Panic at AB/InBev

[FedoraDave]

http://www.mainstreet.com/article/why-b ... ads/page/3

Of course they want a larger share of the beer market; anyone in business wants as much of their market as possible. I can't fault them for that. But insinuating that the beer market will die if under-30s don't buy Bud and Bud Lite is like a horse-drawn buggy manufacturer saying that if people start driving these new-fangled automobiles the transportation industry will die.

I think the beer market in America (particularly the under-30s) is more savvy than previous generations, who pretty much didn't have much choice.

[joechianti]

If they're not careful, they'll end up being to beer what Blackberry was to cell phones.

[RickBeer]

I did not read the whole article, just skimmed it. Keep in mind that the way beer gets to the consumer is via a distribution network. That network, which is governed by a myriad of federal and state laws, makes its money off volume. Who provides the biggest volume? So, if you eliminate the big guy(s), then there is no volume and the distributors can't support their business and ...

[Beer-lord]

No tears for lost AB beer here. Lots of millennials don't have money and are still living at home with mom and dad so spending on beer could be the last thing they can afford. But, usually, partying finds a way to happen and the cheapest drunk is on.

[Brewbirds]

I did not read the whole article, just skimmed it. Keep in mind that the way beer gets to the consumer is via a distribution network. That network, which is governed by a myriad of federal and state laws, makes its money off volume. Who provides the biggest volume? So, if you eliminate the big guy(s), then there is no volume and the distributors can't support their business and ...

RickBeer... or anyone/everyone else who gets it would do a thread or blog about the distribution process as it relates to the micros. In my part of Texas the local breweries six packs ran, on average eight bucks or so BUT some of the locals sold in four packs at the same or higher prices.
When I got here in Roanoke one of the first things I had to do was go to the store for essentials and of course I hit the aisle to check things out.
They helped me out as a newcomer by putting tags on the pricing labels that read "I'm a local" in large print. But all of those six packs were OVER ten dollars each.

Another weird but happy thing that I discovered is the Bell's is available here the weird part is that their beer was cheaper than the locals.

How are these breweries getting so bullied or beat up by the distributors? If they are willing to move the product in defiance (???) of the big boys how does thing whole system work???

Point is that BMC is whining that sales are off and stats say micro sales are up but that is a complete conflict with economic data that says the middle class has no money.

RB my bird brain wants to know.

[Rebel_B]

Hope this is a hoax....
http://www.seattlemet.com/eat-and-drink ... nuary-2015

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[ScrewyBrewer]

The distributors are the reason a brewery has to charge 25% more per keg, even if that keg never leaves the brewery. Many small local mom and pop breweries go the self distribution route to get out from under the distributors thumb. The three tiered system ran it's course, I think it's long been time for a change.

[BlackDuck]

To Vince's point about the cost mandated by distributors. This was posted on a thread on beeradvocate.com

You can see that the costs related to distribution and retail is about 50% of the total cost.

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[RickBeer]

My understanding is that only very small brewers can avoid distributors, and much of the distribution network is mandated by state laws.

BB, remember that each state has different taxes that also impact price. And some states actually regulate the price of things, i.e. have floors. Don't know specifics on Virginia.

[Chuck N]

The distributors are the reason a brewery has to charge 25% more per keg, even if that keg never leaves the brewery. Many small local mom and pop breweries go the self distribution route to get out from under the distributors thumb. The three tiered system ran it's course, I think it's long been time for a change.

Here! Here!

I never understood the need for the three tiered system. I know it was to keep the breweries from owning the bars and distribution but I would think a much simpler and less restrictive law would have sufficed. Something like language that simply says, "No brewery, distillery or winery can own, in any part, an On Sale or Off Sale establishment or combination of either." A law like that would have opened up the beer market to small breweries right off from the end of Prohibition and, unless you lived in St. Louis, you would have never heard of Budweiser. Beer, wine and hard liquor would have become the local artistic product they were meant to be. You would have had people like us saying, "Let's go to such-and-such town. They have "whatchamacallit" (I can't believe that was in my spell-check ) beer there and I heard it's really good." People would travel from one town to another to sample the local beers. And people like Sam Walton would have never been able to destroy the Main Streets of America's heartland.

Ooops! How did that soap box get under my feet?

[Foothiller]

Looking back to that chart, at least "brewer's margin" is in there somewhere -- although it deserves to be much bigger when it's a good beer.

[joechianti]

Seeing how all that works just makes me want to learn how to make my own beer at home.

[Chuck N]

So. How many of us pulled out our calculators and added up the numbers on BDs' chart?

Apparently no one.

No one but I, that is. According to my calculator there 101% in the cost/profit of beer. I bet it's those damn Feds taking more than they're entitled to.

[Brewbirds]

You know ChuckN I kind of like your soap boxes, you should get on one more often.

JoeC you just might be on to something there.

BlackDuck that chart sucks but thanks for sharing. I will try and make an effort to hit the brewery tours more often so I feel like I am helping them stick it to The Man.

[BlackDuck]

Your right Chuck....those numbers do add up to 101%, must be a percentage point of fluff built in there!!!. If you break those numbers down to who is responsible, ie Brewery, or Distributor, or Retail....the brewery is responsible for 42% of the total retail cost. Which is all the items above distributors margin. And that is the sad part, distribution and retail is responsible for more than half the cost. So in their example of a $12 six pack, only about $5.00 is directly from the brewery, that means that $7 is from distribution and retail. That, to me, sucks!!

And if you think that sucks, in their example of $12 per six, that's $2 per bottle. If you were to buy that bottle at a bar, you'll most likely be paying more than double that for the same bottle. So 'The Man' is really putting it to you when you go out and drink.