The SOB Beer Blog
Our rants about beer and beer culture.
Who's Afraid of the Big Bad InBev?
11.17.2012 15:11 PM
Business Week’s Devin Leonard believes there is a “plot to destroy America’s beer.”
Personally, I think his fears are a bit overstated. But something fishy IS going on with beer in this country.
Take for example the story of Becks lover Brian Rinfret. He goes gaga for German imports like Spaten, Bitburger and Beck’s. (Who could resist beer from a country that has had a purity law in place since 1516?) Imagine his surprise when he realized he paid full import price for a 12-pack of Beck’s that tasted weak, fizzy and was, in fact, MADE IN THE USA. Now Beck’s is brewed in St. Louis, along with Budweiser. “It’s the same recipe,” AB InBev reassured Rinfret, but he knew this simply couldn’t be true.
One thing Beck’s should know is that you just can’t piss off a fan and get away with it. Like any sullied beer drinker, he trashed their Facebook page and griped in forums until he was banned. Nevertheless, Beck’s sales have dropped 14 percent year-over-year in September. “They are getting their proverbial asses kicked,” says industry consultant Bump Williams. “Too many customers were turned off when the switch was made,” he clarifies.
The blob-like nature of AB InBev freaks many a paranoid person right out. The group was created in 2004 when AmBev and Interbrew, owner of Beck’s and Stella Artois, merged to create InBev. The AM InBev we know today results from the engulfment of America’s Anheuser-Busch in 2008 in an unprecedented $52 billion deal. Now this massive beast owns 48 percent of the market, with ownership of more than 200 beers around the world – and counting. The company controls 69 percent of the beer in Brazil, is the second-largest brewer in Russia, and the third-largest in China.
The man at the helm of all this is 52-year-old Carlos Brito, a Brazilian-born millionaire. He’s the sort of guy who tucks dress shirts into jeans and wears a name badge even though everyone knows who he is. He doesn’t do interviews and he keeps a low profile. If you manage to catch him on the street, he gives you a dull script he has memorized ten times over and already relayed to The Wall Street Journal.
Main Street America is not exactly thrilled about his dabbling over here. Yet, the love of Wall Street investors has quadrupled the share price of InBev stock since the takeover. Over the summer, AB InBev bought out Grupo Modelo, adding Corona to their repertoire. Analysts speculate the company will make a play for SABMiller to add Coors Light and Foster’s to their lineup and boast Total World Beer Domination. Some say Brito’s end game-plan is to acquire PepsiCo, thus making him King of the Canned Beverage.
Carlos Brito is a business man through and through. He studied mechanical engineering at the Federal University of Rio de Janeiro before obtaining his MBA from Stanford University. His mentor, wealthy Brazilian banker Jorge Paulo Lemann, was known for frugality – a lesson that Brito heard loud and clear. Just after the merger, he shutdown the 277-year-old Boddingtons brewery in Manchester. A year later, he closed the Hoegaarden brewery in Belgium. After two years of worker protests and increased sales, Brito decided to keep production based in Hoegaarden after all. Even so, long-time fans of Hoegaarden say the mass-produced brew doesn’t have the same distinctive taste it once did.
When Brito came to America and acquired Anheuser-Busch, he immediately slashed 1,400 jobs. Employee perks like Blackberrys, corporate jets, and private cubicles became a thing of the past. He sold $9.4 billion in assets, including Busch Gardens and SeaWorld. He began bottling in thinner bottles, with smaller labels, packed into weaker cardboard cases.
The company also doesn’t employ the same strict quality control standards – allowing any old broken fragment of rice into the brew. (Is it any surprise competitor Coors Light has surpassed Bud as America’s #2 beer and domestic sales have slid 8 percent?) All the while, Brito nudged up the price of his beers to increase the profitability of his company.
Did you ever suspect that Budweiser’s flavor was a little different? It is. (If you’re curious how this happened, check out this awesome article at the Brookston Beer Bulletin.) Brito ditched long-time ingredient suppliers to save a buck. They cut purchases of Hallertauer hops grown in Europe. Of course, Budweiser adamantly denies that there have been any recipe changes. Evidence to the contrary would be damning. Now it’s all just hearsay, although a former AB InBev executive confirmed that the company has saved $55 million a year by substituting cheaper hops.
Don’t get too cushy with your craft brews either. InBev is coming for them too. In 2011, “the blob” swallowed the small Goose Island brewery in Chicago. Three months later, the 312 Imperial Pale Ale (which was named after the area code it was brewed in) shifted production to Baldwinsville, New York. . “I have a problem with a craft beer like Goose Island being treated like a mass-produced brand. It’s a slippery slope,” explains Graham Haverfield, beer director at the Wine Library in New Jersey.
It’s frightening to think that one man could have so much say over where our beer is brewed, how it’s brewed and how much it costs. Thankfully, the “Craft Brew Spring” bubbled to the surface to give these suits a run for their money! Also, thank heavens we have SaveOnBrew to help us find the deals, no matter what AB InBev wants to charge for their cheaply produced, mass-marketed beers.
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