It’s been a rough few weeks for the brands in Anheuser-Busch InBev’s erstwhile craft-brewing portfolio. The company has laid off an unknown number of workers from at least a half-dozen formerly independent breweries across the country, and effectively shuttered one entirely. Insiders speculate there are more cuts on the horizon for ABI’s microbrewing-by-proxy business unit, which has struggled mightily as tailwinds turned to headwinds on the overall American craft beer segment over the past half-decade. It’s a shocking reversal for a company that was buying craft breweries and touting their innovation potential as recently as 2019 — or it would be, if this fall weren’t the predictable result of overextension, underappreciation, and macrobrewer brand mismanagement that took place in plain view.
Let’s begin at the end (for now) of ABI’s corporate craft brewing foray: the layoffs themselves. The headcount and details are a little murkier, and the company is, of course, keeping mum about them, but they’re very much afoot. In late February, trade pub Brewbound reported some number of pink slips at Blue Point Brewery (acquired 2014, based on Long Island, N.Y.), Devil’s Backbone Brewing Company (2016, Nelson County, Va.), Golden Road Brewing (2015, Los Angeles), Karbach Brewing Co. (2016, Houston), Wicked Weed Brewing (2017, Asheville, N.C.), and Veza Sur (Miami, launched in 2017.) A week later, Good Beer Hunting noted that some number of marketing staffers who supported ABI’s craft brewing portfolio from the company’s New York City office have also been laid off.
“The consensus was like: Craft means nothing to AB,” one anonymous former employee told reporter Kate Bernot. “We’re not just a cog in a wheel being a craft brand, we’re a cog in a wheel in a cog in a wheel in a cog in a wheel. We don’t move the needle in any way.”
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ABI, for its part, issued a written statement about the layoffs in which Andy Thomas, the president of the company’s regularly reorganized craft-and-more portfolio, The High End, elided specifics and insisted the group was “staying laser focused on continuing to lead growth in the segment.” The firm did not respond to Hop Take’s request for comment for this column.
Even if you think ABI is the scourge of the beer industry and/or modern world, this is a dismal outcome for the workers victimized by this Red Wedding, and the ones who remain — and for the company itself! ABI now appears to be pivoting away from a segment it’s thrown hundreds of millions of dollars at in the past decade and toward the higher margins, commodity sensibilities, and comparative cultural vacuousness of canned cocktails, flavored malt beverages, and other “beyond beer” pseudo-segments to be determined. Which, whatever, that’s the company’s prerogative, I suppose. But given the whole “hundreds of millions of dollars” bit, and ABI’s still-considerable stature in the craft beer category, it’s worth booting up the ol’ Hop Take time machine to revisit some of the twists and turns that brought The High End so… well, low.
Since scooping up Chicago’s Goose Island Brewing Co. in 2011, ABI had purchased more than 15 craft beverage producers and related businesses across the country. Its designs on the segment inspired no small amount of concern among craft brewing’s true believers. Even after the wide-eyed paranoia that area-coded 312 Urban Wheat dupes were coming to cities across the country died down, industry observers had plenty of reasonable anxiety about ABI’s newly minted leadership role in American craft brewing. The company’s fearsome distribution network, and its well-demonstrated willingness to wield said network like a cudgel against competitors real and perceived, was a major source of craft concern back in 2019, when I wrote a big feature on ABI’s then-recently consolidated craft brewing position. Another was its self-professed intent to steward the category to ever-greener pastures.
“It seems like they’re making gains in the craft segment enough to kind of satisfy them” for the time being, Steve Luke, the founder of Seattle’s Cloudburst Brewing, told me at the time. “But once that growth stops for them… I mean, they always have to grow.” What would happen to craft beer writ large if ABI’s portfolio started really struggling? Said Luke, “That’s kind of my biggest fear.”
Make no mistake, there was no love lost between Luke and ABI, which had acquired his former workplace, Elysian Brewing Company, in 2015. In fact, the Seattle brewer had accepted a medal at 2018’s Great American Beer Festival wearing a shirt that said “F*CK AB-INBEV” across the chest. His concern that ABI’s carefully amassed influence over what the American drinking public considered “craft beer” could prove existential for the entire category if the macrobrewer mismanaged its portfolio into decline, hasn’t totally borne out.
Category killing is a thing, sure, and ABI and its precursor, Anheuser-Busch, have practiced the dark art before. But the American craft brewing industry has struggled in the intervening years for many reasons, and ABI poisoning the well by, say, using the Vienna-lager-built good name of Devils Backbone to hawk hibiscus lemonade and vodka-based canned cocktails is pretty low on the list. Sometimes a cigar is just a cigar; sometimes corporate flailing is just corporate flailing. Not everything that has befallen craft brewing is ABI’s fault.
