tag:theconversation.com,2011:/id/topics/budweiser-18870/articlesBudweiser – The Conversation2024-02-09T16:50:30Ztag:theconversation.com,2011:article/2225482024-02-09T16:50:30Z2024-02-09T16:50:30ZSuper Bowl: events like this are perfect for brand storytelling – unless companies get their messaging wrong<p>The <a href="https://www.britannica.com/sports/Super-Bowl">Super Bowl</a> – the championship game of America’s <a href="https://www.nfl.com/">National Football League</a> (NFL) – stands as one of the most lucrative annual showcases for big brands. With <a href="https://www.statista.com/statistics/216526/super-bowl-us-tv-viewership/#:%7E:text=The%202023%20edition%20of%20the,the%20U.S.%20Second%20most%20watched">115m viewers</a> watching the game last year in the US, 30-second ad spots go for a reported <a href="https://www.brandvm.com/post/super-bowl-2024-marketing#:%7E:text=The%2520highly%2520coveted%252030%252Dsecond,enthusiastic%2520about%2520the%2520Super%2520Bowl.">$7m</a> (£5.5m). These days, “Super Bowl ads” are highly anticipated in terms of creative, memorable storytelling that hits home.</p>
<p>For major corporations, getting the creative and messaging right is essential. Successful ads leverage the massive platform not just to grab eyeballs, but to reinforce brand values through authentic, engaging stories.</p>
<p>Goals range from sparking viral conversations to initiating loyal customer relationships to unveiling innovative offerings. Looking back, all-time great Super Bowl ads like Jeep’s iconic 2020 <a href="https://www.statista.com/statistics/216526/super-bowl-us-tv-viewership/#:%7E:text=The%202023%20edition%20of%20the,the%20U.S.%20Second%20most%20watched">Groundhog Day remake with Bill Murray</a>, cleverly appealed to audiences’ nostalgia while also pivoting towards the brand’s eco-friendly direction.</p>
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<p><a href="https://www.forbes.com/sites/forbescommunicationscouncil/2021/03/15/how-and-why-to-build-brand-authenticity/?sh=7a35bac455b5">Brand authenticity</a> has become ever more important in our digitally connected world. Recent uproar involving brands like Peloton, whose <a href="https://www.theguardian.com/media/2019/dec/04/peloton-backlash-sexist-dystopian-exercise-bike-christmas-advert">much-derided Christmas ad</a> appeared to show a husband gift his very thin, nervy wife an exercise bike for which, a year later, she thanks him profusely for “changing her life”. </p>
<p>Media-literate audiences are adept at sensing falsehoods and can become cynical, diminishing brand trust and <a href="https://www.emerald.com/insight/content/doi/10.1108/EUM0000000006475/full/html">affecting loyalty</a>. </p>
<p>But it’s not just consumers; once employees lose trust, this can further damage the brand. Our <a href="https://link.springer.com/article/10.1007/s13162-018-0110-6">research</a> showed that employees who believe in the brand will go out of their way to do good. So when brands appear to “bang the social justice drum” publicly, but employees experience a lack of equality on the inside, this can lead to distrust.</p>
<p>This was the case with Wholefoods which, while telling the world they cared about black voices, was <a href="https://hbr.org/2020/07/woke-washing-your-company-wont-cut-it">accused of ignoring those very voices</a> among their own employees. </p>
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<h2>When brands don’t read the room</h2>
<p>Consumers prefer brands whose <a href="https://www.sciencedirect.com/science/article/abs/pii/S0148296321009462?fr=RR-2&ref=pdf_download&rr=84eacf091a6476ed">values align with their own</a>. Reducing environmental harm and standing up for social issues are two <a href="https://www.weforum.org/agenda/2021/12/people-prefer-brands-with-aligned-corporate-purpose-and-values/">examples of consumer expectations</a> of favoured brands, some of which may be tempted to jump on the bandwagon.</p>
<p>The widespread scorn over Kendall Jenner’s farcical <a href="https://www.nytimes.com/2017/04/05/business/kendall-jenner-pepsi-ad.html">Pepsi ad</a> – which not only downplayed violence against black people but also glamourised it – should have been a salutary lesson for the sector.</p>
<p>But soon after, <a href="https://www.forbes.com/sites/charlesrtaylor/2019/01/15/why-gillettes-new-ad-campaign-is-toxic/?sh=6847bf725bc9">Gillette</a>, in its attempt to play the social activist card, launched its “is this the best a man can get?” campaign. In a dramatic two-minute ad, aspects of toxic masculinity, including bullying, sexism and sexual harassment post-#MeToo were addressed.</p>
<p>This fuelled anger amongst consumers sceptical of the brand’s motives. Others felt the ad was suggesting the majority of men engage in toxic behaviours, leading to significant backlash across social media, with pundits claiming offence at stereotyping and perceived virtue signalling.</p>
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<p>In April 2023, <a href="https://fortune.com/2023/06/07/brands-caught-up-iculture-wars-retail-customers-internet-richard-torrenzano/">Budweiser</a> turned the adage “there’s no such thing as bad publicity” on its head. Sales of Bud Light <a href="https://www.theguardian.com/business/2023/jun/14/bud-light-loses-top-us-beer-spot-after-promotion-with-transgender-influencer">plunged 25%</a> in response to its promotion featuring transgender influencer/actress Dylan Mulvaney. This led to a boycott by angry conservative consumers accusing the brand of <a href="https://www.bbc.co.uk/news/business-66398296">going “woke”</a>.</p>
<p>Before the boycott, Bud Light marketing director Alissa Heinerscheid <a href="https://www.nytimes.com/article/bud-light-boycott.html#:%7E:text=Before%20the%20boycott%2C%20Alissa%20Heinerscheid,for%20a%20really%20long%20time.">said in an interview</a> that the brand was in decline and needed to be more inclusive. After the backlash, CEO Brendan Whitworth <a href="https://www.youtube.com/watch?v=85zvTMFv9Ck">said</a>: “We never intended to be part of a discussion that divides people – we’re in the business of bringing people together over a beer.” </p>
<p>When brands fail to align their behaviours with their espoused values, this can wreak havoc with a brand’s reputation. The consumer base ends up feeling alienated by the brand’s perceived hypocrisy and inauthenticity.</p>
<h2>Evolving narratives</h2>
<p>As the 2024 Super Bowl LVIII approaches, brands want to make sure they don’t go down as yet another big corporation chasing social causes to look good. Rather than disingenuously espousing values, or grasping at emotional connections without context, brands should use the power of <a href="https://hbr.org/podcast/2022/02/the-positives-and-perils-of-storytelling">storytelling</a> to convince viewers of their underlying purpose in a way that connects to their lives.</p>
<p><a href="https://link.springer.com/chapter/10.1007/978-3-030-63614-2_6#:%7E:text=Although%2520transportation%2520is%2520distinct%2520from,or%2520actions%2520of%2520such%2520characters.">Research shows</a> that storytelling increases reader identification with characters, shifts attitudes and beliefs and creates more lasting memorability than straightforward delivery of information. Unlike explicit messaging which can feel inauthentic, getting lost in a story can inspire emotions and shape beliefs in a <a href="https://academic.oup.com/ct/article-abstract/14/4/311/4110790?redirectedFrom=PDF&casa_token=nueJDJ37xvEAAAAA:YDFDq8Dfqsr7BUGQ__E-dKX8NGQ7Sdz8Rd6uqu_aKNLEQloAHaklVqO0KIDccJqfE_0O5veQCsKwiQ">subtle, organic way</a>.</p>
<p>Look at <a href="https://youtu.be/2zfqw8nhUwA?si=rB1CVqNaIG5vZFwv">Apple’s 1984 commercial</a> introducing the Macintosh – it didn’t talk about the actual product, but rather created a hero narrative against conformity and totalitarianism. Or Coca-Cola’s famous 1971 “I’d like to buy the world a Coke” ad that united people at a time when America was <a href="https://www.historyoasis.com/post/things-go-better-with-coke">experiencing a dark period</a> during the Vietnam War. These are the storytelling ads that resonate rather than force-feed a supposed values-based message.</p>
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<h2>Digital immersive storytelling</h2>
<p>In our <a href="https://dosrhul.org/2024/01/26/meeting-net-zero-zero-sum-or-win-win-for-smes-a-novel-approach-to-marketing-a-brands-purpose-through-immersive-digital-storytelling/">research</a>, we go further. We propose using immersive digital storytelling techniques for brands to craft and validate the authenticity of their messaging. </p>
<p>Interactive digital media enables more participatory story experiences between brands and audiences. Working with a company to showcase their sustainability efforts, we created an immersive storytelling experience using extended reality technology. In this case, the founder of the company takes the audience on a walk through a forest purchased to help offset the operation’s carbon emissions.</p>
<p>This visceral storytelling immerses the viewers via a VR headset in the experience, emotionally engaging consumers with a positive real-life story, thus <a href="https://www.bbc.co.uk/news/science-environment-60248830">avoiding the allegations of greenwashing</a> that plague major brands like Google and Amazon.</p>
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<p>By showing rather than telling, this gives consumers a deeply authentic experience of the brand’s causes. They can see for themselves what the company is doing as opposed to being fed messages from traditional advertising.</p>
<p>Rather than indulging in virtue signalling to distinguish themselves, brands may find greater resonance in adopting more immersive and transparent approaches to connect their mission with real-world impact. Such strategies may prove more effective than preachy commercials that lack authenticity.</p><img src="https://counter.theconversation.com/content/222548/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Preachy commercials do not go down well when big brands are suspected of disingenuous motives and virtue signalling.Lucy Gill-Simmen, Senior Lecturer in Marketing, School of Business and Management Marketing, Royal Holloway University of LondonLing Xiao, Senior Lecturer in Finance, Royal Holloway University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1636312021-07-20T12:13:50Z2021-07-20T12:13:50ZFor some craft beer drinkers, less can mean more<figure><img src="https://images.theconversation.com/files/411972/original/file-20210719-17-ui278b.jpg?ixlib=rb-1.1.0&rect=787%2C147%2C2043%2C1369&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">For years, the market was inundated with heavy IPAs. Now drinkers are starting to push back.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/recession-increase-in-popularity-of-home-brew-jeff-lindsay-news-photo/1080969168?adppopup=true">Bruce Milton Miller/Fairfax Media via Getty Images</a></span></figcaption></figure><p>My prepandemic summers were always packed with travel – trips to Europe for work and play, and, most recently, a road trip across the American West. At the end of a sweltering day of activities, I’d routinely wind down with some social drinking.</p>
<p>In recent years, though, I started to notice a shift. Beer lists had grown to include more and more low-alcohol options.</p>
<p>Whether I was in Braunschweig, Germany, a suburb of Salt Lake City, or at home in Central Texas, I found myself no longer forced to choose between the likes of Stella Artois or Miller Lite if I wanted something that wouldn’t put me under the table. Now I could expect to find a bevy of local or national options with an alcohol by volume, or ABV, in the 4% to 5% range – below the 5.9% average of a craft beer and well below the 7% India pale ales that had been flooding the market.</p>
<p>I even started seeing more nonalcoholic beers like <a href="https://www.heineken.com/us/en/our-products/heineken-0-0">Heineken 0.0</a>, which was first released in Europe in 2017 and then in the U.S. in 2019.</p>
<p>It seemed to me that low- and no-alcohol beers were becoming much more popular, but I wasn’t sure. So like a good scholar, I decided to look to the data to find an answer.</p>
<p><a href="https://doi.org/10.1007/978-3-030-41654-6_7">In a recent study</a> I conducted with my colleagues at <a href="https://www.txstate.edu/">Texas State University</a>, we looked at industry literature and <a href="https://www.fus.edu/intervalla/volume-7-questions-of-taste/virtual-pub-crawl-assessing-the-utility-of-social-media-for-geographic-beer-research-in-the-united-states">social media mentions</a>, popular media articles and changes to alcohol regulations. We found that there is, in fact, a growing interest in consuming – and improved technology for producing – beer with less alcohol.</p>
<h2>The rise of big ‘small’ beer</h2>
