Looking Back At the Future of Brewing. Part 5 of 5

Part OnePart TwoPart ThreePart Four — Part Five

First, a few caveats. I’ve never met Dick Yuengling. (I interviewed him at length by phone for the book.) I have no connection to his company. Heck, I can’t even drink his beer because it’s not sold here in Iowa (which is part of his genius….)

But I know generally what he’s been doing for the past twenty-odd years, and I can make some educated guesses about why it’s worked.

Since the early 1980s, he’s built a solid regional market for his beer. The emphasis here is on the word “regional”: Yuengling is only available in a handful of eastern states. The combination of limited sales, narrow territory, and genuine affection have bestowed on the brand a priceless cachet and mystique. (The same was true, by the way, of Coors in the 1960s and 1970s.)

Dick Yuengling is no dummy. Indeed, he may be the smartest guy in American brewing today. I’m certain that he knows that the value of his brand stems from that intangible mystique. I suspect that’s why he’s not veered from his game plan. He’s not trying to transform regional mystique and cachet into a national market. As far as I know, he’s not planning a run for glory that would, most likely, destroy the company. (Again, the classic example unfolded in the 1970s when Coors tried to turn its regional mystique into national sales. But there are dozens of other examples. Olympia, anyone?)

BUT: If ever there was a moment when Dick could make a run for the top, this is it. A-B’s distributors are restless. My guess is that some of them are begging him to expand his sales territory. I’m also guessing that the current stratospheric prices for barley and hops will force some beermakers out of business or into merger. In the next few years, he might be able to snap up a few cheap brewvats. (That happened all the time between 1950 and 1980.)

The question is: Will he do it? Or will he stay low on the radar, but safe — and healthy — in his account books? Will the nation’s craft brewers emulate his current game plan? Will some of them eye the industry’s current anxiety and the InBev/A-B upheaval into their own run for the Big Time, knowing that it might spark a series of price wars, failures, mergers, and the like. Or are craft brewers truly different and are they in the process of rewriting the rules of American brewing?

I don’t know. Time will tell. But it’s worth pondering. Over a beer, of course.

And you thought all of this was going to lead to some great, grand conclusion . . . .

One thought on “Looking Back At the Future of Brewing. Part 5 of 5

  1. Yuengling is so ubiquitous here in DC that it’s easy to forget it’s not a national brand. The level of regional success they’ve achieved over the past 20 years or so is really impressive. Hopefully they’ll keep an even keel and not screw things up.Thanks for this great series of posts – I agree that InBev will likely turn Budweiser into “just another beer” within a few years, which, if it happens, will be sad, even if I’m not much of a fan of Bud itself.My big question is this: If InBev takes over A-B and does their usual hatchet job after pushing out the Busch family, whither the Busches? I can’t imagine that a family with six generations of devotion to beer, brewing, and St. Louis will just go gentle into that goodnight with all that InBev buyout cash (even their relatively small stake is worth a whole heckuva lot at the current offer price).Part of me wants the takeover to happen, just to see what the Busch family does next. I somehow doubt the buyout will come with a non-compete clause!

COMMENT

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s