That’s not to say the company has done a good job of stewarding the craft beer category in its bought-and-paid-for role as its largest player. It hasn’t! And most of what has befallen ABI’s craft breweries — 13 by my count, including Platform Beer Co., which the macrobrewer abruptly shuttered last month after buying just four years ago — is ABI’s fault. The company has been sending mixed signals about its stake in the category basically from the jump. Midway through last decade, as it was still very much in buying mode, it used Budweiser advertising to repeatedly smear the category, causing needless customer confusion and industry agida. It dove into media (October, a beer site launched with Condé Nast in 2017), taste-making (it acquired RateBeer.com in 2019) and homebrewing (it acquired Northern Brewer in 2016), only to eventually shutter, deprioritize, and sell off those properties respectively.
Internally, ABI’s structural approach to the category has been anything but consistent. The company has reshuffled its craft business unit (known as the “Brewers Collective” in corporate press releases, and nowhere else) at least three times since 2017, trying to find a winning combination of the various sales, marketing, and operational headcounts that came with and/or focused on, its many acquisitions. I can buy that certain role redundancies emerge when you buy a baker’s dozen of formerly independent, rapidly expanded, regionally distributed craft breweries, especially when you already own another half-dozen (as ABI did via its partial stake in the Craft Brewers Alliance, which it acquired outright in 2020). I have a harder time believing that rejiggering the org chart thrice in five years is the natural lifecycle of a well-run, well-led, well-funded beer portfolio. But what do I know?
Oh, right: ABI craft breweries’ sales data. I know some of that, and it isn’t particularly pretty. The portfolio’s national sales in IRI-tracked retail outlets were down just under 9 percent by volume last year, which isn’t terrible considering the cooling fortunes of the craft beer category generally. But a closer look at the 2022 calendar year indicates a real mixed bag, with hotter brands like Goose Island, Wicked Weed, Cisco buoying double-digit volume declines from the likes of Devils Backbone, Karbach, Blue Point, and Shock Top (a homegrown craft lookalike whose ongoing presence in the portfolio seems more and more like a cruel joke with each passing year.)
There are bright spots, to be sure! Goose Island has a legitimately hot hand with its Beer Hug IPA family; 10 Barrel (acquired 2014 in Bend, Ore.) debuted a new double IPA called All Ways down in 2021 that’s been selling like mad; and Wicked Weed’s Dr. Dank, also introduced in 2021, posted triple-digit volume growth over its rookie-year numbers while the brewery’s venerable Pernicious IPA chugs along at a great clip. And if you read your VinePair, you know that ABI has high hopes for Kona Big Wave’s Corona-like lifestyle potential, which may well come to fruition this year on the back of a 45 percent increase in marketing. We’ll see! But when you look at the overall portfolio, it’s clear that ABI’s stable of craft brands simply isn’t the “growth engine” that the company itself insisted it would be as recently as 2019. I don’t think it ever would have been, or will be in the future.
ABI spent the last dozen-odd years pouring more than half a billion dollars into craft brewing on an if-you-can’t-beat-’em-buy-’em basis that seemed more desperate than strategic at times. Now that the times themselves have gotten desperate, and running a craft brewing portfolio requires more than kicking back and cashing in, the company is doing what the company does best: slashing costs. Of course, the old business idiom holds that you can’t cut your way to lasting growth — but for the last decade and a half at ABI, that wisdom has proven to be a very deep cut indeed.
🤯 Hop-ocalypse Now
The Light Beer Wars are the stuff of legend in the beer industry. A pre-InBev Anheuser-Busch duking it out with Philip Morris-backed Miller, with Coors and its Colorado cachet entering the mix in its bid to go national? Sign me up! There were deep-pocketed marketing departments, turncoat executives, and distributors fighting tooth and nail for the country’s coveted cooler space. Half a century and several major mergers later, things are decidedly tamer and lamer in the segment. The best macrobrewer backbiting we have going these days is occasional litigation — like ABI’s complaint to the Better Business Bureau’s advertising oversight board about a 2022 Miller High Life campaign that implied Michelob Ultra et al tasted like water. The board in late February censured High Life parent Molson Coors, which says it will appeal the ruling. Who cares! Even last decade’s #corntroversy was more interesting than this!
📈 Ups…
In Virginia, craft breweries are just a signature away from legal self-distribution after the General Assembly approves up to 500 barrels per year… Onetime on-premise overachiever House Beer shut down in 2022, but will come back under *checks notes* ah, extreme motorsports athlete Carey Hart?… The National Beer Wholesalers Association is predicting a “more positive” year for beer based on its latest purchasing metrics… Molson Coors’ marketing guru just got promoted to lead a new whole-portfolio “commercial unit” across the Americas… The Brewing Union of Georgia notches a state representative’s support for its ongoing drive at Creature Comforts Brewing Co. …
📉 …and downs
The world’s wealthiest button-down, Bill Gates, bought $900+ million worth of Heineken shares, which fueled weird conspiracy theories on Twitter… In a taunt to the gods, Athletic Brewing Company announces a non-alcoholic pre-workout coffee beer made with upcycled barley protein… Monster Energy Corporation is looking for another $167 million in damages from Bang’s parent company (on top of the $293 million awarded last year)… The Beer Institute says January 2023 taxpaids show a 4.4-percent swoon over last year….
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