Wanna know why Anheuser-Busch InBev tried to buy Grupo Modelo, maker of Corona et al? Adam Davidson breaks it down brilliantly in The New York Times.
[T]he goal of the Grupo Modelo merger, the company has stated, is to gear up for the big beer fight of the 21st century. As the traditional beer markets of the United States, Europe and Japan age, the most lucrative markets will be in China, India, Latin America, Eastern Europe, the wealthier countries of Africa and other places where, every single day, millions of young consumers will buy their first legal beer. On this front, AB InBev is already facing staunch competition from Denmark’s Carlsberg, Britain’s SABMiller and Japan’s Asahi. It’s not exactly worried about Sam Adams and Sierra Nevada.
Time was that the likes of Sam Adams and Sierra Nevada were exactly the targets of Anheuser-Busch (well before InBev’s 2008 takeover). As I noted last week, the biggest of the Big Beer firms turned the decidedly Orwellian “100 percent share of mind” campaign on craft beer in the late 1990s, demanding that Anheuser-Busch distributors focus only on its products to the exclusion of other brands. The company also targeted craft beer then, as now, the fastest-growing segment of the American brewing industry through phantom crafts (Elk Mountain, anyone?) as well as through PR blitzes (most notably, the Dateline takedown of Sam Adams in October 1996). Nothing really worked, of course.
This time it’s different. Anheuser-Busch is still worried about craft beer’s market share. But it’s more worried about quickly divvying up the wider world beer market. Might this be an opportunity for craft beer?
The late, great Michael Jackson saw just such an opportunity during Big Beer’s last game of Risk. Speaking at the 2002 Craft Brewers Conference in Cleveland, Jackson noted the recent takeover of Beck’s by Interbrew (which would soon merge with InBev) and Coors’ takeover of Bass as well as the $3.6 billion merger of South African Breweries and Miller to form SABMiller. To Jackson, the consolidation was a chance for craft brewers to stake their claims to more consumers’ palates (his entire keynote address to the conference can be found here and is worth the read):
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.