The Business of Beer

beer“Without question, the greatest invention in the history of mankind is beer.  Oh, I grant you that the wheel was also a fine invention, but the wheel does not go nearly as well with pizza.”                       -Dave Barry

Beer is a huge worldwide business.  With pleasant memories of Oktoberfest, an event involving copious quantities of beer, I thought we might take a moment to look at the business side of the brew.

Beer is the world’s most widely consumed and probably oldest alcoholic beverage; it is the third most popular drink overall, after water and tea.

Interestingly, the Czech Republic is the world’s largest per capita consumer of beer.  Folks there each consume 42 gallons per year of the brew.   In second place – no surprise – is Ireland where those jolly folks annually drink 32 gallons per person. Rounding out the top five counties in consumption are Austria, Germany and Romania.

The United States actually ranks 15th in the world in per capita consumption.  We each quaff an average of 21 gallons of beer per year which is slightly more than the average American person drinks in milk.

Within the U.S. it’s surprising that the top three states in per person consumption of beer are New Hampshire, Montana and North Dakota. What gives with that?  It’s cold as the dickens in those states.  You would think that the hottest states would be the top consumers.  My personal consumption skyrockets in August to help me survive the dreaded month in Alabama.

As you might imagine, the citizens of the Mormon dominated state of Utah consume the least amount of beer.  I’ll give you 10 to 1 odds that Mitt Romney never, ever in his whole life enjoyed a brew (although there is no doubt that it would help him assuage his recent defeat).

The largest beer company in the U.S. by far is Anheuser-Bush, brewers of Budweiser,  which has captured 48 percent of the market.  MillerCoors is in second place with 29 percent of the American market.  The remainder of the market is scattered among smaller brewers with Pabst at three percent of the market and my favorite, Yuengling, garnering one percent market share.

Anheuser-Busch Companies, Inc. was an American brewing company which operated 12 breweries in the United States and 18 in other countries.  In 2008, Anheuser-Busch was acquired by InBev, a large Belgian and Brazilian brewer for $52 billion. The acquisition created the world’s largest brewer, uniting the maker of Budweiser and Michelob with the producer of Beck’s, Stella Artois, Hoegaarden, Leffe, Bass, Labatt and Brahma. The combined companies have yearly sales of more than $36.4 billion.

Not everyone was pleased with the sale of Anheuser-Bush to InBev.  Shortly after the sale, one industry watcher said, “Within six months, InBev turned a family-led company that spared little expense into one that is focused intently on cost-cutting and profit margins, while rethinking the way it sells beer.”

Anyway, if I run into you in the neighborhood beer joint, maybe you could buy me a beer during my next elbow aerobics class!

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William Bruce is a business broker, Accredited Business Intermediary, business appraiser and beer drinker.  He may be reached at WilliamBruceOnline@gmail.com or (251) 626-4949.  His business brokerage website may be viewed at www.WilliamBruce.net.

About William Bruce

President, American Business Brokers Association / Business Broker and Accredited Business Intermediary assisting business buyers and sellers with the transfer of ownership since 1986 / Author: How to Buy a Business.
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4 Responses to The Business of Beer

  1. Doug Smith says:

    Will, thanks for the interesting article on beer. What happened to coffee?
    Doug Smith
    Montgomery

  2. Scott says:

    William,
    I am reviewing old articles and saw this on beer…You may have answered this at another time, but I will go ahead and ask anyway. I am looking for business valuation / multiple of a craft brewery with revenue of approx $1.0-$1,5 Million, Brewery is profitable with Revenues generated primarily via Tap Room (58%) and Distribution (42%) with distribution growing, Brewery is 10 years old.

    I do enjoy your posts and look forward to your input.

    Scott

    • Scott, thanks for dropping in. I’m not sure I can zero in on a multiple for your business. The closest my reference sources come is an entry for “Brew Pubs” which gives a valuation formula of 40 % of annual sales plus inventory. I’m assuming this would apply only to your tap room revenue. You also have a wholesale distribution component to the business and I have a citation for “Beer Distributorships – Wholesale” that says $5 to $15 per case sold in last 12 months plus hard assets and inventory. Hope this helps.

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