It’s been a busy time for me recently. I qualified as a Beer Sommelier — which claims quite a bit of time and brainspace — plus I’ve been setting up a business. (Oh hai, you want a beer tasting, perhaps some training?) So I didn’t have much attention to spare when the rumour mill started up around Beavertown perhaps being ready to sell to a multinational. I let all the Twitter fuss play out and gave it no mind. I had other things to do.
But then last week it turned out that the rumours were true. Beavertown announced they were selling a minority stake to Heineken, and all hell broke loose once again.
This time I’ve been paying attention. But it’s taken me a while to work out what I really think about it.
Back to Brixton
Back in November last year, when the news broke about Heineken buying a minority stake in Brixton Brewery I wasn’t overly concerned. I only drank their beer occasionally and I wasn’t particularly invested in the brewery one way or another. I liked that they were creating local jobs. My main concern was that the beer remained the same. Beyond that, I simply didn’t give it much thought.
Brixton is much smaller than Beavertown. Its sale made fewer ripples in the pond.
Tall Poppies?
Beavertown has ambition, and that in itself is a good thing. For £40m Beavertown has secured a 10-fold increase on its current brewing capacity and created 150 jobs.
“Our vision for Beaverworld is an ambitious 450,000hl state of the art brewing facility here in London that will represent the pinnacle of brewing and visitor experience in the UK, maybe even the world.”
Their plans also include an expansion of the Tempus Project. This part in particular is hard not to find exciting.
Beaverworld sounds amazing. And perhaps a little bit like a theme park. But no, if they build it then they will have achieved something to be proud of.
Objecting to the deal might be dismissed as tall poppy syndrome.
It’s tempting – easy even – to hold other people to standards you might not meet yourself. Would I turn down a truckload of cash from Big Beer? I’d like to claim I would, of course. But I have bills to pay, kids to raise… Would I really put principles first if it came to it?
This is purely an intellectual exercise for me. You have to actually achieve something pretty special before the money men from Heineken start knocking on your door.
People don’t go into business to stay small and struggling.
It might seem contradictory to be happy for Beavertown’s success and unsettled by the way they achieved it. But I don’t think it’s wrong. You just need to hold on to the fact that not all buy-outs are the same.
I want you to read this excellent article in Good Beer Hunting by Chris Herron, CEO and Co-founder of Creature Comforts Brewing Co. in Athens, Georgia.
Chris has worked for Diageo and Miller Brewing Co in his time. He’s sat in their boardrooms and he knows how they think. In the article he explains the strategic thinking behind Big Beer’s decisions, and the motivation: protecting their bottom line.
If you don’t have time to read the whole thing (you really should though) then these quotes should give you enough context to continue following the thought train over here. Chris is talking about AB InBev, but of course everything he says about them is true for Heineken too.
“By buying craft brands and lowering the price, [Big Beer] can reduce the price-to-consumers, and force the hand of other craft brewers (particularly large regionals) to lower their price-to-consumer to compete. These price reductions on craft beer shrink the gap between AB InBev’s premium legacy brands and craft brands. Overtime, minimizing this price gap increases the brand equity of their legacy premium brands (Bud and Bud Light), since these brands no longer appear to be at a significant discount. The increase in brand equity for these legacy premium brands suggests consumers should eventually become less price sensitive and AB InBev can take a price increase (claim even more value in brand equity) to generate value.
This is why, from a business prospective, it sucks when an independent craft brewery “sells out” to AB InBev. For us in the industry, we are trading out a collaborator for a competitor, and I personally just don’t believe the repetitive press releases that say the deal is best option for the craft brand and for the employees. Maybe everyone really believes that from the middle on down at AB InBev. But ultimately, it has a much bigger purpose to serve first, before the value it creates for itself can ever be appreciated.
Having worked for the big guys, I believe their focus remains squarely on how they protect their legacy brands, and I remain steadfast in my belief that we can set our young brands up better for long-term success and create significantly better work environments for our employees by staying independent from Mega breweries.”
(Emphasis is mine.)
Will Heineken be satisfied with its minority stake?
Well… let’s look at past behaviour. They took a minority stake in Lagunitas which became full control less than two years later.