<p>Beer has a complicated history in the U.S. Prior to the industry consolation that is the contemporary norm, small, local breweries dotted the country. <a href="https://theconversation.com/how-prohibition-changed-the-way-americans-drink-100-years-ago-129854">Prohibition devastated the industry</a>, but, when it was repealed in 1933, <a href="https://www.chicagoreviewpress.com/audacity-of-hops--the-products-9781613737088.php">there was a period of rebirth</a>.</p>
<p>Although brewing and the consumption of alcohol did <a href="https://uncpress.org/book/9781469652177/alcohol/">not completely stop</a> during Prohibition, overall consumption was drastically reduced. Any drinking that did take place was driven behind closed doors.</p>
<p>However, the repeal of Prohibition returned alcoholic beverages to the public arena. As alcohol restrictions and regulations were loosened or removed altogether, the <a href="https://oxford.universitypressscholarship.com/view/10.1093/acprof:oso/9780199693801.001.0001/acprof-9780199693801-chapter-1">volume of production rose rapidly</a>.</p>
<p>Over the course of the 20th century, <a href="https://www.chicagoreviewpress.com/audacity-of-hops--the-products-9781613737088.php">technological innovations</a> – ranging from improvements to the pasteurization process, to better transportation infrastructure, to advancements in packaging engineering – allowed breweries to scale up their operations.</p>
<p>It was during this period that American brewers like Budweiser <a href="https://doi.org/10.1080/00076791.2015.1027691">uncovered an untapped market for light-colored, low-ABV beer</a>.</p>
<p>To this day, the U.S. is known for its <a href="https://doi.org/10.1080/00076791.2015.1027691">bland macro brews</a>: Budweiser, Miller and Coors. But despite that long history – or perhaps because of it – the country’s <a href="https://doi.org/10.1111/foge.12034">craft beer industry</a> has exploded over the past couple of decades.</p>
<p>In 1983, <a href="https://www.cambridge.org/core/journals/journal-of-wine-economics/article/craft-beer-in-the-united-states-history-numbers-and-geography/51285F0DA449C6DE7B00D8D201FD7F6A">there were 14 craft brewers in the U.S.</a> In 2000, the <a href="https://www.brewersassociation.org/statistics-and-data/national-beer-stats/">Brewers Association</a> counted 1,566 craft breweries. By 2020, the number had swelled to 8,884.</p>
<p>What brewers have dubbed the “<a href="https://www.goodreads.com/book/show/18139968-the-craft-beer-revolution">craft beer revolution</a>” is characterized by its sophistication and specialization; craft brewers have traditionally produced a dizzying array of brands and styles, <a href="https://www.joshuambernstein.com/complete-beer-course">moving the market</a> toward “bigger” – meaning bolder, stronger – brews.</p>
<p>This has led to a paradox. Large-scale producers became known for brewing “small” – low in alcohol and, ostensibly, low in flavor – beer. Meanwhile, smaller breweries became known for making “big” – more flavorful, higher in alcohol – beers.</p>
<h2>Changing times, changing tastes</h2>
<p>While among most beer aficionados, heavy, high-alcohol beer is still popular, demand for lower-alcohol or nonalcoholic options is rising.</p>
<p>The Brewers Association highlights a shift toward “mindful drinking,” indicating that consumers are increasingly keeping an eye on the carbohydrate, gluten or alcohol content of their drink of choice. In fact, <a href="https://www.brewersassociation.org/insights/2020-points-and-2021-predictions/">two-thirds of drinkers</a> say they take into account one or more of these attributes when drinking.</p>
<p>Meanwhile, more Americans are “<a href="https://www.npr.org/sections/health-shots/2019/06/23/732876026/breaking-the-booze-habit-even-briefly-has-its-benefits">sober curious</a>,” insofar as they are willing to take a short break from drinking or choose to abstain from alcohol altogether. These individual choices are part of an overarching social shift making, as NPR put it, “<a href="https://www.npr.org/sections/thesalt/2017/10/06/555909072/teetotaling-made-trendy">teetotaling trendy</a>.”</p>
<p>There’s long been the cultural belief that only people recovering from alcoholism drink nonalcoholic beer. In our study, though, we found that people were increasingly drawn to nonalcoholic beers for a number of reasons.</p>
<p>Someone may be allergic or intolerant to alcohol, taking a medicine that contraindicates alcohol consumption, or have religious or personal preferences that tend toward abstention. Others want to retain the ability to be responsive or responsible for later activities, like serving as a designated driver, operating heavy machinery or being “on-call” for work.</p>
<h2>Making lower-alcohol beer more palatable</h2>
<p>Low-alcohol beer in the U.S. long has suffered from an image problem – namely, the perception that low- and no-alcohol brews taste bad. (And, let’s be honest, many do.)</p>
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<img alt="An ad for Budweiser depicts a psychic over a crystal ball with a Budweiser bottle in it." src="https://images.theconversation.com/files/411956/original/file-20210719-25-10fjn8n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/411956/original/file-20210719-25-10fjn8n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=950&fit=crop&dpr=1 600w, https://images.theconversation.com/files/411956/original/file-20210719-25-10fjn8n.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=950&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/411956/original/file-20210719-25-10fjn8n.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=950&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/411956/original/file-20210719-25-10fjn8n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1193&fit=crop&dpr=1 754w, https://images.theconversation.com/files/411956/original/file-20210719-25-10fjn8n.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1193&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/411956/original/file-20210719-25-10fjn8n.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1193&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Budweiser has pulled off what some might call an act of wizardry: a low-alcohol beer produced in huge volumes with a relatively inoffensive taste.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/menu-for-budweiser-reads-drink-budweiser-americas-social-news-photo/179348042?adppopup=true">Jim Heimann Collection via Getty Images</a></span>
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<p>That’s because the brewing process <a href="https://doi.org/10.3390/pr8111382">can be especially complicated</a> for low- or no-alcohol ferments, which has made it difficult to brew high-quality, low-alcohol beer that tastes good. <a href="http://mentalfloss.com/article/12940/scientific-reasons-respect-light-beer">Some even say</a> that Budweiser isn’t given nearly enough credit for brewing a consistent, relatively palatable, low-alcohol product at such a big scale.</p>
<p>But in recent years, <a href="https://doi.org/10.3390/pr8111382">several studies</a> <a href="https://doi.org/10.1007/978-3-030-41654-6_7">have been dedicated</a> to improving the production protocols and flavor of low-alcohol beer. Although brewing <a href="https://www.smithsonianmag.com/history/the-beer-archaeologist-17016372/">is an ancient art</a>, it has also shown <a href="https://innovationmanagement.se/2018/05/01/the-innovation-that-fuels-the-craft-brew-revolution/">impressive adaptability</a> as times and technology have changed.</p>
<h2>The state of the art</h2>
<p>Combine the better taste with low-alcohol beer’s real or perceived health benefits, and <a href="https://www.reuters.com/article/us-beverages-alcohol/big-brewers-see-strong-potential-for-weak-beer-idUSKCN0ZT0FB">there’s a real niche developing</a> for the style.</p>
<p>That doesn’t mean standard-alcohol – and even high-alcohol – beers are going anywhere anytime soon. Among craft brewers and craft drinkers, IPAs remain the <a href="https://www.brewersassociation.org/insights/beer-style-growth-may-not-matter-brand/">most prominent beer style by far</a>: Over 2,000 brands make and sell them.</p>
<p>Yet the craft brewing industry is increasingly aware of these shifts in drinker preferences and the social benefits of <a href="https://www.youtube.com/watch?v=cdaP7RAc_I8&amp;amp;amp;list=PLSfGHGA7VwdF7WNAfhPFv2RDI02ISLga5&amp;amp;amp;index=40">moderating alcohol intake</a>. Recent trends toward appreciating beer with no or low alcohol <a href="https://wellbeingbrewing.com/pages/our-values">make space for moderate or nondrinkers to participate</a> in the craft beer movement.</p>
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<img alt="Six-packs of beer for sale in a refrigerator." src="https://images.theconversation.com/files/411968/original/file-20210719-25-g8ckqi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/411968/original/file-20210719-25-g8ckqi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/411968/original/file-20210719-25-g8ckqi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/411968/original/file-20210719-25-g8ckqi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/411968/original/file-20210719-25-g8ckqi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/411968/original/file-20210719-25-g8ckqi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/411968/original/file-20210719-25-g8ckqi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Lagunitas’ DayTime IPA – which has 4% ABV – is part of a shift among smaller brewers to offer something for everyone.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/lagunitas-beer-is-offered-for-sale-on-may-4-2017-in-chicago-news-photo/678733830?adppopup=true">Scott Olson/Getty Images</a></span>
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<p>Now, thanks to the work of food and fermentation scientists, the creativity of brewers and the willingness of consumers to keep experimenting, the list of options that have lower-than-average alcohol and that are actually tasty is growing. </p>
<p>German beer giant Beck’s nonalcoholic lager and Athletic Brewing’s <a href="https://www.nny360.com/artsandlife/columns/beerguy/beer-nerd-athletic-s-run-wild-ipa-is-a-lot-better-than-na-beer-has/article_e2ccdc9d-ac2c-5a98-9308-cd6bd86078f1.html">Run Wild nonalcoholic IPA</a> are just two examples of how breweries large and small are trying to tap into the nonalcoholic beer market.</p>
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<p>Meanwhile, most craft brewers now offer some kind of “<a href="https://www.craftbeer.com/craft-beer-muses/session-beers">session beer</a>” – so called because, thanks to their lower alcohol content, they’re suitable for longer drinking sessions. Sales of session IPAs, for instance, <a href="https://www.craftbeer.com/craft-beer-muses/makes-ipa-still-popular">increased 199% in 2015</a>.</p>
<p>Even beyond session IPAs, lower-alcohol brews across styles – gose, Helles lager, Kölsch, saison, and pilsner – are <a href="https://vinepair.com/wine-blog/in-defense-of-the-session-ipa-a-trend-that-doesnt-need-to-die/">increasingly visible, available and popular</a> in both pint <a href="https://www.growlermag.com/we-blind-tasted-31-na-beers-and-found-7-we-actually-enjoyed/">and</a> <a href="https://www.esquire.com/food-drink/drinks/g1569/good-alcoholic-beers/">print</a>, which is just another way of saying that, now more than ever, you can readily find a low-alcohol or nonalcoholic brew in your glass or on your screen.</p><img src="https://counter.theconversation.com/content/163631/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Colleen C. Myles does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Thanks to shifting tastes and improvements to the brewing process, more craft brewers are offering low-alcohol and nonalcoholic options – and are going toe to toe with America’s beer giants.Colleen C. Myles, Associate Professor of Geography, Texas State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1622222021-06-10T12:36:52Z2021-06-10T12:36:52ZAlcohol companies make $17.5 billion a year off of underage drinking, while prevention efforts are starved for cash<figure><img src="https://images.theconversation.com/files/404928/original/file-20210607-10178-1b5bfg2.jpg?ixlib=rb-1.1.0&rect=0%2C14%2C4679%2C2354&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">New research estimates that underage drinkers consume $2.2 billion of Anheuser-Busch InBev drinks – like Budweiser – per year.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/EarnsABInBev/177404906dfa4944b17cc3bf5a42442f/photo?Query=ab%20AND%20inbev&mediaType=photo&sortBy=&dateRange=Anytime&totalCount=63&currentItemNo=0">AP Photo/Reed Saxon</a></span></figcaption></figure><figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/405233/original/file-20210609-19-1gvoc6d.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/405233/original/file-20210609-19-1gvoc6d.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=255&fit=crop&dpr=1 600w, https://images.theconversation.com/files/405233/original/file-20210609-19-1gvoc6d.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=255&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/405233/original/file-20210609-19-1gvoc6d.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=255&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/405233/original/file-20210609-19-1gvoc6d.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=321&fit=crop&dpr=1 754w, https://images.theconversation.com/files/405233/original/file-20210609-19-1gvoc6d.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=321&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/405233/original/file-20210609-19-1gvoc6d.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=321&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">CC–BY–ND.</span>
