Bud and Miller Are Trying to Hijack Craft Beer—and It’s Totally Backfiring
InBev and MillerCoors loom over the US beer landscape like…well, like one of those
monstrous inflatable Bud Light bottles that spring up at certain football tailgate parties
and outdoor concerts. Together, the two global giants own nearly 80 percent of the US beer
market. InBev alone, corporate owner of Budweiser, spends a staggering $449 million on US
But also like those vast blow-up beer bottles, their presence is not-so-faintly ridiculous
and always teetering. The industry's signature light beers are suffering a "slow,
watery death," BusinessWeek recently reported, their sales declining steadily.
Meanwhile, independent breweries cranking out distinctive product—known as craft
breweries—are undergoing an accelerating renaissance. "Sales of craft beers grew 16
percent in volume over the past year versus a 1.7 percent decline for the biggest U.S.
beer brands," Bloomberg reported in January. And new craft breweries are budding like
hop flowers in spring. Here are the latest numbers, just out from the Brewer's
Association. Note that that the number of US craft brewers has nearly doubled since 2010,
and grew 20 percent in the past year alone.
Chart: The Brewers Association
Now, here's an historical look at the situation, a chart that I also included the last
time I looked at the craft-beer revival, back in 2011. Note that the number of breweries
plunged with the coming of Prohibition, surged with the onset of legalization in the
1930s, and then began a long, slow decline as the beer industry consolidated into the
hands of giants like Budweiser, Coors, and Miller. By the end of the 1970s, the entire US
beer market was being satisfied, if that's thw word, by fewer than 100 large brewing
And then, starting in the early '80s—with the gradual demise of Prohibition-era
restrictions like the one that kept breweries from selling beer directly to the public, as
well as people's growing distaste for watered-down swill—the craft-brew revival, the
one reaching full flower today, emerged.
For its part, Big Beer has responded to the declining popularity of its goods in two ways.
The first is relentless cost cutting. When Belgian mega-brewer InBev bought US corporate
beer giant Bud in 2008, it very quickly slashed 1,400 jobs, about 6 percent of its US
workforce. And the laser-like focus on slashing costs has continued, as this aptly titled
2012 BusineseWeek piece "The Plot to Destroy America's Beer" shows.
The second is to roll out phony craft beers—brands like ShockTop and Blue Moon—and buy up
legit craft brewers like Chicago's Goose Island, which inBev did in 2011. Other ersatz
"craft" beers include Leinenkugel, Killian's, Batch 19, and Third Shift. The
strategy has been successful, to a point. Bloomberg reports that InBev has seen its Goose
Island and Shock Top sales surge.
But there's a catch: These stealth Big Beer brands aren't "putting the
microbrewers who started the movement out of business," Bloomberg reports. Rather,
"the new labels are taking sales from already-troubled mass-market brands owned by
the industry giants peddling these crafty brews." In other words, consumers
aren't dropping Sierra Nevada or Dogfish Head and reaching for the Shocktop. Rather,
ShockTop sales are being propped up by refugees from Bud Light and the like.
Meanwhile, the beer world is buzzing about what would be the granddaddy of all mergers:
rumors are swirling that InBev is preparing a bid to takeover SABMiller, a move that would
give the combined company 30 percent of the globe's beer market. The motivation,
reports the St. Louis Post Dispatch: "A-B InBev could reap $2 billion in cost-savings
through an acquisition of their largest rival, through global procurement and shared
services, and eliminating job redundancies."
While Big Beer attempts to solve its problems with crafty marketing and yet more giantism,
US craft brewers are trying out innovative business models. Big-name craft brewers Full
Sail (Oregon), New Belgium (Colorado), and Harpoon (Boston) are all fully employee-owned.
Here in Austin, Black Star Brewery and Pub is cooperatively owned by 3,000 community
members and managed by a "workers assembly" as a "democratic self-managed
workplace." It may sound like it should be a cluster, but the place is always packed,
the service is brisk, the food is good, and the beer is excellent. And the employees
proudly refuse tips, citing their living wage as the reason. Meanwhile, a forthcoming
worker-owned project, 4thTap Brewing Co-op, is creating excitement among Austin beer nerds
with its promise to "bring radical brewing to the forefront of the Texas craft beer
For me, all of this ferment underlines an important point about the US food scene: It may
be dominated by a few massive, heavily marketed companies at the top, but that doesn't
stop viable alternatives from bubbling from below.
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