Matt Curtis reports in Good Beer Hunting that “Plant is adamant that his sale of a minority stake in Beavertown is not a precursor toward a similar path of full control.”
Except we’ve been here before with Plant, haven’t we? He was known for being outspoken against Big Beer. At BeaverEx in 2017 he warned that “the puppet master that is Big Beer is stirring and starting to swipe its tentacles far and wide across this beer industry.”
And yet he’s sold to Big Beer. So why should we believe anything he says now about ‘red lines’?
One objection might be that it’s normal not to comment on a business deal before it’s done. In fact, Beavertown has said exactly that.
“It’s been an uncomfortable few weeks as speculative rumours have been flying about. The reality is that sometimes in business you can’t share everything and I’m a true believer in not talking about anything unless it is a done deal, and up until this very day there was no deal.”
This is certainly true. But there are other ways of dealing with the speculation, as Boak and Bailey have pointed out, that don’t involve saying the opposite of what you’re preparing to do.
So if the words are getting twisted and tricky, let’s look at the actions instead. Plant has shown he’s ambitious. He’s shown that he’s not scared of making an unpopular deal if it will get him what he wants. Why should we believe he wouldn’t do it again, having already done so once? I’ve been around the block enough to know hard choices are easier the second time you make them.
“The red line with us is that this is a minority investment. This is about us, it’s about our vision and ambition,” Plant tells GBH. “[Heineken] is looking to let us get on with doing exactly what we do, with the people that we do it with. Why would you come in and change something that many people perceive to be so special?”
Now I want you to read another important article. This one is in Paste Magazine, and it exposes the logical flaws in the lines people trot out to justify Big Beer buyouts.
All the lines highlighted in that article appear in the post to Beavertown’s blog about the buy out.
“The beer won’t change”
Beavertown said:
“There will be no recipe changes or external pressures on our brewing and business decisions. We will be focussed on making our beer even better.”
And here’s what Paste has to say:
The single biggest, most common deflection of any concern a craft beer fan espouses over brewery buyouts is to simply make this promise: “Our beer won’t change. Don’t worry! Your favorite thing will remain the same, so please allow this to placate you entirely.”
“The team won’t change”
Beavertown said:
“Logan will remain founder and CEO of the brewery, leading Beavertown long into the future and the dedicated Team Beaver that you deal with daily will remain the same as always.”
To which Paste answers:
Big Beer is hardly stupid. They’re not going to insert their own brewmaster or CEO into a company they acquire, as long as they don’t have to. It’s much easier to get fans of the purchased brewery to accept the new ownership if the original owners are still present as figureheads whose job has become repeating variations on “Don’t worry, everything will be fine.”
“It puts our beer into more drinkers’ hands”
Beavertown said:
“This partner was chosen as it offers long term stability for Beavertown and Team Beaver so that we can continue to chase our dreams, grow at a fast pace and fulfil our prophecy of getting great beer on to every street corner, constantly innovating and stimulating more drinkers than ever before.”
This one is an appealing argument. I’ve even fallen for it myself:
But we have to stop and think – at what cost?
I do like Beavertown’s beers. I do think people who haven’t tasted it yet would enjoy it. I do think that might turn more people on to craft beer. And that would be a good thing. But at what cost?
Anticompetitive practices
Here’s another quote from the first Good Beer Hunting article I linked to:
“[Logan] adds that, with its minority stake, Heineken’s many avenues to market would only be made available to Beavertown if requested.”
Let’s remind ourselves that Beavertown have just signed up for a 10-fold increase in brewing capacity to 450,000hl. That’s 45 million litres of beer. That’s a lot of beer to shift. Are we really supposed to believe that Logan isn’t going to make that request? What kind of business would eschew this sort of advantage? Nothing Beavertown has done so far indicates that they’re likely to take a principled stance here.
