RBPMail 7.12, December 2001

Real Beer Page Mail (RBPMail) began as a modest update to craft-brew events on the WWW. It evolved into a news digest and sometimes editorial forum. We present its contents here much as they were emaaled to subscribers.

In this issue:
* Interbrew Interested in South African Breweries
* Heineken Leading Bidder for Carling
* Belgian Breweries Fined for Cartel Activities
* Australian Brewers Launch Summer Promotions
* A-B Loses Bud Battle of Britain (Again)
* 3,800-Year-Old Beer Recipe
* Another Duff Bites the Dust
* Study Finds Pub Life Reduces Stress
* ...Particularly When Somebody Else Is Buying
* Minister Takes Service to the Pub
* Web Watch
    - Do Beers Mature With Age?
    - Real Ale Shows Strength
    - Deceptive Names, Deceptive Beers
* 'Polygamy Porter' Sparks Billboard Flap
* Guinness Buys Brewery to Produce Smirnoff Ice
* A-B Targets Upscale Market with Red Label Beer
* Miller Boosts Advertising; Bud Makes Cuts
* Heineken, Labatt Join U.S.Beer Institute
* Gaming Company Plans to Produce Budweiser Slots
* PGA Makes Amstel Light Its Official Beer
* Sam Adams Brews High-Alcohol Record Breaker
* Editorial: Porecting Our Beer Choices


Reports began swirling last week that Belgian brewer Interbrew was preparing a bid to take over South African Breweries. While Interbrew admitted an interest in SAB, it said that some documents were falsified and then leaked to the media in an effort to scuttle the deal. The 43- page analysis was altered to show a 600 pence a share hostile Interbrew paper bid for SAB, and gave an unrealistic bid timetable under United Kingdom takeover rules. The real document suggested an all-share merger between the two valuing SAB shares at 500 pence. Banking sources said a deal would have to be a friendly merger to succeed, and leaking of the document appeared to be an attempt to sabotage the deal before SAB's Chief Executive Graham Mackay had seen the proposed merger. Such a deal would join two of the world's largest brewers, reshape the global beer industry and perhaps spark more mergers. The combination would make Interbrew, already the world's second largest brewer, just marginally smaller than Anheuser-Busch.

Heineken apparently has regained top position in the £1.2 billion auction for Carling, Britain's best-selling lager that Interbrew was forced to put on the market after buying the Bass brewing interest. There's talk, however, that South African Breweries may reenter the bidding, in part to fight a possible hostile takeover attempt by Interbrew (see above). Interbrew bought the brewing business from Bass last year, including Carling. It was then ordered to sell Carling by the British government on competition grounds. Constellation Brands, a $3 billion American drinks company, was considered the leader in the bidding for Carling before Dutch-owned Heineken increased its own bid. A decision is expected next month.

The European Union Commission has fined Interbrew and Alken-Maes, the two largest brewers in Belgium, for cartel activities. Interbrew was fined 46.5 millions Euros and Alken-Maes, 44.6 million Euros. Alken- Maes was owned by Danone of France at the time of the activity. The company is now owned by U.K. brewer Scottish & Newcastle Breweries. "From early 1993 until the beginning of 1998, the two parties were involved in wide-ranging cartel activities on the Belgian beer market," the Commission said.

Australia's beer drinkers can expect everything from free drinks to a day at the cricket to entice them to drink more this summer as brewers battle sagging sales and cooler-than-usual weather. Foster's Group Ltd., the nation's biggest brewer, and Lion Nathan Ltd., the second largest, are planning special promotions to attract drinkers in the pre-Christmas and holiday selling period. The summer holiday season, which runs from December to February, is when brewers sell about 30 percent of annual volume. Both brewers hope beer promotions will boost sales, which have fallen because of waning consumption. Australians bought 1.5% less beer in the year to June 30 than in the year-earlier period, the first decrease in four years.

