Boston Beer and Lagunitas embroiled in public spat
Take it as a sign that competition among craft brewers is heating up that, since December last year Boston Beer, the brewer of Sam Adams beer, and California’s Lagunitas brewery have been engaged in a slugfest. For Jim Koch, the founder of Boston Beer, this row cannot have come at a worse time as in 2014, Boston Beer celebrates its 30th anniversary.
For a long time, craft brewers have promoted an image of amicable competition. So it came as a bit of a shock when Lagunitas accused Boston Beer of specifically targeting its business and trying to replace its brands on tap wherever possible.
In late December 2013, Tony Magee, the owner of California’s Lagunitas Brewing Company, sent out a series of Tweets that took exception to the release and marketing of Sam Adams’ Rebel IPA, which Mr Magee claims encroaches on its turf.
Sam Adams’ Rebel IPA is a “West Coast Style” beer, not unlike Lagunitas’s most popular brand.
“Learned that SamAdams’ Rebel IPA marketing plans incl specifically targeting our biz as well as other craft IPA. Flattering & sad, it is,” Magee wrote in one Tweet. “BB specifically told our distribs in common that they were going t TAKE r tap handles everywhere they could,” he explained in another. “That’s a directed attack … Imagine someone threatening your children…”
The Tweets drew wide attention and even made it into mainstream U.S. media. Several commentators felt that Mr Magee was having a “tantrum,” and that he was a ninny complaining about the tough competition that every business owner should expect.
Others applauded Mr Magee for speaking up, rehashing the old accusations against Boston Beer that it was more like Big Beer than a craft brewer.
Eventually, Boston Beer’s Jim Koch joined the discussion, releasing a statement that he took “some offense to Tony’s other jabs and misrepresentations,” and most importantly, he denied that his company’s goal was to replace Lagunitas as a favorite choice of distributors and bars. “We don’t target other craft brewers,” he said.
He wrote: “I think it’s a shared responsibility of ALL larger, craft brewers to help those who are following the path we have worked hard to pave… We’re all lucky to be in the middle of a big growth curve for craft beer, and I am glad to see the growth. It’s certainly taken a lot of hard work by a lot of people both in the brewery and on the streets to get here. What’s unique about our industry is that it truly is a brother- and sisterhood. We all need to preserve that spirit as long as we can.”
Boston Beer, which celebrates its 30th anniversary this year, was a rebel on the beer scene in the early 1980s. But as the craft beer market matured and Sam Adams further extended its offerings, its flagship brand witnessed a decline.
In 1998, Boston Lager made up nearly 60 percent of all of Boston Beer’s sales, and it was still growing in the high single digits. However, by 2011, the flagship beer was contributing just 24 percent of sales and shrinking. That’s why in recent years, seasonal beers and other products like ciders and teas have become the new engines of growth at Boston Beer.
Mr Koch would not be the successful businessman that he is if he had not seen an opportunity to grow sales by offering an IPA. That may irk his smaller competitors, especially if he really manages to take volume away from them. But that’s what it means to operate in a free market.
On the other hand, one should not rule out that many envy Mr Koch his successes. Boston Beer has grown into a big business and Mr Koch himself is ranked among the U.S. billionaires.
He is not alone. Several indie beer brands are worth over USD 100 million. The segment has definitely grown out of infancy. Whether they like to hear it or not, craft brewers had better wake up and smell the coffee.
