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A Billion Reasons To Love Beer

Who said brewing couldn't make you a tycoon?

Who said brewing couldn’t make you a tycoon?

Getting rich brewing beer isn’t a phenomenon which started in the twentieth century. Brewers have been minting coin for centuries.  The stakes have just grown larger.

Nearly all of America’s most notable early rich brewing magnates started out as Germans. Eberhard Anheuser (of later Anheuser-Busch fame) wasn’t even a brewer. He ran a successful soap factory and invested some of the profits in the Bavarian Brewery in the early 1850’s. He eventually acquired the brewery in lieu of the debts owed to him.

Adolphus Busch, the other part of the Anheuser-Busch empire, married into the brewing business by hooking up with Eberhard’s daughter Lily. Eighteen years after they tied the knot, the company became known as Anheuser-Busch. 

Anheuser was already well-to-do by the time he brought his son-in-law Busch into the business, and he handed it all over to Busch upon his death in 1880. Bush died 33 years later with a net worth, in today’s money, of close to $500m. 

Frederick Pabst whose name is famous because of his Pabst Blue Ribbon beer was another German taken into the brewery business by his father-in-law. The famous beer never actually won any blue ribbons. Pabst was rich enough in his lifetime to develop a resort in Wisconsin visited by as many as 10,000 people per day and to be able to import stock horses from France.

Joseph Schlitz (Schlitz Beer) did not have a father-in-law to bring him on board the brewing business. Instead, as manager of the Krug Brewery in Milwaukee, he married his former boss’ widow and renamed the brewery.  The Great Chicago Fire of 1871 increased his wealth still further. Plenty of Chicago’s toasted breweries never re-opened, and Schlitz seized a huge percentage of the market.  He didn’t get to enjoy his wealth for very long. Four years later, a week shy of his 44th birthday, he was literally on board a sinking ship.

Frederick Miller (Miller Beer) was already an experienced brewer before he immigrated to the United States just before he turned 30. He wasted no time purchasing the Plank Road Brewery. When he died of cancer at age 63, his innovative techniques had been successful and famous in the brewing industry and production had increased almost 300 fold.

Brewing magnate Adolph Coors found his way to Colorado to search for the purest water to brew his (now admittedly mediocre) beer. Before he was 30 he was selling beer under the Adolph Coors Golden Brewery label. Prohibition in the US seriously impacted is profits and to make ends meet, his brewery started producing malted milk and porcelain and ceramic products. When Coors committed suicide in 1929, he didn’t die poor but the greater wealth was in store for the family after Prohibition was lifted several years later.

All these brewers , rich for their time, would be flabbergasted at the mergers and acquisitions since.  Would Adolph Coors and Frederick Miller have ever dreamed that one day their two brewing behemoths would merge into an entity known as MillerCoors? And then be bought out to become SAB Miller? And bought out again by an entity heavily composed of the brewery run by Adolphus Busch?

These brewers would be ever more surprised by how consolidation had expanded their markets and made their heirs and later investors, many of them non-Americans and non-Europeans, richer than the founders ever were.

Examples: Jorge Paulo Lemann of Brazil is currently the wealthiest person in the world in terms of how much money he’s made from the alcohol business.  His stake in Anheuser-Busch InBev, among other things, had yielded him a $25bn fortune. One of Lemann’s partners, Marcel Herrman Telles, is worth $13bn and another, Carlos Alberto Sicupira, $11.3bn. 

The fortunes of the biggest investors in the now huge SABMiller operation would make Frederick Miller drunk.  Tatiana Casiraghi of Monaco has over $2bn in her pocket, thanks to her father’s share of SABMiller, which he acquired after selling a Colombian-based beer brand to SABMiller. Colombian Julio Mario Santo Domingo III has a similar amount in his wallet from an inherited SABMiller stake.

C. Dean Metropoulos has made billions turning around nostalgia beer brands. Frederick Pabst would be dumbfounded, first, that Pabst had fallen so out of favor and then dumbfounded, again, that Metropoulous had turned around the brand and sold it for $700m.

The presence of non-brewers on the Brewers Rich List illustrates a dramatic shift from the market which existed in the heyday of the German-Americans who established what are today some of the world’s most famous macrobrew brands. In the mid-nineteenth century, beer markets were fragmented everywhere. It was the innovation of these new brewers to try to extend their brands beyond their native regions, which they did, but nowhere near the scale seen today. 

The United States is a large country and had modern transport, making it easier for these industrious immigrants to piece together market share, albeit miniscule by today’s standards. It is hard to imagine such huge market share taking place in much smaller and poorer nations of that time period. 

But today that’s all changed. Charlene de Carvalho-Heineken is worth almost $12bn due to her inherited 25% stake in Holland’s Heineken. Maria Asuncion Aramburuzabala has almost $6bn. Her family owned a controlling stake in Mexico’s Grupo Modelo.  Anheuser-Busch InBev bought Grupo Modelo for $20.1bn. One of Thailand’s richest people made his $13bn plus fortune selling beer.

With consolidation, investors and, much less so, brewery descendants are the ones profiting. The US has a few exceptions on independent breweries minting billion dollar fortunes. Richard Yuengling has a net worth of almost $2bn running America’s largest privately owned brewery. Yeah, he actually runs it and is the sole owner. He was able to acquire the brewery, founded in 1829, from his pop for a song in 1985 when sales were just $6m. Today, they’re over $500m.

Only two craft brewers in the world can lay claim to billion dollar riches. Jim Koch of Boston Beer Company has a net worth of $1.3bn from Boston Beer Company, which remains the largest craft brewery in the USA more than three decades after its founding.  Going public in 1995 aided his billion dollar ascent.   Ken Grossman founded Sierra Nevada in Chico, California 6 years before Koch established the Boston Beer Company and only recently acquired his billion dollar status while keeping the brewery privately owned.

With the number of craft breweries growing like weeds each year, diluting market share for all, it’s probably a good bet that attaining billionairehood through craft brewing is little more likely than being able to get drunk on Miller Lite. 

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