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The Impact of Big Beer on the Craft Brewing Industry in America

The Impact of Big Beer on the Craft Brewing Industry in America

Craft beer has become ubiquitous today and this type of exposure to the marketplace is inclining more and more people to branch out to try different styles of full-flavored beers.

For the beverage giants, sales are stagnant or declining, and they’ve countered with full-flavored beers of their own. These new beers differ drastically from their doldrum pale lagers that have ruled American palates since, well, always.

What has yet to be seen is the impact of these beers on the growing craft beer market and community.

But what is craft beer? Can the term be universally defined?

“While craft beer is many things to many different people, we at the Brewers Association do not define craft beer. We do define a craft brewer,” explains Julia Herz, the association’s Craft Beer Program Director.

According to the not-for-profit group, “An American craft brewer is defined as small and independent. Their annual production is 6 million barrels of beer or less and no more than 25 percent of the craft brewery is owned or controlled by an alcoholic beverage industry member who is not themselves a craft brewer.”

But Chris Topham, the long-time bartender behind the beer program at Eulogy Belgian Tavern, is not as concerned with the final amount as much as the final product.

“Whether it’s a scale of 100,000 barrels or 1,000 barrels,” he pauses, “it’s the product that matters. The liquid that comes out of it and the intent that goes into it.”

Goose Island’s brewmaster Brett Porter agrees.

“What defines craft beer is based on what’s inside the bottle,” he insists. “It’s not about the brand name—it’s about quality ingredients, a quality brewing process and quality brewmasters. All that matters is that the beer drinker enjoys the beer.”

Anheuser-Busch recently completed its purchase of 100% of Goose Island, meaning that what was once a small and independent Chicago operation is now part of a large, global brewing company. While still creating full-flavored and interesting beer, Goose Island no longer falls under the guidelines of a craft brewer.

Porter sees the move as a positive for craft beer.

“The partnership is a good thing for Goose Island and for the craft beer community. Anheuser-Busch is helping to bring Goose Island beers to more beer drinkers, which should delight beer fans of all stripes. Our fans can be confident that Goose Island brewers are still the ones leading the production of all Goose Island beers.”

The utilization of Anheuser-Busch’s distribution network and brewing knowledge is certainly a positive for Goose Island’s market reach and can help further educate people beyond American pale lagers, similar to what Blue Moon has done in recent years.

“People start a journey with beer,” says Jeff Brown, beer merchant for Tenth and Blake, the craft and import division of MillerCoors. “Beers like Blue Moon Belgian White and Leinenkugel’s Summer Shandy serve that introductory drinker but I don’t think that these drinkers stop there, I think it continues.”

Blue Moon is no stranger to craft beer debate. Many people find their relationship to MillerCoors—and their hesitance to mention that—misleading or dishonest.

Brown says they’re not trying to fool anyone.Screen Shot 2013-12-20 at 10.26.57 AM

“I think looking at a brewery like Blue Moon, we’re not trying to hide anything,” he says, “We have a relationship with MillerCoors and without that relationship, Blue Moon definitely wouldn’t be where it is today.”

Brown adds that MillerCoors was very patient with Blue Moon brewmaster Keith Villa’s vision throughout trying times when the beer was not-so-successful.

“It’s taken many, many years for Blue Moon to get where it is today—from Keith working the entire country; walking into bars and explaining to people about what this cloudy liquid actually is, because when we came out with Blue Moon Belgian White, people were not drinking cloudy beers,” he explains.  “So I don’t think that we’re trying to mislead people, I think Blue Moon is a crafty beer.”

Topham feels that it is misleading—but that all advertising is deceptive by nature.

“You can go down the cereal aisle and see Cinnamon Toast Crunch labeled as whole grain. That’s inferring that somehow Cinnamon Toast Crunch is good for your children.  It’s sugar coated bricks of grain.”

He feels that Blue Moon’s artfully-crafted campaigns are just that.

“They’re very conscious of not associating themselves with the Coors brand,” he says.

“Their commercials never mention it, they always show two or three brewers hand-crafting, scooping their hands in the fresh barley. The Blue Moon one is great—holding the glass up to the light. It’s amazing. It’s nonsense.”

Tim Roberts, head brewer at Yards Brewing Co., doesn’t see an issue with it.

“I don’t have a gripe with it,” he admits, “I understand why people are upset with it, but the consumers are going to find out and if they like the beer, they like the beer.”

Roberts also believes that smaller, local breweries are ultimately the ones to gain from advertising full-flavored beers.

“They’re certainly without question introducing people to the idea that there’s beer out there other than light lagers, and so people are trying them and I think that’s good.”

Over the past decade, the craft beer market showed an average growth of 9% and double-digit growth in many of those years, according to numbers provided by Herz.

2012 alone demonstrated an increase of 12% by volume and 15% by dollars.

That’s a lot of beer.

And remember, these numbers are based on the Brewers Association’s guidelines of what represents a craft brewer and do not include brands like Blue Moon or Shock Top, products she refers to as “domestic specialty brands.”

But are some consumers tricked into thinking that they are drinking something small-batch when they are drinking a full-flavored beer from one of the big guys?

The Brewers Association has released a position statement entitled, “Transparency in Labeling,” which calls for beers like Blue Moon to state their relationship to MillerCoors on their labels so that consumers can make informed decisions when purchasing beer.

