What Is Blue Moon Doing in the Holiday Beer Section?

PORTLAND, Ore. (TheStreet) -- Of all the holiday beer shoppers will see in the beer aisles this year, perhaps the most surprising is a 12-pack of a brand that, until just recently, boasted only one beer.

Blue Moon is throwing a 12-pack of winter seasonal beers into this year's holiday mix to take on the holiday samplers offered by Boston Beer Company's (SAM) Samuel Adams, the Craft Brew Alliance (BREW) , New Belgium and other smaller brewers. The big difference is that Blue Moon has the spending power of multinational brewing conglomerates SABMiller and MolsonCoors (TAP) behind it in the form of their North American joint venture MillerCoors.

We usually don't like to call out Blue Moon on this type of thing, as it typically serves as a gateway beer from light lagers such as Coors Light and Miller Lite to small "craft"-style brewers and more complex styles. But the rhetoric being tossed around between the Brewers Association small brewers' industry group and MillerCoors subsidiary Tenth and Blake -- which routinely refers to its beers as "craft" -- makes this holiday faceoff worth noting.

The Brewers Association made its opinion of Blue Moon clear earlier this year when it threw the brand in the "crafty" category and suggesting it was hiding its ties to MolsonCoors in its labeling and committing other, similar lies of omission in its ads. Tom Cardella, head of 10th and Blake fired back at a Beer Marketer's Insights spring conference, saying that craft beer isn't about size, it's really not about the ownership," but rather "the art and science of beer coming together."

That resulted in a rebuke from Boston Beer founder Jim Koch, who reminded Cardella that his brewery has access to brewers, ingredients and a huge and influential distribution system at a far lower cost than small brewers precisely because they have big money backing them up. Also, Koch noted that the use of "craft" by Blue Moon and other brands produced by large brewers eats away at the premium pricing that makes those brands so valuable to begin with.

According to market research firm Symphony IRI, craft beer usually fetches an average of $33 a case. That trumps the $29 brought in by imports and the $20 a case for premium domestic beers such as Anheuser-Busch InBev's (BUD)  Budweiser and MolsonCoors' Coors Light. Water it down or chip away at it with temporary pricing schemes, and you take money out of everybody's pocket.

Koch comes from an old Cincinnati brewing family and doesn't defend his brewery and the niche he helped build with just some kind words and reason. That friendly, smiling, beer drinking face masks a hammer he's more than willing to bludgeon his big beer adversaries with when they step too close. As Blue Moon offers a variety pack that throws and Abbey Ale and Gingerbread Spiced Ale in with its standard Belgian White, Samuel Adams has bolstered its Chocolate Cherry Bock and Old Fezziwig Winter Ale with a little something called White Chrismas -- a spiced witbier that isn't dissimilar to Blue Moon's original-recipe Belgian White.

Boston Beer is also using its Alchemy & Science wing in Burlington, Vt., to produce a line of beer-and-soda shandies to combat those used by Tenth & Blake holding Jacob Leinenkugel. That brand, meanwhile, is throwing a Vanilla Porter in with its Orange Shandy and Big Eddy Imperial Stout for its own holiday pack.

MillerCoors is as big as its fizzy lagers suggest, accounting for 28% of all beers shipped in the U.S., but its flattening sales are making it a bit more aggressive toward burgeoning small brewers than usual. Shipments dropped 1.1% in 2012 and have been declining steadily since the start of the recent recession. Shipments plummeted another 5% during the first half of 2013 and profits dropped 4%. Marketing spending trickled off for the rest of the year, even as it launched brands including Redd's Strawberry and Smith & Forge cider -- the male-focused answer to its apparently girly Crispin brand.

This all follows a 10.4% gain by Boston Beer last year, more than 20% shipment growth in the first six months of 2013 and 13% growth for all of craft beer during that span. That should only continue through the holidays as, according to Symphony, sales of seasonal beers have risen between 15% and 25% in recent years, with much of that growth coming from craft brewers. According to the Brewers Association, those seasonal sales have helped small brewers sales of craft beer 15% by volume and 15% in dollars in 2012. That gave those small brewers 6.5% of all beer sales volume and 10.2% of its income last year. With recent boosts, that small brewer market share is up to more than 7% in 2013.

If you were MillerCoors, wouldn't you turn to the Blue Moon brand -- and its 10.7% growth and 0.8% share of the beer market in 2012 -- for a little holiday cheer? The brand may not be producing the same 26% growth it did in 2010, but last year's growth beat that of both Boston Beer and D.G. Yuengling & Sons -- each of which has a more than 1% share of the beer market. In fact, if Blue Moon was considered a craft brewers, the 1.9 million barrels it produced in 2012 would make it the second-biggest craft brewer in the U.S.

That's about as close to a holiday miracle as MillerCoors gets, but MillerCoors Chief Executive Tom Long already showed how poorly his company handles even the smallest bit of holiday cheer. In an op-ed written for CNN in response to an editorial by Brooklyn Brewery's Steve Hindy accusing MillerCoors and Anheuser-Busch InBev of some less-than-honest "craft" beer labeling, Long defended the legacy of both Jacob Leinenkugel and Blue Moon and made one plea to the U.S. beer drinker: "Whatever style beer you might prefer, all we ask is that you judge us by the quality of the beer in the glass."

That is a fair and reasonable point that most beer drinkers would agree with... if he didn't follow it up with a Bloomberg Businessweek interview in which he told a business audience something entirely different.

"We should be proud to make beers that grow and are popular -- that's the American way," he said. "Being small and unpopular, what's the utility in that?"

In fairness, Bloomberg provided a great, more businesslike description of Long's Tenth & Blake division to go with Long's quote, calling it "an operating unit created to capitalize on the rapid growth of craft and import brews and to help offset slowing sales of light beers." So if there's "no utility" in being "small and unpopular" why is MillerCoors disguising an entire division as a small brewery and pretending a whole line of beers isn't made by the same folks that make disappointing big labels and yellow fizz? Because it matters, and MillerCoors knows it. Just as opening a toy store on the northern tip of Canada that produces and distributes toys all over the world wouldn't turn Mattel into Santa Claus, no amount of deflection or wordplay is going to make Blue Moon a tiny brewery or let it play reindeer games with Samuel Adams, Deschutes, Sierra Nevada or anyone else.

Blue Moon isn't a bad beer and it isn't a bad beer to show up to a holiday party with. We'll even admit that its Abbey Ale has merit, even if its Gingerbread Ale tastes as if someone knocked a spice rack into the brew kettle. It should just get the same treatment as everyone else in the beer aisle, and be stacked next to Coors Light, Coors Banquet Beer, Killian's Irish Red, Miller High Life, Miller Genuine Draft and its other embarrassing relatives. The holidays are a time for family, and it's not small brewers' fault that the rest of Blue Moon's isn't exactly a pint full of holiday spirit.

-- Written by Jason Notte in Portland, Ore.

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Jason Notte is a reporter for TheStreet. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, the Boston Phoenix, the Metro newspaper and the Colorado Springs Independent. He previously served as the political and global affairs editor for Metro U.S., layout editor for Boston Now, assistant news editor for the Herald News of West Paterson, N.J., editor of Go Out! Magazine in Hoboken, N.J., and copy editor and lifestyle editor at the Jersey Journal in Jersey City, N.J.

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