macro-beer

How Big Beer Buy-outs Are Hurting Independent Breweries

In between dogging craft beer during Superbowl ads and producing yellow fizzy water that is allegedly beer, Anheuser-Busch InBev has been not-so-secretly purchasing craft beer breweries to add to their portfolio.  Notable purchases include Goose Island Brewing of Chicago, Elysian Brewing of Seattle and Virginia’s own Devils Backbone Brewing.  On the surface, it seems logical and almost benign to most people.  The two most common perspectives that I hear are:

A. Yes they are sell-outs, but would you turn down millions of (and in at least one case, a billion… with a ‘b’) dollars?

B. I like the beer and they’re going to keep making the same beer, so who cares?

I can understand these perspectives and why some folks will continue to support brands that they’ve grown to love even though the product technically belongs to an evil conglomerate.  I, on the other hand, will not be supporting these brands anymore for one primary reason, these brands now directly contribute to undermining independent breweries.  How? Consider the reasons that AB InBev purchased the craft breweries to begin with.  The purchasee’s brand is growing, the product is making money and AB InBev wants that money.  They want to take that product, include it in a larger portfolio of beers and through a variety of flavorful product offerings gain market share and make more money.  Makes sense right?  Well you know what also helps make more money?  Taking market share from your competition.  That’s the lesser-considered perspective.

AB InBev uses their ever-growing portfolio as ammunition to encourage distributors to only carry their brands.  Distributors are incentivized to exclusively push the AB products to their retailers and in turn independent breweries are muscled out of the warehouse, off the grocery store shelves and off the local restaurant taps.  The Wall Street Journal reported that AB was offering millions of dollars in “reimbursements” to distributors who carried 98% AB products.  They also allegedly offered to cover up to half of the distributors marketing costs (for only the AB brands, of course) to distributors who carried 95% AB products.  From a distributors perspective, this is a pretty friggin’ sweet deal.  You get a bunch of kick-backs from AB and you still get to carry a bunch of craft beer.  In fact, the deal is so sweet that there is almost no way for an independent brewery with limited resources and influence to compete with these incentives.  Therefore, I see these tactics as a direct attempt to stick it to the little guy.  That is why I can no longer support these brands.

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