The Coming Threat to Your Craft Brew

[nhboy (Premo)]

Link to original article.

"Over at Washington Monthly, Tim Heffernan has an in-depth piece on a topic dear to my heart: the stunning consolidation of the US beer industry. He points out, as I have before, that two vast, globe-spanning companies, SABMliler and Anheuser-Busch InBev, control 80 percent of the US beer market.

Heffernan argues that the two companies have essentially hit a wall in getting much bigger here—consolidation is already so extreme that there just isn't much more consolidating to do without provoking the ire of antitrust authorities.

To increase their profits, he shows, the companies are moving toward a vertical-integration strategy: gunning for control of the distribution and wholesaling. That way, they can grow by extracting more revenue and profit out of each dollar Americans spend on beer.

Heffernan takes an odd angle to set up his story. Hyperconsolidation of the kind seen in the beer industry drives down consumer prices, he writes, and low prices for alcohol lead to excessive drunkenness. More on that below—I think Heffernan might be off here.

But what caught my eye was his discussion of the way the beer giants are squeezing suppliers and wholesalers to take control of the retail shelf—and potentially squeezing out independent craft brewers, whose wares (which I adore) have taken off in the past 20 years even as the giants consolidated."

.....

"And the giants are now peddling faux craft beers like InBev's Shock Top or SABMiller's Pale Moon. So if you're running the beer cooler of the retail outlet, you'd do better to offer a couple of corporate-made craft knockoffs than a dozen genuine craft brews. "Craft is a real threat," because it represents a growing thirst for real beer; "but it's also an opportunity," because that thirst can be co-opted by knockoffs.

If the InBev exec's economic analysis is correct and retailers heed his advice, then we could be on the verge of a hard squeeze on what I consider to be one of the most promising aspects of the US culinary scene: the rise of an incredibly robust, varied, and regionally distributed craft-brew industry. They already struggle to get retail space as the once-independent beer wholesale/distribution falls increasingly under the heel of the giants. But if retailers decide they don't want craft beer, because they make more profit from corporate swill, then it's hard times for craft brewers.

Heffernan's discussion of Big Beer's push to roll up distribution and wholesaling is excellent. I'm less convinced by his frame: that it's bad because it means cheaper beer and more alcohol abuse. "

[czygvtwkr]

Why do I care if its made by a big company or a small one? All I care about is the taste.

[Hank]

Originally Posted by czygvtwkr

Why do I care if its made by a big company or a small one? All I care about is the taste.

that's what she said

[glhs837]

Originally Posted by czygvtwkr

Why do I care if its made by a big company or a small one? All I care about is the taste.

Because while the corporate craft beers do taste light years better than their standard offerings, Shock Top for instance, is a damn good beer compared to Bud or Miller or Coors, that same shock top loses in a straight comparison to a craft brew of the same type from places like Flying Dog or Heavy Seas. Both of those loose to something fresh from a micro-brew like Ruddy Duck or in their own brewery, but a lot of buyers wont know the difference until they taste it. And if it's pushed off of the shelves, they wont.

[edinsomd]

Originally Posted by glhs837

Because while the corporate craft beers do taste light years better than their standard offerings, Shock Top for instance, is a damn good beer compared to Bud or Miller or Coors, that same shock top loses in a straight comparison to a craft brew of the same type from places like Flying Dog or Heavy Seas. Both of those loose to something fresh from a micro-brew like Ruddy Duck or in their own brewery, but a lot of buyers wont know the difference until they taste it. And if it's pushed off of the shelves, they wont.

I, for one, stand in awe of your expertise on thus issue. But be advised, if they mess around with my Dogfish Head 60 Minute IPA it's war.

[DipStick]

Originally Posted by czygvtwkr

Why do I care if its made by a big company or a small one? All I care about is the taste.

Heavy Seas (brewed in Baltimore) beats the hell out of Budweiser any day. And it's available almost everywhere down here.

[DipStick]

Originally Posted by edinsomd

I, for one, stand in awe of your expertise on thus issue. But be advised, if they mess around with my Dogfish Head 60 Minute IPA it's war.

Dogfish Head is another good brew.

[glhs837]

Originally Posted by DipStick

Heavy Seas (brewed in Baltimore) beats the hell out of Budweiser any day. And it's available almost everywhere down here.

Originally Posted by DipStick

Dogfish Head is another good brew.

Lucky for us, both of those are within a relatively short drive, so no Smokey and the Bandit shenanigans would be required to get more. But Fat Tire and Anchor Steam, we would lose those.

[Gilligan (Premo)]

Originally Posted by DipStick

Heavy Seas (brewed in Baltimore) beats the hell out of Budweiser any day. And it's available almost everywhere down here.

IMHO..anything beats hell out of Budweiser any day.

We've had such a renaisance of beer brewing in the last 20 years..I'd hate to see that trend discontinue....

[ylexot]

I'm not seeing the threat to craft brews.