Over recent months we have seen three highly regarded and successful independent Australian craft breweries acquired by multi-nationals. Manly’s 4 Pines and Adelaide’s own Pirate Life Brewing were purchased by AB InBev in September and November respectively, while Western Australia’s Feral Brewing was bought by Coca Cola Amatil in October. For craft beer drinkers this can be an emotive issue. The knee-jerk reaction of many has been to cry ‘sell out!’ and vow to never again buy the products of these breweries now aligned with the dreaded ‘Big Beer’.
To be honest I have a moral preference towards independent brewers but I have increasingly been challenging myself as to why that is, and why anyone could logically enjoy a given beer one day and then refuse to drink the exact same beer the next day because the brewer has been bought out. Isn’t that just like those people who are rabid fans of a band for as long as they battle away in obscurity but jump off the minute said band achieves even a modicum of success? Or is there actually a real danger that formerly independent breweries will sell their soul? Just like many (but by no means all) fine bands have done over the years once they got their big break by recording the music the label wants them to instead of the music that got them signed in the first place.
And so here is my attempt to apply some logic to that conundrum, with thanks also to some of my fellow craft beer enthusiasts with whom I have enjoyed interesting and very spirited recent discussions on the topic.
I reckon there are two key considerations here. The first, most obviously is that of the quality of the product. In short, will it still taste the same? Or will the quality of the product be somehow compromised, intentionally or otherwise. Craft beer drinkers are a canny lot (dreadful pun intended) and they will quickly know if corners are being cut. What’s more in this the age of social media, word will get around the closely knit craft beer community incredibly quickly.
But there are signs that Big Beer is starting to understand this and grasp the fact that preserving the quality of it’s acquired brands is critical to maintaining and growing sales. An example is Ballast Point Brewing Co in San Diego which has long been one of my favourite brewers of big, bold and innovate pale ales and IPAs. That quality has, to me at least, not been compromised at all since their acquisition by Constellation Brands in 2015.
Closer to home we can look at the examples of Little Creatures and Mountain Goat. While opinion seems to be a little divided on whether Little Creatures has maintained their quality in their core Pale Ale and Rogers products, generally though I think it’s reasonable to say that the quality hasn’t fallen off a cliff. As for Mountain Goat, I don’t think there has been any discernible change in their products at all.
The other key element I think is innovation. Most craft beer fans I know absolutely love trying new beer and it is something that sets the industry apart… there is an absolute expectation that brewers will experiment, with the results of those experiments being eagerly received by a very willing market that absolutely embraces non-conformity.
Product innovation and the release of bold new beers has been a key part of the ethos and success of each of Pirate Life, 4 Pines and Feral. It is difficult to believe that their (former) owners would have entered an agreement that would stifle their ongoing creativity. Indeed, having a big partner to assist with day-to-day production and distribution of core beers should at least in theory free up the brewers to focus even more on experimentation and innovation. Looking again at Little Creatures and Mountain Goat, while the frequency and originality of Little Creatures’ seasonal ‘single batch’ releases has diminished somewhat, Mountain Goat has to date continued to churn out more fabulous ‘Rare Breed’ seasonal releases (look no further than the near universal praise for the recent ‘Back to the Brewer’ double steam ale).
Time will tell whether the risks of deteriorating quality and less innovation eventuate. If, however, Big Beer truly understands that the craft beer market thrives on and in fact demands high quality, new styles and tastes (granted, these are big ‘ifs’) then one would think that this risk might be low. The one big caveat on this though is that producing high quality beer with the best ingredients and continuing to invest in innovation is inherently more expensive per unit than mass produced blandness masquerading as beer, which brings us to…
Let’s be clear, Big Beer companies exist to make money. Lot’s of money. And in that they are just the same as any other big business you care to name. Big Beer’s interest in buying out independent breweries is therefore fundamentally driven by the almighty dollar and maintaining or preferably growing market share. In short ‘If you can’t beat them, buy them’, and of course there is nothing unusual in that mantra; it happens all the time in all sorts of industries.
But we need to remember that there are two parties to these transactions and for each of Pirate Life, 4 Pines and Feral Brewing, their acquisition by a massive, cashed up Big Beer company was a means to an end, particularly in terms of bringing to bear significant capital, resources, production capacity, buying power, promotion, expertise and more that an independent brewer simply cannot hope to match. Consider these extracts from the media releases accompanying the acquisition announcements:
- “Looking back at what we set out to do when we started in 2015, we aimed ‘to be an exciting and challenging new company brewing internationally recognised beer that excites and challenges the lifestyles and palates of beer drinkers globally.’ Continuing with this philosophy, our new partnership helps us take our dream to a level we could never imagine and push ourselves and our beers further.” – Pirate Life CEO Jack Cameron.
- “Making innovative premium quality beers that are well executed and have high drinkability is what the team here loves to do and what consumers admire most about us. But a growing business is a hungry one. We have a lot of future plans for the business which, if Feral needed to rely on my personal balance sheet to fund, would take years to execute.” – Feral Brewing co-founder and owner Brendan Varis.
- “Our purpose has always been to restore the fun in people’s lives and forever challenge what the world imagines business should be. So we will keep doing what we’ve always done, except now we are able to realise our long-term goals even sooner and immediately roll out some plans that are seriously epic.” – 4 Pines co-founder and owner Jaron Mitchell.
Further, potentially lower average production costs may (and I stress ‘may’) actually flow through to the price paid by consumers.
So while Big Beer will likely continue to make big money, if it also transpires that as a by-product more people will actually have access to more great beer at (hopefully) reasonable prices then that is surely a positive outcome. Further, this might just open the door for more consumers to sample something a bit different and maybe take the plunge headlong into the wonderful world of craft beer.
The moral dilemma
Beyond the profit margins, is there actually anything sinister about Big Beer buying out your favourite independent breweries willy-nilly? Maybe not of itself, but the pursuit of the almighty dollar can and has led to some very dubious practices. Here in South Australia we still have a strong collective memory of Lion Nathan’s extremely aggressive but ultimately doomed attempt to take over Cooper’s in 2005. Consider too the deceptive branding and positioning of in-house mass-produced Big Beer brands like John Boston (Woolworths) and Steamrail (Wesfarmers) as ‘craft beer’, not to mention the dubious practice of Big Beer contracting up as many taps as possible at pubs and other licensed establishments.
But we would also do well to remember that Big Beer does actually make some positive contributions to our society, not least of which from the simple fact that they provide employment for millions of people globally. And not just the people directly employed by Big Beer. In the 2015 edition of the ‘Beer Serves America’ report (http://beerservesamerica.org/ ), it was estimated that that each brewery job generates approximately 34 additional full-time jobs in farming, distribution, hospitality and more.
Regardless though, the beauty of the craft beer industry is that even after discounting those breweries that are no longer truly independent, we remain spoiled for choice. So if it helps you sleep better at night then there are still a staggering number of independent brewers making wonderful beer from which to choose. And with the new ‘independence seal’ being introduced in Australia by the Independent Brewers Association (IBA) in early 2018, consumers should be able to more easily identify independently produced beers.
On balance, I believe there is the potential for some and possibly much good to come from acquisitions such as those of 4 Pines, Pirate Life Brewing and Feral Brewing, and I have little doubt that I will continue to sample their wares for as long as they keep producing great beer, just as I would for any other brewery. But on those times when I’m faced with a single choice between a pint or six-pack from an independent and a formerly-independent, then I’m still likely to opt for the little guy.