June 2007 – BeerScribe

A Bronze Medal In Beer Writing…

Posted on June 3, 2007August 16, 2007

Combine my recent foray into regular online posting, a full-time job, and a recent two-week vacation to Japan and you end up with the first posts in over a month. I use this site primarily as a place for previously published articles and as a medium for shorter pieces that don’t make it into print. Along these lines, I hope to have a few articles published here on the beer-related Japan adventures, of which there were a very memorable few. Suffice it to say, Yo-Ho Brewing and the Baird Brewery pretty much sustained me while traveling.

While away I received an unusual critique of a recent article I wrote. Some readers may know that I write the monthly ‘Defending Beer’ column in Beer Advocate Magazine. I use the column as a way to offer critical thoughts on the industry that I believe we don’t see enough of in beer writing. The column has generated some positive and a lot of less-than-glowing responses. Of the price creep article, one retailer wondered whether I even lived in the real world.

I recently wrote an article on judging beer and how consumers can critically view the myriad awards brewers tout on their bottles and six-packs. Putting aside the content (pick up the May 2007 issue of Beer Advocate Magazine or see the article to be posted here in a month or two), I briefly focused on one particular private tasting group, excerpted here:

Consumers also need to be discerning about contests sponsored by private organizations. Of these events, perhaps the best known is the World Beer Championships run by the Beverage Testing Institute in Chicago. BTI’s medal-based competition is run a bit differently from other events, with less weight placed on style adherence and more on a brewer’s creativity within a certain category. In a laudable twist, the institute’s respectable panel of judges tastes products throughout the year instead of packing all beer judging into less than a week of sessions.

The way an organization awards medals can also be a telling aspect of how consumers should value the honor when choosing a beer. The BTI contest employs the familiar 100-point scale to score beers and awards platinum (96-100), gold (90-95), silver (86-89), and bronze medals (80-84). Beers that fall below 80 points receive a ‘not recommended’ finding. Of the 1650 beers in BTI’s database, only 53 have been rated below 80 points and would fail to snag at least a bronze medal. The BTI event reminds me of a little of a correspondence school where you mail a check for fifty bucks and they send you back a medical degree.

So upon my return from Japan, I received a package from BTI in the mail. The contents revealed a letter from Jerald O’Kennard, Director of BTI and the World Beer Championships. In the letter, O’Kennard congratulated me on my article and announced that BTI had awarded me a bronze medal for my “bronzy efforts in journalism.” I’ve attached a photo of my award. O’Kennard assured me “an invoice for $50 will be sent to you shortly.” Kudos to the folks at BTI for having a sense of humor in letting me know they hated my column.

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Anheuser-Busch and Craft Beer…

Posted on June 3, 2007

Heads are turning and it’s no surprise considering the remarkable success of the craft beer segment. A year after the popular press presided over beer’s funeral, allegedly done in at the hands of spirits, craft producers and their double-digit growth rates continue to resuscitate beer’s maligned image. “One of the things we are clearly seeing is that the American consumer is heading towards more flavorful beers,�? says Paul Gatza, director of the Brewers Association (BA), a group representing the interests of American craft brewers.

Beyond consumers, craft beer’s appeal has also piqued the interest of competitors in the beer industry. “The large brewers pay attention to market trends and part of that response is paying attention to specialty beers,�? Gatza says. “It doesn’t surprise me that the large brewers are offering specialty beers and getting involved in distribution deals with craft brewers.�? Of the large brewers, industry volume leader Anheuser-Busch, Inc., has been especially quick to address the gains made by craft brewers.

A History Lesson

More than a decade ago, when craft beer experienced its first meteoric rise in popularity, Anheuser-Busch (A-B) initiated a series of efforts many believed were designed to address gains made by craft brewers. In 1994, the company created its Specialty Brewing Group to compete with the growing craft segment. The group developed more than a dozen releases.

The first foray into the better beer market included the Elk Mountain and Red Wolf lines, followed quickly by the Michelob specialty series, including the Amber Bock, and an American Originals line. The brewery also released the ZiegenBock Amber, to compete with rival Shiner Bock in Texas, and Pacific Ridge Pale Ale in California to compete with Sierra Nevada Pale Ale.

