The Future of Craft is BrightNov 12, 2015 Comments (5)
ICYMI: earlier this week, Anheuser-Busch InBev and SABMiller agreed to a $107 billion deal to merge the two companies and create the largest-ever global beer company. Our fearless CEO, Nikos, weighed in on the merger to let craft beer fans know what this means for the industry and what we can all do to support craft beer!
Hello craft beer fans!
It’s an auspicious day when the world’s two largest breweries submit their plans to become the world’s one largest brewery. Emphasis on “large.” Anheuser-Busch InBev sells about 100,000,000 barrels alone. That’s more than four times all the U.S. craft brewers combined!
What do I think it all means? A lot of work ahead from all of those who love craft beer!
Whether you’re a craft beer drinker or not, it’s clear to see there are many problems with a deal this large in scale. The majority of these issues boil down to the basics of the Three Tier System, which is what all beer producers must operate under. This involves a lot of industry minutiae but is important if you love craft beer! Here’s what we’re working with:
Tier One: Producers (that’s us and over 3,000 other craft breweries) make the products and sell them to independent wholesalers, many of whom distribute a mix of large and small brands.
Tier Two: Wholesalers sell these products to retail locations, which include bars, restaurants and grocery stores.
Tier Three: Retailers provide a space for that beer to be sold, so craft beverage fans can look for their favorite beers and buy what they like best.
And finally, people enjoy their beer with family and friends!
The most difficult obstacle facing craft brewers is the increased control AB InBev and SABMiller have on the first two levels of this system. Increasingly, these companies are acquiring breweries, purchasing and operating retail locations, and controlling elements of the wholesale tier. As the larger companies have, and exert, more influence in the wholesale and retail tiers, it becomes progressively harder for smaller craft brewers to make their way to the shelves. If these big beer companies also happen to own “craft” brands, maybe they put a little extra effort behind moving those in front of other breweries, if they own the wholesalers, maybe they put a lot of extra effort behind elevating their own brands. And, if they continue to get larger and consolidate further, then maybe they put an insurmountable amount of effort behind continued industry control! Or maybe not…
This is all creating a multi-faceted approach to a desired future state (in my opinion) for these big beer companies, which is: all beer is “giant conglomerated multi-brand brewery” beer. A massive global merger will just lead to more of the same. Here in the United States, we have watched a strange and contradictory drama unfold, as those once on the side of building the craft movement, providing many styles and high quality beer to the great beer fans, have sold to companies that work the hardest to undermine its future (or at least the future where there are a lot more smaller companies innovating along their own path…). The question has often been posed: if the beer is the same and the same people are making it what’s the difference? Well, the difference comes down to the impact of the dollar. What happens when all the revenue that used to go toward building the craft industry, is instead diverted to an entity working to eliminate its core ecosystem?
What does this mean for craft beer fans like yourself? The power is in your hands (and craft brewers like us need you)! As long as craft beer fans continue to look for opportunities to support the craft beer industry and the breweries that are growing its momentum and building on all the awesome achievements to date, then the future is bright. Demand variety, quality and a fair playing field for producers of all sizes! Support decision-makers and influencers (like Oregon’s own Sen. Wyden) who support the growth of craft beer and call for an environment where all consumers can make educated purchases. Perhaps most importantly, DRINK CRAFT BEER!
While you’re doing your part to support craft brewers, we’ll be doing ours by supporting each other. The collaborative nature of our industry helps craft breweries align interests and share strengths in order to grow stronger. There are many strategic partnerships, shared resources, and consortiums which allow smaller companies to act larger in a competitive sense. There are also a lot of strong guilds in states throughout the country where local breweries band together to work to ensure their mutual future success. And a lot of models are emerging in the industry for paths forward that didn’t exist before.
As long as creative craft brewers keep innovating beers and the business models within the industry, and craft fans and retailers keep getting excited by the direction and momentum of the craft industry, and wholesalers stay excited about growing the whole beer business, and strong partnerships between craft brewers continue to move the industry forward, then the future of beer will look different here in the U.S.. That’s where we hope things keep going, and we’ll do our part to take it there. We appreciate all the support, cheers!