How the World’s Biggest Brewer Killed the Craft Beer Buzz
Steve Luke had plenty to smile about. Cloudburst Brewing, the tiny craft brewery he founded two years earlier in Seattle, had just won a bronze medal at the 2018 Great American Beer Festival in Denver. It was recognition on craft beer’s biggest stage — basically the Oscars of beer — but Luke, a lanky brewing virtuoso with a shoulder-length mane and a righteous beard, wasn’t content to bask. As the cameras clicked, he unbuttoned his plaid shirt to reveal another shirt beneath it that read in big, red block letters, “FUCK A-B INBEV.”
There was a quick chuckle in the crowd. Luke left the stage, and the ceremony rolled on.
In one sense, this was nothing new. A generation of independent brewers built craft beer partly by vilifying Anheuser-Busch InBev (ABI), the world’s biggest beer company, formed in 2008 when the Belgian-Brazilian juggernaut InBev purchased St. Louis’ Anheuser-Busch for $52 billion. It was good for business, a form of commercialized dissent. People could stick it to The Man — those soulless and tasteless swill-peddlers — just by drinking beer they liked. Drinkers and brewers alike started using words like “movement,” “renaissance,” “rebellion,” and “revolution” to describe America’s craft brewing culture. Quality and experimentation skyrocketed like never before. Microbreweries appeared in every state in America.
Today, there are 7,000 small, independent breweries in the country — the most since pre-Prohibition days — and craft beer is available on airplanes, in ballparks, and everywhere in between. And you might think, based on that, that this democratic uprising has given way to a new world order; that the people have spoken; that Small Beer has won.
You would be wrong.
For the past decade, Big Beer has been systematically buying up the craft breweries they couldn’t beat, and ABI has bought the most — 10 in all that were snapped up in a six-year shopping spree that touched virtually every major beer market in the country. A few months before Luke and his shirt arrived in Denver, sales among ABI’s acquired craft breweries eclipsed those of the country’s largest independents. Based on the industry’s benchmark retail sales metric, the world’s biggest beer company, long the Goliath to craft brewers’ David, had become the world’s biggest craft beer company as well.
The transformation comes at a pivotal moment for the $26 billion U.S. craft beer market. Growth is slowing, people are drinking less, and wine and spirits are gaining market share. With its unprecedented prominence in a category formed to oppose it, ABI is hastening American drinkers into a “post-craft” future in which macrobrewers make award-winning microbrews, drinkers don’t care who owns their breweries, and, amid the ruins, the once-ruthless ABI stands as the great unifier. It’s an ambitious vision for craft beer’s future that threatens to smother the revolutionary spirit that gave us craft beer in the first place — not to mention the revolutionaries themselves. If ABI can continue to consolidate its hold on the segment, Diana Moss of the American Antitrust Institute told me, “I fear for the craft brewers of America.”
From pastime to revolution
Craft beer was born in the mid-1960s, when an heir to the Maytag appliance fortune bought an erstwhile San Francisco brewery called Anchor and began marketing a full-flavored, malty “steam” beer as its flagship. The fledgling industry got a boost in 1978 when Jimmy Carter loosened federal restrictions on homebrewing, allowing a generation of hobbyists to pursue their passion for full-flavored beers as a profession. By the end of the ’80s, the number of American breweries had jumped from under 100 to nearly 250, though microbrewers were still an infinitesimally small fraction of the market. Budweiser, which sold nearly 50 million barrels in 1988 — a high water mark — had little interest in the fringe beardos selling weird beer a barrel at a time.
By the mid-’90s, however, even Anheuser-Busch’s most loyal distributors (the local, independent businesses that breweries are required by law to work with) were asking the company to add microbrews to its portfolio. Distributors were asking because retailers — supermarkets, liquor stores, and bars across the country — were asking. Drinkers wanted to try one of those new-fangled “microbrews” they’d been hearing about, and if Anheuser-Busch didn’t brew them, distributors would have to start working with breweries that did.
