A-B InBev, History, and American Brewing, Part 1

Part 1 --- Part 2 --- Part 3 --- Part 4 --- Part 5 --- Part 6 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. (*1)

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. (*2)

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!


*1: 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.

*2: 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.