What's A-B Up To?

This is a fascinating development:

Anheuser-Busch InBev has applied for a federal trademark for "314" -- the area code for much of metropolitan St. Louis -- as well as for the telephone prefixes of 13 other U.S. cities.... Besides St. Louis' 314, other area codes that A-B is seeking trademarks for: 412 (Pittsburgh), 305 (Miami), 619 (San Diego), 202 (Washington, D.C.), 602 (Phoenix), 704 (Charlotte), 702 (Las Vegas), 214 (Dallas), 415 (San Francisco), 216 (Cleveland), 303 (Denver), 615 (Nashville) and 713 (Houston).

The obvious question: why? Well, there's this:

Chicago-based brewery Goose Island, which A-B bought this year for $38.8 million, produces a wheat ale called 312, a nod to that city's area code.

Here's the moment where a good blogger would offer some insight into A-B's motives, but I have none. Goose Island's 312 is cool because it's a Chicago brewery, Chicagoans know that, and they appreciate the local nod. But a San Diego-specific Goose Island 619 wouldn't necessarily draw the delight of Arrogant Bastard fans. (To this point, I am not surprised A-B skipped "503.")

It also seems pretty absurd that A-B could hold the trademark, even in a very constrained context, to a number. But trademark law and I don't see eye to eye, so what I think is absurd and five dollars will buy you a nice pint of ale.

Overcompensation?

Serving as further evidence of Sally's Rule*, we have the latest gambit from Belgian-owned Budweiser (via email):

This week marks national flag week; which is a time to pay tribute to the greatest symbol of patriotism in our country. It is a time for all Americans to display the American flag and celebrate our freedom. It is also a time to honor those military heroes that have fought for our freedom with the American flag adorned on their uniforms. To celebrate national flag week and the patriotic season leading up to July 4^th, Budweiser has altered its iconic can by creating a red, white and blue Patriot Can.

Let us count the ways in which this is wrong: it demeans the flag to be used to hawk beer; it's slimy to appropriate respect for the military to hawk beer; calling it a Patriot Can is bizarre for a foreign-owned company and strangely jingoistic. Bud, which for two decades had the most subtle, effective branding strategy in America, now uses cheap tricks as it casts about for a post In-Bev identity. Fail.

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*Macros don't sell beer, they sell packaging.

A Strange Little Revolution Has Died

This is a strange one: ten beer-drinkers filed suit two years ago to block the In-Bev/Anheuser-Busch merger, and amazingly, it made it all the way to the 8th Circuit Court:

The suit cast the deal as a "plain violation" of federal antitrust law, among other things. If the deal went through, the lawsuit insisted, "the beer market in the United States would be controlled by absentee foreign owners (while) consumer welfare and choice and the benefits of competition would be substantially lessened and tend toward the creation of a monopoly."

The suit also claimed that "the constant threat of InBev, the largest brewer in the world, to enter the market" substantially affects the market behavior of Anheuser-Busch and other U.S. brewers.

However, somewhat less amazingly, the 8th Circuit today dismissed it:

A three-judge panel of the 8th U.S. Circuit Court of Appeals upheld a federal judge's decision to throw out the lawsuit last year... The panel suggested that allowing the lawsuit to go forward now could be counterproductive and fruitless.

What a strange coda the whole affair. If those ten beer drinkers asked me, I'd tell them to switch their loyalties over to Boulevard Schlafly*, still proudly brewed and owned in St. Louis.

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*Confused my cities there. In fact, St. Louis is rich in breweries and good beer, so locals don't have to rely on Belgians for a good pint.

Budvar Slaps Down InBud

The ever-more-steroidal American Belgian Budweiser just can't take down the mighty mouse in Budweis, Czech Republic:

LUXEMBOURG, March 25 (Reuters) - A European Union court on Wednesday upheld a ruling denying Anheuser-Busch Inbev the right to register the Budweiser name as a trade mark in the EU.

U.S. brewer Anheuser-Busch, bought by Belgian counterpart Inbev last year, applied for an EU trade mark in 1996 for the name "Budweiser" for its "beer, ale, porter, malted alcoholic and non-alcoholic beverages."

The application was opposed by Czech brewer Budejovicky Budvar, which makes beer marketed in the European Union as Budweiser Budvar, or Czechvar in North America.

Budvar's opposition was upheld by the European trade mark office, OHIM. After a failed appeal at OHIM, Anheuser-Busch took the case to the Luxembourg-based EU Court of First Instance.

Backstory
Pilsners were born in the Czech republic in the 1840s and named for the town of their origin--Plzen. The style spread across Bohemia (and ultimately, the world) and was taken up by breweries in Budweis. What follows is a classic American story. In the 1870s, Adolphus Busch visited Bohemia and returned to the US with an idea about developing a style based on these beers at his father-in-law, Eberhard Anheuser's, brewery. They decided to name it "Budweiser," after the city they had found it in. Of course, the local beer made in Budweis was also called Budweiser. But the wily American managed to beat the makers of the indigenous brew to the legal punch: Busch trademarked the name before the brewery we now know as České Budějovice--aka "Budweiser."

The dispute has been ongoing for over a hundred years, surviving the Habsburg Empire, two world wars, communism, and now democracy and the EU. At issue: can a foreign country raid a traditional product, establish trademark, and essentially displace the original? For decades the dispute has been a draw: Budvar can be sold under the Budweiser name in the EU, but not the US, where it's marketed as Czechvar. The US product is sold in the EU under the name "Bud." (Interestingly, both are sold as Budweiser in the UK.)

Yesterday's news is yet the latest chapter in the ongoing battle. For what it's worth, from where I sit, the deal seems to be settled as best as it can. No company will ever relinquish rights to the name on their home soil, and the countries won't allow an interloper to threaten local hegemony. We have reached, however uncomfortable it is for the two parties, equilibrium, 21st-Century style.

InBud Deal is Final

InBev completed their takeover of Anheuser-Busch yesterday, and the new company will be called Anheuser-Busch InBev. InBev is the contraction of Interbrew and AmBev, the company's last purchase, and the current name lacks none of the poetry of the previous iterations. It is no less lovely than MillerCoors, the spawn begat by SABMiller and MolsonCoors.

The whole thing makes me feel slightly gross. I know a lot of people in the beer industry have certain tender spots for their products, even if they're wholly bland and without character. At the very least, many of the larger plants offer good union jobs. But with the faceless consolidation happening among the mass market brands, it's hard to conclude that the standard tin can American beer is anything more than:



Sad.

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

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.

Bud's American-style Ale

John has the review I know you've all been waiting for, the latest concoction from Bootveizer's marketing department: American Ale.

And the verdict is: Not bad, not bad at all...the beer skews toward the malty side, but actual hops HAVE been used and it reminds me of a very drinkable ESB. My machinist/home-brewer pal Les Barker, was reminded more of a brown ale and noted that the beer has a nice dry finish.

My first thought: compared to what? Looks like John compares it favorably to Bud, the lowest bar in the beer world. I guess we'll just have to wait and see.

The irony and pathos of calling it "American Ale" should be lost on no one, however. No doubt it will be derided by the craft beer community as "Brussels-made American Ale," or "American-style Ale," or somesuch. I hope that I have broken the ice. Feel free to contribute your own variation in comments.