Monday, October 29, 2012

How ABInBev is Destroying Macro Beer (and Helping fuel the Craft Beer Renaissance)

There has never been a beer company like AB InBev. It was created in 2008 when InBev, the Leuven (Belgium)-based owner of Beck’s and Stella Artois, swallowed Anheuser-Busch, the maker of Budweiser, in a $52 billion hostile takeover. Today, AB InBev is the dominant beer company in the U.S., with 48 percent of the market. It controls 69 percent in Brazil; it’s the second-largest brewer in Russia and the third-largest in China. The company owns more than 200 different beers around the world. It would like to buy more.
So starts this interesting piece on ABInBev and its Brazilian Chairman Carlos Brito from BloombergBusinessWeek.

There’s one hitch. AB InBev’s CEO is a skilled financial engineer, but he has had trouble selling beer. The company’s shipments in the U.S. have declined 8 percent to 98 million barrels from 2008 to 2011, according to Beer Marketer’s Insights. Last year, Coors Light surpassed Budweiser to become America’s No. 2 beer. (Bud Light remains No. 1.) Meanwhile, Brito is alienating lovers of AB InBev’s imports by not importing them. And he’s risking the devotion of American beer lovers by fiddling with the Budweiser recipe in the name of cost-cutting.
The article goes on to give a pretty interesting short history of how the Brazilian beer industry consolidated and how they essentially have conqured the global beer market - all from humble orgins, Brahma Beer (taste it and you'll know how humble).

But it is largely a hit-piece about how ABInBev has cut costs, cheapened ingredients and raised prices.  Which is meant to enrage the Bud drinkers of the world, but doesn't bother me one bit.  In treating beer like soda, ABInBev is just opening the door wider for craft beer.  It is no wonder craft beer sales are skyrocketing while macro beer sales are tanking. 

It makes me wonder if the Brazilian experience is affecting Brito's decisions in the US.  In Brazil (where, unfortunately for the beer enthusiast in me) I travel in a few days, AmBev (Brahma, Antartica, etc.) and other macro brewers have effectively shut out competition through tied relationships with bars and restaurants.  There is a nascent craft beer scene, but it is tiny and struggle to get their product in front of customers.  Not so in the US where the free market in beer is alive and well. 

4 comments:

Fernando M Pacheco said...

Hi Patrick,

I hope you find your way around humble beers here in Brazil. If you come to any major city like São Paulo or Rio, it's not that hard to find good beers, local
and imports. But be ready to pay premium price for them.

Patrick Emerson said...

Oi Fernando,

I will be in São Paulo again next week - I travel there fairly regularly these days. I find micros on store shelves in better markets (yes, quite expensive) but they are still pretty hard to find and very difficult to find in restaurants and bars in my limited experience.

I often find myself drinking Heineken which is now brewed locally and not a huge step up but I find a lot more palatable than Brahma and the like. Don't know how much the recipe is changed from the Dutch version.

Any suggestions for beers and locations in SP are welcome.

Fernando M Pacheco said...

Forget about Baden Baden, It shouldn't even be considered craft beer, since is made with malt extract, additives and it's owned by japanese Kirin.
On my blog mostocritico.blogspot.com there's a map for good beer in São Paulo. The places pinned in red are bars and restaurants.
A good place to start is at Cervejaria Nacional, only brewpub in town. Feel free to email me fermaspac[et]gmail.com if you plan to go there. I live only a couple of blocks away and it would be great to meet you for a pint.

Patrick Emerson said...

Oi Fernando,

Seu mapa é ótimo! This will help me a lot. I'll be staying in Jardim Paulista, so not too far from Cervejaria Nacional. I'll make a point of trying it out. I'll contact you, it would be fun to meet. I'll be in SP for most of November.