“The gist of it is us at the Brewers Association, representing our members, feel the beer lover has a right to know when they’re purchasing an individual beer brand, if they’re supporting by that purchase a small and independent craft brewer or a large global brewing company,” Herz says, noting that of the 2,600 breweries in the U.S. producing beer, 98% are considered small & independent.

Several years ago, Roberts took a tour of Budweiser’s Newark facility.

“I think certainly they have the capability of making some of the best beer in the world,” he says.

During the tour, Roberts got to talk shop with their brewmaster and asked him why they don’t make some of the best beer in the world. The answer was simple.

“Budweiser people don’t drink that type of beer and people who do drink that type of beer don’t want to support Budweiser—and sort of thank God for that,” he chuckles, “It wouldn’t really sell even if it was far better than our beer.”

Topham agrees and suggests Budweiser’s inability to break into the craft beer market was paramount in their decision to acquire Goose Island.

“They’ve been trying for years to add another Budweiser product into their brand, whether it be Select or Platinum,” he says. “You go see the [Rolling] Stones and they play two or three [songs] from the new album and I’m like, ‘Get the hell out of here.’ It doesn’t work for them. Play the hits. All day long.”

He sees positives that could come from the move.

“What Budweiser does very well is consistency—whether you think it’s consistently bad or not—it’s 100% consistent wherever you go. Same freakin’ Budweiser.  So if they keep the same idea towards the Goose Island brands, you’re gonna get the same Honker’s Ale everywhere you go. The same 312.”

Roberts agrees that the quality is not what is in question, even though he rarely drinks them.

“It’s not the fact that Budweiser makes this beer that I don’t generally drink them, if I ever drink them, it’s that I’d rather support my friends and support people in my community,” he says. “I think we’ll probably continue on that path to being even more specifically supporting our local breweries.”

It is because of this trend that Roberts feels that the big beverage companies can’t really compete with the success and growth rate of smaller breweries.

“They’re not going to be able to get the support for the reasons we keep talking about —the local and small,” he says. “Everyone wants to root for the small guys and they can never be that.”

Nonetheless, he believes Goose Island can make great use of Budweiser’s years of experience, capital, and technical support.

“If they’re still making great beer and they’re still innovating, then why is that bad for the beer drinker?”

Porter couldn’t agree more.

“Since joining forces with Anheuser-Busch, nothing about our quality has changed. We still use the same high-quality ingredients, brewing processes and passionate, experienced brewers. The only thing that has changed is our ability to produce more high-quality beer.”

This ability was something that hindered the company a few years back. In 2011, Goose Island spent so much time brewing their year-round beers to keep up with demand that they didn’t even have time to experiment with some of their specialty beers.

“For Goose Island, new resources have allowed us to not only bring beers like 312, Honker’s Ale and IPA to more beer drinkers, but it has also let us focus our efforts on our barrel-aging program, where we create beers like Bourbon County Stout, Madame Rose, Juliet and Lolita; beers that I know craft lovers have been asking for,” says Porter. “If we had to focus only on brewing our more mainstream beers like 312, we wouldn’t have as many opportunities to create new and innovative beers.”

Their association with Budweiser’s portfolio has helped these beers enter new outlets and palates.

“The airport is a great example,” explains Topham. “You’ve got your Bud, Bud Light, then all of the sudden, you’ve got your Honker’s Ale. Or a person has an IPA for the first time, loves it, comes into my bar and says, ‘Hey, I’ve had the Goose Island IPA, what’s like that?’

But with this increased exposure comes new challenges. Herz sees potential issues with this type of reach.

“There are challenges and pitfalls to the competitive side of the market and large global brewers, meaning Belgian owned InBev and South African owned MillerCoors,” she warns. “They own the majority of the interest in the distribution side.”

So the positive impact of big beer on the craft industry is not without concern as we are reminded that in a capitalist marketplace, business can be very cutthroat.

“Access to market long-term is a challenge to small and independent brewers, as the large global brewing companies continue to diversify and put more flavorful beers into the marketplace,” explains Herz. “It’s only going to remain positive as long as access to the market for every brewery, large and small, remains equal.”

Other challenges also exist to the brewing community.

Earlier this year, Brewery Vivant sent a Cease & Desist letter to Ardmore’s Tired Hands Brewing Co. about their FarmHands saison.

The Michigan brewery owned a copyright to the name “Farm Hand,” and subsequently any similar uses.

But saisons, or farmhouse ales, were traditionally brewed and drank by…. farmhands.  So it’s not an original namesake sacred to Brewery Vivant and a simple Google search shows that they are not the only other brewery to have a beer in their portfolio using some combination of “farm” and “hand.”

Legal actions are not new to the craft beer industry as Anchor Brewing trademarked the term “steam beer” way back in 1981. That action gave rise to the term “California Common,” which is just another name for the same thing.

Ronnie James Dio claims that Gene Simmons, a shrewd businessman and rock legend, attempted to patent the term “OJ” in the 70s, in reference to a nickname for orange juice (not a Buffalo Bills running back). So is it far-fetched to think that someone would someday try and trademark India Pale Ale?

Due to the popularity of their 312 Ale, Goose Island applied for patents on at least fifteen area codes from around the United States, theoretically to prevent, let’s say, Yards from brewing a 215 Ale.

In 2004, Russian River & Avery Brewing Co. discovered they both brewed a beer called Salvation and decided that they should do something about it. The ensuing action was a blend of the two beers called “Collaboration Not Litigation Ale.” That seems like the best definition of craft beer yet.

 

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