Great Beer!

Well,
I’ve got some choices for you. There’s a rich smooth porter,
a crisp and spicy witbier, an all-organic pale ale, a brisk
and bitter IPA, a pumpkin-and-spice ale that’s perfect for
fall drinking, and a big 8% bruiser that was aged on a bed
of roasted cocoa beans. What microbrewery are they from? Oh,
two little places you may have heard of: Molson Coors and
Anheuser-Busch.

Have these
behemoths suddenly discovered that small is beautiful? Are
they trying to blow the craft brewers out of the market?
Most importantly, are the beers any good? Let’s take a look
and see.

ONCE
IN A BLUE MOON
There’s nothing really sudden about this. Coors introduced
their line of Blue Moon beers in 1995, and the Blue Moon
Belgian White’s been around ever since. It’s a brand with
some years under its belt, not a new idea.

How did Coors
get into the craft business back in the category’s first
boom period? “The craft business was just starting to take
off in the mid-‘9Os,” said Kabira Hatland, with Molson Coors
corporate communications. “It was a segment of the beer
category we wanted to pursue. Our brew master, Keith Villa,
began experimenting with recipes for a drinkable Belgian
style beer – it was very different from what was out there
at the time.”

Villa was the
brewmaster at the Sandlot Brewery, a small brewpub-like
brewery at Coors Field, in Denver. Coors used Villa and
Sandlot as a pilot brewery. “We tested a lot of recipes at
the Sandlot Brewery,” Hatland said, “and landed on the Blue
Moon Belgian White, a unique recipe for a unique ale. It
includes three grains – barley, wheat and oats – for body
and creamy mouthfeel, and hops, coriander and orange peel to
provide just the right amount of spice to make it drinkable
and refreshing.”

The beer won a
gold medal in the 1995 World Beer Championships, “so we knew
we were onto something,” said Hatland. Unfortunately, what
they were on mostly was the wrong side of the curve. Blue
Moon came out just before the craft brewing boom went flat.
As the Brewers Association, the craft brewing industry’s
organization in Boulder, Colorado, is quick to point out,
craft beer sales never declined – but they sure did grow
slowly.

People who were
still interested in craft beers were the kinds of folks who
knew where what they were drinking came from, and they
weren’t interested in “microbrew” from the likes of Coors.
Sales of Blue Moon sputtered, and some of the line
extensions – an Abbey Ale, Nut Brown, Honey Cream, Raspberry
Cream – were dropped. The Belgian White Ale hung on, along
with one seasonal, a Pumpkin Ale, that was produced most
years.

Why did Coors
continue to produce the beers? Hatland declined to comment
on that question. But it’s not really surprising when you
consider that Coors has pulled this kind of “keep it in the
closet ’til it’s in style again” trick before with Zima.
Zima, perhaps the first of the ‘malternatives’, sagged
badly, and then revived quite nicely when the hard lemonade
brigade appeared on the scene. There may be a company
strategy at work here; after all, they still brew Coors
Original and Coors Extra Gold despite a lack of sales
encouragement.

The brand pretty
much went dormant, with very little in the way of promotion.
When it did start to revive, it was almost reminiscent of
the Pabst “push-pull” phenomenon in which a couple savvy
retailers and wholesalers noticed an upswing and followed up
on it.

I knew something
was going on when I was giving blood one day two years ago
and overheard the head nurse talking to one of the blood
runners. “I had this great new beer called Blue Moon last
night,” she said. “It was really different, kind of spicy
and tart, didn’t taste like beer. I liked it so much I had
four pints!” Ah-ha, I thought to myself, Coors is getting
some play.

Sure enough,
it’s made a big resurgence lately. Blue Moon posted
double-digit growth in 2OO5, with impressive sales (for
craft-type beers) of around 2OO,OOO barrels. Coors is slowly
putting some support behind the brand. “Blue Moon has a
number of grassroots promotions and some local print
advertising in various markets,” said Libby Oberpriller, the
Blue Moon brand manager. “We also support the brand with
point-of-sale and neon displays, but are not planning other
promotions at this time.”

Take this as
evidence that Coors is continuing its balancing act with
Blue Moon. Even though the brand is over ten-years-old, most
people still don’t seem to know that it is a Coors brand.
The brewery doesn’t want to put too much money behind it,
fearing a loss of the small-brand cachet; but they don’t
want to let a possible success die on the vine because of
lack of promotion, either.

