Beer Consolidation

I ran across this article on Mother Jones about the number of breweries and brands on the market. We all know that number of breweries in the US is skyrocketing. It seems a new one opens up in St. Louis every other week which I think is also going to happen in KC over the next couple of years. This is all a great thing, I can't wait to drink Wilderness, Fountainhead (pineapple blonde ale, yes please) and Belton Brewing beers.

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But, also noted is the loss of market share for the macros. Their business doesn't much concern me, I'm always amused that some of their brands like Bud Ice Light and Bud Dry exist since I never look at that section of the liquor store. We've had some controversy over the fake craft segment with beers like Shock Top and Blue Moon. These beers account for a very small portion of BMC's (Bud, Miller, Coors) sales but require an awful lot of their bandwidth as they are the only segments BMC can grow.

Now, BMC isn't going to take this loss of market share lying down and the way I see it, they have 2 options available to them. The first, as we've seen with the Goose Island purchase, is consolidation. This is a rather benign way to increase their market share. It's controversial of course, many people have stopped drinking Goose Island beers because of their "selling out", but, in my eyes, as long as the beer is the same, it doesn't matter to me who ultimately profits from selling the beer. Ultimately, though, BMC benefits by limiting the number of beers they produce and they're not that interested in producing interesting beers. It's much more profitable selling known quantities like American Lagers and Pale Ales rather than more experimental high alcohol beers. Consolidation will, in the end, dumb down the brands that are purchased.

The second avenue is much more worrisome, regulation. BMC sells a lot of beer and makes a lot of money. They spend that money on marketing and lobbying. You won't see their fingerprints on anything they'll let the politicians do their dirty work. Rather than working to break down post-Prohibition era laws, BMC lobbies to strengthen those laws. They have the distribution in place, they have no problem making 3.2 beer and no one objects much to a standard 5.0% ABV Bud or Coors. But, laws that limit alcohol content or added caffeine or other products only serve to benefit BMC.

The war against Four Loko had nothing to do with safety, Four Loko was eating away at a portion of an important segment, young drinkers. I know when I was an underage drinker very few craft beers touched my lips. My fraternity room fridge was filled with MBL and Coors Light. This is very important to BMC, if consumers first hundred beers are of this little taste, you're not going to like the more expensive, more flavorful beers. Four Loko was a threat, so BMC sent their assassins, the politicians, to kill it.

Another threat was the Brew Masters show. Sam Calagione got a little too big for his britches and broke into the big leagues of television. BMC flexed their advertising budgets to the Discovery Channel's suits and got the show taken off the air.

Just looking at the chart with the number of breweries, it's obvious that allowing homebrewing at the federal level, deregulation, brings more breweries. This is a bad thing for BMC and they're going to do what they can to eliminate the competition, either by buying the competition or outlawing the competition. When you see some law regarding alcohol (or food for that matter, the food industry is the exact same) think about who it benefits. I guarantee that any law that makes it more difficult to sell alcohol or regulates beer in some absurd way, will benefit BMC and BMC is probably behind it.

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