It’s amazing just how complex my feelings are about the dumbest things. Not Your Father’s Root Beer is inexplicable to me. Partially because I just really dislike root beer and I just can’t imagine drinking a whole bottle of this, and partially because of the witchcraft through which it hath been wrought.
Here, I’ll save you the trouble of clicking on those links (but please do if you have the time).
1. Incredibly high ratings on RateBeer, alone, but especially within style.
2. Fortune, Time, Bloomberg, and Consumerist posts about how alcoholic root beer is “The Beer of the Year” and the best thing EVAR.
3. Boston Globe and Philly Inquirer pieces revealing that Small Town Brewery isn’t a Small Town Brewery, but a subsidiary of Phusion brands, the fine folks who brought you Four Loko and that it’s probably going to be acquired by Pabst.
Before I go into my problems on this, let me just get this off of my chest: Not Your Father’s Root Beer is no more beer than actual root beer is. It’s a Flavored Malt Beverage, an Alcopop. It’s made in a factory that makes Mike’s Hard Lemonade and Smirnoff Ice among other things. And I’m not telling you not to like it. I’m telling you to stop calling it a craft beer. It’s no more a craft beer than Twisted Tea or Bacardi Breezer, or Hooch, or, you know, root beer.
Y’all know that root beer isn’t actually beer, right? The guy who first commercialized root beer was active in the temperance movement and wanted to make Hires “Root Tea”. He called it “beer” to appeal to the working classes and to stop them from drinking alcohol. It’s just marketing. It’s always been a sham.
I don’t even doubt that Small Town Brewery is what it purports to be or that it doesn’t make an array small of craft beers. For all I know, the original location in Wauconda still does on its 3 bbl system. But that product that you see in stacks on the floor at WalMart? That is being released en masse in 30+ states? Not on your freakin’ life. I hope that Tim Kovac is getting enough in royalties and residuals on this to at least finally quit his day job, because it’s a masterful turn that I am, frankly, quite jealous of.
But why not admit it? Why not take pride in it?
The chicanery that Phusion and phriends have used to convince drinkers that NYFRB is a craft beer is, frankly, incredible and awe inspiring, and for a little while I was puzzled by it. Why be ashamed of what you are? Mike’s Hard Lemonade doesn’t try to be something it isn’t. Why is NYFRB doing this? But I think I get it: Earn the trust of the craft beer nerds and a lot of people who aren’t sure about what to think fall into place. Look at the comments on this page. It’s described as “liquid gold”, “a small taste of heaven”, “nectar of the gods”. It boggles the mind. It’s fucking root beer. But when you’ve got the snobs in a tizzy everybody else leans over and takes a look.
What this is really teaching us is 1) The majority of craft beer nerds could give two shits about who makes their beer, or even, apparently, if it’s beer. 2) Most people think that “craft beer” means “not light lager” (thank you Stone). 3) People love soda.
And now let me tell you a story about grocery stores and what products like NYFRB mean to small breweries.
Grocery stores are funny places for beer.
The next time you’re in a grocery store, count the number of facings there are for just Bud Light. Notice that there are full cold boxes dedicated to Bud Light. They’ve got a 12 pack showing long-side and short-side in packaging so that it can fit a whole shelf. They’ve got 12 oz cans, 16 oz cans, 12 oz bottles, 12 oz long-neck bottles, single cans, single bottles, beer balls, party packs, drink your way out of a swimming pool kits, etc., etc. Then there’s a stack in the shape of a recliner and a television to celebrate the fact that football season starts in 2 months.
Just Bud Light. Now start looking at Budweiser, and Bud sub-brands. Lime-a-ritas, etc.
Now, who do you suppose puts all of those facings up? If your answer is “the grocery store” you’re wrong.
Grocery store beer coolers and shelves are decided roughly twice per year at a corporate level. Fortunately, both AB-InBev and MillerCoors pay the salaries of people who actually work for the grocery store corporate offices and specialize in building grocery store sets. There’s software for it. The contents of the shelves are decided down to the inch. Occasionally there’s a bit of manager’s discretion for local brands. A few chains have some local initiatives, but don’t think that the big guys are losing much space for that.
On an individual grocery store level? Those guys don’t stock the shelves, either. That’s done by distributors. When you see somebody walking through the grocery store aisles restocking beer, or fixing the way something is sitting on a shelf, take note of what they’re wearing. It’s probably a polo shirt from a local distributor. They are trying as hard as they can to get as many brands from their distributor on the shelf as possible because that’s how they get paid.
