Loss of an “Anchor” of Craft Brewing? Hardly.

My Views on the Buy-out of Anchor Brewing and Similar Earlier Buy-outs

To expand on a tweet the other day, for the life of me I cannot understand how the sale of craft breweries continues to upset so many people. The sale of San Francisco’s local jewel Anchor Brewing to Sapporo, the large Japanese brewer, is the latest stimulus for discontent.

On various beer boards, blogs, Twitter, and other media the refrain continues that a stalwart of craft brewing, in Anchor’s case a pioneer, is being lost to “big brewing” or “big beer”. The implication, stated clearly or implied, is standards might change in the future, or the beer will be brewed outside the original site, and somehow the soul has been lost.

Arguments are also made that big breweries might out-price out small independents since they have the ability to buy raw materials in massive volumes, or to use their clout with distributors to winnow down competition.

The only part of these arguments I find persuasive is where there is a clear risk of anti-trust activity. Jim Koch of Boston Beer Company (Sam Adams) in a well-publicised article some months ago suggested a closer look be taken to ensure large brewers such as AB InBev don’t use their market position to unfairly restrict competition. If issues arise in that arena, I’m sure U.S. anti-trust officials and competition law authorities in Canada will be on the alert and initiate action if necessary. Private anti-trust lawsuits can seek relief from violations that hurt their businesses, and one or two lawsuits have been reported recently.

But I’m sure the large brewers are careful to examine anti-trust implications before buying small breweries or making other inroads in craft beer culture. I doubt any serious obstacles exist to the pattern we’ve seen to date.

I take the point sometimes made that disclosure is fudged when large breweries keep the branding and small brewery image of their acquisitions intact. On the other hand, I’m convinced most of the market isn’t that concerned with brewery size and source. Anyone with more than a casual interest in beer will find out pretty soon that, say, Shock Top isn’t a start-up from down the block or someone else’s block.

Further, advertising has always taken certain liberties, indeed for almost any consumer or business product. A little “puffery” as it’s known is expected, we live in a business culture that relies on the ability to market effectively and sell. That pays the bills, pays salaries, pays taxes. Consumers are not simpletons and I think most people, at least who take more than a minimal interest in who makes their food and drink, know to read labels and placards with a grain of salt.

The implications of the takeover critiques are often vague. Are the critics suggesting that the vendors of small breweries shouldn’t sell to big brewers? Who can they sell to then, assuming their children, if any, don’t want to continue the business? What about private equity funds? Someone in an unrelated business, is that okay?

The small and medium-size brewers who sell their businesses usually took big risks and worked for fairly minimal returns for years for lots of hard work. We live in a free market, more or less, which is what enabled craft brewing to begin with. I don’t think an implied suggestion not to sell to big brewing will get very far with people who worked for years to make products of integrity because they liked them and their customers did.

Is the idea therefore that consumers should stop buying craft beer once it falls under the aegis of big beer? Of course, if someone wants to support only small independent enterprises, that is their right. Part of the ethos of beer appreciation from the beginning has been to support the small, the local, the little brewery that could. It inspires some of my purchasing, but not all and I suspect at day’s end most committed beer fans want to buy products that are good and, often, well-priced. That means seeking them in different quarters.

Some critics have made the point that recipes can change. I’ve read Goose Island IPA apparently uses a different yeast than before the purchase and one of the hops has changed. Well, I think the new beer is better than it was before! I concluded that even before knowing there was some kind of change.

Buy-outs can make beer better. Upper Canada Dark Ale and Lager improved significantly IMO after Sleeman in Ontario (not part of a mega-brewery at the time) bought Upper Canada’s assets. And beer formulations sometimes change anyway, for a number of reasons, even when ownership does not. The current Stone Pale Ale is different than the original, I believe…

But often the beers don’t change or not significantly. I don’t think Creemore Lager has changed in the least, for example.

If it changes and I don’t like it, I won’t buy it, simple.

Looking at Anchor specifically, Anchor’s beers were pasteurized in any form even before this latest purchase, a process not typically associated with small-scale brewing. And Anchor wasn’t a craft brewer anyway in strict terms, it was founded in 1896. Fritz Maytag turned it into a proto-craft brewery after rescuing it from insolvency in the mid-1960s. In addition, Maytag sold out a few years ago to two individuals who formed an investment company. They had worked with a vodka business earlier, not in brewing…

Anchor did great spadework for craft beer, certainly. Its good work is evident in the form of the thousands of craft brewers in America currently and elsewhere indirectly. But the fact that at this juncture it has found a new home cannot hurt good beer in any way; rather, it will keep the brewery going for a long time. That is something which can’t always be taken for granted with businesses of their size, market, and ownership structure.

What started craft brewing was the idea to make a superior product. Brewery size in and of itself was not the driving factor. Great beers were made by very large companies in England, say, in 1980 and were lauded by beer fans and consumer beer writers. Almost all the Big Six were the result of a complex series of acquisitions and mergers over a long period, too. Where big companies made only or mostly bland stuff, they were taken to task by those who liked a more traditional taste, and rightly so.

Big brewers by making these acquisitions or setting up in-house craft brewing units are making beers which for 40 years critics said they should make. Now we don’t like it?

At bottom, quality is what counts, good beer that is, indeed very good beer. It can be made on any scale, by any type of business. I will buy such beers.

Finally, independent brewers will be incented to get a leg up by big brewery interest in “their” beer. It will impel them to innovate more, make better beer, and compete on being nimble. The buyouts hardly spell the end for small and medium-size brewers. People always want something new, creative, or just superlatively good. The small brewery down the block has an advantage that no big brewery can take away whether it makes craft beer or not.

 

 

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