Craft brewers bothered by Anheuser-Busch invasion

LEO, MY GODSON, just turned 10, so I thought it was about time for him to learn a little about beer.

I bought him some shares of Anheuser-Busch, figuring it’d teach something about brewing, about business and finance; when he’s old enough to cash it in, he can invest the money in something responsible.

Like a case of imperial stout.

In the meantime, I’m pointing him to page 10 of A-B’s 2005 annual report, where in one short paragraph he’ll learn everything he needs to know about the suds biz:

“Today’s contemporary adult consumers… crave variety more than ever before. To meet these changing tastes, Anheuser-Busch introduced more than 30 new products and encouraged consumers to experiment with new flavors and different ways to enjoy beer.”

Thirty new products! Who knew? Granted, some of them are spiked fruit juices, shooters and other alcohol delivery devices that bear no resemblance to malt and hops. But that’s not the point. This is a company that has grown to dominate the American beer scene by spending millions to market a line of vapid yellow lagers. Now it’s spewing new versions quicker ‘n’ Microsoft.

What in the name of Adolphus Busch is going on?

It’s a question that the craft beer world is asking this week in the wake of a deal that will give Seattle’s Widmer Brothers Brewing, which is partly owned by A-B, a sizable stake in Goose Island, a tiny Chicago brewery.

Goose Island president John Hall said the deal is mostly about wholesale distribution. The agreement puts his beers into hundreds of new outlets throughout Illinois.

“Good beer doesn’t do you any good if you can’t get it,” Hall reasoned.

Some craft brewers, though, are understandably worried about what they see as an incursion onto their small but carefully maintained turf – especially as it outperforms the rest of the alcoholic drinks sector.

In April, Dogfish Head Brewing’s Sam Calagione used his keynote speech at the annual Brewers Association conference to urge small brewers to be wary of big-wallet suitors.

“As big breweries and big distributors court our reinvigorated growth,” Calagione warned, “we need to be careful that any alliance we make doesn’t compromise the unique terroirs we have worked so hard to develop.” (He was using the French term that describes the sense of place and specialness of a homegrown product.)

This week, Calagione was shaking his head over the Goose Island deal.

“In five years, if A-B really [cares] about craft beer, then I’ll stand corrected,” he said. “But every early indication is that their motivation is no different than it was in the 1990s, the last time we were experiencing big growth.”

Ten years ago, A-B scoffed at the craftsmanship of small breweries, then cynically hopped on the bandwagon with its phony Red Wolf label. It bought a share of Seattle’s Red Hook brewery only, in the view of many, to dumb down Red Hook’s product line. The damage was deep, as many consumers wrote off microbrewing as a passing fad.

Calagione grumbled, “We are market share. They want to buy us, then indoctrinate us.”

Greg Koch of Stone Brewing in San Diego agreed. “Of course it’s an opportunistic foray by St. Louis. All business moves are opportunistic forays, save those driven by passion. And while I can’t speak for St. Louis, I don’t suspect that the latter is the case.”

I can’t speak for A-B, either, but I keep going back to those 30 new products.

As Benj Steinman, publisher of Beer Marketers INSIGHTS, noted, wholesalers are frustrated by flat-lined sales of A-B’s mainstream products like Bud and Bud Light.

“There’s been a huge outcry for more high-end brands. Anheuser-Busch is trying to address it in several ways,” Steinman said, pointing to baffling new boozy drinks like chocolate-flavored Spykes.

Forget about being assimilated by the Borgs. Craft brewers have more to worry about: their terroirs are at risk of being swamped by a miasma of bottled alcoholic products, each marketed solely to satisfy the bean-counters.

That’s why, for his 11th birthday, I’m getting Leo a case of hand-crafted imperial stout. It’ll age well in the next decade; he can crack it open when he turns 21 and learn all he needs to know about the tradition and craftsmanship that make his favorite adult beverage (I hope!) more than just another alcohol-delivery device.


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