For now, the
grassroots approach seems to be working. “The craft segment
is growing faster than any segment in the beer category,”
said Hatland, “so there is natural consumer interest in
craft products. We focus on brewing the best beer we can,
and let discovery happen.”

MICHELOB
VARIETY This isn’t
a sudden swerve of course for Anheuser-Busch, either;
actually, their path on this is fairly close to that of
Coors. A-B had taken their first shot at the craft-type
market in the early 199Os with Crossroads, a true to style
Bavarian-type hefeweizen. Crossroads was drinkable and
delicious, and one A-B brewmaster told me that they’d brewed
a hefeweizen for the company summer picnics.

Good beer, but
the marketing and positioning was confused; they didn’t seem
to know how to place the beer for the consumer. To be fair,
no one did at that time, and it wasn’t until recently that
this kind of beer started to catch on with Americans. (It’s
quite popular in Germany, with about 25% of the market.)
Crossroads went under pretty quickly.

About six years
later, A-B introduced a number of craft-type beers, all at
about the same time. There were the Elk Mountain beers, the
American Originals line, about six Michelob specialties, Red
Wolf, and two regional beers: Pacific Ridge pale ale in
California and Ziegenbock in Texas. They were, by and large,
pretty good; some of them, like the Michelob Porter and
American Hop Ale, were really good.

The only ones
still around last year were the Ziegenbock, Michelob Amber
Bock, and a couple seasonally appearing Michelob specials.
The American Originals and Elk Mountain disappeared pretty
quickly, the Michelob specialties took a little longer, and
Pacific Ridge was only phased out recently. As happened with
Blue Moon, these beers came in just as the microbrewing
bandwagon’s wheels fell off.

Pat McGauley,
A-B’s vice-president of innovation, thinks it was an
internal issue as well as something caused by external
forces. “I think it was timing,” he said, “but motivations
were different. I wasn’t there, but it was a wave that was
being ridden and I’m not sure what was pushing it. We’re
being driven by the consumer these days. When you match up
being able to make great beers – package them, providing
variety, providing surprise – consumers are looking for
that. Why not from the Anheuser-Busch company? I know the
people I work with every day in brewing can deliver these
beers into the marketplace.”

McGauley and
Doug Muhleman, A-B’s group vice-president for brewing
operations and technology, have a lot to deliver. Beginning
late last year with some seasonal releases, they have opened
up a whole stable of craft-like beers. I was recently A-B’s
guest at the hop harvest on their northern Idaho farm, and
part of the very hard work the trip entailed was tasting as
many of the new craft-type beers as they could put in front
of me. McGauley and I went through them.

“Michelob Porter
and Michelob Bavarian Style Wheat are in the Michelob
Specialty Pack, a 2O-pack,” he said. “We call it our sampler
pack; it also has Mich Marzen, Mich Pale Ale and Amber Bock.
We’ve had that program going since 1997. We change out the
beers, but not every year. We get nice responses back.
People like the in-and-out nature of the products, retailers
like it because it’s an extra SKU on the floor. There’s a
great variety in the Specialty Pack this year.”

There are two
truly big beers in the mix as well, the Michelob Celebrate
Vanilla Oak and Chocolate brews, both weighing in at over 8%
ABV. The Vanilla Oak is aged with bourbon wood; the
Chocolate was actually “dry-hopped” on a bed of roasted
cocoa beans. The Vanilla Oak was good, the Chocolate was
excellent.

“We’re making
beer part of the holidays, part of the celebration,”
explained McGauley. “They’re only going to be in gift packs,
packaged with snifter-style glasses, two 24 ounce bottles in
the package: Vanilla Oak on the left, Chocolate on the
right, for about $2O. You’re sipping these things, savoring
them, sharing them, and the gift pack encourages
that.”

The real
headbanger of the bunch is the Brewmaster’s Private Reserve,
a beer that hit me like a 1O% blonde doublebock – a very
well-crafted, tasty, balanced blonde sledgehammer. “That’s
in national distribution for the holidays,” McGauley said.
“It comes in a big, heavy, black onyx bottle, a 46.5 ounce
flip-top magnum-size bottle. There’s no draft on this
product, just the bottle.”