Why am I talking about grocery stores? Because the only real way to make money in beer is by selling a LOT of it. Margins are paper thin. Volume sales are where it’s at. And grocery store chains equal volume. There are 37,716 grocery stores in the US (or were at the end of 2014). If, by some miracle, you could sell only case of 12 oz bottles in each one of those once per month through a whole year, ignoring any other sales outlet, you’d be making 33,000 bbls of beer. That is roughly the size of the large regional craft brewery in your area. There are 90 breweries that size or larger in the U.S., out of 3500. Fewer than 2 per state.
Next, go find out how many actual craft brands your grocery store carries. I bet it’s fewer than 90 in most stores. Make sure you don’t count any of these brands or any of these brands or any of these brands or any of these brands. It’s a fun exercise.
Grocery stores, like beer reviewers on the internet, don’t really care who makes beer. They care about sales. They want to know that sku A sold faster than sku B. The next time shelves are edited, sku A gets more space, sku B gets less. That’s it. It is, yes, why Bud Light has so much space and won’t lose it. It’s also why small breweries have a hard time with shelf space: because they’re not instantly recognizable; people who aren’t sure about what they’re buying avoid them.
Finally, you’ll notice that there’s a limited amount of space for beer in grocery stores. It doesn’t really change. There are, however, a LOT more breweries, to the tune of 100% growth in the past five-ish years. Space is a premium. The largest challenges to a craft brewer today are shelf space and tap space. They are difficult and expensive to get and even more difficult to keep, because every day there is someone at your heels saying, “Hey, want to try this? It’s NEW. You should sell it.”
When something like NYFRB comes along, an alcopop disguised as a craft beer, a mass-market beverage disguised as a small time brewery, what I see is danger. Why? Because not only is it being bought by the people who don’t know and don’t care, it’s being bought by the people who DO care. Because the elaborate ruse that Phusion and Small Town Brewery have engaged in through their incredible (and expensive) PR firm is masterful and has fooled an enormous amount of people from drinkers to journalists. Craft beer stores that would normally never carry alcopops are buying it by the pallet – and why wouldn’t they? It’s like instant money.
But, make no mistake. Every time NYFRB or something like it comes into a store as a craft beer, something else goes out. And since people have no problem buying the ever living shit out of it, they’re guaranteeing that there’s one less spot for a small, local brewery to inhabit in the future.
So, sure. If it’s good, drink it. Who gives a shit, right? Get TRASHED. You’re an AMERICAN.
But don’t be fooled.
Know the choice that you’re making and what it means. And don’t call yourself a craft beer fan if you don’t care. Let the small breweries know who their fans and allies really are.
Yesterday, we announced over at Mystery Brewing Company that, as of September 1st, we’d no longer be offering refunds on growlers. Since this decision looks like it’s coming a little out of left field, and because I’ve always wanted this blog to be a little behind-the-scenes-ish for the brewing industry, I thought I’d take the time to lay out my reasoning behind why we’re doiing this.
Reason #1: Cleaning Growlers Sucks
It’s incredibly time-consuming and incredibly wasteful. To be fair, we don’t have a top-of-the-line growler cleaning machine, but that’s primarily because – as near as I can tell – one doesn’t exist. Here’s how we clean growlers right now:
THEN when we fill them we re-inspect them (to make sure nothing’s happened inside, or someone hasn’t missed something earlier in the process).
Cleaning growlers is incredibly time consuming. Through 2013, cleaning growlers has been almost a full-time job at Mystery. It’s our estimate that we spend up to 30 hours of employee time every week cleaning growlers on an average week. If you count the amount of money that goes toward cleaning chemicals, water, caps, tape, and growlers that we just plain have to throw away because people are disgusting, on top of employee time, then every time we get a growler back from the marketplace that we need to clean, our profit on that original fill has been completely wiped out. If we were to get that same growler back again (which we have no good way of tracking), we would lose money. Losing money is not a good way to run a business. So the decision is partly an economic one.
Could we cut corners? Sure. But then our growlers would be gross. That’s also not a good way to run a business. Particularly one that relies on repeat purchases.
Reason #2: Growler Returns are a Logistical Nightmare
Getting growlers back from stores isn’t efficient or easy, either. Rather than just making a delivery to a store, you are now requiring a driver to go through the exercise of collecting and transporting empty bottles. Among the issues here:
The crux of the issue here is that having a driver pick up empties adds a significant amount of time onto their route, and often adds an extra level of training and complexity, so it’s also inefficient and costly to the distributor.
