What happens when your favorite craft brewery sells out? Legendary brewers and experts discuss.
Founder of Lagunitas: ‘If you aren’t part of what’s happening, you’re a part of what happened.’
It is the best of times in the craft beer industry. Business is cruising, small breweries are growing bigger and the most successful craft brewers are becoming wildly rich.
Consumers are getting smarter, too. And to meet their increasingly refined preferences, many brewers are striving to be more creative or specializing in their own unique brewing styles. Each of the last three years, about 100 breweries have opened in California. There are more than 600 breweries in the state now, and around the country there are more than 4,200.
But more beer isn’t necessarily a great thing, and this is also a sad time for some beer aficionados who have watched their favorite beer companies grow unfathomably large or, worse, get swallowed up by global corporations.
“It’s disappointing when your favorite brewery gets too big, because suddenly, everyone can get that 22-ounce bottle that you used to bring over and wow your friends with,” said Rob Archie, co-owner and founder of Pangaea Bier Cafe.
Tom McCormick, executive director of the California Craft Brewers Association, says overall national beer sales are not climbing. However, craft beer sales are on the up—and taking a bite out of national brands’ profit margins. This has large companies that make globally distributed lagers strategically guarding their kingdoms by purchasing or merging with craft breweries.
Anheuser-Busch InBev, especially, seems to be on a mission to eat the competition it may not otherwise be able to outperform. In 2011, the maker of Budweiser bought Goose Island Brewing Co. in Chicago. The same brewing giant has since purchased 10 Barrel, Blue Point, Elysian and Golden Road this past year. In one week alone in December, the king of beer giants bought Arizona’s Four Peaks Brewing Co., Camden Town Brewery in the United Kingdom and Colorado’s Breckenridge Brewery.
In San Diego, Ballast Point was purchased in November by Constellation Brands, owner of Corona and Modelo, for a staggering $1 billion.
After such business transactions, the beer may not taste quite the same.
“There is no question about it, the quality of these brands has diminished,” McCormick said. He says InBev has allowed Goose Island to continue brewing its less widely distributed, specialty beers—like its famed Bourbon County Stout—at the original Chicago brewery. But Goose Island’s IPA is now being made in Budweiser facilities for national distribution.
“And personally, I think that IPA is a completely different beer now,” he said. “It’s dumbed down and it’s lower in flavor.”
Sometimes, this is the result of an intentional marketing strategy.
“They understand exactly what they’re doing,” McCormick said. “They’re making a product that has lower flavor profile and appeals to a larger audience, and they shove it on them through marketing and distribution leverage, just to get it in front of the consumer.”
Other times, the beer may get better as breweries grow bigger. With more financial resources at hand, they may more easily overcome challenges related to equipment or technology, or in finding the best ingredients.
By some accounts, Lagunitas Brewing Co.’s IPA, a flagship of the brewery for 20 years, has never tasted better—and this just months after the Petaluma brewery announced a joint 50-50 venture with Heineken.
Tony Magee, founder of Lagunitas, says the recipe of his IPA has indeed evolved.
“There are hop varieties out there now that didn’t even exist under the sun in 1995,” he said. Now, some of those newly developed varieties are in the beer. The beer hasn’t changed, though, according to Magee. “It’s just become a truer expression of itself,” he said.The B.S. detector
As the big boys swoop up competition, there are also small independent craft breweries that now pepper the landscape. The omnipresence of beer in America has raised the bar on quality, and for craft beer devotees, mediocre beer no longer cuts it.
“Craft beer drinkers have developed a very acute bullshit detector, and if you try to sell us bad beer, we won’t necessarily take the bait,” said Brian Yaeger, beer columnist and author in Portland, Ore.
Yaeger personally called bullshit on Ballast Point recently. The subsidiary of Corona lager initially made a name for itself largely through its Sculpin IPA, one of the most highly rated IPAs on the market.
But after being bought by Constellation Brands, the brewery released a flavored rendition of another popular beer, its Dorado Double IPA.
