When Craft Brewers Sell Out, Who Gets Hurt?
It isn't necessarily beer drinkers.
Picture this scenario: In his mid-20s, a young man starts a small business. A few years later, that company introduces a new product that quickly sees skyrocketing demand. Nearly 20 years after that, his company sells for $1 billion, turning him into a multi-millionaire before he even reaches 50.
In Silicon Valley, entrepreneurs like this are lauded and labeled geniuses. But the example above is the tale of Jack White, founder of Ballast Point Brewing Company. He opened a small homebrew shop, Home Brew Mart, in San Diego in 1992, launched Ballast Point out of that same location in 1996, and served dutifully as the brewery’s CEO until 2015, stepping down just before the company was sold to Constellation Brands (best known in the beer world as the owner of Corona) for $1 billion. And for his efforts, many in the brewing world have anointed him with a much more contemptuous label: sellout.
Why are people in the craft beer world so obsessed with the idea of selling out?
When large breweries acquire smaller ones, do they, as critics sometimes lament, ruin the quality of the beer? Not necessarily. Take, for example, one of the most famous craft beer buyouts: Goose Island. I won’t claim to recall whether the now-ubiquitous Goose Island IPA was better before it spread its wings with the help of an acquisition by Anheuser-Busch, but I do think that it’s a serviceable—and-reliable—IPA today, years later. Large brewers actually excel at something that smaller ones can find challenging: consistency. Maintaining a beer’s taste from batch to batch and year to year isn’t easy, and because big companies produce so much of it, creating a uniform product is one skill they certainly have.
Now, it’s true: A big brewer could buy a premium craft brand and opt to boost the bottom line by, for example, using cheaper, lower quality ingredients. But a big company can also chose to use its power for good—sharing its vast resources with a newly purchased brewery to improve quality. The point is: There is no direct correlation between selling out and loss of quality.
Large companies can also offer superior distribution. Because of Anheuser-Busch’s tremendous reach and the money it poured into the brand, Goose Island became the first IPA many bars ever served on draft. Suddenly, venues that previously offered a choice between Budweiser and Bud Light had something new and more flavorful—ostensibly a win for fans of better beer.
For this reason, Craft brewers often mention the opportunity for exposure as motivation for selling. Walt Dickinson, co-founder of Asheville, North Carolina’s Wicked Weed Brewing, cited “the ability to reach more craft drinkers” as a reason for selling out to The High End (the division of Anheuser-Busch currently buying craft breweries). And indeed, when Ballast Point joined Constellation, fans of the brewery were pleased that Sculpin IPA became easier to find.
But while better access to beloved brands can benefit both their makers and their drinkers, it can be a source of problems for the thousands of remaining independent breweries. The most glaring issue can be seen on store shelves and tap handles. When a powerful beer company buys a smaller outfit, it can push its products into beer shops and bars all over the country, crowding out smaller local or independent brewers. Want a unique style from a well-respected beer brand? Now, big beer can offer an equivalent. And they can do it everywhere.
Compounding the problem, beer distribution isn’t necessarily fair to begin with. The industry is notorious for allegations of illegal (or at least unethical) “pay-to-play” tactics, where companies offer kickbacks to stores and bars that agree to favor their products. It’s worth noting that the big brewers aren’t alone in facing these allegations—even craft brewers have been accused of this kind of activity—but the huge financial resources that the largest breweries have at their disposal make these kinds of schemes easier to implement.
But even in a world with infinite shelf space, big beer would cause problems for craft via pricing pressure. Chris Herron, co-founder and CEO of Creature Comforts Brewing in Athens, Georgia, recently presented a detailed explanation of this phenomenon in a piece for Good Beer Hunting. As Herron explains, when big beer, with its massive resources, can offer the same level of quality as craft beer, under established brand names at a lower price point, it can force smaller breweries with tighter margins to make tough decisions about their own pricing to remain competitive.
Taking all this into account, it’s easy to see why, when news broke about Wicked Weed’s sale to AB InBev, plenty of craft breweries took the opportunity to air these and other grievances.
“In Texas, large brewers (and their distributors) routinely oppose law changes that would help small, independent brewers,” wrote Austin’s Jester King Brewery founder Jeffery Stuffings. “We choose not to support these large brewers because of their political stances, and in some cases, their economic practices as well.”
James and Sarah Howat of Black Project Beer had a similar take from their homebase in Colorado. “We have deep and serious issues with many of ABInBev's business strategies, mission, and overall ethics as they relate to craft beer in America,” they wrote in a blog post. “In Denver alone, we've seen several instances of highly aggressive, predatory, and what we consider to be unethical practices. We truly believe that AB InBev intends to systematically destroy American craft beer as we know it.”
Whether or not that’s true, the statement gets at the truth of the matter: Selling out can benefit the small brewery that’s selling, the big company that’s buying and can even benefit the craft beer fans who are doing the drinking. But it’s bad for the thousands breweries who aren’t involved, and that means it’s bad for craft beer as a whole. Remember, it’s been the work of independent craft brewers, not huge conglomerates, that has turned the American beer scene from a global afterthought to perhaps the greatest in the world today.