Like Rabbinical scholars debating every word in the Talmud, there’s long been a faction of beer-geek pedants obsessed with the term craft beer. While the Brewers Association continues to tie the definition to ownership (less than 25% of the brewery can be owned by another alcohol company) and size (an ever-expanding numbers of barrels per year, currently capped at six million), diehards focus mostly on values—is it indie, local, and made by hand?
This ambiguity all came to head last week when a U.S. District Court judge dismissed a class action lawsuit against MillerCoors for labeling the ubiquitous Blue Moon as “craft beer.” To Judge Gonzalo Curiel’s thinking, craft beer is not, and has never been, a legally definable term. To many in the self-defined craft-beer industry, though, this ruling seemed to be just another nail in the coffin in an attempt by the giant conglomerate breweries to absolutely bury the little guy.
If they hadn’t been triggered yet, it was finally time to sound the alarms. In the past five years, the even bigger brewer Anheuser-Busch has bought several craft breweries in an attempt to get a piece of this growing segment. (The craft sector now represents 11% of market share by volume, which translates to nearly 20% by revenue.) The behemoth is currently trying to takeover the world’s second biggest brewer in SABMiller, MillerCoor’s parent company. That would make InBev easily the biggest multinational beer conglomerate on the planet, and the owner of hundreds and hundreds of different brands of beer—literally one out of every three beers sold worldwide.
But still, maybe you have a friend who spends all of his days on beer-geek message boards and knows—he knows, man—that these corporate maneuvers are all just a massive, Illuminati-like plot to rid the world of flavorful beer. (Maybe that craft brewer I just quoted is secretly in the pocket of big beer and about to sell out to them himself—did you ever think about that?) Relax. That’s not going to happen. As one seemingly unconcerned craft brewery owner told me, “These guys are businessmen, not bogeymen.”
Nevertheless, just to be sure, let’s look at what this alarmism actually boils down to—how AB InBev (and these other swelling conglomerate brewers like Heineken International, which just acquired Lagunitas) could, in theory, starting throwing their massive beer bellies around purely in an effort to keep your favorite craft beers from reaching your lips. Here we break down the bullying tactics that Big Beer uses to intimidate its competition.
The tactic: Buying up (craft) competition.
The most obvious reflection of the beer wars is the “if you can’t beat ’em, join ’em” mentality that’s taken hold among big brewers. Or, more accurately, “snatch them up”—kind of like how the Yankees bought every glossy free agent for most of the early 2000s. I’m not talking about misguided purchases of Hideki Irabu or Carl Pavano types either—I’m talking about acclaimed breweries like Goose Island (acquired by InBev in 2011), Blue Point (2014), and just this year, Seattle’s Elysian and Los Angeles’ Golden Road. I’ve seen absolutely no evidence these former “craft” breweries’ beers have gotten worse—many of the aforementioned are now producing better liquid, in fact—but they’ve all become a lot more high-profile. So as the media spends far more time covering middling Yankees at the expense of smaller-market superstars—“East Coast bias!”—the same type of coverage applies to these InBev acquisitions. Now the likes-good-beer-but-isn’t-a-geek-about-it population is buying only the beers they most frequently hear about—Shock Top, Honkers Ale, Space Dust. And guess what? It’s all going into the same conglomerate’s pocket—whether the consumer realizes it or not—while “real” craft beer is stuck gathering dust on the shelves. (Photo: Facebook/Goose Island)
The tactic: Exploiting loopholes in the three tiers of dominance.
A brewing giant’s competition isn’t just on the beer-making side of things; distribution is also a critical piece of the puzzle. You see, after 1933’s repeal of Prohibition, a system was created to divide American alcohol’s production, distribution, and sales channels. Unfortunately, a loophole in this three-tier system allows for breweries to control two of the three tiers by distributing beer under a separate wholesaler’s license. To be fair, many craft breweries self-distribute on a small scale too, either because they are too micro and hyper-local to necessitate a distributor, or because it’s simply good for business. (Stone Brewing out of California is famous for being a major state distributor of its fellow craft breweries). It’s more concerning to the beer conspiracy theorist, though, when Anheuser-Busch starts snatching up distributors around the country, like its recent acquisitions of the Portland-based Morgan Distributing and the Colorado-based American Eagle Distributing. AB—which is now the country’s second-largest beer distributor, with 600 independent wholesalers in network—rarely distributes any beers it doesn’t own, meaning it could become increasingly difficult smaller craft breweries to get any sort of decent distribution away from their home states.
The tactic: Shelf space = control.
