When beer’s like a soap opera

Big beer can be like a soap opera. At times you find rivals in bed together, at each other’s throats and other power games. Take Molson Coors and SAB Miller. They’re global competitors, except in the United States where they have the joint venture, Miller Coors. In Ireland, Diageo produces rival Anheuser-Busch InBev’s Budweiser. Three years ago SAB Miller acquired Fosters but the Australian-based brewery doesn’t own the rights to its namesake beer in Europe, Heineken NV does. Confused? You’re not alone. It’s a question of extending global reach, of achieving or retaining market share, of seeking efficiencies in production as well distribution.

The week commenced with news that the family-owned Heinken NV rejected a take-over by the second-largest brewing concern, SAB Miller. Heineken itself is the third-largest brewer in the world and is sold in over 100 countries. According to the Wall Street Journal, the advantage to SAB Miller was that it would strengthen its reach into Latin America (Heineken owns Dos Equis & Tecate) and Asia, where SAB Miller is weaker (with the exception of Colombia). Other benefits would be that it would’ve reunited the Fosters brand within the one company, seen Grolsch, Heineken & Amstel together. Possibly with Heineken continued to be pushed out into the export market (especially Africa) and the former being concentrated closer to home. SAB Miller recently acquired family-owned Peroni and already has the ubiquitous Pilsner Urquell joining Miller and Castle and Polish lagers Lech & Tyskie in its stable.

So you’re probably thinking this is a moot point now, given Heineken’s rejection of the approach. Well, it gets even more interesting. The second-largest brewer is now subject to a take-over itself by none-other than the global powerhouse that is AB InBev. According to the Wall Street Journal, the Belgian-based company and the largest brewer in the world is currently engaged in discussions with banks over financing the take-over. The reported amount is a staggering €94 billon. The largest deal in the brewing sector to date was the 2008 acquisition of Anheuser-Busch by InBev for $52 billion. They also bought Mexico’s Grupo Modelo, makers of Corona for $20.1 billion in 2013.

In 2013, AB Inbev had approximately 20% of the global beer market (source: Euromonitor). So why does it need SAB Miller? Any deal would further strengthen its foothold in South America and complement existing markets. More importantly, according to Bloomberg, it would give AB Inbev access to markets with rapidly expanding markets in China and across Africa, as well as a bigger presence in Australia. The effect of the acquisition would be subject to approval, such as the likelihood of SAB Miller having to end its interest in Miller Coors. This wouldn’t be too much of a downside because it could simply enter an intra-company arrangement with the Anheuser-Busch operation.

It is perhaps AB InBev’s luck that Heineken rejected the SAB Miller deal because a prospective take-over or merger would seem unlikely as a SAB Miller-Heineken concern would be a similar size to the Belgian behemoth. So where does that leave Heineken? Apparently there are now rumours of Molson Coors and Heineken coming to some sort of arrangement. This could see the houses of Molson, Coors and Heineken coming together to create one big happy family.  Although, such a deal could be interesting in terms of both breweries operations in Cork. In the meantime, Heineken is considering the sale of its Czech operations to Staropramen, owned by none other than Molson Coors (source: Reuters). We just have to wait and see what Diageo and Carlsberg responses will be.

As I said, it’s all confusing and that’s why I think so many people enjoy the small, independent and local aspect of the craft beer movement. Less focus on the bottom-line, more on the product. However, an eye will have to be kept on the continued consolidation within the beer industry because of impacts on distribution, sourcing of raw materials and bottling. Macro-beer will continue to be like the cheesy American soap operas.

Could a rise in tensions lead to all out macro-war?

There’s a perceptible rise in tension between some of the large breweries in Ireland. This goes beyond the normal uber-competitive nature to retain or grow market share. The aggressive stance being taken by breweries appear to be a result from the determination of Molson Coors to establish itself within the Irish market.

