Author, "Ambitious Brew: The Story of American Beer"
Monday, July 7, 2008 12:00 PM
"The InBev bid for Anheuser-Busch is only the latest chapter in the ongoing tale of consolidation, mergers and globalization that is the American brewing industry. ... So why am I -- and the Missouri congressional delegation and all those online activists -- so bothered by [InBev CEO] Brito's siege? It's not that we love Budweiser more than, say, Miller or Coors. (Well, technically, most Americans do love it more: Bud has outsold both brands for decades.) It's that we love the idea of Budweiser, or, more accurately, Anheuser-Busch. Immigrants founded the company and, in the course of about 30 years, transformed it from nothing into one of the world's largest breweries. ... That's why I love Anheuser-Busch and Bud. I am them, and they are me: a mixture of old world and new, hard work, tenacity and ambition."
Maureen Ogle, author of "Ambitious Brew: The Story of American Beer," was online Monday, July 7 at noon ET to discuss her Outlook article on the potential purchase of the biggest American beer company by a Belgian-Brazilian conglomerate, and take your questions on U.S. beer history and the current domestic brewing landscape.
The transcript follows.
Maureen Ogle: Greetings! Time to pop open a few questions and pour a few answers. (Sorry. I couldn't resist.)
For those following the action, this morning InBev formally filed its plan to force the removal of A-B's entire board of directors. The brawl is underway.
Now to some questions.
Silver Spring, Md.: I guess the people in Missouri are upset because of the potential for downsizing in this company. For the consumer, however, this would be a good thing, and would include a better choice of InBev beers in the U.S. Tastes are changing, and lets face it, Bud's only real large market is the U.S. What makes Bud so special? It certainly isn't the taste of the beer they produce. Don't tell me it's the Clydesdales.
Maureen Ogle: I'm not sure that InBev's takeover will result in a better selection of InBev beers in the US. InBev specializes in taking over and then marketing local beers around the world. Many of those beers are, frankly, interchangeable with the traditional American-style lagers (like Bud or Miller).
What we might end up with here is the Brazilian beer that is, I believe, InBev's biggest seller. But right now, even before this takeover, InBev already is selling many of its brands here through its distribution partnership with -- you guessed it -- Anheuser-Busch.
As to Missouri (and the other states where A-B has plants): A-B has a solid reputation as an employer. InBev has a reputation for slicing costs to the tiniest penny. I think people in Missouri are worried about job losses!
Dennis, Mass.: Budweiser and its marketing methods led to the downfall of many a better local beer. I have no love for Bud -- it's not very good beer.
Maureen Ogle: Ah! The crux of the matter. I won't bore everyone with 50 years of brewing history (although my book actually opens in 1844 and runs to the year 2000), but A-B is where it is in large part because of the "beer wars" that dominated the industry in the 1950s and 1960s. Its two competitors then were Schlitz and Pabst. (Guess who won?) Then Miller and Coors tried to take it on. Whoops!
But -- and this is the main point -- during those ferocious beer wars, many many many brewers went after each other's throats, all of them trying to make it into the Top Ten. Plenty of small beer-makers demolished other small beer-makers. A-B just happened to "win" the war; had things played out a bit differently, InBev might be trying to take over, say, Schlitz or Heileman or Miller. (Indeed, I gather it still has some interest in Miller.)
Washington: What would America lose if Anheuser-Busch were bought by InBev? Nothing at all. All the innovation in American brewing is happening at small- to mid-scale micro and craft brewers. Anheuser-Busch has got capacity, but not much else.
Maureen Ogle: Good question! I've been thinking about this a lot.
Yes, it's true that the dynamic action in American brewing is unfolding in the other 1,450 (give or a take a few) small breweries. (Not all of those, by the way, are "craft" brewers. Many are brewing operations attached to chain restaurants.)
And what would happen if A-B is taken over? In the short run, maybe not much -- but in the long run, I think it will cause turmoil among the smaller brewers ,who will seize the accompanying turmoil among A-B's distributors and try to parlay that into larger sales territories.
That's a short answer to a complicated (but important) question. And I'm blogging about it this week (shameless plug for my blog, which you can reach by going to maureenogle.com)
Seriously, it's the main question and the answer is ... complicated.
