Why Independence Matters in Craft Beer

The opening remarks at the 2017 Craft Beer Conference were strong and foreboding with the message being that big beer is here to take over craft beer and independent brewers cannot let that happen. Earlier this week, Bob Pease, CEO of the Brewers Association, spoke at the first general session of the CBC with both passion and concern. “We are pioneers and disruptors of the old order and not surprisingly, the old order has countered with an assault on craft brewers’ values with a deliberate effort to erase a differentiation that exists between small and independent craft brewers and global forces.”

Independence Matters

This is both a national beer issue and one that hits close to home here in San Diego.  With the 2015 sale of beloved San Diego craft brewery, Ballast Point, to beverage giant, Constellation, the less-beloved-but-still-stings Saint Archer being bought by MillerCoors as well as the soon-to-be-opened San Diego 10 Barrel Brewing brewpub, owned by AB InBev, the SD craft beer community has a lot to say on the topic.

We started writing about the 10 Barrel topic last February with, The Issue With 10 Barrel Brewing in the East Village. The crux of that blog piece was this, “It’s not that we don’t want another brewpub in San Diego, it’s that we don’t want a brewpub owned by a company which reportedly plays dirty and actively engages in actions that hurt the craft beer market as a whole.”

This sentiment still stands, and recently, Brandon Hernandez, from Societe Brewing Co, wrote a great piece about the topic entitled, 10 Barrel Is Not Local Beer. The piece is absolutely worth the read, and Brandon echoes how many San Diego craft brewers feel about the topic. There is little doubt, though, that 10 Barrel will do well here in San Diego. Even if the local craft beer drinkers don’t patronize the establishment, there will be plenty of tourists, out-of-towners, and people who just don’t care, to fill 10 Barrel’s roof-top deck in the East Village. This brings us back to Pease’s point about differentiation, “For the sake of beer, we need to tell our story and keep the steering wheel for beer in the hands of the small and independent brewers,” he implored. “We have a responsibility to tell our story.” How are people going to know which breweries are independent and which ones are owned by global conglomerates? One way is by independent breweries telling their stories.

Big Beer Responds

Not only do we need to tell our story, but we also need to speak up about the real issues that the craft beer industry is facing due to pressure from Big Beer. Recently, Jim Koch, the founder and CEO of Sam Adams (Boston Beer Co.), published an op-ed piece in the NY times echoing the CBA President’s sentiments, titled “Is It Last Call for Craft Beer?”

While usually craft beer railing against Big Beer probably doesn’t even make it on their radar, Koch’s piece elicited responses from both MillerCoors and AB InBev. MillerCoors responded with a blog piece that takes a bunch of personal shots at Jim Koch while also patting themselves on the back for “leading the charge” in bringing excitement into the beer industry when they “introduced Blue Moon Belgian White, now the country’s largest craft brand, more than 20 years ago.” Um. Thanks?

The writer says Koch’s fears are unfounded because craft beer growth has been so great over the last 15 years. Let’s be clear, craft beer has seen impressive growth, but that’s in spite of Big Beer, not because of it. Furthermore, it has only been the last few years that the big boys have seen their numbers drop enough to take craft beer seriously and then they decided to take action by buying up craft breweries and distributors alike.

As reported by Fortune, this was AB InBev’s statement on Koch’s op-ed piece, “We understand Boston Beer sales are hurting right now and it is easy to blame the bigger brewers. But with 5,300 breweries out there, the numbers don’t stack up, and we only see positive, exciting things ahead for our industry and for craft in particular, certainly not its demise!”

What an uplifting message from AB InBev. A message that they can get behind because they have been buying up craft breweries and beer distributors at an alarming rate over the last few years. The better that craft beer does, the easier it is to make money off of their “crafty” brands. Not only that, but throwing numbers around like 5,300 breweries sounds good, but when AB InBev still controls more than 45% of the U.S. beer market, and alongside MillerCoors, Constellation and Heineken they control 81% of the U.S. market, that number doesn’t mean as much. Furthermore, with the acquisition of Karbach Brewery this past winter, Ab InBev now owns 9 craft beer brands and owns and operates at least 18 wholesalers across the country.

What’s the Big Deal?

Here in CA, it’s hard enough but at least we can self-distribute. Sure we have to compete with Budweiser’s pay to play tactics (which they were just fined $400,000 for by the ABC), but what about states where breweries have to use a distributor and AB and MillerCoors happen to own both distributors in their small state?

This is what’s most concerning; Big Beer buys up wholesalers that will then only sell their products and they also have a full stable of craft beer available to sell to bars and restaurants at lower prices than their independent craft beer competitors. This makes it incredibly hard for independent breweries to compete in the marketplace. It’s not good for the craft beer industry as a whole when it comes to offering beer choice to consumers.

This is why independence matters and why it’s important for craft brewers to tell their story. For most independent brewers, it’s the story of blood, sweat, and beer. The story of friends with a dream and pouring their heart and soul into every brew. It’s about the money spent on beer going right back into the community and helping a small business thrive. It’s about quality, craft beer and the renegades that brew it. Sure, Big Beer has the money and with strategic buy-outs, now has decent craft beer, but independent brewers have authenticity and roots in their communities and in most cases, a clear conscience when it comes to who ultimately benefits from consumers buying their beer.

 

 

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