When Anheuser-Busch Played Mind Games with Distributors

(Photo by David Lofink via Flickr.com)

In March 1996, August Busch III, then-chairman of Anheuser-Busch, the world’s largest brewer, told a national conference of wholesalers that they had better start thinking solely of A-B brands when it came to distribution.

“Each of you,” Busch told the crowd, “must exert your undivided attention and total efforts on Anheuser-Busch products. If you sell our competitors’ products, can you still give us your best efforts? I don’t think so.”     

The speech crystallized a new A-B policy known as “100 percent share of mind.” It was just as Busch described: Distributors should focus on his brewery’s manifold brands to the exclusion of others, committing to A-B as much as A-B had committed to individual distributors. Or else. Or else what? It was never specified, though the threat of losing A-B’s lineup compelled many a distributor to fall into line.

The policy turned out to be a particular bane for much smaller competitors, what the media then often called micro-breweries. And that was kind of the point. The 1990s were a period of torrid growth in both the number of smaller breweries (and brewpubs) and their output.

Breweries such as the Boston Beer Co., Sierra Nevada Brewing Co. and Anchor Brewing Co. had achieved a national, even international, presence, the tide of their success lifting even smaller operations to a wider consumer audience. These breweries seemed the wave of the future at the close of the 20th century, much the way Anheuser-Busch seemed so at the close of the previous one.

Busch’s brewery had already tried other means to stem the rise of these smaller breweries’ market share. A-B bought sizable stakes in some, as did rivals such as Miller. These bigger breweries also famously introduced brands that mimicked the smaller breweries’ packaging, marketing and (occasionally) taste.

With the exception of smash hits such as Coors’ Blue Moon, a lot of these brands did not take. Miller’s Reserve series, introduced in the early 1990s, died an embarrassing death, sales unable to crest 200,000 barrels annually by the middle of the decade—a good showing for the likes of Sierra Nevada, but a pittance for an operation the size of Miller. A-B’s Red Wolf and Pacific Ridge brands proved similarly forgettable.

Along with these de facto knock-offs, A-B also tried to plant doubts in consumers’ minds about the origins of some of these smaller-batch beers. In particular, A-B took aim at Boston Beer, which in the 1990s brewed almost all of its saleable beer under contract at other breweries and not in its Boston headquarters.

Radio and print ads questioned Boston Beer’s integrity (and that of its principal founder, Jim Koch) and led to a (in)famous October 1996 Dateline segment on NBC that blew the controversy into millions of American living rooms.

More than the ad-and-PR campaign, the stake buys or the imitative brands, though, 100 percent share of mind proved A-B’s most successful weapon of the era. There are no exact figures, given the nature of the weapon (how do you measure the fervency of commitment?), but several distributors did drop smaller breweries’ brands in favor of A-B products.

Newer, smaller entrants in particular faced headaches getting their beers to market, but so did older, bigger breweries such as Sierra Nevada. And, although it was by no means the primary cause, A-B’s 100 percent share of mind campaign contributed to a general collapse in the micro-brewing segment at the end of the 1990s.

Of course, the segment has come roaring back, its beers more widely available than ever. As for A-B, 100 percent share of mind slowly faded as a policy. Not that it mattered much in the long run. InBev would acquire A-B in 2008, making the world’s biggest brewer that much bigger (and costing August Busch III his job). That entity now just simply buys smaller breweries, rather than trying to undermine or ape them.

The post-acquisition Anheuser-Busch has also bought several distributors, presenting a renewed threat to the renewed growth of smaller breweries, a threat that has yet to be fully realized. It may prove nothing in the end. Though history tells us otherwise.

Read more Acitelli on History posts.

Tom Acitelli is the author of The Audacity of Hops: The History of America’s Craft Beer Revolution. His most recent book is a history of American fine wine called American Wine: A Coming-of-Age Story. Reach him on Twitter @tomacitelli.