An old industry joke holds that when you order a beer, the liquid itself is free. You just have to pay for the excise tax, the packaging, and the shipping. The latter is the most immoveable of the three. Taxes can be lobbied down, to some extent at least. Packaging can be tweaked, upgraded, and downsized. But until somebody invents a “Star Trek”-style transporter system to teleport beer from the brewery to your fridge, the logistical drag of getting a heavy product to a thirsty customer at scale will remain beholden to the vagaries of the labor and fuel markets. As a result, macrobrewers put a premium on proximity long before craft breweries turned “being local” into a consumer-facing marketing logline. None more so than the mighty Anheuser-Busch, which emerged from the industry’s 20th-century slugfest with a dozen strategic brewing beachheads in major metropolitan areas across the country. The network of megaplants gave the firm now known as Anheuser-Busch InBev (ABI) an unrivaled ability to get fresher beer to more drinkers at a speed and scale its competition simply couldn’t match.
Now, it’s getting rid of three of those fermentation fortresses. As Beer Business Daily first reported last week, ABI plans to close its breweries in Fairfield, Calif., and Merrimack, N.H., outright, and sell a third, in Newark, N.J., to a buyer outside the beverage industry. “We will be shifting production from these three facilities to our other U.S. facilities and these changes will enable us to invest even more in our remaining operations and in our portfolio of growing, industry-leading brands,” the firm told Brewbound in a statement. (ABI did not respond to a request for comment for this column.) Some 475 workers will be affected by the moves, which get at two even more immutable truths about the brewing industry. First, mega-breweries are expensive as hell no matter what, and second, they can rapidly become money pits when there’s not enough beer running through the tanks. No laughing matters, these.
At the risk of repeating myself, the beer industry is not doing particularly well these days. As the category’s longtime leader and most well-diversified player, ABI has actually fared comparatively well against this year’s headwinds: in its most recent earnings report, its domestic shipments were down just 2.5 percent, and depletions just 2.7 percent, outperforming the field. (That’s what counts for a win in this twilight of the lager leviathans we’re living through.) Zooming out qualifies the victory further. The company had already endured a slow and steady decline in overall market share for a decade and a half when the Bud Light fiasco first touched off in 2023. Its much-vaunted/-loathed craft-brewing buying binge last decade turned into a bit of a corporate hangover in this one, with firesales and layoffs to go with it. Yes, Michelob Ultra ascended to the throne of ABI’s erstwhile flagship earlier this year, but between the rising omnibibulousness of the American drinking public, and the siren song of spirits-based canned cocktails, that throne has lost some luster.
Anybody can intuitively grasp why it’s generally a bad thing for a brewery to sell less beer than it used to. Less obvious is just how bad it is. With mega-plants all over the country, ABI had a powerful edge over its rivals during the Light Beer Wars, when demand was rising and competition — from Corona, craft brewers, Big Liquor, whoever — was limited. But on the other side of the demand curve, all that capacity becomes a millstone. I’ve written about this double-edged sword in the context of craft brewing’s present malaise. Real estate, equipment, and debt are all expensive, and operating at a ~50 percent utilization rate, as the Brewers Association has estimated the overall industry currently is, does not pay those bills. Now multiply by four orders of magnitude, and you start to grasp the scope of the problem ABI is reckoning with.
To be clear, there’s no evidence that ABI’s tank is actually half empty. You would have heard the howls from Wall Street by now. But it’s a good bet, based on a comparison of the firm’s overall domestic capacity to its overall domestic barrelage, that it’s brewing less beer (and flavored malt beverages, and canned cocktails, and so on) than it needs to be to run its massive network at maximal efficiency. In a follow-up piece, BBD published some back-of-the-napkin math suggesting ABI’s utilization rate was closer to 75 percent than the generally accepted sweet spot 10 points north. That would put the macrobrewer in the ballpark of the median American manufacturer: the most recent report on manufacturing capacity nationwide by the Board of Governors of the Federal Reserve, published late last month, put utilization at 75.6 percent for August of this year. But ABI is not built to be a median American manufacturer — not culturally, not geographically, not financially. Out cometh the carving knife.
