Jun 062017
 

Beer monopolyThe book, The Beer Monopoly, by Ina Verstl and Ernst Faltermeier, goes into detail regarding how the four largest beer companies, ABI, SABMiller, Heineken, and Carlsberg, landed their current positions. The historical perspective of each company is well detailed, going back to the starting foundations of each organization.

What makes this book even more fascinating is how the authors focus on each company’s long-term business strategy and culture.  In other words, what makes each of the four companies tick!  Being in the industry for a number of years, we are familiar with the history of each of the four companies discussed, yet the book adds additional depth by carefully detailing the formation of each.

ABI’s modus operandi, as we all know, is acquiring companies and cutting out the fat, along with a great deal of bone.  ABI’s business model is not to grow by building brands, as their performance record indicates, but, rather, growing by swallowing companies.  ABI is a highly centralized and controlled company.

SABMiller, now part of ABI globally, and after becoming successful in South Africa, focused on being acquired by InBev. In anticipation of this move, SABMiller relocated their corporate headquarters to London and, for the most part, ran a decentralized model which understood that brands were local, not global.  SABMiller focused on building successful beers, and it worked well for them, having sold to ABI last year.

The Heineken and Carlsberg stories are somewhat more complicated, in that both are privately owned entities, and have different purposes.  Heineken, controlled by a family with many shareholders, was the first brewery to focus globally. They approached this model by identifying breweries, or JVs, with other breweries in multiple key countries. Heineken’s recent acquisition of Femsa, from Mexico, was instrumental in the company’s long term global survival.  Heineken, like ABI, is a highly centralized organization with key markets run by Dutch management.  Heineken’s ownership structure would make it difficult for another company to acquire them.

Carlsberg, unlike Heineken is owned by a foundation that supports a number of individuals.  Also highly centralized, Carlsberg took a risk and focused on owning the Russian market.  Carlsberg invested heavily only to see that country highly tax and regulate the alcoholic industry.  Even though Carlsberg is in control of the beer market share in Russia, overall volume has collapsed. Carlsberg has little focus and presence in North America.  Carlsberg ownership structure is also such that any attempt to acquire it would be very difficult.

The world growth markets, according to The Beer Monopoly, are Africa and China.  The later, however, has not become the volume provider many breweries believed it would. There is, however, hope for Africa.  When looking to the future, globally, it is clear that few, if any, opportunities exist to buy into a country like these four brewing powerhouses have done in the past.  The big boys are simply no longer there.

So the question remains, at least in the short term, will these breweries be focused on the craft segment, and those opportunities flourishing in the industry?  Based on what we have seen from Lagunitas, Ballast Point, Goose Island and others, it is working, just on a smaller base.

The book examines the industry today. Rest assured future chapters will be even more interesting.  The Beer Monopoly, chapter 2……

Editors note;  RIP; James “Jim” Barrett, the last in a long line of Schlitz Gulf Division managers for Texas when it was the largest state Schlitz  had.  Jim served in WWII in the navy and spent his entire professional life with Schlitz.  Jim retired with his wife Barb, to Granbury, Texas shortly after Stroh took over Schlitz in the 1980s.  Jim was 90.

 

 Posted by at 6:00 am
May 302017
 

Observes the law beerOver the years of posting stories, there have been a number written about individuals who, for personal reasons, violated either federal, state or contractual law.  Examples of such violations include: selling Old Milwaukee kegs as Schlitz, trans-shipping Coors out of a warehouse to eastern markets, dumping beer in Mexico, changing ABV dates on packages in 3.2 states, and brewery executives filing fake invoices for advertising.   While all these actions were illegal, all were done for individual gain.  And all of the above resulted in either loss of the distributorship, loss of job and fines, or prison time.  All for individual gain.

Much has changed in the beer industry in the last ten years, starting with InBev’s takeover of AB.  More and more ABI’s intent has become apparent in their management of their U.S. business, especially in light of their massive volume losses.  In recent months, AB branches in three separate states have been cited or fined for unfair trade practices.  Anyone see a trend here?

