10 Dec Losing Market Share, AB InBev Looks To Incentivize Beer Distributors.
When your competition starts gaining significant market share, you have to start getting creative. Sometimes you create a new product or just buy up your competition, but Anheuser-Busch InBev has other ideas.
The Wall Street Journal is reporting a new incentive program has been established by AB In-Bev for its nearly 500 independent distributors. It’s pretty simple: 98 percent of your inventory will be AB InBev products and you will receive a bonus. WSJ reports the distributors could earn an average of $200,000 a year from the program.
That would leave only two percent of inventory space for other beers, like your favorite craft beer. With limited space and limited distributors, craft brewers would have a hard time getting their product, not only on local shelves, but in other parts of their state or the country.
Why is AB InBev turning to such tactics? Since 2008, their market share in the U.S. has dropped from 49 percent to 45 percent, while craft beer has carved out a seven percent increase – from four percent in 2008 to 11 percent in 2014. Add to that a record 4,144 breweries were operational at the end of November 2015, and it’s easy to see why AB InBev is scared.
But is it time for craft brewers, and consumers, to be concerned? Maybe, but AB In-Bev has tried similar programs in the past and obviously they didn’t work. What should be concerning to the craft beer industry is AB InBev’s purchase of distribution companies in states that do not have the three-tier system, or AB InBev’s purchasing of large craft breweries, like Goose Island Beer Company.
Is this the future of our beer aisles?
In my opinion, this move could backfire greatly on the company. They’ve already lost the Millennial population, who’ve graduated from cheap beer to craft beer, and even some of the Generation X group – those born in the early 1960s to the early 1980s – have begun switching allegiances.
Craft beer drinkers are taking the fight to Capitol Hill, while AB InBev is taking the fight to the streets. The battle is only going to get messier as AB InBev does whatever they can to remain on top.