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<p>Alcohol is still the <a href="https://www.cdc.gov/mmwr/volumes/69/su/su6901a5.htm">most commonly used</a> drug among high school students. According to the Centers for Disease Control and Prevention, every year approximately <a href="https://nccd.cdc.gov/DPH_ARDI/Default/Report.aspx?T=AAM&P=1A04A664-0244-42C1-91DE-316F3AF6B447&R=B885BD06-13DF-45CD-8DD8-AA6B178C4ECE&M=32B5FFE7-81D2-43C5-A892-9B9B3C4246C7&F=&D=">3,500 people under 21 die because of alcohol use</a>. </p>
<p>I have studied the relationship between alcohol marketing and youth drinking behavior for the past 20 years. In 2011, my colleagues and I performed what to our knowledge was the first and only survey of <a href="https://doi.org/10.1111/acer.12084">what specific brands of alcohol underage people drink</a>. We asked 1,032 young drinkers about 898 brands of alcohol to learn what the underage alcohol market looks like.</p>
<p>In a new paper published on June 9, 2021, my colleagues and I combined our survey data with the latest information available about alcohol consumption among adults to estimate the percent of all alcohol sold in the U.S. <a href="https://doi.org/10.15288/jsad.2021.82.368">that was consumed by young people</a>. Then, we were able to calculate how much money underage drinkers are spending and, importantly, <a href="https://doi.org/10.15288/jsad.2021.82.368">which companies are making this money</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/404930/original/file-20210607-27-1lo02iv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two empty red plastic cups next to tipped over beer bottles." src="https://images.theconversation.com/files/404930/original/file-20210607-27-1lo02iv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/404930/original/file-20210607-27-1lo02iv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/404930/original/file-20210607-27-1lo02iv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/404930/original/file-20210607-27-1lo02iv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/404930/original/file-20210607-27-1lo02iv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/404930/original/file-20210607-27-1lo02iv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/404930/original/file-20210607-27-1lo02iv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Just three companies account for nearly half of all alcohol consumed by minors.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/photo-illustration-for-underage-drinking-with-empty-beer-news-photo/1315945612?adppopup=true">MediaNews Group/Reading Eagle via Getty Images</a></span>
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<h2>Who makes money from underage drinking?</h2>
<p>In 2016, the most recent year for which market research and government data were available, the total value of alcoholic beverage sales in the U.S. <a href="https://doi.org/10.15288/jsad.2021.82.368">was around US$237.1 billion</a>. Using our model of the youth market from 2011 and our database of alcohol prices, we were able to estimate the retail sales of youth consumption for 2011 and project it to 2016. In total, we estimate that youth under 21 accounted for <a href="https://doi.org/10.15288/jsad.2021.82.368">8.6% of the drinks consumed and 7.4% of the dollars spent</a>, since young people buy cheaper alcohol. This translates to $17.5 billion. While underage drinking has been <a href="https://www.niaaa.nih.gov/publications/brochures-and-fact-sheets/alcohol-facts-and-statistics">steadily declining since 2002</a>, it is still a substantial source of income for these companies. </p>
<p>According to our <a href="https://doi.org/10.1111/acer.12084">2011 survey</a>, the 10 most popular alcohol brands among underage drinkers were Bud Light, Budweiser, Smirnoff Malt Beverages, Smirnoff Vodkas, Coors Light, Jack Daniel’s Bourbons, Corona Extra, Mike’s, Captain Morgan Rums and Absolut Vodkas.</p>
<p>Three companies own most of these drinks and accounted for nearly half – 44.7% – of the alcoholic drinks consumed by young people. Anheuser-Busch InBev accounted for 21.2% of of these drinks, from which they earned $2.2 billion. MillerCoors sold 11.1% of the booze, earning $1.1 billion. Spirits- and beer-maker Diageo also sold 11.1% of the beverages youth drank – and, since liquor tends to be more expensive per drink compared to beer, earned $2 billion from underage drinking.</p>
<h2>Revenues from underage drinking could be put to good use</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/404929/original/file-20210607-80132-1mr4oht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A sign on a fence saying 'Must be 21 years old to enter.'" src="https://images.theconversation.com/files/404929/original/file-20210607-80132-1mr4oht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/404929/original/file-20210607-80132-1mr4oht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/404929/original/file-20210607-80132-1mr4oht.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/404929/original/file-20210607-80132-1mr4oht.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/404929/original/file-20210607-80132-1mr4oht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/404929/original/file-20210607-80132-1mr4oht.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/404929/original/file-20210607-80132-1mr4oht.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Alcohol companies claim to be against underage drinking but contribute very little money to effective programs aimed at reducing the large market.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/drinking-age-royalty-free-image/172281583?adppopup=true">Kameleon007/iStock via Getty Images Plus</a></span>
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<p>Brewing industry trade association the Beer Institute says that the “<a href="https://www.beerinstitute.org/wp-content/uploads/2018/12/BI_WhitePaper2018.pdf">U.S. beer industry has dedicated itself to preventing illegal underage drinking for more than three decades</a>.” They go on to say that companies do their part to make sure advertising is aimed at adults, educate parents and college students about underage drinking and encourage stores to not sell alcohol to minors.</p>
<p>However, <a href="https://dx.doi.org/10.1093%2Feurpub%2Fcky065">numerous studies</a> have found that alcohol companies’ actions to prevent alcohol-related harms are ineffective. Our research clearly demonstrates a conflict of interest: These companies are making literally billions of dollars from the very behavior they say they want to prevent. </p>
<p>In response to a request from Congress, in 2003, the National Research Council and Institute of Medicine issued a <a href="https://doi.org/10.17226/10729">major report on reducing underage drinking</a>. They recommended that all segments of the alcohol industry that profit from underage drinking place 0.5% of total company revenues in an independent nonprofit foundation dedicated to reducing and preventing underage drinking. In 2016, this would have amounted, for example, to $78 million from Anheuser-Busch InBev. This money could do a lot to support community groups trying to implement <a href="https://www.thecommunityguide.org/topic/excessive-alcohol-consumption?page=1">evidence-based strategies</a> such as reducing density of stores that sell alcohol, raising alcohol taxes and increasing enforcement around illegal sales to minors. </p>
<p>But no independent fund was ever created, and the alcohol companies themselves continue to control the money they contribute to preventing underage drinking, largely spending it on branded “corporate social responsibility” efforts that do more to <a href="https://dx.doi.org/10.1093%2Feurpub%2Fcky065">promote their products than prevent harmful drinking</a>. </p>
<p>Meanwhile, federal funding specifically dedicated to the prevention of underage drinking is minimal. The <a href="https://www.samhsa.gov/sites/default/files/samhsa-fy-2022-cj.pdf">most recent president’s budget</a> recommended a mere $10 million for grants to community coalitions working on underage drinking. On top of this, as a result of a significant alcohol tax cut passed in 2017 and <a href="https://www.thedrinksbusiness.com/2020/12/us-alcohol-producers-benefit-from-900bn-stimulus-package/">made permanent in 2020</a>, alcohol companies are contributing less to the federal budget than ever.</p>
<p>I believe that, because of their conflict of interest, alcohol companies cannot be trusted to spend prevention dollars effectively. The billions these companies make from underage drinking is money that the prevention field could really use. A system, independent of the industry, that would collect and allocate these unwanted revenues could be a better way to get it to local communities and help reduce and prevent underage drinking.</p>
<p>[<em>Get our best science, health and technology stories.</em> <a href="https://theconversation.com/us/newsletters/science-editors-picks-71/?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=science-best">Sign up for The Conversation’s science newsletter</a>.]</p><img src="https://counter.theconversation.com/content/162222/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David H. Jernigan receives funding from the National Institute on Alcohol Abuse and Alcoholism and the de Beaumont Foundation. He also serves as the Scientific Chair of the Global Alcohol Policy Alliance.</span></em></p>In the US, underage drinking accounts for a whopping US$17.5 billion worth of alcohol yearly. New research shows which companies take in most of this money and how little is spent on prevention.David H. Jernigan, Professor of Health Law, Policy & Management, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1547162021-02-08T14:02:51Z2021-02-08T14:02:51ZDrake and Jake, Mountain Dew’s millions and the Marvel Universe – which ads won the Super Bowl, and which fell flat<figure><img src="https://images.theconversation.com/files/382968/original/file-20210208-13-1s54wdo.png?ixlib=rb-1.1.0&rect=146%2C21%2C1895%2C1294&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">State Farm's 'Drake' ad was one of the Twitter winners of the Super Bowl.</span> <span class="attribution"><a class="source" href="https://youtu.be/lvpq2OjmJvg">State Farm</a></span></figcaption></figure><p>Live sporting events are among the few remaining places where advertisers can ensure that no one fast forwards through their commercials which is why companies were willing to pay <a href="https://www.fastcompany.com/90601590/how-much-does-a-super-bowl-ad-cost-heres-how-2021-compares">US$5.5 million</a> for just 30 seconds of air time on Super Bowl Sunday. </p>
<p>So who “won” the Super Bowl ad war? </p>
<p>For the last two years, <a href="https://utccismcc.utk.edu/people/graduate-assistant">I have</a> been using the <a href="https://utccismcc.utk.edu/">Adam Brown Social Media Command Center</a> at the University of Tennessee to understand how social media like Twitter and Facebook react to major events such as presidential debates, breaking news like the <a href="https://theconversation.com/us/search?q=gamestop">GameStop craze</a> and sporting events like the Super Bowl.</p>
<p>Engagement on Twitter <a href="http://www.doi.org/10.2501/JAR-54-4-454-468">is one measure companies use</a> to determine an advertisement’s success and whether it was worth all those millions – not to mention the cost of making Super Bowl ads, which often include celebrities. </p>
<p>Here’s what I noticed from monitoring social media during Super Bowl LV.</p>
<h2>The performers</h2>
<p>I didn’t monitor the game itself – in which Tom Brady led the <a href="https://www.cbssports.com/nfl/news/2021-super-bowl-score-tom-brady-wins-seventh-ring-as-buccaneers-dominate-chiefs-and-patrick-mahomes/live/">Tampa Bay Buccaneers to a 31-9 victory</a> over the Kansas City Chiefs. But I did notice the performers, <a href="https://www.nytimes.com/2021/02/07/sports/football/amanda-gorman-poem-chorus-of-the-captains.html">including the first poet</a> to ever present at a Super Bowl, received a lot of buzz. </p>