Anheuser-Busch lost the latest skirmish in a legal battle with a Czech brewer this week when a London court ruled that the Czechs can call their beer "Bud" in Britain. A-B, maker of Budweiser and Bud Light, failed to overturn an earlier court ruling allowing Czech brewer Budejovicky Budvar to use the name. The two brewers have more than 40 lawsuits pending across Europe. Last month, the Czech state brewer won the right to use the name Budweiser in Lithuania.

Archaeologists have unearthed 3,800-year-old Babylonian beer-making instructions on cuneiform tablets at a dig in northern Syria. Abdel- Massih Baghdo, director of the Hassakeh Archaeological Department, told The Associated Press that the 92 tablets were found in the 14th layer of Tell Shagher, a site just north of Hassakeh. He said the tablets showed beer-making methods and tallied quantities of beer produced and distributed in the region." Hassakeh, 400 miles northeast of Damascus, is known these days for its wheat production.

The producers of the animated television series the Simpsons have forced a New Zealand brewery to stop using the name "Duff" for the beers it sells. 20th Century Fox threatened Duffs Brewery in Dunedin with legal action unless it changed its name. The company changed its name to McDuffs. Brewery owner Gavin Duff told the Otago Daily Times: "I always thought the letter might come one day. What it boiled down to was small guys like us don't have enough money to fight big guys like them." In 1996, the South Australian Brewing Co. was banned from selling "Duff Beer" after 20th Century Fox took it to court.

A British researcher funded by a drinks company has found that visiting the local pub helps men reduce stress. "Pub time allows men to bond with friends and colleagues," said Dr. Colin Gill of Leeds University, author of the study. "Men need break-out time as much as women and are mentally healthier for it." He said that men may feel "unfulfilled or empty" if they haven't been to the pub for a week. The report was commissioned by Kaliber nonalcoholic beer. More than 40% of those surveyed said they went for conversation. Relaxation and friendly atmosphere were the other most common reasons given. Only 10% listed alcohol as their main reason.

A businessman who bought a round of drinks for 200 strangers in a London nightclub received a bill that would buy an entire pub in some parts of Britain. He signed 11 credit card slips to pay for the round of drinks, which, with a healthy tip, came to £42,608.25. The man began his spending spree at Browns nightclub in Covent Garden after offering to buy a birthday drink for the club's owner, Richard Traviss. When Traviss asked for a glass of champagne, he responded by buying nine bottles of Cristal Champagne at £250 each. The man then offered to buy everybody in the pub a drink. Champagne, bourbon and brandy started flowing. Three hours later he topped the party off with a tip of £4,734.35.

The Rev. Robin Spittle, vicar of Suffolk, England, recently held his Sunday morning service in the local pub. "When the church makes the effort to go where the people are, they welcome it and listen to it," he said. "We think the Christian message is extremely relevant in the 21st century. By bringing that message to a local pub we are asking people to meet us half way."

********************WEB WATCH*******************

Michael Jackson notes, "It is important to stress that 99.9 per cent of beers worldwide are made to be consumed immediately after they leave the brewery." He examines the exceptions, notes the pitfalls of laying down beer and offers advice for those who want to cellar their own. The story.

Roger Protz reports that craft brewers in Britain have been given a major boost by a report that challenges the belief that real ale is in terminal decline. The report, researched by Martyn Cornell for Martin Information, says the real ale sector of the British beer market had been seriously under-estimated and is in fact buoyant and dynamic. The story.

Stephen Beaumont offers examples of the food and drink duplicity that attend our daily lives, then asks, "Why do we stand for it?" The story.


An outdoor advertising agency has expressed its opinion of Wasatch Beer's latest advertising campaign for its Polygamy Porter by refusing to erect a highway billboard for the beer despite a contract between the agency and Schirf Brewing Co. Reagan Outdoor Advertising maintains the planned billboard -- which features a picture of a scantily clad man, cherubs and a six-pack of wives -- is in bad taste and exercised a "censorship" clause in its contract with Schirf. "We've exhibited much worse taste than this," brewery owner Greg Schirf told The Salt Lake Tribune. Among other things, the billboard would suggest, "when enjoying our flavorful beverages please procreate responsibly." Wasatch Beer has long satirized the Mormon (Church of Jesus Christ of Latter- day Saints) culture with its advertising. Previous Reagan billboards for Wasatch featured the buxom blond namesake for St. Provo Girl Pilsner and catchphrases "Baptize your taste buds," "Serving the local faithful" and "Oh, my heck."

