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Wednesday, October 17, 2007

One World, One Brewer

Stop the Madness!!!

Just got an e-mail news alert from the UK: Carlsberg and Heineken are in talks to form a consortium to buy the UK's largest brewer, Scottish & Newcastle.
The companies said that it was "currently intended that Carlsberg will ultimately acquire Scottish & Newcastle's interest in Baltic Beverage Holdings, France and Greece, and that Heineken will ultimately assume control of Scottish & Newcastle's business in the UK and other European markets".

Which actually isn't all bad, seeing that it would mean S&N beers would be all under the Heineken wing, and their non-Brit acquisitions would go to the Great Dane. Good God, did I actually just say that another round of megabrewer consolidation "isn't all bad"? Ye gods, it's contagious!

Okay, deep breath. It may not even happen, it's just a discussion:

The statement added that "to date no formal approach has been made to Scottish & Newcastle and there can be no certainty that an offer for Scottish & Newcastle will ultimately be forthcoming".
Maybe not. (Ha!) Although the stock price of S&N, which is up 18%, shows which way the market thinks things will fall out.

Seriously, does this really matter to any of us? Yes, it does. These massive consolidations mean even more deracination (look it up) of beer and beer culture. They cost jobs in the beer industry, and the benefit is what -- a slight increase in profits that is lost in the cost of the consolidation and increased costs of advertising. Some smaller brands will inevitably disappear.

Worst of all, perhaps, is that like InBev, Diageo, Pernod Ricard, Bacardi, Constellation, these giant conglomeration companies will find it impossible to stop acquiring. They are scooping up European regional breweries like blue whales seining krill, and they'd suck up Boston Beer and other publicly held crafts without even a post-prandial burp.

And then what? A race to make the cheapest light beer they can sell for the most profit? Maybe. For sure, you'll see a lot less options, and many of the options you will get will be meaningless. God, I'm feeling bleak this morning.

Addition to the story: Bloomberg is now reporting that S&N is an unwilling target, and that InBev and A-B are possible competitive bidders. An article chockful of stuff.


Alan said...

But isn't this an argument amongst the Devils, to draw in images of Milton or Dostoyevski? If more brewers are laid off, some will add to craft brewing and thereby add to the

You know, this is an inordinately good teaching moment for pure Marxist critique - workers and consumers being alienated (I prefer that to deracination) not only from the control of the means of production but also from the product as well. Nazdrovia Tovarish !!!

But I think the reponse is more Arts and Crafts movement than raising any red banners high. A more aggressive response in terms of the consumer demanding real and local? Does this not also speak also to the hops issue? Has big brewing cornered the hops market? Need there be some victory hop gardens?

So many questions.

J said...

While I think this is terrible news, I feel like there is often and ebb and flow in the beer world. Every time something like this happens, eventually new, small and delicious craft beers pop up, almost in response to the consolidation.

At the same time, I do find it sad that these old European breweries are just becoming another name on some giant's website. I'm even sad about this strange Coors-Miller merger.

Lew Bryson said...

Oh, my. First the Chavez post, and now this? Has my blog become some kind of political freak magnet?

Actually, Alan, I was taking a broader look. It's not just brewers who will be laid off: brewers are a tiny part of the workforce at any large brewery. And if it is an argument amongst the Devils, I fear, as I said in the latter part of my post, that it will only serve to whet their appetites.

The proper response IS Arts and Crafts, but it moves too slowly, even as it is currently accelerating. Local becomes both more attractive -- local jobs, less transport impact, fresher products, more in touch with local taste -- and less practical -- growing population, distance from farm and factory, struggle against cheap goods of apparently equal value. Tough fight, but that doesn't mean it's not worth fighting.

Hops? Post a-coming on that, fella. Things have gotten suddenly weird.

David said...

At the same time, we see craft beer growing in popularity. So I'll play the optimist, as mainstream beer gets more homogenized, BMC drinkers will break down and try that "strange beer" on the shelf. Small brewers can help by producing flavorful beers that aren't extreme. (Stop putting "Imperial" in front of everything. :-) Face it, BMC drinkers are highly loyal to their favorite brand. I can't help but think that mega-mergers mean (even slight) changes in product. Loyalty may waver.

Lew Bryson said...


There are cycles in the beer world, but I'm not so sure how closely linked they are. I don't really know if you can say "because this, then this" about consolidation and craft brewery development. Dunno.

