Beware False Flags on Fourth of July Beer

PORTLAND, Ore. (TheStreet) -- When bars dye beer green on St. Patrick's Day and drop a lime into any pale lager they see on Cinco de Mayo, it shouldn't stun anyone that brewers would want to cloak themselves in the American Flag for the Fourth of July.

It's a bit more off-putting to see brewers with headquarters in London, Brazil, Belgium and Costa Rica put on their most American face just to sell a few more beers during the peak U.S. beer-drinking season.

According to the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau, July is the last of the peak summer months for beer sales. Shipments that fester around 14 million to 15 million barrels through spring suddenly jump to about 18.5 million barrels in May and June before settling in a 18 million or so in July. By August, it's down to roughly 17 million barrels before collapsing to as low as 13.6 million by december. The brewers put on their summer finery around Memorial Day and proceed to wear the Stars and Stripes throughout the season.

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Anheuser-Busch InBev  (BUD) repeatedly uses this idea in an attempt sell Budweiser, despite the fact that parent company Anheuser-Busch was sold in 2008. The resulting company not only laid off a bunch of folks in Anheuser-Busch's old stomping grounds of St. Louis, but set up headquarters in Leuven, Belgium, to keep up appearances for Stella Artois drinkers while keeping its seat of power in Sao Paolo, Brazil, for chief executive Carlos Britto and company.

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Budweiser's red, white and blue cans launched on Memorial Day this year with a promise to donate $3 million to the Folds of Honor Foundation and provide more than 600 scholarships to families of U.S. soldiers killed or disabled in action. It's a noble gesture, but branding experts have not only questioned tying beer to Memorial Day, which is meant to be a somber occasion honoring those who died in military service, but using such a promotion to launch a summer campaign intended to sell beer.

Miller took a similar approach five years ago when it launched red, white and blue cans of Miller High Life that May. It teamed with Iraq and Afghanistan Veterans of America and Operation Homefront to "Welcome Veterans Back to the High Life" by letting them throw out the first pitch at a pro baseball game or giving them great seats at NASCAR races or other events. Miller donated 10 cents for each cap or tab returned to it, but quite obviously could have made that same donation without giving its cans a Stars and Stripes paint job.

So why do it? Because, since 2002, Miller hasn't been "American" at all. It was purchased that year by former South African Brewer SAB and took its place in the SABMiller portfolio in London. It's only further diluted here in the states, where SABMiller's joint partnership with Molson Coors  (TAP) puts Canadian ownership into the MillerCoors mix. There's still a brewing facility and some beer caves that you can tour in Milwaukee -- where Major League Baseball's Milwaukee Brewers still play at Miller Park -- but any revenue from Miller sales there or anywhere else goes to a company that's about as American as Queen Elizabeth or Wayne Rooney.

Even small, regional brewers walk a fine line when they wave the flag from their beer cans. Genesee Brewing Company has been making beer in Rochester, N.Y. since 1878, but was swallowed up by KPS Capital Partners and its North American Breweries in 2009 and added to a portfolio that already included regional brewer Dundee and craft brewers Pyramid and Magic Hat. In 2012, North American Breweries was sold to Florida Ice and Farm Co., which is based in Heredia, Costa Rica.

Keep in mind that absolutely none of this is in compliance with U.S. code regarding the flag, commonly known as the "flag code." Brewers get around this by insisting that their designs only emulate the flag and aren't actual representations of it, but sticklers for the rules could find fault with those flag cans under the following subsection:

(i) The flag should never be used for advertising purposes in any manner whatsoever. It should not be embroidered on such articles as cushions or handkerchiefs and the like, printed or otherwise impressed on paper napkins or boxes or anything that is designed for temporary use and discard.

That's fairly clear, through multinational brewers struggling to maintain a connection between their U.S. past and present-day drinkers shouldn't be faulted for trying. Back in 1988, all-American Budweiser accounted for 25% of all beer consumed in the United States -- which is roughly the same U.S. market share that all of MillerCoors holds now. Its production has plummeted more than 60% from that peak of 50 million barrels and, in 2011, it lost its spot as the No. 2 beer in the U.S. to Coors Light. Miller High Life, meanwhile, saw a brief resurgence in the early 2000s dwindle quickly after the recession. Production dropped by nearly 1 million barrels since 2010 and its 2.1% market share is lower that that of budget brands Busch, Busch Light and Natural Light.

Still, playing marketing games with a nation's flag has consequences, particularly when that flag isn't the one flying over your corporate headquarters. Last year, MillerCoors found itself in a whole lot of trouble for stamping an image of the Puerto Rican flag on its cans and selling them to promote its sponsorship of the National Puerto Rican Day Parade in New York City. Activists and New York State Attorney General Eric Schneiderman expressed concern about using both the flag and the parade to sell beer, especially when the theme of that year's parade was Celebrating Your Health. A year earlier, MillerCoors pulled an ad with the word "emboricuate," or "make yourself Puerto Rican" next to bunch of beer bottles.

If brewers want to be as American as possible this Independence Day, they may want to consider moving their corporate headquarters here and hiring more U.S. workers. Failing that, they could use the same strategy as actual U.S.-based brewers: Stand behind a quality beer instead of hiding it behind a flag.

-- 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,, 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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