Reason #3: Retail Growler Fills are now legal in NC
This summer, the North Carolina Legislature passed a law allowing retail growler fills in North Carolina (Session Law 2013-76). While the rules for this are not yet in place and it is not currently legal for retail establishments to fill growlers, it will be very soon. We anticipate that this will greatly reduce the amount of growler sales we make across the board.
Simply put: If a store can buy a keg from me and fill growlers with it, thereby making a much larger profit, why would they buy pre-filled growlers from me? Sure, some will, but many will not. Among the largest proponents of the retail growler law are Total Wine and Whole Foods, both of which have growler filling stations in other states, both of which are enormous potential customers for us when it comes to retail packaging. We’d rather sell them bottles than not sell them growlers. Or, better yet, sell them bottles and kegs so they can fill growlers themselves.
Reason #4: We’re Moving Into 22 oz. Bottles
And there it is: We’re moving into the bottle market. We’re interested in going into smaller packages that have a lower cost for us (growlers are crazy expensive), more portability, and lower cost in the marketplace. We’ve been told that in all cases in the local market, when a brewery has gone from offering growlers-only to growlers and bottles that their growler sales have dropped precipitously.
Reason #5: We Just Don’t Want To
We, the staff at the brewery, find growlers to be incredibly cumbersome and unpleasant.
Cleaning growlers is one of the grossest jobs we have. It’s full of old stale and rotten beer smells, mold, flies, and broken glass. We spend a lot of time with vinegary beer splashing on our clothes and ourselves, we spend hours wearing layers of protective gear as we clean them to keep chemicals off of us, or keep broken glass off of us. We spend hours scraping price tags and old stickers off of them. It’s just not nice. If we can make a more pleasant working environment while getting beer out to people in a better and more efficient way, we absolutely will.
Growlers have been an important part of Mystery’s growth. In our first year, growlers made up a significant amount of our income. They have been an important part of getting our brand into the state and into the consciousness of state’s beer geek population, but we feel that with the combination of process problems inherent in growlers alongside the future of the marketplace (as we see it), that our time with them as a packaging option in bottle shops and grocery stores is coming to a close.
We’re excited to get smaller and better packaging out and we think everyone else will be excited to see it, too.
Since Mystery Brewing Company‘s appearance on Crowd Rules in May and the introduction of our brand idea on a national scale, I’ve seen a fair amount of discussion online (and in my inbox) about our “no flagship brand” model with varying degrees of agreement or disagreement. I thought it might be a fine time to talk about what seasonal-only brewing means to us, how we do it, why we do it, and why I think that it’s the future of craft beer.
It’s easy: people love seasonal beers.
This idea didn’t just come fully formed into my head. Back when I attended my first Craft Brewer’s Conference, one slide during Paul Gatza’s State of the Industry presentation kept sticking in my head. I might get into a bit of trouble by pulling this slide out of an industry-only presentation, but here it is from 2013. It’s looked pretty much the same way for the past 4 or 5 years:
And, yes, IPA is coming up strong because IPA, but you’ll notice that the other big climber is “Variety.” These trends look the same year after year and they read to me like this:
People are no longer brand drinkers. They’re portfolio drinkers.
It’s always amusing to me that an industry that spends so much time trying to define itself as “not industrial lager” bases its primary business model on the industrial lager model, which is the flagship model: Make one beer, make it well, make it as cheaply as possible, use other brands to keep competitors off the shelf.
There’s two obvious reasons why this model has worked so well and why it’s been adopted by the craft industry.
But this isn’t your daddy’s beer industry any more and drinkers have moved on from the core brand model. A quick look at Rate Beer, or Beer Advocate, or Untappd – or even the fact that those sites exist – will show you. Very few craft fans buy one brand and drink that one brand. Drinking variety is a badge of honor, sometimes even literally.
A few years back, when I was just getting into the beer industry, I saw the results of a survey that showed that when people had a beer that they identified as their favorite – a brand that they were loyal to – they bought that beer, on average, once per month. The same survey showed that they consumed beer several times per week, and often 2 – 3 beers at a time. Some loyalty, huh?
(I really wish I could find that survey and link to it and/or see the results of those questions today.)
The young members of the drinking market – the kids just turning 21 years old – have something that their predecessors never had: vast variety. Any young drinker that walks into a beer store today is faced with not 10, not even 100, but thousands of varieties of beer. I can get 55 different pale ales at the store near my house. And that brings me to two different questions:
1) How could anybody choose just one of those without trying a ton of them?
2) With that much competition already in the market, why on earth should I make a pale ale?
