Just How Independent is that ‘Independent’ Craft Beer You’re Drinking?

04 Jul Just How Independent is that ‘Independent’ Craft Beer You’re Drinking?

by Mark E. Lasbury for Indiana On Tap

For all you people who pay very close attention to my articles, you may have noticed that I have started using the term ”indie craft beer” in place of “craft beer.” This is a not-so-hidden effort to separate craft beer made by breweries that are under the influence of only their own opinions on how to make and sell beer from those breweries that are beholden to outside influences on their product.

Many articles in the past six months or so have questioned the usefulness of the term “craft beer” in light of acquisitions made by several large beer and non-beer companies. In particular, AB InBev has their “High End” line of faux craft beers, including Goose Island, Wicked Weed, 10 Barrel, and Elysian (ten in total), but under the influence of AB InBev, can these still be called craft?

AB InBev has swallowed SAB/Miller as well, and they make waaaay more than six million barrels a year (one of the Brewers Association parameters for non-craftness), so none of the brands under SAB, or any of the brands under the Craft Beer Alliance which is 32.2% owned by AB InBev (Widmer Bros., Omission, Redhook, Kona) can be considered craft – not that anyone would mistake most of those brands as craft.

Here is a look at some of the big players worldwide in beer (prior to Wicked Weed sell out and finalization of AB InBev – SAB/Miller merger). There are few other changes, like Asahi is buying Pilsner Urquell (outside the US) from AB InBev (click to get something you can read). Image credit: Visual Capitalist

Other corporations own one to several breweries along with their other types of holdings. Florida Ice and Farm owns several breweries, including Labatt’s (in the US), Genesee, Carlsberg, Magic Hat, Pyramid and others. Molson Coors is huge as well, so it does not fit BA’s definition; neither would Constellation Brands, which has has four breweries at the moment – Ballast Point, Corona, Modelo and Pacifico. Corona itself produces more than 7.9 million barrels each year, so none of these brands can be considered craft by BA’s definition (under 6 million barrels/yr, no more than 25% owned by a non-brewery, and no egregious use of adjuncts).

I understand that many people like the Ballast Point IPAs, so the question then becomes, are they independent even though they aren’t considered craft by size? It’s murky when trying to define “craft” in words – less so by actions; but who cares? The point is to get us all thinking about craft beer independence and its importance to maintaining the industry we all care about.

The one entity over which I have the most angst is Duvel Moortgat. This is a family owned company, and all they do is beer. So one portion of the BA definition is met, even if breweries like Boulevard, Ommegang, and Firestone Walker are completely or part owned by Duvel. I don’t have barrels/year numbers on all of Duvel (they have US and European arms, so it makes it even harder). But the eyeball test tells me that Boulevard, FW, and Ommegang are craft brewers – are they independent, meaning Duvel doesn’t mess with their operations, marketing, distribution? I think that is so.

Therefore, I have taken up the gauntlet and decided that if a brewery is under the barrel limit and if I have no evidence that they are not in complete control of their beer production (something that may be hard to determine, especially if you listen to AB-InBev), then I will call them “indie craft beer.” I would like to say that I came up with the phrase myself, and I did – I just wasn’t the only person to come up with it. In January, 2016 the San Diego Reader blog used the term “indie beer” based on a prior use in the Three B Zine podcast. Even Sam Caglione of Dogfish Head used the term in a piece in 2016; so much for trying to trademark the phrase.

Yet, the point is made. If a number of people in indie craft beer came up with similar terms to better describe the industry they love and the people they feel are doing things ethically and with an eye to keeping the water level and letting the best breweries rise to the top on their own merit, then there must be something to it.

There shouldn’t be an outside force putting a thumb on the scale to:

1. Affect ratings – ABI purchased RateBeer last October and didn’t tell anyone.
2. Affect who can be on what taps and shelves – A Kentucky distributor purchased by ABI in 2015 immediately dropped 195 brands of beer to focus on ABI brands.
3. Undercut prices by using massive supply chain advantages to make ABI brands not seem to be discount beers.
4. Manipulate supplies to keep them out of the hands of some brewers.

To make the distinction, I choose to use the term “indie craft beer,” but the BA has gone further. They recently adopted a new seal that may be added to a brewery’s products if they meet their definition of small, independent, and traditional. The upside down bottle design (see image below) was a tip of the hat to independent brewers that, since the acquisition ager of the 1960s and the advent of the craft beer movement, have turned beer production in America on its head. Not everyone is a fan of the graphics, but most are behind what it stands for.

The BA seal of independence has come under some criticism for its design and how it can be incorporated into packaging. Some breweries chose not to use it based on the design. Other say it is another hoop to jump through and will cost to implement – spare cash to do this is often lacking. Image credit: Brewers Association

BA says the seal is a visual signal to help people when they are making buying decisions. Specifically, says Julia Herz, director of BA’s craft beer program and publisher of craftbeer.com, “The beer lover has a right to know when they’re purchasing a beer from an independent craft brewer or big beer. This seal will allow them to make their choice with a visual mark.” A drinker should know if her/his dollars are going to be used to erode the branding of “craft beer” and make it harder for small, independent breweries to survive.

The seal was apparently well accepted in the independent craft beer world, with more than 600 breweries signing the licensing agreement to use the seal on the first day alone. The agreement (which is free) is an assurance that if the brewery sells to big beer or otherwise is not operating independently (or at all), they must cease using the seal. What’s more, a brewery doesn’t have to be a member of BA to use the seal – learn a lesson in ethical behavior AB InBev.

