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WRITER, CONSULTANT AND BROADCASTER SPECIALISING IN BEER, PUBS AND CIDER. BEER WRITER OF THE YEAR 2009 AND 2012

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Wednesday, 3 October 2012

Two contrasting responses to the growth of craft beer from two different big brewers

The big global brewers are coming for craft beer.  And there's nothing you can do about it.

Craft beer, interesting beer, flavourful beer, microbrewed beer, whatever you want to call it and however you insist on defining it, is the only part of the beer market where there is any significant margin. In First World, mature, developed beer markets, brewers have willingly commoditised big brands and increasingly treat them no different from pet food or toilet roll.  The power of retailers has stripped any profitability out of these brands for the manufacturer, which is why all the big guys are now focusing on developing markets such as China, India and Brazil.  The huge scrap over who gets to own Tiger beer shows just how important these markets are to the giants of beer.

But the guys left in boring old Europe and North America still need something to do.  They can't simply give up on beer's homelands.  So they're hearing all this noise about craft, and coming over to see what all the fuss is about.

This year I've had several conversations with global brewers about craft - from the very rich companies who say "please tell us in detail who all the main players are, the secrets of their success, what the main drivers of craft are, who's drinking it and where it's going to go," and then decide they don't need to know after all when I ask for a fee in return for this insight, to those who seem genuinely interested in developing more of a craft-like arm to their business.

You know it's getting serious when you see a 'segmentation' of craft beers buyers, like I did this summer.  I used to do this kind of thing for a living, and it requires lots of expensive research to put together.  There were four different kinds of craft beer drinker in this study - each segment was a different size, with a different level of knowledge and different reasons for drinking craft.  And you know what?  You were in one of those segments.  Yes, YOU.  So was I.

So the big boys are going to start flirting with craft, to see if they can take some dollars, pounds and euros from hopheads and beer geeks.  In fact, they've already started - with Anheuser-Busch having dabbled with a half-decent pumpkin beer, Blue Moon of course, Carslberg's Jacobsen range, and now, new offerings from A-B and Carlsberg that talk about 'craft values' in their launch press releases.

Some of these things are going to be horrible.  Some will be badly thought-out and misconstrued.  Some will even be insulting to the intelligence and the palate of craft beer drinkers.

But will they all be?  I don't think so.  We all know there are some very talented brewers within the global giants. The question is, will any of them be allowed to make interesting beer that will then be given sympathetic support by the rest of the organisation?

In recent weeks, I've learned about two different approaches to craft by two different beery behemoths.

One is excellent, the other is cynical, lazy and contemptuous.  Let's deal with the good one first - no reading ahead, I'm sure you can guess who the poor relation is.

Last month I went to see my mates Steve and Rudgie in Toronto.  Steve is the world's greatest beer writer* and Rudgie works for MolsonCoors.** Rudgie will be familiar to readers of Hops & Glory as one of the key men who made my whole trip to India possible, and is now the world's greatest Professional Canadian.  (Not bad for someone who spent the first three and a half decades of his life being a northerner from Warrington.  But he says al-oo-minum now and everything.)

So anyway, last time I went to see Rudgie, he took me to Creemore Springs, a craft lager brewer in the heart of Ontario that proudly boasts of being 'a hundred years behind the times' and was bought by MolsonCoors seven and a half years ago.

Having watched what happens when giant brewers buy little brewers, you could be forgiven for expecting these excellent beers, including a sublime kellerbier, to have become blandised, cheapened and bastardised.  Instead, MC invested in increasing capacity and worked on spreading distribution, and simply left the brewing alone, with the clear admission that if they did get involved they would screw it up, because they didn't understand how the market worked at that level.



In a global market that usually looks no further ahead than two years for return on investment, if they were going to screw it up, they would have done so by now.

Then they took over Vancouver's Granville Island Brewing - possibly the first craft beer I ever drank when I spent a lot of time in Canada in the 1990s.  Same arrangement.  Granville Island gets sales and distribution support, and doesn't get accountants sniffing around the hopping rates.