Not just content with its acquisition of Franciscan Well, Molson Coors already holds 10% of the Irish lager market and is determined to raise its influence with the on-trade. This includes independent licensed premises being offered up to 30% saving on their Sky TV commercial subscription when combined with stocking drinks from Molson Coors’ portfolio. It has also invested heavily in launching Molson Canadian in Ireland, with a large advertising spend and drinks promotions. One particular ad was subject on the Joe Duffy Show because it featured the statue of Jim Larkin, anti-capitalist and noted teetotaler.

Big Jim was always know for being a corporate sell-out & love of drink, oh wait...
Big Jim was always know for being a corporate sell-out & love of drink, oh wait…

C&C Gleeson has a remarkable slice of the on-trade market in Ireland, no doubt built on the back of Bulmers and a large distribution business. Clearly not happy with potential threat of Molson Coors, the company is taking note of new offerings offered by their rivals. It would seem that Smithwicks Pale Ale has seen off the threat of Caledonian Smooth. The new front this time is the lucrative lager market and clearly focused on Molson Coors. First, was the roll-out of Heverlee, a premium Belgian beer that recreates a “classic bygone taste” (i.e. before craft beer). They followed this up with the launch of Irish-made lager, which was launched on 31 July 2014.

Clonmel 1650 is being billed as “a Pilsner-style lager with an ABV of 4.3%, this medium-bodied lager delivers the key attributes expected from a Pilsner, but with a particularly memorable taste which hovers between slightly fruity, estery and subtly hoppy”. All of this is code for yet another inoffensive lager (except when perhaps presented with the price for it). The poignancy of the name should not be ignored. The Siege of Clonmel took place in 1650, where 2,000 inhabitants held out for 5 weeks against Cromwell’s foreign army of 8,000 strong. According to the press release and ignoring the origins of pilsner, this beer wants to be hailed for its “Irishness”.

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The advertising and branding for this beer is clearly targeting both Molson Coors and Diageo. It’s being billed as “Irishness” v “Foreigness”. They’ve borrowed some of the popular lines of attack from the craft beer movement.

Wonder which brewery has been pushing beer from west of the Rockies?
Wonder which brewery has been pushing beer from west of the Rockies?

 

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Just remember that the next time you visit the pub that the Macro Cold War is once again in danger of going hot…

On the radio talking about beer and “various things like that”

It’s been quite some time since I was on the radio for an entire show. Well gone are the days when I hosted a Saturday morning music show on Dublin Weekend Radio. So it was a nice to have been invited onto Food Talk on 103.2 Dublin City FM on Tuesday 5 August by the show’s host, Margaret Scully. The subject of the show was what else but beer and “various things like that”. I must say it was an enjoyable experience (especially finding out that the previous interviewee was Michelin-starred chef, Kevin Thornton) and the 30 minute chat just flew by, covering everything from beer sommeliers to how to taste beer to the vibrant craft beer scene in Ireland.

You can listen back to the show:

http://foodtalk.podomatic.com/entry/2014-08-22T04_35_28-07_00

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Check out Food Talk, which is broadcast on 103.2 Dublin City FM every Tuesday at 1pm.

Things even peachier for US craft beer

Had to get the right glass to try this beer from, a mason jar of course.

At the beginning of July I posted a piece on the US craft beer industry and the healthy state it was in. I based this on data available from the Brewers Association (BA). Since then, however, new data was released by Internal Revenue Service covering breweries operating at the end of June 2014 in the US and was published by the BA. There are now 3,040 breweries across the US. This is represents a 7.7% increase in breweries since 2013 and the number of breweries operating is at the highest level since the 1870s.The BA estimates that 99% of breweries are craft and that the majority of Americans are no more than 10 miles away from a brewery. The figures aren’t fully analysed and I’m looking forward to reading them when they’re released.

In the same piece, I mentioned that the Kentucky Peach Barrel Wheat from Alltech’s Lexington Brewing and Distilling Co. was going to be available in limited quantities in Ireland. I had the opportunity to taste it this past weekend. You’re immediately hit by an aroma of sweet peach and vanilla oak. There’s also a nose tingling effect resulting from the bourbon warmth. With the head clinging to the side of the glass, it pours extremely pale, a light gold and is filtered clear.

