How industry consolidation affects you: beer

Beer! Microbrew this and craft-brew that, how can beer be victim to consolidation?

The business of hops, yeast and malt is still fairly unconsolidated, but it has come together rather strongly in the past decade, to the point where the most famous American beer brands are all owned by foreigners. Anheuser-Busch InBev is the world’s largest beer manufacturer, with 21% of global sales. Don’t let the storied names out of St. Louis fool you; AB InBev is a Belgian-Brazilian company headquartered in Brussels.

In second place is SABMiller, founded in South Africa, headquartered in London, and owner of the Miller-Coors brands that hearken back to the Colorado Rockies. SABMiller sells roughly 44 billion pints of beer each year. SABMiller just made an offer to buy Heineken, a brewing conglomerate of similar size, which the Dutch company has so far rejected; should a deal go through, the combined firm would also control 21% of the beer market. The Economist also suggests that InBev may just buy SABMiller, creating a behemoth with combined production of nearly 600 million hectolitres (or, in practical terms, 125 billion pints) of beer per year.

Despite this consolidation, local and regional brewing continues to thrive. From mid-size producers like Sam Adams and Brooklyn to do-it-youself brewpubs, a wide variety of beers exist alongside the majors—some 3000 commercial entities in all, ensuring some diversity in a consolidating field.

This is the latest in a series of summaries of industries whose corporate consolidation has led to a small number of players controlling the majority of a sector, creating oligopolies in the mass market. Previously

What the watch industry is missing

I’ve been following the Watch reaction since its unveiling last week, and I keep coming back to the short-sightedness of the luxury watchmakers’ reaction.

Mostly, the watch industry has been complimentary, in its way, of the Apple Watch. They are right to compartmentalize it as fundamentally different from their products, and to appreciate it on its own level. Sample quote: “I do not believe it poses any threat to haute horology manufactures, I do think the Apple Watch will be a big problem for low-priced quartz watches, and even some entry-level mechanical watches.” (Monday Note has a good roundup.)

But here’s the thing: anyone who buys an Apple Watch is going to stop buying other watches, regardless of price point.

I keep thinking about my own use case. I’ve been a daily watch wearer since elementary school. I wear a watch with a great degree of pride, as the accessory I rely on. My watches are carefully chosen, and whether an inexpensive Swatch, an oversized Nixon or a finely crafted Breitling, they are a fixture in my life.

Of course, I’m also a daily Apple user, and an early adopter of their products. I own the first-generation iPod, the first iPhone, the first iPad. I undoubtedly will buy the Watch, even though I’m not a rabid message-sender, even though I’m not a jogger, even though I’m not yet 100% certain where the new device journey will lead me. It’s a new Apple gadget and it’s a watch—I’m powerless to resist.

And once I have the Watch, I’m going to wear it regularly. I will tinker with it, find its ideal use cases, answer a thousand questions about it, be proud of it as I was my other first-gen Apple products and every one of my watches. As with the iPhone, I expect it to become part of my daily routine.

And once I’m doing that, well, my other watches don’t stand a chance. Because as the Watch assimilates itself to my life’s rhythms (or, perhaps, vice versa), not wearing the Apple Watch will feel like something’s missing. The vibrations and alerts and shortcuts that aren’t offered by my quartz Zodiac will be glaring omissions. Before long, I’ll be strapping on the Watch every day, just as I put my iPhone in my pocket.

If the Watch works for me, my workaday watches will slowly get relegated to my nightstand drawer, and future watch purchases will shift from investing in the next object of beauty and personal expression to saving a few bucks for Watch 2. And Apple will then own a thirty-year habit of mine, just like they came to own my music and phone habits, too.

Frankly, I’m not even sure I’m happy about this. But I’m going for it. I expect millions of folks like me will, too, and when they do, the disruption to the watch industry will not be pretty.

What I did this summer

It’s been quiet around here because I spent July recovering from my concussion and August catching up from a month of not working full speed.

That said, everything is great! I came out of the trauma fog in time to find lots of fun this summer, including a full 11 days of vacation, which I’d travelblog in this space in detail had we not basically repeated our trip from 2006 to great satisfaction. Shorthand version: Cape Ann; Bass Rocks Ocean Inn; Roy Moore Lobster Co.; Martha’s Vineyard; incredible car ferry reservation luck; Atria and Among the Flowers; Larry David’s ex-wife; ball in the yard with my two growing sons; beaches, starry nights, bunny rabbits, grasshoppers, jellyfish, three-year-olds eating salads, six-year-olds reading 200-page books in one day, an outdoor shower, a flat tire, two more trips to the local playground than we’d made in our previous nine Massachusetts vacations, and a single fish caught with a kids’ rod and reel for the second straight year. Oh, and lots and lots of ice cream. More like this, please.

It happens too fast

Internet pioneer Eric Meyer and his family suffered a heartbreaking loss this weekend as Eric’s daughter Rebecca passed away of a brain tumor on her sixth birthday.