Last year, this flirtation with craft was expanded and consolidated.  Molson Coors bought a brewpub the founders didn't want any more and created the Toronto Beer Academy.



Here, the brewery makes a range of interesting beers as authentically as possible, from classic styles around the world to new craft creations.


They're brewed by good brewers who want to make good beer (and have significantly improved the old kit so they can do so), and are sold on site.  Creemore Springs and Granville Island beers are also sold here, in a bar that celebrates beer in all its shapes and colours.


Together, Creemore Springs, Granville Island and Beer Academy are now part of an independent unit within Molson Coors called the Six Pints Specialty Beer Co.  It's part of MC, but not controlled by it.  It runs as a separate unit, to different rules. There is no MolsonCoors branding here, and no MolsonCoors brands are stocked.


The bar holds brewmasters dinners, and seminars on beer ingredients and the brewing process.  There are new beer launch nights, beer and cheese matching evenings and beer dinners.  All stuff a good microbrewer should do, and done well.


Talking to the guys who run this, there's a philosophy of enlightened self-interest.  It's only going to work if it's done right - and that means not doing it the MC way.  But if it's done well, it might just create a halo effect that makes people think a little bit more of beer in general, in relation to wine and other drinks.  And that would, ultimately, help the rest of the MC business. 

I'm not saying it's the best beer I've ever tasted, and I'm not saying Beer Academy is the best beer bar I've ever been in.  I am saying that this is proper craft beer, served in a proper craft beer bar, and that there is no evidence whatsoever of the ultimate owners trying to screw anything up with short cuts, dumbing down, cost cutting or corporate bullshit.

It's an extraordinarily intelligent response to the growth of craft beer.

Compare that then, with the billboard spotted in Los Angeles by ace beer photographer Robert Gale:

Photo: Robert Gale - his blog has photos of way nicer beery stuff than this

That's right: the biggest brewery conglomerate in the world reacts to the growth of craft beer by trying to claim that one of it's top three priority brands for global domination is somehow in the same space as microbrewers and craft beer.

No shame. And no clue whatsoever.

You might feel that you would always want to support a true micro rather than a big brewer, and that's a view that's difficult to argue with.

But not all big brewers are the same.  They all want a piece of craft.  Personally I'll be welcoming the stuff they do well, in the hope of killing off the crap, insulting stuff as quickly as possible.




* In joke. Not saying it isn't true of course.

** Full disclosure following the admission that I do some consultancy in this area - while Rudgie is a mate, I have not been paid any consultancy or PR fee by MolsonCoors, and have had no advisory role or any other involvement in what's discussed here

21 comments:

Jeff Pickthall said...

Define "craft beer."

Gareth said...

The brewpub sounds really good. There's no point in just railing at big business for the sake of it, in this case they seem to know when they've got a good thing, and that has to be, err, a good thing!

Stella? Therein lies (intentionally dual meaning) the opposite.

TIW said...

Molson also do 'craft' in the UK of course - Worthington White Shield at the National Brewery Centre.

Chris Schryer said...

Pete,
I like that you talked about MC as the good reaction (and I'm sorry I missed meeting you in person while you were here in Toronto; I had planned on attending the Roundtable with you, Jordan and Stephen. Alas, it wasn't meant to be).

I want to touch on something that a dear friend and craft brewer in Toronto pointed out to me about Six Pints: They are doing wonderful things supporting a few excellent Craft Brewers who had plateaued and needed a big-money hand up. And, if I recall, in Ontario they are letting Creemore sales staff rep both Creemore and Granville, which is nice. But watch, as more than a few of us are concerned that the sales techniques might slowly shift from craft sales (where it's pretty common to see competing reps drinking with each other, helping each other at festivals and *gasp* sending referrals to each other when a bar has an open line), to macro sales (where there's a lot of Eddie Haskell smiles, tucked-in golf shirts, branded jackets and not much else). It definitely hasn't happened yet, and maybe never will, but no matter how nice a concept Six Pints is, it is still owned but a company who's sales force has spent the last two decades effectively trying to put small brewers out of business. Their reps will go into bars that are maybe experimenting with a craft line or two, throw a heap of "support" to the publican in return for the craft line, and little brewery X is out. See what happened to Kawartha Lakes Brewery when MC/ABIB realized that Peterborough was a seriously profitable town. They went in, scored earth style, and in the span of a year, KLB lost most of their draught business in their biggest market. That Amsterdam bought them and moved their production to Toronto, is the only reason we still see their products available.

