The Thirsty Beagle: Will AB InBev merger impact Oklahoma's small brewers?

Tuesday, October 4, 2016

Will AB InBev merger impact Oklahoma's small brewers?

News came out last week that shareholders for both Anheuser-Busch InBev and SABMiller overwhelmingly approved AB's $103 billion takeover of SABMiller, thereby clearing the last major hurdle standing in the way of the mega-merger.

It got me thinking about that usual question: What does it mean for small brewers in Oklahoma? That answer is actually a little nuanced.

For starters, what does it mean on its face?

When all is said and done, AB will fortify its role as the world's largest beer company, controlling almost a third of the planet's beer sales, according to news reports. AB will become the fifth-largest consumer goods company in the world.

The beer behemoth will also gain access or increase access in the African, Latin American and European markets.

The merger is actually expected to have little immediate impact in North America, however. The reason? In order to get the blessing of the U.S. Justice Department for the merger, AB had to agree to sell SABMiller's interest in MillerCoors North America. That means any growth in the latter company will be realized by Molson, not AB.

Besides, those in the know report that the apple of AB's eye in this takeover is really Africa, a particularly strong market for SABMiller.

But that doesn't mean there won't be an eventual impact closer to home. The conventional thinking is that as AB grows and expands into new markets, its power and clout will grow. And then all the things AB is doing that craft beer purists don't like -- buying up successful craft breweries, putting out "crafty" products and trying to eat up space on grocery store shelves with exclusivity deals -- it will continue to do those things and possibly do them more and in more aggressive ways.

In order to get a feel on how things will shake out for those within the industry here in Oklahoma, I put the question to a pair of local beer professionals.

Wes Alexander of Tulsa's Marshall Brewing Co. said the issue he's eyeing is distribution, noting that since AB wasn't able to have MillerCoors North America in its portfolio, it may look to use its new international might to trounce the company in order to elevate its own brands in the market place.

"Here in the Midwest, many craft brewers use MillerCoors houses for (distribution)," Alexander said. "Clearly AB will look to crush MillerCoors brewery and distro with price in North America."

So while the consumer may enjoy low prices for the Goose Islands of the world, an AB price war could force some MillerCoors distribution business to shutter. The result?

"Less access to to market for craft," Alexander said.

Meanwhile, back across the state in Midwest City, Roughtail Brewing Co.'s Blaine Stansel said he believes the impact on small brewers may not be that significant, citing the idea that AB and local craft brewers are seeking to serve two distinct sets of customers.

"Make good beer and consumers will buy it -- end of story," Stansel said.

Stansel specifically addressed the pay-for-play issue.

"Who cares if a bar owner gets paid to feature a product?" he said. "Grocery stores get paid to carry certain cereals and jam, and whatever else, and you don't hear people whining about that."

Stansel said the area that would concern him would be if the new and more massive AB started to play political games and lobbied to have the laws changed to blatantly disadvantage small brewers. Even then, Stansel said, that's something AB could do now if it wanted.

The mega-merger is expected to become official on Oct. 10. Beer observers in Oklahoma, and around the world, will be watching to see what happens.

So, what else is going on?

A lot of local eyes will be on Elk Valley Brewing Co. this Thursday, as brewmaster John Elkins releases his 2016 vintage of Pumpion, the popular imperial ale brewed with pumpkin spices and aged on oak bourbon barrels.

The release is set for 3 to 8 p.m. at the brewery, 520 N Meridian Ave. Only a relatively small amount of the beer will be available to take home, as Elk Valley is making 45 cases available from the brewery on Thursday, with a one-case-per-person limit set as of right now.

The beer will be available on tap at the brewery as well, and is expected to be released to liquor stores on Friday for regular package distribution.

Many people have just now -- if you watch the Untappd feeds -- been cracking open their 2015 Pumpion. I myself have one set back in the fridge and am looking to do a side-by-side with the 2016 version.

The 2016 vintage has been in barrels for a year, and early reports suggest it will be drinking very well on Thursday.

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