To support its entry into the craft beer marketplace, the normally guarded brewery also decided to court beer writers. The brewery took a group of nearly 40 journalists on an expense paid trip to watch the hop harvest at its Elk Mountain Farm in Bonner’s Ferry, Idaho. Anheuser-Busch pampered the gathered writers with meals and samples of its new specialty beers. According to one report, Senior Brand Manager Bob Franceschelli told the group that A-B’s efforts were designed to provide a one-stop-shop for its wholesalers. “We think we can satisfy all their demands between our portfolio and our alliances, if not now, then in the future,�? Franceschelli said. Of the specialty beers enjoyed that day, only the Amber Bock and ZiegenBock survived.

Franceschelli’s comments reflected a well-timed change in the way A-B dealt with its wholesalers. As A-B introduced its new releases, it also instituted a distribution exclusivity program called the “100-percent share of mind�? campaign. It called for A-B distributors to direct their full attention towards the sale and promotion of the brands of the brewery and its affiliates, to the exclusion of others, including many small brewers. In a time when craft brewers fought desperately for the attention of distributors, the program effectively slammed the door in their faces.

In the most controversial component of its defense against the encroachment of craft beer, A-B forged distribution alliances with some of the strongest players in the craft beer segment. In 1994, A-B announced an equity partnership that gave it a 25-percent stake in the Redhook Ale Brewery in exchange for access to its nationwide distribution network. In 1996, A-B Chairman and CEO August A. Busch himself traveled to Oregon to strike another equity partnership with the Widmer Brothers Brewing Company. In return for a 27-percent stake, Widmer also received access to A-B’s nationwide distribution system.

Déjà Vu All Over Again

When craft beer sales hit a wall in the late-1990s, A-B’s interest in the better beer segment also tailed off. Fast-forward a decade to the present and A-B is dusting off its old playbook in response to craft beer’s renaissance. In 2006, A-B revived its relatively dormant Specialty Brewing Group to develop a slew of new products to compete with craft brands. The brewery resurrected the old Originals and Michelob specialty brand names to house the brands and initiated a seasonal draft beer program. It held a series of competitions allowing consumers to pick a trio of flavorful new draft beers and developed products targeted at the organic and gluten-free niches. The brewery even released a few experimental offerings, including its BrewMasters’ Private Reserve and Celebrate series.

To support the release of these beers, the brewery followed the old script and renewed its flirtations with beer writers. In August 2006, A-B’s employees recruited more than a dozen journalists for a return trip to the brewery’s Idaho hop farm. In between lunches by the Kootenai River and dinners at a resort, the beer writers learned all about A-B’s latest better beer offensive.

Anheuser-Busch refused requests for a live interview in connection with this article, but agreed to answer three written questions. When asked whether the new releases were designed to compete with craft beers, Dave Peacock, Vice President of Business Operations, wrote, “Anheuser-Busch has been brewing specialty beers throughout our history. From our Bock beer of the 1870s to today’s new releases, our commitment to creating beers that appeal to the diverse taste preferences of our consumers will continue.�?

Playing With Goliath

Beyond competing with its own more flavorful beers, Anheuser-Busch has also renewed its pursuit of distribution alliances with producers of better beer. With the ascendance of August Busch IV, Anheuser-Busch looks poised for a new era. The 100-percent share of mind program has been recast as the “funnel strategy�?, which calls for A-B to act as a conduit providing distributors with a diverse portfolio of beers. Last year alone, A-B signed importation deals for the Tiger Beer, Grolsch, Stella Artois, Beck’s, Hoegaarden, and Leffe brands and purchased Rolling Rock. A-B also struck a surprise peace treaty in the form of an importation deal with longtime litigation rival Budejovicky Budvar, brewer of the Czechvar and Budvar brands.

A-B also quietly contacted at least half-dozen craft brewers about distribution deals. Many craft brewers, including the Boulevard Brewing Company, politely rejected A-B’s advances. Two craft breweries, the Goose Island Beer Company and the Old Dominion Brewing Company, joined forces with A-B and its craft beer partners. In June 2006, Goose Island announced an equity agreement with Widmer that allowed it access to the A-B distribution network. Under the terms of the deal, Goose Island sold 40-percent of its business to Widmer, A-B’s alliance partner.

Goose Island… “The involvement of Widmer worked out really well,�? says Goose Island’s brewmaster Greg Hall. “When we opened the brewery in 1995, we raised money from family and friends. It worked out perfect because we basically swapped out the family and friends portion of ownership for another brewery.�?

