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Author: rclosch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 214602  
Subject: "Bitter Brew" Date: 4/2/2013 11:04 AM
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Two good books have been written that cover in detail the acquisition Of Anheuser-Busch by AmBev. They are “Bitter Brew” by William Knoedelseder, and “Dethroning the King” by Julie MacIntosh who is a journalist for the Financial Times. I would recommend both books to anyone with an interest in business studies. Together these books tell an important story about the growth and corruption of a great American Business. These books cover an important acquisition, but more than that, it is a really good story with lots of plot and many interesting characters, five generations of nepotism, punctuated with serial philandering, bitter divorce, substance abuse, gun mishaps, and untimely deaths. This is a story that details many of the ways to build a wonderful business and then screw it up.

Together the books give clues as to the reason Buffett has joined the Brazilians in his acquisition of Heinz. These are the essentially the same people that built Ambev before it became AB InBev. Upon the arrival of the Brazilians at Anheuser-Busch after the completion of the $52 billion buyout the restructuring was complete, swift and merciless. Busch executives got their first hint of the new management style three days after the merger agreement was announced when their new CEO Carlos Brito flew in St Louis commercial and booked a room at the Holliday Inn. Not only did Busch executives not fly commercial but many of their wives had not been on a commercial flight in years.

Brito arrived in St Louis in November of 2008 at the height of financial crisis and before long Inbev had announced the buyouts and retirements of 1000 upper level employees and management, together with layoffs of 1400 additional employees. Also assigned to history were most of the employee perks and private offices. The new management took a sledge hammer to the expensively furnished private offices on the fifth floor of Anheuser-Busch’s headquarters and replaced them with one large open room with tightly packed desks and long tables. Also gone were 1200 Blackberries, free tickets to Cardinal games and free beer for employees. Inbev eliminated 1.5 billion in annual expenses sold Busch’s theme parks for 2.6 and rapidly reduced AB InBev’s debt from $56.6 billion in 2008 to 30.1 Billion at the end of 2012. When the restructuring was complete on three senior level Anheuser-Busch managers remained.

August III

August Busch III is both the hero and the antihero of the story. He built the Budweiser brand into one of the best known in the world. He was a universally feared workaholic who had a tendency to behave as a king ruling will absolute power. In his 27 years at the top of Anheuser-Busch he built the company’s share of the American beer market from 28% to 54%, an incredible market share for a simple consumer product in a very competitive market.

“The Third” as August III was called, was a fierce competitor, and the company became very profitable under his direction. This success allowed the company to build in a very expensive life style. In addition to his undeniable business skills The Third had inherited the family’s taste for expensive perks (he flew his personal helicopter to work every day in order to avoid St. Louis traffic). For the length his reign from the palace in St Louis he ruled over a court of well-paid vice presidents who oversaw not only the beer business but, the Busch Gardens theme parks in Virginia and in Florida. It was a first-class operation all the way. There was a fleet of Dassault Falcon corporate jets with a staff of 20 waiting pilots. $1,000 dinners, bullet proof Escalades with drivers, hunting lodges, sky suites at Busch Stadium. Every refrigerator at corporate headquarters, on the corporate jets or in the homes of the executives, was well stocked with free Bud, Bud Lite and Michelob.

While the company’s life style made it vulnerable to a takeover by a well-managed cost cutter like AmBev, this was not The Third’s biggest mistake, this was that he ignored the globalization trend that was going on in the beverage business in the 1990s. If he had been aggressively expanding in Europe during the nineties it might have been Budweiser that acquired AmBev in 2007.

The fate of Anheuser-Busch is what results when a company coasts on its reputation and ignores global markets. Despite its reputation as an all-American business idol, Anheuser-Busch by 2007 proved to be a decaying family dynasty unable to compete on the world stage.
The idiot that eventually arrived on the scene was “The Third’s” son August IV or “The Fourth”, who became CEO in 2006. He was not really an idiot; he just had a strong tendency to act like one. The Fourth’s definition of fun included lots of booze, babes, fast cars and drugs. MacIntosh does not mention the drugs in her book but in “Bitter Brew” Knoedelseder quotes associates who claimed that “The Fourth” showed up stoned at various business meetings and social functions. Knoedelseder also describes (but MacIntosh ignores) incidents “Fourths” life where two of his girlfriends died. One an auto accident when August IV was driving her home from college party (an incident very neatly covered up by daddy). The other was a drug related death in his home after the merger was completed (again daddy intervened to hush the incident up)

Grupo Modelo

The Fourth had been CEO a little over one year when he received the buyout offer from AmBev. His defense was to pursue a buyout the Mexican brewer Grupo Modelo. A plan that if it had completed would have made AB too expensive because AmBev would not have been able raise enough money to buy the company that resulted from a merger of Modelo and Anheuser-Busch merger.