Six Pints is doing good things right now, I have a friend who's a brewer at The Beer Academy, and friends on service staff there. But I'm bothered that (unlike Coors with "The Coors Sandlot") they seem to be hiding that they are owned by MC. In terms of segmenting the craft scene into 4 groups, I would bet only one group would know that Six Pints IS MC, and not all of them at that. A bit more transparency, even saying what you've basically said for them here, would be a much much better way to approach this.

Mario (Brewed for Thought) said...

I support the idea of big brewers brewing good beer. Why shouldn't we all? If MC can allow craft brewing to flourish under their watch and InBev can do the same with Goose Island, I don't see a problem.

Sure, there are separate issues along the lines of drinking local, corporatism, but I think many of us first got into craft beer because the big boys didn't offer us the beer we wanted.

What's the worst that can happen? we find actually good beer and choice at sporting events and national chains?

Cooking Lager said...

It's disgraceful, trying to claim a true wife beating cheap as chips lout is a poncy craft beer. I'm disgusted. If it wasn't on special offer and got me pissed for buttons I'd boycott it on principle.

Dubbel said...

Super read Pete. The MC model looks like a great one for other beery 'giants' to follow if they want a slice of the pie. Greene King I'm looking in your direction.

Carsmilesteve said...

Slight tangent, but is it even legal for Stella to claim to be from Belgium? I've been thinking this since the "we were brewing in Belgium since before there was a Belgium" ad. There isn't a brewed under licence disclaimer at the bottom, but none of the stuff we drink here is is any sense Belgian is it?

US History Teach said...

When AB "invested" in Red Hook and brought it to the east coast they didn't mess it up. I had a conversation with the sales director from Goose Island right around the time of the 58% purchase by AB. He stated that they came in and wanted to expand but none of the recipes/vision would change. You are right, they don't understand the craft industry or the changing tastes of those segments. That is why when they try new products like red, ice, and dry they fail.
Cheers,
Tom

US History Teach said...

When AB "invested" in Red Hook and brought it to the east coast they didn't mess it up. I had a conversation with the sales director from Goose Island right around the time of the 58% purchase by AB. He stated that they came in and wanted to expand but none of the recipes/vision would change. You are right, they don't understand the craft industry or the changing tastes of those segments. That is why when they try new products like red, ice, and dry they fail.
Cheers,
Tom

Séan Billings said...

Although I generally prefer to support small independent breweries I have no problem drinking beer from big brewers if it tastes good. What MC are doing in Canada sounds great and can only result in more people discovering that there is more to beer than light lager, which is good for all craft breweries. Once you start drinking craft beer you lose the notion of brand loyalty.

AB-Inbev are in a good position to enter this market, but the people calling the shots right now don't have a clue.

Two mergers ago, when they were still Interbrew, they had at least some understanding of the craft market, which is why products like Leffe and Hoegaarden are in their stable. The merger with Ambev saw a board which only understands industrial lager taking over and the subsequent merger with Anheuser-Busch didn't help that situation, hence the clueless claim that Stella is a Microbrew.

Gary Gillman said...

That's funny though (the Stella ad), I had to laugh. Points for a punchy slogan and they are poking some fun at themselves too, I think. It's good marketing.

Six Pints is making some excellent beers. A couple are as good as anything I've had from craft brewing in the past, some still are finding their legs. But they are on the right track and it's all to the good. There is room for everyone in craft, or crafted, beer, big, medium and small. Just brew it right.

Gary

P.S. Sorry to miss you as well on this last trip, I did not know you were here until it was too late. Another time I hope.

Jordan St.John said...