<p>The <a href="https://theconversation.com/what-the-weeknds-changing-face-says-about-our-sick-celebrity-culture-154164">Weeknd</a>’s halftime performance – and <a href="https://twitter.com/MeggyNikirk/status/1358593762365210624?s=20">his closeup</a> – was the talk of Twitter, <a href="https://www.forbes.com/sites/maddieberg/2020/02/02/super-bowl-halftime-show-2019-twitter-reacts-to-jennifer-lopez/?sh=2858ed79cc2e">as Super Bowl performances usually are</a>. With his prime time slot and <a href="https://twitter.com/goIdenspacegirl/status/1358589788920696835?s=20">greatest hits montage</a>, he was the biggest hit on social media, with over 821,000 mentions during the game, most of which were quite positive. </p>
<p>Poet Amanda Gorman, <a href="https://www.cnn.com/2021/02/04/us/amanda-gorman-super-bowl-poetry-writegirl-cnnheroes/index.html">who gained national recognition</a> at President Joe Biden’s inauguration, received almost 60,000 mentions that were overwhelmingly positive after <a href="https://www.cnn.com/2021/02/07/us/amanda-gorman-super-bowl-poem-trnd/index.html">she read a poem</a> during the pre-game show. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/-ejbSCjg2qo?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Amanda Gorman recites ‘Chorus of the Captains.’</span></figcaption>
</figure>
<h2>Drake, Disney and Dew</h2>
<p>Of the dozens of companies that bought ad time during the big game, three won the Twitterverse with the most positively talked about advertisements of the evening. </p>
<p>I reached that conclusion by analyzing the volume of tweets that mentioned the company or used a hashtag introduced in the commercial, as well as by examining the sentiment score to see whether the conversation around the ads was positive or negative. </p>
<p>One of the big winners was <a href="https://youtu.be/lvpq2OjmJvg">State Farm’s ads starring Drake</a>, in which the rapper appears as a stand-in for “Jake,” who has appeared frequently in the insurer’s advertisements. Over 28,000 tweets mentioned State Farm within 40 minutes of the commercial’s first airing, for a total of 44,000 during the game. “Drake” was a keyword in most of them. Sentiment was very positive for most of the night as people found “Drake from State Farm” funny, until some users brought up the “Drake curse” that is <a href="https://www.bbc.com/news/newsbeat-47947155">supposedly bad luck for sports teams</a>.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/lvpq2OjmJvg?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">‘Drake from State Farm.’</span></figcaption>
</figure>
<p><a href="https://youtu.be/tI1gj730go0">Disney’s trailer</a> for its upcoming series “The Falcon and The Winter Soldier” performed even better, spurring over 100,000 tweets that specifically mentioned the show. Sentiment was also overwhelmingly positive for the show which stars two characters from the Marvel universe, with a score of over 90% throughout the evening. </p>
<p>Mountain Dew’s ad featuring pro wrestler John Cena driving through a “<a href="https://www.adweek.com/brand-marketing/mountain-dew-likely-super-bowl-2021-most-watched-ad/">surreal watermelon-themed amusement park</a>” won the evening on social media. It received over 300,000 mentions, likely driven by the $1 million offered to the first person who tweeted out the correct number of “major melon” bottles that appeared in the ad. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/sjMalUSxBvs?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Mountain Dew’s million-dollar giveaway.</span></figcaption>
</figure>
<h2>A few duds</h2>
<p>Super Bowl mainstay Budweiser had a pretty bad night. At first it said <a href="https://adage.com/article/special-report-super-bowl/super-bowl-lvs-big-commercial-void-makes-room-newbies/2308421">it would not buy advertising this year</a> and instead donate the money to coronavirus vaccination awareness efforts. But apparently it changed its mind and ran several ads for <a href="https://youtu.be/X9jkvq4-tCU">Bud Light</a> and <a href="https://youtu.be/g6CVKs77X74">Bud Light Seltzer</a>. Mentions of the two beers were under 10,000 and sentiment turned negative after the ads began running. </p>
<p>Shift4Shop, an e-commerce platform, <a href="https://www.businesswire.com/news/home/20210203005282/en/Super-Bowl-Ad-for-Inspiration4-Invites-Viewers-to-Join-World%E2%80%99s-First-All-Civilian-Mission-to-Space">advertised its partnership</a> with the Inspiration4 civilian mission to space. The ad did not appear to leave much of an impact on Twitter users, however, with fewer than 2,000 tweets during the game – not much of an effect for the price tag. It reminded me of <a href="https://www.youtube.com/watch?v=N76DzOYxNyo">Quibi’s Super Bowl ad last year</a> which was meant to be the TV streaming app’s debut to the world. It <a href="https://www.radio.com/y98/blogs/the-y98-morning-show/ad-meters-best-rated-and-worst-rated-super-bowl-commercials">was not well-received</a>, and the company <a href="https://deadline.com/2020/10/quibi-to-shut-down-ending-2b-streaming-experiment-1234601356/">called it quits</a> in December. </p>
<p>Another big loser were advertisements that were “heavy” – ad jargon for commercials that are overly emotive, such as those referencing weighty events like the pandemic or the Capitol riots. Most Super Bowl advertisers avoided these themes – opting instead for <a href="https://www.nytimes.com/2021/02/07/business/media/super-bowl-commercials.html?action=click&module=Top%20Stories&pgtype=Homepage">escapism and nostalgia</a>. And the ones that did go heavy didn’t do well, such as <a href="https://youtu.be/yfLz54hzpPs">Bass Pro Shops and Cabela’s</a> ad, during which the narrator intoned that “in these trying times we need nature more than ever.”</p>
<p><a href="https://www.youtube.com/watch?v=D2XYH-IEvhI">Jeep’s ad starring Bruce Springsteen</a> garnered a lot of attention – 20,000 tweets within minutes of its airing after half time – but most of it negative. Over two minutes, the Boss implores Americans to “meet in the middle” in a call for unity that <a href="https://twitter.com/ItsKennyatta/status/1358610451395973121?s=20">some Twitter users described</a> as “tone deaf.” </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/D2XYH-IEvhI?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Too political?</span></figcaption>
</figure>
<h2>Honorable mention</h2>
<p>While it didn’t break the internet, vegan food company <a href="https://youtu.be/r2-f-qBcQFs">Oatly’s love-it-or-hate-it ad</a> got a fair amount of attention given how minimilistic it was. </p>
<p>It featured the company’s CEO playing piano in a field and singing about Oatly’s products. People seemed evenly split on whether the ad was good or <a href="https://twitter.com/CouRageJD/status/1358576481648078848?s=20">absolutely horrible</a> – but it did generate over 16,000 tweets. The negative reaction may have been the company’s plan all along as it immediately began selling T-shirts saying, “<a href="https://www.businessinsider.com/oatly-released-t-shirt-widely-hated-super-bowl-commercial-2021-2">I totally hated that Oatly commercial</a>.” </p>
<p>The shirts sold out in five minutes.</p>
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<p class="fine-print"><em><span>Alexander Carter does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Advertisers forked over $5.5 million for a mere 30 seconds of air time during the Super Bowl. Here’s Twitter’s verdict on which brands got social media bang for their bucks.Alexander Carter, Phd Student in Advertising, University of TennesseeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/917372018-03-13T10:39:27Z2018-03-13T10:39:27ZWhy bland American beer is here to stay<figure><img src="https://images.theconversation.com/files/209974/original/file-20180312-30989-klloff.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Americans tend to prefer beers that have corn or rice 'adjuncts,' or fillers.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/man-beer-retro-clip-art-56756380?src=qF-aGOZRWm1RU8jWXH16mg-1-18">RetroClipArt/Shutterstock.com</a></span></figcaption></figure><p>Although craft beer has experienced explosive market growth over the past 25 years, the vast majority of Americans still don’t drink it.</p>
<p>Only about <a href="https://www.brewersassociation.org/press-releases/2016-growth-small-independent-brewers/">1 in 8</a> beers sold in America is a craft beer. For the first time, the <a href="https://www.washingtonpost.com/news/food/wp/2018/01/13/for-the-first-time-the-three-best-selling-beers-in-america-are-light-beers-can-craft-brewers-catch-up/?utm_term=.3d44be4b56f9">three best-selling beers</a> in America are light beers: Bud Light, Coors Light and Miller Lite. Bud Light alone has a greater market share than all craft beers combined. </p>
<p>So while the selection has broadened dramatically, most people’s tastes have not. Even craft beer companies are adjusting to this reality: A recent <a href="http://www.chicagotribune.com/business/ct-biz-top-selling-beers-20180116-story.html">Chicago Tribune article</a> noted that craft breweries are releasing beers that are “less hoppy and in-your-face” in order to appeal to the majority of Americans who prefer “big corporate lagers.”</p>
<p>In other words, they’re brewing blander beers.</p>
<p>How did Americans come to prefer such bland beer? As an economic historian, I’ve extensively researched the political economy of alcohol prohibition, and the unique history of the U.S. temperance movement might bear some responsibility for country’s exceptionally bland beer.</p>
<h2>The ‘lager bier craze’ clashes with teetotalers</h2>
<p>Unlike European countries with beer preferences and styles that have evolved over centuries, America lacks a homegrown brewing tradition.</p>
<p>The classic American beer is an “adjunct pilsner,” which means that some of the malted barley is replaced with corn or rice. The effect is a beer that’s lighter, clearer and less hoppy than its counterparts in countries like England, Germany and Belgium.</p>
<p>In colonial America, English-style beers and ales predominated, but rum and then whiskey were the drink of choice. Cider, easier to make at home, overtook beer by the early 19th century. </p>
<p>However, the American beer market grew during the great mid-19th century wave of <a href="http://www.beerhistory.com/library/holdings/beerbarons.shtml">German immigration</a>. German lagers were an immediate hit, partially because the German brewing method of <a href="https://beerandbrewing.com/dictionary/2Kudv5620R/bottom-fermentation/">bottom fermentation</a> – which involves a relatively long fermentation period and cold storage – made for a more consistent, storable product than top-fermented ales. The lagers were also mellower, though they were dark and hearty compared to what would become popular later.</p>
<p>But the “lager bier craze” dovetailed with another big trend: <a href="https://books.google.com/books?id=MJbBqn3XWqAC&lpg=PP1&dq=temperance%20movement%20in%20america&pg=PP1#v=onepage&q&f=false">the temperance movement</a>, which at various times sought to reduce problem drinking, reduce drinking more generally and eradicate alcohol consumption completely. From 1830 to 1845, the temperance movement gained momentum as more and more Americans were taking voluntary “<a href="https://books.google.com/books?id=BuzNzm-x0l8C&pg=PA108&dq=%22temperance+pledge%22&hl=en&sa=X&ved=0ahUKEwjFvfPEjefZAhUGRqwKHR71CDQ4ChDoAQg5MAQ#v=onepage&q=%22temperance%20pledge%22&f=false">temperance pledges</a>” and giving up spirits and cider. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/209972/original/file-20180312-30983-1pkwh26.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/209972/original/file-20180312-30983-1pkwh26.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/209972/original/file-20180312-30983-1pkwh26.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=465&fit=crop&dpr=1 600w, https://images.theconversation.com/files/209972/original/file-20180312-30983-1pkwh26.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=465&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/209972/original/file-20180312-30983-1pkwh26.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=465&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/209972/original/file-20180312-30983-1pkwh26.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=584&fit=crop&dpr=1 754w, https://images.theconversation.com/files/209972/original/file-20180312-30983-1pkwh26.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=584&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/209972/original/file-20180312-30983-1pkwh26.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=584&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A print from the 1800s promotes ‘lager bier’ as a ‘healthy drink’ and a ‘family drink.’</span>
<span class="attribution"><a class="source" href="https://upload.wikimedia.org/wikipedia/commons/thumb/5/59/Lager_Bier_%28LOC_pga.02166%29.jpg/1280px-Lager_Bier_%28LOC_pga.02166%29.jpg">Library of Congress</a></span>
