Big Brewers Aim To Blow The Foam Off Micro Brands Tactics Include Pressuring Distributors To Stop Carrying Small, Rival Labels

MONDAY, MAY 6, 1996

George Hancock, a Seattle brewer, got a call last week from the distributor who delivers his Pyramid Ale beers to stores.

Sorry, he was told, but the distributor was dropping the brand - because of pressure from beer giant Anheuser-Busch Inc.

It’s the latest tactic small brewers complain is being used against them by huge corporate rivals fearful of the microbeers’ success.

“That’s the kind of compliment we can do without,” Hancock said. “If that’s the sign of the future, if the breweries are going to restrict distribution, whether by stealth or pressure, that’s going to hurt us.”

Michael J. Brooks, vice president of sales for Anheuser-Busch, denied the company was targeting microbrews.

But he said distributors at a national sales convention had been asked to “consider giving 100 percent of their selling effort in support of Anheuser-Busch brands.”

“Anheuser-Busch believes that its brands’ sales performances are stronger in exclusive operations vs. non-exclusive operations,” Brooks said.

Some attending this week’s national small brewers’ conference in Boston bemoaned what they referred to as “imposter” beers mass-marketed by industry giants but designed to look like they were made by small regional breweries.

Red Dog, for example, is made by Miller’s Plank Road Brewery division and Red Wolf by Anheuser-Busch. The Blue Moon Brewing Co. is owned by Coors.

Anheuser-Busch, the world’s largest brewer, and a host of smaller beer makers have filed a petition with the Bureau of Alcohol, Tobacco and Firearms that would force brewers to divulge where their beer is brewed and who brews it.

“The large brewers are smart business-people,” said Sheri Winter, spokeswoman for the conference organizers. “Our segment is the only one that’s growing and the (profit) margin is huge.”

Annual beer sales fell by 1 percent last year to about $50 billion, while sales of so-called “craft beers” brewed in small amounts regionally or in microbreweries have grown by at least 50 percent a year for each of the last four years.

A representative of large brewers said the sniping by small brewers about their large competitors was counter-productive.

“I wish brewers as a group would devote their energies to growing the market as a whole because sales, quite honestly, could be better,” said Art DeCelle, general counsel for the Beer Institute, an industry association.

Craft beers have higher profit margins - about 25 percent, or nearly double those for traditional brands - and that is also drawing larger brewers to the market, consultant Tom McCormick said.

Still, microbeers account for only 2 percent of beer sales. In some regions, the number is higher - 8.2 percent last year in Oregon, for instance, and an estimated 17 percent in the San Francisco Bay area.

“Here we are today, barely scratching the surface with 2 percent and the big breweries are jumping in with both feet,” McCormick said.

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