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Big beer vs. craft beer, a David and Goliath story

14 Dec

BA_logoThe Brewers Association, a non-profit organization that acts as an advocate for small brewers and brewing enthusiasts, fired shots across the bow of the mega beer producers of the nation yesterday, December 12. Charlie Papazian, president of the organization along with Bob Pease, the groups COO, and Dan Kopman who serves as a member of the Brewers Association Government Affairs Committee and is CEO of Schlafly Beer in St. Louis, authored an opinion piece that ran in yesterday’s St. Louis Post-Dispatch. While on the same day, the Brewers Association website published a similar piece.

The articles call out the likes of SABMiller, A-B InBev, and Heineken for jumping on board the craft beer band wagon and producing brews like Shock Top and Blue Moon. The op-ed says, “…they don’t label these faux-craft beers as products of A-B InBev and MillerCoors

In the article on the Brewer Association’s website, it is said, “The large, multinational brewers appear to be deliberately attempting to blur the lines between their crafty, craft-like beers and true craft beers from today’s small and independent brewers.”

Papazian has long been known as an advocate for small, craft beer producers. In 1978 he founded the American Homebrewers Association as an education and advocacy group for home beer-making enthusiasts. His group later merged with the Brewers Association and he became president. The group is well-known for its very visible festivals such as the Great American Beer Festival and Savour as well as its lobbying activities on behalf of small brewers.

In an article on the beer news website Beer Pulse, Tom Cardella, president and CEO of Tenth and Blake Beer Company, which markets brands like Blue Moon, Leinenkugel’s and Crispin Cider, responded:

“Anyone who visits Jacob Leinenkugel Brewing Company in Chippewa Falls, Wisconsin will understand the blood, sweat and tears that went into building that brewery, and they’ve continued brewing amazing beers for 145 years. And anyone who spends time chatting with Blue Moon Brewing Company founder and brew master Keith Villa will understand the passion and creativity that has gone into developing his Artfully Crafted beers for 17 years. To question the quality of these beers due to their size or success is doing a disservice to the entrepreneurs who created them, and to beer drinkers who love them. Most beer drinkers don’t get hung up on industry definitions, which often change. They just enjoy drinking great beer. Whether people call them craft or some other title is fine with us. We’ll just keep brewing great beer.”

Even Fortune magazine has taken notice of the actions of the big brewers. In an article that ran on their website November 15, the magazine says, “What’s noteworthy about these forays into the craft segment is the way these brands are purposely distanced from their Big Beer parents. You won’t find the Coors name on a bottle of Blue Moon. Rather, you see the name Blue Moon Brewing Company. The same goes for a bottle of Anheuser-Busch‘s Shock Top.”

To many, the actions of the large beer producers are signs that they are worried about the future of their brands. Indeed, over the past few years brands seminal brands like Budweiser and Coors have seen significant drops in their sales and market share. Research released by the Brewers Association shows that the overall beer industry was down 1.3 percent by volume and domestic non-craft was down 5 million barrels in 2011.

At the same time as the large American lagers have been seeing declines, the craft industry is experiencing unprecedented growth. Craft beer grew by 13% in 2011 and by an additional 12% in the first half of 2012.

A craft brewer, as defined by the Brewers Association, is a brewery that produces less than 6 million barrels of beer per year and is less than 25% owned by a national or multi-national adult beverage company. Meaning that brands such as Sierra Nevada, which produced approximately 724,000 barrels of brew in 2011, and Samuel Adams maker Boston Beer Company, which produced approximately 1.9 million barrels are considered craft breweries. By comparison, Anheuser-Busch produced a staggering 340 million barrels of beer last year.

The battle of David and Goliath between the big brands and craft breweries was made even more apparent in 2011 when a bill passed in Texas allowing small breweries to sell beer directly to consumers who toured their facilities. An article in the Houston Chronicle tells of A-B executive Mark Bordas appearing before the Texas senate committee that the bill discriminates against his company because it is tailored to breweries producing fewer than 75,000 barrels per year. Because of this, it appears that AB InBev is very concerned about the competition even the smallest of brewers introduces in the market.

Add to this that the major producers have been busily snapping up smaller breweries, and it is very apparent that craft beer is a force that big business wants to control. Just last year, AB InBev purchased popular Midwest producer Goose Island and has been rolling the brand out nationally. Other brands that have been folded into the big boys include Henry Weinhard, as well as large stakes in Red Hook, Kona, and Widmer Brothers.

In an interview with Bloomberg Businessweek Kopman said that all brewers should label their products so consumers aren’t mislead about a beer’s origin. “We definitely need to discuss this as an industry,” he said. “We need to have an agreed-upon standard for transparency where you are a multinational or an independent.”

And that is the true contention between the craft beer industry and the large producers. The mass producers seem to be trying to masquerade as craft brewers while the true craft brewers struggle to scratch out an existence among the heavily marketed and financed big boys. The Brewers Association ended their article by simply asking that beer-drinkers educate themselves on the beer they are drinking.

Keep up to date on all the beer happenings and news going on in town at the ALL NEW www.JaxBeerGuy.com.

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2 Comments

Posted by on December 14, 2012 in Beer, Beer News

 

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2 responses to “Big beer vs. craft beer, a David and Goliath story

  1. Timberati

    December 15, 2012 at 5:52 PM

    MegaCompany brands have always had an off-label brand to appear chic and trendy. Beer is just another product to them.

    What was Papazian’s organization? It probably wasn’t the AHA. According to BeerPulse.com, August Schell of Schell’s Brewing,said, “In 2005, the Association of Brewers, and the Brewers’ Association of America merged to form the Brewers Association…”

     

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