There was a fascinating post in The Atlantic this week, about how the Internet has been quietly evolving over the past 10 years. The gist runs something like this - on the surface, everything looks the same: same infrastructure, same opportunities, nothing's really changed. Because the web is a platform. YOU could be the next Mark Zuckerberg. Freedom to the people!
But dig a little deeper, (this is the point of the article), and you suddenly realize everything has changed - there has been a profound shift; the "platform" is now dominated by the 5 largest companies on the planet (Apple, Google, Microsoft, Amazon, and Facebook). With user bases in the billions, they are the platforms. You'll NEVER be the next Mark Zuckerberg, because he's got a lock on all the users. (Good luck with your cute little startup...)
Like I said, it's a fascinating post. You really ought to read it. The point of this post, however, is just this: What if the same thing is happening in the craft beer world?
Just today I read about Wicked Weed selling out to AB-Inbev. And just yesterday, I read Chris' Herron's insightful piece on big beer's strategy behind all these acquisitions. Both are well worth reading - especially if you're interested in how we got here and where things are headed in Beerland. I think Herron nails what's going on:
The billion-dollar question AB InBev must answer is: how do they stop their most prized brands’ volumes and values from eroding due to a significant price gap at retail vs craft, when they cannot take the brands’ prices up without risk of losing even more significant volume to their competition given their consumer and competitive set for those brands? Answer: they bring the price of craft down.
Did you catch that last point? That is the sleight of hand we’re not watching with the rest of the show going on. By buying craft brands and lowering the price, they can reduce the price-to-consumers, and force the hand of other craft brewers (particularly large regionals) to lower their price-to-consumer to compete. These price reductions on craft beer shrink the gap between AB InBev’s premium legacy brands and craft brands.
In other words, by purchasing well known, highly desirable craft beer brands (like Wicked Weed, 10 Barrel, etc), InBev can both ramp up distribution (squeezing shelf space), and lower prices (remember gas wars back in 70s?). That ultimately will force their smaller breweries to price themselves downward to try and compete. Which actually devalues their own brands.
It's pretty brilliant from a corporate strategy perspective.
But I suspect it has the potential to silently change the face of Beerland in much the same way that corporate "megafauna" have changed the landscape of the web?
And what drives a lot of it is dollars - corporations that always want to make a little bit more; consumers that always want to pay a little bit less.
Right now, there are more breweries in America than ever before (the vast majority are small and local, much like Lazarus). We also have access to the best beer in the history of the planet.
This is truly a "golden age" of beer.
But it's important to remember that what got us here was not the fact that your favorite IPA cost the same as Budweiser, or that you could get both in the same aisle at your local store.
On the contrary, I think what made craft beer so special in the first place - for me it KettleHouse's Cold Smoke and Double Haul - had a lot to do with the fact that I experienced it first hand, in a small, divey taproom that was packed full of locals.
(Aside: anyone visiting Missoula, Montana needs to check out the original Kettlehouse location on Myrtle Street; I know a huge new facility is in the works outside of town - I hope to God they don't shut that original location down!).
Yes it was expensive. But it was made by locals. You could talk to the brewers. You had to go there to get it. And it was consumed by locals.
I can't tell you how many people I met at that place.
Which is a big part of why I'm in this place, now - starting Lazarus.
This isn't really meant to be a rant. Rather, it's just some random Thursday afternoon thoughts on what makes craft beer great (and what will keep it that way). And I think that finding your favorite local watering hole - and then supporting them by going there regularly! - is a big part of what will keep this industry healthy.
And now it's time to get back to work!