The Company’s Lawyers and Bankers worked around the clock for several weeks to hammer out the details of a merger with Modelo, and when they finally managed to work out an agreement that was acceptable to the managements of both companies senior management in St. Louis started to celibrate, but when the agreement was presented to the Anheuser-Busch board August III vetoed it. We do not know what his motivation was for backing out was, but back out he did. There is the suggestion that his decision was to simply to take his money and run, but is likely that there was more to it than that, and that there was the fear that he had not left the company I the best of hands, and so accepting the AmBev offer was for him an easy way out of a bad situation.

A judgment of the Busch Family mentioned in both books was that, the father and son were known around headquarters as "Crazy and Lazy." Contrast this to the management philosophy of the new AB-InBev CEO Brito from an interview he gave at the Stanford Graduate School of Business,

“success of a corporation hinges on hiring high-performing individuals, who bring passion and commitment to the job, and on building a company culture that keeps them.”

Plenty of corporate CEOs say they want employees who know how to have fun. But Brito, describing the demanding corporate culture he maintains, admits he doesn't even like the word.
"I think fun's too weak. ... I have fun at the beach with my kids," said Brito MBA '89.

"I like people at the company to have fun, sure, plus passion, plus commitment, plus energy, plus lots of other things. Fun is too weak if you want to be best at what we do."

While this story offers an object lesson in how success can spoil a really good business, it is not tragedy, at least if you were in a management position at Anheuser Busch. A few of the former princes of St Louis feel they have be victimized by the Brazilians but these victims walked away with enough money from their stock holding to substantially lessen the pain from their loss of power. August IV received $427 million, Patrick Stokes a longtime assistant to August III, and CEO 2002-2006 received $160 million, August IV $91 million. Upper level managers received $80- $100 million and many lower level managers had stock worth $10 million and up. The real victims were the lower level employees who had no stock options, and the city of St. Louis. The management at AmBev is in no way responsible for the eventual outcome. The story ended the way it did because senior management at Anheuser-Busch became a little too insular and a little too fond of their perks.

I do not think that Buffett would have become involved with this kind of take-over in the past. He is saying that the capital markets have changed. There huge pools of investment capital that did not exist 30 years ago. The growing disparity in personal income in this country and throughout the world means a higher percentage of the world’s wealth is flowing to people that invest as opposed to people that spend most of their disposable income. For investors this means that those waiting for PEs to revert to the mean may have a long wait.
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Author: LONGREITS Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200649 of 214602
Subject: Re: "Bitter Brew" Date: 4/2/2013 11:19 AM
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Great post. Thanks. Which of the two books do you think sheds more light on the Brazilians?

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Author: rclosch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200650 of 214602
Subject: Re: "Bitter Brew" Date: 4/2/2013 11:41 AM
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Which of the two books do you think sheds more light on the Brazilians? <i/>

"Dethroning the King"


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Author: bcs123 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200651 of 214602
Subject: Re: "Bitter Brew" Date: 4/2/2013 12:51 PM
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I just finished Bitter Brew over the weekend and agree with what you wrote.

One part I thought was interesting was the history on Pabst and Schlitz and how they collapsed. Those two companies were formidable competitors with Anheuser Busch for most of the 20th century. Schlitz was the #2 brewer in the U.S. as late as 1976 before it fell apart due to aggressive cost-cutting which resulted in a product-quality scandal that torpedoed the company. I tend to think of these well-established food/consumer product brands as basically unsinkable and this was a useful reminder that that is not always true.

Another interesting point I didn't know was that Miller was a minor player until Phillip Morris bought a majority stake in 1969 and put its marketing and financial muscle behind it, and the company rode to #2 status via the introduction of the first light beer (Miller Lite), which Budweiser very reluctantly followed several years later.

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200653 of 214602
Subject: Re: "Bitter Brew" Date: 4/2/2013 1:02 PM
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One part I thought was interesting was the history on Pabst and Schlitz and how they collapsed. Those two companies were formidable competitors with Anheuser Busch for most of the 20th century. Schlitz was the #2 brewer in the U.S. as late as 1976 before it fell apart due to aggressive cost-cutting which resulted in a product-quality scandal that torpedoed the company. I tend to think of these well-established food/consumer product brands as basically unsinkable and this was a useful reminder that that is not always true.

Curious that it was aggressive cost cutting which led to their demise, since that is exactly what InBev has done with AB since taking it over six years ago. Maybe it's also worth noting that they have managed to lose marketshare every year since, even as they have increased profits apace. Obviously you cannot continue doing that forever and at some point those lines must tug at each other, perhaps mirroring the long ago trend of Schlitz or Pabst.

Now I'm not saying that AB wasn't fat, it was. (I had a teensy tiny window into one corner as they muscled their way into and around major league sports). But it appears InBev is determined to 'save itself rich' and that only goes in for so long before the tides turn against you.