</figcaption>
</figure>
<p>German brewers always <a href="https://www.tandfonline.com/doi/full/10.1080/00076791.2015.1027691">maintained</a> that beer was a “temperance beverage,” unlike ardent spirits such as whiskey. And indeed, European temperance movements did tend to regard beer as relatively harmless. </p>
<p>But activists in the American temperance movement – which by then had become more about abstinence and intertwined with evangelical Protestantism – didn’t buy the argument. The 1850s saw the first big push for <a href="https://www.ncbi.nlm.nih.gov/books/NBK216414/">state-level prohibition laws</a>, which ended up being passed in a handful of states. Those laws didn’t last for a variety of reasons (including the Civil War), but they did serve notice to the brewers that they needed to work harder to convince the public that beer was a temperance beverage.</p>
<h2>Perfect for a midday drink</h2>
<p>In the 1870s, American beer would become mellower still with the advent of a new type of lager: the Bohemian pilsner. Clearer, lighter and blander than the Bavarian lagers that had previously dominated the market, pilsners looked cleaner, healthier, more stable and less intoxicating.</p>
<p>As an 1878 issue of the trade publication Western Brewer <a href="https://www.tandfonline.com/doi/full/10.1080/00076791.2015.1027691">noted</a>, Americans “want a clear beer of light color, mild and not too bitter taste.”</p>
<p>Brewers and drinkers who wanted to avert the temperance movement’s gaze naturally chose light pilsners over dark lagers. But lighter beer also was a good fit for the long hours of American factory workers, <a href="https://books.google.com/books?id=pcOvAwAAQBAJ&pg=PA149&lpg=PA149&dq=midday+beer+factory+worker&source=bl&ots=-cWg0Xi-Ku&sig=lSqQTDeD4Cf1n5LGj0zDViS1fRA&hl=en&sa=X&ved=0ahUKEwiniIHdkufZAhUCR6wKHT0GCO84ChDoAQhEMAg#v=onepage&q=midday%20beer%20factory%20worker&f=false">many of whom ate at saloons between shifts</a>. Coming back to work drunk could get you fired, so if you wanted a beer or two with the salty saloon fare, the weakest beers were the best bet. </p>
<p>Pragmatism and personal taste soon became intertwined. Anheuser-Busch introduced Budweiser in 1876 – whose rice adjuncts produced an even milder beer – to great success. Pabst Blue Ribbon, with its corn adjuncts, became a national sensation as well.</p>
<p>In 1916, Gustave Pabst, the son of Pabst Blue Ribbon’s founder Frederick Pabst, <a href="https://books.google.com/books?id=0Vo5AQAAMAAJ&pg=PA350&lpg=PA350&dq=pabst+the+discrimination+in+favor+of+light+beers+in+those+countries+where+the+anti-alcohol+sentiment+is+strongest&source=bl&ots=yuqeME3t27&sig=uMdCP8Ahkjl2ULz1iADi8pDPoVs&hl=en&sa=X&ved=0ahUKEwjF_c7qzeTZAhWCuFMKHS7KA6wQ6AEILzAA#v=onepage&q=pabst%20the%20discrimination%20in%20favor%20of%20light%20beers%20in%20those%20countries%20where%20the%20anti-alcohol%20sentiment%20is%20strongest&f=false">told</a> the United States Brewers Association that “the discrimination in favor of light beers (is strongest) in those countries where the anti-alcohol sentiment is strongest.” </p>
<p>Nonetheless, the drumbeat of the temperance movement started getting louder.</p>
<h2>Prohibition leaves its mark</h2>
<p>By the late 19th and early 20th century, the temperance movement had returned in force. Efficient organizing campaigns by the Woman’s Christian Temperance Union and the Anti-Saloon League led to a new wave of state and local prohibitions and, finally, <a href="https://prohibition.osu.edu/anti-saloon-league">a push for national prohibition</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/209975/original/file-20180312-30979-1pj0sjr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/209975/original/file-20180312-30979-1pj0sjr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/209975/original/file-20180312-30979-1pj0sjr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=377&fit=crop&dpr=1 600w, https://images.theconversation.com/files/209975/original/file-20180312-30979-1pj0sjr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=377&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/209975/original/file-20180312-30979-1pj0sjr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=377&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/209975/original/file-20180312-30979-1pj0sjr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=473&fit=crop&dpr=1 754w, https://images.theconversation.com/files/209975/original/file-20180312-30979-1pj0sjr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=473&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/209975/original/file-20180312-30979-1pj0sjr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=473&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">An 1888 photograph of the New Hampshire Woman’s Christian Temperance Union.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/keenepubliclibrary/4537662459">Keene Public Library and the Historical Society of Cheshire County</a></span>
</figcaption>
</figure>
<p>National constitutional prohibition, as decreed by the <a href="https://en.wikipedia.org/wiki/Eighteenth_Amendment_to_the_United_States_Constitution">18th Amendment</a> and the <a href="https://www.archives.gov/education/lessons/volstead-act">Volstead Act</a>, was devastating to the beer industry in the short term. But in the long term, it further laid the groundwork for a nation of bland beer drinkers. </p>
<p><a href="https://www.tandfonline.com/doi/full/10.1080/00076791.2015.1027691">Careful estimates</a> by economist Clark Warburton found that alcohol consumption during Prohibition may have actually risen for wine and spirits but fell by two-thirds for beer, which was harder to conceal. Although Prohibition may have introduced a generation of young people to <a href="https://theconversation.com/the-prohibition-era-origins-of-the-modern-craft-cocktail-movement-109623">cocktails</a>, they had hardly any exposure to beer – and certainly hadn’t acquired the taste for hearty beer. </p>
<p>In March 1933, eight months before the 21st Amendment repealed Prohibition, Congress <a href="https://www.alcoholproblemsandsolutions.org/cullen-harrison-act-early-start-national-repeal/">modified</a> the Volstead Act to allow the production of “non-intoxicating,” low-alcohol beer and wine, with a maximum of 4 percent alcohol by volume. </p>
<p>The new, watered-down beer was a huge hit with the public, which hadn’t tasted a full-strength legal beer since 1917. Dark beers and ales had accounted for some 15 percent of the market before World War I. But in 1936 their share was just 2 to 3 percent. In 1947, researchers at Schwarz Laboratories analyzed the alcohol, hop and malt content of American beers in the 1930s and 1940s and <a href="https://www.tandfonline.com/doi/full/10.1080/00076791.2015.1027691">remarked</a> that many of these early post-repeal beers were “too hoppy,” “too heavy and too filling” for consumers’ tastes. The report noted “a corrective trend” in which brewers sharply reduced their hop and malt content.</p>
<p>More adventurous brewers and drinkers were also stymied by post-Prohibition laws. State and federal policies effectively <a href="https://beerandbrewing.com/the-day-homebrewing-was-legalized/">banned homebrewing</a>, and most states required a “three-tier” system of brewers, distributors and retailers that made it more difficult to make and market specialty beers.</p>
<p>The blandification of American beer continued for another 70 years. During World War II, <a href="https://books.google.com/books?id=hHNNBAAAQBAJ&pg=PA132&dq=mittelman+beer+3.2+war&hl=en&sa=X&ved=0ahUKEwiR0bmHrefZAhXQyVMKHUD_DZAQ6AEIJzAA#v=onepage&q=mittelman%20beer%203.2%20war&f=false">American troops got 4 percent alcohol beer</a> in their rations, exposing yet another generation to the joys of weak beer. The hop and malt content of beer <a href="https://www.tandfonline.com/doi/full/10.1080/00076791.2015.1027691">fell sharply and steadily over this period</a>. Hop content fell by half from 1948 to 1969, and the rise of “lite” beer in the 1970s accelerated the trend. Hop content fell 35 percent from 1970 to 2004.</p>
<p>Despite the phenomenal rise of craft beer, light beers are still dominant. The craft beer explosion <a href="https://www.processhistory.org/craft-beer-dighe/">is a remarkable story</a>, but perhaps we should stop calling it a revolution. </p>
<p>For now, bland beers are still king.</p><img src="https://counter.theconversation.com/content/91737/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ranjit Dighe does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The unique role of the temperance movement in US history might explain why, when it comes to Americans’ tastes, bland beer is still king.Ranjit Dighe, Professor of Economics, State University of New York OswegoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/567912016-05-04T10:11:18Z2016-05-04T10:11:18ZCan you imagine a world without Budweiser? We can<figure><img src="https://images.theconversation.com/files/121078/original/image-20160503-17469-13kpvo8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Long live the king?</span> <span class="attribution"><span class="source">Bud beer via www.shutterstock.com</span></span></figcaption></figure><p>Budweiser, the so-called King of Beers, may be on its last kegs.</p>
<p>It may seem odd to picture the demise of the flagship brand of the world’s largest beer company. But Anheuser-Busch – the U.S.-based unit of AB InBev – is following in the footsteps that led to the irrelevance of a host of other once-dominant companies – <a href="http://www.forbes.com/sites/daviddisalvo/2011/10/02/what-i-saw-as-kodak-crumbled/#6727d0e920f5">Eastman Kodak</a>, <a href="http://www.nytimes.com/1997/07/18/business/woolworth-gives-up-on-the-five-and-dime.html">Woolworth’s Department Stores</a>, <a href="http://www.innosight.com/innovation-resources/upload/Disruptive-Innovation-Primer.pdf">Bethlehem Steel</a> and <a href="https://hbr.org/2013/11/blockbuster-becomes-a-casualty-of-big-bang-disruption">Blockbuster Video</a>, to name a few. </p>
<p>While AB InBev <a href="http://fortune.com/2015/10/30/ab-inbev-earnings/">shareholders are cheering</a> each move to boost short-term profitability by snapping up other companies – <a href="http://www.bloomberg.com/news/articles/2016-01-14/ab-inbev-faces-in-depth-u-s-antitrust-review-on-sabmiller-deal">including the US$110 billion takeover</a> of rival SABMiller – CEO Carlos Brito may be unwittingly digging Anheuser-Busch’s grave by ignoring long-term trends. </p>
<p>How could the rational pursuit of profits and growth through acquisition mean the beginning of the end for Anheuser-Busch? </p>
<p>This, we would argue, is a case of <a href="https://hbr.org/2015/12/what-is-disruptive-innovation">disruption theory</a> in action. And the disruptors are the growing ranks of craft brewers that are collectively changing the industry and beer consumption habits as consumers <a href="http://www.businessinsider.com/many-millennials-havent-tried-budweiser-2014-11">increasingly shun Anheuser-Busch and its products</a> – the disrupted – for beers made locally and with a wider variety of higher-quality ingredients. </p>
<p>It’s something we’ve witnessed firsthand, in our own research and through an online community called <a href="http://craftingastrategy.com/">Crafting A Strategy</a> that two of us set up to share knowledge in the beer industry.</p>
<iframe src="https://datawrapper.dwcdn.net/ftDmm/1/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="450"></iframe>
<h2>New market disruption</h2>
<p>Harvard Business School Professor Clay Christensen coined the phrase “<a href="http://www.claytonchristensen.com/books/the-innovators-solution/">disruptive innovation</a>” in 1995 to describe how a new product or service initially takes root at the bottom of a market and then relentlessly moves upmarket, eventually displacing established competitors.</p>
<p>Eight years later he and Michael Raynor <a href="http://www.claytonchristensen.com/key-concepts/">described three criteria needed for a new market disruption</a> to occur. </p>
<p>Let’s consider each criterion in turn in the case of the beer industry. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=380&fit=crop&dpr=1 600w, https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=380&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=380&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=478&fit=crop&dpr=1 754w, https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=478&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=478&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Prohibition became the law of the land in 1919.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/cizauskas/23789036064/in/photolist-Cfa2Cd-9bs2sF-obEyZU-dk3poM-ouz5H9-7DeB9p-6Xgo91-ouVAYi-oweSZp-6WUUvH-oddooH-oeYXys-nz4Qm8-ouXWRm-pUqcsJ-qbmZJ6-4ibvW3-5J7PVM-oeY8Ew-ocTPLB-oeXqP4-7DhpHQ-ouzXDg-oeYEFZ-ounf4R-owJPpn-ouyhFi-9bs2r6-oeZcwg-owqsx7-bB1VZX-wk3ubf-ou9B2A-wjPpuY-oeSB9H-9bv9i3-ouvX7n-ouTRU8-ouxyG9-odHtcH-ouAk8P-ov2BRj-osRPBu-hyBGRd-owPV1n-owTmND-ouTCaz-oeS9gf-oeYKMa-of1HHj">Flickr/Thomas Cizauskas</a></span>