There was the yearlong California ABC investigation of the AB branches which resulted in a $400K dollar fine.  Half the fine will be returned to AB if the branches “behave!”  In Massachusetts, the AB branch was notified of a hearing in June concerning the branches’ activities of providing a” thing of value” to the retail trade. And, finally, in Colorado, the AB branch, American Eagle, was fined the state’s maximum of $5,000, in addition to a 14-day suspension for unfair trade practices.  The branch had to close for five days, with the remaining nine days being held in abeyance for one year, however, the $5,000 was paid in lieu of active suspension.

It seems obvious that AB is either interpreting the state ABC laws to benefit their own interest, or blatantly ignoring the state statues and doing what it takes to gain an advantage over the competition.  When considering the risk of getting fined or caught, versus the reward, AB’s attitude seems to be to move forward and take that risk.

To AB, these penalties are just a slap on the wrist.  If the state ABC agencies really wanted this illegal activity to cease and desist, then the state should make the penalties damaging enough to AB to feel the consequences.  The reality, however, is that it will simply not happen.  Closing a branch for a week is manageable.  The wholesaler can build retail inventories so that out-of-stocks will be nonexistent.  One week off for all employees is also manageable by the branch.

If the penalty was for a branch to shut down for an entire month, however, that could raise some eye brows!  AB products would be out of the market, employees would be out of a pay check for a month, and if the branch is unionized, that might create additional issues.  Imposing such stiff penalties, however, could create a backlash for the ABC.  The state would lose tax revenue and the unemployed workers could potentially become angry and negatively vocal.

Considering AB’s powerful lobbying, tax revenues, and political clout, the industry will continue to see these small penalties assessed.  And because AB owns these branches, there is no risk of a vendor pulling their product for contract violations.

Until the states get tough, the chances of AB continuing to play this game are quite high.  If you’re going to play, you must be willing to pay!

 

 Posted by at 6:00 am
May 232017
 

Jim KochThis Saturday Jim Koch will turn 68, and as we do every year at this time, let’s take a look at Boston Beer in 2017.  Unfortunately, what we see is not a pretty picture.

In the recent IRI data, ending April 30, 10 of the top 17 growth craft brands are totally owned, or partially owned, by larger brewers.  This includes the top five brands, the top three of which are owned by either MC or ABI.  The only craft beer on this list is Seasonal Overlay, a Sam product, which is in the sixth place. Perhaps this data reveals more about Boston Beer’s current status than anything else.

In a recent three-hour investor meeting, Sam laid out three strategic priorities: (1) return Sam Adams/Angry Orchard to growth; (2) eliminate waste; and (3) increase long-term innovation.  The new CMO, Jonathan Potter, has implemented a new brand direction which was well received by the industry analysts.  So the question is: what needs to happen in the craft beer industry to make to make Sam successful again?

Some decades ago, when distributors only represented one major brewery, if their major brand started to decline in volume, the strategy was to eliminate a route and consolidate the stops onto other routes.  In almost every situation, when a route was cut, the decrease in volume accelerated.  The opposite was true for increases.  When a route was added, the trends increased.  It was simple; more feet on the ground produce growth in a brand.

In reviewing Boston’s three priorities for the coming year, only eliminating waste is controllable.   Returning their two key products to growth will be challenging at best. And while Boston has long been known as a company on the cutting edge of innovation, recent years have produced little success.

If Boston fails to turn around their trends, cutting costs will no doubt positively impact their stock prices, thereby putting the company in a more attractive position, should Koch decide to sell.  One analysist put Boston’s odds of selling at one percent over the next five years.

More and more what is coming into play is the impact that the major breweries are having on the brands they are acquiring.  With the resources that an ABI, MC, Constellation, or Heineken can bring to a craft, it is no wonder that IRI data reflects that the top growth leaders are crafts owned by these major breweries.

