Big beer companies appear to be coming for our beloved craft breweries.
In the United States we’ve seen big brewers buy up Pyramid, Magic Hat, Anchor Steam, Kona, Goose Island, Blue Point Brewery Co, 10 Barrel Brewing, and Elysian. Much closer to home, through Labatt, we’ve just seen AB InBev make what will almost certainly be the first of at least a couple moves into the Canadian “craft” market by buying up Toronto’s Mill Street Brewery.
And while our instincts may be to arm ourselves and barricade the doors of our favourite local brewpub–or worse, take to greasy laptops in our collective mothers’ basements in order to fill the internet with cries of “sell out,”–we really probably shouldn’t panic. Because whatever big beer’s designs might be, I don’t think they’re going to work.
Clearly big breweries have recognized the value of craft beer. The Brewers Association last year reported that craft beer accounted for 11 per cent of beer produced in the US in 2014, a number that, while impressive in and of itself, is also shocking given that it represents 18 per cent more craft beer production than the previous year. In Canada too, we’ve seen a 70 per cent increase in the number of licensed, small-scale brewery operations in the last five years. A Financial Post article/infographic of last year even posits that breweries under the 100hL threshold enjoyed a 10 per cent market share in 2015. For big brewery executives reading financial papers as they take a break from grinding up interns to feed to their Scottish work horses, these are figures that are hard to ignore. And so, perhaps predictably, they’ve done what big breweries have done for nearly a century, and have swooped in to buy up some of these increasingly valuable assets.
The irony of course is that, the minute a “craft” brewery is purchased by a huge, industrial-lager-churning macrobrewery, it ceases to be a valuable asset because it loses precisely what it made it valuable in the first place. That is to say, the value of craft beer–the secret to its growing market share–likely lies within its inherent smallness.
More than simply interesting-tasting beer, craft beer offers a sort of philosophical opposition to macro-beer. One needn’t look far (see: this blog) to see that craft beer nerds often align themselves with craft brands not just because they tend to make more interesting beer, but also out of a sense of loyalty to an ideal. Craft beer appeals to people who choose to see the world as a struggle between big corporations and hard-working, “authentic,” or smaller businesses. Craft beer thus has a built-in narrative of “us vs them,” “David vs Goliath”–it is the crafty “other” option for any consumers who care at all about who makes their beer, where it comes from, and what goes into it. Craft beer then has something I’ll call “philosophical currency.”
Highly intangible, philosophical currency trumps logic. Many people will forgo the cheaper version of something or will sidestep the more convenient option out of a sense of loyalty to the philosophy (be it real or just perceived) behind their favourite products. In the case of beer, fans of craft beer will skip the far more cost effective 2-4s of beer in favour of $13+ bottles of specialty beers and they’ll often walk past their local liquor store to buy their beer directly from the folks who make it a block or two further up the road. The value of philosophical currency thus defies many of the marketing principles that big beer executives likely recite each night before they seal their cryogenic champers and/or have had tattooed on their chests since business school.
And so when big beer tries to cash in on those sexy and growing craft-beer market-share numbers that they read about, their efforts are fatally flawed by design. Big beer can’t truthfully co-opt craft beer’s philosophical currency because the very act of buying a craft brewery (or inventing a pseudo-craft beer) confounds the very narrative that makes craft beer valuable: “It’s small. It’s local. It’s quirky. It’s people just like us making beer in the community.” Yes, virtually all the working definitions of “craft” are vague, but if you can trace the hierarchy of your business up to a place where Carlos Brito sits–presumably atop a purple panther that subsists on the dreams of entrepreneurs–few consumers will be willing to agree that you are still a craft brewery.
And so big beer’s efforts to capitalize on craft beer’s growing popularity will fail.
Despite what Labatt’s Shock Top marketing team might think, consumers actually aren’t that easily duped. When your target market seeks authenticity and independence, it’s virtually impossible to fake it and a craft brewery that is now owned by a huge, profit-driven conglomerate will by definition lose its philosophical currency.
With no more philosophical currency behind these brands, they’ll soon lose the thing that made them valuable. And when AB InBev or Molson-Coors, or whomever–who are nothing if not shrewdly aware of the value of things–sees that the craft brands they’ve purchased are being devalued, it’s a pretty safe bet they’ll change strategies and, eventually, these “buy outs” will become a thing of the past.
So we needn’t be scared of them. We actually ought to be scared about what they’re going to try next.