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6.22.08 Macrobrews vs. microeconomics by Jon Worley A couple weeks ago, my dad asked me what I thought about InBev's attempt to take over Anheuser-Busch. I thought he had said AmBev, and so I said that sounded pretty surprising to me, considering how much bigger A-B was than its South American counterpart. But, in fact, AmBev merged with my old employer Interbrew back in 2004 to create InBev. InBev is pretty big. And A-B and InBev are already tied together at the hip: A-B is the importer of many of InBev's biggest brands, and InBev brews and distributes A-B products in Canada and other markets. Did you find those two paragraphs boring? Me too. I don't care if the macrobrew market turns into something like the major label music market with InHueserBev on one side and MillerHeineSAB on the other. The truth of the matter is that most of the largest-selling brands around the world taste remarkably similar. Folks like the late Michael Jackson have written extensively about the "maturity" of the global beer market and the need for brewers to brew beers with "character." That means less Keystone ("America's Least Bitter Beer") and more beers of color. Breweries have been following that trend, and many microbreweries are now huge. It's hard to walk into a bar these days and not see Sierra Nevada or Sam Adams (at the very least) on tap. The number of "mega-tap" bars, those places where 30 or more kegs flow freely, are proliferating at a rapid rate. Sales of Bud are down, and sales of beers like Bell's Oberon Ale are up There's a reason for this, of course. One is taste. Bell's Oberon is a wheat beer, which is a distinctive brew. A (female, I must stipulate) Canadian friend once described the smell as "douche beer." Beer cognoscenti prefer to describe the nose of a good wheat beer as "banana-clove," which is a singular scent. More and more people who drink beer want to drink a beer that has a discernible taste. I'm down with that. Back in college, I favored Milwaukee's Best because it had a taste. A bad taste, to be sure, but a taste nonetheless. The taste "revolution" has been aided by simple microeconomics. Most days around here, you can find a case of Budweiser bottles for $16. That's not the regular price, but somewhere in the neighborhood someone will have a sale that's somewhere around that point. You can get a case of a local micro (Fordham, Frederick, or Dominion) on sale for $20 to $22. Of course, companies like A-B are snapping up these small brewers of "ordinary" beers. In fact, Dominion recently sold itself to St. Louis. These brewers don't make the most distinctive beers, but they're infinitely more unique than the ubiquitous American pilsenser. Bell's Oberon has been on sale for as low as $24 a case and can be found in many places for about $28 a case. $12 seems like a serious premium until you price it out: Fifty cents a bottle. All of a sudden, satisfying your taste buds doesn't seem like that harsh a habit. And compare these prices to wine. You can get three bottles (eighteen small glasses) of mediocre wine for $28. Or you can get twenty-four bottles of excellent beer. Once again, economics favors the flavor. I will admit that this comparison isn't perfect. It's possible to pay $200 or more for a case of beer (the Dogfish Head 120 Minute Pale Ale retails for $10.50 a 12-oz. bottle or $226 a case at one local store), and Boston Brewing kicks out its Utopias once every few years for $250 a 750ml bottle (wine-bottle size), but those are exceptions. The fact is that if you expect your drink to taste good in addition to delivering a solid buzz, good beer is your cheapest bet. In the past five years, the growth area in beer has been in the craft or microbrew sector, with the largest increases seen among brewers of "big" beers, those mega-hopped, alcohol-stoked monsters that tend to peel the skin of the uninitiated. They deliver taste in extreme doses. And so maybe Jackson and everyone else is right. Maybe taste trumps economics and everything else. In any case, though, it really doesn't matter if InBev buys A-B or not. While both own brands that I buy now and again (I'm currently working my way through a case of InBev's Hoegaarden), their core businesses don't interest me. I like the beer that I like, and I'll still be able to find it even if both companies disappear completely.
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