The Brewers Association fell a bit short of its fundraising goal to acquire Anheuser-Busch InBev (NYSE: BUD). In calling an end to the tongue-in-cheek crowdsourcing effort, the craft beer industry's trade group noted that "... it turns out $213 billion is really a very, very impossibly large sum of money."
However, the group did manage to secure pledges for nearly $3.9 million from nearly 12,000 people (this author pledged $50), and now it recommends using that pledge money to buy a craft beer.
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Although a failure, the campaign does highlight how big big beer really is and how, despite an overall slowing industry, craft beer thrives.
The definition of craft beer
The Brewers Association reports there are more than 6,000 breweries operating today, and virtually all of them are craft brewers. Some 2,700 or so of those brewers (about half of the trade group's membership) have adopted its new independent craft beer seal, which they can print on their labels.
The association defines craft brewers as small (annual production of 6 million barrels of beer or less), independent (less than 25% owned or controlled by an alcohol industry member that is not itself a craft brewer), and traditional (a majority of its total volume in beers has flavor derived from traditional or innovative brewing ingredients and their fermentation).
The industry's complaint against Anheuser-Busch is that the buying binge it went on, scooping up almost a dozen craft breweries, watered down the perception of what true craft beer is. Rather than small-batch, locally brewed beer, the spending spree turned the products of former craft brewers into mass-produced commodities. The humorous campaign to buy the macrobrewer was really to remind beer drinkers what real craft beer is.
Of course, many people may not care who brews their beer so long as it tastes good, and drinkers who are loyal to a beer like Kona Brewing from Craft Brew Alliance (NASDAQ: BREW) won't be concerned that Anheuser-Busch owns a 32% stake in the brewery.
Yet many others will. And as more big brewers acquire their craft brethren, they're beginning to face a backlash. A number of brewpubs dropped Wicked Weed beer from their taps after Anheuser-Busch bought it, and Constellation Brands (NYSE: STZ) was forced to take impairment charges on its $1 billion Ballast Point Brewing acquisition, as it encountered resistance to introducing the brand nationally.
Craft is still a threat
Yet craft beer continues to grow. We won't get 2017's final numbers for a while, and growth is likely slower than even 2016's 6% rate. But craft beer production continues to climb higher even as big beer shrinks or remains stagnant.
Anheuser-Busch realizes this, particularly after its Budweiser brand, once the King of Beers, reportedly fell out of third place after being toppled by Miller Lite. A-B's Bud Light remains far and away the No. 1 beer in the U.S., but even that brand's sales are declining. (Coors Light is No. 2.)
That could partly explain its own humorous marketing campaign to elevate the beer. Anheuser-Busch's "Dilly Dilly" campaign first mocked the rise of mead as an adult beverage alternative, but when a craft brewer released a Dilly Dilly IPA, it kept the shtick going by delivering a cease-and-desist letter (and two tickets to the Super Bowl) via a town crier with a parchment scroll.
Anheuser-Busch InBev is obviously a potent force in the beer industry, and an argument can be made that its acquisitions of craft brewers help bring good beer to more people. Yet drinkers are increasingly interested in beer that's new, local, and authentic. To ensure it still wins, Anheuser-Busch can flex its distribution muscle to make it difficult for smaller craft brewers to appear on store shelves, and if it has a passel of "craft-y" beers it can offer instead, that gives consumers the appearance of choice without a real distinction.
The craft-beer industry remains a burgeoning one, as 6,000 breweries will attest, and one that continues to thrive in the face of the onslaught brought on by Anheuser-Busch. While the industry may have fallen short of its goal to buy its bigger rival, it may still win the battle for the hearts, minds, and throats of beer drinkers.
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