More Fighting

On March 29 I posted about the fight Miller and Anheuser-Busch are having over Miller’s use of corn syrup. The fight has continued and is having ripple effects in the beer industry. The Beer institute, the Brewers Association, the National Wholesalers Association as well as the macro brewers have been planning an advertising campaign to promote drinking beer instead of wine or spirits. However, since Miller is suing Anheuser Busch, they have declined to participate in the campaign. Heineken has also decided not to participate. You can read more about this here.

In the context of this ongoing battle among the macro brewers, I am re-posting a post from my pre-WordPress blog about Steve Hindy, founder and owner of Brooklyn Breweries, becoming the head of the Beer Institute.

June 19, 2008

I had intended to write this blog entry about InBev and Anheuser-Busch, but my attention was drawn to another news item about Steve Hindy, founder and owner of Brooklyn Breweries, becoming the head of the Beer Institute. His predecessor was August A. Busch IV. The Beer Institute is twenty-two years old; it is the successor organization to the United States Brewers Association, which dated back to 1862.

The demise of the USBA and the creation of the Beer Institute was a direct result of intense competition in the brewing industry following the purchase of Miller Brewing by Phillip Morris. In 1986 the Beer Institute was organized to include the big brewers as well as regional brewers. It did not include any micro or craft brewers or importers.

Twenty-two years later many of the big brewers including Schlitz and Heileman are no longer in business; in their place are nearly 1500 craft brewers. Phillip Morris no longer owns Miller; South African Breweries does. The federal government has recently approved the merger of Molson-Coors and SABMiller. The rationale for this merger is to create a larger company that can better compete with Anheuser-Busch.

Steve Hindy becoming the president of the Beer Institute is significant because it is an acknowledgment of the geography of the current United States brewing industry. The industry has a two-tier structure with the mega breweries competing in an essentially flat market; following the Molson-Coors SABMiller merger two beer companies will control about 80 percent of the domestic beer market.

Hindy of course represents the other twenty percent which is made up of craft beers and imports. Despite the fact that the beer industry appears, once again, to be consolidating, the craft beer segment represents diversity and growth. The origins of the modern American brewing industry were individually owned breweries operating in a local environment. Whether there are three major brewers or two and whether they are wholly American owned, the mega brewers cannot make an effective claim to continuing and maintaining that heritage.