Anheuser-Busch has entered the craft beer space with the Michelob brand. The company’s products under that banner include Michelob HefeWeizen, Pale Ale, Ginger Wheat, and Winter’s Bourbon Cask Ale. The company also introduced Pacific Ridge Pale Ale, a thinly veiled copy of Sierra Nevada Pale Ale. Earlier, Anheuser-Busch was attempting to enter the craft beer market with Michelob HefeWeizen, Pacific Ridge Pale Ale, and Winter’s Bourbon Cask Ale. The Pacific Ridge Pale Ale was a thinly veiled copy of Sierra Nevada Pale Ale, while Shock Top was another copy.
Anheuser-Busch’s entry into craft beer
With the growth of craft beer, Anheuser-Busch has stepped in to help small breweries. Craft brews have emerged as a thriving niche within the alcohol industry, drawing a younger demographic. The move will also enable the craft brewers to maintain their independence while leveraging the larger corporation’s distribution channels and marketing efforts. Here are some of the key takeaways from this brewing giant’s recent acquisitions.
For many years, Anheuser-Busch has been working with craft brewers and distributors to make their brands available to consumers. This expanded partnership will allow them to bring premium craft products to the masses, and will strengthen the craft beer industry in the United States. And, of course, it will also help the craft brewers, who will have access to a wider consumer base with a variety of brews to enjoy.
Earlier this year, Anheuser-Busch announced the acquisition of Wicked Weed Brewing. The Chicago-based brewer’s original brews were brewed at a brewpub and were marketed for local and regional consumption. Since then, the company has opened up two more bottling facilities, Goose Island Brewing Co. in Chicago and Devils Backbone Brewing Co. in London. The acquisitions are part of a strategy to build a cache of craft brews.
The Brewers Association of Colorado has made a number of statements about the brewery giant’s entry into craft beer. Andy Thomas, president of Anheuser-Busch’s Brewers Collective, is leading the charge to support craft breweries. Previously, Thomas was the CEO of the Craft Brew Alliance and oversaw the break-out growth of key craft brands. These comments are indicative of the growing pressures that Big Beer is feeling from craft brewers.
Craft brewers may have to compete with multinationals, namely Anheuser-Busch, in the long run. Craft brewers may sell themselves as an antidote to Big Beer, but their sales have fallen since the multinationals stepped into the ring. While they’ve acquired several breweries, the craft beer industry has been struggling against wine, spirits, and even legal marijuana. The market is now highly consolidated.
Company’s commitment to clean-up
The world’s largest brewer, Anheuser-Busch, has committed to investing $1 billion in communities across the United States over the next two years to improve and restore its buildings. These investments are intended to boost the economy in these communities, as well as strengthen the connections between the company and its consumers. This new commitment also comes at a critical time, as the country is trying to recover from the COVID-19 pandemic.
Anheuser-Busch’s commitment to clean up its Illinois distribution facility is especially significant because the company was responsible for the building’s contamination of the surrounding area. The company’s brewing process released large quantities of CO2 and other pollutants that pollute the air. In addition, Anheuser-Busch’s commitment to clean-up its Illinois distribution building after it became the home of marijuana also came into question.
The company owns 30% of City Beverage, the largest Budweiser distributor in the state. The proposed state laws have made Anheuser-Busch’s plans to distribute Budweiser and other beers in Illinois controversial, and the Liquor Control Commission is concerned that the company will be unable to maintain its commitment to clean-up its beer distribution building. The liquor control commission also wants to protect Illinois’ three-tier alcohol-dispensing system, which was instituted in the wake of Prohibition. If the company permits this business, it could erode the state’s lucrative wholesale alcohol industry.
Company’s commitment to community
Anheuser-Busch recently announced a series of community restoration and clean-up initiatives to celebrate Earth Day. The initiatives are being spearheaded by craft breweries across the country in partnership with the nonprofit Keep America Beautiful. The foundation will provide six grants totaling $10,000 to these local initiatives. The foundation has been supporting such causes for years. In fact, the foundation recently pledged to donate $2 million to organizations dedicated to maintaining a clean environment in Illinois.
The company’s founder, Adolphus Busch IV, has personally invested in the project. He has spent the last half of his career in the cannabis industry. His father was also a big supporter of the medical marijuana movement. He plans to invest more money in the project in the future. Eventually, the Anheuser Busch building will be converted into a marijuana cultivation and distribution facility.
In addition to brewing marijuana, Anheuser-Busch owns more than 36,000 breweries across the United States. The company has also started selling four-packs outside of its home state. While these breweries may not have been the most successful, they are a darling for beer chasers. The company plans to build a 52,000-square-foot brewery in Illinois to meet the demand for beer.
In Illinois, legal recreational cannabis sales are a new industry and require custom-built facilities. The first month of recreational marijuana sales saw a total of $40 million and $36 million. By choosing a reputable company with extensive experience in building special purpose facilities, companies can maximize their profits and comply with industry regulations. In Illinois, Cannabis Facility Construction’s Andy Poticha has led more than 30 projects in eight states since 2015. He has successfully completed nearly 10,000 square feet of finished space.
Magee and Goeler are working to transition their staff between the two sites. The Chicago brewing facility will employ 50-60 people when fully operational. The head brewer of Lagunitas in Chicago will be spending a month in California. Magee has also leased a condo in Bucktown for himself and for his guests from California. Magee also hopes to purchase an apartment in Uptown for guests from the Californian plant.
Its “exclusivity incentive program”
Anheuser-Busch, the maker of Budweiser beer, is under fire from federal and state regulators for enticing independent distributors to drop competing brands in exchange for cash incentives. The company has denied the accusations, but distributors have said that the marketing practices are unfair and have made it harder for smaller national brands to gain store share. It’s also accused of forcing distributors to drop microbrews.
While the Super Bowl remains the largest advertising venue, many marketers are growing weary of the enormous price tag. In response, some brands are opting out of the Super Bowl entirely, leaving smaller, independent brands to play in the sandbox. Moreover, since the Super Bowl is so expensive, only Anheuser-Busch has the category exclusivity. That means the other brands will have to spend dollars on the network airing the Super Bowl.
Anheuser-Busch introduced a new exclusiveness incentive program in St. Louis earlier this year. Currently, only 38 percent of distributors aligned with AB InBev participate in incentives, but it aims to double that number within three years with its new rewards program. If the plans are as successful as hoped, the incentives could increase sales. Therefore, it’s important to remember that this is a voluntary program.
While the new incentives are designed to spur competition, the market dominance of Anheuser-Busch means that new craft brands are not able to compete against the giant. This means that Anheuser-Busch’s incentive program may end up costing independent distributors a lot of money. Fortunately, most second-tier Anheuser-Busch wholesalers are still working to promote craft brands. This includes the Empire Craft Alliance, a combination of Anheuser-Busch houses.
While the company’s monopoly status has kept it in a relatively small number of independent distributors, it still has a strong presence in the wholesale beer industry. It has also publicly stated that it has no intention of buying more than one distributor. Its wholesaler carries over six hundred brands from 29 suppliers, and more than two-thirds of these brands qualify as craft. Anheuser-Busch’s exclusive incentive program has led to an overall reduction in the industry’s ticket waste rate from twenty percent to less than five percent. But independent distributors say that the new incentive program is far more about AB’s bottom line than the craft beer industry’s craft beer sector.