The craft beer industry is in a weird metaphysical place right now. Physically, it is in great shape — 3,700 plus breweries open, market share up around 11 percent and tons of investment interest. But that last part is causing the weirdness, at least when it comes to the growing list of craft brewers, by the BA definition, that have now been acquired by Big Beer companies. What does it all mean for “craft beer?” And does it matter?
These aren’t just questions posed by a silly CBB editor, but by the founders of the craft beer movement, like Saint Arnold’s Brock Wagner. When we chatted with Wagner at the Great American Beer Fest, he went so far as to say the term craft beer might be nearing the end of its usefulness.
First, some background: Wagner has been carrying the craft beer flag for 20 plus years, back when craft beers were more commonly thought of as “microbrews.” His brewery, Saint Arnold, has been a staple of the scene over that period of time. Saint Arnold’s footprint currently is Texas, Louisiana and parts of Florida (slowly going up the coast), but “outside of that, I have no plans on expanding any more. Really, our focus is Texas,” he said.
As craft beer slowly started to carve out a niche as an actual industry, Wagner believed it was super important to maintain that small, independent spirit. In fact, he was on the board of the BA from 2004-2008 and was involved in writing the BA definition in 2007, at which time he argued the percentage of ownership allowable by a Big Beer company should be as low as 25 percent.
And now, he seems much less rigid (or at least less interested in being rigid) when it comes to answering “what is craft beer?”
“I think the industry is in a state of change right now,” he said. “ It keeps evolving, and it’s very healthy, but … craft beer has been so successful at changing what beer is in this country. And as that continues to evolve, the line is getting less and less bright. In 20 years from now, I don’t think we’ll be referred to as craft beer as an industry — we’ll just be beer.”
He uses this anecdote to illustrate what he means:
“Sometimes I’ll go to the grocery store to observe beer selection. Just the other day, a guy pulled some Blue Moon off the shelf. I asked him why he made that selection. He said, ‘I really love craft beer.’ I said, ‘Yea, MillerCoors does a really good job with that beer.’ It did not matter to him. He didn’t know, but it didn’t change his position on it.”
Moral of the story: What the customer thinks is craft beer is what craft beer is. So, things are now evolving, “it is tough to tell someone that Hop Stoopid was a craft beer yesterday and today it’s not.”
“Look at what Widmer is doing. Is that craft beer?” Wagner asks. “It looks like craft beer. They are pretty much operationg on their own. You don’t see the finger prints of a big brewery. So, it becomes difficult, and especially with the hurdles of changing the definition so Boston Beer could still be a craft beer. It just gets harder and harder, and at some point it just becomes an ‘I know it when I see it’ thing. And I think the customer, 20 years from now, will just want to drink good beer.”
So, why now? Why weren’t we thinking this way all along? Well, in Wagner’s view, the aforementioned evolution needed to take place to get to this point.
“The industry was more vulnerable 10 years ago with smaller market share and a lot of people saying they are exclusive AB and wouldn’t touch craft beer,” he said. “You didn’t see the clear path to where we are today, so I think, back then, it was important to protect who we are and hold on to that. … But look at the market share craft has now and how it’s growing and the number of breweries out there; it’s not going away — that’s not a risk at this point — but it’s going to change.”
“At some level there has to be an evolution and understanding of what’s happening in the market place and what actually matters. The big brewers need the small brewers in their portfolio so they can remain relevant in the marketplace. It is not going to eliminate the other small brewers in the marketplace. It makes good business sense for them. It is not a situation where it’s going to create an environment where small breweries can’t continue to thrive. They will.”
Moving on from “craft beer” as a term wouldn’t have to mean removing categories that identify better beers from watered-down lagers. For example, the IRI uses the labels sub-premium, premium and super premium — going in that direction might make more sense in the market place and with consumers.
“A customer going in and buying a Blue Moon is a potential Saint Arnold customer. So, to put the labels in a different bucket, from a business stand point, makes no sense to me. People aren’t saying ‘I only drink beer from big breweries; they just like the flavor, and it has been well marketed and they know what it is.”
Wagner is a thoughtful guy who seems to adapt with the times, whether he particularly wants to or not, and not just on this issue.
“I was an anti-can guy, but my co-workers revolted, negotiated a contract, presented it and said ‘please sign here,'” he laughs. “You know, I’m learning to enjoy eating crow, cooking it many different ways. I like the cans. I hate hearing myself say that.”
Saint Arnold’s canning business is small right now (under five percent), having only started this February. The brewery is using a machine from CFT Packaging that does about 180 cans a minute.
Evolution. Thinking about things differently — never getting stuck with the way things are — that’s really what a craft beer business is all about, right?