Budweiser accused of selling watery beer
Anheuser-Busch InBev is in talks to purchase SABMiller.
The beverage giant Anheuser Busch InBev is at loggerheads with customers in California, Pennsylvania and New Jersey. They've filed lawsuits saying the company's beer is watered down.
It's not complicated to measure the alcohol in beer, says Peter Reid, publisher of Modern Brewery Age. All you need is this ancient glass tool called a hydrometer. "This is a very old piece of technology. It dates back to the Greeks," he says.
Mega brewers, like InBev, now also use sophisticated computers and robots to check alcohol levels. It's doubtful they ever get it wrong. Yet that is the basis of the lawsuits, that the "5 percent alcohol by volume" label on Budweiser and other InBev U.S. beers is false. They say the beer has been watered down.
Reid says lawsuits over alcohol levels are common, but usually in the opposite direction. "Often times, beverages are pilloried for being too strong," he says. "You have products like Four Loko or malt liquors."
Beverage industry consultant Tom Pirko says the lawsuit is about more than technicalities. "It's probably really about confidence and trust. Are we really getting what we paid for?"
He says U.S. customers are already kind of suspicious of the big brewers. InBev, based in Belgium, has a reputation for cutting costs and watering down other brands it has bought. But InBev wouldn't save very much money by watering down Budweiser in the way the lawsuits claim, says beverage analyst Thomas Mullarkey at Morningstar.
"Shareholders are only rewarded if customers keep buying the beer," he says.
The risk to Budweiser's reputation would be much greater than the $5 million in damages sought by the lawsuits.