The BS Arguments of Craft Beer Sell-Outs: How Brewery Buyouts Hurt Craft Beer

Let me tell you who I care about, in the world of beer: I care about the craft beer industry as a whole. I care about selection and availability of great craft beer, and at night I dream of a world where great beer from independent breweries can be accessed just about anywhere.

That dream is currently under attack, primarily by so-called “Big Beer,” but not entirely. For all of the wrangling and shady dealing that AB-InBev and MillerCoors are conducting in the American beer market, equally disturbing is the propensity of beer geeks and even food & drink publications to rationalize and apologize for the buyouts and practices that are currently driving craft beer into the most dangerous situation it’s faced in more than a decade. In some cases, would-be allies are willingly parroting back the exact marketing copy that AB-InBev would love to place in their mouths. Other times, beer drinkers are simply accepting the bullshit reassurances of just-purchased breweries who have huge monetary incentives to be dishonest.

But don’t take our word for it. We’re not here to simply rant and rave—we’re here to give you specific examples of BS rationalizations you’ll see in the wake of every major brewery buyout. We’re here to point out the logical chasms and blatant hypocrisy that proliferate in the public response to buyouts. And we’re here to point out exactly why these buyouts are so capable of devastating the craft brewing industry.

Edit: Another great perspective can be found in Chris Herron’s (of Creature Comforts Brewing Co.) recent, extremely interesting essay in Good Beer Hunting, in which he’s arguing that brewery buyouts are less about the profit that can be made off craft brands, and instead linked to protecting AB-InBev’s legacy “premium” lagers.

First, let us simply acknowledge that apologist screeds, whether they’re coming from just-purchased breweries or publications, always have one thing in common: They skillfully and selectively choose to address some of beer drinkers’ concerns about brewery acquisitions, while conveniently ignoring others to which they have no satisfactory answers. When confronted with difficult questions, they fall back on straw man arguments without ever addressing the biggest problems with Big Beer’s desire to dominate every facet of the U.S. (and world) “craft” beer market. And if we, the passionate beer audience who care most about the health of this industry let them get away with it, how can we expect ANY brewery to remain independent in the long run? If craft beer drinkers don’t show that they care, we’re not exactly giving a compelling reason for not taking an AB-InBev check, are we?

This conversation has risen to the top of the beer industry jetsam once again recently, following AB-InBev’s acquisition (via their faux craft division, The High End) of beloved Asheville, NC sour-producers Wicked Weed, who have been a favorite brewery of Paste over the years. To say we were disappointed is a vast understatement, and although we’re sure the beer will remain just fine (more on that momentarily), there are so many other factors to consider. In the piece that follows, we’ll run through some of the BS rationalizations that have been made for brewery acquisitions, while referring at some point to this 2016 piece from Serious Eats, “What ‘Selling Out’ Allows a Craft Brewery to Do,” which I consider emblematic of the apologist attitude mentioned above.

Line of BS: “This buyout will allow access to new distribution networks and can get the beer to customers in new markets! You’ll be able to get our beer in more locations than ever before!”

Translation: Sure, at the expense of small breweries in those new markets, and local competitors at home.

It’s amazing to me how your average craft brewery can be so passionate about “supporting the industry” right up until the day of their buyout, and then suddenly turn the tables afterward and announce to their fans that one of the advantages of the sale will be “access to new distribution networks.” They are, in effect, asking people who drink their product to stop caring about any other brewery the second they do this. “Be happy for us,” the brewery asks. “Be happy that we’re entering new states. Sure, we’ll be doing so with the backing of AB-InBev, and yes, our product will be displacing small, independent breweries from tap handles and grocery store shelves, often via illegal pay to play tactics they’ve been caught for repeatedly, but the important thing is, it will be GOOD FOR US.”

