When we pop a top and chug down an ice-cold beer, we know that we're getting a proprietary blend of barley, malt, and hops, but few drinkers realize there's an amalgamation of other ingredients, a veritable gumbo of additives that might just cause you to become a teetotaler.
Food blogger Vani Hari, known as the Food Babe, discovered last year that Anheuser-Busch InBev (NYSE:BUD), MillerCoors, and other brewers have been given a free pass by the government on publicly disclosing their ingredients. Unlike other food and beverage companies that fall under the purview of the FDA, brewers are regulated by the Treasury, and it has chosen to allow for voluntary disclosure.
Perhaps with good reason: Anti-freeze components? Crushed insect shells coloring? Dried fish bladders? Mmmmm!
Hari, the woman who got Kraft Foods to remove the fake orange food coloring from its mac and cheese, and Subway to stop using "yoga mat" chemicals in its bread, began a campaign to force the brewers to publicly reveal their ingredients. Though the brewers initially hemmed and hawed at doing so, the tens of thousands of people who signed her online petitions within 24 hours of her posting them caused both Anheuser-Busch and MillerCoors, the joint venture of SABMiller (NASDAQOTH:SBMRY) and Molson Coors (NYSE:TAP), to publish the ingredients for their most popular beers on their websites, with other brands soon to be revealed.
Consumers have become more concerned and thoughtful about what they're ingesting these days. In addition to Kraft and Subway, Coca-Cola and PepsiCo recently agreed to stop using a flame retardant chemical -- brominated vegetable oil -- in their soft drinks, and have been looking for suitable substitutes for the artificial sweetener aspartame. Yum! Brands also said it would stop using azodicarbonamide, the so-called yoga-mat chemical, in its breads; Chick-fil-A is testing alternatives to its peanut oil that contains a chemical made from butane; and Starbucks stopped using carmine, the red food coloring made from the shell of the female cochineal insect.
In short, the movement is part of a larger and growing trend among consumers to shun products that contain ingredients you can't pronounce. The food blogger focused on Bud and Coors, though, because they account for more than 75% of all beer sold in the U.S. Anheuser-Busch, the world's biggest brewer, controls about half the market, and MillerCoors some 30%.
The ingredients list published for Budweiser and Bud Light won't set off too many warning sirens, however: It's apparently just barley malt, rice, yeast, hops, and water. MillerCoors posted the ingredients for Miller Lite, Coors Light, and several other brands on its Facebook page, with most of the ingredients coming from water, barley malt, corn, yeast, and hops.
Yet Anheuser-Busch adds a caveat that says its ingredients list "is consistent with the FD&C Act," which curiously sounds like a dodge, though they didn't respond back to an email asking for clarity.
The mass brewers don't need anymore headaches when it comes to their beer, as they're already suffering a hangover from declining sales as drinkers opt for more flavorful craft beers. According to Symphony IRI Group, sales of the biggest U.S. beer brands fell 1.7% in 2013 compared to a 16% surge in craft beer sales.
When ABC News slimed the beef industry with its notoriously specious reporting on so-called "pink slime," for which it's now being sued, it caused the leading manufacturer to close most of its production because retailers wouldn't stock it anymore, despite there being nothing inherently wrong with the product. (It's making a comeback again, however.) Investors needn't worry that Anheuser-Busch or MillerCoors will be shutting down breweries anytime soon, but they might want to worry if sales will continue heading south as drinkers search for beers that more closely hew to the German Reinheitsgebot purity laws than those that might seem like they were brewed from a junior chemistry set.
Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, Molson Coors Brewing Company, PepsiCo, and Starbucks. The Motley Fool owns shares of PepsiCo and Starbucks and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.