ABI and The Future of Craft Beer

From the inception of modern craft beer, its brewers, sellers and drinkers have been an intrepid bunch, persisting in the shadows of macro brewers who paid them scant attention. Plenty of passionate craft fans and industry insiders have made no secret of their lack of love for the giants, particularly for the largest of them all, Anheuser-Busch InBev. And since May 3, when AB InBev, or ABI, announced it had acquired Wicked Weed Brewing, much beloved by Asheville, N.C.’s craft community and beyond, a lot of craft enthusiasts have been downright incensed. What follows is a small sample of the comments.

That very day, the craft beer news website The Full Pint responded, “It would seem that Wicked Weed has instantly traded in their industry street credibility for a a big pile of money.” By that afternoon, Jeffery Stuffings, founder of highly respected Jester King Brewery in Austin, TX, issued a statement that JK was pained to announce it was cutting ties with Wicked Weed.

Beer writers and bloggers and social media users continued to flog Wicked Weed for selling out. Almost unbelievably, a week later Wicked Weed had cancelled its annual July Funkatorium, a celebration of wild ales and sour and barrel-aged beers with top breweries from all over the U.S. participating. Except in the days after the acquisition, over 50 of the 75 breweries that had planned to participate pulled out. In a story that made mainstream media, USA Today reported that this community fundraiser that brought in an estimated $40,000 for an Asheville charity last year, would be reimaged at a later date.

May 9 tweet from @notobigbeer

No To Big Beer’s May 9 tweet

Then, as if to fan the flames, ABI sent out a memo the same day of the Funkatorium cancellation, May 10. Having gained SABMiller’s South African hop farms with the SAB Miller acquisition last year, they plan to use all the 2017 crop for their own acquired craft breweries. The Beer Street Journal termed the reaction, “social media outrage.” Beer writer Bryan Roth, who I admire, argued for the big picture and some moderation, noting that this is only a tiny fraction of the hops used annually in the U.S. But the situation got personal when my favorite brewery, blocks from our house, wrote on Facebook that ABI’s decision meant they were out 1584 pounds of South African hops that had already been allocated to them.

Alvarado Street Brewery's Facebook post on South African hops

Alvarado Street Brewery’s May 10 Facebook post on South African hops

Roth makes a good point that there are plenty of hop varieties and craft beer will go on. And Wicked Weed’s acquisition doesn’t impact the vast majority of craft beer fans. It’s the deeper issues that should concern craft beer enthusiasts.

First, in the last seven years, ABI has bought up ten U.S. craft breweries outright, with minority owenership in three more. Most were acquired in the last three years, along with Virtue Cider and Spiker Seltzer. Plus, there’s Shock Top, ABI’s house “craft” beer, and international craft brewery acquisitions like Bogota Brewing Company (Colombia) and OB (Korea) that have taken place on four continents.

Second cause for concern: lack of transparency. Example: last November when my husband and I visited Portland, OR, I wanted to check out the PDX 10 Barrel. We got to talking to the young couple sharing a long table with us, self-declared craft beer fans from St. Louis, who reported they enjoyed visiting craft breweries when traveling. “You guys know who owns 10 Barrel?” I asked. “No, I don’t know,” the wife answered.  “No idea,” the husband replied.

Nothing in the Portland or Bend 10 Barrels hints that they’re API-owned. Visit the 10 Barrel website—or Goose Island’s or Elysian’s or Karbach’s or Devil’s Backbone’s—and good luck searching for a mention of ABI’s ownership. Better yet, try looking for information on The High End, the ABI division created several years ago to manage their craft business.

Third, ABI has a history of distributor incentive programs that, in some cases are more like “promote our brands over the competitors or suffer the economic consequences.” Next time you’re in an airport, walk by the bar selling “local craft beers.” I’ll almost guarantee if you’re in California you’ll see Golden Road or Breckenridge in Colorado, Goose Island in the Midwest, and Karbach in Texas, along with the ubiquitous Shock Top and Stella Artois. It’s not surprising that where it can, ABI has even purchased distributorships, including two of the largest in Colorado in 2015.

Fourth, ABI appears to be diversifying their acquisitions. Last fall, they picked up Northern Brewer, one of the largest homebrewing supply businesses in the U.S. through ZX Ventures. This particular group describes itself as “a global disruptive growth group, incubator, and venture capital team backed by one of the largest multinational companies in the world, Anheuser-Busch InBev.” In March, The High End stepped into beer blogging with The Beer Necessities. It’s a nice-looking website with lots of content and an experienced beer writer as editor.

You can argue that capitalism, at times, gets cutthroat. Or that craft beer has benefited from the ABI-trained brewers like Mitch Steele, who have moved over to craft, taking with them the high standards and know-how required to brew to consistency. And, The High End hires bright people. They snap up highly successful breweries that already make good beer, knowing better than to mess with the product. Instead, they assist with marketing, supply chain issues and financing.

But what does it portend for craft beer’s future when small breweries have to compete with Goliath? Monday, May 15, ABI announced that over the next three years it will invest $2 billion in a new U.S. capital expenditure program. Interestingly, there was only one mention of a High End brewery, “$15 million to begin innovative cross brewing capabilities at the Fairfield brewery through Elysian partnership, including significant updates to brewery infrastructure.”

Simply put, my–and your–favorite little breweries down the street can’t compete with that kind of money. And that’s enough to scare the beard off a brewer. In the coming years, it’s inevitable that 1) more and more craft brewery founders will want to retire, and 2) The High End will come ’round flashing the cash. As a result, we’ll see more distinction between brewery models and likely new ones beyond the exisiting neighborhood brewpubs, small production breweries with taprooms, ABI-owned breweries, the Sierra Nevadas and Boston Beers and the traditional 20th century macro breweries.

In a May 10 piece, “How Beer Became a Moral Issue,” Jeff Alworth, perhaps today’s most eloquent beer writer, summed up the recent developments saying, “We are stepping from a kind of naivete into a more mature, but perhaps less fun, more cynical, world. The sale of Wicked Weed shows we still have the capacity for betrayal, but not for many more of these.”

If this new world vision disturbs you, support indie breweries now.

Speak Your Mind