Last week I wrote about how AB InBev was changing the name of the internationally known Bass Pale Ale to Bass “Trademark One” in a wildly misguided attempt to save sluggish sales of the historically British beer.  While this is a startlingly obvious example of the mismanagement of"> Last week I wrote about how AB InBev was changing the name of the internationally known Bass Pale Ale to Bass “Trademark One” in a wildly misguided attempt to save sluggish sales of the historically British beer.  While this is a startlingly obvious example of the mismanagement of">

The Slow Death of Great Brands

IMG<em>20130601</em>151340Last week I wrote about how AB InBev was changing the name of the internationally known Bass Pale Ale to Bass “Trademark One” in a wildly misguided attempt to save sluggish sales of the historically British beer.  While this is a startlingly obvious example of the mismanagement of an amazing brand that should sell itself it certainly isn’t the first misstep from the brewing behemoth.

Last October Bloomberg Businessweek wrote a startling piece illustrating the mindset of AB InBev CEO, Carlos Brito.  A Brazilian-born multimillionaire with a shrewd and impressive skill set at financial engineer who has aspirations of being the king of canned sparkling beverages, regardless of alcohol content or taste.

The problem is that while Carlos Brito is a genius when it comes to running a multi-national beverage conglomerate he seems incapable of selling beer.  When AB InBev was formed Brito managed to slash costs across the monstrously large company to the staggering tune of $1.1 billion in a single year.  The profits of the company expanded and the company’s share price quadrupled.  This of course made him a darling among Wall Street investors and a clearly an undeniable captain of industry.  Or is he?

The Bloombery article articulates the problem with Brito’s stewardship; slipping brand quality and sales numbers.  The company has decreased sales by 8% between 2008 and 2011.  In 2011 Coors Light surpassed Budweiser, dethroning the long undisputed number two American beer.  What is more offensive to customers of AB InBev’s beers is that they have purchased a number of import brands, only to stop importing them.

The article starts with a story about New Jersey man, Brian Rinfret who discovered that upon noting that his beloved Beck’s tasted bland that it was no longer a product of Germany.  Instead AB InBev, who now owns the brand, moved production away from the Reinheitsgebot in Germany to St. Louis.  Rinfret and numerous other decry the loss in quality of the immensely popular German Pilsner despite AB InBev swearing that it has kept the same recipe.  More infuriating to consumers is the now domestic beer has kept its import pricing despite now being brewed domestically.

The article goes on to discuss various other horror stories of messing with popular beers from around the world.  From shutting down the Boddington brewery after a vibrant (and successful) 227-year-old history, to almost closing the Belgian Hoegaarden brewery after claims of poverty. Those claims were only satisfied after two years of international sale spikes and brewery worker protests before they decided to keep the brewery open.  Even then, AB Inbev has received the ire of dedicated Hoegaarden drinkers who swear the beer quality has waned under the stewardship of AB InBev.

This is unsurprising as Carlos Brito is known for sacrificing quality for profit.  The article claims that the drop in Budweiser sales is a result of “experimentations” with the recipe to provide a similar taste experience with cheaper ingredients.  It details a plethora of cost saving measures implemented after the hostile takeover of Anheuser-Busch by InBev.  Moves like laying off about 6% of the American workforce (1,400 people), selling Busch Gardens and Sea-World, using smaller labels and thinner bottles, weaker cardboard for its 12-packs and cases, and no longer requiring whole grains of rice for use in their beer.

These changes certainly have made the company profitable but it has weakened brand loyalty and decreased sales among their most popular and known brands.

There are more shady business practices that I plan to outline in future entries but what I wanted to illustrate here is that while a brand like Rolling Rock, Becks, Harp, Boddingtons, and a plethora of others may have loyal fans, by screwing with the product itself you lose those consumers that helped make your brand what it is.  And by damaging their relationship with the beer you do much more harm than the “cost savings” you think you are getting in return.

While AB InBev might be extremely profitable, currently their whole business philosophy is focused on the short term.  In the end they are damaging their brands, brands with vibrant and insanely rich histories all for the sake of increased profits.  It is another reason to stay away from the big two “American” brewers and makes me have deep concerns for a brewery like Goose Island because it is only a matter of time before Carlos Brito, or someone similar, comes to create “cost savings” at the expense of quality and ruins your brewery’s reputation.

This is a large part of why I am an enthusiastic craft beer advocate.  Eager to help independent craft breweries and brewers who would rather go out of business than sacrifice their quality.  I would rather drink a beer I know that is owned and operated by someone who loves beer as much as I do.  It is a sublimely sweet piece of mind.

For a near complete list of beers owned by AB InBev that I would encourage your to avoid see this link at wikipedia.