You get the peach up front but the bourbon takes over, matches with the sweetness though. However, you’re hit by the aroma on each sip; similar to a tropical shampoo taking over your senses when washing your hair. It’s drinkable, dangerously so when compared with the snifter sipper that is the bourbon barrel ale. This beer has also spent six weeks in used casks.

I’m not one for cocktails (I prefer the Bellini with just the champagne) but I can see that at 8% ABV this beer is aimed at those who do. On the other hand, when you take into account the popularity of fruit wheat beers out there and in particular Sweetwater Blue (with blueberries and at 4.9%) out of Atlanta, this beer could perhaps be lower in alcohol and still achieve the same impact. Doing something like that could prove to be a big seller (even on a seasonal basis) if they wanted to re-release it on a more regular basis.

Had to get the right glass to try this beer from, a mason jar of course.
Had to get the right glass to try this beer from, a mason jar of course.

It would be good to see some more lower alcohol bourbon-inspired ales on the market. Take for instance BrewDog’s Bourbon Baby at 5.8% ABV. It’s a scotch ale aged in Kentucky bourbon barrels. There’s rich, sweet fruits on huge nose. The beer pours dark and topped by a frothy head. There’s the expected vanilla woody notes on huge taste and sweetness continues into the finish complete with a warming sensation. According to Fraserburgh’s finest: “This is light. This is dark. This is Bourbon Baby”.

There's certainly room in the market for lower (albeit not too much) bourbon barrel aged beers
There’s certainly room in the market for lower (albeit not too much) bourbon barrel aged beers

Celebrating the independence of US craft brewing

This year saw the passing of a true revolutionary, Jack Joyce, co-founder of Rogue Ales and patriarch of Rogue Nation. He was a firm believer in “freedom of expression, absence of bullshit, variety, and the pursuit of beer with taste” even challenges the conventional craft beer mantra of small, independent and traditional. A former lawyer for Nike and who had negotiated Michael Jordan’s early shoe deals, Joyce was committed to “doing things differently, a desire and a willingness to change the status quo” and be believed that being a “leader doesn’t mean you have to be the biggest”. He like Fritz Maytag, Ken Grossman and even Jim Koch and Steve Hindy (although he reportedly didn’t agree with contract brewing) left an indelible mark on the US craft brewing scene. So when he checked out on 27 May 2014 what shape was the US craft beer industry in?

Jack was toasted at a beer tasting I hosted at the beginning of June
Jack was toasted at a beer tasting I hosted at the beginning of June

There are now 2,768 craft breweries in the US out of 2,822 total breweries. This represents the continued upward trajectory of craft brewing. There was an increase of 15.3% in number of craft breweries n 2013 than the previous year. In keeping with year-on-year growth in market share and production output, there was a significant increase in the number of regional craft breweries in 2013.

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US Craft Brewing Facts:

  • There are 2,768 craft breweries in the US (overall 2,822)
  • Craft breweries increased by 15.3% in 2013; regional craft breweries (+22.6%), microbreweries (+22.8%) & brewpubs (+7.1%)
  • Slight decrease in total number of microbreweries opening in 2013 (304) to 2012 (340)
  • Sales up 17.2% in 2013 (overall beer sales down 1.8%)
  • Market share stands at 7.8%
  • 49% increase in US craft beer exports
  • 18% increase in craft beer volume production (overall beer down 2%)

This time last year, I posted a piece on Fritz Maytag in Revolution in Red, White & Brew because I wanted a US feature for July 4th. He was a pioneer not only in terms of what he did in saving and transforming Anchor Steam but more generally what he did for inspiring independence in US brewing. A group of us were only discussing his contributions to the revolution during the European Beer Bloggers Conference (EBBC 2014). This year, I’ve decided to focus on an Irish-American connection in Dundalk-native and now resident of Lexington, Kentucky Dr. Pearse Lyons.