The definition of independent is the same as BA’s definition of craft (see above), but it could use a little work. The grey areas involve groups like Duvel – big, but family owned and in the business of making good beer. Each Duvel brewery allowed to do its own thing. Constellation Brands has several breweries, but they do many other things as well. Is the corporate mind controlling what each Constellation brewery is allowed to do? Could be.

Tin Man Brewing in Indiana is another example – they were recently acquired by Neace Ventures. Neace itself is not a brewery – yet I have zero belief that Neace is going to horn in on Nick’s and Sara’s business at the brewery. As Bob Pease, CEO of BA recently said in an interview, “There’s a big difference between gaining access to capital and partnering up with a global brewery, specifically in the areas of raw material and distribution.” If you would like a list of suggestions (by someone more knowledgeable than me) of things to tighten the definition of independent, see this piece from Christopher Barnes at The Full Pint. I don’t agree with the entire piece, but there are some good points in there.

These are freeze frames from the AB InBev video saying that independence doesn’t matter. No real point here, just like to see the guys spewing the bosses’ party line looking ridiculous. Photo credit: Jackie Blu on Facebook

Response to the new independent seal from ABI InBev was quick and contrived. Felipe Szpigel, the director of AB InBev’s “craft” division, which they call the “High End,” said last week, “Using independence is an oversimplification. You cannot assume that everyone has the same impact and that a trade definition is precise enough to apply to all and define for consumers what’s good or bad.” OK, that diatribe doesn’t really mean much, and certainly doesn’t address AB InBev’s past actions or their past derogatory talk about craft beer.

Likewise, the indignant video produced by AB InBev just three days after BA’s unveiling of the seal seams too much by half. Are we supposed to believe that five brewers from AB InBev-acquired breweries just happened to find themselves in front of a camera within 72 hours of BA’s announcement, and that just by accident the video ended up edited together as an AB InBev response? Nope, their pathetic response means that the indie craft beer movement is having an effect – sometimes the little guy can land a powerful blow or two.

David Buhler of Elysian (AB InBev owned) said that if a brewery were truly independent, they wouldn’t use the label – using the seal shows you are beholden. Yeah…kind of a deflection there. Walt Dickinson of Wicked Weed (AB InBev owned) argued that Pernicious was craft before their sale, so it is craft now – that’s only a part of the argument. While Pernicious might or might not change, the way the brewery’s beer is used by its owner has definitely changed. Again… a deflection.

Garret Wales of 10 Barrel Brewing (AB InBev owned) stated that the seal robs the consumer of the chance to make up their own mind…um, maybe not. Both Wales and Andy Ingram of Four Peaks (AB InBev owned) brought up the fact that beer is losing ground to wine and spirits, so any infighting is hurting all beer. Did they also call each other in advance to see what each would wear for the video?

This sounds like an AB-InBev spin to me. Spzigel stated that it is community involvement that matters –really? 1) Doug Dayhoff of Upland Brewing stated just a couple of months ago that this is the point at which mega-beer is most vulnerable, so this sounds like a weak attempt to blunt that argument, and 2) what has this got to do with a brewery being independent of corporate influence?

Independence Brewing in Austin, TX has adopted the Independent seal from BA. I guess with that name, you’d sort of have to. If they sell out, all is lost. Image credit: Independence Brewing

Overall, the video falls short of a rational argument as to why dependent is better than independent, but in truth, there is still a grey area about just what being independent looks like. Maybe it would be easier if we looked at a short list of what things might show that you AREN’T independent:

1. Goose Island’s 312 Wheat Ale is named for Chicago’s area code. But since their acquisition by AB InBev, 312 Wheat Ale has been made in New York. I know that some beers are contract brewed in other breweries, but they are usually nearby and are done by the breweries from the original brewery. If your beer is made half way across the country in the corporate brewery of your owner, you’re probably not independent.

2. In the first year after 10 Barrel sold out to AB InBev, the number of states they distribute to more than doubled. Goose Island has gone from becoming a regional brand in 2011 to being distributed in 46 states in 2017. If you suddenly flood markets to which you have no natural connection, you’re probably not independent.

3. 10 Barrel Brewing made a point of stating that one year after they were acquired by AB InBev they had not switched to the in house AB InBev malt. If they have to say that, one has to wonder what things have changed. More to the point, AB InBev decided not to allow outside sales of SAB South Africa Hop Farm products. They said the harvest was small, but then they flew the brewers from ABI-acquired breweries to South Africa in an attempt to get them to use those same hops. If it has been “suggested” by your owner that your brewery does or doesn’t use certain ingredients, you’re probably not independent.

Here are two pictures from the Washington National Baseball Park. It looks like people still have a choice, but they don’t. What is independent about this? (click for a better view) Photo credit: Huffington Post

4. I have seen a multitude of Facebook posts in recent weeks showing signs for $2.50 pints of Goose Island, or distributors buying up and selling AB InBev faux craft brands because they can get them so cheaply. In fact, AB InBev is allowing these beers to be sold at a very small profit or at a loss. Can you imagine an independent brewer routinely selling his/her beer at a loss? If your beer is being sold more cheaply than you can make it, you’re probably not independent.

That’s it. I don’t have a perfect system for identifying a truly independent brewery – no one does. What’s worse, most of the time craft beer drinkers don’t really know what is going on with a brewery beyond what they see in their pint glass.

I don’t have any evidence that Duvel is manipulating any markets or demanding things from Brewery Ommegang, Boulevard, or Firestone Walker, but I suppose one could argue that a lack of evidence doesn’t mean they aren’t doing it; maybe they’re just better at it than AB InBev. But I still like the eyeball/smell test. Boulevard doesn’t smell like a tainted brewery to me – the important things is that we understand the situation and pay attention. Only then will we know where to spend our craft beer dollar.