Exile on Craft Street?

By June 2, 2019Featured


  

In response to the growing number of acquisitions of craft breweries by the “Macro brewers” in 2017 the Brewers Association created an “independent craft brewery seal” to inform craft beer drinkers about what they were putting in their mouths.

They believe – and can reference polling data to prove, that most beer drinkers do care if the beer they are enjoying is made by an independent brewer. But as I have chronicled before in this blog, there is something a little odd about an industry and association that prides it self on inclusion and unity – but is clear about excluding the brewers and breweries that were acquired.

At this year’s Craft Brewers Conference (CBC) in Denver, I talked with a couple of those exiled brewers to see if they were still being actively shunned. Goose Island was one of the earliest well known craft breweries bought up by AB Inbev – considered a shocker when it happened back in 2011.

I ran into Peter a cellar man at Goose Island who told me: “People treat us pretty much the same, though there’s is always one guy who makes a comment.” He then said: “I was walking though the hall earlier and I heard someone say ‘Hey Goose Island, you shouldn’t be here.’ I turned around to talk to him and he was gone. But by in large people understand, it isn’t that bad. Most people think we make good beer, and that is what’s important. We have our own thing, and though we are owned, we still do what we do.”

As acquired craft breweries transitioned, their production numbers dropped out of the sales and growth statistics of craft beer, which made things look less rosy for the industry. As of the end of 2018, AB Inbev had acquired enough craft breweries to chart at the 5th largest craft brewer – if all of their “crafty” brands were added together.

10 Barrel  Brewing, a well respected independent from Oregon was acquired by InBev in 2014, when the discomfort over acquisitions and “sell outs” was getting pretty high. At the CBC I met Ian from 10 Barrel at a meet and greet at a hop producer, and he was happy to talk about what appeared to be a double standard. “We are still people, you know? We are still the same brewers, we still share hops with each other..”

Follow the Craft Brewing Crowd at the CBC, but why isn’t everyone welcome?

He went on to say that he still gets a lot of crap, mostly from people who don’t know him or the history of his brewery at all. “I think we got some respect for showing up at these BA events, but it can be hard sometime. I was glad to hear that they weren’t as hostile at the conference opening this year.” Ian was referencing an earlier CBC opening diatribe against “crafty” acquired breweries which included the warning: “They are eating your lunch, taking the food off of your table”.

Then there was the announcement this month that Sam Adams (The Boston Beer Company) was purchasing Dogfish Head Brewing. This was one of the first high profile “mergers” of two of the originators of successful craft brewing. I found it strange that some people found it upsetting – depicting Sam Adams as a “big brewer” with yet another acquisition of a small well regarded brand.

What Will Change at DogFish?

It is preposterous to think that Sam Adams is going to absorb Dogfish or even eliminate their brand names. Sure, there are some hints that financial problems at both companies greased the wheels for the deal, but it’s certainly a sign of a maturing industry anyway. The “Eater” food and beverage blog titled their article on the deal “RIP Craft Beer”… and commented “If craft beer wasn’t already over, this latest news might be the nail in the coffin”. Really?

In Fortune’s article on May 10, they conclude with “There’s an emotional element at play when two craft founders realize the landscape has changed so drastically they need to make a bold move before being gulped up by that Big Beer boogeyman.”

It’s not a small group of friends creating craft beer together – it’s a big industry that is changing it’s business model – and going in many directions. It reminds me of something Bill Covaleski of Victory Brewing told me at a CBC in Denver back in 2014: “It’s like we are all in a race, we are all starting at the same place but running in different directions. Who will win and how will we know?” Ironically, just two years later Bill was explaining his merger with Southern Tier Brewing backed by a private equity firm.

Bill of Victory talking with Sam of Dogfish – back when it was only about making better beer

Maybe soon it won’t matter who owns you as long as you make good beer. As Forbes put in their article on the merger on May 10th “The craft beer business isn’t the gentle marketplace that it used to be. More than 7,000 breweries are now fighting it out for a share of drinkers’ refrigerators, while supermarket shelves abound with colorful labels and quirky flavors.”