Dr. Pearse Lyons addressing attendees at the International Craft Brews & Food Fair (source: Alltech)
Dr. Pearse Lyons addressing attendees at the International Craft Brews & Food Fair (source: Alltech)

At EBBC 2014 I had the opportunity to have a beer with Brian Yaeger and it was in his 2008 book Red, White and Brew that I first came across Pearse Lyons and what he was setting out to do in terms of brewing in Kentucky. The Southern US states, with a couple of exceptions (e.g. Texas, Florida etc), were fairly late to the craft beer revolution. Today the State of Kentucky is only 39th in number of breweries and 45th in terms of breweries per capita. On this side of the Atlantic, few had heard of the Lexington Brewing Company up until recently.

A familiar sight at Irish beer festivals
A familiar sight at Irish beer festivals

Over the past two years, the awareness of the Alltech, Dr. Lyons and the Kentucky brands both in terms of beer and whiskies has grown. He may have left for the US in the 1970s but he has always kept one foot on the island, just look at the Alltech investment in Dunboyne. He’s even building a distillery in Dublin. There’s a great team at Alltech and I’ve gotten to know a few of them over the past couple of years. However, one can see Dr. Lyons as the driving force behind all that they do and he describes himself as an “entrepreneur, salesman, marketer and scientist all rolled into one”.

The Alltech Lexington Brewing and Distilling Co. produces a number of beers, all ales. Their flagship is Kentuck Bourbon Barrel Ale, which is the result of aging their 6% Kentucky Ale in bourbon barrels for six weeks. I’m not that much of a whiskey drinker and always found bourbon a unique prospect but I must say this beer has grown on me, especially when it’s served in a snifter. It tastes of good ol’ Kentucky bourbon. They have followed suit with a stout also aged in a bourbon barrel with the added addition of Haitian coffee (also owned by Alltech), which maries well with the bourbon smoke. They produce a good value IPA (although would love to see them bring the cans to Ireland) and a Kölsch-style beer, which when I first saw the beers on sale a couple of years ago in Nashville, was branded Kentucky Light. As a sign of encouraging new craft beer consumers, this name was thankfully dropped. They have produced three seasonals but only one of which has arrived in limited quantities in Ireland, the Kentucky Peach Barrel Wheat. The others being two collaboration brews, a bourbon barrel maibock (with Blue Stallion Brewing Co.) and the other being a blend of barrel aged stout that has been specifically aged for two years and Country Boy Brewing’s Black Gold Porter, oh and of course the blend is then barrel aged for good measure.

Alltech’s Lexington Brewing and Distilling Co. was asked to supply beers & whiskey for ths US Embassy's Fourth of July celebrations
Alltech’s Lexington Brewing and Distilling Co. was asked to supply beers & whiskey for ths US Embassy’s Fourth of July celebrations

A year ago this July, Alltech held the first International Craft Beer and Brewing Convention in Dublin and a second edition was held earlier this year. The good news is that the event (rebranded as the International Craft Brews and Food Fair) will return in February 2015. The first focused on entrepreneurship (see Brewing up new businesses) and the second had growing the market for craft beers (targeting customers and publicans) as a theme. There’s even the Dublin Beer Cup and opportunities for brewers to introduce their wares directly to consumers. N17, Rascals, Stone Barrel Brewing and Independent Brewing made their beer festival debuts in Febuary 2014.

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The two Dublin editions afforded valuable opportunities for people in the trade to network and form new connections, some of which have resulted in new business for Irish breweriers. For example, Galway Bay Brewing has just done a collaboration brew with Chicago’s Begyle Brewing, a conference alumnus. Hardknott from Cumbria got added opportunities to visit Ireland and ahead of this year’s conference, brewed Yerba with Metalman. Alltech has rolled out this conference in Kentucky and I’m sure a number of Irish brewers are itching to be invited.

For what he has done in terms of brewing and for what he’s doing in terms of promoting the industry more widely through conferences and numerous events, this is the reason I chose to feature his contribution to the craft beer revolution.