I will never forget where I was when I heard the sad news. I was standing in the brewery at Naked City Brewing when I heard the terrible report. A day that will live in infamy. Well, not really.
The word hit the streets this morning and was met with dismay, disbelief, and even anger. Most craft beer lovers, and especially those in Oregon and Washington, considered it sad news to hear that Anheuser-Busch acquired 10 Barrel Brewing. The Bend-based company released a video announcing the purchase agreement, which I share below and encourage you to watch. Hear their side of the story.
Plenty of people are spitting venom at 10 Barrel Brewing right now, and it’s tempting to jump on that bandwagon, but I won’t. I don’t mean to justify anything. I’m not condoning anything. Certainly, I’m bothered by it all as much as anyone, but I think a level-headed discussion is valuable.
My thoughts:
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
sponsor
1. Anheuser-Busch and the other big beer companies have been losing market share for years now. In recent years, overall beer sales in America have declined. As beer sales declined, the craft beer segment grew, and continues to grow. They shrink, we grow. Big Beer has been losing market share, not only to craft beer, but to imported beer, liquor, wine, cider, and other adult beverages. Buying craft breweries like 10 Barrel Brewing, where and when they can, is just one aspect of what I imagine to be a very serious, multifaceted strategy to maintain and grow profits.
2. The best part of the beer business is the beer; the worst part of the beer business is the business. It might be easy to call them whores or sell-outs, but remember that this is business. As beer drinkers, we too often form an emotional attachment to breweries. We somehow feel like it is our brewery. It’s not. Beer. Business.
3. They don’t owe us anything. 10 Barrel Brewing is not in the business of making us feel satisfied, or complete, or emotionally fulfilled. This is not Don Quixote Brewing Company. They are not obligated to be the David versus the AB Goliath. For all I know, this is exactly why 10 Barrel Brewing started in the first place. This might be the realization of their ultimate dream. If it is, good for them. Mission accomplished.
4. Don’t hate them, yet. The legendary Portland publican Don Younger once said, “It’s not about the beer, it’s about the beer.” I read that to mean, nothing else matters–if the beer is good, then it is good beer. 10 Barrel Brewing claims that they will continue to operate autonomously with the goal of making and selling more great beer. I’m going take them at their word. Well, for now. I’m moving forward with cautious pessimism.
5. Most craft beer drinkers don’t care. If you read the Washington Beer Blog, you are part of a small minority within the larger realm of craft beer drinkers. You’re hardcore. You are really into it. Most craft beer drinkers these days are much less concerned with this kind of stuff. The reason craft beer sales have skyrocketed is because craft beer is attracting a new and ever-growing audience. It’s not just about us beer geeks anymore. If it was just about us geeks, there would be no growth and Big Beer Company would not feel threatened.
6. Get used to it. Many of the craft breweries we love are not exactly new. Some have been around for 20 or even 30 years. That means the people who started and presumably still own these breweries might be looking for exit strategies. When Anheuser-Busch purchased Goose Island Brewing, part of me said, “Damn, that’s a shame.” Upon hearing the dollar amount, another part of me said, “JACKPOT, congratulations and thank you for 20-something years of great beer. Now go enjoy the fruits of your labor.”
7. IMPORTANT TO REMEMBER that there are still over 3,000 craft breweries in America that Anheuser-Busch does not own. The vast majority of those breweries are not for sale.
I am aware that you might feel like I’ve betrayed you, my fellow beer lover, by saying some of these things. I love craft beer as much as anyone and feel no need to defend myself. I am just trying to be a realist. My relationship with craft beer, just like yours, is emotional and personal. At the same time, I think it is good to accept the reality that the beer business is in fact a business. It is a beautiful, delicious, and growing business, but a business nonetheless.
I guess a name change is in order – 10 Million Barrel Brewing Co. Sad.
Bill, I understand they were already on pace to end the year as 40,000 Barrel Brewing before this announcement.
