As the big get bigger, what do the small get?

The potential acquisition of South African Breweries (SAB) by their larger rival Anheuser Busch Inbev (ABI) has got many commentators gasping for breath: not at the audacity of it – that was reserved for when InBev (as was) took down Anheuser Busch – but rather the implications of the sheer scale. The scale, both of the deal (the fourth biggest corporate takeover) and the ultimate beast it will become (who we shall call ABSAB).

Interestingly, a stock response of commentators is ‘Don’t Panic Mr Mainwaring!’ The deal, as these deals do, will create opportunities for smaller operators. Drinkers, reviled by the deal and the inevitable consolidation / loss of brands in the shake-up, will vote with their wallets and support the little guy. New market niches will open up, too small for a goliath like ABSAB to spot, yet alone exploit. David will win the day! Fleet of footedness, quick decision-making will out!

And there will be some of this. Of course there will. But on balance, it’s a romantic notion and one that, in truth, isn’t borne out by precedent.

The first issue is growth. In most western, mature consumer markets beer is flat-lining or declining. Drinkers are drinking less. This pressure rolls through to licensees: what to stock; how much space they can give to beer and ultimately what brands end up on the bar. What licensees want is a range of guaranteed strong sellers and a ‘something interesting’ selection. ABSAB (Stella, Peroni, Budweiser) can fulfil one side, craft can fulfil the other (in fact, increasingly, ABSAB can fulfil this other side too). In less mature markets, there is underlying growth in beer consumption – in central and South America for example – and that growth is driven by brands. Big brands; famous brands, foreign brands; often American or European: brands that are a status symbol. ABI and SAB are getting together because growth in their core markets is slowing (or has stopped). They’re getting together because in emerging markets it’s about brands. The deal allows more consumers to access their brands in more markets, efficiently and cost effectively. And most consumers won’t react negatively. They won’t even think about it.

The second issue is craft. Craft beer, however you define it, is exciting, interesting and inspiring. It’s been brilliant for beer in many markets. But craft beer is, what? At best 10 – 15% of market volume. Most of us, most consumers, simply aren’t in the franchise or drink it infrequently. Most of us, in short, drink the sorts of beers that ABI and SAB make.   Now, clearly there is growth and clearly craft is slowly, steadily impacting consumer perceptions of the market. But if we assume that the basis of the ‘Innovation-Adoption Curve’ is correct, then most of us are fairly unadventurous. We’ll follow. And what will this mean in terms of brands? It won’t mean opportunities for spontaneous fermented wild beers hitting the mainstream. It will mean the likes of Blue Moon, Goose Island, Meantime, Lagunitas, Kona becoming more widely available, and if we’re lucky the larger – independent – craft brewers – Sierra Nevada, Brooklyn, Boston Beer will be available too. But the real opportunity if for the crafty beers under the umbrella of brewers like ABSAB. They offer the rationale of differentiated choice, with the convenience of a single and efficient point of supply.

What ABSAB appreciate is that currently global brewing is over-supplied. There are two responses. One, consolidate to ensure supply over time reduces and is done cost effectively. Two, build brands. This deal does both and will be successful.

For smaller brewers, given that they can’t consolidate to the same level, the real opportunity is the second option. To build brands. Take the UK beer market. There are now 1,700 breweries. The UK is the most breweried-per-head country in the world. Yet the beer market has been declining at about 4% a year since 2005. Per capita consumption of beer is falling, despite the noise of craft. There will be a fall out, even with the UK Government’s small brewer duty relief (perhaps because of it). Now is the time to build brands not supply product. Look at Camden Town, only three years old, but already widely available throughout the capital. Why? Good beers (with broad appeal); tremendous branding. Look at Beavertown. Good beers (with more challenge to them), impactful branding.

No, the opportunities presented by ABSAB getting together are twofold. For consumers, it’s in the truly niche operators, who make more complex, highly differentiated and challenging beer styles that they can supply effectively to the market. For small brewers who don’t, the real opportunity is to build your brand. And the real money is to be made when the likes of ABSAB buy them from you.

The Beer Guy

Within beer circles there are now public personalities in ways unimaginable a generation ago. Many brewers are celebrities, some like Sam Calagione become media figures. There are revered saviours, like Fritz Maytag or Michael Jackson. Sages too, like Ken Grossman. Or outspoken campaigners, like Roger Protz. Yet, my friend Dan Rosenbluth, who died recently after a short illness, was largely unknown in the broader beer world, despite being universally popular and loved amongst his considerable circle of peers and friends. Dan had an impact as significant as that of these names and many more – but, typical of him, it was perfectly understated. He was, to use his phrase (although he never applied it to himself), a beer guy through and through. More than this, he remained a beer guy in the increasingly un-beery world of multinational, corporate brewers. Some feat.