If you’re a craft drinker, ask yourself these questions: When was the last time you weren’t interested in trying something new from a brewery you like? When was the last time you didn’t want to try something from a new brewery? When was the last time you bought the same beer more than a couple of times in a row?
See? It’s happening to you, too. Variety is king.
Based on that information, I decided to pursue the idea of seasonal-only brewing. There were a couple of different facets to the decision. One of them was to capitalize on the fact that people enjoy variety and enjoy seasonal beers. It’s what people buy the most, and so it seemed natural that they would also buy our seasonal beers. The other was to differentiate our brands, and not just make another golden, pale, amber, porter, stout, IPA lineup, but to actually fit into the niches that were open in an already-crowded beer market.
One of the main misconceptions about our model is that we’re just flying by the seat of our pants and have no idea what’s coming next. In reality, we have a set schedule that we brew by that is based on both style and season. It works like this:
We have four style categories that we brew in: Session, Hop Forward, Saison, and Stout.
Each season we make something seasonally appropriate within that category, and we repeat that beer each year. So, just like every other seasonal brand in the country, each beer comes out once/year, is consistent with how it tasted last year, and will be back again next year when it is again seasonally appropriate.
You can click into the graphic, but I’ll break down the styles for you here in text.
Hop Forward Line
On top of that, we also do more limited seasonals, one-offs, experimental, and barrel-aged brews. Since it seems weird to call a beer a seasonal at a seasonal-only brewery, we release them in a line we call our Novella Series. Some of them are truly one-and-done. Some of them we’ll make again. Some of them are candidates for future categories as we expand. Basically, these are where we’re trying our new recipes and styles. Now that we have an operating taproom, many of these go on tap there and there only, but we still like to be able to get special one-offs into the market in keg format.
There are, no doubt, many challenges to this model. I anticipated some of those challenges, and some of them caught me by surprise.
I, like most crazy founders of things that don’t really exist, thought that the brilliance of my idea would be self-evident and that people would immediately understand what the hell I was talking about. In reality, we opened the brewery to confusion about our model and it’s still one of the most significant challenges we face (which is at least one of the reasons I’m writing this article).
As it turns out, the most common question you’re asked as a new brewery is, “What’s your flagship?” When you have an answer that’s a paragraph and not a sentence, people aren’t excited to listen and that’s because – as I was surprised to find out – most of the people who are buying beer at bars and restaurants don’t really care about beer.
I will almost definitely catch some sort of flak for that, but it’s true and, what’s more, it will always be true. You can almost definitely say the same thing about wine, liquor, chocolate, hot dogs, or any other specialty product. Because the people who are most likely making these decisions are making a myriad of different decisions and purchases, and they’re just not excited by the nuances of the brewing industry, nor should they be. They want to make an easy decision about one small facet of their operation and then get along to the next crisis in their day. Plain and simple, it’s not their job to care about the difference between your business model and the next guy’s. In many cases, beer is a set-and-forget kind of purchase. They will buy one brand until sales start to dip and then they will buy a different brand. If you go into a bar or restaurant with a brand that will go away on its own (or will appear to), then it looks to them like you’re just giving them more work.
We’ve honed our elevator speech, we’ve made charts and graphics and flyers, and we’re continually working on more ways of getting information out to bars and restaurants on a regular basis. Still, our largest challenge is defining our business to the customer in a way that they easily understand. We have a hard time convincing bars that they could just, say, always keep our stout on tap and that it creates variety in their lineup for them without any further work on their part.
The same goes for our relationship with our distributor. We’ve had a great time with our distributor, but we’ve found out the hard way that we were not providing enough information to their reps in order to best sell our beer. Sales reps fall in the same place as bar managers and beer buyers. We are just one brand in their book. If they don’t have a good understanding of what that beer is, what it tastes like, or why it changes, it’s a lot easier to sell something else. We’ve had to come back into the brewery and make changes in how we are handling information and what we’re expecting from sales. It was our assumption that beer reps working for our distributor would naturally be interested in learning more about the product and representing it correctly, but it’s a naive view of a crowded market. We don’t just make another pale ale, and if our beer is difficult for a rep to sell, they won’t sell it. After all, it’s just one small facet of their job.
Seasonal-only also contradicts how distributors are built to sell product. There is an onus in distribution to push the flagship brand of a brewery in order to qualify a retail establishment for inclusion on seasonal releases. To put it more plainly: If you, as a retailer, order a bunch of Crappy Golden Ale from Brewery X then you are virtually (but not legally) guaranteed that when Super Popular Imperial Stout comes out from Brewer X in the fall, you’ll get some. But if you don’t buy Crappy, you can kiss Super Popular goodbye. When all of your brands are seasonal, it’s hard to play that game.