Much of the success of these acquired brands occurs when their new owners are able to expand their footprint. That being said, however, the impact of their resources is obvious. It makes sense that any potential buyer for Boston would be a major brewer.  A major brewer would be willing to pay a premium and could leverage their resources and synergies.

Just two years ago this week, Boston’s numbers showed growth in the double digit range, while their stock prices were setting new heights.  How Boston will look two years from now is unknown, but what we do know is that Jim Koch will be 70!

Happy 68th, Jim!

 

 

 

 

 Posted by at 6:00 am
May 162017
 

Beer monopolyWhen searching for beer on line, Amazon has more than 101 pages of books listed under the beer category.  The majority of these beer books are about styles, bars, countries, or cities and their beer culture or history.   There have been, however, a few beer books published offering more than simply beer styles.

There are also a small number of beer books written by disgruntled former owners or key executives that bash their previous companies.  You may remember some of these: Silver Bullets: A Soldier’s Story of How Coors Bombed in the Beer Wars or Beer Blast, by Philip Van Munching; or the sad story of Stroh’s, Beer Money: A Memory of Privilege and Loss.  These are just a few of the compilation of titles available.

Several books are very interesting and well written, including: Bitter Brew, the inside story of how InBev acquired AB.  There are, however, two publications that stand alone in assisting the reader in understanding just how the beer industry wound up in its current positon.  Ambitious Brew: The Story of American Beer by Maureen Ogle, is an outstanding read of the history of beer in the U.S.  In fact, Ogle has recently published an update focusing on the rise of crafts over the last 20 years.

Another well written book and recently published book, The Beer Monopoly by Ina Verstl and Ernst Faltermeier, focuses on four brewing companies: ABI, SABMiller, Heineken, and Carlsberg.  The book details how each company came into existence and how their unique corporates cultures evolved.   The authors examine the respective business models of each company, thus giving the relevant indicators explaining each company’s survival.

As one nears the end of The Beer Monopoly, the question arises as to the future of the industry.  While these four companies achieved the success they have today brewery acquisition, one has to wonder how future growth will be attained.  The question becomes: what beer companies are still remaining to be purchased?

The Chinese and Russian beer industries did not unfold as major markets, as so many had predicted. Industry pundits claim a marriage between Heineken and MolsonCoors makes the most sense.  Now that SAB is gone, Heineken is the distant second to ABI in size, and this marriage would narrow that gap.

There are some very good German breweries that are still family owned, which could come into play.  Krombacher, at over five million hectoliters, would be one to watch.  Other German beers include Veltins and Warsteiner.  On this side of the pond, there is Moosehead in Canada, which is still independently owned.

That said the large American crafts could very well become the next target.  Boston, Sierra Nevada and even New Belgium come to mind as more and more the industry is seeing these highly successful crafts struggle to grow. The belief that the three remaining major players are limited in their ability to expand more, globally, makes these breweries much more attractive, thus driving up their value.  Lagunitas, Goose Island, Ballast Point and others have taken advantage of this opportunity.

In upcoming posts, we will look at how these two writers, Verstl and Faltermeier, positioned each brewery, and have given insights into what the future of the beer industry holds.

Congratulations, I knew the record would stand until it was broken…..

Editor’s note: With this post, our recorded views pass 100K. I would like to thank all those who supported this weekly blog, whether you are a reader, or have provided comments on the various beer industry topics thought out the years, I thank you for your support.

Geoff

 

 

 

 Posted by at 6:00 am
May 092017
 

AmazonLast month, at a retailer appreciation kick-off event for a new brewery, a longtime importer reminded me of a prediction I had made 15 years ago regarding the future of wholesalers.  Given the direction of the industry at that time, it was clear that the biggest change would occur at the middle tier.

