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Monday, September 14, 2015

Sellouts and the Transformation of Craft Beer

Last week's news that a couple more craft breweries have been acquired by big beer caused shock waves throughout the industry. You'd think folks would be getting used to this kind of thing, but no such luck, apparently.

Some of the sharpest attacks were reserved for Lagunitas founder Tony Magee, who sold a 50 percent share in his company to Heineken. Many were offended by Magee's long-winded remarks justifying the deal and what it means for Lagunitas. By comparison, MillerCoors purchase of San Diego-based Saint Archer produced a fairly subdued response.

My view of these arrangements is simple. The Lagunitas deal looks mostly like an opportunity for the company to expand internationally. It may well be a prequel to a full sale to Heineken, but that remains to be seen. MillerCoors hadn't bought a craft brewer since 1988 and they want a piece of the action. No surprise.

Admittedly, I would have hated these agreements had they involved Anheuser-Busch. As noted countless times, I dislike them because they leverage their position via ruthless cost-cutting and through vertical integration of markets where they own breweries, distributors and retailers. None of that is okay with me, so I beat them up whenever possible. Heineken and MillerCoors aren't in the same league.

In my mind, the people bashing Tony Magee are doing so because they don't like his verbosity or how he does business. Many referenced the case he brought against Sierra Nevada involving Lagunitas IPA. Some incorrectly said he was trying to patent "IPA." Not so, He merely wanted to patent the typeface used on Lagunitas IPA. As most know, he subsequently dropped the case when people beat him up on social media. But never mind.

With respect to buyouts and partnerships, there will be more of them. Many more. Mass market lager is imploding and there's a lot of money out there looking for a place to go. And the most logical place for it to go is craft beer, which continues to see dramatic growth. This is not rocket science.

There's more, of course, Craft beer has gone faddy on us. Once upon a time, music fans hankered to be the first to see a new artist live or purchase a new release by this or that artist. Exclusivity was a badge of cool. In today's world, beer fans hanker to be the first to taste or own bottles of specialty beer. That exclusivity has been a boon for brewers, distributors and retailers.

It gets more complicated. We've reached the point where new breweries easily attract press and clientele, while established breweries are often relegated to secondary status. "New and cool," is the theme. Staying relevant in a scenario where you have new breweries opening all around you is tough. So I have been told by owners of established breweries who struggle with this reality.

In this warped environment, no one should be surprised when a craft brewery sells full or partial ownership to big beer. As Jason Notte said in a column last week, it's time to discard any pretense of idealism or integrity in craft beer. It doesn't exist. The fact is, each and every brewery is for sale to whomever has the cash to buy it.

Craft beer is big business. Nothing more, nothing less. Sooner or later, money changes everything.

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