I agree with pretty much everything you said, and I don’t fault 10 Barrel for making the decision if they thought it was in their best interests.
What worries me is what the future holds. If the big conglomerates buy a craft brewery here and there to have some presence in that segment of the market, that’s fine. If they start using their clout with distributors to make life even more difficult for the small craft breweries, that would be bad. If they start buying up more and more breweries and shutting some down, essentially re-starting the consolidation process that we saw in the last century, that would be terrible.
Perhaps those are unfounded concerns, I don’t know enough about the industry to know, this is just coming from a consumer’s perspective.
I wonder if the PR folks at AB asked them to hold bottles when they were making that video.
I echo John’s concerns – if this means an increasing number of tap handles and shelf space are taken up by fewer choices because of Big Beer distribution clout, then this really is a dangerous time and trend. Squeeze the small breweries out with a stealth campaign – stealthy because the brews squeezing out the indies are seen as indie in brand, but aren’t indie in deed.
If they can all coexist, great. But if they start to squeeze the playing field… bad times.
I would drink anything from Don Quixote Brewing Company.
The concern is, what happens when, not if, they flood the local market with loss leader kegs. Earlier this year AB-Inbev began a program of predatory pricing in WA and OR, and were selling kegs of Goose Island IPA for $56.
$56
That’s right, a 1/2 barrel keg for half the going price of a “cheap” keg of mass-IPA.
Ours go for about $140. I can’t make beer for $56 a keg. But they can take the hit, take over taphandles, and kick us right in the kegs. Now they’ve got a known, locally popular brewery that’s already cranking out 40,000 barrels, the risk is even worse.
I think we easily think of it as AB making the deal. It’s important to remember that it’s AB Inbev, the global conglomerate, not the American company. That being said, if the beer is still good, I’ll continue to buy it as much as I already do. Can we really still complain about the 40% equity AB Inbev holds in CBA anymore?
I agree with Beer Stone and Steve. Even if the beer stays the same at 10 barrel, which I doubt due to previous QC problems. It is the AB machine that ruins the craft beer market. They will take 10 barrel and jam it down the throats of the distributors and bars with resources that small craft brewers don’t have. The already cheap 10 barrel keg gets cheaper, comes with perks, the 6 pack is on post off even more often and for less, making it difficult for the other 3000 breweries that can’t sell beer that cheap because they don’t have billions of barrels of other beer and how many other brands to lean on. It un-levels the playing field and will damage the craft beer market, especially in the NW.
Good for the 10 barrel owners for getting their pay check, I can’t say I wouldn’t be tempted if I was them, because it is business. But, frankly they are sellouts, that is exactly what they did! I hope the 10 barrel brewers jump ship and start something worth while, because if I was them I’d be pissed right now.
As a brewer, I understand their motivation. On the other hand it bugs me that buying their beer, which I enjoy, will from now on be putting money in AB’s pocket, where they can use it to continue lobbying for laws that hobble independent craft brewers–the recent Florida growler/on-site sales issue springs to mind.
Still, I can’t really hold it against them.
Yes it is a business and they can sell to whoever they like. As a consumer I can buy from who I like which will not be 10 barrel any more. I support small business and local brewers. Yes I will pay more for the privilege because it is worth it.
I love how you always keep it chill when having to deliver news such a this. Stay Classy Kendall!
None of the tasting criteria for good beer include the brewer’s business model. Remember when Consumer Reports tested 23 leading beers last year and Shock Top scored very well?
The shakeout in the late 90s had as a very small factor A-B pressure on its distributors, Tom Aciteli says in The Audacity of Hops. His conclusion: the biggest factors were people going into brewing as a quick-bucks opportunity and making bad beer. Yes, distribution can be a problem down the road for new breweries who want to have a presence beyond a 50-mile radius (Not everyone does, especially not in their first few years). We do have a few distributors who are craft-centered and prosper without any of the big three. and we may have a few more spring up.