With the onslaught of new brands and breweries, it seemed that the middle tier would be over whelmed, and to some degree, this is exactly what has happened.  Distributors are no longer asking for brewery personal support in their markets, they are ignoring breweries that will not position support people or teams in their market.  For example, six months prior to rolling out in Austin, Bells, transferred three experienced sales people to work the market up until the roll-out point.  From the wholesaler’s perspective, the first month’s sales were a success.

For those breweries that are established, similar to Bells, wholesalers are functioning as a warehouse and a delivery system for these breweries.  Wholesalers are demanding that breweries function in this role, and the breweries are delivering on this request. My prediction 15 years ago went even further, as predicted sales would be generated with brewery sales teams and orders would be transmitted to the wholesaler, who would logistically delivery the beer.  Under this scenario, the wholesaler would work off lower margins, assuming the wholesaler has no sales department, or a limited sales department.

Long term vision for wholesalers should narrow to protect the three tier system, not the franchise laws.  The three tiers ensure the continued existence of wholesalers, even if they evolve into just a warehouse, delivery, and merchandising function. One can already make the case that wholesaling is well on the way to that model.

Perhaps the biggest threat to the middle tier is not the craft brewers, or even ABI or MC and others with retail taprooms, but Amazon.  Amazon is, where legal, testing ways to crack into incorporating beer and/or alcohol into their business model.  If Amazon manages to do so, no doubt their involvement will dramatically change the beer industry.

Amazon Prime members do not pay for delivery charges, and one would assume there are millions of Prime members. From a breweries’ perspective, Amazon could be an attractive partner.  Think of all the possibilities!  On the other hand, from the wholesalers’ view, Amazon could be a major nightmare.  The emergence of Amazon delivering beer could signify the end of the middle tier.

If, however, the middle tier would work with Amazon, and become the warehousing and delivery function of Amazon, wholesalers could continue to play a significant role in the industry.  Consumers could order from the Amazon site, Amazon would process the order through their local wholesaler, and the wholesaler would, in turn, deliver the beer order.

Amazon becomes the retailer, and the wholesaler is able to direct-deliver the beer.  This might even evolve into an Amazon order including products from two, or even three different wholesalers, but with only one wholesaler responsible for delivery of the product(s).  Consider all the possibilities.

All the industry tiers should understand that Amazon is not going away. Something will happen that will change the industry and its access to market. It is just a matter of when said change will happen.   Maintaining the middle tier should be the main goal, however, what the middle tier will look like, is up to the wholesalers.

Compromise works well in this world, but only when you have shared goals….

 

 Posted by at 6:00 am
May 022017
 

TexCraft BrewersMarc Sorini, the noted lawyer for the law firm, McDermott, Will, and Emery, recently outlined his opinion, noting that the expansion of brewery owned brewpubs or retail outlets, sometimes referred to as satellite outlets, will not disrupt the market.  He goes on to state that even in California, a state that has as many as six outlets, such brewery expansion would not mean much in terms of market penetration.

Sorini believes that having that many “would be fine,” but he also goes on to state that the industry has to be “vigilant” and not destroy the current system.  Likewise, he believes that taproom expansion is over blown and that every state has limits on the number of brewery-owned taprooms.

It is safe to say that many wholesalers do not have the same point of view as Sorini.   Texas House Bill 3287 clearly states that all license-holder-locations should count toward taproom cap totals for on-site sales. The current law allows taproom sales from a brewery up to 225K bbls. per year, however, when the law went into effect, none of the industry tiers had the foresight to know the ramifications of either AB or MC buying a Texas craft.  Which, as we know, is exactly what happened with the sale of Revolver and Karbach to MC and AB, respectively.

Texas wholesalers, sensing that in such situations as stated above, wholesalers could lose more control over the middle tier, introduced House Bill 3287.  This house bill was meant to modify the law, thus ensuring that all locations would be included with the license holder.  Thus, in the above mentioned case, AB and MC sales would be included in Revolver and Karbach sales, thus making the operation of such taprooms illegal.

