Alpha Consumer

'Beer Wars' Falls Flat

By Kimberly Palmer

Posted: April 17, 2009

Today’s guest post comes from Amy Mittelman, author of Brewing Battles: A History of American Beer.

'Beer Wars Live' was a unique event, which I suppose was what Anat Baron, the director, intended. The film itself was slow moving and rather dated. The two main villains are Anheuser-Busch and the three-tier system of beer distribution. The protagonists were Sam Caligione, the very charismatic and appealing owner of Dogfish Head Brewery and Rhonda Kallman, co-creator of Sam Adams and current promoter of Moonshot Beer.

Baron attempts to provide a story by focusing on Caligione and Kallman, but there isn't much drama. Caligione appears to be succeeding, although he does worry about the financial risk he is incurring. Moonshot is a caffeinated beer and Kallman meets a lot of resistance to this idea. Personally, the beer does not seem appealing to me.

Baron tried to provide tension by searching for August Busch, great-grandson of the Anheuser-Busch founder, and demonstrating, to good effect, the impressive political and economic power of wholesale distributors. However, in her portrayal of the beer industry, she conflated some of the facts. The Beer Institute and the National Beer Wholesalers Association (NBWA) represent two different aspects of the beer industry and do not share identical interests. Further, the Brewers Association often shares some of the political agenda of both bigger organizations, especially in the areas of taxation and alcohol control legislation.

[For more, read a Q&A with the film's directer.]

Baron made Beer Wars prior to the merger of Miller-Coors and the sale of Anheuser-Busch. At the end of the movie, she portrays the Miller-Coors merger as inevitable given Anheuser-Busch’s invulnerable and powerful position in the market. When she has to acknowledge the surprising sale of Anheuser-Busch to InBev, she offers no explanation. Since she completed the movie, the country has gone into a deep recession and our changed economic circumstances made the movie feel out of touch. Although the craft brewers seem like "regular" people, much of the movie takes place in a corporate, overwhelmingly white environment.

When the movie was over, Ben Stein moderated a panel discussion. Although Baron received a lot of criticism online for choosing Stein, I thought he did a good job. At the end of the discussion, he asked both Sam and Greg Koch, founder of Stone Brewing, if their breweries had been growing. Both answered that they had grown phenomenally in the past ten years. This directly refuted Baron’s main point about the stranglehold the three-tier system puts on small brewers.

I went to see 'Beer Wars' as someone who already knows a lot about the beer industry. My sense is that the audience, both in my theater and at the live event, was in a similar position. Baron is essentially preaching to the converted. I don’t think 'Beer Wars' will convince a committed Bud drinker to change his or her mind.

The German Beer Market

As a beer buyer who works with several distributors, inc. Stone, in Los Angeles I feel we are very fortunate to have craft brewers here in California that can distribute their own products. Increasingly I am approached by local brewmasters who can promise to bring in their beer whenever we need it. In addition, this holds out the promise that when they grow like Stone, they can begin distributing other people's beers. I can only commend, applaud and admire Greg and the rest of the folks at Stone for supplying us with beers that could be seen as direct competitors. In fact, as we all hopefully know by now, this market is not a zero-sum one and the ethos of craft beer is respecting and learning from others, all the while loving your own product. Arrogant AND humble!

Finally, Amy's point about the future of the US beer market is well taken. In the past, there were countless breweries with small market shares here. Perhaps we are revisiting that era ever so slowly. For a very different type of beer market, albeit a changing one, I suggest a glance at the German one. As the Wikipedia page indicates, even the biggest brand only has 7% of the market. Some call it "fragmented", I'd call it locally-oriented.

"While the beer market is weaker but more centralized in northern Germany, the south has lots of smaller local breweries. Almost half of all German breweries are in Bavaria[11]. In total, there are approximately 1300 breweries in Germany producing over 5000 brands of beer. The highest density of breweries in the world is found near the city of Bamberg, in the Franconia region of Bavaria. The Benedictine abbey Weihenstephan brewery (established in 725) is reputedly the oldest existing brewery in the world (brewing since 1040).

The biggest German brands in volume terms (millions of hectolitres) are Oettinger (6.7%) followed by Krombacher, Bitburger, Warsteiner, Beck's and Veltins[12]."

cheers,

Carl Berqguist

Los Angeles

Carl Bergquist of CA @ Apr 27, 2009 17:34:53 PM

The German Beer Market

As a beer buyer who works with several distributors, inc. Stone, in Los Angeles I feel we are very fortunate to have craft brewers here in California that can distribute their own products. Increasingly I am approached by local brewmasters who can promise to bring in their beer whenever we need it. In addition, this holds out the promise that when they grow like Stone, they can begin distributing other people's beers. I can only commend, applaud and admire Greg and the rest of the folks at Stone for supplying us with beers that could be seen as direct competitors. In fact, as we all hopefully know by now, this market is not a zero-sum one and the ethos of craft beer is respecting and learning from others, all the while loving your own product. Arrogant AND humble!

Finally, Amy's point about the future of the US beer market is well taken. In the past, there were countless breweries with small market shares here. Perhaps we are revisiting that era ever so slowly. For a very different type of beer market, albeit a changing one, I suggest a glance at the German one. As the Wikipedia page indicates, even the biggest brand only has 7% of the market. Some call it "fragmented", I'd call it locally-oriented.

"While the beer market is weaker but more centralized in northern Germany, the south has lots of smaller local breweries. Almost half of all German breweries are in Bavaria[11]. In total, there are approximately 1300 breweries in Germany producing over 5000 brands of beer. The highest density of breweries in the world is found near the city of Bamberg, in the Franconia region of Bavaria. The Benedictine abbey Weihenstephan brewery (established in 725) is reputedly the oldest existing brewery in the world (brewing since 1040).

The biggest German brands in volume terms (millions of hectolitres) are Oettinger (6.7%) followed by Krombacher, Bitburger, Warsteiner, Beck's and Veltins[12]."

cheers,

Carl Berqguist

Los Angeles

Carl Bergquist of CA @ Apr 27, 2009 17:34:51 PM

Response to Greg Koch

Greg,

Thanks for commenting. I realize that craft brewers face an uphill battle versus the large brewers. I was pointing out your success to indicate that I don't think the situation is as dire as the movie suggested. Yesterday I was in a local liquor store that had a nice selection of Bud, Coors, and Miller as Stone, Boston Beer, Smuttynose, and High and Mighty. Distributors and retailers are business people and will respond to the "pull" you describe.

I wanted to congratulate you on articulating, both in the panel and in blog comments your vision of what economic success and growth means to you. I don't believe that it is inevitable or desirable that all companies wind up as big as Anheuser-Busch.

Amy Mittelman of MA @ Apr 27, 2009 15:22:47 PM

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Alpha Consumer

Alpha Consumer

Kimberly Palmer, senior editor for U.S. News & World Report, writes about how to save money, avoid scams, manage debt, and be a savvy shopper. Send your personal finance questions to her for expert money advice.


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