Trouble Brewing

THE boss of SABMiller, Graham Mackay, recently suggested that the big rush of consolidation in the brewing industry was over. Like the bar talk encouraged by his company’s products the pronouncement was precise, certain—and wrong. On Tuesday October 9th London-based SABMiller, one of the world’s bigger brewers and America’s second largest, and Molson Coors, America’s third-biggest beermaker, announced that they would get together in a joint venture in America.

The rest of the brief article can be found here. For sake of symmetry, my thoughts will be brief as well:

  • The American beer market demonstrates that even markets dominated by one or two producers can still be intensively competitive and function remarkably well.
  • The beer market also demonstrates how small producers (e.g micro-breweries) can successfully compete against multi-national behemoths with no government subsidies or steep tariffs on imported brews (not that these are nonexistent, mind you).
  • Similar to that, the malaise in the overall beer market belies the strong growth in premium brands. Prosperous Gen-Xers desirous of signaling refinement recoil at the notion of ordering a mass-marketed brew like Coors, but have no problem ordering another Coors brew by the name of Blue Moon, mainly because its marketing as a "highly-drinkable, hand-crafted" brew flatters their vanity (As does serving each wiezenbierglas adorned with an orange slice perched on the rim--I've long been amazed that merely serving a beer with a slice of citrus can influence people quite strongly as to the perceived quality or pedigree of the beer.). Bottom line is, invest in something like Molson Coors for its premium portfolio, or go for something like Boston Brewing Company with its ever-more popular Sam Adams brews.

Always a good decision.