Saturday, October 13, 2007

MillerCoors: Shotgun wedding or knife fight?

If you were wondering why I hadn't posted anything about the MillerCoors joint venture...here's why: I was getting paid to write something about it for Portfolio. Here it is. I'm not real optimistic about it working well.

8 comments:

Michelle said...

I agree with what you said in your article about it being an almost necessary evil to merge in the short run, but in the long run, duplication of like products and internal competition may eventually outweigh the benefits of the merger.

Not to mention I don't like either's products enough to drink them. LOL

Jeff Alworth said...

The calculus works if the product is corn chips because no one cares where they're made. But beer is local. Particularly the smaller brands caught up in the merger like Leiney's will suffer. Who's going to drink a completely indifferent product that's brewed in Golden, CO just because it was once brewed in Chippewa Falls? No one in Wisconsin. Will Westerners drink Coors if it's not made with Rocky Mountain spring water?

In the age of consolidation, one thing has proven true: those that consolidate lose market share. Bud stays strong. This will be a long-term disaster--as usual.

Matthew D Dunn said...

Great piece. But you're kind of a downer. AB sounds like the decepticons.

But I imagine you disagree with McKay about how craft beer will fade? But craft beer has a long way to go. I'd like to hear your thoughts about the future of craft beer in terms of its growth in market share and perhaps its effects on AB and MillerCoors (or imports or spirits). Will AB and MillerCoors start doing "craft" styles well? Lots of possibilities I suppose...

Perhaps you could point me towards something you've written?

Lew Bryson said...

Jeff,
I think you're right, which is why brewers who don't do a local product usually try to keep as quiet as possible about where the beer comes from.

Lew Bryson said...

Matthew,
I do disagree with McKay, and craft beer does have a long way to go. But as I pointed out in an earlier Conde Nast column (http://www.portfolio.com/views/columns/first-draft/2007/07/20/Beer-Wine-Industry-Parallels), "craft" wine had a long way to go -- and did. Closer to home, imports were under 1.5% of the US beer market as late as 1985; now they're 15% and still growing. I think craft is well-positioned for long-term growth. My only question is what McKay meant when he said craft beer would "fade." I wish the interviewer would have pressed him a bit.

As for A-B and MillerCoors doing craft styles well, they already do craft styles better than some craft brewers. That's subjective, of course, but I'd bet a fair amount of money that blind tasting would bear it out. The question is whether they'll learn how to sell those beers without disassociating them from their corporate identity; in other words, will you be able to sell a Miller IPA? Will Coors be able to sell Blue Moon if everyone knows "it's made by Coors!!!" That's another issue.

Stonch said...

Lew, do the macrobrewers need to associate products from craft breweries they own with the parent's brand identity?

I'm not sure they do. For example Worthington White Shield is made by a small brewery in Burton which is part of the MolsonCoors empire, but the label doesn't say so. Personally I don't see a problem with that, and anyway I don't see it as a MolsonCoors beer, anymore than I see Goose Island as an A-B beer.

I appreciate this isn't a point you were making but I'd be interested to hear your view.

Lew Bryson said...

Stonch,

I think at this point they do; not legally, but for marketing. It's not sure, but there's always been a school of thought that if people "found out" that Blue Moon, for instance, was a Coors product, they would stop drinking it. Coors doesn't deny it, or go to great lengths to distance themselves from it, but neither do they put their name on it. All a brewery MUST do is put the town where the beer was brewed on the label.

As you said, I don't have a problem with it. If it's good, I'll drink it, especially if it's the right beer for the moment and it's the best of limited choices. But until my small but growing beer-political concerns get stronger, I don't really care who brewed a good beer.

bucdaddy said...

I will occasionally have a Coors (it's what's there if I'm eating at my uncle's house) or MGD, and I'm fine with Blue Moon and Leiny, certainly. I'll be a bit more inclined to drink them now, tho. "The enemy of my enemy is my friend."