Dan was born in California, although he was raised in Florida and that’s where his heart was; a man of the South yet, set against the ill-informed stereotype of the ‘Confederate Redneck’, Dan was broad-minded, liberal and outward looking. These values, underpinned by his unblinking fairness and generosity made him a mentor to many and a role model to more.

In the world of multi-national brewers, the competitive focus isn’t just on their peers. It’s on consumer goods businesses: marketing-led companies, FMCG companies. Companies where the consumers is King and bottom line profit is the whispering Councillor behind the throne. The product happens to beer, but the focus, the driver, the end game is money. Just money. Oh, they’ll deny it. But it’s the truth: because the behaviour of these businesses reveals it. The brewer is no longer the hero. The accountant rules the roost. The beer itself may be carefully brewed, but uniform consistency is the only mantra; the reverence has gone. The rules of accounting say high gravity brewing; two day lagering (if any); ‘precision’ brewing, adjunct mashes, pasteurisation. Such tools are the name of the Accountant-brewer’s game, because without them, in such a cut-throat environment they believe, you won’t survive. And the Queen of these companies is the marketeer. I was a Marketing Queen and I’m proud of it. But I’m proud of it because I loved beer and for me, the science of marketing was there to support the art, the passion, the reverence of and for brewing.

Dan was the same, yet more so. He worked at Coors in Golden, Colorado, at a time when Anheuser Busch, still independent, were dictating the agenda of the market. If your beer wasn’t light, it wasn’t right. If your beer didn’t have IBUs below 10, you were doomed. Coors, particularly before the days of the joint venture with SAB (Miller Coors), did have a brewing heart. Pete Coors was a brewing meddler (in a good way) and even had – has still, in fact – a small-scale brewery where he would ‘try things’ (Barman Pilsner probably being the most successful). And much against modern multinational practise, he would also support initiatives from people like Keith Villa to try experiments, to have a go. One such experiment was a beer that ultimately became called Blue Moon.

Dan came into the marketing team at a time when craft was growing but not ripping up trees. Blue Moon had tickled along for a decade, largely going nowhere. He was asked to review its performance with a view to ‘rationalising’ it. The pressure on him was severe because, when he looked at the numbers, he could clearly see why he was being asked. The volumes were small. The beer was complex to brew. The profit delivery was modest. In Coors terms, it got lost in the rounding.

Yet Dan was a beer guy. He could feel the opportunity. He could see it was ahead of its time. He implicitly understood who might drink Blue Moon, why and when. The way he told the story involved some benevolent fudging of numbers and some heartfelt groveling. But he won the day. They tightened what the beer was about (‘artfully crafted’) and stuck with the programme (such as existed): the right serve; the right glass. Simple stuff, executed well. Today, Blue Moon Belgian White is the single largest craft brand in the U.S.

And there’s the rub isn’t it? How can a ‘craft’ brand be from a multinational giant like Molson Coors / Miller Coors? Without getting in to the argument which is a well-trod and frankly rather dull tale now, the point is, Blue Moon is a watershed brand in U.S. brewing. It is the brand that changed the paradigm both of the big brewers – they quickly came to see that flavourful beers could be business drivers for them – and smaller brewers too – because they got the benefit of a major player opening up ‘craft’ with retailers in a way that alone, would be more difficult to do.

The argument around brands like Blue Moon being / not being craft is perfectly legitimate. In due course, when the pain of Dan’s passing has subsided somewhat, I may even join in. But more than anything else, every time I see that distinctive blue label, that luminescent, cream coloured moon, I shall think of my good friend and the role he played in helping to change the attitudes of the big US brewers towards craft beer and ultimately, the benefits that had for all.

In Memoriam. William Daniel Rosenbluth. August 1969 – July 2015. A Beer Guy.

