Craft beers become big business, even for industry giants

St. Louis Post-DispatchNovember 26, 2012 

TRAVEL COLORADO-BEER-LIST 2 TB

New Belgium Brewing Co. in Fort Collins, Colo., is the nation's third-largest craft brewery and one of the 10 largest breweries overall.

JOSH NOEL — MCT

All puns aside, craft beer is hopping.

Sales of more-flavorful brews have surged at a double-digit clip the past few years.

So much so that fast-growing labels such as California's Lagunitas and Colorado-based New Belgium are planning new breweries to serve national markets. Meanwhile, brewpubs have popped up left and right, churning out small-batch servings of porters and pale ales, and building an image of a sector full of scrappy entrepreneurs.

Now, increasingly, Big Beer is getting into the act as well, buying and building craft labels, then plugging them into their huge marketing and distribution networks.

MillerCoors, which has its own craft and import division known as Tenth and Blake, owns Wisconsin-based Leinenkugel and Oregon label Henry Weinhard, and is building both into national brands. Its Blue Moon Belgian White is expected to sell 2 million barrels this year, which would make it the 10th-largest beer-seller in the nation if it were its own company. Of all the growth in the craft segment last year, one-third came from brands run by Tenth and Blake.

"There's a revolution going on in beer," said Lee Dolan, Tenth and Blake's vice president for sales and marketing. "We're glad to be a part of it."

Anheuser-Busch InBev isn't far behind. It keeps adding new versions of its Shock Top line of wheat beers — on pace to sell 800,000 barrels this year — and in March 2011, it bought control of Chicago craft brewer Goose Island. Now it's taking the brew national, with hopes of selling 1 million barrels by 2015.

It's a smart strategy for the big guys, and a pretty simple one, said beer industry consultant Bump Williams.

"They're just trying to give beer drinkers what they want," Williams said.

But for the booming ranks of independents, the influx of Big Beer is a mixed blessing.

On one hand, the marketing muscle that industry giants wield can help draw more beer drinkers to more adventurous, alternative brews. After all, craft beer is still a fairly niche product — all 2,100 craft brewers combined sold just one-eighth as much beer last year in the United States as Anheuser-Busch did.

On the other hand, some worry that the big guys could muscle smaller brewers off the shelf, so that the only craft beers consumers see are the ones brewed by the corporate behemoths.

The trick for smaller brewers, said Jim Gorczyca, owner of O'Fallon Brewery in Missouri, is to make sure consumers know who is who.

"I think the craft customer is a pretty savvy beer drinker," he said. "For them, authenticity is very important."

Of course, Goose Island, Leinenkugel and Henry Weinhard's have authentic roots, too. All three got their start as regional independents, and that's how many customers still see them. They retain their own breweries and their founders are still involved in running the brands. There's little outward sign of change. The words "Anheuser-Busch" appear nowhere on Goose Island's bottles or packaging.

Even more important than image are the mechanisms of distribution, of getting beer to market. The nation's complex network of wholesalers evolved over decades to serve the nation's brewing giants, and today virtually all of the 3,300 distributors in the United States have a perpetual contract with Anheuser-Busch or MillerCoors.

That network, plus their massive marketing budgets, means the big guys can make almost any beer huge and crowd out competitors, said Paul Gatza, president of the craft beer trade group the Brewers Association.

"When they decide they want to get a product on the shelf, they can pull some levers and make that happen," he said.

Craft brewers have ridden the coattails of that system. Many sell their products through A-B or MillerCoors distributors, benefiting from an infrastructure built to support Big Beer without having to build it themselves. Those wholesalers help small labels get on store shelves and in tap handles, and people all over the industry point out that beer consumers have never enjoyed a wider array of choices.

Lexington Herald-Leader is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service