Will Takeovers Threaten Diversity in the Beer Industry?

Will Takeovers Threaten Diversity in the Beer Industry?: One of the amazing things about the current craft beer revolution is the number of small players and the immense diversity of beers they produce. However, we are recently seeing a new trend of mergers and purchases: with craft breweries consolidating, larger breweries purchasing or buying into smaller ones, and even of the big brands merging together. What positives and negatives does this trend have for craft beer and its consumers? Long-time beer writer and consumer activist Tim Webb, Executive of the European Beer Consumer Union, will outline the issues.

Transcript

1. TIM WEBB: WHERE WILL ALL THE BREWERIES GO?
2. WHO AM I TODAY? Campaigner for better beer since 1974 Author of 12 titles including Good Beer Guide Belgium; LambicLand; and The World Atlas of Beer Publisher and editor: including Around Amsterdam in 80 Beers and Beer in the Netherlands Member of the Executive of EBCU (European Beer Consumers’ Union)
3. THE FIVE ERAS OF BREWING In the beginning came the ale wives …. then came the Guildsmen and the town brewers …. then the industrialists …. then the survivors of war and Prohibition …. then the bankers who make beer
4. SOME OF THE OLD NUMBERS UK: 6500 breweries (?+ brewpubs) in 1901, 151 in 1973 US: breweries reached 3300 in 1870 (av. 2300 hl), deleted by Prohibition (1920-33) France: 4000 in 1890, roughly 30 by 1975 Belgium: 3000 registered in 1900, 125 in 1980 Switzerland: peaked at 550 in 1885, troughed at 16 in 2008
5. WHY DID BREWERIES MERGE AND GROW? To keep up with technology & land prices To achieve economies of scale To accumulate wealth, property & influence To reign by monopoly Hormones
6. THE SLOW TURN AROUND Few breweries have a 50th birthday this decade De Kluis (Belgium) / Traquair House (Scotland) / Anchor Steam (San Francisco) 1975: the low point – 4000 breweries (40% German) CAMRA – Michael Jackson – US importers
7. HOW FAR HAVE WE GOT SO FAR? Although there was little overall impact till 2003, since then we have attained: •  A brewery count well north of 20,000 – maybe 30,000 •  A greater range of beer types or styles than ever before •  A 10% shift from industrial to craft in 12 years •  A sizeable collection of small, quality driven breweries in 60+ countries
8. SOME OF THE NEW NUMBERS UK: 6500 breweries (+ brewpubs) in 1901, 151 in 1973 1600 today US: breweries reached 3300 in 1870 (av. 2300 hl), deleted by Prohibition (1920-33) 4600 today France: 4000 in 1890, roughly 30 by 1975 900 today Belgium: 3000 registered in 1900, 125 in 1980 still only 180 Switzerland: peaked at 550 in 1885, troughed at 16 in 2008 600 today
9. ON THE ONE HAND …. Every taste innovation in beer brewing for the last 40 years has come from craft brewers Craft brewers provide jobs, pay their taxes locally, and give local communities a source of pride. In many countries beer is reclaiming alcoholic beverage market share from wine and spirits
10. AND ON THE OTHER HAND …. One largely pointless behemoth is set to take 30+% of the world’s beer market by 2017 With logistics operations unsuited to smalls brews As sales of industrial beers are falling And craft brewers are bought for their brand value
11. THE LIKELY GAME PLAN To keep shareholders happy by reporting ever- upward sales (7 + 4 = more than 7) Seek to take control of the beer market by 2017 Merge in with Coca-Cola by 2020 Thereby controlling the drinks market and owning 25% of the world’s water supply
12. THE COMPANY TRACK RECORD To be dominant in the ingredients supply chain To control the distribution network To buy shelf space and exclude rivals To trade under an increasingly obscure name To cut overheads by shedding jobs
13. THE FUTURE FOR CRAFT BREWERS One among many – so collaborate or compete Struggling for intelligent investment Rejecting or supplying 60% discount customers If the beer does not sell it is dropped or improved Keeping it personal or being a chain-store brewer
14. SO WHAT WILL HAPPEN NEXT? Craft brewing will continue to rise because more people positively like good beer than positively like cheap beer It will take more market share from industrial beer …. wine …. and drinks like cider and coffee Brewers of nasty beers will struggle At least one global brewer will disappear
15. WHAT IS THE ROLE OF BLOGGERS & WRITERS? Stay independent: be aware of attempts to buy your opinion as an essential resource for the confused enthusiast Take reasoned and joined up stances: on issues like gypsy brewing – good mammon – bad small brewers – beers that smell of egg and taste of cheese – traditional vs new Encourage consumer representation: at the same level that producers assume a right to representation Never forget that between 1955 and 1975 we almost lost beer altogether
16. THAT’S ALL FOR NOW