Sometimes, it's not what you do, but what you say.
That seems to be the obvious lesson from Anheuser-Busch InBev's successful "Nearshoring" of Stella Artois in May 2021. ABI wasn't the first brewer to attempt this; several years earlier Beck's was met with considerable consumer backlash when it was learned the German brand was being brewed here, not in Germany. Likewise, large brewers' earliest acquisitions of craft beer brands were met with outrage on social media. Today, those announcements are being met with a yawn.
What explains the difference between the reception given Beck's several years ago and Stella Artois today? A good part of the reason, says Jim Watson, a beverage analyst at Rabobank in this initiative was well communicated. ABi emphasized the Belgian recipe, sustainability and the jobs producing Stella Artois in the U.S. would create in the U.S.
"We cannot find any evidence that the US consumer views Stella any differently today. Over the past 12 months, its sales performance has been the same as that of competing brand Heineken. Neither the price trend nor the volume trend of either brand has differed much, and the premium positioning of Stella seems not to have changed," Watson says in a note to clients.
That's important because domestically produced craft beer has taken over the highest end of the market. Still, imports face serious challenges, Watson adds: they face import duties, travel long distances and if licensed to local producers often has diseconomies of scale. Plus: Margins are coming under pressure.
Beers from Europe, which make up 20% of U.S. beer imports, are facing high container rates, high fuel costs for road transport and high packaging costs. About 60% of U.S. beer imports arrive in glass bottles, Watson says, and furnaces in Europe may high natural gas price thanks to Russia's war upon Ukraine. To bean counters, all this adds up to the obvious case for moving production to the U.S.
Watson says the Rabobank analysts believe production of Stella Artois in the U.S. has boosted profitability, because it can brew at several U.S. breweries. But not every U.S. brewer can do this. The biggest advantage to local production is no import duties, trade conflicts and logistical issues. The currency match between revenue and costs helps de-risk finances. And reducing greenhouse gas emission makes a backlash from consumers or environmental agencies "less likely," Watson said.