Philadelphia: Ms. Ogle, regarding Budweiser outselling Miller or Coors: If you will excuse me, they are the same beers. It's just like Premium and Unleaded gas -- they all come from the same tap, and if one can tell the difference, the most subtle of subtle differences, then that is simply a testament to their propensity for time-wasting. One only must travel abroad for 20 or 30 minutes to discover that even the worst beer on tap in the Schiphol Airport emasculates the best mainstream American beer. In five minutes at a Mexican bodega, one discovers the same about Mexican beers. That a foreign company is buying Anheuser-Busch ... I am doing back flips as I type.
Maureen Ogle: Yes, to some people they are the "same beer." And indeed, they're made using similar processes. But it's worth remembering that something like 96 percent of the beer sold in the U.S. is Bud, Miller, Coors, etc. People like this kind of beer. In the 30 years that the craft brewing industry has existed, it never has been able to expand its share of the market beyond about 6 percent or 7 percent.
Here's one possible explanation: Beer has two essential flavor components, malt and hops. Because of the way our taste buds are arranged on our tongues, we humans have a preference for either the hops component or the malt component. (I am a malty person myself.) So if a brewer makes, say, intensely hoppy ales, he or she runs the risk of ignoring about half the market for beer -- people like me who, whose taste buds favor malt, won't drink it. So a beer-maker like A-B or Miller has been very, very successful by aiming for the entire beer market by making a beer that's neither too hoppy nor too malty.
Sure, I prefer other beers (again, I'm a fan of Turbodog and other malt-rich beers) ... but no one's gonna get rich just making beer for me! Does that make sense?
Anonymous: Is there a pattern to which countries prefer stronger or weaker beers? Belgium has some great beers; some of them have real taste, and a few pack a wallop. Here in Brazil, pretty much all mass-produced beers are "pilsen" variety, and pretty weak, but it can't be just a matter of tropical temperatures -- most mass-produced beers in the U.S. (e.g., Bud) are weak, and temps in Brazil, at least in the south, can get pretty chilly in the winter. And Mexico, with some hot temps, has both weak (e.g. Corona) and stronger (e.g. Negro Modelo and Bohemia) beers.
Maureen Ogle: I don't think there's a pattern for taste preference, but there is a big difference in attitudes toward alcohol and in the beer cultures in those other countries.
Namely, they are more accepting of alcohol as a part of everyday life. And they (most of them) have long, long traditions of enjoying alcohol with food and as an ordinary part of leisure activity. So many of those countries have had brewing industries that consist of many small beer-makers that survive because there's a wide array of drinkers.
The situation here in the U.S. is historically different -- since the early 1800s, we've had an, um, uncomfortable relationship with alcohol. It's not regarded as just an ordinary part of our lives. Instead, we tend to demonize alcohol and drinking.
Also, we Americans came to beer late, and when German immigrants tried to persuade us to drink, we didn't want the rich heavy beers that were supposed to be sipped and savored. (That's partly because of our protein-rich diet here in the U.S.). We wanted a light-bodied beer -- like Budweiser.
I'm simplifying a complicated string of historical events and trends (which I discuss in a lot more detail in my book), but again -- the difference here is not the beer, so much as it is the drinking culture in different countries.
Now the interesting issue is this: How is the emergence of these mega-beer giants, like InBev and SA, affecting global drinking tastes and cultures? (One short answer is that when I first visited China in 1987, all the beer was truly local. When I went back in 1999, all the local beer had vanished! It was pretty much Heineken or nothing...)
Iowa: Bud has a world market -- to say its only large market is the U.S. is like saying Coke or Pepsi's only large market is the U.S. You get can get Bud in any country in the world! The U.S. beer market right now, though, is fantastic. There some great U.S. beers available that beat beers I used to drink in Europe, hands-down.
Maureen Ogle: Yes, A-B long ago turned Bud into a global brand. It's available pretty much anywhere in the world.
And yes, right now the U.S. has the most creative, dynamic brewing culture in the world. I know that seems hard to believe, but it's true. We Americans have access to more beer styles across a broader spectrum of flavor "profiles" than any other country in the world -- and those beers are domestic, not imported!
As I said in the op-ed piece, we patriots should man (or, um, woman) our barstools and drink American -- and it's not hard to do!