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Author: mungofitch Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200655 of 214602
Subject: Re: "Bitter Brew" Date: 4/2/2013 1:32 PM
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But it appears InBev is determined to 'save itself rich' and that only goes in for so long before the tides turn against you.

Sometimes it's more subtle, not just an either/or thing.
There are firms that pinch every penny with a vengeance, but only where
it doesn't affect the product quality or the client's perception of the product.
That approach can be extremely sustainable. And profitable.

Jim

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Author: texirish Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200662 of 214602
Subject: Re: "Bitter Brew" Date: 4/2/2013 4:19 PM
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Curious that it was aggressive cost cutting which led to their demise, since that is exactly what InBev has done with AB since taking it over six years ago. Maybe it's also worth noting that they have managed to lose marketshare every year since, even as they have increased profits apace. Obviously you cannot continue doing that forever and at some point those lines must tug at each other, perhaps mirroring the long ago trend of Schlitz or Pabst.


Business Week article along these lines:


http://www.businessweek.com/articles/2012-10-25/the-plot-to-...

Cutting out the fat and shaping up the organization is OK, and was needed. But steps that impact the quality of the product can lead to lasting damage.

Are they're betting on growth in the emerging markets, counting on the brand name, and willing to settle for some losses in the old core?

Apparently Buffett must believe their management style is sustainable. We'll see.

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200666 of 214602
Subject: Re: "Bitter Brew" Date: 4/2/2013 9:20 PM
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That approach can be extremely sustainable. And profitable.

Well now, that's the trick, isn't it?

Whoops! InBev has just decided to increase dramatically the AB marketing budget, after four years of consecutive cuts.

I guess that particular move wasn't "sustainable", even though it was temporarily "profitable."

Whoops! A lawsuit from customers claims AB has been watering down their beverages to boost profits. Probably not true, of course, any more than the idea that Schlitz changed the brewing procedure to cut costs back in the 60's. Oh wait...

"Our information comes from former employees at Anheuser-Busch, who have informed us that as a matter of corporate practice, all of their products mentioned (in the lawsuit) are watered down," Boxer said. "It's a simple cost-saving measure, and it's very significant."
http://www.cbsnews.com/8301-201_162-57571414/budweiser-miche...

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Author: FreethinkerKW Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200667 of 214602
Subject: Re: "Bitter Brew" Date: 4/2/2013 10:25 PM
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Goofyhoofy sez,

Curious that it was aggressive cost cutting which led to their demise, since that is exactly what InBev has done with AB since taking it over six years ago. Maybe it's also worth noting that they have managed to lose marketshare every year since, even as they have increased profits apace. Obviously you cannot continue doing that forever and at some point those lines must tug at each other, perhaps mirroring the long ago trend of Schlitz or Pabst.

Now I'm not saying that AB wasn't fat, it was. (I had a teensy tiny window into one corner as they muscled their way into and around major league sports). But it appears InBev is determined to 'save itself rich' and that only goes in for so long before the tides turn against you."



Goofy, you're hinting at the problems evident now to all of us who work in the hosptiality industry.

As someone who works in a very popular Key West bar, the fall of Budweiser products since AnBev bought them out (and foreign beers now being badly produced in the US by InBev to save money) has been on the order of amazing. Our barbacks (these are the guys who stock our bars before, during and after we open for business daily)all buzz about the demise of Budweiser products. It reminds me of when I enetered the bar biz in the late 70s and Schlitz was then king of American beers, taking up the prime space in our college bar in Richmond, VA. When the Schlitz "skunk beer" formula was discovered to leave flotsam in bottles over 30 days old (I can remember holding up bottles to bright bar lights with our bar crew and hearing our bar owner curse the distributor), Schlitz went from 1st to almost last place in a matter of a few years.

If you read the story in Businessweek about AbBev and its penny pinching bean counting ways, you know now (and espcecially bar people know this) that the Budwesier brands are in the early innings of their imminent demise due to inferior ingredients and lax brewing standards.

Crafts beer are gaining quickly in my bar on not only Budweiser, but Miller and Coors product as well.

A new bar just opened in Key West and is a smash hit. It's called the World of Beer and has 500 different brands of beer displayed in a long wall of glass refrigerators. The place is packed night and day. And the bar doesn't serve a single AnBev product. No Bud. No Stella. No Bud Lights. No Becks. No Mich Ultras. No Coronas. Nothing AbBev owns or is partnered in is represented because true beer lovers know the quality of AnBev products is on a fast skid to the pit below the outhouse.

Buffett won't be owning this dog much longer as market share continues to crater.

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Author: FreethinkerKW Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200669 of 214602
Subject: Re: "Bitter Brew" Date: 4/2/2013 11:35 PM
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But it appears InBev is determined to 'save itself rich' and that only goes in for so long before the tides turn against you.