This thread on Twitter from Hop Burns & Black explains it brilliantly, so I’ll let Jen do the talking for a moment here:
Our two cents… The Heineken deal is undoubtedly good for Beavertown but it is helping to shaft the independent scene from whence Beavertown came, and in our own small way, we have to stand up and say no, actually, we don’t agree with this. /1
— Hop Burns & Black (@hopburnsblack) June 24, 2018
Heineken is the world’s 2nd largest beer co with enormous resources at its disposal. As with ABI, it obtains advantage through wielding its enormous power, e.g. infiltrating distribution and retail to skew these channels in favour of their brands… /2
— Hop Burns & Black (@hopburnsblack) June 24, 2018
…being able to source raw materials others can’t get, using an army of tactics and enormous economies of scale to drive down the price of craft beer, creating an unfair playing field and making it even harder for small independent brewers to compete. /3
— Hop Burns & Black (@hopburnsblack) June 24, 2018
From a retail perspective, Big Beer has similar objectives, to use its heft to make it harder for the competition. Basically, for us, an independent retailer, to support #Beaverken or any other Big Beer buy-ups would be like turkeys voting for Xmas. /4
— Hop Burns & Black (@hopburnsblack) June 24, 2018
This isn’t happening in isolation.
This matters now, and it matters here. The Beavertown deal is the first time ever a Macro has bought two craft brewers in the same city. London Fields, Camden Town, and Meantime have all gone to macros too. You can’t help wondering who’s next.
London has over 100 breweries. That might not sound like much, given London’s size. On a per-capita basis that’s a tiny amount. But it wasn’t all that long ago, back in the 90s, that London had just two.
“Who cares, it’s just beer.”
Well hang on a minute. Let’s unpack that. This seems to be saying two things.
- Beer is a simple pleasure that should just be enjoyed with being be overanalysed.
- Beer is not worthy of analysis and thought.
If you take all the thought out of beer, soon enough the enjoyment will leave it too. If you take all the thought out of beer, soon enough you end up in a world where pretty much all beer tastes the same. A world where there’s nothing to like, and nothing to get excited about. This is not hyperbole. I’ve lived it. This is what beer was like before craft beer came along. It could be like that again if we’re not careful.
Here’s what I want from beer:
I want to drink beers that are full of flavour.
Sometimes, I want new beers that are innovative and experimental.
I want to support brewers for whom the quality of the beer matters every bit as much as its profitability.
I want that brewer to make a profit, and to be able to make a living while employing others.
Sometimes I prefer a beer that’s local, because it’s local. I like to drink a beer from a brewery that is a part of my community; where I know the people who made it; where I can chat to the brewer at the tap room; where I can support someone taking a risk and running a business to follow an interest that I share: the love of a good beer.
Supporting independent breweries makes all of this possible. Big Beer buyouts work against it.
Big beer buyouts take profits out of the community.
Big beer buyouts squeeze independent breweries out of the market.
Big beer buyouts harm the independent bottle shops, bars and tap rooms that help foster the vibrant and creative craft beer industry I love so much.
Drawing some conclusions
- It does matter when an independent brewery sells out to big beer, because it harms the industry as a whole.
- Each time it happens, those of us who care will need to explain why it matters, over and over again. People won’t know why, won’t remember why, won’t care why – and that’s their prerogative.
- We should remember to direct anger and arguments properly. Social media managers are people too. They most likely had no say in the deal. They may even agree with your point of view but not be allowed to say so. Vote with your wallet instead.
- There will always be someone trying to score cheap points off the back of it – notice and remember.
Nailing my colours to the, uh, mast
So what am I going to do about it? Time for some personal responsibility here.
I am a Beer Sommelier. My business involves recommending beer. That might be as part of my tasting sessions, or in my writing. I can’t claim to know the ins and outs of corporate ownership behind every beer brand. But, where I do know the details, I will always recommend a beer by an independent brewery over one where Big Beer is involved.
I’m often asked to recommend a good ‘first craft beer’ – one that’s flavourful and interesting but not so unfamiliar that it will put people off. My go-to choice for this used to be Beavertown’s Neck Oil. I won’t recommend that any more. Instead it might be Brick Brewery’s Peckham Pale, or perhaps Thornbridge Jaipur.
It’s not much, perhaps, but it is something that’s within my control and so it’s something I’m going to change.
What are you going to do about it?
It doesn’t have to be big. It doesn’t have to be 100% of the time. But if you love craft beer, you should stand up for it. Tell me how in the comments below.
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