It's about the beer
Gina Miller and Bill Keeper
It was bound to happen sooner or later: The beer industry may have reached the tipping point
with craft brewery acquisitions meaning that such deals will no longer have the same payoff for
the major brewing companies.
And that's not only because of slowing growth in the craft beer segment or the premium price
tags small brewers have been able to command, but also the mounting resistance among
serious beer consumers. And you might remember Bill, that's exactly what I predicted (and
called for) several months ago in our column.
You know my position on all of this - when craft brewers sell out to mass producers some
serious authenticity is lost, and that means the brand loses. When that happens t's going to be
harder and harder to get craft voices heard at the wholesale level which in turn means less
choice for folks like us who love craft beer.
It's clear to me that he anger of craft beer drinkers seems to grow more palpable with each
buyout. When Anheuser-Busch took over Wicked Weed Brewing earlier this year, the latter
stressed that its beers would still be made in Asheville, N.C. by the same staff. They wanted to
make sure people understood they'd still be getting the same beer they loved before, despite
the new owners. You heard the same BS when Constellation Brand purchased Florida's Funky
Buddha Brewery. They made sure to say the "team of employees will continue to work
together", and the founders would still run the day-to-day operations with the same
commitment to brewing great beer." Excuse me while I throw up. I'm not alone in recognizing
that baloney for what it really is. A slew of bars/brewpubs dropped Weed and Funky from their
taps. Some festivals even uninvited them. If I owned a bar or ran a festival I'd do the same!
After Constellation dropped $1 billion on L.A.'s Ballast Point in 2015, the former built a massive
new brewing facility in Virginia for its new brand. Even if commitments that a brew will remain
true to its roots may be sincere at the outset, once a beer begins to expand its distribution
nationally, it can't help but lose some of the "crafted" characteristics that consumers love. And
at that point, it's really no longer craft beer.
Now, the chickens are coming home to roost. Anheuser-Busch just fired 380 employees from
the high-end division that houses the craft breweries it acquired over the years -- some 90% of
its sales force. The company said it was "rethinking the business model surrounding the High
End" and would no longer focus on acquisitions. We'll see about that.
That's it from me, chug-a-lug, Bill.....see you next time.
Hello Gina -
You've got to get over this. I know you're upset but have a glass of Ballast Point or Wicked
Weed or Goose Island and relax. Oops, did I name the wrong beers? Just teasing - calm down;
you know I agree with you. A bigger question is does anyone else really care?
UBS, a wealth management firm, recently released a study on U.S. alcohol consumers that
found that 45% of drinkers don’t care if the beer they drink is from an independent brewery.
The survey took input from around 1,200 Americans who said they are alcohol consumers. Only
30% said that independence was extremely important when deciding what beer to purchase,
while 25 % said it’s somewhat important. What’s more, just over 40 % of people said that the
quality of beer stays the same after a brewery is purchased, and 11 % said they believe the
brand would improve. None of that bodes will for our side in this.
Look Gina, I understand that there’s always the caveat that surveys have a lot of room for error
— especially surveys of only 1,200 people. But there’s still something to be said when the
survey reflects the market. Sales of breweries like Goose Island and Wicked Weed may have
caused a huge uproar among craft beer fans, but the beer still sells and will continue to sell in
more locations thanks to AB InBev’s distribution network.
So as I see it, the question for craft breweries really becomes: Can the 30 % of drinkers who
actually care if their beer comes from an independent brewery support more than 5,000
breweries? With the recent slowdown of beer consumption and the struggles of some of the
bigger craft companies like Boston Beer Company, the answer may be that the market is just
oversaturated. It may be that craft beer is relying on too few people to sustain the current
growth patterns. And no, I don't personally believe that but it is possible.
So how do independent craft brewers and the Brewers Association make more drinkers care
where their beer comes from? Judging by the fanaticism (count me in) over New England IPAs,
niche sales seem to be working. But beating AB InBev, Molson Coors, and Heineken outright in
the craft business? That seems to be getting harder every day.
Now before you get really upset Gina let me cheer you up. A reverse look at that survey says
that the majority (55%) of beer drinkers DO care who makes their beer! I knew that would make
you feel better. Also a Harris Poll of 2,000 regular craft beer drinkers last month regarding 29
different beer-related terms found that respondents were most familiar with the term
“independent/independently-owned,” with 81% of people polled saying they knew the term as it
relates to beer. Even more, “independent” and “independently-owned” were terms that ranked
second-highest among words drinkers said would be “more likely” to influence their purchases.
So things may not be as bad as you think. This is still the Golden Age of Beer in the US so sit
back and enjoy it. It's easy to see that no matter what the macro guys doe craft beer is just too
good to go away.
Here's looking at you Gina