Guinness North America has purchased a major Pennsylvania brewery last operated by Pabst Brewing in order to expand production of Smirnoff Ice malt beverage. Guinness NA, a subsidiary of Diageo of Great Britain, paid $29.8 million to buy the Fogelsville brewery in the Lehigh Valley and will spend another $15 million to prepare the facility for Smirnoff Ice production. "Smirnoff Ice has been a stunning success," said Paul Clinton, president and chief executive of Guinness North America. "This plant will help Guinness meet the ever-rising consumer demand and will expand our ability to deliver Smirnoff Ice more efficiently and conveniently to our customers across North America." Since its launch in the United States in January, Smirnoff Ice has captured 1.8% of the 200 million barrel annual beer market, said Benj Steinman of Beer Marketer Insights, an industry newsletter. It's the leading drink in a category called "malternatives" -- alternatives to malt drinks such as beer.

Anheuser-Busch is marketing a beer called Red Label for the high-end market. For instance, a glossy four-page ad in Vanity Fair magazine depicts sexy models in provocative scenes: One shows a group sitting in a sidewalk cafe getting a full-body drenching in a rainstorm; in another, a woman perches seductively on the edge of a bathtub exposing her nude back to chic party-goers. Red Label is being sold in select clubs and restaurants at "premium-plus" price levels, according to Anheuser-Busch's Vice President of Brand Management and Director of Global Brand Creative, Bob Lachky. The company declined to provide a specific price for the drink, and no descriptions of what the beer tastes like have been offered. It comes in a bottle emblazoned with a gold "r" and the names of those glamorous world capitals. Launching a drink with a more premium image "would be consistent with Bud's strategy," said Morgan Stanley beverage analyst Bill Pecoriello. "The one segment where you've had tremendous growth and where they haven't fully participated is really the high-end segment."

Miller Brewing Co. increased its overall advertising spending for its Miller beer brands by 60% for the first six months of this year, while rival Anheuser-Busch cut spending for Budweiser and Bud Light brands, according to a report in Advertising Age magazine. Meanwhile, No. 3 brewer Adolph Coors Co. increased ad spending for its Coors brands by nearly 6%, Ad Age said. Miller spent $147.1 million on so-called measured advertising -- print and television ads -- for the first six months of 2001, compared with $91.9 million for the same period last year. Anheuser-Busch cut its overall ad spending by 6.2 percent to $126.6 million, the magazine said.

The Beer Institute announced that Heineken USA and Labatt USA have joined the association in its international category. Heineken USA is a subsidiary of Dutch Heineken, the world's second-largest brewer, and Labatt USA is wholly owned by Interbrew of Belgium. "We are extremely pleased to welcome Heineken USA and Labatt USA to Beer Institute," said Jeff Becker, president of Beer Institute. "These international leaders will contribute many good ideas as well as resources to aid the industry in our efforts to make us successful, responsible corporate citizens."

Shuffle Master of Las Vegas and Anheuser-Busch have signed a licensing deal for slot machines based on A-B's Budweiser beer. The slots will incorporate the Budweiser logo and promotional images. The company said it will work closely with Anheuser-Busch on the development of the slots, but did not indicate in its announcement when or where it planned to introduce Budweiser-themed machines. The machines will present new issues in Nevada if Shuffle Master plans to put them in casinos there. The use of an alcoholic beverage as a theme for a slot, and the use of advertising as the central focus of a slot machine will both come under scrutiny, said Dennis Neilander, chairman of the Nevada Gaming Control Board.

