News From, you know, Around

InBev purchases Anheuser-Busch. St. Louis headquarters will become North American headquarters of Anheuser-Busch InBev. All breweries will stay open. For now. Of course, InBev is famous for slashing payroll and cutting jobs while niche-i-fying every brand. Unfortunately, by sheer fact of being bought out by a global monolith Anheuser Busch loses its niche-defining quality - namely that it is an American beer. Others anxiously wonder what will happen with A-B's marketing team. The buy-out leaves Pabst and Sam Adams to fight over banalities that make each uniquely qualified to lay claim to America's #1 Brewery.

MillerCoors to split baby. A few months back Miller Brewing Company (owned by SABMiller) and Coors agreed to join forces under the US entity MillerCoors. Of course, much blood was spilled debating where the world headquarters of this beast would be. Coors aficiandos argued that Golden, Colorado was the only place that made sense. Miller freaks pointed out that Milwaukee was better suited. Well, the board of MillerCoors has decided that Chicago is the place. The Milwaukee and Golden offices will remain, but administrative positions will be replaced by increased brewing jobs as the breweries in each city will re-tool slightly to brew each other's beer.

Unsurpisingly China produces the most beer. In other news: water is wet. China has 1.321 billion people - good for 20% of the world population. Well, it turns out, China produces 22% of the world's beer. Not surprising given the cost of labor there makes manufacturing less expensive than in Europe or the US. The top four beer producing nations are China, US, Russia and Germany (in that order).

Finally, back in May, the Wisconsin Supreme Court ruled that bars can do what the state or municipalities ask them to, even if the bars aren't specifically told to do it. The basic gist was that, based on concerns about drink specials on Friday or Saturday nights contributing to binge drinking in bars near the UW-Madison campus, the state of Wisconsin and city of Madison made it known that may, you know, if ya want, you can stop doing that. No laws. No regulations. Just a vague hint. So, in a move that surprised no one, all of the bars simultaneously got rid of their drink specials. Of course, sensing some collusion, some helpful residents sued the bars for acting anti-competitively. Well, the Wisconsin Supreme Court said, these bars are actually exempt from antitrust liability because the city of Madison said "pretty please" which basically coerced the bars into banding together to screw the customer and do nothing to actually stop binge drinking.

The Big are Getting Bigger

So, if you're in the brewing or distribution industry, raise your hand. OK, you can put them down. If you're an afficianado, raise your hand. OK, thanks, you can put them down, now. If you've randomly stumbled across this site and will be leaving soon, raise your hand. Oh, already left. Right. Well, not that it matters, I can't see you anyway. I was just trying to gauge whether anyone actually cares about this whole InBev-AB thing.

If you're wondering who "InBev" are and what "AB" is, you can find out here and here, respectively. Needless to say, this aggregation would create the largest brewing entity in the world and the fifth largest consumer products company in the world. The news broke about this beast of a transaction early last week and I've put off commenting about it for now.

But, now it appears that SABMiller is getting in on the action. While Bud is mulling its options, Miller has said they would welcome a "partnership" with InBev [cite, via the omnipresent Brew Blog], and InBev appears to be taking this seriously. It appears that this SAB-InBev move may just be a play to force A-B's hand; surely such a merger would be dark days indeed for Bud. Or at least on an international stage.

And, that's an interesting dilemma for Budweiser; by foregoing this merger, Anheuser-Busch would basically be saying "Damn globalization. We are OK with the American market and we think anything more would dilute our brand. The rigors of being under InBev's bland-marketing thumb would sully our reputation. We have a reputation for quality product and quality service and we are unwilling to compromise that reputation for the prestige of a larger global identity. We are perfectly happy being the number one brewery for the number one country in the world, and we think that's good enough." Because the fact is everytime InBev takes over a brewery, they cut marketing budgets in that organization in favor of a centralized marketing system that emphasizes the niche that each brand can fill. I suspect Budweiser's niche would be the "hard working, beer as sustenance, male" niche. Which, granted, is filled all over the world, not just here in the U.S.