Sometimes it's more subtle, not just an either/or thing.
There are firms that pinch every penny with a vengeance, but only where
it doesn't affect the product quality or the client's perception of the product.
That approach can be extremely sustainable. And profitable.

Jim



You need to get out into popular bars and talk to the bartenders and barbacks about what is hot, and what is not.

Craft beers are exploding in sales. Bottled beers and draught beers from megalithic brands which buy ads on Super Bowl Sunday are on the decline, but especially InBev product.

Read that BusinessWeek article in this thread.

And google InBev news items.

There are dozen of stories about the fall of these iconic brands, not under the Busch family, but under the InBev imprimatur. It's real and it's happening right now.

One of our top five selling - and two of our Top Ten selling - bottle beers in my bar are craft beers in a bottle. (Blue Moon and Sam Adams.)

One of our top 10 beers is an import whose formula has not been messed with: Heiniken.

Budweiser? King of Beers? Hardly. Budweiser is no longer a top 5 selling beer in our bars. In fact, Budweiser is always on sale - a true loss leader - at Key West liquor stores where it is now selling well to homeless people who are going "upscale" from Natty Ice (Natural Ice)and Busch. Natty Ice used to be the drink of choice for the homeless, but more and more, I see them sipping a can of Bud while searching for golf balls by the golf course. So Budweiser is cannibalizing sales from its low end product. That's not what I call a "moat".

Bud's high end brands, the older Bud Select and the newer Bud Platinum? Sales are so small that we don't even sell a case of either in a week. One of my barbacks told me that when we sell out of Bud Select, we are not ordering any more.

Bud Light is still holding on to first place in my bar and is probably going to be overtaken by Coors Light soon enough. Just two years ago we used to sell one case of Coors Light for every 5 cases of Bud Light we sell. Now for every one case of Coors Light we sell, we sell 2.5 to 3 cases of Bud Light. Coors Light didn't even have its own bin in the beer coolers just two years go. Now it has two bins.

Mich Ultra, which was making a small comeback for the Michelob line, is now in regression again. Long ago, we quit selling Michelob and Michelob Light. (Yes, they are still made, but Mich Ultra has cannibalized those two.)

One American beer, made and brewed the way it always was - and with Union labor - is making a fantastic comeback at this time: Pabst Blue Ribbon. It is the only "hip" American beer mass produced and sold at convenience stores. It once had the cache of Natty Ice, Busch and Keystone, but more and more, young people are asking for a Pabst. (My bar still doesn't serve the bottles, but we sell a ton of its draught. We'll probably start selling the bottles at our outdoor bars as demand increases.)

But the most amazing rapid ascent of brands are the craft beers with national distribution: Blue Moon (it has the fastest growth in my bar year over year, month over month), Sam Adams, Sierra Nevada, Steamhouse, etc., are all coming on strong, eating Top Ten, mass marketed beer market share from the 3 bigs.

(Blue Moon is owned by an arm of Molson Coors, the crafts been division called Tenth and Blake Beer Company. This is one to watch, and were I Molson Coors, I would not ever make a funny TV ad. Simply let the word of mouth do the selling.)Blue Moon is on an amazing tear now and if Miller Coors is smart, they'll let this beer grow organically, never messing with the forumula so as to exponentially grow the franchise (which is what happened to Schlitz when it was pre-eminent).

I don't understand how Warren Buffett or Berkshire investor can think InBev is a company with a safe moat when there are plenty of boats in the moat firing stone piercing cannon balls at the smug bean counters hiding behind the walls.

If you judge your beers by the amount of ads they place on television, you are sorely mislead as to what is happening at retail. You certainly won't know who is rapidly losing market share, and who is gaining if all you do is think more advertising = a successful brand with a big moat.

I won't even give Bud Light another 5 years before it is dethroned as the number one seller in America. I think that honor will befall Coors Light very soon. (I give Bud Light maybe 3 more years in my bar before it is dethroned by Coors Light as the number one seller.)

Lastly, we now have three extremely successful craft beer bars in Key West where no domestic brands (as advertised on Super Bowl Sunday) are sold. A fourth new bar, which will brew its own beers on site, has the same plans: no sales of Bud, Miller, Coors, etc.

There's a huge change in drinking tastes taking place right here and now. It's an eye opening thing to be in the middle of this and to read stuff from Wall Street "analysts" and Omaha sages who don't know what is happening in the trenches.

If I had to buy one huge beer brand at this moment without consulting any charts, I'd buy MolsonCoors (NYSE: TAP) because they own the fastest growing domestic and craft beer selection in my bar's coolers, i.e., Coors Light and Blue Moon, respectively.

