06 Jan 2013 @ 11:27 PM 
 

Craft vs. Crafty – A Late Entry Into the Debate

 

This is a very late entry into this debate, and there’s a good reason why: I’ve been having a hard time articulating to myself just why I think the debate has been so… well.. wrong. I tried recording a podcast about it, but I was just a rambling mess (more so than usual) and so I felt like the best way to approach this was through writing.

To cover the backstory: Back on December 13th, a few high ranking members of the BA wrote an article in the St. Louis Dispatch titled Craft or crafty? Consumers deserve to know the truth in which the authors attempt to call attention to the problem of “faux craft” beer being made by the large international conglomerate breweries, namely Anheuser Busch-InBev (ABI) and MillerCoors, henceforth to be referred to this in this article as The Duopoly (because that’s what they are). It was timed to coincide with a press release by the Brewers Association titled The Beer Drinker’s Right to Know, which seemed to be a response to this insane interview on Forbes/CNN titled Big beer’s response to craft: If you can’t beat ‘em, join ‘em which contains some crazypants quotes from the Executive Chairman of SABMiller like

“There’s a huge debate in the craft world about us, all big brewers, because we’re like the enemy. We’re the other guys. They think we’re stealing their authenticity. What we say is, “Let the consumer decide.” If we’re authentic enough for the consumer, that’s authentic enough for anyone.”

and

“I don’t think the craft movement in its current guise will continue to grow indefinitely. I don’t think it can. It’s not economic. Too many people won’t make any money. Too many of them will go out of business. And I think it will become less fashionable. These things are fashion to some extent.”

Though if I had to guess, what the BA was really responding to is this:

“We have our own craft brands. We also look selectively to acquire, or form partnerships with, or cozy up to people who have incubated good businesses. It’s difficult for big companies to incubate small brands. That, at its heart, is the dilemma. To start a small brand in a credible, consistent, sticking-to-it kind of way is hard for big companies. That’s what small entrepreneurs do best.”

because that is, in reality, the heart of the matter. By the by, that article was actually a followup article to one that came out back in November titled Big Beer dresses up in craft brewers’ clothing, which nobody seemed to take issue with.

Unfortunately, the BA press release and article was taken as an attack and was received with vitriol by some of the country’s smaller brewers that happened to land on this list of Domestic Non-Craft Brewers. They pissed some people off and, frankly, I don’t blame them for being pissed. At least one of those brewers – D.G. Yuengling & Sons – was welcomed warmly during the keynote address at the Craft Brewers Conference a couple of years ago in a we’ve-expanded-our-definition-so-you-can-be-craft-now moment. Throwing them under the bus on this chart is.. well.. kinda crazy. Until this chart, I didn’t realize that the BA didn’t consider them craft anymore.

I won’t summarize the response that the BA received from August Schell. I think it sums up the sentiment that was expressed out and around the internet quite well. You can read it here: August Schell’s response to Craft vs. Crafty on Facebook

Now, here’s my thought on the whole thing:

Faux-craft can be a threat, but not – I think – in the way that this concerted press release and chart make it out to be. It’s not because consumers might be confused into thinking that some shit Shocktop Wheat IPA is craft. It’s because consumers might not have the chance to have a choice in the matter.

One of the biggest warning shots that craft has had fired across its bow in the past 30 years was the AB-InBev purchase of Goose Island. There are a million and one reactions to that purchase and most of them are ridiculous because they’re either about whether or not the beer is going to suck now or whether or not it should still be counted as craft.

I’ll tell you: No, the beer will not suck. No, it is not craft. Done. Happy now?

The problem, I think, is a far more complicated one than it appears on the surface. Here’s why the Goose Island purchase is a threat:

Because Goose Island is good beer with a good reputation that people like and have heard of.

Why is that a problem? Because AB-InBev has a program that it runs with its distributors whereupon you can become an “aligned distributor”. That means that you purposefully exclude products not from the AB-InBev catalog from your sales. In return, you receive excellent lines of credit, better pricing on your products, and all kinds of interesting incentives that give you a competitive advantage in the market. Here’s a quote from the Wholesaler Family 2011 Consolidation Guide (lifted from The Washington Monthly: Last Call):

We ask all wholesalers to use the guide’s self assessment tool to objectively consider their capabilities and goals. Wholesalers who aspire to be an Anchor Wholesaler can identify any gaps they have in these qualities and build a plan to address them. Some wholesalers might remain committed to their current market, but realize further acquisitions are not right for their business. Others might decide now is the best time to consider whether a sale is in their best interest.

