I would be failing my professional obligations if I failed to note this week’s Big Beer News: SABMiller has agreed to sell itself to Anheuser-Busch InBev. Said merger, if approved, will make ABIBSAB The Biggest Beer Maker On The Planet! (Although I prefer SABABIB. More fun to pronounce than ABIBSAB.)
First four caveats:
1. Only time will tell, obviously, if the proposed deal will go through. Antitrust and all that. (Although, if history is any guide, this is a done deal. If only because the Justice Department is about to endure that periodic episode of turmoil, during which not much gets done, known as the presidential election. Thanks to that and the current mess in Congress, neither god nor you nor I have the faintest notion of how/when this deal will go down. But down it will go.) (“Down” in this case meaning “deal accomplished.)
2. I’m no expert. I have zero insight into the workings of ABIB or SAB. They are, after all, global behemoths and I am but a mere person.
3. I’m also not an expert in the arcana of the three-tier system and the dynamics and politics of beer wholesaling/distribution. Which is where, here in the U. S., the merger will have the most impact. (In the U.S., middlemen are responsible for moving beer from brewer to retailer; as you might imagine, those distributors are powerful players.)
4. The global market is driving this deal. Not the North American/US/craft beer market. The global market. But this post is not about that. Because: I’m not an expert in global beer markets.
Note: What follows is relatively link-free because there are multiple sites that can provide more information about any one point. And if someone wants to create a site devoted to summarizing, accurately, all beer news/trends/events, etc., why, that would be swell.
Assuming you’re still interested, here’s my take, narrow and parochial though it is:
The biggest loser in this deal is likely to be . . . The Brewers Association. Not “craft beer.” The BA.
Please note: I’m not picking on, blaming, attacking, or otherwise challenging the Brewers Association. Indeed, I’ve nothing but good feelings for it and the people who run it. My only point here is that the BA has inadvertently mopped itself into a corner and surrounded itself with both a rock and a hard place.
For thirty-odd years, the BA, as the voice and body (if you will) of “craft brewing,” has touted “craft” beer as an alternative to “mass produced” beer (aka factory beer, yellow beer, factory swill, etc.). Drink craft beer, and you’re drinking beer made with love, art, talent, creativity, and only four ingredients. Etc.
Historically, that stance has been attached to The Narrative: Us versus Them, Us being noble, beer-making Davids and Davidettes; “them” being Big Brewers (e.g. Anheuser-Busch, Anheuser-Busch InBev, SABMiller. Etc.)
Several years ago, the BA wove another layer into the narrative: Thanks to craft beer, the “average American” lives within ten miles of a brewery. Drink local beer! (As long as said “local” beer is “craft” and thus pure, noble, etc., and not Yellow Swill from the AB brew factory on the other side of town.)
For thirty-plus years, the BA has written and directed that narrative, and enjoyed enormous success thanks to it. The narrative appealed to baby boomers and All Those People After Them (aka Xs and Ys), and is now being gulped by the “Millennials,” currently the nation’s largest beer-drinking demographic and the first generation to grow up not just digital but craft.
Moreover, the “drink local” plot line dovetailed to perfection with the farmers’ markets and community gardens the flourish thanks to the early-ought, Pollanesque, food-based environmental project, inspiring bearded brewers to brew beer near bike trails. Or in “blighted” industrial neighborhoods. Or, score!, both. Bare minimum, the environmental angle amped craft beer’s cool factor with all those former kids whose K-12 years included enormous doses of environmental political correctness.
In any case, the narrative helped build and bind the industry.
Alas, now the narrative is coming undone, a victim of its own success, and may be too weak to survive an ABIB/SABMiller merger.
Reason one is obvious: If/when Big Breweries ever become attractive to craft breweries, the dividing line between Us and Them will blur and a chunk of the narrative will fall apart and . . .
Oh. Wait. That’s already happening.
In the past year, and on what seemed a weekly basis, craft brewers rejected the BA’s narrative in favor of the one written by Big Beer: “Join our winning team and enjoy well-oiled access to huge numbers of consumers.” (Because let us not forget the fundamental point: Thanks to its distributor networks, Big Beer offers Small Beer the most well-oiled, most lucrative, most direct path to the largest number of consumers.)
