Tuesday, March 18, 2014

The Problem Big Beer Faces

Brewing is an ancient art, dating back thousands of years of human civilization. It was used in bartering, as currency, to purify water and as a social lubricant. It is, and has been, everywhere in daily life as part of the community. It should come as no surprise, then, that brewing can be big business as illustrated by the sheer numbers of production from the largest breweries.  Bases on such numbers it would seem that these breweries’ beers are revered and loved by all. This is not the case and 20 years ago the big breweries paid no mind to detractors. With over 95% of the beer market, why would they?   
However, that 95% is no more. The Brewers Association envisions that by 2020, what made up that other 5% (namely craft breweries) will increase to 20%, thus decreasing the value of the aforementioned largest breweries, who are now taking notice. It seems their reaction has two main tactics: buy up craft breweries, and/or produce beers similar to those of craft breweries. The first is straightforward. Goose Island Brewing out of Chicago sold to AB-InBev a few years ago, much to the chagrin of craft beer lovers. Many saw this as a giant, international corporate conglomerate bullying the small, local family business into submission—not the best image to have for large corporations, even though it is not accurate.

The other tactic is a bit cloudier. Instead of straight up producing and offering other types of beer, some large breweries create smaller breweries, which then produce such beer. This avoids the stigma associated with the big breweries created by the first option. It seems creating a smaller brewery, using a different name, and producing different types of beer is preferred to just buying a smaller brewery.  Perhaps this is the better way to go…at least in the short term.

Here is the problem: deception lasts only so long before it comes back to bite. The second option addresses a symptom of big brewers’ perception, not what produces this perception.  While the first option, buying smaller breweries, comes with push-back, at least it is honest and open. Maybe this is by default as it is difficult to hide a multi-million dollar deal.  Still, the public is not deceived, either in reality or (importantly) through perception.  The creation of smaller, otherwise named breweries is not only deceptive, it is willful intent to deceive. What the public calls “lying”, and this betrays any relationship and significantly damages trust.

From there, it does not really matter how the beer is produced or even if it is high quality.  The public has a tendency to shun those who have betrayed them.  While America is a forgiving country and allows for mistakes, it has little tolerance for those who manipulate its patience, sympathy and embrace of small business.  As the voices of craft beer lovers gets louder, so too will their cries of foul play of Big Beer. This is starting to happen and an example of the counter-reaction from Big Beer is more deception...without lying.  The prime example is the new Miller Fortune, labeled as an “undistilled beer” (every beer is undistilled) and a “spirited lager”, clearly (and intentionally) aimed at the whiskey market.  Do they really want to deceive those consumers as well?

In the mean time, craft beer drinkers will continue to expose Big Beer whenever they can, shun Big Beer and tell others to follow suit. However, just as America has no acceptance of deception, it still is forgiving. An apology, a real one, followed by acts of conciliation (more than “gestures”) can go a long way. It remains to be seen if Big Beer comprehends this, accepts it, and follows through. The bottom line is that the animosity towards Big Beer is not aimed at the Beer (although that is where the fallout lands), but at the Big—not the product of Big Beer, but Big Beers’ treatment and value of relationships.