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The Future of Beer

“Say it ain’t so, Joe,” those where the famous words a child uttered to Shoeless Joe Jackson, star outfielder for the disgraced 1907 Chicago White Sox team, the only team to ever purposely lose a World Series. His few words became a rallying cry for an outraged public after their trust was betrayed. That is the feeling many Coloradoan’s, and other craft beer lovers are feeling across the country as they see their beloved local breweries being gobbled up by the huge mainstream breweries they once so willingly mocked. But why you ask? Simple. It’s all about the explosive growth of craft beer, and the effect it is having on the once neat and tidy world of big beer.

To give you some perspective on the changes craft beer have brought upon the market you only have to look back thirty-three years. That was when six breweries (Anheuser-Busch, Miller, Heileman, Stroh, Coors, and Pabst) controlled a whopping 92% of all the beer produced in our country. There were only eighty total breweries operating, and most of them were turning out some form of a Pilsner. Experts were predicting that within five years there would only be 20-30 mega-breweries left operating. But, we all know what happened next. The Micro Brewery movement began to appear as a new generation of brewers fueled by the burgeoning homebrewing culture (homebrewing only became legal in 1978) decided to challenge the norm, and create more flavorful brews for the public.

It wasn’t until 1994 that craft beer finally achieved a market share of 1% volume. It wasn’t enough to ruffle the feathers of the big brewers, they mostly ignored the 601 independent Micro Breweries mostly located on the west, and east coasts. As craft beer slowly crept into the public consciousness over the next decade the big guys did make a few moves. Leinenkugel, Blue Moon, Killians, Land Shark Lager, and Shock Top are but a few of the faux “Craft Beers” you can see on grocery store shelves across the country.

By the beginning of this decade the growth of craft beer had reached levels that were starting to make the big boys nervous. By 2011 there were 2,000 breweries operating and they had increased their market share to 6%. Only three years later that number had grown to 3,000 breweries and a whopping 11% of the market. Craft beer was bumping mainstream beers off taps across the country. In liquor and grocery stores they were taking up more of the space that forever had been real estate owned by the larger, and richer, brewers. Where once ABInBev (the owners of Anheuser -Busch) could rest assured that their products would dominate, now they were starting to feel pinched. Their main competitor MillerCoors was also seeing their relevance slipping. After years of trying to establish a foothold in the craft market the big guys did the next best thing. They decided to use their considerable financial clout and co-opt the rebels that were challenging them.

The list of recently bought breweries is impressive. ABInBev now owns Breckenridge, Camden Town, Goose Island, Blue Point, 10 Barrel, Elysian, and Golden Road, plus part of Red Hook, Kona, and Widmer Brothers. Heineken owns half of Lagunitas, Duval Moortgat is the proud owner of Firestone Walker, Boulevard, and Brewery Ommegang. Constellation Brands just scooped up Ballast Point and MillerCoors owns Henry Weinhards, Leinkugel, and Saint Archer plus part of Terrapin.

This could only be the beginning. As numerous long time brewery owners are looking to cash out and retire, the fat stacks of cash being waived in front of their faces start to look more attractive. There are rumors of other stalwarts sniffing around—New Belgium, Brooklyn Beer, and Stone are a few of the bigger names consistently being mentioned. Even employee-owned Full Sail brewing sold out last year to a private equity firm. It seems nothing is off limits right now.

There are positives, and negatives, attached to all of this recent activity. On the plus side the embrace of craft beer by the mega brewers means they will help promote alternative styles, and brands across the country. Television ads and such will start showing up. But, there is a potentially rough road ahead for the smaller craft brewers. The buying spree that ABInBev has embarked upon comes concurrently with reports of them offering large cash incentives to their distributors across the country to drop craft brands not owned by the parent company. By purchasing more craft brands they are able to offer their large, and powerful distribution network a full slate of craft beers to carry. With their considerable financial clout they are actively working with grocery chains across the country to ensure that their brands are the ones consumers see on the shelves at the expense of the smaller local brewer.

What the future holds for the rapidly evolving world of beer is to be determined. One thing is certain: American’s taste for craft beer is not going away. We recently achieved an all time high for breweries in the U.S.A. when the 4,144th brewery opened, with another 1,800 in various planning stages. And if your favorite brewhouse is gobbled up, don’t sweat it. Just head down the street to the next one, lord knows there will be one.

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