Washington: You said InBev might bring a Brazilian beer to the U.S. ... which one?
Maureen Ogle: Brahma! It's worth a trip to InBev's Web site just to see the amazing array of beers that the company sells around the world.
Washington: Your article is rich on factoids about the history of beer, but doesn't offer a whole lot to back up your argument that Anheuser-Busch should be sold to InBev. The only reasons you give are that the sale embodies the spirit of the American revolution, that Adolphus Busch would hire the InBev CEO, and that Anheuser bought Rolling Rock from InBev a few years ago. Do you have a more compelling justification for the sale?
Maureen Ogle: Oh, I don't want the sale to happen! Indeed, I think InBev is about to make a really stupid mistake (because if it buys the company, it effectively destroys what has given A-B its cachet for over a century: the leadership of the Busch family).
In my op-ed piece, I wasn't so much arguing for the sale as I was pointing out that once we get past the handwringing over the deal and once we accept that it's probably a done deal, well, hey, there's nothing new under the sun. This is just another brewing merger/takeover like hundreds of others that have preceded it.
But again, I want to stress that I am more than a little heartbroken about this whole thing. I'm realistic -- the world won't stop just 'cause my heart's breaking. Carlos Brito doesn't care what I think.
But the historian in me just couldn't help point out the ironies in the situation.
Alexandria, Va.: The only American beer I like is Corona. I always have wondered about the taste buds in St. Louis and Milwaukee. The best movie made about beer was "Smokey and the Bandit." Do you remember when drinking Coors had cachet?
Maureen Ogle: Speaking of Coors, now there's a great example of what happens when a brewer gets too big for its britches. The Coors family decided to try to cash in on that regional mystique -- and they ended up all but destroying the company.
It's a fascinating episode, and one I cover in detail in the book (which is why I won't bore everyone with it now) but it's one of the better cases of the past offering a guide to brewing's future.
Washington: Interesting to note that many of the commenters are ignoring the economic implications of the sale (like you said, InBev cutting jobs) because they are snobby microbrew drinkers. Me, I can taste the difference between Bud and Miller, and I do enjoy drinking mass-produced light American beers as much as I enjoy a nice microbrew. I guess I really am an outlier.
Maureen Ogle: Nah, you're not an outlier. You're ... eclectic in your tastes! Like me. Because I enjoy Bud -- and Abita Turbodog and Anchor Liberty and Saranac Adirondack Lager and just about any oatmeal stout I can lay my hands on.
By the way, many people can and do taste the difference between Miller and Bud. That's because there is a difference in the adjuncts added to the brew vat. Bud is made using rice and Miller is brewed using corn. I definitely can taste the difference.
Herndon, Va.: Ms. Ogle, I can't get too worked up about "them furriners" taking over A-B. Growing up in Nebraska and attending the University of Nebraska in the 1960s, I well remember all the small regional or "one-state" breweries being swallowed up or disappearing as A-B and other megaliths dropped their prices on their way to total market domination. Side comment -- one owner of a dying local brewery, when asked about "light beer," responded with "you want that (crap), then take my beer, pour it in a glass to two-thirds full, and top it off with water!"
Maureen Ogle: I have a funny quote in the book about light beer. Joe Ortlieb, then president of the now-defunct Ortlieb Brewing in Philadelphia, hated the whole light beer "craze," which is what many people thought of it back in the 1970s.
He ran a TV ad that showed Joe standing next to a bottle of Ortlieb, a glass half-full of beer, and a pitcher of water.
"This is how we make light beer," he'd say, and then he'd pour water into the glass. And then he'd look at the camera and say "now that's why we don't make it."
Beer in China: Got to disagree with you on local beers disappearing in China. I traveled throughout the country in 2003, and in every city I visited I drank a different local (or perhaps regional) beer. Sure, the beers were mass-produced, and they all were relatively light, but there certainly was regional variety.
Maureen Ogle: Really? That's great news. Because I'm telling you, we were all over the country in 1999 (I think that's the right year; maybe '98), and even in tiny isolated villages -- there was Heineken!
Philadelphia: It's a bit off-topic, but it seems a bit unusual (but awesome!) to have a woman cover beer. Have you found that to be the case? What sort of responses do you get when people find out that you write about beer? How did you become interested in the subject?
