The other day I was listening to one of my favorite public radio programs, Marketplace, and heard an interesting story about recent shake ups in the beer market. Apparently, amidst declining U.S. beer sales in 2009, there have been a number of mergers and acquisitions involving macro breweries (i.e. the Goliaths in the David v. Goliath beer wars).
We've all heard about Belgium-based InBev buying up Anheuser-Busch, but there appears to be a trend emerging. Dutch brewer Heineken announced recently that it has negotiated the purchase of Mexican beer conglomerate FEMSA, maker of Dos Equis, Tecate and Sol.
I'm no economist, but it seems like some macro breweries have weathered the recession better than others, and they are using cash, debt, and/or stock equity to buy up some of those companies that haven't been doing as well. This could be a big boon to the InBevs and Heineken's of the world, because it gives them wider distribution outside of Europe, and will likely increase their global market share, at least in the short term.
But, I also think something else might be happening, and it's an issue that Marketplace reporter Amy Scott barely touched upon in her segment. There has been an undeniable trend over the past 5-10 years of micro-breweries gaining market share in the U.S. as American beer tastes skew increasingly towards more flavorful, more full-bodied, and yes, higher A.B.V. beers. True, craft breweries still have a very small piece of the pie, but it's getting bigger.
What if the big guys are starting to get scared of the little guy? And instead of improving the quality and flavor of their own beers, what if they are gobbling up each other in the hope that they can bully the micro-breweries around, without improving their product?
As statistician Nate Silver noted in his blog, it's difficult to understand what is driving this divergence--and whether it's a one off thing, or part of a larger trend--but he thinks it may have something to do with more Americans "substituting Michelob and Coors for more expensive micro-brews like Alpha King and Dogfish Head." Presumably, Americans are drinking more craft beer, even while total beer consumption is declining.
All of this begs the question: What would you do if you were the executive of a big, macro-brewery with loads of cash to spend?
Would you 1) buy a Mexican beer company that mass-produces poor quality beer that Mexicans themselves don't like to drink, and Americans are increasingly dubious of? Or, would you 2) acquire a well respected craft brewery that is making really good quality stuff, and gain a foothold in the fastest growing segment of the beer market? Hmm...
