Independence, Small Breweries, and Covid
People have been talking about “independence” in the beer industry for decades—a lot longer than they’ve used the phrase “craft beer,” in fact. A recent push by the Brewers Association (BA) to make this case seems to be gaining traction. One would therefore assume member breweries are happy. So why aren’t they?
Independence Matters
Our journey starts with Bart Watson’s report on progress toward raising awareness about brewery independence. Three years ago, the Brewers Association made independence its signature initiative and encouraged member breweries to adopt a seal promoting it. Misconstrued at the time as a marketing gimmick, the idea wasn’t about moving a given unit of beer. Rather, it was a public awareness campaign to persuade customers to buy from independent breweries—and draw a distinction with corporate-owned craft brands that threaten them. At the time, I argued that this would be a long process, one that might not bear fruit for a decade, and that “success” would be measured in a sizable number of customers (but not most or even a majority) willing to make it part of their buying decision. If corporate craft is indeed an existential threat, this was the best play.
According to Watson, it’s going about as well as could be expected:
“[Fifty percent] of craft consumers (those who responded that they drink craft “at least several times a year”) said they had seen the seal, up from 42% last year, and 64% of weekly craft drinkers said they had seen it, up from 53% last year….
“In this survey, consumers were asked, “If you saw this logo on beer, how much, if at all, would it affect your likelihood of purchasing the beer?” In the latest results (Spring 2020), 49% said it would make them more likely (14% much more, 35% slightly more), 8% less (2% much less, 5% slightly less; numbers don’t add due to rounding), and 43% said it wouldn’t affect their decision at all. That net +41% between more and less likely is the highest over 5 iterations of this survey, and almost double from the first time we fielded in fall 2017.”
That’s impressive movement—more impressive than I would have guessed three years ago. It makes some sense. During these past three years, breweries have grown by a third, and the taproom revolution brought more people into breweries’ living rooms. The consciousness of local (an imprecise proxy for independent) has spiked over that period.
Thinking about what might account for this rapid change, I began to think about how the unique challenges of 2020 may have impacted this dynamic.
Buying Local During Covid
The COVID-19 pandemic has presented the beer industry with its greatest disruption since Prohibition. The loss of draft as a revenue source, particularly in taprooms and brewpubs, combined with forty million people experiencing employment interruptions scrambled nearly every business model. Breweries haven’t broadly been forced to close (yet), but they’re also not thriving. Even large companies that have seen grocery sales spike are in a net deficit by losing draft. The coronavirus hit smaller breweries harder, of course, and their volumes are down.
If there has been a silver lining, it’s that customers have come out to support their favorite breweries. Those that cultivated the deepest emotional connections with fans have seen the best responses. Over the course of dozens of Coronavirus Diaries, brewers have written how breweries used a range of clever approaches—home delivery, online ordering, curbside pick-up—to reach customers. Despite definite setbacks, most brewers described a deep gratitude for those customers who stuck with them during this crisis.
The feds helped a bit with PPP loans and unemployment benefits, but governments have otherwise been an unreliable partner, sending mixed messages about safety and opening and closing business based on unpredictable criteria. Breweries had to manage the crisis largely on their own.
Seeing Watson’s report, I wondered if breweries might have begun to see leveraging independence as even more important given the challenges of COVID. I asked about it on social media, expecting breweries would offer a generally positive response.
Boy, was I wrong.
Rising Dissatisfaction
The Brewers Association is the descendent of an organization created for erstwhile “microbreweries.” Early on, it sought members that were small and local, breweries easily distinguished from lager-brewing behemoths. The success of craft brewing has created mini-giants, however, and their concerns came to dominate the organization. It is difficult to equally serve the needs of 500-barrel brewpubs and 500,000-barrel nationally-distributed beer companies. I have frankly been startled that breweries haven’t squabbled more publicly about the BA’s direction, but during the growth of the 2010s, all seemed calm enough.
The Independence Seal may be a flashpoint. I didn’t get anything like a representative sample of responses in my social media queries, but it was striking how many were complaints. Of the roughly twenty industry folks who replied (numbers that included a taproom owner, state guild head, and label designer), just one was unambiguously positive: Adam Robbings from Seattle’s Reuben’s Brews.
“I’m for it. We use it. If independence doesn’t matter, smaller less efficient (smaller economies of scale and smaller marketing budgets) independent breweries have no future. We need to do better explaining why independence matters, I think. The term craft has been hijacked by big beer, muddying the waters. So we need to explain what advantages small independent breweries offer to customers. The seal is the first step on a far harder and longer journey.”
This is a perfect restatement of why BA initiated the seal in the first place, and my sense is that among most small breweries, its underlying rationale—that small, independent breweries are at a structural disadvantage in the market—is uncontroversial. Despite what would seem like a slam dunk over the seal, though, breweries vented much spleen when I raised the issue, pointing to a range of (sometimes unrelated) complaints. And here we begin to see those fissures develop.
Some folks commented on narrow complaints, such as the size and design of the logo, and the BA’s failure to offer supporting material or a broader educational component. But the comments that really caught my eye were those that questioned the BA as an agent working on their behalf. They might agree with the underlying message of the seal, but they don’t think the Brewers Association has the legitimacy to champion it.
(Breweries posted a lot of their comments online, so they must be fine having their opinions out there. Several spoke privately, however, so I’ll leave the names off the quotes. They are all verified real people.)
“My brewery does not and will never display the seal. Small & independent does not mean being on the stock exchange or owned by venture capital.”
“For years now the BA has ceased to represent small brewers in any real sense and instead their mission seems to be driven by what the Top 50 ‘craft breweries’ want. To be honest, for us, a 3000 bbl brewery who is still primarily a brewpub, the squabbling between ‘big beer’ and ‘big craft beer’ has very little impact on us. The narrative of ‘independent craft’ only serves as a weapon for ‘big craft’ breweries fighting it out on Walmart shelves against multi-nationals.”
“I’m not entirely sure what the BA even offers a member of our size at this point. I mean, they just put out a Seltzer book? That tells me who they are really working hardest to support and promote. And it sure isn’t the smallest of breweries that are so worried about depletions, set building, intense competition from the macros, SKU management and out of market share in chain grocery and convenience that leans them toward making seltzer, that’s for sure.”
“If you’re going to scream something from the mountain tops, you’d get further screaming the names of the handful of breweries who are NOT independent, and who owns them. And while we’re at it, maybe a word or two about why that creates an unfair advantage. I appreciate why it might be unpalatable to launch a frontal assault against a well-heeled, multinational powerhouse, but in telling people they should choose independents, you’re essentially saying they should avoid corporate-owned beer.”
“We already created our own "True Craft - Brewer Owned & Operated" seal and place it on all of our labels, so that's why we never adopted the BA’s.”
The three elements of the story intersect at an interesting place. I’m reading the tea leaves a bit here, but this is how I’d put it. The Brewers Association has long been an imperfect port for small breweries trying to shelter from the storm of big beer and big distribution. They have steered in because the BA seems better than being out to sea with the sharks. (Yes, my maritime metaphors are straining!) The COVID pandemic, however, forced breweries to fend entirely on their own, which showed them exactly how rough the waters outside the BA are. Now that they have seen what that looks like, many appear to be quicker to criticize the BA.* No idea what that means, but it certainly caught me by surprise.
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* I was this close to saying “jumped ship,” but resisted. A ship is not a port, after all.