Elysian_6-pack

Addressing the Elysian Brewing situation

At least one of my previous posts on this subject was, perhaps, a bit too personal and I know some people took it to be self-aggrandizing. I didn’t mean to come across that way and I’m sorry. Also, some people thought I was apologizing for Elysian Brewing’s decision to sell itself to Anheuser-Busch, which I did not mean to do.  Maybe I was just too freaked out to clearly express myself.

Below, I address some of what I have observed on Twitter, Facebook, and the larger conversation in general. This time, I’ll try to stay out of the way and simply share what I know. Maybe you already know all of this, maybe you don’t.

· Who made the decision? There is (was) more than one owner of Elysian Brewing: a small group of private owners, not “shareholders.” Selling to Anheuser-Busch was not a unanimous decision, but it was the majority decision. Dick Cantwell, one of the founders and the head brewer, was in the minority. To a large extent, Dick is the face of the brewery and many people have been talking as if it was his decision, so people should know that he was outvoted.  I do not know how other individuals voted, only that Dick opposed the decision, which is something he told me and others.

· Why did Elysian do this? The company seemed to be doing just fine? Why sell? We probably all have our opinions and the answers being provided by Elysian and Anheuser-Busch at this point seem scripted and cliche, which is understandable and predictable. Presumably, AB made an offer and Elysian accepted.

· Did Elysian Brewing sell out? Yes. Objectively or subjectively, yes. They have not disclosed a dollar amount or the nature of the agreement. AB is a publicly traded company so we should expect some disclosure at some point. Sell out is an emotionally charged term and there is probably a less evocative way of saying it, but a horse by any other name is still a horse.

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· What does this mean for Elysian’s employees? THAT is the real human face on this thing. If you feel betrayed, just imagine how the employees feel. For the long-term employees, especially, this must be a gut-wrenching development. It’s still a fresh wound. We have no word on how it will actually impact employees. Better wages? Better benefits? Worse? Are their jobs at risk? We simply do not know and I won’t speculate because we’re talking about real people. I know this, some of the employees are very bothered by this development.

· Will the beer change? The official word is that it won’t and that Elysian will continue to do, and brew, what it wants. We’ll find out.

· Will Anheuser-Busch screw up the beer market now that it owns Elysian? They have a proven track record. After taking over Goose Island Brewing, they undercut prices, selling kegs of beer at deflated prices to saturate the market and, presumably, push out local brands that actually need to make a profit on their IPA. Will they do that around here and wherever else Immortal IPA is sold? I’m expecting it.

· Should you continue to drink Elysian Brewing’s beers? Some beer drinkers hold breweries to a higher ethical standard than they do other companies and may opt not to support AB by drinking Elysian beers. Other beer drinkers don’t care and drink what is good and/or affordable. I suspect the former will be more vocal about their decision than the latter. It’s a free country and you can vote with your dollars.

· Will Elysian beers now be brewed regionally at big Anheuser-Busch facilities across the country? I don’t know. Probably. Why not?

· How do other breweries feel about this? Over the past few days, I have heard from several brewery owners, brewers, and beer industry folks. (I don’t mean that to sound self-aggrandizing, but that’s how it is.) Their opinions are all over the map. Some say things like “Congratulations.” Other say things like, “F#*% Elysian!” Some believe that this was a business decision and the owners acted within their rights as business owners. Others see this as a complete and utter betrayal and they are pissed. Congratulations or betrayal seem to be the two common themes I’m hearing.

· What do they mean betrayal? We all know that there is a distinction between craft breweries (as defined by the Brewers Association) and mega breweries like Anheuser-Busch. So when a craft brewery sells out to Anheuser-Busch, it is always considered a betrayal of some sort. That’s understandable. However, many people (both consumers and industry insiders) feel that Elysian’s sellout was especially poignant because the company for so long was a cheerleader in the “us against them” beer battle that all craft breweries are waging against the big beer companies.

When 10 Barrel Brewing Company sold itself to AB back in November, it wasn’t nearly as poignant. People had no idea about the kind of ideals to which the relatively young company subscribed. However, Elysian Brewing was never shy about its position against big, corporate beer. So yes, for beer consumers and other breweries, many of whom idealized Elysian until last Friday, this is an especially difficult pill to swallow.

Elysian_new_loserWill they continue to make Loser Pale Ale, with its current tagline? Yes, that’s what I’m hearing.  Apparently corporate beer still sucks. But now the statement is a deeply paradoxical riddle, or something.

