Last year Americans bought more craft beer than they did Budweiser. In the 1970s there were only forty-four breweries in the United States, but now there are over three thousand. The market for “macro” lager is on the decline and the companies that make it are looking at craft beer as a way to turn profits around. What does this mean for the “soul” of the craft beer movement?
This past week Budweiser’s parent company Anheuser-Busch InBev purchased the Seattle based Elysian Brewing Company. This is the fourth craft brewer InBev has bought in the past few years, after Goose Island in Chicago, 10 Barrel Brewing in Oregon, and Blue Point Brewing in New York. It is clear that InBev has noticed that consumer taste is shifting away from mass produced domestic lager. Now they are looking to diversify the sources of their profits, and in return each of the once independent breweries gets a huge capital infusion and the production and distribution resources of one of the largest brewers in the world.
Elysian is a fast growing brewery with international distribution, including here in Japan. Last year though they started to run up against some hard limits. Demand was rising but there wasn’t enough capital available to finance a further increase in production. The owners knew they were going to need a large amount of investment to continue to grow their business. What they needed to figure out was where the money would come from. InBev’s offer changed everything.
As they talked over selling out to a huge company and rival, the founders faced an ethical dilemma. After all one of the founders, Dick Cantwell, is a very active voice in the craft brewing community. He even wrote the book on opening your own brewery. Now these men had to decide if they should take a step that many of their cohorts and customers would see as a betrayal. It could not have been easy.
There is a lot of concern about what effects this acquisition will have on the market. Craft brewing is a strange ecosystem, with a sense of cooperation and collaboration even as thousands of local brewers engage in intense competition. As InBev flexes their distribution muscle to grow Elysian’s market share, what will happen to the smaller local brewers who can’t compete on that scale?
Japan is also seeing the major players move into the craft market, with Kirin buying a stake in Yo-Ho Brewing. In fact, Japan’s major brewers are all looking to get involved in “craft” brewing. In addition to their Yo-Ho deal, Kirin is going to set up two small craft style breweries of their own. Sapporo is creating a new sub-company to brew craft beer this summer, and Asahi is going to sell its craft style seasonal beers four times a year.
On one hand all of this is great news for beer drinkers. Ideally all of these mergers and investments should mean a wider availability of better tasting beer. That is something I think we can all applaud. I do think though that there is an intrinsic distrust in huge corporations that is not entirely unearned. We all have stories of the stress that comes with dealing with huge business, be it customer service for a broken computer or just the simple act of flying. Beer aficionados are right to be concerned about the potential fate of craft breweries that have been subsumed by a larger entity. Though these feelings are certainly engendered by the anti-establishment ad copy of craft brewers themselves! Elysian themselves make Loser Pale Ale, with its tagline “corporate beer still sucks.” Even after the acquisition, they’ll keep selling it, irony intact.
Also filled with irony is a Budweiser commercial that aired during the Superbowl this past Sunday. The add celebrates Buds status as a macro beer “for drinking” and denigrates craft beer and all those boring beer geeks who like to “dissect” their beers. Beer geeks like me and the Mad Capper I suppose? To me the subtext of ad seems to be “Bud, for when you want to get REALLY DRUNK for REALLY CHEAP!” The best bit comes at the end, where they mock a fake “Pumpkin Peach Ale,” while the brewery that they just bought had a beer called Gourdgia On My Mind which is a Pecan Peach Pumpkin Ale.
I think that these sorts of buyouts and counter moves were inevitable. Craft beer has seen explosive growth over the past few years, and it was only a matter of time before the big entrenched conglomerates responded. I try to look on the bright side, but of course I worry. I have enjoyed the Elysian beers that I have tried here in Japan, like their Night Owl Pumpkin Ale, and I hope that they can maintain that quality. However I have noticed in the past that the more corporately minded a “craft” brewery is, the more boring their beer. Of course I would prefer a Kona, Sam Adams or even a Blue Moon to a Budweiser. But I would prefer a Baird, Oskar Blues, or Lagunitas even more. More than just a concern about quality is a concern about the market itself. Here in Japan the large brewers have a stranglehold on the distribution system and it is very difficult to walk into an establishment and have any choice about what beer to drink. The more brands that a giant like InBev has in their portfolio, the easier it is for them to get more space in bars and in stores and push out the competition. What we see here in Japan is their ideal world, and thats a bad place to be for beer lovers.
What do you think? Did Elysian sell their souls? Is selling out to a multinational conglomerate justified? Will you still buy Elysian beer? Let me know in the comments! If you are interested in further reading, check out this opinion piece here, or a good history of ABInBev here.