Alms for the poor: the moralistic debate over crowdfunding breweries

You have to give it to the Americans: they were the first to have moved the regulars’ table with its low-hitting talk from the pub to the internet. Or how else to explain the recent electronic squabbling over Stone Brewery’s crowdfunding initiative?

In July, California-based Stone announced plans to build new breweries on the U.S. East Coast and in Berlin. This news has been widely reported on both the beer and business sites on the internet. With at least USD 85 million dollars needed for the new expansions, it was a little surprising to see Stone launch an Indiegogo campaign to raise USD 1 million of the total cost through crowdfunding. Stone is admirably clear that the new breweries will get built regardless. A mere million is only about one percent of the total they are going to spend on the two-headed expansion.

If I were unkind, I would call “crowdfunding” the “new begging”. It basically works along the same principles. Except that in the case of Stone, you will get a special edition beer and not just an e-card saying “thanks” if you donate.

Crowdfunding seems to be a popular means these days to raise money – not from banks but from the general public: from people like you and me. On the internet site Kickstarter, which is devoted to this sort of soliciting, there have been nearly 300 brewery projects advertised since 2011.

The remarkable thing is that of the 300 crowdfunding campaigns on Kickstarter one out of two proved successful. According to my count, only 15 were cancelled before completion, while 140 never reached their target.

A quick look at those projects reveals that their targets range from several thousand dollars to about USD 50,000. Some try to get USD 5,000 to build a tasting room, others want USD 25,000 to start a brewery, while others again look for USD 50,000 to buy equipment for a brewery. There is usually some kind of low-end bauble for reward: stickers, bottle-openers, coasters, t-shirts and the like, all staggered in value according to how much you donate.

I have no problem with electronic begging. If people want to give their money to these undertakings – fine by me.

But, whoa, this view is not shared by everyone. A Will Gordon, on 23 July, put out a post on Deadspin saying: “Crowd-Funded Brewery Campaigns Are Bullshit” (http://theconcourse.deadspin.com/crowd-funded-brewery-campaigns-are-bullshit-1608353775).

Never mind the provocative language, Mr Gordon is basically arguing that you should not donate any money to Stone’s projects because donations should be used for charity. “Go spend the USD 50 on good beer from local upstarts,” he says. “Opening a brewery is a risky proposition – there are currently over 3,000 in operation in the United States […] – but there won’t be that many in 10 years. The growth is unsustainable. So if you happen to enjoy the work of the new guy on your block – and there is a new guy on almost every block these days – help him grow the old-fashioned way by simply buying his wares.”

Mr Gordon points out – point taken – that “commercial breweries are not themselves charitable endeavours. They make things to sell for a profit, and the things they make don’t always serve the greater good. […] I wish Stone the best of luck with their new breweries, and I hope they do so well that they open one on my street. If they do, I promise to buy their beer every day. But crowd-funding campaigns for established, mainstream commercial operations are bullshit.”

It did not take long for someone with an opposite view on crowdfunding to hit back. Two days later, a Jon Katz posted on foodrepublic.com “Crowdfunding Breweries Is A Very Good Thing” (www.foodrepublic.com/2014/07/25/alms-pour-crowdfunding-breweries-very-good-thing).

While Mr Katz may not donate money to Stone just to get a bottle of its special beer, he says that he is generally very much in favour of crowdfunding campaigns. “They’re an effective way to help support local breweries that might not yet have the facilities to increase production or distribution outside their city, let alone outside of their street. Plenty of breweries now making waves have benefited from it. […] All of the crowdfunding campaigns do one thing very well – they get people talking. Crowdfunding is literally a way to have people cover your marketing and advertising costs while you directly market and advertise to them.”

The moralistic debate over the pros and cons of Stone’s campaign still rages on. Whatever the outcome of Stone’s fundraiser – Mr Gordon predicts that Stone will hit its target – the controversy has already done Stone lots of good: whether you approve of Stone’s crowdfunding or not, it got people talking.