It's interesting that the default Six Pints response is to throw resources at talented people. Like Chris Schryer says up above, we're all sort of keeping a watchful eye on them.

That said, Creemore hasn't suffered in quality and Granville Island seems to be doing rather well even if their pale ale is sort of dated by dint of having been designed in 1985.

I can't argue the point that the stuff they make on site is good, and more often than not I find myself defending their staff, who are educated and able to actually talk about beer coherently.

One of the problems that they face is that it will take a certain amount of time before anyone actually trusts the beer academy. Is it enlightened self-interest, or is it research for later domination on a larger scale? Take the Kolsch, for instance. It's a tasty beer. How long will it take for them to realize that they have credibility because they own a location and make a good product? Do they then capitalize on it?

The issue is that if they don't do that, people might actually think less of them for avoiding it. If they do it, will the perception change?

Does any of that matter in the face of a tasty beverage? Does anyone care as long as the market segment for craft beer continues to grow?


tonycaviar said...

What multinationals do in Hungary? SAB Miller (Dreher) chose to install a booth on a big Budapest beer-festival, and wrote on the front with big letters: CRAFT BEERS! And what you got was their cheapest shit mixed with some instant caffe. I would say NOT for human consumption - http://folyekonykenyer.blog.hu/2012/08/30/jolesik_mint_a_pofanveres

Phil Teer said...

Great piece Pete. Many years ago, in the late nineties, I was briefed by Anheuser-Busch to create a campaign that would "kill Sam Adams". It was the first time I heard of a microbrewery. I thought it was interesting that such a big company would take such small rivals so seriously that they would want to snuff them out at birth. Looking back, I reckon it's because the big business model cannot cope with small. Markets talk up choice but privately, they loath it. Small and diverse can't be scaled up because it appeals to niche tastes. Niche is bad when your model is all about rationalisation. Anyway, our ads bombed in research and were never made. Not that an ad was going to make much difference anyway.

Boak said...

Great stuff. Market forces dictate that the big boys will fight back, as they did in the UK by reintroducing cask. You couldn't avoid the dig about accountants though :-(

noor SHUVO said...

Our flagship Beer. A session India Pale Ale brewed with Warrior,Amarillo & 'Mystery Hop X.
A powerful East Coast I.P.A. with a lot of citrusy hop character.
THE session Beer for beer geeks like us!

I think about beer said...

Very nicely written article. MC and their parent company, SAB, have had a pretty decent reputation for allowing their gems to shine. They were, in large part, responsible for returning Pilsner Urquel to its former flavor glory when they took it over.

As per the comment on AB and Redhook, they changed the flavor massively when they bought it. It was renowned for its touch of diacetyl in the flavor profile. As soon as AB took it over, they scrubbed the recipe and removed it, making Redhook ESB a much blander beer.

Anonymous said...

Great piece.

But I do think you have missed the fact that Molson Coors are doing the exact same thing closer to home with Sharps, investing in infrastructure and leaving them to do what they do well.

I think about beer - Molson Coors is not owned by SAB Miller btw. They are two distinct separate companies.

Anonymous said...

What do Sharps do well??

I'm at a loss with that one.

Oh, apart from flooding the market with stupidly cheap Doom Bar.

I can't begin to express the contempt that I feel for big businesses that attempt to snuff competition with the weight of their cheque books, even when they act under the pretence of doing 'good'.

The simple fact that MC go to such lengths to obfuscate the origin of their 'Craft' offerings says a lot about where they stand in the market.

But in the UK the game is far simpler because we are a tiny market. The big players are desperate to crush this 'rebellion' before it takes too much of a foothold, and 'pressure' groups like CAMRA are happy to hold their coat whilst they do it so long as they maintain their perverted interest in 'anything so long as it's served from a cask'.

Of course, if you happen to be poacher turned game keeper, then it's far harder to write objectively about your former clients and friends....

Pete Brown said...

Anon, if that snide insult towards the end if your whine is aimed at me, have the courage and decency to put your name to it, or shut up and piss off.

Also, try doing some fucking research. Sharos are making some incredible beers right now. But that doesn't suit your miserable world view, does it?