The WBDT have asked the Texas Craft Brewers Guild for their support, and at this moment, no member has supported the bill.  Interesting!  While the wholesalers sense these acquisitions as a threat to the three tier system, the craft brewers see it as a possible threat to the value of their business.

Since taprooms are a key part of any breweries’ revenue stream and marketing, if one eliminates the taproom aspect of a breweries’ operation, the value of that brewery will significantly decline.  Such actions also close the door to a breweries’ ability to leverage themselves to potential buyers.

In essence, what this bill brought to light is a snapshot of the direction of beer.  AB and MC, losing massive volume, are buying key crafts in markets that make sense, while at the same time, using their ability to access taprooms to control the retail tier of the three tier system. Wholesalers in Texas are protecting the tied house provisions, while the craft breweries are looking to protect their own interests and keep their ability sell out at a premium or top dollar.

There might not be another situation in this country which is more the personification of the beer industries’ special interests than this HB 3287.  On the surface, there does not appear to be any compromise available, but the industry should know soon.  Stay tuned.

There are times in politics when you must be on the right side, and lose.

 Posted by at 6:00 am
Apr 252017
 

logo@craft brewers conThis year’s Craft Brewers Conference has just concluded, and once again, the event was well attended with over 12,000 industry people. While the attendance was impressive, the initial feedback from a number of attendees was not positive.  From those who attended, many mentioned that the overall excitement from previous years’ conventions was missing.

The early first quarter numbers continue to show a dramatic slowdown in crafts’ volume and dollars.  Longtime established crafts, including Sierra and Boston, have negative trends.  Only New Belgium seems to be ahead of the trends, predominantly due to their 15-pack cans of Dayblazer.  The downward trend was one of the main topics of conversation at the CBC.

Given the crafts’ downward trend, along with the recent announcement or more than 7,000+ active breweries, one can see why the conversations at the CBC centered on the future of the industry.  The two most talked about topics were consolidation and fallout.  Taking a page from Charles Dickens, it was the best of time, it was the worst of times.

Even those brewers that are currently successful are concerned about the industry and its direction.  Many have commented, though not publicly, that if given the opportunity to build again, they probably would not, knowing the standings of today’s industry. Soon the industry could see more brewery closings than openings. Not unlike what happened to golf courses after the 2008 real estate crash.

The question is: will 2017 be remembered as the year that marked the end of the craft growth?  Perhaps, 2017 will be the year that ends the wannabe craft brewers or more aptly stated: will this be the beginning of the amateurs vs. the pros?

Two additional issues always seem to surface: first, finding quality people; and, second, finding distributors for the craft beers.  Regardless of what happens, both of these issues will continue to play key roles in the industry.

In the future, three craft models will continue to be functional.  One is simply the corner brewpub with a restaurant; the second is the small distributor who self distributes; and third is the fully integrated brewery. The corner brewpub has obviously been a successful venture for years.  The small distributor model works given certain guidelines and expectations, as is noted by the many successful brewers around the country. Finally, there are those who have the means, ability, and willingness to achieve a fully integrated brewery. These are the industry pros.  The point that good people are hard to find, should be more in line with good people are hard to find for what I am willing to pay!  From brewers to top beer executives, good people are available; brewers just have to be willing to pay for top hires.

To find distributors, brewers have to understand that there is more to creating and building a brewery, and that hiring good staff requires good compensation.  A successful brewery must build branding, marketing, a sales teams, pricing, promotions, and on and on.  Those who will, and can, will have no issue in finding distributors.  If you build it, the distributors will come.

The craft segment is not dying, nor is it making the shift to consolidate. What the craft industry is doing, is changing to accommodate those who have a clear vision of what is needed in the industry to be successful.

An investment in knowledge pays the best interest….

 

 

 Posted by at 6:00 am
Apr 182017
 

i-see-beer-2When Coors Brewery expanded their Texas footprint in the mid 1960s, the brewery approached each major market looking only for one distributor.  Prior to the 1960s expansion, Coors was only sold in El Paso and Amarillo.  Coors appointed a few distributors in small markets, Mineral Wells being one of them, but the company had only one distributor in Ft. Worth and one in Dallas.  Within 10 years, however, Coors was the number one volume beer in all these markets.

