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The view from the top

Beer Industry leaders offer insight into their attitudes

A couple of times, August Busch gave me a self-mocking smile, like a night-time talk-show host mugging to his audience. He didn't quite appear embarrassed, but perhaps the situation seemed a little pompous, even to America's (and the world's) biggest brewer. There he was, sitting at a table, on a stage, alongside the chief executives of the biggest brewing companies from each continent. It was one of those rare assemblies that prompts black humor: had there been an earthquake, half the world's mainstream lager beer might have drained away.

August was travelling with his son Stephen. If they had fallen down a hole in the ground, one of the world's most remarkable dynasties would have been at least partly submerged. None of the other industry leaders could call themselves family brewers as the Busch duo can.

They were assembled at the World Beer Forum, in Munich, Germany, under the rubric "Power Brands made by Power Men". Perhaps the muscle-flexing title was responsible for August's wry grin.

Competing brewers are hardly like to exchange strategic secrets at such forums, but the conversation did offer interesting insights into the attitudes of the world's beer emperors.

While not retreating from his previously stated ambition to reach 60 per cent of the market, he did describe this as an "upper projection...over a period of ten to 15 years".

Emperor August told the packed audience that, if it were ever necessary, Anheuser-Busch would cut its profit margins to defend its market share in the United States. However, the company would not do this as a means of increasing its share. While not retreating from his previously stated ambition to reach 60 per cent of the market, he did describe this as an "upper projection...over a period of ten to 15 years". He emphasised the mature state of the American beer market.

Perhaps with this in mind, a questioner asked whether he would persist with smaller brands in speciality styles. August had already mentioned the growing market for more assertive-tasting beers, and now added: "We will pursue every profitable segment." However, he gave more time to the room for expansion in the wider world, with "the globalisation of American culture".

August currently reckoned to have nine per cent of the world's beer market, which he seemed to feel was modest enough. I asked him later how much of the world he would like, and he said that he would be "ecstatic" to have 15 or 20 per cent at some time in the future.

How achievable would that be? When A-B had begun to explore the world, in the 1980s, market research had often been discouraging, yet subsequent sales overseas had been "a pleasant surprise". August's take on this: Research is a good servant, but don't let it be your master.

More Augisms: Be willing to change your approach. Just because it did not sell last time, doesn't mean it won't sell next time. The amount of money you have to spend is less important than the quality of your people. Remember, you have less to teach than you have to learn. Be humble; you are a guest in the other person's country.

Although he recognised that standard brands were declining in importance, he warned product managers against "obsession with the new."

Like Anheuser-Busch with Budweiser, its European counterpart Heineken is best known for a brand that is more than a century old. Heineken itself is family name, not "an invented brand," as the company's chairman, Karel Vuursteen, put it. He made the point that the consumer doesn't care how old a brand is, and responds best to a company with a consistent culture. Although he recognised that standard brands were declining in importance, he warned product managers against "obsession with the new." Through three generations, the foundations of Heineken had been "gut feeling and imagination," rather than the fashions of marketing. The company did not try to predict what might happen - rather to shape its own future. It did not, however, try to impose its presence, but to invite the consumer to enjoy its products.

While both of these companies are in a diversity of international markets, Kirin's chairman, Keisaku Manabe, saw his Japanese base as primarily a launching pad for expansion in Asia, especially China, Taiwan, Singapore, Malaysia and Vietnam. In acquiring local breweries, or forging partnerships, he saw a need to maintain regional brands as well as introducing Kirin. "We want to widen the world of beer, not narrow it." His refrain, the need for patience in developing Asian markets, contrasted with the breezy cheer of Fosters' president Ted Kunkel.

"Lighten up! This is a fun industry!!" Kunkel urged the assembled brewers and marketing men. He explained that Australians do not take themselves too seriously, are irreverent towards the status quo, have a sardonic sense of humor, enjoy uncomplicated good times, like sport and winning, and live in a very clean country. Apparently these "Australian values" are reflected in Fosters, and have helped make the beer an international success.

The theme of South African Breweries' CEO Graham Mackay was very different from those of the other speakers. Athough his company is a continental giant, dominating its home market, the political situation in the recent past prevented it from even trying to develop an international brand.

Mackay spoke of the difficulties of brewing in a country where raw materials are expensive; the purchasing power of the drinker low; village home-brewing a major factor; transport difficult; and the political situation in transition from an authoritarian government to "freedom." I had previously wondered why South African Breweries had made so many recent acquisitions in the former Communist countries of Eastern Europe; now I began to understand. They have the hard-learned knowhow to deal with such markets, to turn around the long-neglected breweries and perhaps achieve organic growth.

All this talk of cross-border beers may have seemed fanciful in Germany, a country where the overwhelming majority of breweries are still local. The premise of the forum was that brewers should pay more attention to marketing. I hope they understood the cautionary points made by Busch and Vuursteen.

Perhaps they did. There was also a full house for a panel under my own chairmanship, in which North American brewpub owners, micro-brewers and contract brewers explained how they had built their businesses. The speakers were Paul Shipman, of Redhook; Dan Gordon, of Gordon Biersch; Ed McNally, of Big Rock; "Wicked" Pete Slosberg; and Jerome Chicvara, of Full Sail.

In my interventions from the chair, I tried to bridge a few cultural gaps. The strongest message from the panel was the need to provide the consumer with information about different styles of beer. This is true in the U.S. because of the sudden, confusing, diversity of styles. It is equally true in Germany because beer is taken for granted and specialities face death by indifference.

Published Online: SEPT 16, 1999
Published in Print: DEC 1, 1997
In: Ale Street News

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