Amstel Light and PGA of America have cut a deal to make Amstel Light the official beer of the PGA. As part of the three-year pact, Amstel Light gains exclusive rights to the PGA of America name, logo and official designation in advertising and promotional efforts, and will have a "prominent presence" at such events as the Ryder Cup Matches, the PGA Championship, the Senior PGA Championship and the Grand Slam of Golf.

Boston Beer Co., which set a record for producing the world's strongest commercially brewed beer when it released its Millennium in 1999, has moved the record higher. The new high-alcohol beer will be available in limited markets in the United States starting in February 2002. Called Utopias MMII, the beer has an alcohol content of 24%. The beer will come in its own unique packaging. Each 24-ounce bottle is shaped like a brew kettle, complete with access hatches, and finished in copper tone. The brewery expects Utopias MMII to sell at retail for $100 a bottle, though the limited supply of 3,000 bottles may have an effect on the price. Millennium had a suggested retail price of $200, but bottles sold for as much at $1,000 in online auctions before dropping back to or slightly above the suggested retail.


The British press devoted considerable coverage the last two weeks to reports that Interbrew is considering a bid for South African Breweries. Interbrew said its proposal to take over SAB was "only a preliminary working document," but such a merger would leave the new company only slightly smaller than Anheuser-Busch, and that alone makes it a big deal.

But why should you care if a Belgian brewery, already No. 2 on earth, adds a few breweries in South Africa and China? For one thing, SAB isn't exactly chump change, but instead the fifth largest brewing company in the world. Last year it bought Pilsner Urquell, maker of the classic Czech golden lager. Graham Mackay, its chief executive, recently said he sees a future where his company could become the Coca- Cola of the beer world. SAB sells 98% of all the beer consumed in South Africa and is a market leader in China, Poland, the Czech Republic, Honduras and El Salvador.

In the four years after it acquired Canada's Labatt Brewing in 1995, Interbrew's production doubled. The company stayed busy since, most recently buying the Bass brewing interest in England and Beck's, Germany's top-selling export.

Interbrew has copyrighted the phrase, "World's Local Brewer." Just a few of its brands include Stella Artois, Hoegaarden, Leffe, Labatt's, Bass, Boddington, Tennent's, Worthington, Beck's, Staropramen, Ozujsko Pivo and Rolling Rock.

You have to respect the philosophy put forward in communications in print and at Interbrew's Internet website: "We see beer as a local business, with the main volumes coming from domestic brands. The brands that find a way to be local, in the community, part of people“s life, and something they relate to, are the ones that are chosen -- accounting for 90% of all sales around the world today. That is why Interbrew has elected to be the World“s Local Brewer."

Smaller American breweries have taken much the same approach in advancing the beer renaissance in this country. That doesn't exactly make them allies with Interbrew.

"Our main marketing objectives are to promote a domestic lager brand to be our primary brand in each market, to support this primary brand with at least one other brand in our portfolio, and to enhance Stella Artois' status as an international brand," Interbrew reveals. "Brand cycles are very long with beer brands being built over the course of many years and brand strength often lasting for decades. We intend to continue to invest heavily to maintain and enhance our brands."

Bottom line: Whether Interbrew is selling specialty beer or mainstream beer, its goal is to sell more beer. It has the resources to both buy breweries and to promote the brands its buys, targeting market share that might go to your favorite beer. During the first American Beer Month (July 2000), Stella Artois was advertised on a giant billboard in New York's Times Square. That cost more than the entire ABM budget.

SAB has already indicated it has similar plans for Pilsner Urquell, and if Interbrew acquires SAB the brand is guaranteed still more support. This is a terrific beer and we'll be excited to find it more places and in fresher condition. We'll buy our share, but it won't be because of a billboard in Times Square. We still think of a trip to New York City as a chance to track down great local beers like those from Brooklyn Brewery and Southampton Publick House.

The point is we have choices, and mega-mergers may even expand those choices by offering beers in markets where they were previously unavailable. We'll never fault you for choosing a good beer, no matter the size of the company that owns the brewery, but we remind you that if you want to continue to have that wide range of choices, you better support the breweries that make the beer you like -- no matter the size billboards they can afford.