</figcaption>
</figure>
<p><strong>1. Large populations of consumers who have not had the means to make the product themselves and have gone without it altogether.</strong></p>
<p>For most of the 20th century, high-quality craft beer was in short supply. </p>
<p>The bigger brewers mass-produced what one <a href="https://books.google.com/books?id=JMVSUEjTCWgC&pg=PA48&lpg=PA48&dq=We+don%E2%80%99t+make+beer;+we+make+flavored+water+for+people+who+don%E2%80%99t+like+beer&source=bl&ots=fw6q7qdsbl&sig=A5XO2jBw5MFH-9ILzTMcmRmP-ro&hl=en&sa=X&ved=0ahUKEwjTlu2p_7PMAhVBqh4KHc8XCFMQ6AEIHDAA#v=onepage&q=We%20don%E2%80%99t%20make%20beer%3B%20we%20make%20flavored%20water%20for%20people%20who%20don%E2%80%99t%20like%20beer&f=false">anonymous Midwest “braumeister” described</a> as “flavored water,” while home brewing <a href="http://www.homebrewersassociation.org/homebrewing-rights/statutes/">was illegal</a> in the U.S. until relatively recently. </p>
<p>In the <a href="http://www.sciencedirect.com/science/article/pii/S0007681304001004">words of Bill Coors, Adolph Coors chairman and CEO,</a> in 1987: </p>
<blockquote>
<p>You could make Coors from swamp water and it would be exactly the same.</p>
</blockquote>
<p>The repeal of Prohibition in 1933 didn’t include home brewing, which meant few people knew how to brew and new brewery start-ups were rare. The <a href="https://eh.net/encyclopedia/a-concise-history-of-americas-brewing-industry/">number of brewers</a> dwindled from several thousand prior to Prohibition to about 100 in the late ‘70’s.</p>
<p>That marked a turning point, as a new federal law finally made home brewing legal again. But other laws remained in force in the '80’s and '90’s that didn’t allow early craft brewers to sell directly to consumers, forcing them to first sell to a wholesaler that would then distribute the beer to a retail grocer or bar. This system meant the only way to make a reasonable profit was <a href="http://beeronomics.blogspot.com/2011/10/on-brewpubs-and-economies-of-scale.html">to go big and leverage economies of scale</a> to ensure your product was featured by distributors. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=458&fit=crop&dpr=1 600w, https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=458&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=458&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=576&fit=crop&dpr=1 754w, https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=576&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=576&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Revelers celebrate with a pint after prohibition is repealed.</span>
<span class="attribution"><span class="source">Bar drinking via www.shutterstock.com</span></span>
</figcaption>
</figure>
<p><strong>2. Customers who use the product need to go to an inconvenient, centralized location.</strong> </p>
<p>There were <a href="https://www.brewersassociation.org/statistics/number-of-breweries/">only 89 breweries in America in the late 1970s</a>, and their distribution model meant that consumers had very few choices. In particular, they had inconvenient or no access to craft beer. They generally drank Bud, Pabst, Schlitz, Miller, Coors, etc. By 1981, these brewers <a href="https://eh.net/encyclopedia/a-concise-history-of-americas-brewing-industry/">controlled 76 percent</a> of the U.S. market. </p>
<p>In other words, you had a large population without easy access to well-crafted beer and a system that centralized production and tightly controlled distribution. This created an opportunity for disruption, in the view of <a href="https://hbr.org/2012/12/surviving-disruption">Christensen.</a> The question was, would something change that allowed a larger population to make beer and sell the product more directly to consumers?</p>
<p><strong>3. A technology/business model is developed so that a large population can begin owning and using, in a more convenient context, something that historically was available only in a centralized, inconvenient location.</strong> </p>
<p>In the beer story, that game-changing innovation was the brewpub business model. This became possible after laws began to change in the <a href="http://www.beerhistory.com/library/holdings/chronology.shtml">1980s</a> to allow over-the-counter sales of beer produced in-house. </p>
<p>Yakima Brewing and Malting Inc. opened in Washington state in 1982 and was closely followed by California’s <a href="http://www.californiacraftbeer.com/the-history-of-craft-beer-in-california/">Mendocino Brewing</a> in 1983. The advent of microbreweries coincided with <a href="https://hbr.org/2015/10/why-more-mas-is-a-sign-that-scale-is-no-longer-an-advantage">other industry trends</a> that made it easier to make a profit from small production. There was also growing <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2620918">ideological opposition</a> to <a href="http://pubsonline.informs.org/doi/abs/10.1287/orsc.2015.1000">the incumbent sector</a>.</p>
<p>Collectively, these changes drove the craft beer revolution in the U.S.</p>
<p>Noted beer historian <a href="https://eh.net/encyclopedia/a-concise-history-of-americas-brewing-industry/">Dr. Martin Stack</a> summed up the innovation this way: </p>
<blockquote>
<p>Microbreweries represented a new strategy in the brewing industry: rather than competing on the basis of price or advertising, they attempted to compete on the basis of inherent product characteristics. </p>
</blockquote>
<p>The result? The number of new breweries has grown exponentially, <a href="http://www.bloomberg.com/news/articles/2016-03-22/i-ll-toast-to-that-u-s-brewery-count-hits-all-time-record">recently surpassing the 1873 U.S. record of 4,131 breweries</a> that now occupy every state. </p>
<h2>Why disruption works</h2>
<p>Disruption works because the initial business models or technologies of the eventual disruptors don’t perform as well as existing ones, so little attention is paid by the incumbents. N. Taylor Thompson <a href="https://hbr.org/2013/09/what-markets-do-and-dont-get-about-innovation/">succinctly summarized</a> new market disruption as: </p>
<blockquote>
<p>a cheaper, more accessible, and worse-performing (business model) that turns non-consumers into customers. </p>
</blockquote>
<p>From a financial perspective, chasing a smaller group of nonconsumers (like craft beer drinkers) who want only beer that costs a lot to make seems like a relatively foolish use of assets. Instead, executives at AB InBev, which is also known for beers including Corona, Stella Artois and Michelob, understood that making light lagers at a <a href="https://finance.yahoo.com/q/ks?s=BUD+Key+Statistics">30 percent to 33 percent operating margin</a> allowed them to earn the most money out of each dollar spent. They ignored craft for so long because craft breweries typically operate on an unattractive 2-5 percent margin. </p>
<p>While being ignored, craft beer producers learned and improved without needing to focus attention on direct competition from the large incumbents, pushing operating margins higher and getting the attention of wholesalers who were keen to the <a href="http://www.mckinseyonmarketingandsales.com/a-perfect-storm-brewing-in-the-global-beer-business">changing buying habits among beer drinkers</a>. As a result, their operating margins soared, even as their scale remained relatively small. Boston Beer Company’s operating margins, for example, <a href="https://finance.yahoo.com/q/ks?s=SAM+Key+Statistics">have crept up to 16.3 percent</a>. </p>
<p>The <a href="https://www.brewersassociation.org/statistics/national-beer-sales-production-data/">numbers say it all</a>: while overall beer sales fell 0.2 percent in 2015, sales of craft surged 12.8 percent. Bigger craft brewers <a href="http://www.npr.org/sections/thesalt/2014/05/28/316317087/big-breweries-move-into-small-beer-town-and-business-is-hopping">are building factories</a> all over the U.S., and <a href="http://jom.sagepub.com/content/40/2/483">pipelines of expertise</a> are flowing toward craft as Anheuser-Busch executives migrate over.</p>
<p>But AB InBev’s response continues to follow the “disrupted” playbook and typical strategy for mature companies: mergers and acquisitions to defend their existing space and to increase average margins through economies of scale.</p>
<p>Most recently, the company agreed to buy fellow behemoth SABMiller, maker of dozens of beers including Leinenkugel’s, Miller Lite and Peroni and another brewer chasing the same high-margin beers American consumers <a href="http://www.wsj.com/articles/budweiser-ditches-the-clydesdales-for-jay-z-1416784086%22%22">increasingly shun</a>. Even attempts by SABMiller’s American division, MillerCoors, <a href="http://www.bloomberg.com/news/articles/2013-08-08/blue-moon-vs-dot-craft-beer-rivals-millercoors-strikes-back">to create “crafty”</a> beers are increasingly dismissed by consumers.</p>
<p>Here’s the irony: this merger <a href="http://craftingastrategy.com/blog/give-me-profitability-and-give-me-death">equates to</a> chasing a 30-33 percent margin on a $2 product (about $0.62) instead of investing in craft processes to make a 16-20 percent margin on a $5 product (about $0.90) that more and more people seem to want. </p>
<p>To make things worse for AB InBev, this craft beer movement seems to be not only spreading all over the U.S. but <a href="http://beergraphs.com/bg/238-where-in-the-world-do-people-drink-craft-beers/">also the world</a>. </p>
<h2>Chasing profits to death?</h2>
<p>Wessell and Christensen suggest that by the time incumbent firms realize a new market disruption is occurring, <a href="https://hbr.org/2012/12/surviving-disruption">it is usually too late</a>. <a href="http://www.reuters.com/article/a-b-i-ma-devilsbackbone-idUSL5N17F43V">Even a recent craft beer company buying spree</a> by Carlos Brito and AB InBev likely cannot stem the tide.</p>
<p>Case in point: its courtship of <a href="http://usopenbeer.com/2015-open/">highly acclaimed Cigar City Brewing</a> fell apart after the Tampa Bay brewer rejected AB InBev’s bid and <a href="https://cigarcitybrewing.com/oskar-blues-ccb/">opted instead</a> in March to become a part of private equity backed brewer Oskar Blues for <a href="http://www.denverpost.com/business/ci_29636788/oskar-blues-buys-cigar-city-brewing-deal-valued">$60 million</a>.</p>
<p>Cigar City likely left tens (perhaps hundreds) of millions of dollars on the table when it walked away from AB InBev. Late last year, for example, wine giant <a href="http://fortune.com/2015/11/16/constellation-brands-ballast-point/">Constellation Brands paid $1 billion</a> for the slightly larger craft brewer Ballast Point from California. </p>
<p>At the time, <a href="http://www.brewbound.com/news/fireman-capital-to-purchase-cigar-city">Cigar City founder Joey Redner said</a>:</p>
<blockquote>
<p>I was almost at the altar with someone else, but it never felt 100 percent right… It was a potentially life-changing opportunity and ultimately, I thought that I wasn’t going to be happy. No amount of money was going to make me happy.</p>
</blockquote>
<p>And his customers, the ones helping drive the trends reshaping the beer industry, must be very pleased, because AB InBev’s strategies are <a href="http://www.bloomberg.com/news/articles/2012-10-25/the-plot-to-destroy-americas-beer">creating a backlash.</a> The fear is that by buying up craft breweries they’ll end up destroying what they represent. </p>
<p>Was Cigar City’s move foolish or wise? Redner opted for less money, a better corporate fit and greater control in brewing the product Cigar City’s customers expect. </p>
<p>Regardless of whether that strategy is successful, we believe this move signals a tectonic shift in the global beer industry. Specifically, craft beer has diminished big beer’s longstanding competitive advantages built on scale, distribution and laws that minimized competition from small-scale brewers.</p>
<p><a href="https://hbr.org/2002/12/the-consolidation-curve">Large breweries have now, it seems, entered a strategic decline</a>, merging and acquiring each other and <a href="http://www.bloomberg.com/news/articles/2012-10-25/the-plot-to-destroy-americas-beer">chasing profits</a> at the expense of future customers.</p>
<p>Chasing higher profitability through <a href="http://www.bloomberg.com/news/articles/2012-10-25/the-plot-to-destroy-americas-beer">lower-quality products</a> and <a href="https://theconversation.com/beer-behemoths-struggle-to-fend-off-craft-brew-craze-47908">acquisitions</a> might please shareholders, but it also fits nicely into disruption theory’s playbook where new technologies, laws, consumer awareness and business models actively work against the long-held advantages of incumbents. </p>