What I get nervous about is the consolidation not working for them and then they go looking for the bright spots in the beer market: the craft brewers.

Unknown said...

This is bizarre news, but it makes perfect sense. Since all of these mega brewers are essentially commodities dealers. Their products only compete on price; quality is only a secondary concern. In order to compete more efficiently they have to look for ways to cut costs. Hence this feeding frenzy when energy costs are higher. Neat-o.

Anonymous said...


Seems to me that this M&A frenzy is not only a knee jerk reaction to flat to slipping mainstream (aka - macro) beers but also to the stark reality of rising costs and the need to contain them.

I for one doubt that there's much discussion regarding brand over lap, brand sustainabiity and the like but then again - what the heck do I know. I'm just trying to put this in perspective with te overall trends in M&A and the world economy in general..Afterall - most of the big houses are public companie and have a "duty" to both board and stockholders......

Anuwho - good info as always.

Tom Mariano

Drew Beechum said...

Isn't Scottish & Newcastle the last of the UK owned majors as well?

It is a veritable super-capitialistic feast!

Stonch said...


I do find it sad that these old European breweries are just becoming another name on some giant's website

That seems to imply (correct me if I'm wrong) that you consider S&N not to be a giant. It most certainly is, and an extremely acquisitive one at that - 8th largest brewer in the world, market leader in France and Russia as well as in the UK. They don't brew in Scotland or Newcastle any more, so the connection to the past has been entirely broken. In short, I wouldn't weep for them.


"Has my blog become some kind of political freak magnet?"

I think what started it was you trumpeting that fact you are a "libertarian" - a pretty extreme political ideology - that gave the rest of us the green light to turn this into "Seen through a Marxist Prism"! ;-)

Stonch said...


"Isn't Scottish & Newcastle the last of the UK owned majors as well?"

The world's biggest brewer is headquartered in London, so not really, no.

Lew Bryson said...

Bigawd, Stonch, one off-handed remark ("trumpeting?" Please!) and it's open season? Whew. Glad I've got the Power of Moderation! Which I swear I won't misuse; I just didn't want a political shouting match on my drinks blog. Fair enough?

But as for S&N: hell yes, you're absolutely right. Just another conglomerate aggregate, and no precious victim. I only freak because of the continued gravitational accumulation; as Tom said, it's a business model. We've seen it before, but IMO it doesn't end well.

And...isn't SAB London-based also?

Anonymous said...

"The world's biggest brewer is headquartered in London..."

That should be Leuven, not London.

While I agree that quite a bit is lost in all these mergers and acquisitions, I'm confident that the small local brewers are too small (hence not profitable enough) to be acquired by such giants who are in it for the money. Therefore I'm not that worried; the larger brewer concerns may water down the choices among more popular beers, but as long as micro breweries can survive, I'll have all the beers I need.

Lew Bryson said...

"That should be Leuven, not London."

Yeah. Stonch, who were you thinking of?

But as far as small local brewers being too small for acquisition...I'd quote you some lyrics: "Little bugs eat littler bugs, who ride on their back and bite 'em. The littler bugs eat littler bugs, and so on, infinitum."

Larger micros have bought smaller micros, happens fairly often: Pyramid/Portland, Flying Dog/Frederick, hell, even Clipper City/Oxford Class. And A-B bought 49% of Old Dominion, which I wouldn't have called a large micro. It's hard to say what a bigger brewer might buy. I'm not overly concerned about smaller ones disappearing; there's a lot of sturdy equipment out there now, and plenty of folks who know how to brew, and a growing demand. I guess I worry about a continuing commodity mindset in the industry, and yes, a blandification and dumbing down of the craft idea to reach a larger market...just when that larger market is reaching up to more flavor.

Stonch said...

"That should be Leuven, not London."

Sorry you're right - I meant the world's second biggest brewer is headquartered in London (being SABMiller).

What a fool I was, what a mutton-headed dolt was I.

Anonymous said...

You see, I used to drink Rolling Rock almost exclusively, but when Busch bought them out I just quit. Haven't bought another one since. Went to several diff. Sam Adams vars. instead & think I like them better. I think it's funny, Capitalism unchecked seems to equal communism. Well, aren't we ending up with a central Bank, pharmacy, Department Store & now Brewery ???