Does a company like AB-InBev, when it acquires the likes of Wicked Weed, truly believe that the average, run-of-the-mill beer drinker in Asheville, NC, exclusively cares only about seeing Wicked Weed succeed? Do the owners of Wicked Weed believe their drinkers want to see only Wicked Weed thrive, rather than the several dozen other breweries that exist in that city? Because that’s the only person they’re making an appeal to, with “we’ll have access to new markets”—someone who has an intense desire to rationalize their local brewery’s choice to sell out. Go read that Anheuser pay-to-play settlement again, from only a couple months ago—it’s one of the largest ever at $400,000, but that money still means nothing to AB-InBev. It’s more efficient and profitable for them to break the law and pay occasional slap-on-the-wrist fines, rather than give craft beer a legitimate playing field. Now ask yourself: Why would you choose to support this, when you don’t have to?

It isn’t difficult to see the effects of AB-InBev’s faux craft portfolio in action. How many airport bars or neighborhood sports bars have you been at in the last two years that have been filled almost entire with AB-InBev-owned brands? They’re relying entirely on the consumer’s willful ignorance in knowing/caring which brands are owned by whom. The customer walks in, sees tap handles from Goose Island, Elysian, Wicked Weed, Golden Road, Four Peaks, Blue Point, Breckenridge, 10 Barrel, etc. Looks like a nice little craft selection, right? Except for the fact that the profits of every one of those places go straight to the coffers of AB-InBev, and are then levied against the rest of the craft industry.

Line of BS: “It’s a BUSINESS. The point of a business is to make money. Are they not allowed to cash out? What’s the difference between this buyout, and ____ other buyout?”

Translation: “We desperately want you to pretend that every single buyout should be treated equally, regardless of the company’s reputation.”

This is one area where I diverge from the Brewers Association’s rather limited perspective on what does and does not constitute “craft beer.” In their eyes, Founders Brewing Co. selling a 30% stake to Spanish brewing conglomerate Mahou-San Miguel—who have basically no presence in the American beer market of any kind—is the same thing as Wicked Weed’s 100% buyout by AB-InBev, which produces the most widely consumed beers in this country. I don’t think it should be too complicated to understand why these two cases are significantly different, and it shouldn’t be treated as absurd that the consumer would thus perceive the two “buyouts” differently as a result. Put bluntly: One brewery sold a portion to a company that isn’t actively undermining the craft beer industry in the U.S., and one sold a 100% stake to a company that is the single biggest threat to the success of that industry. These things are not equal.

founders buyout inset.jpg Should a 30% stake to a Spanish company with no presence in U.S. beer really be considered the same as a 100% buyout by Anheuser Busch? We say no.

This is all to say the following: Yes, it makes perfect sense as a consumer to treat one buyout as different than another, and it doesn’t make you some kind of hypocrite to examine these breweries on a case-by-case basis. And likewise, it’s not unreasonable to expect craft breweries that care about the industry to find a non-AB-InBev or MillerCoors solution to finding investment or cashing out.

It should go without saying that it is the right of these companies’ founders to eventually sell the brewery they worked to create, but recent years have demonstrated a variety of alternative routes that breweries both large and small can take in order to do so. Look at Oskar Blues and Cigar City, which both became part of Fireman Capital’s United Craft Brews LLC company. St. Louis’ Schlafly (Saint Louis Brewery) was able to find local investors when they sold out, in the form of Sage Capital. Victory Brewing Co. and Southern Tier joined forces to form Artisanal Brewing Ventures with Arbor Investments. And on a smaller level, Stone Brewing Co.’s True Craft program intends to invest its $100 million fund specifically into small breweries looking for investment of less than 25% of their companies, with a stated goal to “allow brewers to continue to operate independently without having to borrow from banks, sell to traditional venture capitalists, or sell to multinational conglomerates.”

What do all of these alternative sources of investment/buyouts have in common? Well, as far as we know, none of them are making campaign contributions to your local state rep/state senator in exchange for opposing any forthcoming, pro-craft beer legislation in your state. This is why ownership matters. If you’re a Georgia resident, and you’re wondering why the state is JUST NOW, for the first time, able to sell you a pint of beer at a local brewery, look no further than local lobbying from AB-InBev and the distributorships that are in bed with them.