I wasn’t quite on the beat in 2008, when InBev completed its hostile takeover of the St. Louis giant that built Budweiser into the King of Beers, but I recall much gnashing of teeth over the notion that a foreign company would control the country’s biggest brewer. Even Barack Obama, then running for president on the Democratic ticket, weighed in, calling it “a shame” at a July 2008 campaign stop in The Lou. There was less mainstream-media consternation about the incoming Brazilian ownership’s plans for the company’s brewing network, but given InBev’s reputation for dispassionate consolidation and cost-cutting, it was very much a concern for politicians in whose districts the 12 plants operated. Missouri’s two senators at the time made a bipartisan effort to block the deal; then-chief executive of InBev, Carlos Brito, went so far as to publish an open letter in the St. Louis Post-Dispatch (now apparently lost to the sands of the internet) promising not to close any of the company’s dozen breweries to try to earn lawmakers’ support for it. In the end, of course, InBev won out. The fate of the breweries has hung in the balance ever since.
True to his word, Brito didn’t close any of ABI’s 12 plants. But he stepped down in 2021, a few years after former Missouri senator Claire McCaskill, a one-time critic of the takeover, lost her reelection bid. The commercial and political landscapes have changed enormously. On the former tip, drinkers’ drift away from traditional light lager and towards so-called “super-premium” beer, FMBs, and spirits-based canned cocktails, as well as improvements in packaging and flavoring, have reduced freshness concerns and improved margins. That makes it less vital to have breweries as close as possible to every market. The biggest brewery built in the United States in three decades is Mark Anthony Brands’ FMB factory, which opened in the relative boondocks of Richland County, S.C., in 2022. Proximity isn’t what it used to be.
On the latter… I mean, look around you, man. The consensus position in 2008 was that InBev’s political opponents lacked the leverage to actually block the takeover, even if they had the will. Some 17 years later, performances of populism are in, but it’s easier to find a diehard Bud Light Next drinker than actual action on behalf of workers on America’s sclerotic ruling elite. The intervening two decades have been brutal on the U.S. labor movement, too. “Due to the strong contract the Teamsters negotiated and ratified in 2024, there are job protections for all members at Anheuser-Busch facilities nationwide,” a spokesperson, Maura Drumm, tells Hop Take. “All workers have been given the option of new brewery jobs with generous relocation money. The Teamsters Union is working with our members at impacted facilities to make sure they are safeguarded during this transition process.” It’s good news for Teamsters at ABI, there’s no doubt about it. Better than it could be; better than it was for Teamsters put out of work by Republic National Distributing Company’s collapse in California earlier this year. But even if the workers relocate to ABI’s remaining nine plants — which will receive the benefit of new investment as a result of these shifts, the firm told Brewbound — the communities losing those union brewing jobs are likely losing them for good.
Here’s another old industry joke. In 1996, near the height of its power, a pre-InBev A-B got in a nasty media spat with Boston Beer Co. over the provenance of the latter’s Samuel Adams brand, virtually all of which was contract-brewed somewhere other than Boston. “Which beer is brewed and bottled in New England?” demanded the much larger brewer’s full-page ads in The Boston Globe, which showed bottles of Boston Lager and Michelob side by side. The answer, of course, was Michelob — A-B brewed the beer at its Merrimack, N.H. plant. A “buy local” pitch from the biggest brewer in the country! Imagine that. “Anheuser-Busch, Inc. Your New England Brewer,” the ad concluded. Not anymore.
🤯 Hop-ocalypse Now
Last year, as the craft brewery closures began to outpace openings for the first time in the modern era, Brewers Association head honcho Bart Watson said the industry was in a “painful period of rationalization.” With the industry contracting for the second year in a row, BA chief economist Matt Gacioch traded a clinical diagnosis for a nautical one. “If the craft beer industry is a ship, we can comfortably say we’re no longer in the safety of a harbor,” he said in a year-end statement from the trade group marking 225 openings and 399 closings. “The days of relative calm are behind, and brewers are getting their sea legs in this new, challenging open water.” At press time, it was unclear whether “a rising tide lifts all boats” in water that deep.
📈 Ups…
Congrats to Phil Rosse, who will succeed Mark Anthony Brands founder Anthony von Mandl in the firm’s top job when the latter steps down at the end of this year… The latest Consumer Price Index has beer finally trailing overall inflation in both the on- and off-premises… The newly unsealed Federal Trade Commission complaint alleging price collusion between Walmart and Pepsi is a fun read…
📉 …and downs
The BA is projecting craft volumes down more at the end of 2025 than they were at the halfway mark… A laid-off Pabst Brewing Co. employee initiated a potential class-action suit over how the firm terminated 60-70 workers earlier this month, then filed to dismiss his own complaint…
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