InBev products, all of them, are losing market share in my bars. By the way, the new bar which sells 500 beers from around the world down here is not selling Becks or Stell Artois, because their new brewing by InBev has ruined their tastes. That right there should tell you all you need to know about InBev. They snatched defeat out of the jaws of victory, all in the name of shaving costs.

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Author: VIIIandXX Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200672 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 3:01 AM
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I don't understand how Warren Buffett or Berkshire investor can think InBev is a company with a safe moat when there are plenty of boats in the moat firing stone piercing cannon balls at the smug bean counters hiding behind the walls.

Buffett or Berkshire don't own InBev stock.

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Author: stillwater9999 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200684 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 10:01 AM
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Since water is healthier than alcohol, Mayor Bloomberg is applauding.

sw

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Author: mungofitch Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200686 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 11:08 AM
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Sometimes it's more subtle, not just an either/or thing.
There are firms that pinch every penny with a vengeance, but only where
it doesn't affect the product quality or the client's perception of the product.
That approach can be extremely sustainable. And profitable.
...
You need to get out into popular bars and talk to the bartenders and barbacks about what is hot, and what is not. ...


I'm not quite sure I follow you. Interesting comments all, but nothing to do with what I said.
My comments did not mention the brewing industry, let alone AB InBev.
I wasn't talking about beer, I was talking about managing a company.
My point is solely that it is not correct to assume that firm penny pinching
leads inevitably to bad products and terminal corporate decline---in any industry.
A business can be extraordinarily tight with the purse strings so long
as it does not adversely affect the product's quality or its perception.
Berkshire has 23 staff at headquarters, no stock options, and the boss is paid $100k/year.
They seem to do just fine. Not the most illustrative example, but on topic.

As for good beer, I can't think of anything ever made by AB InBev or
any of their predecessor companies that I would even dignify with the term "beer".
Nor indeed anything ever made in the US I've ever tried. Making love in a canoe.
(I'm sure that there are many fine brews from small firms, but none has
yet crossed my path—I get to the US only once every several years).

I rarely drink anything in the way of suds other than cask conditioned ales.
Last thing I popped in my fridge was a 2005 vintage ale from Fuller, Smith & Turner plc.
I do wonder what my great-great-great-great-grandpa's stuff was like...guy name of John Molson.
Probably good when the firm was small, bad when they got big, same as usual.

Jim

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Author: rclosch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200687 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 11:16 AM
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I don't understand how Warren Buffett or Berkshire investor can think InBev is a company with a safe moat when there are plenty of boats in the moat firing stone piercing cannon balls at the smug bean counters hiding behind the walls.

Who says he does?

Buffett sold his interest in The old Anheuser Busch in 2008 durning the merger negotiations. And to the best of my knowledge has never bought any AB-InBev.

rc

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Author: xFatOtt Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200695 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 1:04 PM
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Craft beers are exploding in sales. Bottled beers and draught beers from megalithic brands which buy ads on Super Bowl Sunday are on the decline, but especially InBev product.

Right, but InBev isn't standing idly by. They recently (2011) purchased Goose Island Brewery and dramatically ramped up production of one of the best craft beers in the world: Goose Island Bourbon County Stout. Craft beer lovers (me included) are falling over themselves to buy this at $20-$25 per 4-pack of 12 oz bottles.

Not to mention that, based on their online menu, your Key West World of Beers sells at least one InBev item - Goose Island Honker's Ale.

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Author: eurotrash01 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200696 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 2:19 PM
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Right, but InBev isn't standing idly by. They recently (2011) purchased Goose Island Brewery and dramatically ramped up production of one of the best craft beers in the world: Goose Island Bourbon County Stout. Craft beer lovers (me included) are falling over themselves to buy this at $20-$25 per 4-pack of 12 oz bottles.


It is on my shopping list now. :)

http://beeradvocate.com/beer/profile/1146/10672

Love all this great beer being made just about everywhere. None getting watered down.

et

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Author: WuLong Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200697 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 3:29 PM
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I'm sure that there are many fine brews from small firms, but none has
yet crossed my path—I get to the US only once every several years

Only if your taste runs to IPAs.
Most "craft" beers in the US are severely over-hopped.

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Author: NoxiousDog One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200698 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 4:19 PM
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Only if your taste runs to IPAs.
Most "craft" beers in the US are severely over-hopped.


Then you're severely limiting your selection. Craft beer runs the gamut.

I'd be surprised if 20% were overhopped let alone most.

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Author: WuLong Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200702 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 5:06 PM
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Then you're severely limiting your selection.
Given that I've worked in the food industry, I tend to doubt it.
However, feel free to make recommendations.

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Author: Conehead Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200705 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 8:00 PM
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Hi. Sorry for being an intruder from the best of list. But beer is a topic I can't pass up. :-)

Personally, I won't buy beer from a brewery I haven't visited. (Reason: brews like Blue Moon, which you list, but is actually a product of MillerCoors.) There are a lot of folks like me. At least near where I am.

