New York, 31 July - U.S. beer makers are trying to plot a new course as their industry faces a roiling sea of political and economic uncertainty and global consolidation.
Industry executives gathered in New York Wednesday for the annual members-only meeting of the Beer Institute, a U.S. lobbying group, where discussions touched on taxes under a new U.S. administration, the weakening economy in the United States and Europe and the impact of recent brewer mergers.
The Beer Institute, which is lobbying Congress to roll back federal beer excise taxes to pre-1991 levels, is also eyeing the race for the White House, seeing benefits in each candidate.
"On one hand, Republicans tend to be low-tax," said Jeffrey Becker, the Beer Institute's president. "On the other hand, Democrats brought us out of Prohibition and have a better appreciation for low- to middle-income wage earners than generally Republicans do."
The Beer Institute says federal excise taxes on beer, which are about 33 cents per six-pack, unfairly target lower-income groups that make up the bulk of beer drinkers. Taxes make up about 42 percent of the cost of a beer, Becker said.
He takes no comfort in the fact that Cindy McCain, wife of the presumption Republican president nominee, Arizona Sen. John McCain, is in the business.
She is the chairman of Hensley and Co, a family business that is one of Anheuser-Busch Cos Inc's largest U.S. distributors. Becker said the relationship could make McCain give the beer industry a wider berth.
"That distance could include some things that we may not particularly care for, but I think you'd see that anyway. I think there could be some challenges regardless."
Common lore states that beer is recession-proof, and Becker said that is true only up to a point, since a real recession will hurt everyone.
He predicted the U.S. beer industry would see sales grow "a little bit over 1 percent" in 2008.
"While it doesn't sound very dramatic for some people, it's very good for us." Year-to-date sales were up about 1 percent, with cheaper domestic beers up about 1 percent and more expensive imports down 3 percent, he said.
"In a down economy, you do see some trading down with consumers. That's why it'd be interesting to see what we do in a good economy."
CHANGING FACES
Grupo Modelo Chief Executive Carlos Fernandez, who spoke at Wednesday's meeting, told Reuters afterward that he discussed industry challenges, such as competition from other kinds of beverages, increasing consumption, as well as lowering taxes, and improving communication and corporate responsibility.
Fernandez declined to comment on the fate of his company, Corona beer maker Modelo, now that Anheuser-Busch Cos Inc , which owns half of it, has agreed to a $52 billion takeover by Belgian rival InBev NV to create the world's largest brewer.
Along with the just-launched U.S. joint venture between SABMiller Plc and Molson Coors Brewing Co, the Anheuser deal is helping change the face of the beer industry, said Beer Institute President Jeffrey Becker.
"It's not necessarily a bad thing. Change is good. Change keeps you focused ... makes you rethink your priorities, plan differently and think more globally," Becker said.
Becker, who serves as a national advocate and spokesman for the U.S. brewing industry, said he was looking forward to considering larger global issues, such as world health and trade, now that the U.S. players are fewer and bigger.
"As for further consolidation, it's anybody's guess," he said, and declined to talk about specific companies.