So much talk about the Big Beer Deal! As well there should be, it being, after all, a Rather Big Deal.
What’s gonna happen? Is this bad for “consumers”? Will this hurt “craft” beer? Etc.
None of us, of course, can see the future (alas). Nor are any of us privy to chit-chat among the powers-that-be at AB InBev. But none of that prevents me, who’ve never minded making a fool of myself in public, from taking a stab at prediction. And asking a question. Or two.
First a recap.
In 2005, Anheuser-Busch created a Craft division (or unit; I’ve no clue about the correct corporate terminology. Craft’s CEO is Andy Goeler. He’s an old Anheuser-Busch hand, a marketing guy. He once headed marketing for Bud Light, and later worked to put Shock Top into the market.
In 2008, Anheuser-Busch was acquired by a global beer behemoth named InBev.
In 2014, the Anheuser-Busch division of Anheuser-Busch InBev created an internal “division” dubbed the “Craft and High End Team.” It’s headed by one Felipe Szpigel, hauled up north from Brazil (from which comes InBev) to oversee U.S. craft. According to Szpigel, his job is to generate sales (demand) by “elevat[ing] the beer category. To get beer into places that you would expect only liquor and wine to be before.” This is a separate “division,” but it operates, in Szpigel’s words, as a start-up.
And, of course, in recent weeks, ABInBev announced it was purchasing global beer giant SABMiller. (It’s unclear to me if that has anything to do with anything other than it’s become a flash point for pondering beer’s American future.)
So if that’s all straight in your mind, here’s my prediction: Sometime in the next two years (because it’ll take at least a year for the ABIB/SAB deal to finalize), the new company (ABIBSABMiller, aka, I gather, NewCo.) will combine Craft and the Craft and High End Team into a single entity, and spin that off , using whatever legal, contractual mechanisms that enables one company to become parent of another. NewCo. will be the parent company, just as, for example, Stella Artois is owned by ABI, but functions as a separate company.
For the sake of simplicity (please!), let’s call my imagined new entity Real Beer, Inc., or RBI. It’ll operate in North America. Real Beer will sell many brands of beer: Ten Barrel. Elysian. Goose Island. Golden Road. Blue Point. Whatever else it snaps up. And of course whatever new brands it creates via either its Craft and High End Team or its Craft division. (Yes, I agree. SO confusing.)
Ponder, if you will, the possible ramifications. RBI could buy up, say, brewpub chains like Granite City or Rock Bottom, and expand them. The result would be an Appleby’s of “craft” beer. (Except, as I’ll explain below, that the beer won’t technically be “craft” beer.)
For that matter, new brewpub chains: Imagine a Goose Island brewpub in every airport and suburb. For that matter, hundreds of Elysian Fields Pubs scattered all over the U. S., complete with seasonal beers, burgers, growlers, and “funky” decor focused on black-and-white photos of old-timey Seattle, where Elysian was born. (Or, if they’re really creative, a grunge ambiance: photos of long-ago rock ’n roll groups or bearded brewers or Pike’s Place Market. Something like that.)
Or an entirely new chain with an appropriately hip name and ambiance. (I’m too unhip to come up with a name. Please not Fuddruckers or something like that. How about . . . Green Fields? Barley and Burgers? Village Pubs, Inc.? I dunno. I’ll let the marketing folks figure out that one.)
But it won’t be just brewpub chains. RBI is a grocery chain’s dream come true. None of this futzing around with shitty distributors or small orders. RBI will arrive in town fully equipped with truck drivers, marketing materials, and, well, clout. And since the vast majority of grocery stores are chains, it’ll be that much easier for said chains to get more “craft” beer into shoppers’ hands. It may not be local beer; it won’t be “independent.” Well, not exactly. But . . . it also won’t be Budweiser or Bud Light.
And at that point, at last, Big Beer will pose a serious threat to many of the thousands of brewers who have cast their fate with the Brewers Association, the thousands otherwise known as “craft” brewers.
As of this writing (November 2015), the BA defines a craft brewer as “small, independent and traditional.” By which it means:
Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales). Beer production is attributed to the rules of alternating proprietorships.
Less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member that is not itself a craft brewer.
A brewer that has a majority of its total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation. Flavored malt beverages (FMBs) are not considered beers.
[NOTE: The 6 million number reflects the current output of the BA’s largest member, Boston Beer Co., which makes Sam Adams. If BBC expands, so, too, the barrel limitation will shift accordingly.]
Real Beer, Inc. will easily meet two of the three components of the BA’s definition: Small and traditional. It’s the third requirement — independence — that Real Beer, Inc. won’t be able to accommodate. “Independence” will be the one, the only factor that will differentiate “real” craft beer from non-real craft beer. The BA’s fortunes and future will hang on that one slender thread.
And that’s where things will get interesting. Because the BA and ABIWhatever and all the rest of us will finally learn what we’ve all been dying to know: All things other than ownership being equal, how much will consumers care whether the beer they’re drinking is independent?
Or, put another way: Can the Brewers Association survive on “independence” alone? Will consumers, that vast, amorphous collection of consumers-humans who make the craft industry possible, be willing to factor ownership into their every beer purchase? Not local, mind you. Not organic. All that will matter is . . . ownership. Will consumers care? Will they care enough to keep “craft beer” afloat?
For that matter, will the astonishing entrepreneurial energy that has driven the craft industry for thirty-plus years finally evaporate? Will more than one would-be brewer look at the new landscape, eye the Barley and Beans chain brewpub down the street, and say “Aw, fuck it. I’ve got a different business idea I’ll pursue.”?
Beats me. I can predict a plausible structural future. A cultural one, I cannot.