One of the local brewers that I know was telling me (and many others, we are at a tour of his brewery) that 15 years ago his competition was imports like Becks. And that it was really tough because the typical bar only had four taps. (And although he didn't say it, we all know that 3 of those four taps were reserved for Coors, Bud, and Miller or other super-national brands.) Now he says that the competition is still just as tough, but the reality is that a bar isn't going to open around here without at least 20 taps. And that most of them will be reserved for local breweries. So while the competition is still tough, he's much more likely to be fighting with someone else that is local craft brew.

--CH

P.S.
With so many local beers with amazing quality (and often no preservatives), why buy a national brand which spends all of its money on advertising? It's a no lose situation: support your local economy while drinking better beer with a better variety.

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Author: DutchMark Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200708 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 11:17 PM
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A new bar just opened in Key West and is a smash hit. It's called the World of Beer and has 500 different brands of beer displayed in a long wall of glass refrigerators. The place is packed night and day. And the bar doesn't serve a single AnBev product.

That they don't sell Bud or Coors I fully understand. But no Leffe, Hoegaarden, Jupiler or Hertog Jan? I hazard a guess that around 300-400 of those 500 beers are inferior to those 4. That decision seems more based on spite than on quality.

Mark

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Author: DutchMark Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200709 of 214602
Subject: Re: "Bitter Brew" Date: 4/3/2013 11:25 PM
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One of our top 10 beers is an import whose formula has not been messed with: Heiniken.

But Heineken is popular exactly for the same reason Bud is popular. A decent beer with little taste that offends few. With beer I find popularity is inversely correlated to taste.

Mark

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Author: ranshdow Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200710 of 214602
Subject: Re: "Bitter Brew" Date: 4/4/2013 12:04 AM
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Given that I've worked in the food industry, I tend to doubt it.
However, feel free to make recommendations.


Shiner Bock is my first choice whenever I'm in Texas and New Mexico. I actually prefer it over most local microbrews I've tried.

Years ago they were trying to promote themselves in San Diego, don't know if that caught on. Never seen it for sale in Northern California, but then again I don't go to Bev Mo.

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Author: WuLong Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200714 of 214602
Subject: Re: "Bitter Brew" Date: 4/4/2013 10:56 AM
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Shiner Bock is my first choice whenever I'm in Texas and New Mexico.
I love Shiner Bock. Don't really think of it as a "craft" beer, though.
My personal fave is Newcastle.

Fwiw, the Publican in Chicago has a really nice beer program.
http://thepublicanrestaurant.com/

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200717 of 214602
Subject: Re: "Bitter Brew" Date: 4/4/2013 11:47 AM
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My comments did not mention the brewing industry, let alone AB InBev.
I wasn't talking about beer, I was talking about managing a company.
My point is solely that it is not correct to assume that firm penny pinching
leads inevitably to bad products and terminal corporate decline---in any industry.


Of course if you can penny pinch without affecting the product, the perceptrion of the product, the distribution of the product, or anything else regarding the product, who would argue.

But then the thread is about InBev, which has penny pinched its way to declining marketshare ever since the acquisition of AB. Any idiot can milk a historic company with a great brand for a while, but then it catches up with you. Image momentum is a wonderful thing, right up until it's not. Ask Schlitz.

Here's another famous penny pinching company that might need to loosen up. Historically famous and lauded for their tightfistedness.

Walmart's shelves are looking empty these days, and it's not because the product isn't available: The company simply doesn't have enough employees to restock them, store workers tell Bloomberg. The big blue retail behemoth has added 455 US stores over the past five years, but its workforce has dropped by 1.4%—that's about 20,000 fewer people to put toilet paper and socks out on shelves. And as employee ranks thin, other problems bubble up, Bloomberg notes: longer check-out and customer service lines, for instance.

A Walmart spokesperson denies anything is amiss. But the company's sales growth has slowed, and its own CEO reportedly admitted last month that it is "getting worse" at stocking shelves, though he pinned the blame on the fact that "we run out quickly and the new stuff doesn't come in." Employees agree. "There are gaps where merchandise is missing," said one California department manager last month. "We are not talking about a couple of empty shelves. This is throughout the store in every store. Some places look like they’re going out of business."

http://www.newser.com/story/165148/walmarts-problem-more-sto...

How does this happen?

The Bentonville, Arkansas-based retailer’s workforce at its namesake and Sam’s Club warehouse chains in the U.S. fell by about 120,000 employees between 2008 and Jan. 31, according to a securities filing on March 26. The company now has about 1.3 million U.S. workers. In the same period, it has added about 455 U.S. Wal-Mart stores, bringing its total to 4,005.
http://www.bloomberg.com/news/2013-04-02/wal-mart-customers-...

