Thursday, January 3, 2008

Striking While the Iron is Hot

I read about this over at Brew Blog, although we've been hearing rumors about this for some time. A-B appears poised to follow Blue Moon (Coors) lead in the craft beer market with a Belgian White of their own - Shock Top. They don't mention when this beer will be released, but just judging by the label (right) I'd guess this is a late Spring to early Summer release.

So, that's the news portion for the morning. What follows is random musings about timing and the industry overall.

Is this the perfect time for A-B to do this? Yes. If you're a shareholder for the company, this is great news I would think. Beer prices are rising in the craft beer market, that's no shock. What's more, there are a ton of new (newish) labels out there. You see this every time you walk down a beer aisle in a grocery store. I can't help but imagine that with their strangle hold on distribution in the US, A-B is poised to put their crafts in every market. Your local bar with 4 Macros and 2 Micros... well, it isn't a stretch to think you'll lose one of the micro's in place A-B's product. Reps will push it, signage will be provided and the incentives overall to switch will speak loudly to bar owners.

I saw this a couple years ago in Northern California with Bare-Knuckle stout (another A-B craft). Bars in my area all of a sudden had this new stout nobody had heard of, posters were on the walls and glassware was provided for those willing to try this new beer. In one bar, in Auburn, the Bare Knuckle replaced a regional micro brewed stout. Who will they go after with Shock Top? I actually can't help but think they're going after Blue Moon, but I also can't help but think that more than a handful of publicans will drop regionals like Great White or even national brands like Widmer.

Will it work? I think it will, to a certain degree. I don't have the stats to back me up here, but I have a feeling that many of those buying craft beers don't have any sort of strong loyalty to micro brewers as a whole. I was talking with a beer buyer for a great store in Souther Oregon last week and he was amazed at how many 20-somethings were buying craft beer nowadays. What was more amazing to him was that a majority (his word) would walk up and buy a 22-ounce craft-beer and with the other hand buy a 12-pack of PBR. That doesn't mean much of anything, except that I believe such buying habits benefit A-B.

Will it hurt the Craft Beer Movement? No, I don't think so. If anything, I suppose shelf space in chain grocers and convenient stores will opt to carry the A-B products. Beyond that (and don't get me wrong, that's not a small thing) I think we'll still be able to support the movement in specialty stores and on-premise sales. This could potentially slow growth for budding brewers, but as a whole I see the industry continuing to grow in double digits this year.

So, in conclusion, here's a summary of what I was trying to say. I think this is good for A-B because:

- A plethora of brands exists, and A-B is a trusted name for most beer buyers. When I did business consulting I used to tell companies if they had more than 5 goals, they didn't have any goals. I think this works for choice too, with a whole lot of buyers. Overwhelmed with variety, not wanting to make the 'wrong' choice, it's just easier to buy from a name you trust.
- Rising prices in craft beer (and macros, but buy smaller margins) means something for so many people out there now, worried about employment, debt and interest rates...
- A-B understands more about buying habits than most of us care to admit.