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Friday, May 26, 2017

The Art of Subtle Subjugation

Anheuser-Busch's recent acquisition of Wicked Weed Brewing led to a deluge of blog posts and articles on the dangers of craft brewery buyouts. What started out as a slow stream of acquisitions some years ago has now accelerated. The subtle subjugation of craft is underway.

The big fellas only grudgingly decided to start buying up craft breweries. Why? For years, they assumed craft was a fad that would go away. They figured it would never put much of a dent in their market share and they assumed that dent would be temporary.

They changed their tune only when forced to. Craft brewers put them in a bind. The suits at AB watched their sales volumes take a beating at the hands of independent brewers who had the audacity to make beer with flavor and character. Imagine the nerve of these people.

As the numbers started to skew against them, the big guys developed a strategy to save their own skins. It was a multi-level plan and included the creation of the fake craft brand Shock Top, as well as what has been a carefully imagined acquisition strategy.

Shock Top flopped with serious craft fans. It's had some success as a gateway craft brand with uneducated drinkers, though MillerCoors' fake craft brand, Blue Moon, has been far more successful in creating an actual niche between premium macro and authentic craft.

The acquisition strategy was slow to materialize. You can see the vision by looking at the acquisition map. The geographic symmetry is obvious. They have breweries in Oregon, Washington, California, North Carolina, Virginia, Illinois, New York, Colorado, Arizona and Texas. That's no accident.

There's still plenty of dirt where they don't yet have craft ownership. They'll likely address that slowly going forward. For now, they own craft breweries in some of the most high profile craft beer states. The geography positions those breweries to compete with independent craft on a local, regional and, yes, national basis.

Of course, we've been concerned about AB's acquisitions for years. The Wicked Week deal may have broken the proverbial camel's back with industry observers. A lot of the chatter involves speculation about how AB will behave in the marketplace in the days ahead.

It's almost comical. Many wonder if AB is serious about squashing independent brewers. Will they use their massive distribution network to cut shelf access? Will they flood the market with High End product and start a price war? Will they limit access to affordable raw materials? Will they use brewpubs to build local brand identities and confuse what craft is and isn't?

Please. This is a giant corporation that has no scruples whatsoever. They're constantly in court over some bullying tactic. The big boys have not enjoyed watching their numbers dive as craft thrives. They will use any tool at their disposal to protect and improve their position in the industry and put craft brewers in their place

That "place" is on the fringe of the industry, removed from the most lucrative profit channels. The effort to squeeze retail distribution and undercut craft on price is already well-underway. That's just the start. They have other anti-competitive measures in the hopper or on the drawing board.

AB isn't necessarily in a big hurry. With craft breweries in their pocket, they're content to ride the wave for now, assuring industry watchers and gullible beer fans that all is well and nothing will change. It's a brilliant sleight of hand, part of the art of subtle subjugation.🍻

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