Bad Times for Big Brewers

The financial news for small breweries across the nation has been very good in recent months. However, things are not going so well for the nation’s mega-brewers. Recent news that small breweries posted massive sales increases year over year from 2010 came on the heels of news that major US breweries were losing money by the fistful. In fact, the financial situation for some of those breweries is so bad that they’re taking drastic steps to combat these tough times.

One of the most interesting changes is the announcement by Molson Coors that the company will reduce the pay package for their CEO by 13%. While that might not sound like a huge amount, how much would you lose if your paycheck was slashed by 13%? For Peter Swinburn (the CEO of Molson Coors), it amounted to earning a full million dollars less in 2010 than he did in 2009 ($7.1 million as opposed to $8.1 million). 

The income reduction was a part of the company’s overall strategy to combat falling sales and value (the company’s earnings dropped by more than $13 million between 2009 and the end of fiscal 2010). Of course, cutting CEO pay packages is not the only thing that big breweries are doing in an attempt to remain as competitive as possible.

Anheuser-Busch recently bought out Goose Island Beer Company in Chicago. Seeing the success of small breweries has given big companies the idea that they can hide behind the little guy. Goose Island will continue as its own brand, but it’ll be siphoning profits back into its larger parent. There are many other examples of big breweries masquerading as small ones. Take Blue Moon for example. This is a well-regarded “craft brew” that is really not a craft brew at all. It’s owned by Molson Coors, though the larger company prefers to keep that affiliation “on the down-low”. 

Another example of this is Green Valley Brewing Company, which is actually an Anheuser-Busch operation. Anheuser-Busch keeps this even quieter than Molson Coors keeps the Blue Moon connection and will probably come as a surprise for quite a few drinkers. In fact, you might have some bottles in your refrigerator that come from a company that you are not aware of or don’t want to support at all. However, the real situation here is that it validates small brewers of all stripes – it says volumes that megalithic companies like Molson Coors and Anheuser-Busch are willing to go to these extremes to look like a small brewer.

Posted on April 30, 2011 and filed under The Business of Beer.