Put another way, having spent thirty-plus years teaching entrepreneurs how to start and succeed as a brewer, the Brewers Association now must watch as many of its own decamp craft in favor of deep-pocketed investors with better access to distribution. There’s no way that can be pleasant for the folks in Boulder.
Reason two is more problematic (and will take longer to play out).
The BA’s narrative relies heavily on a specific model of consumption: Drink local. The BA is (rightly) proud of the fact that, thanks to its efforts, fresh, local beer is probably right close at hand. Right there! In your neighborhood! Nice, right?
Not so much. Historically, but especially since the repeal of Prohibition, Americans have consumed their alcohol “off premises.” We Americans, we’re not big on public culture. We’re way too fond of our own private castles. We buy beer at the store and drink it at home. Or, to phrase it as a negative, Americans drink at brewpubs and tap rooms — but not in numbers sufficient to sustain four thousand breweries and brewpubs. So who cares if everyone lives within twenty-five miles of a brewery? What matters is what’s available at the store.
And guess who has the biggest presence in those retail outlets? Why, yes, that would be Big Beer, not craft beer. Indeed, the thirty-odd-year history of craft beer is the story of the struggle for access to distributors (those middle men who wholesale and deliver beer from brewer to outlet) and thus shelf space. It’s no coincidence that one-time craft brewers who "sell out" to Big Boys cite distribution as their reason. They want access to consumers; the Big Boys can provide it.
So shelf space is now and always has been a major concern for thousands of craft brewers. In the short term, the proposed merger of the two behemoth shelf hogs will throw the entire shelf-space/distributer/three tier arrangement into chaos. In the era of ABIBSAB, the BA and its “independent” brewers will struggle for shelve space as never before.
Oh, who am I kidding? Many independent brewers aren’t gonna have shelf space. Period. So here's hoping their business model is, ya know, based on something other than shelves.
As it turns out, however, many “craft” brewers don’t care about shelf space. Their business is on-site only. Some operate brewpubs and taprooms only, with growlers to go. Some operate breweries in order to subsidize other agricultural operations. They’re only open on weekends. Shelf space? They don’t care.
Mind you, these small fry are not the kinds building a business with the intention of selling it to ABIBSAB for millions down the road. They’re only interested in . . . oh. Hmmm. Uh . . . I have no idea what their intentions are down the road. And neither does anyone else.
And that brings us back to the Brewers Association. Will the BA’s narrative be enough to sustain it in the face of, well, not chaos — in the face of entirely too many things happening to it at once?
Can it still meet the needs of an increasingly divergent membership, which, to recap, now includes everything from entrepreneurs angling for a proposal from ABIBSABHeinekenWhoKnowsWhoElse to eensy-weensy, “lifestyle” operations to its mainstays — outfits like New Belgium and Boston Beer Co., Dogfish and Boulevard, Stone and Sierra Nevada?
Should the BA continue to support itself, in part, by teaching people how to succeed in business in order to depart for better-oiled pastures? How meaningful will the “local” beer thing be if, post-merger, “local” translates into “no access to shelves”? What can the BA do once the Big Craft Cats have to battle each other for the few inches available to them?
(Oh, oh! I know! The BA’s annual Craft Brewers Conference can include seminars in how to conduct internecine warfare!) (Kidding, people. Kidding.) (Sort of.)
The negative possibilities are endless. And the onset of the Age of ABIBSAB could prove to be the BA’s undoing. Not craft beer, mind you. We're gonna have "craft" beer for decades to come. The BA, however, may not survive.
At least not in its current form. My historian’s lens can easily imagine a scenario in which the BA, faced with dwindling member numbers (at present, about two-thirds of “craft” breweries belong to the BA) on one hand and/or outright rebellion from members more interested in better distribution and winning teams than in maintaining allegiance to all things four-ingredient, pure, and independent on the other, splits in two.
Or . . . merges with the Beer Institute, the lobby/trade group that represent “big” brewers. (It’s worth noting that the BA itself was created in 2005 during the merger of the Association of Brewers and the Brewers’ Association of America.)
But in the Age of ABIBSAB, I see no scenario in which the BA can continue business as usual.
Which is a loooong-winded way of saying that today’s merger may be tomorrow’s historically significant moment.