There are four
seasonal drafts – Spring Heat Spice Wheat, Beach Bum Blonde
Ale, Jack’s Pumpkin Spice, and Winter’s Bourbon Cask – and
two regional drafts; New England gets its own Demon’s
Hopyard, Ohio gets Burnin’ Helles. If the two regionals are
successful, each of the 12 A-B breweries across the country
will eventually produce one for its own area, all
different.

Finally, there
are two organic beers in national distribution, Stone Mill
Pale Ale and Wild Hop Lager. Why organic beers? Again,
McGauley’s listening to the consumer. “People wanted
craft-style authentic beers, and they, today, like that
they’re organic as well,” he said. “Female consumers
particularly like organic products. They’re succeeding as
beers; success is not just in the organic stores, but in the
package liquor stores.”

THE
LONG RUN We’ve all
been here before, about ten years ago. The big brewers see
the success of the craft brewers – and the attractive higher
prices their beers command – and figure they need a piece of
that action. They jump in with a big splash – and not much
happens. Miller took a shot at it themselves with the inside
strategy, buying the Celis Brewery and a half-interest in
Shipyard Brewing; the plan crashed when Celis went under and
Shipyard eventually bought their half back.

How do we know
that these moves by Molson Coors and A-B are going to be any
different? Should you invest any money, time or energy in
them?

Well, maybe.
“It’s an entirely different era,” McGauley said when I asked
why he thought this time around would be different.
“Consumers are looking for more, they’re more discerning in
nature. That’s why these beers will be successful. They like
things that come in and out of season, they’re waiting for
the Pump Spice. They like these fuller-tasting beers. Can we
satisfy those needs? There’s a lot about authenticity in
these styles, and we’re not over-marketing the beers. The
beer talks for itself.

“I know we’re in
it for the long run,” he said. “I don’t think the consumers
will change their minds tomorrow and not want these kinds of
beers. Satisfying the needs of the retailer is important,
but it goes back to what the consumer wants. We’re in
business to sell beer. When you go from the core of our
portfolio – Budweiser, Bud Light, Bud Select – to the new
specialties, you can start picking what you’d drink in
different situations.”

Blue Moon is one
of the brightest spots in the Molson Coors portfolio these
days, small as it is. Probrewer.com noted back in May that
the growth in Coors beer volume in 2OO5 was “driven by
double-digit growth of its Blue Moon label”.

They can hardly
ignore it, especially when people continue to discover it on
their own. “Growth of Blue Moon Belgian White is strong
across the country, and we’re very pleased with it,” said
Hatland. “It has truly grown by consumer word of mouth and
through bartender and wait staff
recommendations.”

What about the
outlook for craft brewers, that is; what are the chances
that these craft offerings, with the marketing might and
distribution muscle of mega-brewers behind them, will simply
bulldoze craft brewers into oblivion. I’ve been reading
hand-wringing posts and e-mails about this from a variety of
‘beer geeks’ since I wrote about trying the A-B beers
elsewhere.

I don’t think
this is a serious issue. Nationally available craft-type
beers are going to be popular and natural choices for chain
restaurants and chain grocery stores who want to deal with
as few suppliers as possible. Craft brewers aren’t really a
big factor in those markets now. But the real bastions of
craft beer consumption are going to turn their noses up at a
major brewer’s offerings. Doug Muhleman admitted as much:
“We know that plastering Anheuser-Busch on the label will be
a turn-off for a lot of people.”

Besides, buoyant
as craft beer sales are, that’s not what’s really concerning
the big boys. I asked Muhleman about that; are these beers a
reaction to craft beer sales, are you concerned about their
share of the market? “We see young legal age drinkers going
more to hard liquor,” he said. “That’s the major issue for
Anheuser-Busch, for the beer industry.”

That’s what
these beers are really about, Blue Moon and the
Anheuser-Busch stable. They’re about shaking things up,
about offering choices to the consumer. You only have to
look at the vodka section of your shelves to know that the
spirits company got that message loud and clear. The craft
brewers based their business on it. Now the big guys are
learning that the future is not about focus; it’s about
diversity.

The gratifying
thing is seeing how much fun they’re having with it. There
were five A-B brewmasters along on the Idaho hop harvest
trip, and they were having a blast showing off their new
beers. The real reason that the other A-B breweries are
going to introduce their own regional drafts? Because the
other brewers all want to get in on the fun. If they can
hold their own, and convince the rest of the company that
diversity is useful and profitable, things should get
interesting.