Maureen Ogle: Hey, it's beer-related! It's not off-topic.
Here's the truth: In 2001, I was casting about for a new book topic (I'd just finished my second book, a history of Key West). I wracked my brains and came up empty. Nada. No good ideas.
Then one day I was driving down the street, thinking about nothing in particular. A few blocks ahead a red truck rolled past my line of vision. And my brain said: "Beer. Go home and write a history of beer in America."
I knew right away it was a good idea, so I figured it had been done to death. I was thrilled to discover that, really, no one had ever written a substantive history of beer. So I dug in.
I should add that at the time I didn't drink beer and knew nothing at all about it -- not even what it was made of -- and knew nothing about its history. But I prefer that perspective: I'm a blank slate. I have no agenda. It's all new to me and I learn as I go.
Craft Brewers: Maureen, I know that A-B bought a big stake in the local Old Dominion Brewery out in Ashburn. Is A-B's strategy to buy up a lot of the smaller craft breweries like Old Dominion? If so, they are going for world dominance, it seems to me. Any idea what the new owner would do concerning a new strategy?
Maureen Ogle: A-B owns stakes in Old Dominion, Redhook and Widmer, and its reason for doing so is simple: It wants access to the craft-beer "niche," to that segment of the market.
Why? Because a bottle of, say, Widmer, returns more profit than a bottle of Bud. That, by the way, is why A-B's distributors have been getting restless of late: A distributor wants those higher-profit brands on its trucks, and they don't think A-B is being aggressive enough in tackling that segment.
I don't know what InBev will do with those brands. If it's smart, it will hang on to them and go after even more. But: if Miller/Coors is smart, it will do the same thing -- which is why I think there are going to be a lot of mergers, takeovers, etc., in the craft segment. Those guys are valuable properties to these big giants.
Burke, Va.: Ms. Ogle: What do you take from the trend of the major brewers trying to dip a toe into the "tastable" beer markets -- either by buying up micros or by coming up with their own products that actually have taste?
Maureen Ogle: I think they don't have any choice. Brewing is an insanely competitive biz, and beer sales have been flat for fifteen years now. The giants have to do anything they can to compete.
Oddly enough, back in the early 1990s, when craft brewing was about 10 years old, the major brewers tried their hand. Most gave it up (especially A-B) as a lost cause. They just didn't take craft brewing very seriously back then.
I suspect they regret it now! By the way, the two success stories in that regard were Coors's effort with Blue Moon, which is still around, and Miller's purchase of Leinenkugel, which proved to be a good move for them.
Herndon, Va.: Ms. Ogle: "Regional mystique" is always a big factor. When living in Kansas City, Mo., in the early 1970s, I found myself obliged to stop in Kansas, when driving to visit relatives in Nebraska, to pick up Coors (then sold only as far west as Kansas). Before coming back, I had to pick up Olympia (sold in Nebraska, but not Kansas and Missouri) for friends who thought it was "special."
Maureen Ogle: Oh, boy, the regional mystique is a huge factor. And that's why I think Dick Yuengling is the smartest guy in brewing right now -- he's the only beer-maker out there who never has tried to go national. His beer is only available along the eastern seaboard.
Now why would he do that? Because he watched Coors, Olympia, Rheingold and a bunch of other brewers go bankrupt when their owners tried to turn regional mystique into national sales. Bad idea -- very bad idea!
$17 A Bottle?: Maureen, why did a bottle of Bud cost the equivalent of $17 today way back when? And why were people willing to drop that kind of money for one bottle of beer? There's not a beer made today that I would pay anything close to $17 for -- not even at Nats Stadium, where a brew costs an outrageous $7.50.
Maureen Ogle: Because of the ingredients! Yes, I know that's hard to believe, but at the time Carl Conrad insisted on imported Saaz hops and he also used rice, which made the brewing process more expensive because it was a lot more complicated. I know that sounds goofy to us now, but it's true.
By the way, all those adjunct-based beers back then were the "premium" beers of their day. Odd how that has changed...
Washington: "Bud is made using rice and Miller is brewed using corn." I'm wondering, is this historically true? Because as you mentioned, many of our big brewers were started by German immigrants. If only they'd have followed the Rheinheitsgebot!
