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OPINION: Reaction: "Craft Beer Is Not Depressed, But The Brewers Assocation May Be"

I thought this was a very interesting read. I hope you do too. A local beer industry professional Thad Fisco of the Labrewatory wrote a blog post on how to best grow the craft beer segment and why the Brewers Association’s approach was not in line with what his organization believes is best.
https://craftingastrategy.com/blog/craft-beer-not-depressed-brewers-association-may-be

This of course was followed by a swift slam piece of AB-InBev (?) and the author and a call for boycott of his small business by a Portland journalist who seems to have a less nuanced and comprehensive understanding of the market and craft’s place in it.

The whole gist is that

a. The market competition is healthy
b. Big beer is investing billions in craft not trying to destroy it
c. It’s smarter for the whole industry to focus on growing the whole segment rather than drawing lines and stoking infighting

What are your thoughts?

I like the idea that the main goal of a brewery is not growth (either of their business or the market), but rather running a healthy business.

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His argument is essentially “A rising tide lifts all ships,” right?

Not necessarily a super-hot-take, I guess. For all that big beer does to try to corner market shares and “Wal-Mart” smaller brewers, an unintended consequence to that strategy may be that they introduce new consumers to craft beer, who then in turn defect to locally-owned/independent options.

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While the BA is engaged in protectionism, AB InBev is experimenting and redefining the market in an effort to remove barriers to entry for the 80% of non-craft beer drinkers. Independent brewers have a lot to learn from their efforts to grow demand in an increasingly competitive business,” writes Fisco.

Yeah, there’s that.

Seems that BA is doing good job if it’s targeted this way by AB Inbev people.

@Iznogud I interpreted that as “AB InBev is willing to dumb down the product to get people in the door, and not just bombard people with Hazy IPAs and Pastry Stouts”

Essentially. Keeping people stoked about beer is important. Stoking negative feelings and ideas about a good time product by enforcing an artificial, increasingly complex, and self-defeating division may not be in our collective interest.

Mass market companies will steer the mass market toward more craft consumers. Small companies will enjoy a greater audience for their products. It’s not just okay but good and healthy and desirable for small brewers that there are mass market craft beer consumers and large companies that serve this mass market.

If you compare this with coffee, the beer market, at least here is very healthy. There were two struggling mom and pop coffee shops and six Starbucks in our town of 20 thousand people. One went out of business. Starbucks bought and branded half the coffee aisle in our two largest supermarkets so I mail order and/or travel for all my coffee.

On the other hand 10 Barrel (AB InBev) in Portland is one of dozens of breweries, produces and employs locally, while many craft brands from outside the State of Oregon are sold here.

I’m not saying Big Beer is rolling over and not competing in the craft and larger beer market. I’m just saying that many in the industry believe this competition is evidently healthy and has been very good for small breweries, and that given all possible types of growth, Big Beer’s has been good in many markets.

Is it that hard, though, to envision a future where each of the biggest players have bought up breweries in every big city, and beer ends up in the same situation as Starbucks/coffee or Wal-Mart/5 and dime stores?

The big guys are interested in profit and market share. Innovation will always comes second.

We may not see it on a city-wide scale yet, but in San Diego I’ve seen it on a hyper-local scale, with 10 Barrel building a big shiny new facility next to a relatively decent brewery in a slightly run-down part of town near our ball park. The local brewery makes better beer, but guess who does better business on game days? When the local brewer has to close shop, does the big brewer continue to expand and keep trying to eat the little fish?

I come from country where craft brewers are making similar excuses for brewing mediocre pale ales and blonde ales (not that anybody can brew proper Hazy IPA or Pastry stout around here). And in my opinion it’s BS.

Quite conveniently articles never mention 24% of craft beer dollar share which I find far more important piece of data than bbl share. But of course they are not shy of throwing “growth in business is a measure of success” BS around.

I am keen supporter of labeling big beer as lepers and kicking them out of the playground. As much as they would like back in no need for that.

Would it make sense for Big Beer to buy up everything? There are 7000 breweries out there in the US alone. AB InBev has already signaled that this is not their thing. They own 12 of 7000.

Mass market brewers will supply mass market beers because of the advantages of scale. Most people who love craft for variety and quality of product, and people at RateBeer who seek variety first, will buy from small breweries.

Wal*Mart’s model is materially different. They are replacing all mom and pop retailers with one big retailer. That obviously cannot and will not happen here in the States.

Another thing worth mentioning here is that the explosion of the two decades in the craft space owes its success to consumer taste – the greatest driver of the sector’s success. If there is consolidation in the industry, it won’t be because a record number of consumers are loving beer variety and quality available in the market. That would only happen if people turned away from beer in droves. This didn’t happen with wine and it didn’t happen with coffee.

Everything? Of course they wouldn’t buy up everything. Between the few biggest players they buy 5 or 6, throw their billions behind shiny new breweries/tasting rooms, use their influence to get even more space on grocery store shelves, and continue to make it more and more difficult for independent and new operations, even those that are putting out a high quality product.

I’m not necessarily predicting this will happen, nor am I saying a similar result isn’t possible if some of the larger independent breweries continue to grow, BUT I think you have to have your head in the sand to not acknowledge that there is at least a possibility that this is what the beer world looks like in 20-25 years.

The alcohol industry is heavily regulated, arguably even more so here in Canada than in the US when it comes to retail sails, therefore comparing to coffee may not be the best analogy.

Do we need ABI to bring people to craft, when Sam Adams, New Belgium, etc have been doing that for years? Maybe ABI is not a threat to microbreweries, but is still a threat to " big craft"? If you think big craft is an important part of the craft beer ecosystem then maybe expansion by macros is more problematic. I think the independents, including big craft, banding together as a community is not harmful, and I will buy BA independent craft over macro owned captive craft when I can. I want a society generally less dominated by huge global corporations, and beer is one market where I can make that choice with little sacrifice on price quality or convenience.

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