An early blogger, Eric harnessed the power of personal publishing for his catharsis, and in the process, he brought our entire community into his heart. I invite you to read about Rebecca (starting from last August, when Eric first posted about her tumor) and follow Eric on Twitter as well.

Then hug your kids, and spoil them a little, because life is too short, and surely they deserve it.

As all tragedies can have uplifting consequences, in recent weeks my world has been tinted for the better by Eric’s experiences, which serve as a reminder of the wonderfulness of childhood and a way to keep perspective as we collectively grieve for Eric’s loss.

This morning my six-year-old and I watched another parent deliver an aggressive, top-of-her-lungs rebuke to her child for a moment of forgetfulness. When she finished, she apologized—to the other adults. “That mom is really mad,” my son said to me quietly, eyes wide. I could only sigh. Life is too precious, our children too innocent, the world too cruel.

My three-year-old is off to his first “camp” experience later this month. All the children have to wear the same shirt every day. At orientation, the camp director told us, firmly and pleasantly: “If your child doesn’t want to wear the camp shirt, seriously—don’t force it. Your time with your child is too valuable to argue over what to wear. Just bring it and we’ll put it on later.”

Your time with your child is too valuable. We could append almost anything to that sentence, couldn’t we? I think about how I may chide my kids over relatively minor issues, and then I think about Rebecca Meyer, ten days younger than my own kindergartener, and it strengthens my resolve to make their lives as full of kindness and affection as my heart can find. The things we worry about pale in comparison to the issues most of us are fortunate not to confront.

Eric, my deepest condolences go out to you once more, as well as a note of thanks, for sharing your stories and a bit of your soul.

Truth in advertising: New England Patriots Jersey Guarantee

The New England Patriots got some favorable press today, including a front-page link on ESPN.com, for their new “jersey guarantee.”

Under the terms of the guarantee, if a jersey is purchased of a Pats player who departs the team within 12 months of purchase, the customer is entitled to a new jersey at a 25 percent discount.

Generous? Not so much. Clothing markup is typically 40-50% from wholesale; that $100 jersey costs the Patriots $50-60 to procure. So at a 25% discount, the replacement jersey is in all likelihood still sold at a profit.

The Patriots aren’t accepting product returns or giving refunds. They’re offering a well targeted coupon code. The only certainty from this promo is that the Pats have a new path to selling more jerseys and making more money. Some guarantee.

Progress

At Columbia University, the Columbia Daily Spectator has decided to stop printing a daily physical edition, opting for a weekly paper and daily postings online.

This follows announcements from magazines like New York to reduce their publication schedules, but because it’s a college paper, this one strikes close to home. In 1994-95 I was editor in chief of Franklin & Marshall’s The College Reporter, and I spent many a late night finalizing galleys and eliminating serial commas before driving, often at 3 a.m., from Lancaster, Pa., up to Ephrata, 25 minutes to the northeast, to slide our glue-sticked and blue-penciled newspaper-to-be through a very wide mail slot at the printer, so that the paper could be printed and distributed on time Monday afternoon.

It’s been years since I saw the Reporter at any length. I enjoyed for several years receiving the newspaper mailed to me as editor emeritus, although that policy died out after awhile, and the paper somehow failed several times to establish a proper digital presence. (It seems to finally have an up-to-date website, although the content made me double-check that it wasn’t a parody.) I imagine readership on campus at F&M had a similarly parallel experience. The school will eventually, like Columbia, turn the print edition into an anachronism, and ultimately a dead product. Columbia’s weekly paper won’t last very long either.

I love my printed media. I love carrying The Economist folded lengthwise in my coat pocket onto an airplane; I love flipping through the heft of the New York Times on a weekend morning and perusing its daily sections on the subway; I love reading Car and Driver on the can. But I’m also a digital native, having been online since the 1980s, and I love that, too.

And so does everyone else. The benefits of digital publishing are incontrovertible. The world has already made up its mind, and it’s just waiting for the stragglers to let go of the past. When I bring the Times on my morning commute, I am almost always the only person reading a printed newspaper on the train, and if there’s another paper in my car, it’s a freebie handed out on the subway steps, wire stories and local advertising for the bored. The days of learning the accordion fold are over.

So farewell, Columbia Daily Spectator, and farewell, weekly New York, and farewell, eventually, to the rest of the printed periodicals that have brightened my life for 35 years. You will be missed. And you won’t, too.

Communicating value to customers

Southwest Airlines has been running an ad during the NCAA basketball tournament that touts its frugal ways. The ad is transparent, honest and pragmatic.

“You save money dealing directly with us,” the voiceover says of its website, and “we save money dealing directly with you.”

From there, the ad touts its low airfares—see? See?—as a clean extension of the value proposition behind the company.