Maureen Ogle: No time left to explain why, but yes, this began here in the U.S. in the 1860s and 1870s. I explain why in the book, but the short answer was that Americans then wouldn't drink all-malt beers!
Arlington, Va.: The true holy grail of beer lovers in my opinion is cask-conditioned beer -- that is fresh beer out of casks that still have live yeast. It's disappearing out of the U.K. somewhat, but a few places around here have it, and it is delicious! Was it ever common in America? If not, why not?
Maureen Ogle: Cask-conditioned beer was never popular here -- well, not until recently. That's because Americans never drank much beer until the big wave of German immigration in the 1840s and later -- and Germans made and drank lager, not ale.
I know that seems counterintuitive. We all have this image of the Founding Fathers downing ale. But in fact, colonists drank relatively little beer, and preferred rum and cider. Why? Because those latter two were much less labor-intensive -- and that mattered in the colonies, where labor was in short supply.
Carlisle, Pa.: It is telling that we as a nation are so bothered by a multinational company taking over one of our own, yet we feel no remorse when a U.S. company takes over a foreign one. We want the world to accept American companies with open arms -- but when they come here, that's a different matter.
Maureen Ogle: Isn't that the truth? When I step back and look at this whole InBev affair, it's a good reminder of just how complicated life really is.
I mean, there's the American icon issue, the globalization angle, the weak dollar angle ... just about any stance anyone can take ends up oversimplifying a really complex set of issues.
Washington: Back when I lived in Belgium and Germany, I decried Interbrew (InBev's predecessor) for its lackluster products like Jupiler and Stella Artois (much like my disdain for Anheuser-Busch and its lackluster products), but to be honest, InBev can do a lot of things that other distribution companies can't. I've learned this since returning back to the states. Today, I can get Hoegaarden and Leffe at nearly any liquor store or bar -- what used to be a very rare occurrence is now commonplace thanks to InBev's distribution network seems. Anheuser-Busch stockholders would be negligent to not take this into account.
Maureen Ogle: Yup. This comment is a great example of what I mean by the complexity of the issue: there are winners and there are losers, but which is which depends entirely on your point of view!
InBev has in fact introduced a slew of beers to the U.S., Stella being the obvious example. (Personally, I can't stand Stella. I do not get why people like it so much. But that also just proves a point I'm always trying to make: Beer itself is so relative. What I think tastes great, you may think is swill.)
Washington: If InBev is successful in taking over Anheuser-Busch, will it change AB's beer brands' recipes to make them actually taste good, or will they remain undrinkable?
Maureen Ogle: I very much doubt InBev would alter the recipes, or at least not anymore than A-B itself has done over the years. Consumer tastes change constantly, and most beer-makers tinker with their recipes to accommodate those tastes.
As to whether, cough cough, the beer will remain undrinkable ... well, that depends on what ya think tastes good!
Washington: Honestly, why should I care whether InBev takes over AB? AB and its distributors have been borderline terroristic (or at least monopolistic) in the way they treat craft brewers. Their involvement with brewers such as Redhook, Dominion, Goose Island and others has resulted in a homogenization of the craft segment that makes it less interesting. Why should a dedicated craft-brew drinker like me care about this?
Maureen Ogle: I think I sort of addressed this earlier, but you asked it in a way that gets to another point: Why should craft beer drinkers care?
Because I think that InBev's presence is going to cause a lot of short-term upheaval and I predict that many craft brewers will try to seize that upheaval and engineer their own expansion. So it's possible -- indeed, likely -- that craft brewing will feel the impact. Maybe not immediately, but it will be felt. (I'm discussing this topic all week at my blog.)
Washington: Could this lead to a cheaper Belgian-style weise beer or hefewiezen? The cheapest ones I know are either very local or Blue Moon. I'd love something cheap and universal to most bars.
Maureen Ogle: Have you tried Widmer Brothers's weise beer? It's not bad at all.
Washington: I don't think Yuengling is the only beer not to go national ... you can't get Fat Tire east of the Mississippi, and its all the rage out West.
Maureen Ogle: Sorry. I was typing to fast. I meant of the old, mainstream "big" brewers (not, mind you, that Yuengling is "big" compared to A-B or Miller/Coors).
