These are wild times in the craft beer industry. That's not exactly front page news, but growth and change is happening at such a shocking pace that heads are spinning. The elephant in the living room is the ongoing challenge represented by big beer.
On the plus side, we recently learned the US brewery count surpassed the old record of 4,131. Perhaps most interesting about that revelation is that the old record was set in 1873, and was followed by a period of intense consolidation, then Prohibition, then more intense consolidation. The shift back to growth began roughly 30 years ago and it's been a crazy ride ever since.
There's more. For example, IPA continues to be the dominant craft style. Big surprise. In fact, one could easily argue the popularity of IPA has overflowed into other styles, many of which are hoppier than ever. And despite the ascending brewery count, there are still thousands of communities that are large enough to support a brewery and don't yet have one.
In the midst of all the good news for craft beer is the black hole of consolidation. The billion dollar Ballast Point buyout is the lead in that part of the story, and has more than a few craft brewers wondering what their place might be worth. Breweries that sold earlier, like 10 Barrel, Elysian and Goose Island, look at the Ballast Point deal and wonder where they went wrong.
Of course, the larger story on the consolidation front is the impending buyout of SABMiller by Anheuser-Busch/InBev. The multi-billion dollar deal has the potential to turn the entire beer world upside down. That reality has raised the hackles of regulatory types and a few yet-to-be-bought politicians.
Now there's news that a group of citizens from Oregon, Washington and California has filed suit in US District Court challenging the ABI/SABMiller deal on the grounds that it will hurt consumers by restricting competition and choice. No kidding. The plaintiffs aren't asking for any money. What they want is the merger stopped.
There's about zero chance of that happening in our current political climate. They'd have about as much luck getting assault rifles banned. There's little doubt the AB/SABMiller merger, which is largely a global play, will wind up being bad news for America's independent craft brewers. But there's no feasible way to stop it. All you can realistically hope to do is mitigate the impact.
The primary threat to independent craft brewers is only indirectly related to AB's acquisition of craft breweries. You can't get too excited about that because they will never own more than a small percentage of the total number of breweries. The threat is on the distribution side, where Anheuser-Busch is working to leverage its influence and limit independent craft brewers access to market.
That's not a joke. A Wall Street Journal story outlines an AB incentive plan that rewards distributors who focus primarily on AB brands. A couple of anonymous distributors spilled the beans, telling the WSJ they can receive incentive payouts of as much as $1.5 million annually if 98 percent of their volume is in AB brands. A distributor in St. Louis just dropped Deschutes because it had to choose between the incentive program and craft.
Look, Anheuser-Busch will never own or have influence over every distributor in this country. There will always be independents that go their own way. But AB has the power, via its owned and affiliated distributors, to make things difficult for independent craft brewers. The strategy outed in the WSJ article is just one part of that effort.
Many casual and some serious beer fans have their heads in the sand, more or less refusing to see the danger. Fine. Those who do see the threat can act against it by refusing to spend money on AB products, including acquired brands like 10 Barrel, Elysian, Goose Island, etc. There's nothing personal about this. It's business. Giving good money to Anheuser-Busch helps fuel the effort to undermine independent craft brewers.