This is a crucial topic, as beer remains one of the few goods left in this world that you actually have to go to a brick-and-mortar store to buy. No one grabs a weekend six-pack online; you enter a store and scan the shelves for something good. And whether you’re at a tiny bodega or a massive Binny’s Beverage Depot, there’s only a finite place to actually shelve these cans and bottles. Aside from Yuengling, the top 50 best-selling beers in America are owned by two or three conglomerate breweries. So if you’re a store owner who wants to make money, you’d obviously want to probably stock those top 50 beers. Basic economics. But these conglomerates also have less-popular brand extensions introduced every year, your Bud Light Platinums and ___-a-Ritas, not to mention their massive portfolios of all the former craft breweries they’ve acquired—all of which they can pressure store owners to buy if they want to continue having the ability to stock their top-selling beers. Now the supermarket has no space for any local saisons! (Photo: abqbeer.com)
The tactic: Tapping the lines.
Even more concerning than shelf space is the fear of tap-line control. Are you a bar owner that wants a keg of the limited, seasonally released Bourbon County Brand Stout from Goose Island? Then perhaps you need to commit some 365-days-a-year draught lines to its flagship beers as well. In other words, if you want the limited-edition goods, you need to show a willingness to consistently sell everyday products. There’s no real proof this sort of deal takes place, but alarmists have long speculated about the practice. Certain bar owners that get shut out on these highly coveted rare kegs have often taken to social media to bitch. Likewise, last year the beer world was rocked when Dann Paquette, co-founder of Pretty Things Beer & Ale Project in Massachusetts, decided to blow the whistle on tap line payola in a series of late night Tweets: “Ever heard the term ‘committed lines’?” he wrote. “Breweries buy draft lines so their lame beers aren’t irrelevant.” Paquette never named what breweries were doing this illegal practice—which, if you’re an alarmist, is convenient, because now you can just assume it’s those big, bad breweries you currently despise mucking up the flawlessly curated tap selection at your favorite bar. (Photo: sprengerstaproom.com)
The tactic: Hoarding hops (and other raw materials).
Why is that tiny brewery you love only able to produce its beloved triple IPA every few months? Or its bourbon-barrel-aged stout just once a year? It’s not necessarily because the brewers are dicks—though they might be. It’s more likely they simply can’t access the key ingredients necessary to make these beers. There’s only a finite supply of hops in the world because, like grapes, the plant only grows well in certain regions (mainly the Yakima Valley here in America). Likewise, used barrels can be even tougher to land, with barrel brokers constantly wheeling and dealing to land the best offers. If you’re a big conglomerate brewery, though, you don’t worry, because you have the ability to buy in massive bulk, and to undercut some smaller brewery that wants just a few thousand pounds of hops (or an empty barrel or two). This benefit has been a great thing for bought-out breweries like Goose Island, which now has a 143,000-square-foot barrel-aging warehouse, but not necessarily a good thing for smaller breweries grasping for barrels and the sexy hop varietals of the moment. (Photo: Flickr/Allagash Brewing)
The tactic: Limiting premium cans.
The latest rumor among small-guy boosters is that big beer is hindering craft’s access to the materials needed to make cans—the hottest vessel for drinking beer right now. It’s all those damn cases and cases of stupid cans that turn blue when they’re cold, your alarmist friend rants! He actually has reason to be alarmed as 16-ounce cans—the beloved size of Heady Topper and some of the other most acclaimed IPAs of the moment—are actually in short supply. Unfortunately, you’ll need to tell your alarmist friend that the guilty party here is not big bad BudMillerCoors, but instead craft brewing itself. One craft brewer told me that his wait for delivery on cans from Crown (a top can-maker) had just been pushed from four weeks to 12 weeks or more. And if you’re a new craft brewery that wants cans? Forget about it. (Photo: Facebook/The Alchemist)
The tactic: Lobbying your hobby.
In America, everything comes down to those big bad lobbyists, who can turn Super Bowl Sunday into a national holiday, or get the government to rule that bacon is now a vegetable if they truly wanted it to be. Brewing’s big boys have the National Beer Wholesalers Association and the Wine and Spirits Wholesalers of America, both of whom work to oppose any folks out there looking to change the three-tier system or improve the tax rates for smaller breweries. And since the big brewers have the money to afford guys that can control the politicians who have the ability to keep the poor, little brewers down, this scenario is actually a somewhat scary thought that should probably be addressed. So hopefully, at the next presidential debate, instead of talking about boring things like the economy and climate change, we might just hear the moderator say, “Mr. Trump, do you think the three-tier system is just a scam to help big beer destroy craft brewing?” (Photo: Facebook/National Beer Wholesalers Association)
Aaron Goldfarb (@aarongoldfarb) is the author of How to Fail: The Self-Hurt Guide, The Guide for a Single Man, and The Guide for a Single Woman.