of Anheuser-Busch. Unfortunately, unlike yesterday's great front-page piece, none of these are accessible without a subscription. (What's up with that anyway? Why are parts of the WSJ free online and other parts are not??)
But here's the drift: One piece examines the way in which InBev's go-go, macho culture may clash with A-B's more regal, attention-to-detail approach to business. It also points out that InBev has a history of installing its own people in companies that it acquires. (I guess that's no surprise....)
Another report argues that InBev may encounter resistance from those who don't want an American icon sold to a foreign company.
This piece can be read free: speculation about how Warren Buffett may react to the proposed purchase. (Buffett's Berkshire Hathaway is A-B's second largest shareholder.)
The Journal also contains most of the text of a piece that originated at breakingviews.com. This one looks at corporate family dynasties, and argues that times change; sentimental saps need to get over it and move on. (Auggghhh. Help me get this knife outta my heart.)