Responsibility Matters

In the trade group known as the Beer Industry, Anheuser-Busch holds sway

Apr 19, 2006 at 4:00 am
Almost immediately after you pull up, the Web site operated by the Washington, D.C.-based trade group the Beer Institute, a banner ad for Anheuser-Busch's campaign against alcohol abuse scrolls across your screen amid images of foamy pilsners, ales and stouts. Alongside A-B's signature eagle, the message blares:

"Responsibility Matters."

Continued navigation reveals industry sales data, studies calling for the rollback of beer taxes and an interesting nugget of historical speculation. "According to one prominent anthropologist, what lured our ancient ancestors out of their caves may not have been a thirst for knowledge, but a thirst for beer," reads a nonbylined essay.

"Beer gave people protein that unfermented grain couldn't supply. And besides, it tasted a whole lot better than the unfermented grain did. But in order to have a steady supply of beer, it was necessary to have a steady supply of beer's ingredients. Man had to give up his nomadic ways, settle down, and begin farming. And once he did, civilization was just a stone's throw away."

Founded in 1986 to replace the U.S. Brewers Association, the Beer Institute includes among its members all of the major U.S. breweries, as well as about 80 smaller outfits. The group collected more than $4.5 million from its members in 2004, which it spent on programs like lobbying Congress and conducting public relations campaigns from its C Street offices.

The Beer Institute came under recent scrutiny, not for its anthropological claims but for the way it regulates beer ads — or fails to regulate them. Critics quoted in a New York Times business story last month condemned the Institute for violating its own advertising code.

George Hacker, director of alcohol policies at the Center for Science in the Public Interest, cites a Super Bowl ad that featured men trekking up to their roofs with lawn chairs and coolers of Bud Light. (They told their wives they were going to clean the gutters.)

Compare that ad, Hacker says, to the stipulation in the Beer Institute's code that says beer commercials should not portray "beer drinking before or during activities, which for safety reasons, require a high degree of alertness or coordination."

"Here are guys climbing up a ladder and sitting on a roof, which is high-risk activity," Hacker says. "People fall off roofs, they break their necks. They get hurt."

Hacker complained to Anheuser-Busch. He says the brewer responded by questioning his sense of humor.

Then he took his beef to the Beer Institute's newly formed independent review panel, which consists of four members without ties to the beer industry who address complaints against beer ads. But the panel never heard Hacker's complaint.

Per Beer Institute guidelines, it didn't have to, because the ad was no longer airing.

"The purpose of the [panel] is to consider advertising and marketing materials currently in use," Beer Institute president Jeff Becker explains in an e-mail response to a request for comment. "CSPI's request to review ads that are no longer running could generate a large number of complaints, which could undermine our review board's mission to look at complaints about ads actually in the marketplace."

Counters Hacker: "That's absurd. It allows them to reach the largest single amount of viewers, and then conveniently drop the ad and eliminate any possibility of review."

Hacker says Anheuser-Busch had a hand in crafting the Beer Institute's advertising code — and the power to veto it.

In fact, though representatives from the major brewers won't say so on the record, it appears that industry behemoth Anheuser-Busch, which makes about 50 percent of the beer sold in the U.S., is the driving force behind the group.

"Anheuser-Busch is obviously the largest member," says Ted Marti, president of August Schell Brewing, a New Ulm, Minnesota, microbrewery that belongs to the Beer Institute. "We [small brewers] don't hold any power there. Could A-B take their toys and go home? I suppose they have a little bit of a threat there."

"Anheuser-Busch is clearly calling the shots behind the scene at the Beer Institute," agrees Amon Rappaport, spokesman for the Marin Institute, an alcoholic-beverage watchdog group. "It's really just A-B taking on another identity."

The Beer Institute maintains that Anheuser-Busch's influence is on par with the organization's four other board members — Miller, Coors, Heineken USA and Procermex (which represents Corona). But of the five, only two — Anheuser-Busch and Miller — enjoy the privilege of being able to veto Beer Institute initiatives.

According to Becker, the trade group's president, in 2004 Anheuser-Busch contributed about 35 percent of the Beer Institute's revenues, about the same percentage as Miller. Coors' share was 15 percent; the remainder came from other members. (Becker says the funding breakdown for 2005 is not yet available.)

But those figures don't include some Anheuser-Busch/Beer Institute collaborations, such as an advertisement shown during this year's Super Bowl in which beer drinkers of different nationalities toasted one another in their native tongues, from Gaelic to Swahili. Though Anheuser-Busch paid for the ad, the local brewer's name was nowhere to be seen. Instead, it featured the Beer Institute's logo. Confusing, especially considering that the spot kicked off a new advertising campaign called "Here's to Beer," an attempt to grow beer's share of the adult-beverage pie that is funded entirely by...Anheuser-Busch.

"That amounts to an in-kind donation of more than $2 million," claims Rappaport, citing the baseline price of a Super Bowl ad. (Anheuser-Busch does not release figures pertaining to individual advertising expenditures.)

Why does A-B go to all the trouble? Because the brewer has an interest in creating the appearance of a unified front, says Glenn MacDonald, Olin Professor of Economics and Strategy at Washington University's Olin School of Business.

"You tend to see groups like the Beer Institute when most of the companies [in an industry] have similar interests," MacDonald explains. "If all interests are pretty much going in the same direction, and there's one big player that's really kind of driving the bus, when they're negotiating or lobbying the government they're going to say, 'No, this isn't just one big company based in St. Louis, this is beer companies all over the nation, acting together.'"

When it comes to fighting taxation and advertising regulation, that's not necessarily a bad thing for the beer industry, adds MacDonald: "If everyone's involved, they exert a lot more pressure. Even if A-B no doubt sets the agenda."

When asked to comment on Anheuser-Busch's relationship with the Beer Institute, Robert C. Lachky, the company's executive vice president of global industry development, responded via e-mail.

"Like other major brewers, Anheuser-Busch is a board member of the Beer Institute (BI) trade association," writes Lachky. "The vision of the BI is developed by the association's board of directors, and Anheuser-Busch participates in this process as a BI board member."