· Elysian Brewing is no longer a craft brewery. That’s not an opinion. That is according to the official definition provided by the Brewers Association, the national organization representing the interests of the craft beer industry. Elysian is no longer privately owned and therefore is not a craft brewery. Again, this is especially poignant because Dick Cantwell, one of the owners of Elysian, was for so long an important part of the Brewers Association. I would imagine that he was part of the discussion of “how to define a craft brewery.”

· Will Dick Cantwell continue in his role as President of the Washington Brewers Guild? That remains to be seen. I know this, while I sit here writing this, he is in Olympia leading the troops as they spread out across the capitol to rally support for the beer industry (see my post about that).

· Is this part of Anheuser-Busch’s master plan to destroy the craft beer industry? From what I see, purchasing breweries like Elysian is part of a larger plan to recapture market share that it is losing to craft beer. Shock Top and the other faux craft beer brands are also part of that plan.

In recent years, overall beer sales in America have declined. As that happened, craft beer sales increased consistently and convincingly. Beer is a $100 billion per year industry, of which companies like Anheuser-Busch control about 90 percent of the sales. It would be unrealistic to expect them to roll over and play dead while craft beer (and imported beer, too, by the way) steals their lunch. Also, you should expect snakes to behave like snakes. Are you familiar with the parable about the frog and the scorpion?

· Is there any way –any way at all– that this development is a positive thing for the local beer industry? What do you think?

I encourage you to share your comments.



23 comments

  1. Thanks for wrapping it all up (for now), Kendall! We were shocked to hear of the sale to AB and didn’t realize Cantwell voted against it. Now it makes sense!

  2. I missed the news about 10 barrel brewing. Is there a good overview somewhere of who owns whom? I’m interested in both nationally known brands (Goose Island) and/or Washington breweries.

  3. Thanks for this level-headed post. They made their decision, and I’ll make mine by taking my money elsewhere.

  4. Interesting to hear bits about Dick being in the minority, and that there are a number of employees not very happy. I’m guessing that we may see another new brewery rise out of these ‘ashes’.

  5. AB-Inbev owns Goose Island, Blue Point Brewing (NY state), 10 Barrel, and Elysian. The other 3,396 craft breweries in the USA are not owned by anyone but themselves.

  6. Miller-Coors, as I understand it, doesn’t own any craft breweries. Unless you think of Leinenkugel’s as craft. It they did own a craft brewery, they wouldn’t be craft. They just create crafty product names and pretend. Blue Moon and Batch 19, for example.

  7. ABIn-Bev has their hands in a lot of “craft” beer brands. AB is a minority partner in Coastal Brewing Company on the east coast that owns Fordham Brewing and Old Dominion. More close to home (PNW) is the Craft Brew Alliance, which owns Redhook, Widmer, Kona Brewing, Omission Beer, and Square Mile Cider. At the moment, AB owns about 1/3 of the company. Conversely, the Widmer Bros only own about 18% of the brewery.

  8. Nice work as usual Kendall. One bone I might pick however is that Elysian is no longer a craft brewery because the BA sez it isn’t. The BA also sez that Sam Adams is a craft brewery, and so is Yeungling now apparently, but Widmer isn’t, despite all evidence to the contrary on the shelf and in the bottle. BA sez that a craft brewer can be up to 6 million bbl/yr… but then later on proclaim that “craft brewers are small brewers”. That’s what’s known as an oxymoron. Not sure it’s wise to consider the BA both judge and jury.

    Seems to me that we are headed towards a situation that is more akin to the wine world, where in the end there are two basic animals: “wine” and “cheap wine”. Which, in a sense, would be the ultimate victory for craft brewing as a movement.

  9. “Is there any way at all that this development is a positive thing for the local beer industry?”

    It’s possible that people will be more likely to start craft breweries if there is a chance that they can then sell them for a nice payout. So we could end up with more craft breweries in general, although they may be more ephemeral.

  10. I wrote a summary story back in October about the consolidations. Seehttp://www.hoppytrailsbeernews.com/2014/10/28/americanbeer/
    for details on who owns whom thesedays.

  11. Also, at last count there were 70+ other “craft” brewers still making great handmade beers just in King County, with several hundred in WA state. The purchase of one good brewery does not mark the end of the craft beer movement. I read somewhere recently that Budweiser has lost nearly 50% of its sales from ten years ago. They are desperate to be relevant to the 21-26 year old age group, who are drinking craft beer, wine and spirits.

