A couple of decades ago, Budweiser, owned by ABInbev, was the best-selling beer in the United States, and the brand your snobby European relatives brought up when insulting American beer. But according to the The Wall Street Journal, Budweiser shipped only 16 million barrels in 2013, down from 30 million in 2003. And what’s worse, the number doesn’t figure to get better anytime soon. A stunning 44 percent of people aged 21 to 27 have apparently not attended a keg party never sipped an ice cold Bud.

Not every reason for this decline is Budweiser’s fault. Americans are more health conscious. People drink more wine, mixed drinks, and spirits than before. But a bigger problem for Bud is the rise of “craft beers,” defined as brews that make 6 million barrels or less each year. Once confined to specialty bars and festivals, craft beers can now be found just about anywhere. And taste-discerning Americans have responded: For the first time, the craft beer industry shipped more barrels of beer than Budweiser last year.

So how does the venerable Bud get back? Improve its quality? Lower prices? Nah. The company has decided that it’s the advertising that needs to change. If you’ve watched an American sporting event over the last 25 years, you’ve surely noticed the Clydesdales, the massive white-legged horses pulling a cart of Budweiser, usually through the snow. But that long-running mascot apparently doesn’t do it for Millennials. So Bud’s going to change. According to the Journal:

This season Budweiser will air spots featuring people in their 20s looking directly into the camera and calling out friends’ names as a narrator asks “If you could grab a Bud with any of your friends these holidays, who would it be?”

Is this going to work? Slate’s Jordan Weissman doesn’t think so. Budweiser is a beer “without a purpose,” he writes. “If you walk into a bar, there will almost always be a cheaper beer, a less caloric beer, and plenty of tastier beers on tap.”

But Budweiser might find inspiration from another much-maligned beer: Pabst Blue Ribbon. For those of us pre-Millennials, PBR had pretty much the same reputation as Budweiser. It was cheap, ubiquitous, and perfectly mediocre. But over the last five years, Pabst has enjoyed a hipster-fueled revival, doubling in popularity between 2009 and 2012. C. Dean Metropolous & Co. bought Pabst–which also owns other low-end staples such as Old Milwaukee and Schlitz—for $250 million in 2010 and sold it this September for three times that amount.

How did Pabst become so popular? It’s never had ads featuring hot young people shooting pool and having a great time in the bar. In fact, that’s exactly why: It hardly advertised at all, according to Quartz.

“After observing the beer’s unexpected popularity in Portland, Oregon back in 2001, the company concluded that people were buying the beer because it wasn’t aggressively being pitched to them.”

For a brand as large as Budweiser (it is the “King of Beers,” after all), not advertising at all probably won’t cut it as a strategy. But cynically pandering to Millennials—a generation too young to remember when bad beer was considered “normal”—isn’t going to cut it, either.

Source: http://www.theatlantic.com/

Your next specialty beer could cost you a lot more.

High demand for craft beers is creating a black market for some small batch brews, and unauthorized dealers are selling the beers underground (or online) for inflated prices up to 20 times above retail.

“Whether it’s a top-rated brew or one with new or seasonal ingredients, everyone wants to get their hands on exclusive batches. The demand is certainly there, and people are stepping in to fulfill that need in unsavory ways,” said beer cicerone Anne Becerra.

It’s common for craft brewers to release small or limited-time batches of a beer. Most of the time, it’s out of necessity.

“For us, it’s a space issue,” said Russian River Brewing Company co-owner Natalie Cilurzo. “We are physically limited to producing a finite amount of beer due to property, building and ultimately, tank space. At some point there is just nowhere left to put one more tank.” Other times it’s particular ingredients, production costs and lengthy brew times that lead to smaller batches.

But scarcity creates a demand that also generates hype, which some sellers are seizing on.

When supply is limited and demand is strong, price gouging is common. And brewers are having a hard time fighting the black beer market. “I am constantly finding our beer being sold in places it shouldn’t be at incredibly high prices,” said Cilurzo. “They are getting away with it.”

Many of these hard-to-get brews are getting sold online, in stores and even in restaurants at 5-20 times the original price tag. Russian River puts out a popular seasonal sour beer that sells for around $5, but Cilurzo said she’s seen it online selling for $100 or more.

Bill Sysak, craft beer ambassador at Stone Brewing Co., said he’s seen a limited-edition beer from his brewery being sold online for more than $1,000 a bottle. It was originally sold in 2002 for $7.99, and probably isn’t worth the inflated price. After all, 95% of all craft beers are meant to be consumed right away.

Quality control is a big issue for brewers. How and where a beer is stored can have negative effects on beer quality in just a matter of days. “Beer is a food product and it does not take much to spoil it,” said Cilurzo.

Tomme Arthur, co-founder and brewmaster at Lost Abbey, introduced a cherry version of its popular Cable Car beer in 2012 and sold it for $45 for a 750 ml bottle. Only 80 cases were made, and he said it’s now being sold for $800 on the black market.

The black market also means someone else is profiting from the brewer’s hard work and money, and can hurt a brand’s reputation. “Breweries that produce these special beers have costs that include alcohol and business licenses, paying sales, property taxes, production costs without seeing any added revenue from these black market sales,” said Sysak.

Price gouging has left a bad taste among the beer community, but there are also legal implications. Each state has its own alcohol regulations, as do shipping companies. Brewers need the proper licenses and permits to sell and distribute their products. “They cost money and we pay a lot in taxes. There aren’t any rules with how one goes about selling beer in a garage,” said Arthur.

But unscrupulous sellers get creative. When posting an in-demand beer online, they only describe the bottle and label and won’t mention the alcohol inside. Ebay has cracked down on these sales, but as Becerra said, “where there’s a will, there’s a way. They find other sites. It’s getting ridiculous”

Bloated beer prices have also being found on retail shelves and restaurants. “It’s not a good way to build your brand,” said Cilurzo. “Our recommended selling price can be $5, and yet we see it in a liquor store that bootlegged it and put it on the shelf for $25. The consumer doesn’t understand we have nothing to do with that.”

Source: http://money.cnn.com/