Ten years later, Coor’s second expansion in Texas, saw the Dallas distributor, Willowbrook, now close to five percent of Coors Brewing Cos. total volume.   Willowbrook’s large Coors volume made the brewer uncomfortable in that one distributor could represent such a high percentage of volume.  Given Coors plan not to have large distributors again, Coors appointed four distributors in San Antonio and four in Houston.

This plan was diametrically opposite of AB’s plan, which operated under the belief that larger wholesalers were better equipped to dominate their market, which was a strategy that worked for AB.  Four Coors wholesalers were too small to compete against the larger AB and Schlitz houses and Coors paid the price, as none of the four operations survived.

The AB model helped Budweiser grow, as both the brewery and their wholesalers dominated the US market.  In one sense, their size simply wore down AB’s competition.  In Texas alone, Silver Eagle in Houston and San Antonio; and Ben E. Keith and L&F in Dallas, were in the top five volume AB wholesalers in the U.S.  All of these AB distributors now have brands outside of the AB offering which have taken advantage of their market domination too.

When InBev took over AB, in reality the big asset was not just the brands, but also the AB wholesale network, which is considered the best in the country.  InBev quickly learned that they needed to work with their wholesalers, however, InBev had another agenda.  After 10 years, it is safe to assume that ABI is changing their tune.

The industry is watching how ABI handles the proposed merger of the three large mult-state AB houses in North Carolina, South Carolina and Georgia.  Just in the past several days. AB announced it will not approve this merger citing a number of concerns.

So the real question is: are AB’s concerns legitimate or is there another reason?  If the merger is approved, a real concern for AB could be what would happen if this new super AB house joined several other large AB houses, (perhaps BEK, Silver Eagle or L&F) and created an AB wholesaler group!  The volume these wholesalers would represent for AB would put AB on the defensive and give this proposed new group enough power to negotiate from true position of strength.

Many of the current AB houses were already in place when InBev took over AB, however, some houses, with ABI’s approval, have been created. This scenario, however, now seems now to be coming to an end.  These JV’s could be a serious threat to ABI, especially if current sales trends continue.

We are all born ignorant, but one must work hard to remain stupid….

 

 

 Posted by at 6:00 am
Apr 112017
 

GilletteI acquired Texas Beers in May 1981 and Schlitz immediately announced a general market price increase.  As a new owner, this decision on the part of Schlitz, put me in an awkward position. Retailers would be pushing back at the idea of a new owner raising prices on their product. So, despite having a more than 40% market share, the increase caused me to be unsettled about the immediate future of Texas Beers.

Fortunately, AB, Miller, Coors and multiple other beers increased their price at the same time.  Despite this small respite, I took steps to increase the Schlitz inventory in Texas Beers warehouses, while at the same time holding the current price.  My competition however raised their prices.  Remember, in 1981, retailers only changed prices when the product changed prices, so Schlitz was now one price point under AB, Coors and Miller.

Upon depletion of the current Schlitz inventory at the old price, I was forced to match AB, now, however, my sales had been soaring, and for the month of June I was the number one volume wholesaler in the state of Texas.  Needless to say, all of those increases disappeared after the price increased.

Well after Stroh took over the Schlitz Brewery, and Stroh had terminated most of Schlitz support programs, including electronic media, the negative trends for Schlitz began accelerating.  To change the Schlitz trends, Stroh repositioned the Schlitz brand by lowering the price, thereby making the brand price-point more regional than national.  The consumer, unfortunately, did not buy into this new pricing and the rest is history.