It's funny because I'd never really thought much of Budweiser. I've never really liked Budweiser, and while I went through a brief "Bud Ice" phase, I've mostly been an MGD person for my swill of choice, though lately it's been PBR and/or High Life. But I was talking with an ex-tavern owner over the weekend, and he made an interesting comment. He told this story about a friend of his who had stopped managing his own tavern and took up with the Budweiser distributor. This friend would ride along when the distributor was dropping off the A-B products and would talk to the various tavern owners and managers. The guy would ask how things were going, whether the distributors were treating the tavern owners alright, whether the managers were happy with how the product was selling. Typical tavern chit-chat. And then, three times a year the tavern owner would get a survey from Budweiser asking many of the same things. If anybody marked any response with a "3" or lower (on a 5-point scale) Budweiser would call and ask why; they at least listened like they cared. I thought that was interesting. But what I found most interesting was this: A-B was the only one doing it; not Miller; not Coors; not Pabst. The tavern owner I was talking to said he sold primarily Bud for that very reason; he told the other brewers and distributors that if they would do that, he would be happy to sell, but that alone showed a dedication to customer satisfaction that none of the others seemed interested in pursuing.

Of course, that's hearsay as far as all of you are concerned. But, it does make this point: Budweiser will no longer provide that kind of dedication to customer satisfaction if they are purchased by InBev - and that's a shame.

But that's also a lesson to be learned for all of the craft breweries. It is a way to differentiate yourself. Customer service that the big guys are simply too big to provide. Go on ride-alongs with your distributors and talk with your retailers. Get out to the pubs and talk with the people drinking your beer. Get out to the grocery stores and thank your buyers for purchasing that six-pack. Support your community events. Many of the craft brewers I talk to here in Wisconsin are already doing this and that's why I think we have such a strong and vital brewing industry here. Not only is it a state that has an innate desire to drink local, but it's further ingrained by the breweries here being active in their communities and giving back as much as the communities give to them. The More You Know.

Well, heck, this was kind of an old-school post - it got pretty far from where I thought it would go when I started writing it, but that's alright. This point is perfectly as good as the one I was going to make about the need for small breweries to band together in informal, or formal, organizations and pool resources to help each other where they can. For example, a buying group to buy in bigger bulk to get price discounts and reserved quantities for grains and hops that all of the members need to buy anyway. For example, an advertising group to place general advertising that benefits the group (e.g., "Milk it does a body good." or "Pork, the other white meat." or "Wisconsin craft beer, we aren't just Leinenkugel's anymore.") I'll write some other time about how I'm amazed that the craft breweries aren't doing this stuff.

By the way, sorry for posting a day late - while I was able to get a post up on Monday, the holiday threw off my schedule. See you tomorrow, too!

Audience Participation: Lifting the Couch Cushions and Looking Under the Driver’s Seat

Who knew there was such a thing as "premium" light beer? Or, more precisely, who knew that Miller Lite is considered a "premium" anything?! But, it's still an interesting question.

Given the economic downturn, and beer's status (particularly craft beer's) as a luxury item, will people start turning to beers like Busch Light, Old Milwaukee and Milwaukee's Best instead of drinking Dogfish Head 120 by the case? According to Miller Brewing's henchman over at Ye Olde Brew Blog, "wide price gaps can encourage people to trade down."

Currently, the going price for a six of New Glarus Seasonal seems to be around $7.99; a case of the stuff will set you back a cool $32. Compare that with $17.49 for a 30-pack of Busch Light. A price gap of $14.50. The price gap between Miller Lite, a "premium light beer," and Busch Light, presumably not a "premium light beer," is $4.33, up from only $3.94 a year ago; and Miller is worried about defectors.

So, is a widening a price gap going to make you change your beer drinking habits? If not, what price reducing tactics, if any, do you intend to take?

Here at MBR we're hoping to get more free beer.

By the way, who determines whether a beer is, or is not, a "premium" light beer? (That's a serious question. If you know the answer or have a marketing data sheet breaking down beer into such categories, I'd love to see them.)

The Jacob Leinenkugel Brewing Company

Leinies. If you are from the Upper Midwest you know all about The Jacob Leinenkugel Brewing Company. Practically every person I talk to, including myself and people old enough to be my grandparents (and probably those old enough to be my great-grandparents), had a keg of Leinie's Red at their 21st birthday party. It is a rite of passage, and has been since 1867. It is the Upper Midwest.

But, there is a dark side to The Jacob Leinenkugel Brewing Company. It is owned by Miller Brewing Company. And Miller Brewing Company (soon to be called called MillerCoors), in turn, is owned by SABMiller, one of the largest beverage conglomerates in the world with over one hundred beer and beverage brands in its portfolio.

