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Wednesday, September 16, 2009

Bud American Ale: the Triumph or Demise of Craft Beer?

[I'm out of town until September 18 and away from computers of all sorts. On the assumption that you won't have read every post from the past 3 years, I'm reposting a few favorites. See you soon.]

I finally got my hands on Bud's American Ale, which seems simultaneously to be: 1) over-compensation for a company that's no longer American, 2) an acknowledgement that new products, not just new ads, are the only way to grow in the US market, and 3) a legitimate beer.

Let's start with the third point first. This is a real craft beer, not just a marketing gimmick. Bud has made a beautiful amber ale with a nice caramel malt note and a lightly citrusy hopping. They have dry-hopped it with Cascade hops (whole hops, apparently). I wouldn't call it a transcendent beer, but if you did a blind taste-test with this beer and several other craft ambers, I suspect it would finish in the middle of the pack. It is, for example, Fat Tire's superior--by quite a margin. I'm not a huge fan of ambers, but if I went to a party and this was in the fridge along with Corona, Widmer Hef, and Fat Tire, I'd be happy to grab the Bud Ale. And I'd enjoy it, too.

It's not surprising that Bud has made a good beer. I don't doubt that if Bud wished, its brewers could instantly produce a dozen excellent beers, and probably a world-class lager or six. The best, most well-trained brewers in the world work for Bud. They don't brew world-class beers because they don't wish to, not because they can't.

Three questions spring to mind: why a craft beer, why an amber, and what does it spell doom for craft breweries?

The answer to the first question seems obvious. While the macro market is flat or in decline, the micro market continues to grow and grow. The US beer market continues to grow slowly, but all the growth is in the craft segment. Bud can continue to buy up smaller breweries piecemeal to get a part of that growth, or take the plunge with their own brand and try to bring the market under the Bud name.

Okay, so why an amber? No doubt there's an easy, flip answer--the focus groups liked it best. (And actually, I bet they did. I bet Bud tried a bunch of ales and came up with this one. I would have loved loved loved to have been among the focus groups so I could see what was in the mind of the giant.) But it also makes sense. If you want to build a market for ales, you want to actually brew an ale. The craft market has proven the enduring popularity of the style, particularly as an introductory beer for new ale drinkers. It's nothing like Bud. Amber ales are especially fruity and ale-y. They exhibit a sweetness totally unlike light lagers--and which totally beguiled an early generation of Oregonians. Add a little dry-hopped Cascade citrus, and you introduce drinkers to the flavor of hops without risking turning people off with bitterness. If you want to create a market by priming the palates of for ales, this is a great way to go.

All well and good, but does it spell doom for craft breweries? If Bud makes a great (and cheaper) amber, will people quit drinking Full Sail's? I would love to hear the beer-economist reflect on this question, but my sense is that it's just the opposite: Bud can reach 100 million consumers who will never otherwise consider a craft beer. And once they've begun drinking Bud's ale, they may well enjoy Black Butte Porter or BridgePort IPA or Roots Heather. If Bud's experiment is successful, they will expand the market for craft beer--one they won't ever be able to dominate in the way they dominate the single-product macro market.

I love that Bud has made a serious beer. It looks to me like a trojan horse that millions of Americans may unwittingly invite into their refrigerators. And once dry-hopped ales get in there, they may never leave.

Update. Maureen Ogle points out an obvious analogy (one I nevertheless missed) to the scenario above: the Starbucks phenomenon.

Originally posted October 27, 2008

1 comment:

Mark said...

Sorry I missed the original post, but good to read it now. A couple of points. I don't think that AB brewers do not wish to brew different or better beers. Unless you are talking about the head brewer, the brewers at AB are brewing what the product managers and related marketing folks are proposing. And, you don't kill a cash cow like Bud and change your mega-production to craft beer even if your sales are flat and profits are waning.

One value for AB or others to brew good beer is that when one finds oneself in the middle of Iowa, say, and there is no craft brewery distributing in your area, it's a relief to see something like this. (I'm making this up because I have no idea whether there are good craft breweries in the middle of Iowa or if this particular beer is available there.)

I think you are right that AB's experiment is likely to expand the market rather than gobble up Full Sail, for example. I don't, however, think that AB believes they are going to be in the craft segment except through acquisition. This move is a way to establish their bona fides in the craft beer world and is never likely to be a big part of their production. In fact, I would imagine that acquisition of craft breweries and the pilot brewing of ales like this are deliberately linked. "If we can make good craft beer here in Newark and we are buying up craft breweries, then we can start brewing those recipes anywhere--LA, Chicago, Des Moines," says the head brewer and director of operations.

I cannot think of any other large macro brewery who is seeking to turn over production of pale lagers to a broad range of interesting ales, or even a broad range of interesting lagers.

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