Here are some eye-opening numbers. In North Carolina, where Wicked Weed just sold to AB-InBev, the N.C. Beer & Wine Wholesalers Association has contributed a total of $696,462 in lobbying in the last three state election cycles. The Craft Brewers Guild, on the other hand? A total of $13,000. Is it any wonder that HB500, a craft beer bill designed to modernize the state’s beer industry and increase the self-distribution cap, just had all of its most important provisions stripped out, despite support from the public and the breweries? How can small, independent breweries stand up to that kind of lobbying to state reps who don’t care about public opinion or supporting small business?

To quote the statement from Craft Freedom, a coalition of N.C. breweries that were supporting HB500:

“We are disappointed with the outcome of today’s ABC Committee Meeting. The barrel cap & franchise reforms were stripped from HB500 before the vote to pass it. But, our fight continues… We are especially disappointed that some members of the General Assembly would side with an established foreign beer distribution cartel that has a long history of back room political deal making. It appears that backroom political pressure is more important than public opinion or fighting for North Carolina small businesses.”

So in short: Sell your company whenever you want, but don’t pretend that AB-InBev or MillerCoors are the only avenues to do so. Breweries like to couch this choice as “We’d rather be owned by ‘beer people’ than banks or private equity, because they understand our industry better,” without acknowledging that the reason AB-InBev “understands the industry better” is that they have plenty of (occasionally illegal) experience in attempting to crush their craft competition. So it would be more truthful to say “We’d rather be owned by someone willing to apply their unique brand of ruthlessness and anti-craft fervor in a way that benefits us,” but that doesn’t sound quite as pleasant.

Line of BS: “As long as the beers don’t change, what’s the problem?

Translation: “Please judge us exclusively by this standard, given that we have no answers for your other concerns.”

The single biggest, most common deflection of any concern a craft beer fan espouses over brewery buyouts is to simply make this promise: “Our beer won’t change. Don’t worry! Your favorite thing will remain the same, so please allow this to placate you entirely.”

Nevermind the fact that the company’s profits will now be channeled toward the shady practices cited in our response to the two previous lines of BS. This is the “best practices” reply that breweries purchased by AB-InBev have come to realize gets them off the hook with the greatest number of fans—simply ignore all serious criticism, and cherry-pick any opportunity to respond to accusations that “the beer will change.”

Let’s get something clear, here: The people at AB-InBev and MIllerCoors are not stupid. They have long since realized that actually trying to mess with what these craft brewers are creating is a bad strategy that comes with negative headlines. They purchase successful companies with well-liked core beers, and they allow those core beers to remain relatively unaffected—even if they do often transfer production of them off-site to AB-InBev mega facilities. But in general, issues of “beer quality” are the last thing that craft beer fans need to be concerned about.

This has admittedly been rather difficult for many beer geeks to wrap their heads around. We feel righteous anger when beloved breweries such as Wicked Weed are bought out, but we give those companies constant escape routes for accountability when we claim that the product will now be “watered down” or magically changed into swill within a month. In doing so, we’re tacitly admitting that the only bar they should have to pass is keeping their product tasting the same, when in reality that should be the assumption in 2017, rather than some kind of exception.

By way of illustration, allow me to post the text of several questions posed to Wicked Weed’s Facebook page in the immediate wake of their buyout. Let’s see which ones get answered. You can see every one of these comments on the initial buyout post.

Facebook commenter: “Good business move, but let’s see the quality of the products. Mass production doesn’t typically bode well for quality. Hoping for the best.”

Immediate Wicked Weed response: “Our beers will continue to be made here, with the same attention to detail as always.”

Facebook commenter: “Quality is only one issue. AB-InBev fights craft brewers at every turn. Their endless amounts of cash lobby heavily in politics to keep their stranglehold on the market. Wicked Weed is basically throwing the middle finger at all other craft brewers who are trying to carve out a niche outside of big brother brewing co.”