Such corporate ownership is not, inherently, a bad thing. A number of great beers are owned by huge conglomerates. But, these brands get purchased for a reason. Usually because they have great local brand recognition and are accessible, or can be made accessible, by the everyday person. And, this is was definitely the case with Leinies. In the late 1980s after the first craft beer boom in the United States in the late 1970s and early 1980s, Leinie's was a well-respected brand locally here in Wisconsin, but also in Minnesota, Michigan and Ohio. Miller saw an opportunity to diversify its portfolio and The Jacob Leinenkugel Brewing Company saw a great opportunity to expand its sphere of influence in the Upper Midwest, and a partnership was formed. (That's business speak for Miller purchasing Leinies.)

It is hard to say what the impact of this was in terms of quality of the beer. Even if someone had cellared a 1986 version of Leinie's Red and compared it with today's, it would be hard to say whether one was "better" than the other.

But, what we can say is that those that have been here, and those that have grown up with Leinie's, have become disappointed in the brand. Whether it is merely the knowledge that it is now a corporate sell-out, or whether there actually some diminished quality in the beers, the perception remains: Leinie's is a second-rate alternative to "macro" beers. Cheaper (in every meaning of the word) than New Glarus or Capital, but at least it is not Budweiser.

Leinie's seems to have worked very hard in the part year or so to turn this perception around. In 2005, Leinenkugel's failed to take home any awards at the Great American Beer Fest. In 2006, it took home a silver for its Sunset Wheat, and a gold for its Creamy Dark. Using the Sunset Wheat to launch a whole series of specialty seasonal beers, this year, 2007, Leinie's won a gold for its Berry Weiss.

Then, early in 2007, Leinie's launched a high-end brand called Big Eddy. The first beer brewed under the Big Eddy brand was an Imperial India Pale Ale. It was only available on tap in a small handful of locations in Milwaukee and Madison. It wasn't even available at its own brewery; in fact, it wasn't brewed in the Chippewa Falls plant where the Big Eddy Springs are located. It was presented as a cask-conditioned "real" ale and it was available at The Great Dane Hilldale location (where you will no longer be able to get unique beers like the Big Eddy IIPA). When I had one in late June, I was unimpressed, despite rave reviews at RateBeer and BeerAdvocate. I thought it was unbalanced, even for an IIPA. The malts were weak and rendered weaker by the cask (the cask itself was improperly maintained and poured, which isn't Leinie's fault directly except for its failure to ensure that those responsible for serving its beer were properly trained on the quirks of the cask). The hops were overblown, and the whole thing was just unpleasantly bitter and cloying.

But, now, Leinie's has released the second in the Big Eddy series. After rave reviews, it has expanded somewhat the keg distribution. It is ostensibly available in Madison and Milwaukee and the Detroit area on tap (if anyone knows where in Madison has this on-tap, please let us know). It is also being bottled, and is (or was) available at Star Liquor here in Madison, and I'm sure other stores have it as well. There is a list at Leinie's website showing the Madison availability, but use at your own peril. I think we paid $9.99 for a 4-pack.

The packaging is impressive, though the twist-off top seems a little cheap, the stylish lettering and subtle, classy coloring make it look appropriately nice. It was pulled out of the refrigerator and allowed to raise in temperature for about 20 minutes before it was poured. To drink this at refrigerator temperature would waste its flavors and aromas. Meanwhile, the snifter it was to be poured into was inpected to ensure it was entirely clean and free of any residual soap. It was the longest 20 minutes since 11:40 p.m. on Christmas Eve.

It poured a thick, oily, pitch black with a thin brown head that never really materialized into anything substantial. This beer is black. Pitch black. There is some brown-ish-ness around its extreme edges, but it fades into black quickly. Its aroma is big and round with huges notes of roastiness and chocolate and subtle caramel. There is a grassiness that comes through presenting a nice brightness. The flavor, on the initial hit is surprisingly dull; then, it hits. The chocolate flavor melts in your mouth, the roastiness floats on and fades into a sharp bitterness and wine-like alcoholy taste that finishes off the flavor components, though they continue to play in your mouth until the next sip. The body is thick and velvety and luxurious, coating the entire mouth and tongue and, really, anything it comes in contact with. This is a very nice Russian Imperial Stout. While drinking three of these would be out of the question, drinking one is quite pleasant and filling. I can't help thinking that this beer will improve with age. For now, the flavors are surprisingly subtle and complex given the huge aromas. In time, I suspect these will reverse. But, in the meantime, congratulations to Leinie's for crafting a fine beer worthy of its premium status.

If they could only put this much effort and quality into all of their other beers...

