Independence and Oat Creams
Two small things today, disconnected but for the fact that they have lodged in my brain and keep drawing my attention back. The first comes from a letter sent by a Craft Brew Alliance stockholder to the CBA board. In it, David Cohen urges CBA to pursue a purchase by a multinational partner. It’s just one data point, but Cohen lays out a detailed case for why CBA is undervalued, and it says a lot about the difficulties of large craft breweries.
“CBA lacks the margin structure and scale of its peers to grow sales, profits, and cash flow consistently,” Cohen wrote. “In our opinion, despite Kona’s virtues as a brand and its solid growth, the intrinsic value of this highly attractive asset will not be recognized by the public market with CBA as a stand-alone company.”
Independence, Cohen argues, is bad for business. There’s no way CBA can make, distribute, and sell beer as cheaply as bigger companies. It doesn’t have the heft to pursue big initiatives. But it’s far too big not to try to compete as a national company. If independence doesn’t have intrinsic value, value that allows midsized breweries to sell at a price point that is still profitable, they’re caught in-between the giants and the buzzy little guys. This is why the Brewers Association is trying to give "independent" value beyond some gauzy feel-good sentiment and turn it into a buying decision. Accordingly, ABI, MillerCoors, et al are really trying to get everyone to ignore independence at all costs. That’s why the craft divisions of ABI, MillerCoors, et. al. will continue to argue “It's all about the beerz, bro!”
Also on my mind, “oat cream,” that descriptor I discovered at Other Half last week. It’s wonderfully evocative and has captured my imagination. That brewery used it to describe hazy, hoppy beers made with lots of oats and lactose. But since it’s an invented description, it could mean anything. My homebrewer mind keeps coming back to it, wondering: “how would I make a beer called ‘oat cream?’” I haven’t exactly come to an answer yet, but I’m loving the riddle. It would be less hazy IPA and more ... something else. Hmmm. Feel free to make suggestions.