If one were to categorize the trajectory of craft beer in the first half of the 2010s, it would certainly involve a focus on rapid, unprecedented growth.
According the Brewers Association, craft beer has tripled its market share (by volume) in the first half of this decade, holding over 12 percent of the total share by 2015, despite beer consumption overall being on a downward trend during the same period.
It's still early in the second half of the decade, but by the looks of it, we'll have a very different way to characterize the world of craft beer for the current period: buyouts and consolidation.
That market share growth during a period of decline? It's at the expense of Big Beer: "macro" producers controlled by massive, multinational corporations. At the early stages of this upset, macro producers often relied on packaging gimmicks and faux-craft brands to try and reclaim part of their market share; now, the industry has shifted to buying craft brands outright and incorporating them into their own brand portfolios. Naturally, this has caused some commotion.
Goose Island. 10 Barrel. Golden Road. Elysian. Ballast Point, Blue Point, Breckenridge, Lagunitas, Founders — the list keeps growing. Most recently, Belgian's Brouwerij Bosteels — maker of Tripel Karmeliet and Kwak — just announced that they will sell to AB InBev, after 225 years and seven generations as a family-owned brewery.
Even craft brands that don't want to join the ranks of the macro buyouts have found a path through growth via purchase and consolidation. Example: Cigar City sold a controlling interest in its brewery to Fireman Capital Partners, a Massachusetts-based private equity that also owns controlling interests in Squatters, Perrin and Oskar Blues.
While many craft beer fans see consolidations like this as a welcome alternative to macro buyouts, these kind of deals are still radically changing the landscape. The bigger local breweries want to grow, and once you get to a certain scale of production, having to choose between continued growth and full independence becomes more and more of a reality.
On the macro buyout end of the spectrum, it's easy to think that the sky is falling. Some of the most respected and beloved names in craft are now no longer members of the Brewers Association (the organization that decides what constitutes "craft" in the first place), and beer giants like Ab InBev, by far the dominant player in the buyout scene, are certainly not done.
A thread on the Beer Advocate forums titled "What are we going to do about Big Beer buyouts?" includes talk of boycotts, which breweries are now part of the naughty list, and whether or not there's anything we can do about macro beer corporations swallowing up our precious craft brews.
They may seem mildly hysterical, but fears about AB InBev buyouts are not completely without merit. The beer giant has a history of aggressive and arguably adversarial behavior toward craft brands in the marketplace. Part of that is basic big business: AB InBev's constantly-growing portfolio, deep pockets, and unparalleled production resources allow it to operate on a margin far thinner than any craft brand can hope to do, much less a small, local craft brand.
In addition to the already low prices of its brands, AB InBev has offered additional financial incentives to retailers to devote increasingly larger portions of tap and shelf space to its brands. It's akin to big-box stores snatching up valuable real estate on undercutting the local competition on products that directly compete with theirs. It's easy to see why some view craft buyouts as anathema to the continued growth of craft beer.
But Big Beer's buying spree is not unlimited. I'm no strategic business analyst, but I see the trend as a way to reclaim slipping market share, rather than a tactic to eventually destroy craft beer. It won't be financially feasible to buy every brewery that's willing to sell; even if it were, the offers would become lower and lower, dropping the number of breweries in the market for a buyout in the first place.
If you're concerned about the independence of your favorite brewery, then continue to support their products. Buy and drink local. Or you can keep your beer and politics separate and simply focus on what you like. Neither approach is objectively right or wrong, and at the end of the day, it is beer — a product designed and produced solely for enjoyment — that we're talking about.
When it comes to news of the next craft beer buyout, you can be sad, angry, excited, hopeful, or thoroughly neutral, but just understand that there will be plenty more to come as craft brands continue to fight for market share against an ever-growing competitor. Like it or not, we're now in the age of consolidation.
— [email protected]; @WordsWithJG