<p>In 20 years, will cracking open a Budweiser on a summer day still be commonplace? Or will it be a relic of times past? If AB InBev stays on its current strategic course, the latter, while tough to imagine now, is the more plausible scenario.</p><img src="https://counter.theconversation.com/content/56791/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samuel S. Holloway owns Crafting A Strategy, an online business knowledge sharing community for the beer industry. Content from Crafting A Strategy is cited in this article. Sam is a minority percentage owner of Oakshire Brewing, a small batch craft brewery based in Eugene, OR and serves on Oakshire's board of directors as an outside director.</span></em></p><p class="fine-print"><em><span>Mark R. Meckler is co-owner of Crafting A Strategy, an online business knowledge sharing community for the beer industry. Content from Crafting A Strategy is cited in this article.</span></em></p><p class="fine-print"><em><span>Rhett Andrew Brymer does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It may be the world’s largest beer maker, but Anheuser-Busch’s days may be numbered thanks to the rapid rise of craft brewing and a little thing called disruption.Samuel S. Holloway, Associate Professor of Strategy and Entrepreneurship, University of PortlandMark R. Meckler, Associate Professor of Management, University of PortlandRhett Andrew Brymer, Assistant Professor of Management, Miami UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/479082015-09-29T08:40:56Z2015-09-29T08:40:56ZBeer behemoths struggle to fend off craft brew craze<p>Anheuser-Busch InBev, brewer of Budweiser, Stella Artois and more than 200 other brands, is already the largest beer maker in the world, <a href="http://www.stltoday.com/business/local/is-a-b-inbev-brewing-the-next-big-deal/article_781171ab-ac87-5808-b0f8-a2fa67589959.html">controlling</a> more than 20% of global sales. It may soon get a lot bigger: this week it reportedly <a href="http://www.reuters.com/article/2015/09/27/us-sabmiller-m-a-idUSKCN0RR0YY20150927">plans</a> to bid for its closest rival, SABMiller, in a deal that could create a company worth some US$275 billion. </p>
<p>If this transaction were to occur without either party being forced to sell off too many assets to meet the demands of government regulators – not a sure thing – it could create one of the world’s ten largest companies by market value. The resulting “<a href="http://www.stltoday.com/business/local/how-burger-king-public-offering-could-fund-megabrew/article_282d4dd2-7f69-11e1-a65f-0019bb30f31a.html">MegaBrew</a>,” a term coined by Sanford Bernstein analyst Trevor Stirling, would control as much as 30% of total beer sales.</p>
<p>The planned acquisition continues a <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2268705">dramatic trend</a> of fewer and larger brewers dominating the beer industry. Back in 2000, there were 22 major beer makers. A series of mergers, takeovers, joint ventures and majority purchases whittled that down to just four in 2012. These four giants, which also include Heineken and Carlsberg, are all headquartered in Western Europe and currently account for <a href="http://www.beerinsights.com">more than three-quarters</a> of US beer sales. </p>
<p>And soon that could be just three giants. </p>
<p>So what’s driving this intense consolidation in the beer industry? How are these behemoths handling the rapid rise of craft brewing? And what does it all mean for consumers? </p>
<p>The answers to these questions, as I’ve learned over my 17 years exploring food system trends – particularly industry consolidation – and their impact on sustainability, can be as complex as a hoppy IPA.</p>
<h2>The battle for growth</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/96299/original/image-20150926-17729-5ahnoc.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/96299/original/image-20150926-17729-5ahnoc.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/96299/original/image-20150926-17729-5ahnoc.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=764&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96299/original/image-20150926-17729-5ahnoc.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=764&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96299/original/image-20150926-17729-5ahnoc.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=764&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96299/original/image-20150926-17729-5ahnoc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=960&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96299/original/image-20150926-17729-5ahnoc.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=960&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96299/original/image-20150926-17729-5ahnoc.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=960&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The chart shows the industry’s steady consolidation.</span>
<span class="attribution"><span class="source">Phil Howard</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>AB InBev, which has been <a href="http://adage.com/article/news/a-sabmiller-ab-inbev-merger-u-s/230264/">rumored</a> to be hunting SABMiller for years, is expected to offer $106 billion to buy the maker of Peroni and Grolsch. It would <a href="http://www.reuters.com/article/2015/09/27/us-sabmiller-m-a-idUSKCN0RR0YY20150927">combine</a> AB InBev’s strength in Latin America with SABMiller’s in Africa, where it controls 90% of the market. </p>
<p>Heineken rejected a bid from SABMiller one year ago, a combination that had the potential to stave off acquisition attempts from AB InBev, at least for the near future.</p>
<p>Although all four of the top companies are extremely profitable, they are experiencing <a href="http://www.antitrustinstitute.org/sites/default/files/Global%20Beer%20Road%20to%20Monopoly_0.pdf">flat or declining sales in many of their largest national markets</a>. That has left acquisitions – both of each other and smaller regional breweries – as one of the few options available to continue the rapid rates of growth demanded by their shareholders. </p>
<p>Their other main options for increasing profits include cutting costs and raising prices. And that’s where we get to consolidation’s negative impact on consumers.</p>
<h2>Price fixing and signaling</h2>
<p>In recent years, the prices for beer have <a href="http://blog.wblakegray.com/2013/02/is-budweisercorona-merger-really-bad.html">increased much faster than those for wine and spirits</a>, coinciding with the <a href="http://www.amazon.com/Concentration-Power-Food-System-Contemporary/dp/1472581113">greater market power</a> of the big four brewers. </p>
<p>In Europe, price fixing has often been to blame, while in the US the tactics have been more subtle, though the the result has been the same. </p>
<p>In 2007, for example, Heineken, Grolsch and Bavaria <a href="http://www.nbcnews.com/id/18176660/ns/business-world_business/t/eu-fines-brewers-m-price-fixing-probe/#.VgliK7ThsQ4">were accused</a> of holding secret meetings in the 1990s to divvy up markets and fix prices in the Netherlands, leading to $370 million in fines by European Union regulators. </p>
<p>In the US, no such meetings were even needed. In a classic example of “price signaling,” AB InBev, which <a href="http://www.ab-inbev.com/content/dam/universaltemplate/abinbev/pdf/investors/annual-and-hy-reports/2014/AB_InBev_AR14_EN_full.pdf">controls</a> about half the beer market, would regularly lift its prices, and SABMiller and other brewers <a href="http://www.justice.gov/opa/pr/justice-department-files-antitrust-lawsuit-challenging-anheuser-busch-inbev-s-proposed">quickly matched those increases</a>. </p>
<p>This behavior got the attention of officials at the Department of Justice, which took the rare action of blocking AB InBev’s bid in 2013 to take full control of Mexican brewer Modelo, maker of Corona and Pacifico. A <a href="http://www.bloomberg.com/news/articles/2013-04-19/ab-inbev-u-s-file-agreement-in-court-on-modelo-acquisition">deal later emerged</a> that allowed the acquisition to go through, but Modelo’s business interests in the US had to be sold to a rival company to prevent AB InBev, which <a href="http://www.ab-inbev.com/content/dam/universaltemplate/abinbev/pdf/investors/annual-and-hy-reports/2014/AB_InBev_AR14_EN_full.pdf">reported</a> $47 billion in sales last year, from having even more market power to control prices. </p>
<p><a href="http://www.ft.com/cms/s/0/17eb2264-6066-11e5-a28b-50226830d644.html">Most analysts</a> expect that if the AB InBev-SABMiller deal goes through, regulators in the US and possibly China will require similar selloffs to dilute the combined company’s market dominance. SABMiller controls about a quarter of the US market. </p>
<p>Regardless, the economic power of AB InBev will increase substantially on a global level.</p>
<p>One example of this increased power is the ability to dominate shelf space at retailers. Many retail chains give either AB InBev or SABMiller <a href="http://www.washingtonpost.com/business/beer-merger-would-worsen-existing-duopoly-by-ab-inbev-sabmiller/2013/02/01/efa78ce8-6b1c-11e2-af53-7b2b2a7510a8_story.html">direct control over the placement of all the beer they sell</a>, including competitors’ products. This gives them to power to place their own brands in the most visible locations, and allot them the most space. </p>
<p>This strategy is aided by offering numerous slightly different versions of the same product, such as the dizzying number of varieties of Bud Light that fill the refrigerator cases. The acquisition could leave AB InBev as the only “category captain” left. And that means your impulse choices would be strongly steered toward this firm. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/96542/original/image-20150929-30999-vmzqxv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96542/original/image-20150929-30999-vmzqxv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96542/original/image-20150929-30999-vmzqxv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96542/original/image-20150929-30999-vmzqxv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96542/original/image-20150929-30999-vmzqxv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96542/original/image-20150929-30999-vmzqxv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96542/original/image-20150929-30999-vmzqxv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Craft brewing has exploded in recent years.</span>
<span class="attribution"><span class="source">Craft beer via www.shutterstock.com</span></span>
</figcaption>
</figure>
<h2>The counter-trend of craft brewing</h2>
<p>While the big brewers consolidate, a countervailing trend is happening on the other end of the spectrum and shaking up the beer industry. </p>
<p>Although overall beer sales are leveling off in most industrialized countries, double-digit growth has occurred in the craft segment in recent years. To be <a href="https://www.brewersassociation.org/statistics/craft-brewer-defined/">considered craft</a>, annual production must be six million barrels or fewer, less than a quarter can be controlled by a non-craft brewer and most of its beer must derive from traditional and innovative flavors and ingredients. </p>
<p>US sales of craft brews <a href="https://www.brewersassociation.org/statistics/national-beer-sales-production-data/">surged 22%</a> in 2014, compared with about 1% for the overall market, according to the Brewers Association. As a result, craft beer’s market share doubled to 19% last year from 9% just <a href="http://www.bevindustry.com/articles/85377-craft-brewing-2011-volume-sales-grew-13-percent-">three years earlier</a>. </p>
<p>This means that as ownership has concentrated at one end of the supermarket beer aisle, it has diversified at the other end. Although the prices of craft brews tend to be higher, the number of options for beer drinkers has never been greater. At the end of 2014, there were 3,418 <a href="https://www.brewersassociation.org/statistics/number-of-breweries">craft brewing companies</a>, up 42% since 2012. </p>
<h2>The big brewers respond</h2>
<p>Big brewers have responded to the fast growth of craft with two strategies. The first is their conventional tack of acquiring selected craft brewers to offset the <a href="http://money.cnn.com/2015/07/30/investing/budweiser-bud-light-sales-anheuser-busch-inbev/">falling interest</a> in their own top brands, such as Budweiser. The other involves imitating their smaller rivals’ consumer-winning styles with “crafty” beers that <a href="https://www.msu.edu/%7Ehowardp/beer.html">hide their corporate parentage</a>. </p>
<p>Just this month, for example, AB InBev <a href="http://www.latimes.com/food/dailydish/la-dd-golden-road-brewing-buyout-20150925-story.html">purchased</a> Los Angeles-area brewer Golden Road (news you won’t find on the company’s website), and SABMiller <a href="http://247wallst.com/consumer-products/2015/09/10/millercoors-expands-craft-beer-effort-buying-into-saint-archer-brewing/">acquired</a> a majority interest in San Diego-based Saint Archer Brewing Company. </p>