But on that subject: many many many of the craft brewers -- like the folks who make Fat Tire and Dogfish and Abita -- are trying as hard as they can to create national markets. A few years ago, Fat Tire was only available in a few states. It has expanded its territory significantly in a short time.
That's because it managed to wrangle distribution deals. That -- the distribution system -- is what's going to feel the impact of the InBev takeover. That's where and why the craft brewers will feel this.
Arlington, Va.: What does it mean to file a motion to remove the board of directors? That seems like grandstanding, and not something that will be effective.
Maureen Ogle: I gather it's a way to use a legal mechanism to move the deal forward: InBev can argue that A-B's current board is not satisfying the stockholders. If the court (or whatever entity rules on this stuff) agrees, InBev would be able to replace those directors with people who are in favor of the InBev takeover.
It's just another move in a complicated game....
Madison, Wis.: InBev's stock continues to plummet and its brands sales are drooping as consumers cut costs ... how long can this bluff by InBev's CEO continue before his own company crashes and burns?
Maureen Ogle: Good question! I'm fascinated by the fact that, as you say, InBev's stock is spiraling downward. Plus, I still say that if Brito and InBev succeed, they're in for a rude awakening, because the removal of the "Busch factor" from the equation will diminish the value of A-B. History has shown that over and over and over again.
Should I Care?: Hi Maureen. I liked your article. Though I am not a big Bud drinker, if I was, why should I care who owns the company? I don't imagine Bud will go away regardless, right? Why the big fuss then?
Maureen Ogle: Partly I think it's the timing: The economy already feels like it's going to hell in a hand basket, and now someone wants to buy a legendary American company.
I'm bothered by it in part because I love the idea of this one family running the show for six generations. That's amazing! But: you're right. In the long run, it's a corporation and the ownership doesn't matter. Except I still think InBev is gonna destroy the company...
Washington: A lot of local breweries in Europe are being swallowed by the large corporations. Will this trend happen in the U.S.? We have so many wonderful microbrews that, as far as I know, remain independent (such as New Belgium, Dogfish Head, etc.).
Maureen Ogle: Ah! Now there's the $64 bazillion question: Will the independents remain independent? The short answer is, some won't. Some of these have become very attractive to larger brewers. Also, a couple of other things that will roil craft brewing:
Some of those microbrewers who've now been at it for 25 or 30 years will start thinking about retirement, and it's not clear at all what they will decide to do with their companies.
Also, brewers are being clobbered by prices. Barley and hops are both at record high prices, in part because of severe shortages. Some of those independents simply won't survive. And when they close their doors, some other, more stable beer-maker will grab the plants and maybe even the brands and use those to expand their sales -- which will put more pressure on other independents.
Detroit: Isn't InBev just taking advantage of the weakened dollar in making an offer that would not have been possible but for a favorable Euro exchange rate?
Maureen Ogle: Definitely! InBev competes primarily in small, "underdeveloped" countries, but all of a sudden, thanks to the weak dollar, it's got a chance to grab a bigger share of an aging, "mature" beer market.
McLean, Va.: If A-B is taken over, what might happen to its captive craft breweries, Red Hook and Dominion?
Maureen Ogle: Somewhere in all these replies, I talked about this, but the short answer is: No one knows. If InBev is smart, it will hang on to them. If InBev puts them on the market, you can bet that some other, smaller, craft brewer will try to grab them. That's now little companies become giants.
Budweiser overseas?: When I visited Ireland a year ago, I was surprised to see Budweiser on tap in several pubs. I was surprised that the Irish would drink such a weak fizzy beer. But I was told that it wasn't American Budweiser, it was a Czech beer named Budweiser.
Maureen Ogle: There is a Czech beer called Budweiser -- Carl Conrad used it as his inspiration for Bud. The Czech company and A-B have wrangled with each other over the name for a century. I've lost track of where they are now!
Fredericksburg, Va.: Living in Germany for six years in the early '90s, I often was amazed to see German and other NATO soldiers buying Bud by the case in the local PX. In Germany -- beer heaven! I finally inquired as to why, and the response was "we can drink a six pack of Budweiser and get a slight beer taste without getting the least bit drunk." Budweiser -- the first unintentionally light, nonalcoholic beer!