Shortly after the Goose Island deal made headlines, word leaked out that the Old Dominion Brewing Company of Virginia had finally found a buyer. Long rumored to be on the selling block, Old Dominion’s production has languished in recent years despite record sales in the craft beer industry. According to sources with knowledge of the terms of the sale, the Coastal Brewing Company, a partnership between A-B and the Delaware-based Fordham Brewing Company, purchased Old Dominion for nearly $5 million, including an assumption of debt. Under the partnership, A-B will own 49-percent of Old Dominion, with Fordham taking a 51-percent share.

The effect the A-B partnerships will have on the veteran craft brewers remains to be seen. Workers at Old Dominion, who have been largely kept in the dark about the sale, are apprehensive. “The only thing that I do know is that it won’t be good for those of us that have put their hearts and souls into Old Dominion for many years,�? says one concerned employee on the condition of anonymity. In response to a question as to the level of influence the brewery exercises over the alliance breweries, A-B’s Dave Peacock wrote simply, “We do not brew these beers and play no role in their management, marketing or operations.�?

“We’ve had some really good growth in the short time we’ve been in their system,�? says Goose Island’s Hall. “They give us zero direction whatsoever, we’re making all of the calls. We’re the furthest thing from a subsidiary of either Anheuser-Busch of Widmer you could dream of.�?

While A-B and Widmer only need focus on whether Goose Island can produce enough beer to meet demand, the Coastal partnership will need to resurrect a wounded brand and rebuild employee morale. In 2006, Old Dominion’s beer sales were down more than 15-percent, with only contracted brands enjoying growth. A-B and its partners have made clear that they plan to reduce Old Dominion’s portfolio of beers from nearly 30 offerings down to three to five plus seasonal beers. The Old Dominion pub will also now stock the A-B products, including Bud Light.

The Next Step

The irony of A-B’s sudden increase in attention is not lost on craft brewers. “A few years back, we were discussing Anheuser-Busch and the big question was the zero-share-of-mind,�? says Tomme Arthur of the Port Brewing Company. “I think it’s inevitable that if craft beer continues to grow at this rate, the big brewers are not going to just sit back and wait.�?

In light of their recent successes, the craft industry remains sensitive about A-B’s interest in the better beer segment. While many craft brewers profess a lack of fear over the prospect of competition from A-B’s homegrown products, the distribution side of the equation has always caused their tempers to flare. In an October 1994 interview with Inc. Magazine, Jim Koch, of the Boston Beer Company, derisively referred to Redhook as ‘Bud Hook,’ called the Redhook/A-B alliance announcement a “declaration of war,�? and pronounced that “the cozy fraternal days of the microbrewery business are over.�?

While the loss of collegiality was of grave concern then, craft brewers today are responding to the recent Goose Island and Old Dominion deals with a new focus of concern. “I think the verdict is out about how genuine their interest in our segment is,�? says Sam Calagione, president of Dogfish Head Craft Brewery. “I’ll be happy to be proven wrong. But I know that their goal is to approach a finite number of brands, whether they are craft brands, quasi-craft brands, or imports, and bring them into distribution at the expense of breweries that are not brought in.�?

Calagione also challenges the notion that the funnel strategy materially differs from the 100-percent share of mind program. “Their goal is to make sure they are the only one-stop-shop in beer distribution,�? he says. “It’s up to all of us small breweries and all the non-A-B distributors and the A-B distributors that don’t want to be told by St. Louis what to put on their trucks, to make sure that doesn’t happen.�?

Goose Island’s Hall strongly disagrees. “We haven’t seen that at all, in fact just the opposite,�? he says. “The distributors we talk to want access to more beers they can’t get. It’s a reality that in most markets, A-B probably calls on as many or more accounts than someone else. I can’t see where it’s a bad thing that you can get your beer into more people’s hands.�?

Hall acknowledges he has encountered some critics of the brewery’s involvement with A-B, but he has a response line at the ready. “I tell them, ‘Can’t you taste the beechwood in there? Don’t you think it makes it taste better,’�? he jokes. “We’ve gotten some backlash but we tell them the truth, that the beer is coming is coming on a different truck now, but it’s the same beer from the same brewery and people.�?

Bridging the opinion divide, brewer Tomme Arthur believes brewers should carefully consider their options but understands the decision to join A-B’s distribution network. “In some ways the change is good because some breweries are going to gain access to the market that they didn’t have,�? he says. “Access to market is one of the biggest concerns for most brewers.�?