Consistency is the challenge that I correctly anticipated. My feeling was that in order to get people to trust an ever-changing beer lineup, you have to make sure that the beer that’s going out is consistent within the brand and that it’s always great. Simply put: You cannot have your entire lineup change four times per year if half the beer you put out is sub-par. What’s more, the beer has to be consistent year-to-year, so that the flavor that customers loved last year is back again for their enjoyment.
We’ve put a lot of effort into making sure that we have an excellent lab and good science. We manage 95% of our own yeast propagation, we test every batch through the system for any sort of contamination, and we’re in the midst of starting a tasting panel program to make sure that flavor consistency isn’t just a decision between me and my brewer.
All this said, I do believe that seasonality is the future of craft, and that these challenges – particularly the ones in which people don’t understand our business model – will fade away, precisely because more breweries will eventually buy into the idea.
If I were to polish up my crystal ball and tell you what I think the future of beer looks like, I think it goes a little like this:
Small craft brewers face a number of future challenges from both inside and outside craft.
The big guys are losing market share, and they know where it’s going.
MillerCoors just expanded their “craft” division. Tenth and Blake just got a fancy new building and I’m sure we’ll be seeing plenty of new MillerCoors-funded “craft” brands coming into the market. Anybody who isn’t concerned by that from a small business perspective should take a look at Blue Moon sales numbers and then taste the sours that are coming out of ACGolden’s barrels and think again.
This past year AB-InBev took what should look less like a warning shot and more like first volley in the purchase and proliferation of Goose Island. They can shore up loss of market share by purchasing and assimilating craft breweries and this act shows it. Aggressive corporate behavior and ruthless market dominance is what took them from prohibition to the best selling brand in the world and nobody should believe that they can’t, or won’t, make beer good enough to give any craft brewery a run for its money. Everybody should also remember that Budweiser was, at some point in history, a delicious, crisp, and well-made American pilsner.
These giants and their pocketbooks have considerable influence and sway with the distribution system, which most small brewers still depend on enormously without having robust protection from franchise law. Small brewers, in most cases, still play by the same rules as the large brewers when it comes to distribution because there are no exceptions for business size written into the law in most states. Unfortunately, 99.9% of small brewers don’t have the same financial sway that the makers of industrial lagers do. They are at an incredible disadvantage there.
Inside the craft industry, we’re building our own industry giants. Boston Beer, Sierra Nevada, New Belgium, and others are so far and away larger than most of the small breweries in States that it’s almost unfair to lump them in the same industry. When we talk about “the Big 3” we could just as well be talking about those three, since the three of them together make more beer than 98% of the breweries in the U.S. combined.
Regional and super-regional breweries continue to dominate the craft market through many of the same tactics used by the makers of industrial lagers: aggressive expansion and financial influence on local markets through event sponsorship. They get a pass from craft drinkers, though, because of two key reasons: 1) They’re still largely seen as small breweries (because in comparison to AB-InBev, they really are). 2) They make great beer.
However, as those companies continue to grow with a bevy of regional breweries behind them looking to follow in their footsteps, I find myself asking:
Can this country support 50+ super-regional breweries AND 3000+ small breweries? How long can we go before small breweries start going under because they can’t keep up with the big craft brands? How do I differentiate my company to allow it to survive?
I can’t play in the same space as these other breweries. I have neither the financial resources nor the desire to create a nationwide brand. What can I do to stop my company from being swallowed up? What advantage do I possibly have over any of these guys?
The answer is the same for any new small business: agility, creativity, innovation.
I’ll never be able to get my ingredients cheaper, I’ll never be able to make more beer than they can, have lower prices, have flashier advertising, or fancier new packaging. Our advantage – and the advantage of many other new breweries out there – is our small size. We can do things on a 7 bbl scale, that nobody would ever want to do on a 100 bbl system. Maybe because it’s a pain in the butt to manually quarter that many lemons, or maybe because finding a source for 500,000 jasmine flowers is unreasonable. It doesn’t matter why – it is.
The advantage to seasonality in a small brewery is that it takes advantage of what we do best: We make small amounts of really fresh beer, we make a variety of styles, we make them quickly, we make them well, and then they go away. We offer variety and exciting innovation in a marketplace that’s filled with overwhelming sameness. We offer exactly what drinkers are looking for, exactly when they’re looking for it.
Now, if only we can get everybody to understand that. Drinkers love the idea. Bars, restaurants, and distributors are following along, and soon, I hope, breweries will, too.
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.”
“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: