Are Macrobreweries The Evil That Craft Beer Aficionados Fear?

Among almost every craft beer drinker, the mere mention of Anheuser-Busch InBev or SABMillerCoors will bring an immediate snort of derision. Take this post by beerpulse.com and that pretty much sums up the feeling of most craft beer drinkers. Admittedly, I too had this type of visceral knee-jerk reaction when I originally read that AB-InBev was acquiring Goose Island, but my opinion is evolving.

There are plenty of reasons to dislike a lot about the macrobreweries’ business practices. One can easily go to Netflix and fire up Beer Wars and feel a sense of righteous indignation. I am no fan of the three tier distribution system and the overt influence that AB-InBev has on distribution due to the near monopoly it has on the network within the United States. However, those that follow the craft beer segment seem to either willfully ignore or are blissfully ignorant that some of the larger craft breweries exert similar influence to get their product to market.

I can hear the counter arguments now: “What about Jim Koch giving hops to craft breweries when there was a hop shortage?” and “Harpoon helped out The Alchemist during a flood”.

Sure, those things happened, but make no mistake, that era is over.

I had a candid conversation with the owner of a prominent craft brewery in the DelMarVa region and he all but declared the era of collegial affiliation dead. While we all love that new breweries are popping up all over the country, that means the finite shelf space available in any liquor store is growing increasingly smaller as is the availability of open taps in pubs. Those with the power (and money) will do everything to maintain relevance.

We all know the extreme efforts that the big boys will take to ensure prominent shelf space, but the larger craft brewers are increasingly doing the same thing. Go to any airport in the country and the bar will have a couple of the macros and at least one Samuel Adams beer on tap. Boston Beer Company has taken painstaking efforts to ensure that everywhere the big players are, they are right next to them. What amazes me is that Boston Beer Company seems to get a free pass utilizing similar tactics to AB-InBev and the other big players. Hell, the designation of what a craft brewer was changed to six million barrels of beer produced annually just so Boston Beer Company could stay in the club.

Locally, this is happening on a lesser, but similar scale. On the East Coast, Dogfish Head will exert influence to do everything from ensuring prime shelf space to an entire tap-takeover at prominent craft beer bars. In essence, they are forcing out the smaller craft brewers the same way that the macro-breweries did to the craft segment a decade ago. Again, these larger craft brewers get a free pass from the community. How do we reconcile that cognitive dissonance? I’m not really sure, but I think a good hard look at the benefits of larger players in the space may a good place to start.

The impetus to this blog started the other night at a small local pub that happened upon a keg of Goose Island’s 2013 Bourbon County Stout. Unsurprisingly, I joined a buddy to enjoy a glass. As always, the Bourbon County Stout was outstanding and this started the conversation. Say what you will about adjunct lager and macrobrewery beer, it is if nothing, but consistent. When you open a Budweiser, Heineken, or a Miller you know it is going to be exactly like every one you had before and every one you will have after that. Any brewer worth their salt will tell you just how hard that is to achieve on a small scale let alone the gigantic proportion that the largest breweries create. Even the larger and more established microbreweries have quality control issues. The best example is when Dogfish Head had to dump an entire run of their 120 Minute IPA.

What if the best of both worlds collide? What if the flavor, innovation, and quality of the best microbreweries are combined with the consistency, economies of scale, and distribution of the biggest players on the planet? I don’t think this is an unreasonable thought. The biggest breweries are hemorrhaging market share. In contrast, the craft beer market grew 17% by dollars in 2012 to capture 10.2% of the market by the same metric. Don’t think this has gone unnoticed. A quick look at the Blue Moon craft beer commercials with absolutely no mention of the parent company is a perfect indicator of the depth of understanding the large players have.

They have to adapt or die. It won’t be a swift death blow, but it will be a death of a thousand cuts. The acquisition of microbreweries like Kona and Goose Island show the long term vision of players like AB-InBev. However, the margin for error is slim. Already, Kona quality is not the same as it has been prior to the acquisition. If that becomes the standard marker for acquired breweries, the patience of the craft beer drinker will be even less for the big breweries (if that is even possible) than it already is. However, if the quality is consistent and excellent products that were once unavailable in certain regions – like the aforementioned Bourbon County Stout on the East Coast –  become accessible, I don’t see how this isn’t a universal win.

I am by no means sold on the macros foray into the craft beer space, but that glass of Bourbon County Stout gave me hope that the entry of the macros into the craft beer segment will not mean the death of a movement, but instead the potential for enhancement.

Saúde!

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~ by its12oclocksomewhere on December 30, 2013.

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