“They released this watermelon IPA that tastes like they dropped a bunch of Jolly Ranchers into the beer,” he said. Yaeger thinks an independently operated Ballast Point would not have released the same beer. “So, I’m not going to buy Ballast Point anymore because they’ve shown me they only want to sell beer, not make good beer.”
As a beer buyer, Archie says he is becoming more discerning the more new beers are made. He says he tastes roughly 15 new beers every week during meetings with brewery sales reps. Only one or two of these eventually wind up on the bottle shelf or on tap at his beer bar, which features more than 200 beers at any given time.
“We’re looking for stuff that’s interesting, a twist on an existing style,” he said.
Many breweries are beginning to specialize in making particular styles of beer. Modern Times, in San Diego, has focused recently on making different renditions of coffee stouts. The Bruery, in Orange County, focuses on barrel-aged beers, many of them sours. So does Rare Barrel in Berkeley. Ol’ Republic Brewery, in Nevada City, is making German-style beers. Moonlight Brewing Co., in Santa Rosa, makes a variety of beers with virtually no hops at all. Owner Brian Hunt draws inspiration from beer styles made long before hops became a ubiquitous flavoring ingredient. In San Francisco, Woods Beer Co. brews beers with yerba mate.
“Very few breweries do everything well,” Archie said. “I love knowing that one brewery is honing down the details of a certain style rather than skirting the surface on a lot of styles, doing nothing great and doing a lot of stuff all right.”
Hunt, at Moonlight, says brewers should make the beers they’re good at making.
“There are enough breweries out there that you don’t have to do everything,” he said. “It isn’t necessary, because someone else can do it better than you.”
Hunt says young brewers everywhere are striving to excel in their own unique styles—and it has become a bitter struggle.
“More and more breweries starting up are trying to make increasingly unique beers, because they’re desperately, desperately trying to find a market they can grab onto,” he said. “They are struggling to find somebody that wants their beer.”
The challenge of standing out in the crowd may be what eventually stanches the craft beer industry’s growth, Hunt says.
In 2008, there were just over 1,000 craft breweries in America. After a 400-percent growth spurt in eight years, McCormick says the rate of expansion isn’t slowing at all—at least not yet. He says almost uncountable breweries-in-planning are now setting their roots and preparing to tap into the fertile marketplace.
But not all big names in craft beer are celebrating. Sales of New Belgium’s main beer, Fat Tire, dropped 1.4 percent in 2015—a decline compounded by the simultaneous growth of the overall craft beer market. By comparison, sales of Lagunitas’s IPA jumped by 57 percent last year, according to Magee. He says his brewery is growing so rapidly because he has “stayed ahead of the curve.” By forming a joint venture with Heineken, Magee says, “Heineken is learning as much from us as we are from them.”
Magee, who still oversees operations at his Petaluma brewery and the more recently built facility in Chicago, says his partnership with Heineken is ultimately propelling the growth of craft beer. He says the growth of breweries and the evolution of the industry is nothing to lament. The craft beer industry was bound to change the moment it was born, he says, and it has changed every moment since and will not stop changing.
“And if you aren’t part of what’s happening, you’re a part of what happened,” Magee said. “I want to be a part of what happens next, and it isn’t that I’m just trying to be part of the winning team. We are the winning team—craft, not Lagunitas, but craft. I just want to be where craft goes next.”
Magee says he recently proposed joint ventures with another craft brewery.They declined, he says, and have plans to sell out to InBev.
Knee Deep Brewing Company, in Auburn, is among the fastest growing breweries in the Sacramento region and is expanding much faster than the industry itself. A production of 6,200 barrels in 2014 and could be at 60,000 barrels by 2020, according to general sales manager Andrew Moore.
Moonlight is taking a different approach to growth. Hunt says he gets more inquiries from bar managers who want his beer than he is able to meet. Yet he has little interest in rapidly expanding his small operation, which he says is growing by a modest 15 percent per year.
“If people grow their business based on demand, are they growing to make quantity, or for quality?” he said. “Some brewers put money toward distributing their beer. I’d rather put my money toward making the beer I want to make.
“I may be a poor capitalist, but I see no need to get rich quick.”