There was a culture war then raging against the machine, and drinkers took up craft beer as a battle flag.
Ceding this ground to other breweries, even then-tiny ones like Samuel Adams and Sierra Nevada, was anathema to Anheuser-Busch. So in 1994, Anheuser-Busch sent Tim Schoen, a three-decade company veteran, on a recon trip to the Pacific Northwest — then, as now, a craft-brewing hotbed — to figure out what they were missing. He came back with bad news.
“The authenticity of craft is really something that the big guys could not duplicate,” Schoen told me. There was a culture war then raging against the machine, and drinkers took up craft beer as a battle flag. They drank it because it tasted good, but they identified with it because it was cool.
Schoen tried to build an answer to craft beer from within the company, launching look-alike brands that had little apparent connection to Anheuser-Busch, aping Sierra Nevada with Pacific Ridge and Shiner Bock with ZiegenBock. It was a begrudging admission in St. Louis that microbrewing was no mere fad.
It did not go well. Aside from some infamous concoctions like Tequiza (a quickly killed blue agave and lime flavored lager), it wasn’t really the brewers’ fault. “We came out with some really good beers, and none of them really gained any significant traction,” said Mitch Steele, who worked on the craft beer skunkworks team at Anheuser-Busch in the ’90s and is now the brewmaster of Atlanta’s New Realm Brewing. While flavors could be cloned, the anti-corporate spirit could not. The craft beer aisle was like the staff cabins in Dirty Dancing. Tequiza was Steve Buscemi in the “How do you do, fellow kids” meme.
For a time, Anheuser-Busch seemed to be flailing. “A war was being fought every day for shelf space and tap handles, and Anheuser-Busch, for once, didn’t have the weapons to win,” wrote Josh Noel, a reporter at the Chicago Tribune, in his 2018 book Barrel-Aged Stout and Selling Out.
Some of the other macrobrewers fared better. Blue Moon, Coors’ in-house crafty brand launched in 1995, was growing at a 25-percent clip through the first three years of the new decade. Leinenkugel, acquired by Miller in 1988, saw similar growth.
Anheuser-Busch tried to arm itself in kind, contorting its premium Michelob brand into a dizzying array of craft-esque line extensions, from honey lagers to pumpkin spice ales, and launching Shock Top in 2006. But the company had also started investing in craft brewing in the ’90s, taking minority stakes in Washington State’s Red Hook in 1994 and Oregon’s Widmer Brothers in 1997. Those buy-ins were met with some grousing and contempt from the close-knit craft brewing community, but it wasn’t until Anheuser-Busch acquired 42 percent of Chicago’s beloved Goose Island in 2006 (under Widmer’s name, to deflect criticism) that things boiled over.
The Brewers Association — formed in 2005 as craft brewing’s trade organization — took action, ejecting all three breweries from its ranks. The “excommunications,” as Noel called them, were received with mixed feelings. Some members of the craft community were glad to draw a line in the sand. Others were sorry to turn their backs on their peers.
Keen observers, however, could see that more was at stake. “The move gave Goose Island the skeleton key of beer sales: access to Anheuser-Busch’s distribution network,” wrote journalist Nicholas Day in 2006 for the Chicago Reader. The imagery would prove apt throughout the next decade, as Anheuser-Busch InBev opened door after door for its acquired breweries, leapfrogging them ahead of their former revolutionary comrades and setting in motion a multistage plan to turn the tide in the craft beer revolution.
Stage 1: Co-opt key partisans
In July 2008, when InBev acquired Anheuser-Busch to become ABI, craft beer sales totaled less than 5 percent of the U.S. beer market. But then (as now) craft beer was one of the few segments still growing. So once the dust had settled on the merger, ABI sized up craft beer’s significance in the increasingly fragmented U.S. beer market and decided something needed to be done.