Maureen Ogle: Oh, that's funny! But the fact is Bud did have a lower alcohol content, thanks to American laws back then. It only has been recently that many states have started to allow manufacture and sale of beers with more than about 3.2 percent alcohol content. So those GIs were drinking cheaper beer with a lot less kick than the European stuff.
Arlington, Va.: While I freely admit the Bud and Bud Light products are not on par with microbreweries (like Victory for example), Bud does represent something American -- it is apple pie, NASCAR, the troops overseas. To most people this isn't about business but about the desire to keep an American Icon the way it is. It's not like AB is going to go bankrupt without a sale, and not every business needs to be available for purchase.
Maureen Ogle: I couldn't agree more! Sometimes smaller is better, if you know what I mean.
On the other hand, A-B has shareholders breathing down its neck, and there's one thing about shareholders: They want instant gratification.
Alexandria, Va.: What do you think about the rise of Sam Adams? Are they considered one of the Bigs yet? And do you think they will benefit from the Anheuser-Busch sale? Thank you for taking my questions.
Maureen Ogle: Sam Adams, which is owned by Boston Beer Company -- which was founded by Jim Koch (who is still the major holder and CEO) -- is the classic example of the "craft" brewer that made it big.
He's a very smart guy, and he'd like to expand. He'll be looking for A-B distributors who are worried about the InBev deal. My guess is that he'll be doing some serious growing once this deal goes through -- or at least he'll try to use the opportunity to grow.
But he needs to be careful. If one of the giants decides to squash him flat, well...
Falls Church, Va.: Would InBev continue to pursue sports advertising with the same intensity as A-B?
Maureen Ogle: I'm sure InBev would stick with the current deals and probably try for more. If nothing else, it probably would try to promote televised soccer (the Brazilians being people who know a thing or two about soccer).
What's the name of those Belgian horses? Percherons? Maybe the Clydesdales would be retired in favor of Belgian horses!
Pacific, Mo.: No one is talking about the downside of Carlos chopping up Anheuser and selling off bits and pieces. He will need to do so just to recover the $40 billion-plus in debt he will generate. Why is this a good idea? Anheuser has, for most of the past 40 years, provided excellent return on your investment. What company has not fallen on tough times in that time frame? Let Anheuser's current board run the company, and profits will rise without$ 40 billion in debts.
Maureen Ogle: Amen to that. Yes, I agree: For all Brito's talk about how he'll leave the company intact, well, I'm not buying it. (No pun intended.)
And I think the value of the company will plunge after the takeover,and then he probably won't have any choice but to chop it to pieces and sell it off. It's really very distressing!
Washington: I am one of those microbrew snobs that doesn't really care for Bud, but any fan of beer cannot be excited about this potential buyout. A-B has managed to assemble the most efficient distribution network in the world, and thanks to it Americans are able to taste some of the greatest American beers from all across the country. From what I can tell, InBev is not nearly as great at distribution (as evidenced by 14-month old Becks on store shelves here in the states), and I would expect the same nonchalant attitude toward distribution after the purchase -- which would mean a beer that we now get a couple of weeks after finishing will take months, degrading the taste.
Maureen Ogle: Oh, the distribution system -- that is going to be the key to InBev's relative success or failure, because yes, A-B has an extraordinary distribution system, and has had one for 75 years. But in the past 18 months or so, some of those distributors have been very unhappy. They're the people to watch. They are going to be major players in this affair.
Falls Church, Va.: Isn't Miller already owned by a South African concern? (This may be in your article, but Outlook sometimes doesn't get read till lunch on Monday ... or Tuesday...) And whatever happened to my favorite regional beer that destroyed itself by going national, Stroh's?
Maureen Ogle: When the Stroh family self-destructed by, as you say, trying to go national (an event that I describe in the book), that brand ended up in, I think, the Kalmanovitz portfolio (that's the outfit that took over and destroyed Pabst). But like a lot of brands, it no longer had any value.
Yes, Miller is owned by SAB, and SAB recently merged its North American Miller ops with Molson-Coors's North American ops, to create Miller/Coors.
Interesting side note: The people at Miller werethrilled when SAB acquired Miller from Philip Morris in 2000 (2001?) They were so happy to have a (gasp) brewer take them over, because PM never really had any interest in beer as beer...
