Craft beer has grown dramatically over the last few years. What began as an anomaly 35 years ago right here in California has now become mainstream. All through the 1980s, many called craft beer a “fad.” But craft beer kept on growing. In the ‘90s, some felt certain it would begin to shrink and fade away with a new generation of beer drinkers moving on to something new. But craft beer kept on growing. Others thought for sure the great recession of 2007-09 would be the demise of high-end beer. But craft beer kept on growing. Craft brewers have revolutionized beer in America and around the world, and corporate brewers got caught with their brewer’s boots down.
Throughout the wild run of popularity that craft beer has enjoyed over the years, large global brewers with names like Anheuser-Busch InBev, SABMiller, Constellation and others have dabbled in craft beer with little success. In the early ‘90s, AB (before being bought by InBev) tried a Sierra Nevada Pale Ale knockoff called Pacific Ridge Pale Ale. The label looked just like Sierra Nevada’s Pale Ale, right down to the green color scheme and even had the distinctive cascade hop flavor. The label had no mention that it was made by Anheuser-Busch. With AB’s powerful access to market and a $4.99 shelf price, we thought it might put a still-young Sierra Nevada Brewing Company out of business. Pacific Ridge was a flop.
After that, AB tried putting its identity on high-end brands such as Budweiser American Ale and Budweiser Brew Masters’ Private Reserve. Both have been discontinued. MillerCoors dabbled in the craft look-a-like category with a beer called Colorado Native, also with little luck. More recently, faux-craft brands like Shocktop (ABInBev) and Blue Moon (MillerCoors) have been marginally successful.
So what’s a large, global brewer to do when local craft brewers across the country begin to capture the imagination and the wallets of beer drinkers from coast to coast?
Buy ‘em!
Consolidation is nothing new to the beer industry. Breweries have been buying breweries for generations. But the modern day Goliath-buying-David trend is different.
With the gradual decline of light, low flavor lagers, Big Beer had to find a way to maintain relevance and growth in the market. Their buying spree started when ABInBev bought Goose Island Brewing, a popular Chicago-based, family-owned brewery in 2011. This is where AB first experimented with their new “take-over formula” in major markets across the country: buy a craft brewery, keep the brewery and tasting room open so it retains its “craft-feel,” leave any mention of new ownership off the brand, take one or two of the top selling core brands and brew them at an AB brewery for large-scale efficiency and roll out national distribution through the existing AB distribution network. ABInBev now owns eight craft breweries across the country and MillerCoors, a little slower off the blocks, owns one outright and a majority share in a second.
Will this buying spree continue? Probably.
Tom McCormick, “Big Beer’s Buying Binge: An Insider’s Perspective on the Craft Beer Industry”, Beer Paper LA (August 2016), 16.