A recent WSJ article entitled, Gillette, Bleeding Market Share, Cuts the Price of Razors, tells the story of P&G, who had purchased Gillette for $57 Billion in 2005.  After 12 years of raising prices on their blades, Gillette decided to lower blade prices by 20%.  Gillette razors had been losing market share for the last six years going from a 70% share in 2010 to 54% last year. Gillette’s market decline was attributed to their price increases along with the competition from Harry’s and the Dollar Shave Club both which cost much less per blade than Gillette.  According to the WSJ, this price reduction would translate to a lowering their PTC to about 12% less than today.  A question might be, where is the other eight percent going?

Both Harry’s and Dollar Shave Club now have a blade share of 12.2%, up from only 7.2% in 2015.  This includes both in-store sales and on-line sales.  One Barclay’s analyst believes it will be very difficult for former Gillette users to switch back from Harry’s or the Dollar Shave Club now.

To some degree the ongoing story of the Gillette blades parallels the last 10 years of AB’s model in the US.  AB’s rapid price increases in all segments have driven their drinkers elsewhere.  So the question is, should AB, unlike Schlitz or Gillette, continue to maintain their pricing strategy or slow down their price increases or even lower their prices?  AB seems to be doing that with their price beers to generate summer volume.  With these brands, they probably will have some success.

Looking back, Schlitz should have just maintained their premium price points and had all brewery, wholesalers and retailers make full margins instead of trying to save the brand by lowering pricing.  At least all would have made more dollars.

Cutting prices or putting things on sale is not a sustainable strategy. On the other side, one cannot cut costs to save one’s way to prosperity…..

 

 

 

 

 

 

 

 Posted by at 6:00 am
Apr 042017
 

Scoot InnSix years ago while in New York City, I decide to visit one of New York’s oldest bars, McSorley’s Old Ale House, established 1854.  While not the oldest bar in New York City, it is one of the five bars featured in the YouTube below.  Even today, McSorley’s serves only two beers: one dark and one light. Neither of these two beers have a name, nor do the customers know at which brewery they are brewed the bar claims the beers are the original brew from Ireland.

Today, the beer industry continues to fight declining on premise sales, either from competition or from the consumer who is not frequenting bars or casual dining as in the past. The question is, why is this behavior occurring, or what can be done to reverse the trend?

Many of the craft-centric casual dining bars, including Yard House, feature a number of HD TVs broadcast of sporting events.  In recent years, even the powerhouse station, ESPN, has lost over five million subscribers, yet it appears those people who dropped ESPN do not support bars to see live sports. Then there are the craft/import bars like The Ginger Man or The Flying Saucers who have a niche and continue to do well and hang in.

There is one segment in the on premise market that continues to be viable year in and year out, regardless of industry conditions.  It is bars such as these that have been around, not only for decades, but in the case of McSorley’s, over a hundred years.  Every town has one or two classic bars like McSorley’s.

The interior of these on premise establishments, rarely if ever changes, the beer offerings almost never change, and yet these bars continue to do well, often because of their unique culture.  Consider many of the towns that host large colleges, including Austin, Columbus, Stillwater, College Station, all these towns have an old classic bar that has been in business for generations.  When there is a home sporting event, many of the student body, along with alums who are returning to relive their college memories, populate these well know and well loved establishments.

Major cities, too, have their iconic bars that never change.   Many of these timeless businesses have had the same beer on tap since opening.  When Club Schmidt’s celebrated their 50th anniversary, Budweiser had been on draft there for 50 years!  Rarely do such classic bars install the newest or most popular beers, rather they stick with the beers that helped propel them to fame. Needless to say, such business models have worked.

Upscale bars and chains will continue to come and go, they will continue to change with the times, providing the consumer with the latest and greatest beers.  Some will make it, and some will not, but those bars where memories have been made, and have a unique culture will continue to thrive.  Hipps Bubble Room, Scoots Inn, Time Out Tavern, Adair’s Bar and Grill, Greenville Ave Bar, are just a few that will continue to thrive.

Where everyone knows your name…

Beer Fodder;  

 Posted by at 6:00 am