Not that the company had much of a choice. The U.S. numbers were troubling. Once-kingly Budweiser was down double-digits from its late-’80s zenith. Bud Light was bleeding a couple points a year. “With their domestic brands declining so much, it was only natural” that ABI would take another run at craft beer, said Mike Mitaro, an industry veteran and founder of Brewers Advisory Group, an independent consultancy.
Only this time, instead of doubling down on what it was bad at — creating authentic craft brands — ABI leaned into what it was good at: being a giant corporation. “InBev has always operated by acquisition,” said Maureen Ogle, beer historian and author of 2007’s Ambitious Brew. “So that’s what they did.”
The rest of Chicago’s Goose Island went first, in 2011. Then Blue Point, a Long Island brewery, in 2014. Between 2014 and 2017, ABI went on a shopping spree, buying up eight more craft breweries: 10 Barrel, Elysian (Seattle, Washington), Golden Road (Los Angeles, California), Four Peaks (Tempe, Arizona), Breckenridge (Colorado), Devil’s Backbone (Roseland, Virginia), Karbach (Houston, Texas), and Wicked Weed (Asheville, North Carolina). The craft beer community erupted with scorn at each successive purchase, labeling the craft brewers sellouts, scabs, and traitors to the movement. Jim Koch, founder of the Boston Beer Company (makers of Samuel Adams) and an elder statesman of the craft brewing industry, took to calling them “captive craft” brands.
From coast to coast, the company could compete directly with craft brewers on all the things that had brought drinkers to those breweries in the first place.
Company representatives insisted there was no overarching strategy to its shopping spree. But every acquisition pulled ABI’s hidden strategy into sharper focus: The company was acquiring craft proxies in the country’s most important beer markets, geographically encircling the nation’s brewers and the drinkers they served.
After completing its push into the U.S. South, buying Devil’s Backbone, Karbach, and Wicked Weed, ABI had a foothold in every major beer market in America. From coast to coast, the company could compete directly with craft brewers on all the things that had brought drinkers to those breweries in the first place: from founders’ funky backstories, to community ties and grassroots aesthetics, right down to the beers themselves, often with drinkers being none the wiser about who was signing the checks.
“There’s just too much of a lack of transparency on who really owns and runs these brands that are being marketed as if they come from these indie local craft breweries,” said Dogfish Head’s Sam Calagione in a recent phone call. This so-called “craftwashing” technique evokes a whole range of emotions in true-blue independent brewers. Plenty of sneering disdain — but some genuine gloom, too.
“When Anheuser-Busch [InBev] goes out of their way to hide the fact that these breweries had any association to the company that owns and runs them, it’s just crummy,” said Tom McCormick, the executive director of the California Craft Brewers Association. As a fixture in the Golden State’s craft brewing community for three decades, he views macrobrewers’ present interest in the category as “amazing” proof positive that he and his fellow revolutionaries were onto something. ”Back in the eighties, we had no idea what [craft beer] would become. We were in it because we loved it,” he said. Now, that labor of love is being overrun with companies that, in his estimation, “don’t care about anything but the money.”
“It sucks,” agreed Dick Cantwell, who co-founded Elysian in 1995 and cast the sole vote against its sale to ABI. Nowadays, he’s brewing again, this time at San Francisco’s Magnolia Brewing Co. “It’s a bit demoralizing to find that they have managed to kind of hit us where we live.”
But while it’s created anguish and anger within the industry, average drinkers might not even care. And that’s where ABI’s timing appears to be acute. When Tim Schoen took his Pacific-Northwest reconnoiter in the ’90s, craft beer was all “hopheads and hippies,” said Schoen, who today is the founder and CEO of Brew Hub, a contract-brewing company based in Lakeland, Florida. Craft beer was a subculture, a niche back then. “Well, fast forward,” he said. “There’s a lawyer, there’s an accountant, there’s a janitor drinking craft beer.”
That growing appeal with mainstream American drinkers proved to be a double-edged sword for craft brewers. It brought legitimacy, stature, and financial success for many of them. But it also brought a wave of drinkers more interested in good beer than the anti-corporate ideology from whence it came. On the way from cultural battle flag to mainstream beer category, craft beer became more popular, but less special — and that made it vulnerable.
