Wednesday, May 23, 2012

Diageo and the BrewDog "un-winners"

Recently, a scandal rocked the beer world.  The Scottish brewery, BrewDog, won the Bar Operator of the Year award at The British Institute of InnKeeping (BII) Scottish Awards on Sunday May 6, 2012.  At least, they should have. See, the judges said so, but sponsor Diageo decided to ignore the judges and hand the award to someone else.  Essentially, Diageo used their leverage to “persuade” BII presenters into doing their bidding. This did not go over well with BrewDow, the BII, beer lovers and the judges.

Diageo is a large international conglomeration of wines, spirits, and beer. Notably, their British Isles beer influence comes in the form of brands such as Guinness, Smithwick’s, and Harp.  BrewDog, on the other hand, is a small nascent Scottish brewery that has, and pronounces, a reputation of going against the grain. In their own words, they are a “beacon of non-conformity in a (sic) increasingly corporate desert”.  The only thing these two companies have in common is that they make beer.

So why did Diageo refuse to award BrewDog as per the judges’ ruling? Apparently, only the Diageo representative at the BII Awards knows the answer, because Diageo corporate headquarters released a statement/apology saying the actions of said representative does not reflect in any way Diageo values. Still, this plays into the waiting hands of BrewDog. What better way to highlight their “against the grain” attitude than tangible evidence that it is affected the “grain”?  And BrewDog knows this, and has fired off several tweets, blogs, etc berating the Diageo action and apology.  So much so, that Diageo has pleaded with BrewDog to cease the ‘witch hunt’ of the involved representative.  There is no indication that BrewDog will heed this plea. Why should they?

But what’s the big deal, really? On the surface, it seems that it is just fun and games and BrewDog sees as an opportunity to promote themselves, play the victim.  Yet, below the surface, there are interesting factors. For instance, craft brew in the British Isles has changed in the last 40 years.  The small English pubs that produce their own beer are virtually non-existent. Those breweries mentioned above (Guinness, et al) are not in the hands of the original owners.  Real Ale almost disappeared, but thanks to Campaign for Real Ale (CAMRA) this tasty beer ‘style’ has come back.  But its return, and specifically CAMRA’s strict adherence to Real Ale, has been called into question by BrewDog.

While BrewDog has nothing against Real Ale, they would like to see more options in the U.K. other than Diageo and Real Ale. BrewDog makes very different kinds of beer than those two.  While it used to be a struggle between macro-beer and CAMRA, BrewDog enters to challenge both…or at least co-exist with them.  This latest issue at the BII is a rather obvious uppercut to BrewDog’s platform…but the punch missed.

Another issue is the market.  While craft beer still only makes up roughly 6% of the total beer sales, it is growing. And if you have 94% of the market, why not gobble up the remainder? If craft beer sales continue to grow, then that number can reach 10% maybe even 15% in a few short years.  That is enough for the big brewers (Diageo, AB-InBev, SABMiller, Heineken, Tsingtao, Carlsberg) to take notice and alter or implement some new plans. One can see this in the new labels (and their varieties) Anheuser-Busch and Coors are putting out: Blue Moon, Bud Light Lime, Shock Top, Wild Blue, Batch 19, Colorado Native, etc).  They want a piece of the craft beer pie, and if they can't make the bee, they'll buy it (see: Goose Island). Sadly, they see craft beer and beer in general, as a line item and not a passion.  Craft beer is growing because craft brewers make interesting and delicious beers.  Not because they add flavors and syrup to an already bad beer. BrewDog knows this. So, too, does Diageo. A bigger fight may be on the horizon.