© David Preston, Beer Tinted Spectacles, 2015

To wit

The landscape of the most southerly part of the Netherlands is not what you would expect from a country where contour lines are collectors’ items. Limburg is a spur; in its northern part, it grips the rest of the country like a rock climber navigating a tricky overhang. South from there, flowing with the river Maas it nips in like a squeezed balloon; tightly constrained between Belgium to the west and Germany, east – it can be no more than 10 miles at its narrowest point before erupting out in a final burst of Dutchiness.   It is a beautiful part of the world; unexpected, rolling, hilly, with beautiful villages and towns, lime-lined lanes and the unsurprisingly cosmopolitan city of Maastricht sitting astride the river. In many respects Limburg feels British: verdantly green fields, half timbered houses, short, sharp hills, hedges, twisting, snaking lanes where you can easily get lost. Yet it is most definitely and perhaps defiantly Dutch: those narrow strings of brick, a greater sense of order and productivity – more neatly clipped than an English shire.

It was here I really discovered wit beer. For many years I have had a taste and interest in wheat beers, but very much in the Bavarian style, where the clovey, bananary chewiness and billowing, puthering head is imparted from the grist and yeast alone. The serve too is decidedly German; elegantly tall glasses yet with a teutonic robustness. ‘Belgian style’ wit beer, if that isn’t too blunt and broad a term, is something else entirely. There’s a playfulness about these beers, a fusion of rustic, agricultural roots from the ‘base’ beer, with the inventiveness that came from adding new world spices – and by new world, we’re talking Indonesia, the Spice Islands – far away; wherever the European merchants were trading. These were the original funky beers.

IMG_1614Most know this beer style through a Belgian beer – rather, through the Belgian beer in the style, Hoegaarden. But I got familiar through a hardly-known Limburg wit beer from a small producer in Gulpen, east of Maastricht. The whys and wherefores aren’t important here, but I was there on business and was taken aback by a lovely, traditional set up. The brewery, Gulpener, named from the village it is situated in, is barely more than a series of farmhouses stretched either side of the road. The offices are in the old family home. The brewery tap is a restaurant on the town square. That same road into Gulpen, the one you take as you head east out of Maastricht is an undulating affair. Butting it up to it are fields of barley and wheat earmarked for the brewery, carrying signs signifying the fact as you approach. The main beer is a fruity pilsner, very much in the east Dutch style – grassy, assertive, rewarding yet drinkable. Yet the wit beer – or waere witte in local dialect – is an altogether more quirky affair. Named after a local ground-dwelling hamster, that likes to nibble on local crops and which was, until recently, endangered, Gulpener Korenwolf is a lovely introduction to the style; with a luminescent hazy yellow glow, a bright white head and a pronounced banana ester aroma. Yet the taste is more surprising with a grist bill that contains not just the expected wheat but also some rye and spelt – both more primitive, simple grains that lend a nuttiness in the finished beer. The addition of elderflower too gives a wafty floral essence to the smell and taste. For a while, we sold a decent amount in the UK before my company at the time tired of selling profitable but small brands. And probably, ones with hamsters on the label. Shame that you can’t find it over here now.

IMG_1604But there are plenty of other lovely wit beers. It’s trite to say they make a lovely summer drink – true though it is – but actually there’s so much variation in the style that restricting them to easy generalisations and singular occasions is missing the point. Hoegaarden is the benchmark of the style and some bemoan that it has lost some of its character since ABInbev closed the original brewery and started brewing in their Leuven plant. Yet, this is still a great beer, at a drinkable strength (4.9% ABV) and with loads of interest too. To the eye it has that characteristic wit beer haziness, a browney-lemon colour with visible yeast. The copious white head is characteristic and inviting, but for me, it’s the aroma that draws you in: light cloves, a coriandery-allspice and a mild dash of lemon peel. It’s a ‘drink me’ smell, no doubt. And it’s beautifully presented – in possibly one of the most appealing beer bottles there is and that intriguing ‘Hoegaarden’ script. A lovely beer; a classic beer.

IMG_1610And where the classics tread others follow. Blue Moon Belgian-White is widely available in the UK now; it is the U.S. largest selling ‘craft’ brand at well over a million barrels a year – it sounds staggering but that’s small fry compared with the size of the market. Unsurprisingly, many bemoan this beer too as a result; criticizing it for masquerading as a ‘craft beer’ when it’s brewed by a ‘big brewer’. But it’s just missing the point – this is the largest brand for good reason: it’s tasty and interesting. Unlike Hoegaarden, it’s a sweeter beer, brewed not with the addition of curaçao orange peel (a bitter, inedible orange) but Valencia orange. And oats in the grist give it that smooth, coating mouthfeel that make it a fulfilling drink. It’s recommended to be served with an orange garnish, which I shall politely refuse as it kills the head and deadens the beer’s natural aroma, but that’s not to say it isn’t a good match. My only criticism, the amount of yeast in the bottle is off putting – it’s a sludgy brown colour and very clumpy – whereas normally, I swirl the yeast into the beer, here I was careful to avoid doing that as it made the beer sludgy brown in colour too. Despite this, you get the feeling that with the resources of Molson Coors behind it, this boutique brand is really a sleeping giant.

