On Friday, the New York Times ran an editorial by Garrett Oliver entitled Don’t Fear Big Beer. Oliver is the brewmaster at Brooklyn Brewery as well as the author of the seminal book on beer and food, The Brewmaster’s Table. I have a lot of respect for Garrett’s opinions, generally, and he makes some good points here, too. I certainly agree with him when he announces that “today the United States has by far the most exciting beer culture in the world.”
And I love his suggestion that the craft brewing segment has shed its “fad” status after nearly thirty years of ups and downs to emerge as a mature, stable part of the beer industry, or in Oliver’s words — “a welcome return to normality.” Historically, that makes sense. For most of the years since Europeans washed up on America’s shores, the small and regional brewery held sway. It’s only been since the rise of our big, national corporate society that things have gotten so out of whack. The consolidation of countless industries has been bad for everybody, except of course the big corporations and their shareholders, over the last fifty plus years. When I graduated from high school — ahem, thirty years ago — there were only 40 or so breweries left in the entire nation and it looked like the industry was doomed to make insipid caricatures of European lagers in perpetuity.
Then a few things happened. Airfare got cheaper and more people started traveling, discovering diverse beers all over the map. Based on this new demand, a number of the larger import brands started selling their beer in larger U.S. cities. This was the setting where I personally discovered better beer, haunting small jazz clubs throughout New York City that were serving Bass Ale, Guinness and Pilsner Urquell. Then there was homebrewing, which came up and out from the underground, when Jimmy Carter signed a federal law decriminalizing it in 1978. Those three changes to 1970s society, along with others I’m sure I’m forgetting, conspired to create a backlash among a small but thirsty minority who wanted beer that tasted of something more than the watery concoctions the big brewers were — and still are — passing off as beer. Thanks to those cranky few who wouldn’t settle for the beer landscape as it was, the microbrewery revolution forever changed what was possible and as a result, today the diversity of great beer available here in the states is better than anywhere else on Earth. The fact that this was accomplished in the face of an advertising and marketing blitzkrieg sending the opposite message about what beer is makes it all the more remarkable. Their success seems to have prefigured similar returns to quality local and regional renaissances in all manner of goods, such as coffee, bread, cheese, chocolates and organic food generally.
Is “[t]he age of American industrial brewing,” as Garret teases, “over”? Not today, certainly. Even Garrett knows that “it’s not going away tomorrow” but I absolutely love his notion that “there is no future in it.” On a level playing field, I think things would indeed run their course fairly quickly, in perhaps a generation, with flavorful beers gaining the upper hand among anyone taking the time to think about their choices and learn something about what they’re drinking. Unfortunately, real life is nothing like that. Large corporations have almost all the resources, not to mention the ear of a political system that knows that helping the status quo keeps them in office. They’re not going gentle into that good night without a fight. And, sadly, I think they have enough of an advantage that they could hang on a good long time absent a social and economic revolution. Government tends to bail out big corporations and lets small ones die every single day. Which is not to imply Garrett doesn’t know that, but he’s decided to accentuate the positive, certainly a laudable approach.
Oliver ends his editorial with some truly inspiring words:
If we truly want to restore the vibrant beer culture that flourished in this country before Prohibition, craft brewers need to retain the values and goals — creating beers that are flavorful, interesting to drink and made from proper beer ingredients — that put us on the map in the first place. Let’s not undo American beer again.
I wish I could be that sunny and optimistic. I think what he says, while correct, is not really the problem faced by small breweries. Oliver seems to imply that craft brewers hold the keys to their own success and that all they need do is stay true to themselves, that simply making a great product is enough to guarantee continued growth. Maybe I’m mis-reading that, but it seems far more complicated to me, and it ignores the fact that the big brewers will not give up their own hard won market share easily.
That’s why I think Garrett is overlooking something when he says “America’s 1,500 craft brewers are undaunted by the prospect of a juggernaut that would have 30 percent of the domestic market” and that “MillerCoors is not a threat to craft brewers.” He ties that last statement to over expansion, and while that has been a problem for many small brewers trying to grow too quickly, it’s not really the reason Miller or Coors are combining their efforts to challenge Anheuser-Busch’s market dominance. I think craft brewers should feel a bit more daunt about that task. There is a problem that 95% of the market believes the beer they drink is good enough and are either too busy or too ignorant to know the difference. That’s a real problem.