After Wicked Weed’s sale to ABI was announced in June 2017, nearly 50 craft breweries pulled out of the Asheville brewery’s popular annual Funkitorium Invitational festival in protest, forcing the cancellation of the event. Some in the craft beer community claimed a moral victory, but true victory in the battle against Big Beer was more elusive than ever. ABI now had a freer hand than ever to wield the weapons — innovative beers, colorful brewers, and local breweries — once used against it, to shore up its portfolio, neutralize its competitors, and, of course, sell more beer.
Stage 2: Supercharge production
People in the beer business use the term “liquid” as a way of discussing the beer itself, separate from all the non-liquid stuff it takes to sell beer, like packaging, advertising, shipping, and so on. Like many independent brewers, ABI’s acquired craft brands tend be pretty good at making “liquid” that drinkers want. But ABI is really good at the rest. “They make beer more efficiently than anybody in the world,” Koch, who now serves as chairman of Boston Beer Company (Sam Adams’ parent corporation), told me.
After every acquisition, there was a settling out period, where a tiny brewing company adjusted to life under the banner of the beer world’s biggest behemoth. The transitions were never seamless, but after the staff shakeouts, once the backlash had died down and the companies were sufficiently integrated, these ABI-backed craft breweries were in formidable positions. The could supercharge production of its craft brands to a degree that was previously unimaginable in the business.
Even for large independent brewers, lining up additional capacity or introducing a new package can be fraught with logistical hurdles. For ABI, it’s business as usual.
Consider Golden Road, the Los Angeles craft brewery ABI bought in 2015. Joining ABI, said cofounder Meg Gill in a recent phone call, has freed her up to focus on brewing “really solid, amazing liquid.” When something sparks — like last year’s Wolf Pup, a session IPA, and Mango Cart, a fruited wheat beer — ABI is there to pour gas on the fire. When Gill needs to brew more Wolf Pup than Golden Road has capacity for, she calls an ABI intermediary to coordinate a “cross-brew” at another of the company’s facilities. When supermarkets ask Golden Road to make 15-packs of Mango Cart, another hot beer in its roster, Gill picks up the phone, and ABI’s vast logistics apparatus springs into action.
This all happens at a scale that would be staggering to most independent brewers. “They understand that we’re not going to ask them to do something if we know it’s going to be under 10,000 barrels annually,” said Gill of ABI. That figure is for a single beer; around 95 percent of all independent breweries produce less than 10,000 barrels annually, across all their beers, according to an estimate from Brewers Association chief economist Bart Watson. Even for large independent brewers, lining up additional capacity or introducing a new package can be fraught with logistical hurdles. For ABI, it’s business as usual.
According to Gill, Golden Road currently brews less than 50 percent of its liquid at its own facility, and that portion will be even lower next year. “I’m very glad that we chose this route,” she said, reflecting on the support she gets from her brewery’s “strategic partner.”
In beer, higher volumes mean better margins, which mean lower prices. Golden Road’s national sales (in both dollars and volume) grew by over 55 percent through December 2018, according to Chris Shepard’s analysis of data from the market research firm IRI. Much of that growth, he said, is due to Golden Road using 15-packs for Wolf Pup and Mango Cart. This is a potential bellwether. If value packaging like 15-packs becomes the new normal in craft beer — and by the looks of things, it will — ABI “can push craft beer pricing down and hurt a lot of people,” said Mitaro from the Brewers Advisory Group. “In the end you’re gonna be selling 15 cans for the price you were selling 12.”
And if you’re not — if you hold the line and sell 12 cans for the same price ABI is selling 15, said Sonia Marciano, a professor at NYU’s Stern School of Business who has studied ABI’s business practices: “What do you say to a customer? Why should they buy you?”