IMG_1273There’s home based competition though. Living in the Midlands, you don’t see Camden Town’s beers that regularly; so it was a pleasant surprise to find a bottle of Camden Wit up here where the air is thin. Camden is a brand savvy company, but they can clearly brew great beer. The Wit exemplifies this: it’s an enticing beer. Balanced and zesty with just the right touch of hop bitterness; the beer has a good ‘structure’ – forming and retaining a bright, white head with a nice texture and a lemon peel tang. There’s just a good enough slug of yeast in the bottle to give a snippy, lively carbonation and a zippy mouthfeel. Perhaps just a touch more alcoholic body is needed, but let’s not split hairs, it’s a grand beer nonetheless. It left me with the desire to take a trip underneath Camden’s arches to investigate more.

And yet, and yet. Whenever I drink this style, I am taken back. To those gentle, rolling hills; to the verdant fields and narrow bricks. To a farmhouse brewery. To Limburg: and to a hamster on the label.

© Beer Tinted Spectacles, 2014

The thorny issue of ‘craft’

Over a quiet beer or two, I have been wrestling with a dilemma.  Actually, no, that’s not right, as a dilemma is something you can’t satisfactorily resolve.  Rather, a thorny issue:  when is craft craft or not craft?  To stretch it further, are big brewers who sell ‘craft’ beer simply responding well to the drinker trends in the market, or are they being just plain crafty?

The Motley Fool ( – a network of bloggers offering advice and gossip on companies and share performance – recently penned an article on US craft beer sales. It made for interesting reading:  although craft beer is only 6% of the market place, they are growing strongly, up 14% in the last year according the American Brewers’ Association – in an overall market where per capita consumption is declining.  Interestingly, the big brewers’ performance within this was marked. Miller Coors’ Blue Moon brand grew by 50% between 2009 and 2011, and Leinenkugel’s grew by 20%.  Anheuser Busch is also a player. They have bought Goose Island and also launched their own craft brand, Shock Top, the latter growing 70% year to date*. In comparison, more established players – the genuine craft brewers it is argued – are growing much more slowly.

Raspberry WheatWe drank Shock Top Raspberry Wheat in the Salty Dog in Sarasota – with no idea it was an ABI beer. Inspired marketing or a confidence trick?

There are two really interesting dynamics going on here.

First, that there is a debate going on about ‘craft’ at all.  Big companies get big for a whole host of reasons – luck, daring acquisitions, market expansion, exploitation… and brand building skill.  If they spot an opportunity to sell brands to drinkers, they’ll do it, and endeavour to do it with scale.  As far as I’m concerned, if a drinker is happy that a beer is a craft beer, then whether we agree on principle or not becomes purely academic: it is. Get over it, and start competing.

Second is the debate about what constitutes craft?  The answers are invariably couched in a hotchpotch of measures: volume brewed; use of adjuncts purely for taste, independence.     This is missing the point – a point bigger than beer. What manifests itself in beer as ‘craft’, is a slew of market trends impacting right across food and drink products: national, regional, local, provenance, authenticity, passionate producers, natural ingredients, interesting tastes & textures, original recipes – I could go on.  It’s popping up in tea, coffee, wines & spirits, across all foods from fresh meat and veg to ready meals and snack foods.

So what’s the connection?  These trends are tapping into our desire to emotionally connect in some way to our roots – however we define them as individuals.  This could show itself as national pride or local knowledge; it can show itself as truly authentic or re-interpreting the past, but importantly it doesn’t define itself by scale.  Look at Rachel’s Organic or Yeo Valley – organic, touchy-feely, yes. Niche – no. Or Tyrell’s Crisps, Red Sky or Kettle Chips.  Made from potatoes (not substitutes), interesting natural flavours, lovingly fried in kettles, yes. Niche – no. Or Sam Adams, Blue Moon, London Pride, Doom Bar – interesting, unusual, brewed with care? Of course.  Niche – no.

It’s good news all round for brewers, but as it’s about more than just the beer – it’s great news for brewers great and small.

*Clearly, that’s in the year to the date of their earnings release, not the year to date this year.  Mind you, January sales up 70% would be no mean feat.

© Beer Tinted Spectacles, February 2013