But the more proper question is whether Miller and Coors separately or MillerCoors together makes that problem any different. I’ve been giving this a lot of thought since I first heard the news the morning I arrived in Denver for GABF last week, trying to figure out what it will mean for the marketplace, and especially for the smaller players. I can’t help but think this will change the nature of distribution, especially in smaller markets. All over the place in the last decade, we started seeing markets with three distributors (with each having one of the three big brewers in their portfolio) consolidate down to two, with one Bud house and the other carrying both Coors and Miller. And while I suspect neither Coors nor Miller was particularly thrilled to have to share the spotlight, for distributors it was a boon. But two distributors usually means less places for small brewers to find someone to carry their beer and sell it to retailers, bars and restaurants. If that spreads to larger cities, it would certainly reduce the choices available to a small brewer. In Bud houses that are owned by A-B (where that’s legal) or ones that tow the 100% share of mind that leaves a small brewer with a choice of exactly one, not really a choice at all. San Francisco is like that, to some extent. Cal Bev went out of business five or so years ago, leaving Golden Brands — now called DBI Beverage Distributors (with Miller and Coors) and Matagrano (with Bud). In the City by the Bay, at least two independent distributors, that is ones without a big flagship brand, also bring smaller brands to market, but that’s not the case in many other places.
Will that continue to happen with the consolidation of the two major brands? No one can say for sure, of course, but it certainly seems logical that we’ll begin to see more two-distributor territories in the near future. And that I think could be very bad for some small brewers, especially the ones without the resources to hire a field representative to work with the distributors in markets outside their home. The regional breweries, which are already fueling most of the craft beer segment’s growth, should have no problem keeping a distributor, but it could be problematic for the smaller, more local breweries. It may also make it more difficult for cusp breweries just on the verge of growing larger. With only two distributors to choose from (and effectively one in some places), instead of three, it seems likely some breweries will have a hard time finding a home to sell their wares and that this could effectively keep some breweries from expanding their business.
Also, it seems to me the prices wars among the big three will not go away in a reconfigured landscape of the big two. Those price wars have kept beer prices artificially low for quite some time, and that has also made it difficult for craft brewers to charge a more premium price for their beer, even though it’s warranted. The recent scarcity of barley and hops and the attendant price hikes that will now finally have to be taken will only increase the gap between the big brands and the craft brands, especially if the big two go head to head (which seems likely, doesn’t it?). It’s my feeling that makes it harder to persuade people to trade up to better beer. So while it may be too early to tell if any of this will indeed have an effect on the beer industry generally, it seems foolish to carry on and just assume it won’t.
Perhaps Oliver is correct with his advice not to be afraid, but we can’t ignore them either. Just as they respond to gains by the craft segment and view us a threat to their market share, we have to protect our more modest gains just as vigorously. To me, that’s how we lay to rest the age of American industrial brewing. It’s not merely enough to make a more flavorful product that people want, we also have to work together as a united front. That’s the real lesson of the MillerCoors merger. The two small giants finally realized that fighting each other for number two was a fool’s game and did nothing but help number one. The craft segment, for all its collegial atmosphere, does include ugly examples of infighting for a larger share of our tiny slice of the pie. The only way we win this fight, is if we all win this fight. Not even the largest craft brewer can come close to being anything but a speck of a David to the Goliaths of our industry. It’s only together as an idea and as a movement that we register at all. That’s our strength, that we’re everywhere all at once, a many tentacled benevolent beast. Cut off one, and there are still 1,499 more left to fight the fight. But we must work together to have any effect at all. Can I get an Amen, brewer?
NOTE: Stan sent me two links to posts where my friend and colleague Maureen Ogle has also addressed this issue, the first, Pondering the Fear of Beer, and the second, Pondering Beer’s Future, both address questions raided by Garrett Oliver’s NY Times op-ed piece. Thanks Stan.