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Miller merger could be a good thing

The future of the industry: Article based on the keynote speech at the Craft Brewers' Conference, in Cleveland, Ohio

You may be surprised to hear this, but I think mergers like that proposed between Miller and South African Breweries are good news for craft beer. It is a question of action and reaction.

Keynote speaker

Michael Jackson shows off a brewing paddle he was presented in appreciation for delivering the keynote speech at the Craft Brewers Conference in Cleveland, Ohio.

Quite simply, the bigger the major brewers become, the greater the number of consumers who feel left behind, even alienated. These people want the chance to exercise their individuality when they order a beer. They are potential buyers of imports, microbrews and the products of brewpubs.

The first truly global brewers have begun to emerge in only the past few weeks. South African Breweries already owns Pilsner Urquell, would like to acquire Scottish and Newcastle, and is buying Miller.

With a relatively small U.S, presence (Rolling Rock) and a proportionally far bigger one in Canada (Labatt), the Belgian parent Interbrew acquires the mighty Beck's, Germany's best known export brewer. Almost as an afterthought, it swallows the sizable Diebels, biggest producer of Alt.

These are not small beer. Interbrew, which already owned many breweries in Central and Eastern Europe, is occupying new territories all over the world with a view to being market leader in each This approach is quite different from that of Heineken and Carlsberg. They are internationally present as premium products (the beer world's answer to Peter Stuyvesant or Rothman cigarettes), but have not so overtly sought to dominate major markets.

As the battle to control the world intensifies, the new super-giants will damage each other to the benefit of the micros.

As the battle to control the world intensifies, the new super-giants will damage each other to the benefit of the micros. When companies merge, in any business or country, two-plus-two rarely makes four. There are usually customers who feel that their favorite product is no longer the same, and who in consequence look elsewhere. As each brewery in the merger may have a similar range of beers, those that sell least are likely to be dropped. A manager running several breweries in different countries cannot, however hard he tries, sustain local specialties indefinitely to the same degree of individuality.

This notion of the global brewers' fallout benefiting the craft brewer may seem Pollyanna-ish, but it has already been evident in the Nordic and Baltic countries. Having never quite hacked North America, Carlsberg has been building a dominant position in these countries. In precisely the same period, Denmark has gained a beer movement, with an annual festival and a crop of new products.

With the exception of Anheuser-Busch, which has grown organically, the biggest brewers have sought growth by acquisition. Breweries available for sale are usually big but less successful. Thus groups consolidate over-capacity. They then close breweries, centralising production in fewer plants and lengthening the road to market at a time when preservatives and other additives are under scrutiny by the consumer. The growth to global from national ambition also lowers the common denominator of flavor. This is already so low that many young consumers see aroma and flavor as being faults, distractions on the path to feeling drunk. The same follows for "super-premium" vodkas and gin.

Making tasteless beer is not easy but the big guys have the experience, skill, and technical knowledge to do it. They also have the marketing budgets to persuade people that there is some point in drinking the stuff.

Producing and promoting, a drink that looks like lemonade, or even club soda, has little aroma or flavor, and makes people drunk, is an invitation to restrictions on alcohol. In trying to make their products wholly tasteless, the big brewers have devised, or adapted, Light Beer, Dry Beer, and Ice Beer. Producing "malternatives" is even more of a provocation to tougher laws.

Light beer is still successful. The other categories live in a refrigerator somewhere, with Wine Coolers, Iced Tea etc. I believe that even such "Techno Beers" and line extensions help the craft brewers, by fragmenting the market. When I began writing about beer, there was only one Bud brewed in the U.S. Then along came Light, Dry and Ice. Now the consumer knows that there can be more to beer than Bud.

The big brewers made some very good specialty beers for a time, in an effort to benefit from the success of the micros. Their head brewers knew what they were doing, but the cost accountants and marketing people could not think "micro".

For them, it seems to have been the road not taken. They chose "Beer as Soda Pop". Craft brewers are "Beer as Wine". That is the road we must take. We must stick to it, and climb higher along the way.

We have come a long way already. When I started writing about beer, there were fewer than 50 brewing companies in the U.S. Back then, you could count on your fingers the individual beer-brands that were not light lagers: Champale, a couple of porters in Pennsylvania, the Ballantine and Genny products, Little Kings, Rainier Ale, the Anchor range....

There are now more breweries in the U.S. than in any other country, including Germany: about 1,500, making beers in more than 50 styles, many more "authentic" than the European originals upon which they are modeled.

This is a remarkable achievement, an astonishing success story. Why don't we tell the story?

This is a remarkable achievement, an astonishing success story. Why don't we tell the story? Were we distracted by the opportunists who came into the business when it was being hyped by Wall Street? Remember them? "Mr. Jackson, I don't know much about brewing, but I know that Americans enjoy a beer like Budweiser." I would point out to them that someone had already noticed that market, a man named Busch. They were all going to overtake A-B in two three or four years. They've all gone now, telling the world that they got out just in time. It is their absence that makes this such a pleasant conference - and the beers of Great Lakes (if only the Conway Brothers would make their beers a bit more like Bud...).

"Everybody knows about micro-breweries," someone said at this conference. No, they don't. I have even met people in Seattle or Portland, Oregon, who are unfamiliar with the phrase "microbrewery". Far more are familiar with the phrase, but unsure what it means. Or whether it is a good thing. Some people still get a bit giggly about having been to a brewpub, as though it were somehow not "normal" beer. Would they feel the same way about visiting a cook-from-scratch restaurant, as opposed to a McDonald's?

We understand the differences, because we love, live -- and no doubt breathe -- beer. It is easy to forget that not everyone shares our passion. Having earned my living by the pen since the age of 16, I am passionate about writers. As a young television producer, I persuaded James Baldwin and Norman Mailer to appear on a program. Thrilled with achievement, I asked an aunt what she thought of the program.

"I liked the black man," she said, "but that feller with the curly hair was a bit of a loudmouth." The names James Baldwin and Norman Mailer had meant nothing to her. We have to allow for the fact that millions of people drink without thinking, as though they were sleepwalking, but could be awakened to the pleasures of good beer.

I joke about wine, but I love it. I love beer more. I could go through my life without ever touching soda pop. Those are three categories of drink that sell in high volumes.

First we need to persuade people to drink beer. Many of those who do drink beer have only ever consumed a pale lager. We need to show them that beer can mean more than that. We need to reassure them that small can be beautiful. And we need to keep coming back to the most basic points. I started to write a piece his week for the newspaper The Independent, in London, then realised that I was assuming too much on the part of the reader. I started again:

If you wanted bread with taste and texture, would you look for the biggest-selling packaged brand, or seek out a mom-and-pop local bakery? To accompany it with a characterful Cheddar, would you opt for an internationally-known name on a pack of cheese slices, or would a farmhouse producer hold more promise? To wash down your snack, would you choose a brand-named wine made from a concentrate of unspecified grapes, or might a named variety and vineyard better fit the bill?

Why didn't I put it that way before? I can't use the same introduction every time, but I can remind myself that you don't have to be a geek to enjoy beer.

Published: JUNE 8, 2002
In: Beer Hunter Online

- Editorial

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