An open Letter on AB Buyouts and Advertising
An open Letter on AB Buyouts and Advertising
From the Founder and President of Renegade
To anyone who gives a shit:
Buyouts have been a hot topic lately with the recent purchase of 10 Barrel Brewing and Elysian Brewing by AB InBev. As a small brewery owner, I have reflected a lot on these changes to the industry and here is why these purchases should matter to you the consumer:
Craft Beer is Independent
Craft beer, by definition, is independent. We are making more than beer, we are supporting a way of life that is truly American. We are group of rag tag bootstrapped businesses banding together to make something of the highest quality. We are making something in America by American owned businesses and in the process creating good jobs in quality work environments where people are respected and valued. We are saying no to corporate models of making the cheapest product possible and covering it up with advertising.
The more buyouts that occur, the less independent this industry becomes. This means that we have fewer voices to stand up for legislation that benefits small independent business owners like preventing the sale of full strength beer in grocery and convenience stores in Colorado. This issue could threaten the livelihood of many small brewers and liquor store owners and will certainly lead to fewer craft choices for Colorado consumers. Would AB object to this legislation? I think not.
Small and independent also means there are a lot of us. We are sprinkled throughout the country in many different communities contributing to many different local economies through sales and excise taxes. Craft brewers also have a rich tradition of generously donating to local charitable causes (every week Renegade donates a portion of sales to a local animal shelter). More consolidation means less impact on local economies.
Now, I am not unaware that every business owner needs an exit strategy, but craft brewery owners need to find exit strategies that don’t endanger craft as a whole. With fewer independent brewers, the market that is based on creativity and uniqueness will be more based on profit and cost savings, which brings me to my next point.
Craft Beer is Not a Margin Game it’s a Quality Game
Craft beer is not a margin game. It is in the sense that you need to have some margin or you will be closing your doors. But, unlike macro brewers, craft brewers don’t compete with each other solely on margin. Craft brewers compete on quality and creativity. This benefits you directly as the consumer. Teaching AB InBev to compete on quality and creativity is a bit like teaching an old dog a new trick. Their corporate structure is based on dumbing down their product to save costs and using marketing to cover up their short comings.
If AB continues to acquire craft brands, their corporate muscle will allow them to get a six pack price of “craft” beer in their portfolio well below the price that Renegade Brewing or any other small independent brewer can offer. Our margins are so thin I could give you a clean shave with them, but I will never compromise the quality of our product to increase that margin. As the craft uninitiated begins to try these AB “craft” brands, they won’t know that quality has slipped because they are coming from drinking Bud. They will only know that the price of this “craft” six pack is $2 less than my six pack, it has more flavor than Bud, and I must be sitting in my mansion somewhere getting fat and happy of my extra expensive six pack. In reality, I make difficult budget decisions everyday in running my business because we operate off such a small margin.
Well how big is this craft uninitiated part of the market, you ask? Only a mere 92% of beer market belongs to the macro brands. Yes, price wars are a serious threat to craft beer. And, if you don’t think that AB will water down quality, consider their latest move.
Craft Beer Quality Will Be Watered Down by Macro Buyouts
During the 2015 super bowl yesterday, AB aired an ad that purported that Bud is “brewed the hard way” and that it is “made for people who like beer” and is “not made to be dissected”. One of the lines that craft brewers have particularly latched onto is “let them sip their pumpkin peach ale”. Could AB have been referring to their coffee pumpkin ale? As we all know as of January 23rd AB InBev produces a coffee pumpkin ale called Punkuccino under their newly acquired Elysian line of beers. Or do you think AB is even aware that they now produce this beer?
You see, not two weeks after acquiring one of the most respected craft brands on the market did they start an ad campaign that is directing at hurting the sales of that company. Now if AB’s motivations were to buy that brand to build it up, why would they launch a marketing campaign to deliberately hurt the brand they just purchased? I would suspect it is because AB’s recent purchase of craft brands is more about watering down the quality and cutting costs and taking the margin that brand has to offer in a short term game. If ultimately the brand dies off and leaves the market, then AB has nothing to lose, they have one less craft beer on the market to compete with Bud, Bud Light and any other low quality macro brand they produce.
Oh, and if you don’t think the macro brands will lie to you, you need only consult the line “Brewed the Hard Way”. If pushing buttons is brewing beer the hard way, then I don’t know what you would call what we do at Renegade, maybe “Beer Brewed the Purely Stupid Way”. Everything we do is manual. Our brewers touch every single part of the process. We sweat when we work. We are sore the next day. Are we unique? No, this is craft beer, truly brewed the hard way because we care.
In short, independence is necessary to continue craft beer as you know it. Craft brewers will never out-price or out-advertise AB InBev. But, we can and do, out-do them on quality, creativity and contribution to our local communities.
Thank you for supporting craft beer,
Founder and President
Renegade Brewing Company