corporate mergers: proof that cheap beer is all the same
Brent Finnegan -- October 10th, 2007
We live in the age of corporate mergers. We Americans get most of our news and entertainment from a mere six companies. Now the fat cats are consolidating our beer.
SABMiller and Molson Coors Brewing are merging, putting them in direct competition with Anheuser-Busch (WSJ).
WSVA reports that the merger may effect the plant in Elkton.
Kabrina Hatland with Coors says no breweries will be closed, but instead the new entity called MillerCoors will be using all eight breweries in the new network to produce beer from both companies brands. Which beer will be brewed where will be based on market demand, location, and other variables.
All that stuff always tasted the same to me. Now I know why.
Molson Coors:
Coors, Molson, Killian’s, Keystone, Zima, etc.
SABMiller:
Miller, Icehouse, Mickey’s, Milwaukee’s Best, Olde English, Peroni Nastro Azzurro (and countless others around the globe)
Six of one, half-a-dozen of the other.
We were watching an episode of Anthony Bourdain’s show last night where he travels to Iceland, and we’re wondering where we could find Brennivin. Anyone around here know how to get it?
Finn, you’re absolutely right. These companies all make the same cheap characterless beer then use marketing to create the perception that one is better than the other so they can charge different prices.
It’s that way with tons of stuff, soda, personal care products (think how much money must be in making mens razors considering how much time is spent advertising), fast food, office products, footwear…the perception of quality is more important than actual quality in most cases.
But as far as beer goes this merger won’t really effect anything, both of these companies only dealt with the mass produced anyway. More alarming is a case like Old Dominion Brewery’s where A-B bought a 49% share: http://beeractivist.wordpress.com/2007/03/11/old-dominion-brewing-sold-out/
Of course there isn’t supposed to be any change in the product line or quality but all the existing staff was let go shortly afterwards. A-B is actively pursuing a number of other regional breweries as well.
Thanks for that link, Tim. I had no idea.
I don’t know the answer to your question, Gxeremio. It took me two weeks to find Beamish on tap in Ireland. I finally found it the last day I was there — one block away from St. James Gate, of all places.
Wow, I had missed the sale of Old Dominion Brewery, thanks Tim.
I have two beer rules:
1)Beer is like bread, it doesn’t travel well. Buy it locally produced.
2) Beer has only four ingredients: water, hops, barley, and yeast. If you use other stuff, call it “malt beverage”. Reinheitsgebot has produced the best beers for nearly 500 years, and I don’t need no corporate malt hustler to tell me different.
I have a friend that we all called crazy when she said she was able to tell the difference between Bud Light and Miller Light. We called her crazy until she passed a blind taste test. We even threw in a cup of the two mixed to throw her off. I certainly don’t have a preference between the two (or three), although I have friends that call me crazy for sometimes being in the mood for a watery American brew.
Tim,
All the Old Dominion products we carry significantly (20%) went up in cost after Coastal bought them.
You can special order through the Virginia ABC stores. That’s probably your only shot in Virginia.
Different staff, more expensive product, and they discontinued Tupper’s Hop-Pocket Pilsner which was an awesome beer. Doesn’t seem like business as usual to me.
mmmmmmmmm…. beer
Big company spends money to buy little company. Consumers are told that they will benefit because larger operations always convert into better prices (economies of scale).
Real result. Big company bought little company to make money (as much as possible of course, who doesn’t want to?). Big company paid not only for little company but for the transactional costs of doing so (lawyers). Big company now not only wants and can make more for their product but they have to in order to make a return upon their investment. Economies of scale are great, but when saddled with a marketing department (staffing expenses) they can sell their product for more and the economies of scale argument get thrown out post merger due to stockholder demand for return on investment, they benefit- not us.
Just check your bill and customer service level for Comcast. (I know that Adelphia went broke, but Comcast bragged that our prices weren’t headed up and they lied. Point blank).
The trend towards brewery consolidation has been a long one, with only a relatively recent blip in the other direction. Prior to prohibition, there were over 4,000 local/regional breweries in the States, with many fewer consumers. That number shrunk to 756 at prohibition’s end. Most of the ones that survived did so by selling their malt extracts to the food industry, which is why barley malt is still a pervasive sweetener in baked goods (yeast likes it) and dry cereals.
The number dropped again during the big wars, and the market dropped out during a period of WWII when so many males were overseas that their womenfolk began staffing production facilities in the states in higher percentages. To address this rather different market, most of the successful breweries introduced a pale, lighter beer which was thought to be more appealing to women, which we now associate with American beers in general.
In 1961, the count of breweries was 230, and by 1983 there were only 51.
The trend changed a little bit after the very sensible Jimmy Carter signed a law which once again legalized homebrewing, effectively giving birth to the craft brewing industry in many kitchens and backyards. Many homebrewers took their hobby into the business world, and in the 90′s we thankfully saw a sudden upward swing in the number of small breweries and brew-pubs around the country. Cally’s is a fine example of the latter, (although I’d like more vegetarian menu choices).
When the craft brew market hit about 1% of the retail total for consumers in the states, the mega-breweries started acquiring some of the larger examples of micro-breweries, and it’s been going on ever since. It’s a common business strategy for the big guys, most often associated with Microsoft, to purchase all or some of the competition as new, superior products emerge. You effectively improve your offerings, and eliminate the competition at the same time, with little R&D.
Ben