The GABF and craft brewers’ worries over identity and price
For the 36th time, beer lovers gathered from 5 to 7 October 2017 in Denver, Colorado, at the annual Great American Beer Festival (GABF), the renowned American beer festival and competition, to sample some 3,800 beers from more than 800 craft breweries around the country. 60,000 tickets were sold for the event.
Not present were several craft brewers now owned by the Big Brewers. That’s because the organisers introduced a lottery system which positively discriminated against them in order to give small brewers more of a statistical chance to attend.
In Colorado, beer is part of the state’s ethos and a major industry that employs thousands of people. The state hosts more than 300 craft breweries with an annual economic impact of USD three billion in 2016, according to recent research.
It is also home to operations for the two largest beer companies, with Coors in Golden and Anheuser-Busch in Fort Collins. The Beer Institute, which represents the largest brewers, estimates a USD 15 billion economic footprint in the state.
Although craft beer has been on a roll with there now being over 5,500 breweries in the US, there were several articles in the run up to the GABF which worried about the consequences for the industry after the Big Brewers have stepped onto craft brewers’ turf. The largest beer companies now own stakes in dozens of craft breweries.
There seems to be consensus that these acquisitions have created an “identity crisis” by rendering the term “craft” obsolete, at least for the true craft brewers.
The Brewers Association (BA) acknowledged the problem when it launched a seal that certifies “independent craft brewers” in June this year. The campaign to redefine craft beer is the most aggressive PR push from the trade association since 2011, when AB-InBev bought Goose Island from Chicago and ignited the current beer war. Already over 2,300 craft brewers have signed up and the BA said it would use the GABF to raise awareness for the seal.
“We think it’s necessary because we think the beer drinker has a right to know who’s behind the brands that they are supporting or purchasing,” Bob Pease, President and CEO of the Brewers Association, was quoted as saying.
How the BA’s effort will affect the marketplace remains uncertain, according to analysts. Kyle Leingang, an attorney in the craft brewing industry who was involved in the deal for AB-InBev to buy Asheville’s craft brewer Wicked Weed in May this year, argued that perhaps only the beer geeks will care about the origins of their beer.
Mr Leingang surmised, probably correctly, “there is going to be a lot of consumers out there who don’t necessarily care who owns their beer as long as it’s high-quality and they can get it at a cost that’s acceptable to them.”
The key word in his quote is “cost”, another term for price. A popular conspiracy theory among craft brewers is that the Big Brewers use their craft brewery acquisitions to bring the price of craft beer down overall.
It was pointed out in a piece by Chris Herron on the website Good Beer Hinting in May 2017 that, soon after being bought by a Big Brewer, the new owners lowered the price of the acquired breweries’ IPAs and other core beers. IPAs form the largest segment among US craft beer styles.
Allegedly, this strategy pursues two aims: raise sales volumes quickly and narrow the gap between mass lagers (at USD seven on average for a six pack) and craft brands (at or over USD ten).
By selling their craft beers at comparatively lower prices than true craft, the Big Brewers not only gain advantages when placing their beer at bars and shops, they also crowd out the independents and make their businesses far less economic.
“If there’s one thing independent craft brewers can’t do that macrobrewers can do [with their craft breweries], it is lose money,” wrote Jacob McKean at California’s Modern Times Beer in a scathing appraisal of recent craft beer sellouts. “And this strategy is, by far, the most effective way for macrobrewers to reduce consumer choice and extinguish the craft beer movement they’re now trying to co-opt.”
The latter worry may be overblown but one should always bear in mind the old graffiti “You need not be paranoid to believe they are after you!”
With its new campaign, the BA wants to educate consumers – not only about who makes their favourite beers but the differences in business approaches between Big Brewers and independents.
Independent brewers want to emphasise that their product is local, fresh and the profits remain in the community.
Alas, the argument about local beer is murkier in Colorado, where beers such as Budweiser, Coors Light and Blue Moon are as fresh and high-quality as a glass of beer in the small neighbourhood brewery.
However, faced with increased competition from the Big Brewers’ crafty brands, Colorado’s independents are not relying on the seal alone to sell their beer. Instead, some are adjusting their business models by serving food and by partnering with nearby independents to run a free shuttle service between taprooms. For example, ten breweries, two cideries, and a winery set up a shuttle bus service in Denver's River North Art District. It operates every Saturday and First Fridays.
But will this be enough to convince consumers that ownership is more important than price when it comes to making beer purchasing decisions?