I am reminded of Nardelli's disastrous turn at Home Depot, where he pinched enough workers out of the aisles and trimmed inventory so much that sales cratered and the stock plummeted.

Of course Home Depot finally got rid of him and has reversed course (to positive effect.) WalMart is still denying it has a problem, even though they are trying to run stores with more than 10% fewer associates per store amid widespread complaints from consumers. I remember K-Mart before and after, and it wasn't pretty, and now they look like a junk shop.

InBev? Well, they've reversed course on marketing, and have started some other initiatives to try to get things under control. I would think a five year slide in share would help open some eyes, but once your momentum is going the wrong way and you've opened doors for competitors, it's even harder.
 


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Author: NoxiousDog One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200722 of 214602
Subject: Re: "Bitter Brew" Date: 4/4/2013 4:35 PM
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Given that I've worked in the food industry, I tend to doubt it.
However, feel free to make recommendations.


If we assume that an IBU of 40 is the lowest possible for an IPA, and that German Pilsners can go well above that range, ( http://www.brewersfriend.com/2009/01/24/beer-styles-ibu-char... ), here's a list that easily qualifies as not overly hopped:

Every wheat beer ever unless someone's really dumb.
Shiner - Bock (13), Premium (13), Black (18), Wild Hare (31)
St. Arnold Brown (24), Amber (31), Lawnmower (20), weedwacker (15), Santo (17)
Dogfishhead Midas (12), Raison D'Etre (25)
New Belgium Fat Tire (18.5), shift (29), 1554 (21), Blue Paddle (33), Trippel (25), Abbey (20)
Sierra Nevada Porter (32), Ovila (24), Tumbler (37), Summerfest (28)

And that's without thinking too hard. I know Breckenridge, Avery, Brooklyn, Yeungling, Omegang, Harpoon, Lagunitas, Abita, Full Sail, and Anchor have similar offerings.

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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200726 of 214602
Subject: Re: "Bitter Brew" Date: 4/4/2013 11:34 PM
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re: Overhopped.

Back in the day when I was young lad, I was a home brewer (back in the day = 1980s). The wide selection of craft beers and imports we enjoy was merely a dream. It was a revelation to actually taste hops in a beer and understand how important they were to the flavor profile.

BudMillerCoors don't have hops (to speak of) and those beers suck. Therefore, more hops = better taste. Makes sense, right? So my buddies and I began experimenting adding more and more hops and with each batch we found we could taste more and more hops! That meant our beers must be tasting better and better!

Except they really weren't, they were just becoming painfully hoppy. It wasn't until started trying to balance the whole I started making really good beers. But it took a lot of brewing (and a lot of drinking) to get to that point.

I still like a good hoppy beer more than the typical beer snob, but I think a very high percentage of craft beers are overhopped. I think part of that is because the public wants hoppy beers because they are delighted to finally taste some hops, just as I was. I think things will revert back to more balance given time.

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Author: rclosch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200727 of 214602
Subject: Re: "Bitter Brew" Date: 4/5/2013 12:06 AM
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I must say that this thread has turned into a pleasant surprise. Upfront I should point out that my days of significant beer consumption are long gone (my liver having turned to mush about fifteen years ago). My serious consumption of beer ended about the time that Craft Beers were starting to get popular, and long before they were called craft beers. So the discussion on this thread has been an education.
As I hear more about the brewing business today I cannot help but wonder what would have happened to Anheuser-Busch if August III had not decided to take his money a run. In my opinion and with the benefit of hindsight it now to looks like a great move.

Maybe August IV would have been able to deal with the threat from all these local start-ups, but I will remain skeptical. All of the problems that AB-InBev faces today have been around since the 1990’s, and have gotten a lot worse since 2007. It is not just the craft Beers that are eating their market share but wine and liquor have also become much more popular with the American consumer.

I do not see that hauling out a new platoon of frogs at the Super Bowl would have solved this problem. Nor do I necessarily believe that Budweiser would taste any better today if it were not controlled by AB-InBev. This shift in the tastes of the American consumer had already been impacting Budweiser before the merger and was one the reasons that they were vulnerable to an attack by AmBev. There is no indication that August IV had any clue about the competitive threat these changes posed to his business.

I think it is possible that the takeover and the cost cutting imposed by Brito may turn out to be critical to the eventual survival of the brand. In any event all this discussion of craft beers has peeked my interest in AB-Inbev. It seems to me to be way too early to say that this is a failed business model, and I will be very interesting to see how this story plays out.

For what is worth I can still buy Stella at the World of Beers down the street. Then further I put out a cooler as I watched the Arnold Palmer Invitational in my back yard and the neighbors prefer Stella to Heineken two to one, Sorry no craft beers in this sample (Bay Hill just has not gotten into craft beers yet).