There are many aspects of an aligned wholesaler, and an explicit focus on our portfolio of brands is paramount. Those who are aligned with us only acquire brands that compete in segments underserved by our current portfolio and that bring incremental sales, not brands that have a negative impact on the A-B portfolio.

In a nutshell: our brands are your priority.

Okay, fine, you say. So craft doesn’t sign on with a Bud distributor. Big deal. Except that the country doesn’t have very many distributors with the same kind of reach and network that the two big houses do. To not sign on with those distributors – in most markets – is to put yourself at a significant competitive disadvantage. Unfortunately, to sign on with those distributors – in most markets – seems to now put yourself at a significant competitive disadvantage. Because now, when a bar says, “Hey – my customers keep asking me for a Pale Ale – can I get one of those?” The Bud guys can say, “Sure – Goose Island Honkers Pale Ale coming right up.”

Not that they wouldn’t say that anyway, but now they have incentive to push it harder. It doesn’t seem like much. Alone, it’s not.

Education is key

Part 2 of the problem is that there is awful – and by awful, I mean fucking TERRIBLE – education about beer in the bar and restaurant market. Here’s the thing I find the most embarrassing in restaurants: when they’ve put time into crafting the most beautiful wine list in the world, and the beer they offer is Heineken or Amstel Light or something because that’s imported fancy beer. There is a really large emphasis on wine education in culinary institutes, but unless a chef has a personal preference for beer it is basically ignored. This goes doubly when it comes to management and server training. So, unless you’ve gone out of your way to hire a huge beer geek at your restaurant to run your beer list, an IPA is an IPA and Honkers or Shocktop Wheat IPA or Leinenkugel Big Gig is just as good as Pliny the Younger. I mean.. hey – is it cheap? Then, cool, get it.

That’s why faux-craft is a threat: not because craft drinkers might be somehow duped into thinking that some other beer is a craft beer, but because new craft drinkers might never get the chance to have anything else. It’s not an awareness problem, it’s a market share problem. Nobody doing purchasing at Wal-Mart is going to be a big enough beer nerd to call out a distributor on pushing a faux craft instead of a craft, so nobody who shops at Wal-Mart gets to see anything else. Not a big deal, right? Except that that’s the single largest retail outlet in the country.

(Alternate argument says, “But those people are learning about craft and might eventually move onto other brands,” which is legitimate. My argument to that says, “People are lazy and if they can buy a six pack with the rest of their groceries, they will. It takes education and affluence to go to a beer-only store.)

The BA has posted articles about the need for more education in bars and restaurants before, but it didn’t receive the same kind of attention that last press release did. I guess it’s easy to write off Garret Oliver as an elitist jerk, which might be one of the single wrongest sentences I’ve ever written. He’s right.

The Definition of Craft is Misguided and Outdated

Part 3 of the problem is the definition of craft. The basis of the definition is written around tax guidelines – or worse, proposed tax guidelines written in legislation that hasn’t passed yet. If you’re anywhere near the craft industry at all, you’ve seen this definition before:

Small: Annual production of 6 million barrels of beer or less. Beer production is attributed to a brewer according to the rules of alternating proprietorships. Flavored malt beverages are not considered beer for purposes of this definition.

Independent: Less than 25% of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member who is not themselves a craft brewer.

Traditional: A brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewers brands) or has at least 50% of its volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor.

This summary might better explain what a craft brewer is: Not The Duopoly.

In the grand scheme of things, the definition here isn’t that bad. Small and Independent I can get behind (except for the definition of 6 million barrels as small – that is complete bullshit), what makes the definition wonky here is “Traditional”. Everything about this definition is about taxes and business size and that Traditional part of the definition means that you’re making a quality call in the middle of the definition.

I’ve thought about this a lot, and it goes against what I’ve said for years, but here’s what I think should be the definition of a craft brewer: A brewery that isn’t publicly traded on the stock market.

