Because I am one of the cool kids, I go on the social media sometimes. #selfie. Well, except Facebook, because the last thing I need is to be subjected to Erin from high school’s baby pictures and Tupperware party invitations. Oh yeah, I’ll totally come over to buy overpriced crap, even though I could accomplish the exact same thing by staying at home and shopping online in my underwear. Geez, and Erin was one of the smart kids.

Anyway, I asked everyone on Twitter:

You can click here to see all their responses on Twitter, but I’ll summarize them here.

  • Coors (x2)
  • Steam Whistle (x2)
  • Rickards (x2)
  • Alley Kat (x2)
  • Alexander Keiths
  • Innis and Gunn
  • Ambers
  • Guinness
  • Whistler Grapefruit
  • Laid Back Lager
  • Miller Genuine Draft
  • Stella Artois

Either I have douchey Twitter followers, or else nobody likes normal beer anymore. Whatever happened to good ol’ Molson Canadian or Labatt Blue? That last sentence was brought to you by Don Cherry. All I needed was to call them ‘pops’ too.

Let’s take a look at a couple of the popular ones – at least from our little informal poll – Rickards and Steam Whistle. From each of their websites, starting with Rickards:

At Rickard’s, we believe that to succeed sometimes you have to stick your neck out. Do something daring. And in 1984 Rickard’s did just that with the introduction of Rickard’s Red. Created at a time when North Americans were almost exclusively drinking lagers, this colourful and full-flavoured ale was a big step away from the ordinary. This was a stand out beer in a typically safe market. And people loved it.

The rest of the website reads similarly. Small beer company does something slightly different, people love it, etc. Steam Whistle’s site reads pretty much the same:

We believe that world-class results require focus and dedication, so we developed a distinctive recipe for our single brand based on Europe’s renowned brewing standards yet is brewed fresh locally at our independent, Canadian Brewery.

We use traditional brewing techniques and only four natural ingredients including spring water, malted barley, hops and yeast – all GMO-free. There is a fifth ingredient in every refreshing bottle, and that is the passion of our dedicated Brewmaster and staff.

Hey look, it’s another beer brewed with care and only using the finest ingredients. Wow, we’ve never seen that before. I’d like to see a cheap beer with the slogan of “Hell, you know it’s crap. But it’s cheap so therefore college kids will drink it.”

What may surprise you about the two brands is how different their ownership structure is. Rickard’s is a wholly owned subsidiary of Molson Coors, while Steam Whistle was started 15 years ago by three guys who got laid off when Sleeman’s was bought by Sapporo, one of Japan’s largest breweries. Yet they’re marketed pretty much the same.

Consolidation in beer has been happening for at least the last decade, and the North American market is dominated by 4 different players, Molson Coors, Anheuser-Busch InBev, SABMiller, and Heineken.

Molson Coors: Coors, Molson, Keystone, Carling, Zima XXX, and others.

Anheuser-Busch InBev: Budweiser, Bud Light, Stella Artois, Beck’s, Brahma, Corona, Alexander Keiths, Labatt

SABMiller: Miller, Fosters, Grolsch, Milwaukee’s Best, Pilsner Urquell, other European/African/South American brands

Heineken: Heineken, Strongbow, Amstel, other European brands I’ve never heard of

Most of the names I listed above are owned by one of those four big players. It’s really easy for big beer companies to swoop in and take out small players like Steam Whistle. They’re small enough that a big company can pay a big premium and still give them the equivalent of fishing the change out of one pocket.

Plus, it has the benefit of misleading consumers. How many times have you heard somebody say that they hate Budweiser, yet will down Alexander Keith’s fast enough to make even the ugliest chicks look attractive? Big companies do this all the time. Look at all the chip brands owned by Pepsico, or all the different brands of cereal owned by General Mills, or a million other examples. Yeah, you can figure it out by reading the small print, but like people are going to do that. People can’t even make it to the bottom of a 500 word blog post without getting bored.

Big companies will get bigger, that much is obvious. Usually most of their brands are mature and slow growing. So they take their profits and buy up small, start up competitors. These competitors are usually ran by entrepreneurs who have poured everything into their companies for a decade or more, and who might be interested in cashing out or a role that allows them to spend more time with their families. This trend will continue until capitalism gets replaced by a Star Trek type utopia where we have everything we could possibly imagine. This will happen shortly after I die, because of course it will.

As an investor, it’s up to you to identify the small companies who will get bought out. It’s one of the reasons why I advocate investing in small caps. One of the reasons why small caps tend to enjoy better returns than their larger brothers is because sometimes those larger brothers will buy them out for large premiums. Large companies don’t often buy other large companies.

So remember, chances are your favorite beer is owned by some big company. And if it’s not, it might be in the future. Now go ahead and impress your friends with such information, drunky.

 

Tell everyone, yo!