Friday, March 06, 2015

Pop open a Trojan Goose and enjoy this explanation of why you shouldn't.

Get ready for an uncommonly good explanation of the American brewing marketplace, a link forwarded me by my friend Jerry Ramsey. Here are a few passages and my thoughts.

For America's craft beer revolution, brewing battle has come to a head: The independent beer movement has exploded, threatening Big Beer and posing new dilemmas for craft brewers, by Michael Pizzi (Al Jazeera America)

... “It’s not just a matter of craft brewers banding together with our fists in the air against Big Beer anymore,” said (Chris) Gallant, Bronx Brewery’s general manager. “The biggest challenge is that there are just so many of us.”

What does this have to do with our monolithic "friends" at the Big Two?

The “Big Two” conglomerates — Anheuser-Busch Inbev and SABMiller — recognize the small beer movement is growing into a legitimate threat ... (and) pitched battles are brewing between Big Beer and small beer lobbies over distribution and franchising laws that determine access to markets. In Congress, dueling bills have been proposed to reduce the steep excise tax on beer in the United States, one of which offers a graduated tax schedule that would benefit small breweries. With their deep pockets and army of lobbying firms, Big Beer might just have its way.

With friends like them, who needs Islamic terrorism, except that "traditional low-cost American beers like Budweiser, Coors and Miller are simply going out of style." If you're a multinational monopolist, what's the response to an aesthetic precluded you by virtue of DNA?

“At Anheuser-Busch, you see a future where if you don’t act now to restructure the marketplace, your present product selection is going to confine you to a much smaller business down the road,” said Barry Lynn, a senior fellow at the New America Foundation who has done extensive research on the beer market.

So restructuring the marketplace is what Big Beer has begun to do, experts say. Contrary to its recent anti-craft messaging, Anheuser-Busch has actually begun to buy out independent breweries, starting with the 2011 purchase of Goose Island in Chicago. It has since bought out Blue Point, 10 Barrel, and, last year, Elysian in Washington (which, ironically, produces the Pumpkin Peach Ale that Budweiser mocked in its Super Bowl ad). The company has not commented whether the buying spree will continue, including in an email to Al Jazeera, but its strategy so far seems to involve subsidizing and selling its craft offerings cheaper than its competitors, proliferating them across its massive, coordinated distribution networks.

Lynn said he didn't think the plan was to profit off these beers directly. “What they want to be able to do is offer wholesalers or retailers a full array of products, to say ‘you don’t need to go anywhere else, we’ve got your craft covered.’”

Yes, that's right: Colonize taps and shelf space, lock them down by whatever means is workable, and keep small brewers from coming through the door. It's what AB-InBev does with zombie crafts like Trojan Goose Island -- and yet many of you still feed money to the monolith.


Paul Gatza, director of the Brewers Association, which represents the craft beer industry, said the Big Two can, by way of co-opted distributors, offer preferential treatment — prices and promotional displays, for example — to bars and stores who choose not to carry independent brews. Now that craft is in their repertoire, Gatza said, “you’ll see it more and more at bars, where Anheuser-Busch is dominating the facility and all the beers on tap are produced or owned by them."

And where have we heard this before? Right across the river, in fact, where the money you feed the monolith via Trojan Goose is used against the interests of your local brewer.

In some states, Big Beer has taken the even more aggressive strategy of buying out wholesale distributors. In doing so, Big Beer is challenging the formalized 3-tier system that has regulated the alcohol market in the U.S since the 1930s — whereby the brewer or distiller, wholesale distributor and retailer are all supposed to be separate entities, or tiers. Established in the aftermath of prohibition, the idea was that an intentionally inefficient system would keep the alcohol industry’s once-formidable political power in check. Decades later, those safeguards against vertical integration helped catalyze the craft revolution.

Small brewers argue that the acquisitions should be illegal nationally (in most states, it already is), pointing out there is no incentive for a distributor owned by Anheuser-Busch to carry anyone else’s brew. The controversy has come to a head most recently in Kentucky, where earlier this month the House approved a bill backed by independent brewers that could require Anheuser-Busch to sell its distributors in the state.

And yet, perhaps the most enjoyable aspect of these David vs. Goliath scenarios comes when Goliath starts crying like a hungry and abandoned baby.

Damon Williams, director of sales and marketing for Anheuser-Busch in Louisville, Kentucky, told Al Jazeera in an email that the bill "has nothing to do with craft beers and everything to do with greedy special interests."

Damon, my man ... takes one to know one, doesn't it?

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