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Friday, July 30, 2010

Rise of the New Regional Breweries

Note: I'm away from the computer for a few days, and so have re-posted some of my favorite items from recent years. Today's post was occasioned by the In-Bev purchase of Anheuser-Busch. I have added an update below the post.
When I was a kid, my cousin--whom I idolized in the way an eight-year-old inevitably does with a 20-year-old cousin--used to name his dogs after beer. He was a farmer out in Eastern Oregon, and there was something about driving tractors that was irresistible to the young city slicker (from that vast metropolis, Boise). I never stopped to consider why he had a lot of dogs, but maybe the life of a farm dog isn't always a long-lived one. In any case, the reason he thought it was cool to name his dogs after beer companies was because there were a lot of regional beer companies, and they had identities. It wouldn't occur to a young man to name his dog after a brewing company now, but in the era of "I seen 'em" and "Raaaaai-neeeeeeir Beeeeeeeer" and "Blitz Country," it made perfect sense. His St. Bernard "Oly" was my favorite.

I am reminded of all of this as I consider the demise of Bud, the last of the independent American brewing titans. Now all we have left are "brands"--labels on cans all containing the same, indistinguishable pallid product. Breweries are gone, replaced by "plants," just as faceless as the beer they make. I suspect there's still a little pride in Colorado of Coors and in Milwaukee of Miller, but it must be a vestigial, nostalgic pride. There's nothing about Miller that says Milwaukee anymore--the association is purely reflex memory.

On the other hand, a lot of growing craft breweries have become pretty big deals. Boston Beer Company is now the largest independent brewery in the US. Sierra Nevada and New Belgium probably fit the standard of "regional brewery"--something like a million or more barrels. Maybe Widmer does, too. Deschutes and Full Sail are now in the top 20 (.pdf)--certainly not out of spitting distance. (There is a massive drop off from the top 3-4 to the next few, to be sure, but these companies are gaining.)

It's interesting to think of these, rather than the regional breweries ascendent back in the 60s (Ballantine, Hamm's, Blitz-Weinhard, Schaefer), as the next cohort of regional American breweries. We're still in the mode of thinking of them as "micro." But really, if the sale of Budweiser tells us anything, it's that the macros are looking like dinosaurs, while the erstwhile micros are creating broad regional markets that might well carry them into the future as major players. It's hard to imagine that Budweiser's pre-eminence will continue. They've held it for decades, but in business, no one stays on top forever. Ask GM.

Before 1970, there was a lot more parity between the major breweries. In 1950, Schlitz was "king," but just by a nose. They produced only 7% of the nation's beer and the top ten brewers only made 38%. A-B was king a decade later, but they still only produced 10% of the country's beer. And there were a still a lot of regional independents:


RANK BREWER BARRELAGE
1Anheuser-Busch, Inc.8,477,099
2Jos. Schlitz Brewing Co.5,694,000
3Falstaff Brewing Corp.4,915,000
4Carling Brewing Co.4,822,075
5Pabst Brewing Co.4,738,000
6P. Ballantine & Sons4,408,895
7Theo. Hamm Brewing Corp.3,907,040
8F & M Schaefer Brewing Co.3,202,500
9Liebmann Breweries2,950,268
10Miller Brewing Co.2,376,543

Total Barrelage Of All U.S. Brewers in 1960: 87,912,847 barrels.
Top 10 Brewers' Percentage of Total U.S. Barrelage: 52 percent.

I don't have the numbers for Budweiser, but it has long accounted for about half the beer sold in the US. If the brand erodes here, as Coors and Miller's have, Americans will be drinking more of something else. In another 20 years, we may see Boston Beer on top, with Bud relegated to second, Miller and Coors perhaps off the list. It's not inconceivable that eight or nine of the ten largest US breweries in 2025 are what we now call "craft breweries." I mean, it's already beginning:
  1. Anheuser- Busch Inc.
  2. Miller Brewing Co.
  3. Coors Brewing Co.
  4. Pabst Brewing Co.
  5. Boston Beer Co.
  6. D.G. Yuengling and Son Inc.
  7. Sierra Nevada Brewing Co.
  8. New Belgium Brewing Co. Inc.
  9. High Falls Brewing Co. (Genesee)
  10. Spoetzl Brewery
The brewing world has always been marked by vicissitude, even when things appeared static year-to-year. But now we may be in a very serious moment of change that will require us to rethink what we mean by "micro" and "macro."

Interesting times.

Update. Since I posted this, we've had some movement on the top ten list. Have a look at Brewers Association's list from this April:

1 Anheuser-Busch InBev St. Louis MO
2 MillerCoors Brewing Co. Chicago IL
3 Pabst Brewing Co. Woodridge IL
4 D. G. Yuengling and Son Inc. Pottsville PA
5 Boston Beer Co. Boston MA
6 Sierra Nevada Brewing Co. Chico CA
7 New Belgium Brewing Co. Fort Collins CO
8 Craft Brewers Alliance, Inc. Portland OR
9 Spoetzl Brewery (part of Gambrinus) Shiner TX
10 High Falls Brewing Co. Rochester NY

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