That is, if your beer even makes it to shelves in the first place. ABI’s “go-to market” machine is a marvel that gives it remarkable influence over how and where its brands are sold — and whether other brewers’ stuff is sold at all. “It just takes up space,” said Matt Hartman, co-founder of independent craft distributor Remarkable Liquids, about ABI’s craft expansion. That means the company can box out rivals from retail shelves, tap towers, even entire stadium concessions.
As the linchpin between producers and retailers in the United States’ peculiar post-Prohibition booze-selling system, distribution is as crucial to brewers’ success as their beer — if not more so. Beer distributors are supposed to be independent so no one supplier or retailer can control access to markets full of thirsty drinkers. But since 1980, the number of traditional beer distributors has decreased from over 4,500 to around 3,000, according to the National Beer Wholesaler Association. This benefits big brewers like ABI. The fewer access points to market there are, the more sway macrobrewers have over those that remain. That is, if they don’t already own them outright. In his book, Noel reported that ABI has actually bought up 18 distributorships in states where it’s legal to do so.
And lo: ABI has “an absolute hammerlock on distribution,” said the American Antitrust Institute’s Moss. She testified before the U.S. Senate against ABI’s $100 billion acquisition of SABMiller in 2015 (which was ultimately approved), so she knows — and how well — the company throws its weight around in the market when left unchecked.
As the biggest supplier in the portfolio of virtually every distributor it works with, ABI is able to flex its muscle in lots of ways. As Anat Baron, producer and host of 2009’s Beer Wars and a former executive at Mike’s Hard Lemonade, put it in a recent phone call, “He who controls access controls the game.”
Stage 3: Win the propaganda war
In today’s beer aisle, hearts and minds are as important as shelf space and tap handles. To truly win out, Big Beer has to do more than simply crush Small Beer. It has to convince the American drinking public that there’s no difference between the two. This is where ABI has perhaps been most shrewd.
In 2016, the company took a 49-percent stake in RateBeer.com, a popular online beer-ranking forum, and outright bought Northern Brewer, a homebrewing e-commerce platform. With those investments, ABI acquired two properties dear to beer geeks and tapped into a trove of precious consumer data indicating the stuff the craft beer community cared about the most. (Just to note it: ABI bought the other 51 percent of RateBeer this year.)
Also in 2016, the company launched a partnership with publisher Conde Nast to create a full-blown digital publication about beer culture called October. “It’s a love letter to beer,” said Mike Raspatello, a former festival producer who serves as the venture’s president. He’s quick to point out that the site’s editorial voice is contractually protected from the influence of its majority investor. And a small disclosure about the company’s stake accompanies every story October publishes.
Investments like October give ABI a platform to promote its vision for a post-craft future — a future that favors its brands’ position in the market. In the coming age, “beer-positive, bring the industry together-type thinking” will carry the day, said Meg Lagesse, the director of communications for ABI’s craft business unit.
To help foster that new age, Lagesse helped the company launch Elevate Beer, a program through which independent brewers can take safety seminars and use the expensive quality-control labs at ABI’s acquired breweries for free; and beer journalists can download free stock photos that portray people of color and women drinking ABI’s craft beer for their articles.
Lagesse also worked with Raspatello to weave ABI’s “beer positive” gospel into the 2018 production of OctFest, October’s beer, food, and music festival held on NYC’s Governors Island. On his personal blog, Josh Noel reported that 35 of the 86 breweries showcased were partly or wholly owned by ABI. Lagesse confirmed this count but disputed the suggestion that the company had “craftwashed” its involvement in the festival. (Like October itself, the festival’s site featured a small disclosure of ABI’s involvement.)
“I think before, when the landscape was different, craft brewers were a little afraid to say they [were] a part of ABI because of negative reactions they would get,” said Lagesse, who began her beer career at Goose Island in 2015. “I think the consumers have become more okay with it.”
And as ABI increasingly muddles the definition of craft beer, the company has also begun to deploy a new tactic in its battle against craft brewers: ridicule.
