Beck’s in the U.S. or Schlitzing your wrists
Is AB-InBev running the risk of doing a Schlitz with its Beck’s brand in the United States? In the early 1970s, the then number two brewer in the U.S. changed the brewing process for its flagship Schlitz brand. The executives and company were making money and they thought all was well but then the brand dropped and never came back. Finally, in 1982 Schlitz surrendered to an offer by rival brewer Stroh.
Beer industry veterans know this story only too well. That’s why they are following with interest the recent “scandalette” around Beck’s.
In November 2011 AB-InBev decided that all Beck’s to be sold in the U.S. – that’s several hundred thousand hl – was to be brewed in the U.S. as of 2012.
The move was risky because U.S. consumers like their high-end beer brands to be imported rather than brewed locally. Both Corona Extra and Heineken, which are the top-selling international beer brands, are imported from Mexico and The Netherlands respectively.
Some time earlier this year Beck’s born in the U.S. started to appear in the market at a price equalling Heineken’s – around USD 8.50 per six-pack (that’s for the Chicago area).
Apparently, this was not lost on the consumers. On 25 October 2012 the magazine Newsweek ran a long piece called “The plot to destroy America's beer” which tells the plight of Brian Rinfret, a loyal Beck’s drinker who tried to complain to AB-InBev against its decision to locally brew Beck’s for the U.S. market. Here’s what Newsweek wrote:
“Brian Rinfret likes imported beer from Germany. He sometimes buys Spaten. He enjoys an occasional Bitburger. When he was 25 years old, he discovered Beck’s, a pilsner brewed in the city of Bremen in accordance with the Reinheitsgebot, the German Purity Law of 1516. It said so right on the label. After that, Rinfret was hooked.”
One Friday night in January, Mr Rinfret, 52, stopped on the way home from work at his local liquor store in Monroe, N.J., and purchased a 12-pack of Beck’s. When he got home, he opened a bottle and to his surprise it tasted light. It tasted weak. To him, says Newsweek, it wasn’t a German beer. It tasted like a Budweiser with flavouring.
When he examined the label, it said that the beer was no longer brewed in Bremen. He was also miffed to have paid the full import price for the 12-pack.
Next, Mr Rinfret left a telephone message with AB-InBev, but nobody got back to him. According to Newsweek, Mr Rinfret had better luck with e-mail. An AB-InBev employee informed him that Beck’s was now being brewed in St Louis along with Budweiser. “But never fear, the rep told Rinfret: AB-InBev was using the same recipe as always”, writes Newsweek.
As Mr Rinfret was not satisfied with the reply, he posted a plea on Beck’s official Facebook page in March: “Beck’s made in the U.S. not worth drinking. Bring back German Beck’s. Please.” Others felt the same. So Mr Rinfret kept trashing Beck’s on Facebook until, he says, AB-InBev “unfriended” him in May - the Facebook lingo for banning someone from its site. Afterwards Mr Rinfret could not post anything there any longer.
But Mr Rinfret, says Newsweek, was only temporarily silenced. He now complains on a Facebook page called Import Beck’s from Germany.
The Newsweek article next quotes an industry consultant, Bump Williams, who says that sales of Beck’s at U.S. food stores were down 14 percent in the four weeks ending 9 September 2012 compared with the same period last year. “They are getting their proverbial asses kicked,” Mr Williams was quoted as saying. “Too many customers were turned off when the switch was made”, he added.
We can only speculate as to what prompted AB-InBev to transfer the brewing of Beck’s from Bremen to St Louis. Most likely, it improves the brand’s bottom line. However, this strategy – declining volumes yet higher profits – cannot go on forever. No wonder, many people fear that Beck’s in the U.S. could go the way of Schlitz, which would be a shame, really.
Reporting its third quarter 2012 results, AB-InBev said that Beck’s global volumes grew 5.0 percent. However, taking a nine month view, they were down 1.7 percent.