St. Louis: First, Maureen I would like to say thanks for writing a good article. I believe in many of the things you have stated. However, I must say that if InBev buys out Anheuser-Busch it is not just St. Louis that will be hurt, but all 12 of the A-B breweries, their distributors, the parks, the history and the heritage. It is proven that InBev does not stick to their word and does what is in the best interest of their shareholders.
The reason InBev wants A-B is because their stock is starting to decline, so they need something to jump-start it again. Purchasing A-B and slashing into the books to make the company appear profitable is what InBev will do! If you look at A-B's stock history it is proven that they are very profitable alone. Their shares actually increased nonstop from the early 1980s until 2002.
However, if you look at the dollar, it continually has decreased since 2002-2003, which is the same time period A-B's stock has become what some call stagnant. If you look at the latest statistics concerning the best beer brands in the world, A-B has the top two -- No. 1 is Bud Light and No. 2 is Bud -- and it also has 4 of the top 10. That's pretty impressive for the No. 3 brewer in the world in the second-largest beer market in the world!
I would like to add a comment concerning some of the previous comments concerning craft brewing. My comment is that A-B actually has microbreweries at some of their main breweries to develop craft beers, which they test to see how well they perform, although many people will not taste them because they only are distributed in certain markets. I also don't think some people know that A-B in St. Louis (and probably at their other breweries) helps some of the smaller craft breweries obtain their ingredients for their craft beers.
Maureen, I have tasted several beers from InBev (I realize they have 200 brands compared to A-B's 80 or more) and I've traveled all over the world trying various local beers along the way. I enjoyed some but found many were poor quality. I believe InBev actually would hurt the overall American appeal to some beers -- mainly Bud or Bud Light because of their heritage -- although it may help more with local craft beers or Miller (because people do not feel obligated to drink American, which is what SABMiller CEO wants). I guess I'm attached to my American beer when I drink it, and I don't want anything to happen to it. Also, do you believe InBev can do anything to implement new beers that would appeal to American tastes that we as Americans can't do ourselves, considering brewers from all over the world come to us for help?
Maureen Ogle: Oh, lots there, and I'm not sure I have time to respond to all, but re: the question about what InBev brings to the table as far as brewing goes, I think the answer is nothing.
Because you're right: A-B runs one of the world's finest breweries -- meaning a place where people tinker with ingredients and yeast and so forth -- and I doubt InBev gives a damn about it.
A-B has invested a lot of money in the past few years working on "craft" beers. It faces a challenge, of course: how to break into a market whose consumers hate "big" companies. But it also has to figure out how to make the wide array of beers that craft brewers do without using up all of its vat capacity (because of course it still has to keep making its "regular" beers).
A-B definitely is not the bad guy that many people think it is. The people at A-B care about beer and brewing. That's what's going to be lost if the company is sold. All American beer-makers will lose a friend in the business. I know that sounds hard to believe, but it's true...
Washington: Can South African Breweries takeover of Miller offer a glimpse at the possible future A-B faces if InBev manages to force the sale? As far as I can tell, little has changed since Miller went from being a Milwaukee-based company to a Johannesburg-based company. So is all this hand-wringing much ado about nothing?
Maureen Ogle: The big difference is this: Philip Morris took over in 1969 and 1970, and Miller since then has been just another corporate beer-maker, which is why it never since has been able to compete with A-B. (A-B, by the way, makes about 105 million barrels a year; Miller makes about 40. Miller and Coors combined now make about 60.)
I think part of A-B's edge all this time has been the fact that it was a company focused on the beer and on the heritage. Don't discount the value of the continuing presence of the Busch family. Without them, A-B will become just another Miller.
Maureen Ogle: Sadly -- and I am sad -- I've gotta go. I have an appointment. I wish I could keep answering questions, but...
For all of you who shared your ideas, thank you so much. As I noted earlier, I am blogging about InBev, craft brewing, and the future. I'm going to try to incorporate some of the unanswered comments into my blog posts.
And for more information (okay, maybe more than you want) I hope you'll read "Ambitious Brew." It's out in paperback now and readily available.
Again, thanks so much for this lively experience. It's great to have a chance to "talk" to readers.
Okay, patriots: Grab a beer and man your barstools!
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