Cloudburst Brewing’s Luke knows better than most how ABI works this angle. In February 2015, he hosted a party at his house in Seattle to watch the Seahawks take on the New England Patriots. Luke wanted the party to be “kind of a safe space” for Elysian brewers and friends to unwind after a chaotic, emotional week in which they got word that their brewery had been sold to ABI.
It wasn’t in the cards. In the third quarter, Budweiser premiered a new ad called “Brewed the Hard Way.” It positioned the King of Beers as the red-meat antidote to all the namby-pamby craft brews out there. Bud was “not brewed to be fussed over,” the commercial blared, specifically singling out “pumpkin peach ale” as the apotheosis of everything real beer, manly beer — American beer — stood for.
Elysian made a pumpkin peach ale. Elysian co-founder Cantwell, who had hired Luke in 2011, left the room. “Maybe to scream in the yard,” speculated Luke, who left Elysian shortly after the acquisition to open Cloudburst.
This “shut up and drink your beer” attitude is even trickling down to some of ABI’s craft holdings as well.
“We barely noticed that the Seahawks lost,” Cantwell recalled. “It was such a ‘fuck you.’” Whether the ad was intended to “foster class warfare,” as he suggests, or just to shore up the company’s flagship lagers as the everyman choice, ABI has continued the crusade. There was the 2016 Super Bowl spot called “Not Backing Down,” which celebrated Budweiser with pointed block-caps proclamations like “NOT A HOBBY” and “NOT A FRUIT CUP.” And then came Bud Light’s popular ”Dilly Dilly” campaign, launched in 2017, which sometimes mines a similar vein. In those spots, an everyman king punishes preening, aristocratic beer geeks for doting on their brews. Bud Light bravely stands “for the many, not the few,” the slogan claims.
(If this all sounds familiar — a flailing but still powerful leader inciting a rank-and-file base against perceived elites by vilifying certain socio-cultural stereotypes — you’ll be unsurprised to learn that vendors on e-commerce platforms like eBay and TeeSpring are selling MAGA/Dilly Dilly mash-up merchandise for enthusiasts of both.)
This “shut up and drink your beer” attitude is even trickling down to some of ABI’s craft holdings as well. “Friendly tip,” read the side of some recent Goose IPA six-packs. “Your mouth is for drinking IPA, not talking about drinking IPA.”
In an effort to counterpunch, craft brewers have tried to refocus the conversation from how the IPA tastes to who owns the brewery it comes from. In June 2017, the Brewers Association launched the Seal of Independence, a graphic independent breweries can put on their beer labels and marketing materials to tell drinkers that they are, in internet parlance, not owned. To date, over 4,000 breweries have adopted the seal, which is off limits to those that have significant investment or outside ownership.
Julia Herz, the Brewers Association’s craft program director, touts the seal’s widespread adoption — and social media engagement on the corresponding #SeekTheSeal campaign — as evidence that the campaign is having an effect (though there are no sales figures yet backing up the claim). Calagione calls the seal “the most powerful and potent weapon that the craft brewing community has” in the ongoing battle to identify Big Beer’s acquired brands to drinkers.
However, while the seal is fairly straightforward, the definition of independence is not. The Brewers Association’s definition of independence dictates no more than 25 percent of the company can be controlled by another entity. Several leading craft breweries, including Calagione’s Dogfish Head, have sold minority stakes below this threshold to private investors.
“ABI is well aware of this danger, which is why it is so touchy about the ‘independence’ argument,” said Jeff Alworth, founding editor of the popular blog Beervana. He pointed in particular to a 2017 video released by ABI’s craft-beer business unit, in which representatives from its acquired breweries — many of them founders who happily stayed on post-sale — speak ill of the Seal of Independence campaign.
Whether you view this sort of thing as traitorous capitulation or pragmatic dealing really depends on what you think craft beer is. Is it a cultural movement? Or is it just, well, a liquid?
“Their mission is kind of to say, well, ‘What is craft beer? It doesn’t really mean anything anyway,’” said Cloudburst’s Luke. “So it’s diluting the difference between a true small independently owned brewery and their brands.”