  12. “Is there any way at all that this development is a positive thing for the local beer industry?”
    Knowing nothing of the dynamics at play this is probably a stretch, but would anyone in Craft NOT pick Dick Cantwell to get into the decision making process at AB In Bev? Maybe, just maybe, his voice could be heard in the halls, and if so, there’s your positive outcome, as there’s no better choice IMO to infiltrate the borg. He’s going to always be a positive force in craft, the question will be if he can do it there or do it somewhere else. He will not be assimilated.

  13. Typically a deal such as this would include a variety of no-compete, no-disparagement clauses for the principals. So what we’ll hear for the next couple years from Dick and Dave will be:

    “This is a good thing for the company. We will stay on. I am happy. Beep Boop.”

  14. My main concern with all these acquisitions is that it’s getting harder and harder to keep track of who owns what. It’s also becoming less of a black-and-white situation, so I’m still trying to sort some of it out in my mind. For example, if it’s not OK for A-B InBev to own Elysian, is it OK for Duvel Moortgat to own Boulevard and Ommegang? And if it’s not OK for A-B to have a 30% stake in the Craft Brew Alliance, is it OK for Mahou San Miguel to own 30% of Founders? Makes my brain hurt.

  15. It seems that this decision came about because Elysian “needed” to expand and was at a “crossroads”. The fact of the matter is, the way beer is currently they could have held steady at their current production and distribution, been profitable and independent. Elysian wants to be everywhere, and now they can be. There was another route, the one taken by Russian River.

  16. Brew Bound released a great article providing more insight as to what went into this decision. Not everyone was on board to go this route but in the end it wasn’t exclusively about the money but also what their long term plan is. I’m not happy with it but this shed a little light on the decision…http://www.brewbound.com/news/2015/inside-b-inbevs-acquisition-elysian-brewing?utm_source=Brewbound&utm_campaign=2cb8351b94-mailchimp&utm_medium=email&utm_term=0_6026cb3473-2cb8351b94-168864501

  17. I’ve taken a lot of heat for what I wrote about this, not that I care about that but what was curious is that, as opposed to when I laid into 10 Barrel, ALL the negative reaction to my umbrage at the sale came those who consider themselves the icons of craft beer. As the comments here show, and ALL of the 250+ replies I’ve had by email, there is an almost unanimous disappointment among the general beer fan polulation. I’m curious to see if that “beer intelligentsia” will be as offended by what you wrote as they were by me. I freely admit that you’re a gentleman and I’m a curmudgeon but we essentially said the same thing. I do want to refer to what JoeDog said above, though. Joe, nobody cheerleads harder for great brewers to be rewarded than me and I know Kendall feels the same but if Elysian really needed to grow, there are a LOT of different ways to go about it other than to sell your brewery to a company with a horrid track record of shady business practices and an undisguised determination to control America’s beer culture. They could have offered the brewery, ala Full Sail, to their employees and let them buy in. They could have made inquiries to Diageo or SAB Miller or Molson Coors or Duvel Moortgat or Seagrams or any of the other major spirits congloms, who do NOT have such an ugly history. They could have even just approached a bank and asked for financing, OR – especially here in Seattle! – could have found private investors. This area is crawlin’ with venture capitalists. I accused them of being lazy and uncreative and I absolutely believe that they were…BUT it makes me very happy to know that Dick Cantwell was a dissenter to this sale. I owe ya one, Kendall, for that little tidbit. I HATED taking a swing at Dick and will gladly go back and do an update. Meanwhile, I’m right with everybody here, on TWO points: Sad about this sale, and grateful to Kendall for writing such an even-handed explanation.

  18. Oh Steve, the “Beer Intelligentsia” is “offended” by you because you’re an obnoxious blowhard and we don’t take anything you say seriously. But like Oscar Wilde said, the only thing worse than being talked about is not being talked about, so you got that going for ya. Not that I claim to speak for all of us in this, of course. That sort of thing has to be ratified at our bi-monthly cabal.

    But I did read your piece, both of them actually, and I do agree with almost all of the sentiment in it regarding Elysian. A little tip though: if you’re going to position yourself as being on the defensive against some onslaught of scurrilous counter-opinion, at least cite some comments or emails or something. It read like a crazy person shouting at an empty room.

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