"Craft" Beer

All of the "industry" blogs and news of late is how the "craft beer" segment, for the third year in a row, is growing at a double-digit pace. (see the interesting "Brew" Blog and "Brew" Magazine for a good summary of this discussion) This year happens to be up 14% over last year. And, while this segment is currently 4% of the industry, it is predicted that soon (2010?) the segment will be over 10%. Of course, the problem is: What is a craft beer? And, at least one Wisconsin brewery is right in the heat of this battle. The Brewers Association (a collection of "craft" breweries) has promulgated the following definition:

1) The brewery must turn out less than 2 million barrels per year (production limitation)
2) Be less than 25% owned or controlled by an alcohol beverage supplier that is not a craft brewer (ownership limitation)
3) Either have an all-malt flagship or have at least half of its volume in either all malt beer or in beers that use adjuncts to enhance rather than lighten the flavor (quality limitation)

This is an interesting definition. On the face of it, as a consumer, I have no real problems with this definition. In fact, I might go further. I would set the production limits lower. 2 million barrels is a lot of beer. Sierra Nevada is 600,000+ barrels. And, really, much over 1 million barrels I can't imagine that you are "craft" anymore. You don't have the production ability to experiment, your brewing schedules are extremely regimented, your marketing costs are outrageous; in other words, it is no longer a "craft" but acts, for all intents and purposes, as a small "big brewer".

I would argue that the biggest "problem" with the definition is the quality limitation. Really, how can you decipher what the intent of the brewery is in using adjuncts? It's too subjective. Using adjuncts, for example rice, for both "flavor" and "lightening" is a fairly ingrained (haha, pun!) tradition. It doesn't make sense to me to take a relatively objective definition, one that will be used to parse an industry, and read brewing motive, a subjective limitation, into it. It would make more sense to set out a list of adjuncts and acceptable brewing ratios that set out presumptions of the intent. Rather than base the definition on the subjective intent of the brewer (e.g., what is the purpose of using the adjunct in question) set out guidelines that make it clear that you have crossed the threshold from "flavor" enhancement to "cost-saving and flavor deprecation". For example, and I'm not a brewer on any much of a scale, so I don't know if these are reasonable, just a guess, but say "If your grain bill is over 10% rice" it is presumed that you are using the rice not as a flavor component but simply to reduce costs and lighten your beer (although, as mentioned earlier, one could argue that this is not an inherently troublesome motive).

But, back to the question at hand, can you figure out which Wisconsin brewery has the biggest problem with this definition? If you guessed "Jakob Leinenkugel Brewing Company" you win the prize. Leinie's seems to be regretting getting into bed with Miller in 1988 (for reasons that are not entirely clear to me, but I was just a young teenager in 1988 so it's not like I was paying attention to such things). Yes, Leinie's is run as an "independent" brewing operation; but the fact is, at the end of the day, their board and by extension their brewers, report to Miller SAB. And, if Miller doesn't like what it is seeing, it has significant ability to step in. More importantly, by being part of such a large enterprise, Leinie's has relegated itself to a mere "profit center" in the eyes of Miller. It's not a craft brewery to Miller; Miller sees it as a growth opportunity and a profitable division.

While Leinie's points to 140 years of family management, the fact is, at this point, it is not entirely family managed. It's family managed unless Miller has a problem with the management. Maybe I'm wrong, maybe they are truly "independent" of any Miller influence. But then, I would argue, what's the point for Leinie's? Why not buy yourself out? But, the fact is, Leinie's likes being in bed with Miller. They get great marketing teams, and excellent distribution; and for that price, they had to sell their soul.

So, Leinie's wants to eat their cake, too. They want to be considered a "craft" brewery, despite all the benefits of ownership and stock control by a non-craft brewery (even assuming that they fall inside the production limitation of 2 million barrels; I suspect that my revision, of 1 million barrels would rule them out).

Leinie's would prefer to define a "craft" brewery as "having a variety of interesting styles of beer." We'll ignore this; by any accounts this is not a reasonable definition. So, I would say, even if we discount the Brewers Association's definition, what makes Leinie's a "craft" brewery? The fact that they have a Berry Weiss? Because they have a Big Eddy series? (which, as a side note: the Big Eddy is a river near their Chippewa Falls plant, but they don't even brew these beers there; a second-hand account related to me tells that the brewers there didn't even know about the Big Eddy IIPA). I would argue that, even absent Miller's influence, Leinie's acts more like Sam Adams and the larger regional breweries rather than a small brewery truly concerned about the trade. At the end of the day, I suspect that Leinie's board of directors talk about "pallets" being moved and "product" getting to the shelf and "brands" being introduced rather than any overwhelming desire to participate in the world-wide beer discussion.