Who’s Your Beer’s Daddy?

This is the second of a two-part post. Part 1 was published last Tuesday, October 13.

10 Barrel BrewingWho’s your beer’s daddy? And how much does it matter to you?

Last week, I wrote about some of the recent jaw-dropping mergers, acquisitions and other arrangements in the brewing world, topped off the October 12 announcement that SABMiller had accepted AB InBev’s acquisition offer. I ended the post with this paragraph:

But how much do all these changes really matter to average craft beer consumers? Do most of them care as much as my friend Rich about who’s really brewing the beer in their hands if it tastes good? Will thousands of them start boycotting their local brewery if it sells out to Big Beer? What do you think?

Let’s start this week with the question who’s “Rich?” (Not his real name.)

Peter B'sHe’s a smart guy–he holds a degree from MIT–who left the macro beer world a long time ago. He favors craft stouts and almost anything that’s been barrel-aged. All the regular employees at Peter B’s Brewpub, just down the hill here in Monterey, know him. Ask Rich what he likes about Peter B’s, and he’ll reel off answers like the beer—especially Sum of the Hours—Kevin Clark the brewmaster, the service and the fact that it’s a truly neighborhood brewpub.

What the Big Beer players do hardly matters to Rich and a sizeable contingency of like-minded craft beer enthusiasts. Any breweries beyond regional size are too big for Rich. Sierra Nevada and Boston Beer no longer qualify as true “craft” breweries in his book. Yesterday’s news that Ballast Point (San Diego) filed to go public? Not important to Rich.

Really, though, today’s developments are part of the harvest reaped by craft beer’s decades of success. Economic growth, desired by most members in a capitalistic society, requires cash. As Don Erickson wrote in the current issue of Celebrator, “So how do brewers get the funds they need? They either take out a loan or acquire partners/investors.”

 Katy Brandenburg of 10 Barrel Brewing with Hugo Patiño

Katy Brandenburg of 10 Barrel Brewing with Hugo Patiño

Craft beer workers and consumers are notoriously proud of the industry’s David vs. Goliath image, but I’m willing to bet the bottom line for most is the quality and cost of the product they like. For some, like Rich, local ownership and keeping profits in the community matter. For others, not so much.

There were stories of Bend, Oregon residents who refused to enter 10 Barrel Brewing or purchase their products after AB InBev bought the company in December, 2014. My husband and I checked out 10 Barrel during a late August visit to Bend. The ten beers on the sampler flight ranged from good to excellent. The food was very good. Our server, Katy Brandenburg, was knowledgeable and friendly. Hugo mentioned to her that I blog on beer, and before long, Assistant GM Danny Davis was at our table.

Leslie with Danny Davis  of 10 Barrel Brewing

Leslie with Danny Davis of 10 Barrel Brewing

Danny readily talked about the ABI deal, citing an example of how, during negotiations, the ABI rep asked a brewer what hops they were having trouble procuring. (Getting the right hops in the right amounts at the right time can be a major pain for craft brewers.) The rep then walked out of the room, phone to ear. He returning saying the desired variety and quantity would soon be on its way. By the time we left 10 Barrel on an early Saturday afternoon, there was a line of customers waiting for tables. My bet is that a good beer mattered more to them than AB InBev’s ownership.

Here’s the bigger question: Is American beer entering a new wave of consolidation even as U.S. craft breweries continue to open at a rate of two per day? We’ve seen it before. In 1873, there were 4131 breweries in the country. By 1913, the number was one quarter of that. A year after the 21st Amendment ended Prohibition in 1933, there were 756 breweries operating in the U.S. By 1983, that count was down to 80. Only time will reveal the answer.

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