<p>AB InBev has also created less mainstream brands that include Shock Top, Landshark and Wild Blue, while SABMiller developed Blue Moon, Batch 19 and Third Shift. Even the firm Blue Ribbon Intermediate Holdings, which has a “<a href="http://www.mycentraljersey.com/story/life/food/2015/07/21/draft-picks/30387635/">virtual monopoly on American heritage brands</a>,” such as Pabst, Schlitz, Stroh’s, Old Milwaukee and Heileman’s Old Style, outsources most of the brewing to SABMiller. </p>
<h2>An unstoppable trend?</h2>
<p>AB InBev and SABMiller have found some success with these strategies, but they have so far <a href="http://www.motherjones.com/tom-philpott/2014/07/craft-beer-revival">failed to compensate</a> for declining sales of their more mainstream brands. </p>
<p>The growth in craft and independent brews – and their multitude of distinct flavors and styles – shows no signs of slowing down. Each year, for example, the <a href="http://www.greatamericanbeerfestival.com/brewers/beer-styles/">Great American Beer Festival</a> adds to the number of styles that are judged in its competition – currently 92 plus a number of subcategories. </p>
<p>This trend, toward local and independent and away from mass-produced products, is a challenge the dominant players are facing in other industries as well, such as fast food, groceries and soft drinks. Although these huge companies are unlikely to disappear in the near future, the challenge of continuing to satisfy investors as well as consumers has encouraged defensive strategies that could be viewed as either bold or desperate.</p>
<p>Acquisitions are a temporary means of maintaining growth rates, but the success of smaller firms suggests that the bigger “MegaBrew” gets, the harder it may fall in the future.</p><img src="https://counter.theconversation.com/content/47908/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Phil Howard receives funding from the National Science Foundation and the U.S. Department of Agriculture. He is president of the Agriculture, Food and Human Values Society, and is a member of the International Panel of Experts on Sustainable Food Systems. </span></em></p>AB InBev’s expected bid for SABMiller continues a trend of industry consolidation at the top, but the strong growth in craft brewing is challenging that strategy.Philip H. Howard, Associate Professor of Community Sustainability, Michigan State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/423962015-07-23T09:47:47Z2015-07-23T09:47:47ZThrough the brewing class: what beer-making can teach students about business<figure><img src="https://images.theconversation.com/files/89242/original/image-20150721-24304-1xmb9ee.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">What lessons are there in the beer industry?</span> <span class="attribution"><span class="source">Rhett Brymer</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p><em>This article is a part of The Conversation’s series on unique courses. For other articles in this series, read <a href="https://theconversation.com/philosophical-toolkit-in-tow-scholar-travels-to-conflict-zones-42805">here</a> and <a href="https://theconversation.com/a-teacher-uses-star-trek-for-difficult-conversations-on-race-and-gender-43098">here</a>.</em></p>
<p>Next time you are in your local grocery store, step in to look a little more closely at the beer cooler. Amid the brightly colored, creative packaging lies the final battle for the ultimate goal – your purchases. </p>
<p>But, what battles were fought to get the beer to that particular cooler? More importantly, what might those battles say about larger trends in business today? </p>
<p>At Miami University’s Farmer School of Business, we designed an experiential class to go in depth with these issues, leveraging the lessons of the beer industries as a way to better understand larger trends in business strategy and supply chains. </p>
<h2>What can the beer industry teach us?</h2>
<p>Why beer? What is significant about the brewing industry? And what can students take away (besides a new appreciation for hops)?</p>
<p>The beer industry turns out to be a fascinating microcosm of the larger landscape of today’s business climate. Breweries are varied and transparent, prisms through which students get to see firsthand the strategies employed by the full spectrum – from tiny nanopubs to the <a href="http://www.brewbound.com/news/the-brewers-association-top-50-u-s-craft-breweries-of-2013">fastest-growing midsized breweries</a> to the <a href="http://www.agmrc.org/media/cms/coors_6C217F1EDB6E5.pdf">largest brewing facility in the world</a>. In other words, they offer the perfect opportunity to use a hospitable, popular setting to examine a plethora of questions facing the industry and individual businesses.</p>
<p>For instance, how can microbreweries survive given their paltry market share? (The average US microbrewery has a 0.0041% market share.) Who are they? And how do they compete against the global brands and scale of the macrobreweries? </p>
<p>We set out to find out for ourselves – and for our students.</p>
<p>During a three-week intensive examination of the beer industry, we toured 25 breweries and related facilities from Portland, Oregon to Asheville, North Carolina in a field study to get to know the intimate details of the industry’s supply chain. </p>
<p>And what did we find?</p>
<p>The overwhelming majority of new market entrants in the beer industry are craft breweries that sell to a very localized consumer base. </p>
<p>As the dominant market players concentrated on general markets, widespread distribution and global uniformity, there were many <a href="https://www.gsb.stanford.edu/faculty-research/publications/why-microbrewery-movement-organizational-dynamics-resource">geographic niches</a> for entrepreneurs to claim local identities. </p>
<p>Now, the craft and local nature of these new beers is <a href="http://www.wsj.com/articles/budweiser-ditches-the-clydesdales-for-jay-z-1416784086">capturing</a> the new generation of beer drinkers – indeed, 44% of drinkers aged 21 to 27 report never tasting Budweiser or Bud Light, two macrobrew icons. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/89243/original/image-20150721-24266-1xscmcy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/89243/original/image-20150721-24266-1xscmcy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/89243/original/image-20150721-24266-1xscmcy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/89243/original/image-20150721-24266-1xscmcy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/89243/original/image-20150721-24266-1xscmcy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/89243/original/image-20150721-24266-1xscmcy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/89243/original/image-20150721-24266-1xscmcy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In touring the beer industry, students start to understand it at a deeper level.</span>
<span class="attribution"><span class="source">William Newman</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Instead, <a href="http://libra.msra.cn/Publication/42770013/microbreweries-as-tools-of-local-identity">drinking local beer</a> has become part political statement – lowering carbon emissions and supporting local entrepreneurs – and part cultural experience – either as connection to a hometown or as a tourist destination. </p>
<h2>Application to the future</h2>
<p>In touring a few dozen breweries, students begin to understand the industry at a much deeper level. </p>
<p>They see up close the struggles the small brewers go through to survive. They understand the challenges of scaling up and maintaining complex businesses with national distributions. They recognize strategies and the logic behind them.</p>
<p>Yet, they still have to grapple with large, unanswered questions:</p>
<blockquote>
<p>How many local breweries can the US sustain? </p>
<p>Will we see a bubble in the beer industry as more <a href="http://www.cnbc.com/id/101142795">investment money</a> pours into brewing?</p>
</blockquote>
<p>In response to declining light lager sales domestically, the major breweries have turned to acquiring smaller craft brands like 10 Barrel, Elysian and Leinenkugals, <a href="http://money.cnn.com/2015/05/15/news/companies/beer-sabmiller-meantime/">mirroring efforts</a> in the food industries as “big food” yields market share to local, niche brands.</p>
<p>Similarly, independent craft brewers, like New Belgian and Sierra Nevada, have become <a href="https://www.brewersassociation.org/insights/brewery-consolidation/">national brands</a>, bringing together the opposing forces of scale economies and local branding, replete with high connection with consumers, small batches and nimble product offerings. But can rapidly growing craft breweries keep their local feel? </p>
<p>So, some of the questions we ask are: will acquired local breweries continue having craft appeal with new macrobrewery ownership? What are the quality implications for regional craft beers once they are part of a larger company? </p>
<p>Interestingly, unlike the big companies, small beer manufacturers tend to view each other as more <a href="http://blog.stonebrewing.com/index.php/collaboration-not-competition-a-look-at-craft-beer-culture/">collaborators than competitors</a>, and openly share stories of assisting a competing brewery when in a pinch. </p>
<p>Because of the craft beer market growth, <a href="https://www.brewersassociation.org/statistics/national-beer-sales-production-data/">increasing revenue</a> at individual craft breweries has not had to come at the <a href="http://www.cnbc.com/2014/02/26/rewery-revolution-heats-up.html">expense of other craft breweries</a>. </p>
<p>Instead, thousands of craft breweries have formed alliances, such as the Brewer’s Association, to <a href="https://www.brewersassociation.org/current-issues/brewers-association-and-beer-institute-send-joint-letter-to-members-of-congress/">lobby on behalf of smaller breweries</a> to position themselves with better laws, taxes and regulations, in turn decreasing the advantages of large incumbents.</p>
<p>This leads to yet another question: will the collaborative ethos of smaller craft breweries turn ugly when craft beer sales begin to decline? </p>
<h2>What’s in a bottle of beer</h2>
<p>The bottle of beer on the grocery shelf seems so simple. Yet, it is the result of an intricate orchestration of materials and logistics that takes seeing to grasp. </p>
<p>Producing glass from train cars of sand; securing contracts for hop futures to avoid severe shortages; malting your own barley; breeding superior strains of yeast; locating plants on top of preferred aquafers: all sourcing strategies used to achieve an edge on the competition. </p>
<p>Students respond avidly when they see an industry in such great depth. They appreciate how complex running a business truly is regardless of size. </p>
<p>They are stunned at the variety of company cultures, and become more comfortable in finding one right for them. They see the fruits of an idea, an entrepreneur and hard work, compelling confidence in many students to start their own ventures. </p>
<p>Students in this class get to experience the “real stuff,” outside the sterility of a classroom, and outside their disciplinary bubbles. As prominent activist and food writer <a href="https://www.penguin.com.au/products/9781846148033/cooked-natural-history-transformation">Michael Pollan recently wrote</a>: “One of the problems with the division of labor in our complex economy is how it obscures the lines of connection.” </p>
<p>Being out in the field and being challenged with the complexities of several real businesses each day helps make those connections. So, we do these tours each year. We embark on our next field tour in January 2016.</p>
<p>Although numerous programs on the science and techniques of brewing have <a href="http://www.beeradvocate.com/community/threads/beeradvocate-magazine-98-march-2015.263602/">cropped up</a> nationwide, few have explored the breadth and depth of the business in all its intricacies and connections. </p>
<p>Single-industry classes, such as this one, allow students to see the lines of connection between business functions, across the niches of a marketplace. They also allow them to explore the complexities of supply chains and cooperative strategies that structure the modern-day economies that these graduates are entering.</p><img src="https://counter.theconversation.com/content/42396/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The beer industry is a fascinating microcosm of the larger landscape of today’s business environment. Students can examine a range of questions facing businesses, through the beer industry.Rhett Andrew Brymer, Assistant Professor of Management , Miami UniversityW. Rocky Newman, Professor of Management, Miami UniversityLicensed as Creative Commons – attribution, no derivatives.