I love this commercial for its win-win approach. Southwest is calling out on national television that they’re not playing games. If you work with us, they say, it costs us less, and in turn, we’ll help you spend less, too. In today’s savvy shopping environment, it’s great to see a brand talk frankly about minding costs and passing savings onto customers.

Compare this with the sign I see in the building cafeteria when I’m in my New Jersey office. It covers the front of every napkin dispenser they have.

napkins

“When our costs rise,” it says, in bold red type, “Your [sic] prices rise.”

This little sign could be a win-win, like Southwest’s ad. But it’s not. It’s antagonistic. It’s a threat. There’s no mutual benefit, no collaboration, just a warning. Waste our money, and we’ll take it right out of your pocket, bucko.

It helps that the cafeteria is the only place to grab lunch without a decent walk. They have a bit of a monopoly, and it shows: the food is somewhat expensive, the cooks refuse to go off-script, and certain stations randomly don’t open some days. All of which mirrors the attitude on the napkin dispensers. Don’t mess with me, eater. I’m all you’ve got.

The cafeteria misses an opportunity to create customer loyalty that could have been communicated simply and effectively. How much better would the napkin dispenser make customers feel if it said, “Keeping costs down keeps your lunch prices down,” instead of going toe-to-toe with diners?

How industry consolidation affects you: eyeglasses

Luxottica is in the news in the digital realm right now for its forthcoming collaboration with Google on Glass-wear.

Google went straight to the top on this one, as Luxottica is by far the industry leader in eyewear. The company makes eyewear under 27 different brand names, for both its own brands, such as Ray-Ban and Oakley, and a variety of high-profile licensees like Chanel and Prada.

Luxottica has the market pretty well covered on the retail side, too: if you’ve ever set foot in a Lenscrafters, Pearle Vision or Sunglass Hut, you’re on their turf. The company also takes care of the eyeglasses at Sears and Target, among others.

In total, Luxottica has roughly 80% of the major eyewear brands under its control. Main competitor Safilo has an impressive portfolio of licensing partners but a much smaller footprint and fewer known in-house brands.

Me, I’ve been wearing American-made Bevel glasses of late, and independent ic! berlins before that. But it’s interesting to know that when I made a big switch a number of years ago from Oliver Peoples to Paul Smith, I wasn’t really changing much of anything.

This is the latest in a series of summaries of industries whose corporate consolidation has led to a small number of players controlling the majority of a sector, creating oligopolies in the mass market. Previously

Tea

A friend of mine asked about tea, and in answering, I realized I drink quite a lot of tea and have discovered some very good things to drink, which I thought I’d share here.

Hot

I drink hot tea sporadically for enjoyment and all the time when I’m sick. And my hot tea appreciation reached its apex with Mighty Leaf tea. They’re all delicious. The organic mint melange is in my house right now. I’ve always enjoyed Tazo Calm, which you can get at Starbucks and which tastes great with honey instead of sugar.I’m also on a simple chamomile kick right now. Twinings is fine at this. (My kids prefer chamomile, too, and I’d love to find a 50- or 100-pack of chamomile tea bags. For now I’m buying the Twinings 20-packs.)

And, frankly, ordinary black tea is underrated. A 12-oz Lipton’s with honey–keep going with the honey, a little bit more, no seriously, ok that’s enough–is pretty great in its own right, even in decaf. You’ve probably never even tried it.

Iced

We keep a regular supply of Honest Tea in the house. The basic Honest Lemon Black is my favorite. It’s the right amount of sweet, although it’s sweeter than it used to be, before Coke bought the company out and made it more mass, but it still has 40% the sugar profile of a Snapple and fully organic. I buy it by the case. I also enjoy the peach white tea on occasion, and several of the esoteric versions they sold a decade ago in glass bottles that are now hard to find, like their peppermint tea.

Most other bottled and canned iced tea is horrifically sweet. The best ones actually shy away from being “tea” and include elements of fruit juice. One exception to this is Arizona’s Diet Green Tea with Ginseng, which is a terrific lunch accompaniment.

On the sweet but awesome side, try some Turkey Hill Orange Tea. I buy the diet decaf which is as good as the regular. It’s made with real orange juice and an embarrassing amount of sweetener, and if no one’s looking, I can drink a half-gallon of it in pretty much one sitting. Every person I’ve introduced it to–dating back to 1994, in my college apartment–has become addicted to it, most recently my parents, who otherwise avoid artificial sweeteners. It’s like umami tea.

As a counterpoint, it’s wonderful if you have the determination to home-brew iced tea. I say determination because it’s incredibly unsatisfying: you’ll want some tea, so you’ll heat up a lot of water, which takes a long time, then pour it into a pitcher with half a dozen teabags, which makes you yearn for it, only now you have a quart of hot tea that you have to chill for an hour before you can drink it. If you’re responsible enough to brew it the night before, then it’s tasty. I’ve found moderate success with an assortment of “brewed iced tea” brands, none of which were special enough to stay in memory.

Time to get something to drink.