With the benefit of experience at their sides, craft brewers plan to carefully consider Anheuser-Busch’s renewed interest in the better beer segment. In surveying the new landscape, Arthur suggests that all craft brewers should maintain their focus on what made them successful. “How a brewery responds to a larger group giving them access to market, and the integrity of the product, is what matters most,�? he says. “The consumer will be left to decide whether the things being done from here on out still merit their consideration.�?

–Article appeared in June 2007 issue of Beverage Magazine.

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Losing Global Beer Culture, One Pint at a Time…

Posted on June 3, 2007June 3, 2007

There is no such thing as the ‘perfect pint of Guinness’, lime wedges have no business in the neck of a beer bottle, and Stella Artois is a Belgian beer by the thinnest of margins. For many drinkers around the world, these beer fictions left unexposed make up the whole of their understanding of global beer culture. It’s a marketing truth that drinking imported beers makes consumers feel more worldly, like we’re engaging in some exotic, alcohol-fueled version of a Ricola ad. While choosing a St. Pauli Girl may briefly ignite your inner Dieter, the romance quickly wears off in the buzz of American Idol night at your local.

More than simply annoying hardened beer geeks, the widespread marketing canards that beer drinkers experience every day are a symptom of a larger problem. Beer culture is one of those things that can’t be faked or recreated. It’s organic and fragile, a thing that lives, breathes, and without support, can die just the same. Much like polar ice caps, the ozone, and Paris Hilton’s self-respect, beer global culture is in jeopardy and need of saving.

U Fleku… Full of character, tradition, and historic charm, Americans have always looked to our European brewing elders to teach us about beer and to inspire our efforts. Long considered to be the pinnacle of world brewing, there remain some rays of truth in the shining accolades we shower upon European beer. But in the dizzying world of brewery conglomerations, mergers and acquisitions, these once bright spots now appear dimmer and more transparent, like quick moving mirages on our beer landscape. Few mainstream foreign brands remain in the hands of their original owners. InBev alone controls hundreds of beer brands, including Stella Artois, Beck’s, Boddingtons, Franziskaner, Hoegaarden, Labatt, Lowenbrau, and Spaten. Enjoy Red Stripe? Well then ‘Hooray Diageo,’ which owns a majority stake in the former Jamaican brewery, as well as controlling the Guinness, Harp, and Smithwick’s brands.

Call it the Starbuckization of global beer culture, the ability to experience once local brands anywhere in the world. The darker side of global branding is the damage it leaves in its wake, including shuttered breweries and tainted legacies. In the last two years alone, the brewing community has lost the famed Hoegaarden brewery, Boddingtons brewery, and Tyne brewery in Newcastle, among others.

This column isn’t meant to simply sniffle over lost comrades or join the paper-mache puppet waving throngs of unshowered world trade propagandists. Global beer culture is something that every beer lover has a duty to maintain. I want future generations of beer lovers to learn about the beauty of beer and its history first-hand and not through tales of woe told by sobbing, elderly beer lovers.

The dictionary defines culture as a set of values or social conventions associated with a particular field, activity, or group characteristic. The global beer culture I’m seeking to preserve is not only brewery history and tradition, but also the practice of integrating beer into every day life. I’m not talking about sneaking sips during sermons, but about respecting beer and giving it a spot at the table, be it lunch, dinner, or just a mid-day break with friends. Beer culture is the experience of sitting at a shared community table, with an earthen mug, enjoying kellerbier in a small Bamberg pub with a group of strangers.

To truly experience beer, you must enjoy beer beyond the four corners of your living room or favorite pub. I agree that the selection of foreign beers available in most major cities is an amazing feat of distribution. But the experience of traveling to the great beer cities of the world, from Antwerp to Dusseldorf to Prague, and the perspective that it gives you cannot be replicated by armchair advocates. To sit in the Kulminator and sip a 20-year old beer, to watch a fresh wooden keg of Uerige Altbier tapped in front of you, or to witness the unwavering dedication of the Kobe waiters of Cologne is to see beer achieve its greatest potential. These encounters are defined by deep pride, respect, and care, absent any chest-thumping self-promotion or hint of self-awareness. The message is clear: beer deserves our respect.

We shouldn’t take these experiences for granted to too long delay indulging in them. As the business of beer changes, so will its culture. We as beer lovers need to strive to maintain and preserve our traditions and heritage in the face of the dangers posed by those who would treat beer as simply another widget to be sold at bulk. A Harp sign over the bar doesn’t make your dive a quaint Irish pub and it’s a poor replacement for the real thing.

–Article appeared in March 2007 issue of Beer Advocate Magazine.

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