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The Future of Craft is Bright

Nov 12, 2015 Comments (5) The Future of Craft is Bright

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!


Comments (5)

  1. Wolf Linderman:
    Nov 12, 2015 at 04:00 PM

    Right on! This is a very clear and concise analysis of the issue. AB-Inbev clearly has a master plan and it is far more sinister than the "Better World" they say they want to build on their website. (What weird, Orwellian strangeness that is, huh?) You keep making your great beer and I'll keep drinking it--and shouting the message of craft beer to anyone who will listen.

  2. Sandy Smith:
    Nov 12, 2015 at 04:29 PM

    I'm in! I pledge to drink all the craft beer I can imbibe with relative responsibility and proselytize accordingly! Thanks for Tricerahops--btw--which makes this an easy pledge to adhere to. Cheers, Ninkasi!

  3. Angelo:
    Nov 12, 2015 at 04:58 PM

    Great read Nikos! It's scary to see all of these ones great craft breweries being bought up by the corporate conglomerates. It's nice to see a brewery like Ninkasi standing up for our burgeoning craft industry. Keep up the good work and keep making great beer!

  4. Mike H:
    Nov 12, 2015 at 09:47 PM

    I'll keep doing my part. I'll be by Friday to pick up another 1/2 barrel of total dom for the kegerator.

  5. Mike:
    Nov 13, 2015 at 04:23 AM

    I think the craft brew industry is safe. The giant breweries are to be commended for the technological capability to repeatedly do 30000 gallon boils and make the exact same "beer" time and time again. What I don't think they'll ever get to in a volume large enough to positively effect their bottom line is the subtle nuances that craft lovers seek out in the large variety of craft brews. I drink about 2 Busch brews a year, when someone offers one. I cannot even REMEMBER the last time I've spent my own money on one. I haven't brewed my own in years but I will start again before I'll be locked in to mass produced swill. I'm nowhere near alone!


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