Because when you put quality into the definition of what a craft brewery is, you run into another problem.

Craft beer does not mean “good beer”

Part 4 of the problem is that people are confused about what is craft beer and what is good beer.

Craft beer does not mean good beer. There’s a lot of shitty craft beer out there. Sorry to say. Just because you’re small doesn’t mean you know what the hell you’re doing. It doesn’t mean you know how to build a recipe or package without an infection. It just means you’re small. If you want to say small breweries are craft breweries, then cool – that’s a craft brewery. But if you start making quality calls in the definition then there are a lot of breweries that are going to need to turn in their “craft” badge.

So what does that mean? It means that Utica Club and Yuengling and August Schell and Genessee and all that light beer with corn in it is probably craft. You might not like it, but you don’t stay open for 150 years because your beer is shitty, so deal with it. It also means that Sam Adams (SAM) isn’t, nor is the Craft Brew Alliance (BREW) or Mendocino (MENB), Sackets Harber Brewing Company (HBWO), Big Rock (BRBMF) or, of course The Duopoly (BUD, TAP) or any of the other international conglomerate breweries.

So, if I can sum all of this up: Craft vs. crafty. Is it an issue?

Yes, but not in the way it’s made out to be. Faux-craft is a problem because the big breweries control an unreasonable share of the market (80+%!) and, thus, have a stranglehold on the distribution system, meaning that they can control the flow of product in many markets. If they can give the mid-level suppliers – who are often poorly educated about the product they’re buying – an easy alternative to a higher priced product, regardless of how “cool” local is, they’ll control the market share and, thus, put small breweries out of business.

The BA’s position statement was, by all means, appropriate (somebody has to be a watchdog for the craft industry and call out the big guys, because craft brewers are so stupidly apologetic about The Duopoly). But, it is clouded by the fact that their own self-made definition of what craft is has a (recent!) history of changing to suit their priorities and contains a basically unenforceable criteria – quality – that they insist on enforcing based, it would appear to most outsiders, on beer color.

Drinkers are confused about what to do with this position statement because they’re being told that beer that they consider “good” (Goose Island, Ommegang, Magic Hat, Pyramid, Red Hook, Leinenkugel, etc.) is apparently “bad” because they falsely associate “craft” with “good”. In reality, those breweries are NOT craft, based on taxation definitions alone and it is not – and should not be – a measure of how good their beer is, merely whether or not they can join the Brewers Association.

Final word. Support your local brewery. If the big guys get their way, your local brewery will go away and the BA or anybody will be powerless to stop it because so many craft drinkers can’t be bothered to draw a line in the sand. The number of conversations that I have with craft beer drinkers that have an element of, “Yeah, but a Miller High Life on a hot day is awesome!” is astounding. No it’s not. It’s gross, just like it is on any other day. It’s not a good beer. (Oh, the apologetic craft brewer in me says, “But it’s a well made beer!” Sure. Your McDonalds hamburger is a well-made hamburger but it’s still a shitty goddamned hamburger.) You know what’s good on a hot day? A wit. A hefeweissen. A craft pilsner. A foreign extra stout. A really crisp IPA. I can keep going FOR HOURS about what beer is good on a hot day instead of a Miller High Life, and I will no longer compromise.

And you shouldn’t either. Here’s why you shouldn’t support faux-craft – and that includes everything from Blue Moon and Shock Top to (yes, I’m deeply sorry to say this) Goose Island and all the others: Because you’re feeding the machine that is working to remove choice from your life. The Duopoly is a consolidation machine that will, if given the chance, wipe out all competition possible.

Don’t let it.

Additional reading/listening just for fun:

The Street: 10 Craft Beers That Aren’t

Beer Advocate Thread: Craft vs. Crafty

Another definition of, well, not ‘craft’ beer

WUNC: The State of Things – Brewing Beer Battle

Last Call: Industry giants are threatening to swallow up America’s carefully regulated alcohol industry, and remake America in the image of booze-soaked Britain.

The Plot to Destroy America’s Beer

Random Thoughts from Littleton (about the Wholesaler Family 2011 Consolidation Guide)

 

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