Perhaps some of the younger posters in this thread could raise the objection that we are just a bunch of bland beer old farts, and I am afraid that this is objection that it is hard for me to refute.

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Author: crschoen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200728 of 214602
Subject: Re: "Bitter Brew" Date: 4/5/2013 8:33 AM
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There are firms that pinch every penny with a vengeance, but only where it doesn't affect the product quality or the client's perception of the product.

There's an extremely fine line there. I've owned BUD for a few years, and continue to be impressed by their cash flow and profitability. But on the other hand I look at a company like JNJ that tried to cut corners and costs on product quality control and manufacturing oversight to the bone and it ended up being disastrous with their consumer products division, which was always one of the company's cash cows. You can squeeze a few dollars which is great in the short term, but if you squeeze too hard you risk a quality or Public Relations disaster that throws away all the money you would have saved many times over.

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Author: BenGrahamMan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200733 of 214602
Subject: Re: "Bitter Brew" Date: 4/5/2013 2:06 PM
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What a fun thread and right up my alley. I love running and beer, as well as running for beer, or just beer.

Here are some of my favorite beer links.

www.beeradvocate.com ( I am not familiar with a free smartphone app). I was in Vermont recently, and was able to have 2 cans of Heady Topper (#1 rated beer in the world be beer advocate.) It seemed real worthy of it's position.

www.ratebeer.com They also have a free app for the Droid. I love trying new beers, and will often consult the app as I am searching for a beer.

There are several stores in Central NJ, which sell tap beer in a growler. I love that stuff as well.

I think you can also search "top tap rooms New Jersey (or whatever state you are in, and find good places that way.)

Side note. We have been going to Utah for several winters to enjoy the slopes. Last year I was there, and via my running club, I found out that tap beer at bars in Utah is limited to 3.2% alcohol. This year we chose Colorado instead, and I had some really enjoyable brews.

My favorites are certainly the IPA's. I also enjoy the kick of the higher ABV's.

Some of my favorite available brewers or beers are:

Dogfish Head (60/90/120)
Green Flash IPA
Avery Brewery IPA
Rock Art Vermonster


I was recently looking at Craft Brew Alliance (BREW) and didn't pull the investment trigger. Perhaps soon. Yet, craft brews have certainly grown so much, that perhaps investment is difficult because of massive proliferation.

Great article in recent Fortune Magazine on the start of Samuel Adams Brewery and founder Jim Koch.
http://money.cnn.com/2013/03/21/smallbusiness/samual-adams-k...

Cheers!

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Author: dlbuffy Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 200778 of 214602
Subject: Re: "Bitter Brew" Date: 4/8/2013 11:33 AM
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Right, but InBev isn't standing idly by. They recently (2011) purchased Goose Island Brewery and dramatically ramped up production of one of the best craft beers in the world: Goose Island Bourbon County Stout. Craft beer lovers (me included) are falling over themselves to buy this at $20-$25 per 4-pack of 12 oz bottles.


For the beer discussion - Not completely correct. InBev took on the production of a couple of Goose Islands core beers, the higher volume beers. Those are now brewed in an InBev brewery. That means the old/current Goose Island production line has more free schedule to focus on the higher priced beers like Matilda, Pepe Nero, etc. The Bourbon County Stout is just one of those higher end beers. To be honest, that quality is falling, the last years was not as good as previous years. I am worried about them.

The reason that Goose Island is going to loose direction is because InBev took the owner and gave hime a corporate position over their new craft brew section. He will be paying attention to growing that, and will not be able to oversee daily operations at the brewery.

For the penny pinching discussion - I totally agree that when you loose the visioneer (?) you loose the focus on the product that got you there. I worked for a growing and very strong call center in the 90's boom to outsource all support calls. They prided themselves on American call centers, based in places where they added jobs to the economy. They also paid well and they really focused on training their agents. (I was a trainer, training developer, training manager at this company.) Then the president retired and the new CEO proudly announce his accounting credentials. The board got a shake up too and was mostly new and mostely accounting people.

Immediatly 'new' ideas were being flowed through the system to 'improve' the company. Call centers were being planned in India and South America. The whole training structure was reorganized. As a call center training manager I oversaw five accounts billing millions a year. It was difficult to keep them all staffed (it was a call center after all) and scheduling training rooms around other business usage required constant vigilance. Then add to that the continual software and hardware updates that required documentation updates on a quarterly basis. The job was full and very busy. The restructuring was to take my position and make it manager over three-five call centers. All the additional clients and differing support structures.

That is when I decided the company had completely lost focus. I went looking for a new job. That call center was closed months after I left in a cost cutting move. The company stock also dropped like a rock for a few years. I stopped watching or caring about them a while back, but the penny pinchers in charge changed the mental focus of the employees from taking care of the customer to answering as many calls as possible.

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