Apocalypse Brau

A beer writer reflects on his 20-year career as he prepares for the end of the world

May 1, 2012 By Harry Schuhmacher

It isn’t necessary to imagine the world ending in fire or ice. There are two other possibilities: One is paperwork, and the other is nostalgia.—Frank Zappa

This will be my last column, as the Mayans have predicted that we are all to experience a painful death in December 2012. Unless the Mayans are lying, we’re dying. But then again the Mayans weren’t the most trustworthy bunch. Did they really predict the end of the world? No matter, if this is it, I sure as hell ain’t going to be banging out any more articles. I’ll be too busy immersing myself in a sort of Bacchanalian revelry. Caligula will have nothing on me. Bring me my bottle of Infinium and my jewel-encrusted chalice and release the dancing girls. What, no jewel-encrusted chalice or dancing girls? Well, just bring me my 1998 Anheuser-Busch commemorative mug, a can of Steel Reserve and my long-suffering wife.

As the end draws near, it brings on bouts of reflection. Which naturally beget regret and a few points of light. As I look back on my 20-plus-year career in the beer industry, I ask myself what my enduring legacy will be. Mmm. Not much, I fear. I haven’t produced any good beer, erected any fermenters, owned any distribution trucks or sold any beer at retail. I’ve drunk an awful lot of beer and made an awful lot of friends. Urine? And laughs. That counts for something, I guess.

I’d say the main legacy that I’ve left behind is a big honking block of beer writing, chronicling the beer industry’s change five days a week since 1998 in Beer Business Daily. Assuming 250 workdays a year, and an average issue of BBD is 2.5-page long, that’s 8,750 pages of beer trade writing. It’s exhausting just writing that sentence. That’s the equivalent of about 40 novels.

Of course, when I started writing about this industry, it was much different. The players were different, the number of players was different, and the power each player wielded was different. Back then, it was Miller Brewing Co., Coors Brewing Co., Anheuser-Busch and a few regional and craft brewers and importers who didn’t amount to much. In fact, when I got into the beer business in 1991, craft beers had less than one market share point. The largest three brewers (A-B, Miller and Coors) had 80 share points and growing. The regionals (Pabst, G. Heileman, Stroh, Schlitz) were gasping to hold onto their 15 share points, and the imports only had 5 share points and were not growing.

The hot topic that year was the doubling of the federal excise tax on beer, and whether Coors was going to buy Stroh or when Heineken was going to start using more beer distributors instead of wine and spirits distributors. Budweiser was starting to feel softness, but was still by far the largest beer brand in the United States, selling 2.5 times as much as the next-largest brand, Miller Lite. Amazing as it sounds today, Bud Light and Coors Light were selling about the same amount of beer. Corona sold less than a million barrels. Heineken was twice the size of Corona. Pabst Blue Ribbon was in a free fall and would lose half its volume in the next 10 years.

Bud Light now sells more than twice as much as Budweiser, Coors Light outsells Miller Lite, and PBR is back to what it was selling in 1991. And crafts are inching up on seven share points and growing like gangbusters.

The structure of the industry has changed as well. We now have what I’d call a duopoly, with AB InBev and MillerCoors eating up about 80 share points. Both are owned by multinational conglomerates. Craft brewers have sprung up in virtually every town, and some have grown to be national or regional brewers. Yuengling and Boston Beer, which were barely on the radar screen in 1991, are now large players with more than one share point a piece. Stroh, Schlitz and G. Heileman, once players, are gone as breweries. And yet some former big brands are making a comeback. PBR is the big one, but you also have Genny, Lone Star, Rainier, Narragansett and others. Even Budweiser is starting to turn around. My, have times changed and continue to change. But of course, it all won’t matter come December, 2012. If you can’t find any dancing girls, just bring me a turkey leg.

I imagine today’s beer industry is not dissimilar to the beer industry my father encountered in the 1950s and 1960s. While the beer industry of my youth (1980s -1990) were dominated by big national brands which all more-or-less tasted the same, his beer industry was one of strong local and regional breweries with unique characteristics battling against up-and-coming national brands. I remember my father telling me the big national brewers were soon going to dominate everything, and that would be the nail in the coffin for smaller breweries. But of course, if you live long enough, you can see that Madam History, like all beautiful women, occasionally gets bored with herself but is too lazy to think of something new, and so repeats herself. Simba called it the “Circle of Life.”

Industries consolidate in the name of cost efficiencies and the wonders of mass production. And then, when there is nobody left to buy,the consumer wakes up and says, “Hey, I want more choice.” And then the industry de-consolidates. Happened in coffee. Happened in chocolate. And it’s obviously happening in beer with the craft beer renaissance. And it will even happen on the international beer stage. You watch: In the next 10 years, I believe, AB InBev will be broken up and sold off in pieces, because the pieces will be worth more than the whole. Why not 20 years? Because that bitch Madam with her iPhone and Twitter gets bored more easily and quickly these days.

But through it all, there has remained one constant: the beer distributor. Yes, beer distributors have consolidated and become more sophisticated, but they still perform the same function: consolidating orders, selling, delivering and merchandising beer. Since Prohibition repeal, distributors have had to master the art of diplomacy—keeping all of their various beer suppliers happy. Because they have consolidated, they now have to master a very important new task: managing all of the new brands and packages that are coming down the pike at a furious rate. It’s daunting, but with technology, doable. But why bother? It’s all in vain. Are my dancing girls here yet?

Craft brewers have their own challenges today. The main one being raising capital for increasing capacity. If I were a young brewer today, I’d leverage up to the hilt and buy as many tanks and bottling and kegging lines as possible. Because if the world ends, it won’t matter, anyway. If it doesn’t, well, it’s always better to dig a deep hole and climb out of it than to just rest on your laurels. In reality, we very well may end up with too many breweries again at some point, which will facilitate a shakeout and consolidation among craft breweries.

I guess I’m going to keep churning out my paper, chronicling those who actually accomplish things in this great industry. You know, just in case.