Miller merger could be a good thing
The future of the industry: Article based on the keynote speech at the
Craft Brewers' Conference, in Cleveland, Ohio
You may be surprised to hear this, but I think mergers like that proposed
between Miller and South African Breweries are good news for craft beer.
It is a question of action and reaction.
Michael Jackson shows off a brewing paddle he was presented in
appreciation for delivering the keynote speech at the Craft Brewers
Conference in Cleveland, Ohio.
Quite simply, the bigger the major brewers become, the greater the number
of consumers who feel left behind, even alienated. These people want the
chance to exercise their individuality when they order a beer. They are
potential buyers of imports, microbrews and the products of brewpubs.
The first truly global brewers have begun to emerge in only the past few
weeks. South African Breweries already owns Pilsner Urquell, would like
to acquire Scottish and Newcastle, and is buying Miller.
With a relatively small U.S, presence (Rolling Rock) and a proportionally
far bigger one in Canada (Labatt), the Belgian parent Interbrew acquires
the mighty Beck's, Germany's best known export brewer. Almost as an
afterthought, it swallows the sizable Diebels, biggest producer of Alt.
These are not small beer. Interbrew, which already owned many breweries
in Central and Eastern Europe, is occupying new territories all over the
world with a view to being market leader in each This approach is quite
different from that of Heineken and Carlsberg. They are internationally
present as premium products (the beer world's answer to Peter Stuyvesant
or Rothman cigarettes), but have not so overtly sought to dominate major
markets.
As the battle to control the world intensifies, the new super-giants will
damage each other to the benefit of the micros.
As the battle to control the world intensifies, the new super-giants will
damage each other to the benefit of the micros. When companies merge, in
any business or country, two-plus-two rarely makes four. There are
usually customers who feel that their favorite product is no longer the
same, and who in consequence look elsewhere. As each brewery in the
merger may have a similar range of beers, those that sell least are
likely to be dropped. A manager running several breweries in different
countries cannot, however hard he tries, sustain local specialties
indefinitely to the same degree of individuality.
This notion of the global brewers' fallout benefiting the craft brewer
may seem Pollyanna-ish, but it has already been evident in the Nordic and
Baltic countries. Having never quite hacked North America, Carlsberg has
been building a dominant position in these countries. In precisely the
same period, Denmark has gained a beer movement, with an annual festival
and a crop of new products.
With the exception of Anheuser-Busch, which has grown organically, the
biggest brewers have sought growth by acquisition. Breweries available
for sale are usually big but less successful. Thus groups consolidate
over-capacity. They then close breweries, centralising production in
fewer plants and lengthening the road to market at a time when
preservatives and other additives are under scrutiny by the consumer. The
growth to global from national ambition also lowers the common
denominator of flavor. This is already so low that many young consumers
see aroma and flavor as being faults, distractions on the path to feeling
drunk. The same follows for "super-premium" vodkas and gin.
Making tasteless beer is not easy but the big guys have the experience,
skill, and technical knowledge to do it. They also have the marketing
budgets to persuade people that there is some point in drinking the
stuff.
Producing and promoting, a drink that looks like lemonade, or even club
soda, has little aroma or flavor, and makes people drunk, is an
invitation to restrictions on alcohol. In trying to make their products
wholly tasteless, the big brewers have devised, or adapted, Light Beer,
Dry Beer, and Ice Beer. Producing "malternatives" is even more of a
provocation to tougher laws.
Light beer is still successful. The other categories live in a
refrigerator somewhere, with Wine Coolers, Iced Tea etc. I believe that
even such "Techno Beers" and line extensions help the craft brewers, by
fragmenting the market. When I began writing about beer, there was only
one Bud brewed in the U.S. Then along came Light, Dry and Ice. Now the
consumer knows that there can be more to beer than Bud.
The big brewers made some very good specialty beers for a time, in an
effort to benefit from the success of the micros. Their head brewers knew
what they were doing, but the cost accountants and marketing people could
not think "micro".
For them, it seems to have been the road not taken. They chose "Beer as
Soda Pop". Craft brewers are "Beer as Wine". That is the road we must
take. We must stick to it, and climb higher along the way.
We have come a long way already. When I started writing about beer, there
were fewer than 50 brewing companies in the U.S. Back then, you could
count on your fingers the individual beer-brands that were not light
lagers: Champale, a couple of porters in Pennsylvania, the Ballantine and
Genny products, Little Kings, Rainier Ale, the Anchor range....
There are now more breweries in the U.S. than in any other country,
including Germany: about 1,500, making beers in more than 50 styles, many
more "authentic" than the European originals upon which they are modeled.
This is a remarkable achievement, an astonishing success story. Why don't
we tell the story?
This is a remarkable achievement, an astonishing success story. Why don't
we tell the story? Were we distracted by the opportunists who came into
the business when it was being hyped by Wall Street? Remember them? "Mr.
Jackson, I don't know much about brewing, but I know that Americans enjoy
a beer like Budweiser." I would point out to them that someone had
already noticed that market, a man named Busch. They were all going to
overtake A-B in two three or four years. They've all gone now, telling
the world that they got out just in time. It is their absence that makes
this such a pleasant conference - and the beers of Great Lakes (if only
the Conway Brothers would make their beers a bit more like Bud...).
"Everybody knows about micro-breweries," someone said at this conference.
No, they don't. I have even met people in Seattle or Portland, Oregon,
who are unfamiliar with the phrase "microbrewery". Far more are familiar
with the phrase, but unsure what it means. Or whether it is a good thing.
Some people still get a bit giggly about having been to a brewpub, as
though it were somehow not "normal" beer. Would they feel the same way
about visiting a cook-from-scratch restaurant, as opposed to a
McDonald's?
We understand the differences, because we love, live -- and no doubt
breathe -- beer. It is easy to forget that not everyone shares our
passion. Having earned my living by the pen since the age of 16, I am
passionate about writers. As a young television producer, I persuaded
James Baldwin and Norman Mailer to appear on a program. Thrilled with
achievement, I asked an aunt what she thought of the program.
"I liked the black man," she said, "but that feller with the curly hair
was a bit of a loudmouth." The names James Baldwin and Norman Mailer had
meant nothing to her. We have to allow for the fact that millions of
people drink without thinking, as though they were sleepwalking, but
could be awakened to the pleasures of good beer.
I joke about wine, but I love it. I love beer more. I could go through my
life without ever touching soda pop. Those are three categories of drink
that sell in high volumes.
First we need to persuade people to drink beer. Many of those who do
drink beer have only ever consumed a pale lager. We need to show them
that beer can mean more than that. We need to reassure them that small
can be beautiful. And we need to keep coming back to the most basic
points. I started to write a piece his week for the newspaper The
Independent, in London, then realised that I was assuming too much on the
part of the reader. I started again:
If you wanted bread with taste and texture, would you look for the
biggest-selling packaged brand, or seek out a mom-and-pop local bakery?
To accompany it with a characterful Cheddar, would you opt for an
internationally-known name on a pack of cheese slices, or would a
farmhouse producer hold more promise? To wash down your snack, would you
choose a brand-named wine made from a concentrate of unspecified grapes,
or might a named variety and vineyard better fit the bill?
Why didn't I put it that way before? I can't use the same introduction
every time, but I can remind myself that you don't have to be a geek to
enjoy beer.