Why the Anheuser Busch InBev – Goose Island Deal Is Good For Craft Beer…

Now I have in the not-so-recent past been accused of being a Goose Island-apologist and even a touch sycophantic when it comes to my hometown brewer. And I have made clear my respect for Goose Island and its founding family, including John and Greg Hall. To their credit, the Hall’s have made no bones about their decision to enter into an equity agreement with the Widmer Brothers Brewery and to their participation in the Anheuser-Busch distribution channels.

Despite all of Goose Island’s successes, [Chicago’s] s notoriously competitive distribution challenges in part led to the brewery’s decision in 2006 to enter into an equity agreement with the Widmer Brothers Brewery and the Craft Brewers Alliance, which has ties with Anheuser-Busch InBev. With their decision quickly came harsh words from self-appointed craft beer purists. Greg Hall quickly dismisses the criticism by noting that the big guys give them better access to market but “zero direction whatsoever” as to the beer. For others he jokes, “Can’t you taste the beechwood in there? Don’t you think it makes it taste better?” Simply put, “the beer is coming on a different truck now, but it’s the same beer from the same brewery and people.”

I’ve visited the Fulton Street brewery twice in the past two years and have been continually impressed by Goose Island’s dedication to pushing the brewing envelope and to developing some very interesting beers. If you expected Goose Island to go on autopilot after the 2006 Widmer deal or to fall prey to some flavor-killing influence of Anheuser-Busch, you’ll have to take you beer geek insecurities elsewhere. Goose Island has done nothing but improve its operations, both in terms of efficiency and creativity, since the inking of those big deals. The brewery has also enjoyed unprecedented access to a notoriously rough market in Chicago.

For the doubters, you need only consider what Goose Island has done since 2006 and then ask whether your local, “independent” brewery has fared as well. GI has introduced Sofie, Fleur, Juliet, Madame Rose, Pepe Nero and Nightstalker, as well as a number of variations on Bourbon County Stout. It has instituted a sustainability project meshed with a session beer offering through Green Line. Matilda is now widely available throughout the city on draft and the brewery is fast becoming known for anything other than its flagship Honker’s Ale (which remains excellent).

Despite industry criticism and snarky beer geek attacks, Goose Island has proven its dedication to producing world-class beer and to being inventive. And despite the departure of longtime brewmaster Greg Hall, I expect the brewery will continue to innovate. The future will tell on how a full AB-InBev owned and Greg Hall-less venture proceeds.

After getting beyond the initial surprise of the deal, I’m left with the thought that the A-B deal is actually good for craft beer (and certainly for Goose Island). As I noted in last month’s BeerAdvocate Magazine, it is time for the big brewers to signal their intentions towards craft beer. To date, Anheuser Busch’s entries have largely come across as a series of half-hearted, faux-craft brands that have tried to co-opt craft’s cool while simultaneously portraying the trend as cartoonish. While a few of the offered A-B brands have been respectable in terms of flavor (such as the Michelob Porter or the brewery’s dunkelweizen), the rest have been busts.

The Goose Island deal looks like a more focused approach for AB-InBev. According to the Wall Street Journal, the brewing behemoth intends to focus on a few core brands (as it does elsewhere around the world), including the Blue Moon-killer Shock Top (a cartoon brand in my opinion) while purchasing a handful of successful craft brewers. This latter approach, more in line with the InBev model, allows the company to bet on already successful brands instead of undertaking a throwing things at the wall approach that long seemed to dominate the A-B releases.

The Goose Island sale to AB-InBev in one sense must be seen as a victory for craft brewers. Instead of simply trying to knock-off or belittle their efforts, the world’s largest brewery clearly appreciates some of the nuances of the American marketplace. And it is certainly vindication for the hard work and efforts of the Goose Island family.

I also expect that this will signal the end of the half-hearted, Budweiser American Ale stabs at flavorful beer that we have seen in the past. Better to have the behemoth support, promote, and deliver flavorful craft beer than to crowd tap handles with flavorless and embarrassing knock-off brands (beyond the handful that will remain, such as Shock Top).

The deal also gives us hope that AB-InBev will finally take baby steps towards getting serious about supporting better beer. I expect Goose Island will receive a helpful infusion of cash and greater access to more markets as the division grows. As the industry continues to gray, it’s inevitable that many other craft brewers will find a buyer in AB-InBev, which will in turn lead to craft brewers comprising a greater percentage (however negligible globally) of the AB-InBev brewery portfolio. Assuming craft beer drinkers do not abandon their favorite but now-sold craft brewers, AB-InBev will experience pressures to continue to brew brands and keep local breweries in operation that they have not before faced in places around the world, including in Belgium.

To the extent that craft brewers can maintain an ownership, controlling, or operational interest in their breweries, using AB-InBev’s capital resources to expand their breweries will also lead to a greater availability of craft beer in markets across the nation. We have all seen our favorite breweries quickly expand their footprints across the country, only to have to pull back to a few or even a single state due to the inability to meet demand. This will continue to be a challenge for breweries for many years to come.

There are of course dozens of questions remaining to be answered in determining what effect AB-InBev’s growing involvement in the craft beer sector will have. We have no idea whether AB-InBev will be content to take a hands-off approach, as it has so far with Goose Island, and just see fit to help great craft brewers grow and showcase their brands or whether the large brewer’s shark-like corporate culture will cannibalize brands and move to shutter breweries and centralize brewing operations.

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Co-opting Craft, Miller Style…

As we head into December, people in the beer industry start to wonder how their respective channels performed during the year. Overall, it appears that craft beer has weathered the economic downturn pretty well, albeit with an expected decrease in sales compared to recent year juggernauts. While increased sales and volume are two important ways of measuring the craft beer industry’s performance, they are not the only measuring sticks. How the craft beer industry’s competitors have responded to its performance is another way to judge how well it is doing.

Take for instance the recently unveiled website for MillerCoors, the joint venture between the American brewing divisions of SABMiller and Molson Coors. After getting through its buggy age verification system (took me four tries over a three week period to finally gain entrance), I perused the Our Beers section, which breaks down the company’s brands into four curious categories. The first category, Domestic, is pretty self-explanatory. The second, Import, is a little more unusual and a sign of how global the brewing industry has become and how involved these two powerhouse corporations have become. The final two categories caught my attention. Under the heading of Craft, the website promotes the Blue Moon, Henry Weinhard’s, and Leinenkugel’s line of beers. The final catchall category, titled Specialty, includes other brands such as Killian’s Irish Red, Fosters, and the recently departed Zima.

The website doesn’t detail the distinctions to be drawn between the final three categories and they remain a bit of a curiosity. I’m not at all clear of how the company defines ‘craft’ or ‘specialty’, why Killian’s qualifies as a specialty brand while Blue Moon is a craft, and why Fosters isn’t an import. I could make some educated guesses on these points (Killian’s was once an Irish brand purchased and long-produced by Coors in the United States, while Blue Moon was created by Coors and Foster’s is brewed in Canada and brought into the United States as opposed to being brewed outside of North America).

I’m also not sure how I feel about the brazen use of the word ‘craft’ to promote its products. While this attempt at co-opting the cool of craft is no new trick, the Big Two have given up on any pretense of trying to muscle in on the success of craft beer. This is a bit ironic considering the underwhelming public response to Budweiser American Ale and to the suspended Miller Lite Brewers Collection a line of “craft-style” beers.

With that said, these beers continue to do well at the Great American Beer Festival and excluding their numbers from consideration considerably undersells the growing popularity of craft beer, better beer, or however you want to define the consumptive phenomenon.

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