Life after the revolution
National sales data shows nearly all of ABI’s acquired breweries up double digits in volume and dollar sales through 2018, and breweries that faced the most negative reactions when selling to ABI seemed to be thriving the most under its wing: Wicked Weed grew its sales over 90 percent in dollars and a whopping 140 percent in volume, according to IRI data through December 2018.
“Within AB, there aren’t commercial strategies of like, ‘Hey, there’s an enemy out there,’” said Gill, whose 2018 numbers at Golden Road were also gobsmacking. The success of ABI’s acquired breweries, she says, lies in their focus on beer rather than ideological battles. “There is no negative space when you’re in AB[I]. The only negative space is the haters outside of it.”
Haters aside, a deeper negative space looms. Craft beer is still a relatively small piece of ABI’s portfolio. Elsewhere in its business, the company faces stiff headwinds: It’s buried in debt, its stock fell nearly 40 percent in 2018, and its credit was recently downgraded. People just aren’t drinking as much beer these days, and when they do, they don’t reach for ABI’s core brands. Michelob Ultra is a bright spot, but it won’t cancel out Bud and Bud Light’s slumps.
To figure out whether ABI is for real about craft beer, keep an eye on Goose Island.
These problems are dogging the whole beer industry, but they’re particularly vexing for the world’s biggest brewery. Throw in the slowdown in the maturing craft market, and industry observers wonder how long ABI’s self-appointed role as the segment’s “beer positive” vanguard will last — and what consequences smaller brewers face once the salad days are truly gone.
“The brewer in me has more anxiety about the intentions of today’s ABI” than yesterday’s Anheuser-Busch, said Dogfish Head’s Calagione. The old company’s leaders were fierce competitors, but at least they were “beer people first and business people second,” he said. “Contrast that to ABI today, and it’s abundantly clear that quarterly shareholder profits are more important than the health of the American beer industry.”
To figure out whether ABI is for real about craft beer, keep an eye on Goose Island. As the first prize in ABI’s sprint to the craft throne, the Chicago brewery may be a bellwether for whether the company will invest in its craft brands once their post-acquisition momentum has given way to tougher sledding.
Goose Island had a difficult 2018. According to IRI sales data through December 2018, Goose Island’s volume and dollar sales are both down around 10 percent. Bourbon County Brand Stout, the brewery’s once-a-year barrel-aged release, remains coveted by craft beer insiders, but the rest of the brewery’s beers are having a tough time maintaining traction.
Now a nationally distributed brand, Goose Island has run out of new markets to enter. Once ABI has scooped up the low-hanging fruit with its craft acquisitions, will it stretch for higher branches? Or just move on to the next tree (say, CBD-infused beverages) to find returns for its shareholders?
Todd Ahsmann, Goose Island’s current president, rejected the idea that ABI was pulling away from Goose Island. “I’m not saying we don’t need to be a successful business next year, or next quarter,” he said, “but we definitely have time to develop.”
He points to Goose Island’s barrel program (“not as immediately as big as people thought, but we’re sticking to it”) as evidence that ABI will invest in its acquired brewers, even if a payoff doesn’t materialize right away. With ABI’s backing, Ahsmann said, its acquired breweries can champion the craft segment as its growth slows.
At the corporate level, ABI says the same thing, insisting it’s committed to turning over a new leaf and growing the segment collaboratively — rather than milking it until returns peter out. “We are, of course, concerned as everybody,” said Mika Michaelis, the new president of the company’s U.S. craft business unit. “That’s where we have to step up and together find a better way to move the category.”
But ABI’s most vocal critics aren’t quite sure of what that means or what would happen to America’s 7,000 craft breweries if everyone joins the post-craft world or what ABI is even driving at.
“It seems like they’re making gains in the craft segment enough to kind of satisfy them” for now, Luke said. “But once that growth stops for them… I mean, they always have to grow.”
He paused, considering what would follow. “That’s kind of my biggest fear.”