There's this weird thing about the beer industry; as beer drinkers, we don't seem to necessarily think of it as a business. Obviously, we're aware of the reality that beer costs money and we are adult enough to realize that someone's making a profit off the fact that we like a refreshing buzz after a long day. But we hold beer companies to a different standard than we would, say, a manufacturer of light bulbs.
We expect more from the folks who make our beer. We pretend we have a relationship with our favorite brewery. There's an emotional attachment we have with a favorite IPA, and we associate a sense of tradition with a sixer of tall cans when packing them along for a fishing trip.
Craft breweries, especially in the Northwest, have succeeded in treating their patrons as more than customers or even fans, instilling in drinkers a sense of equity in their operations — like they've helped build something pint by pint. That's probably the most worthwhile return (other than tasty beer, of course) you get by devoting your money and free time to a particular brewery.
But there is big money in beer. We've been reminded of that a lot recently, mostly because one company, AB InBev (a Belgian company that bought the Anheuser-Busch empire), is hoping to acquire SABMiller for $107 billion in what would be one of the biggest financial mergers — of any industry — in history. Had SABMiller not announced that it was selling off its 58 percent share in MillerCoors in order to dodge antitrust laws when the deal goes through, we'd have one company owning the majority of the world's beer.
"By pooling our resources, we would build one of the world's leading consumer products companies, benefiting from the experience, commitment and drive of our combined global talent base," AB InBev CEO Carlos Brito said of the deal.
But there's the problem. I'm not sure beer drinkers want to drink the creation of one of the "world's leading consumer products companies." It sounds like they're selling Soylent Light.
AB InBev clearly has plenty of cash on hand, and they'll continue to make up a sizable chunk of the U.S. beer market, but they're a little worried about how drinkers, especially younger drinkers, are opting for local craft beers over the sort of stuff sold with bikinis on billboards. Because in our corner of the country, most of the beer taps at your neighborhood pub are from local or regional breweries, you might be surprised to know that craft beer made up only 11 percent of total U.S. beer sales last year, according to the Brewers Association. No matter how poetic I wax on this subject, the reality remains that a hell of a lot of people in a hell of a lot of places want Coors Light for some reason. Still, the craft share is growing, and growing fast.
So what do companies like AB InBev do when their dominance, all but unquestioned for so long, is truly challenged? They buy up their competitors, of course. Just this week, Ballast Point Brewing out of San Diego was purchased for the astonishing sum of $1 billion by Constellation Brands, a company that owns numerous wine labels, including Robert Mondavi, as well as Corona, Black Velvet whiskey and other spirits and beers. That number is insane, but Ballast Point has doubled production from 2014 to almost 123,000 barrels a year in 2015, and Constellation is clearly betting on the future of the brewery.
Closer to home, both Oregon's 10 Barrel Brewing and Seattle's Elysian Brewing Company were sold to AB InBev within the past year. Some devoted fans of those brands jumped ship at the news. Others just shrugged, because the beer has remained pretty damn good. And although every local brewer I've asked has told me they'd never sell out to a big beer conglomerate, I imagine that when a suit walks into your taproom with a $25 million check (the estimated price paid for 10 Barrel, which had only been open for eight years), you might change your mind.
There is, however, a keen way to bridge the divide between being a brewing behemoth and tapping into the beer fan's loyalty, and you can see it with Pabst Brewing Company. The company, under the direction of CEO and beer industry veteran Eugene Kashper, has bought up nostalgic regional brands and kept them alive. In the Northwest, they have Rainier and Olympia; in Texas, it's Lone Star; in Chicago, Old Style. Perhaps on the ledger books, this isn't much different from AB InBev's steamroller. But it sure feels a lot better when you go looking for a cheap sixer to pick up something unique to your region, and not a Big Brand.
Again, it would be ignorant, at best, to think that brewers large and small would eschew the trappings of free-market capitalism just because beer snobs have a warm feeling in their guts. But in the end, any product's fate is controlled by the consumer, right? Drink with authority, because you're shaping an industry and you don't want to be sold a light bulb. ♦
