While Anheuser-Busch (AB) made a lot of headlines acquiring small independent breweries into its High End portfolio, it has very conspicuously avoided any association with those brands. A recent 10 Barrel 10th Anniversary celebration made no mention of AB’s ownership of 10 Barrel, which it acquired in late 2014. A controversial plan for AB’s Golden Road Brewing to open a brewpub in Oakland led to the jaw-dropping whopper from Golden Road’s Meg Gill, as reported in East Bay Express, who told “…a group of (Oakland) residents on Wednesday that “non-factual opinion columns” are trying to paint Golden Road as part of Anheuser-Busch, and that such reports are — her words — “fake news”
Whether or not you think this is all an evil corporate cover-up by AB to masquerade as a local brewery, I think this is a bad idea from the standpoint of pure capitalism. That’s right, even from a perspective driven by naked greed, I think AB would be more successful with their High End if they disclosed their ownership in their craft beer brands like 10 Barrel and Golden Road. Sure, people care a lot more about where their beer is made than they do their toothpaste, so I understand the logic behind it. I just think it’s the wrong approach.
I write this as someone who spent the last 20 years selling technical equipment to companies for measuring things like the power of a laser beam. You may think selling equipment like that is a lot different than selling beer, and you’d be right. But there is a common ground in sales, whatever is being sold, which applies to both power meters and beer. I certainly realize AB InBev has plenty of smart, experienced sales and marketing folks, but there’s plenty of cases where smart, experienced marketing folks made bad decisions. I think this is one of them. Besides, lacking relevant experience on a subject has rarely stopped any blogger from spouting off their opinions on something and it’s not going to stop me either. So allow me to explain why it’s in AB’s best interest to disclose their ownership in their High End brands with consumers.
Point 1: It’s a lot harder to hide the truth in the information age
It’s rather futile for AB to hid their ownership of breweries in The High End portfolio when a simple Google search of terms like “Golden Road Brewing”, “10 Barrel Brewing”, “Elysian Brewing” generates links to news stories of these breweries acquisition by AB on the first page of results. You don’t have to be a brewery obsessed beer wonk to learn those Golden Road brews you liked at your friends party are in fact, from the same company that produces Budweiser and Bud Light. A big problem with AB’s approach in hiding the ownership of their High End brands is that people are going to very find out the truth very easily sooner or later.
Point 2: “The High End” should become the AB InBev “Seal of Approval” in an Era of more suspect beer.
Say what you want about about craft beer sell-outs, breweries like Golden Road, 10 Barrel, Goose Island, and Elysian brew mighty tasty beer. I’ve had a fair share of beer from independent breweries that may have been brewed with honesty and integrity, but basically sucked. Small independents brew lots of great beer, but I’ve found the quality can be very uneven at times, especially from new breweries. AB brands don’t have these issues. I’m fine to give my local brewery a mulligan on a lackluster brew full of off-flavors, but the typical beer drinker isn’t that way. Identifying beer as an AB High End brand is a great signal to consumers the beer is going to be good.
Final point: AB has a lot more to gain from loyal Bud drinkers and others ambivalent about “purity of craft beer” than beer geeks that probably wouldn’t drink their beer no matter what
More or less, beer drinkers can be lumped into three categories:
a) Those that drink mass market lagers and might occasionally drink a beer of a different style like a Pale Ale, Saison or IPA.
b) Those that drink a mix of mass market lagers and Pale Ales, Saisons or IPA.
c) Those that drink almost exclusively a wide variety of beer styles, often exclusively from independent breweries.
There’s certainly debate about the size of these groups, but a) and b) put together easily dwarf group c). Even though c) is certainly getting bigger and a) is getting smaller, group c) consists of maybe 10-20% of the beer drinking population with a) and b) comprising the rest. Those in group a) aren’t going to care all that much that 10 Barrel’s Cucumber Crush comes from the same folks that bring you Budweiser. In fact, they may prefer it comes from a company they are comfortable with than a suspect brewery they never heard of. Those in group b) also won’t care that much about who owns the brewery either as long as they can be confident in their purchasing decision. Of course, group c) is full of of beer geeks, many of whom would refuse to drink anything from AB and they’re such information driven consumers, you’ll never fool them into drinking AB.
So when AB goes to great lengths to hide their involvement in their high end brands, they are pursuing a strategy that matters the most to the smallest group of beer drinkers less likely to drink their beer, while failing to leverage and enhance their brand to a much larger group of beer drinkers that would. Not only is it dishonest and raises questions about what AB is trying to hide, it really seems like a lost opportunity for AB to claim a position of superior brewing quality with their brand.
So far, AB is doing fine with their High End portfolio without my advice, but I expect at some point they’ll be more forthcoming. That’s because it’s to their advantage to do so, and even an evil corporation will figure out it’s the right thing to do.