Apr
20
2009
Make Beer, Not War: Why Macrobreweries Aren’t Worth Getting Worked Up Over 
I have a question for you, and I’d like you to answer honestly: How much harm has AB|InBev caused you? No, making you drunk dial your ex-girlfriend does not count.
There was a hell of a lot of Big Light Lager vilification in Beer Wars. Overall, though it was quite entertaining, I found the movie cynical, masturbatory, and very much preaching to the choir. Close to half of the film was spent illustrating the detrimental effects macrobreweries are having on craft beer and customer choice, and the rest was spent portraying the craft brewers as persecuted visionaries. It has certainly been successful in stoking the righteous indignation of independent business owners and their faithful patrons, but it makes me wonder just what we’re getting so upset about.
Most of the beer varieties sold in America are barely differentiable light lagers all brewed by the same conglomerate. We can spend all day arguing on the grounds of spirit and soul over how obviously horrible this is for the beer world, but when you stop and think about it, does it really matter?
In every creative marketplace, given enough time for growth, there will emerge a dichotomy of commodity and culture, be it food (McDonald’s v. Morimoto), movies (Scary Movie v. Sundance), comics (X-Men v. Watchmen), games (EA v. 2D Boy), art (Kinkade v. Not Kinkade), or beer. In every case, the two sections of the marketplace are so distinct and separate that it’s rare that they overlap. Sure, AB|InBev is probably in a position to purchase and digest every microbrewery in the world, suing the last holdouts into oblivion, but if this was really such a big threat, don’t you think it would have happened by now?
There were two points that were made in Beer Wars that really bugged me (among the many that only bugged me a little bit), because while they were obviously intended to show that macrobrewing is bad and you should be ashamed of yourself for having ever looked at an MGD, all they did was prove, albeit obliquely, that microbrewers really have nothing to worry about.
The first was the revelation that macrobreweries are starting to try to mimic the craft breweries. Sam Calagione pointed out that these faux-craft beers will go onto the shelves at much lower prices than is feasible for the more expensive to produce microbrews. Customers might see, say, a $3.99 pumpkin beer made with cheap spices and adjuncts, and choose that over Dogfish Head’s $10.99 pumpkin beer made with all of the best ingredients. They’ll get home, try the beer, think it’s disgusting, and never try another craft beer again. SCARY!
Do we honestly think the typical Joe Minivan or Jane American Idol who eats at McDonald’s and has eight Kinkades on their living room wall is even interested in craft beer in the first place? Hell, do you even want to associate with them? These people are members of the commodity marketplace! Maybe 1-2% will try a craft beer and join the culture side of the market, but other than that, you’re talking about an entirely different world. It’s like saying Morimoto has trouble getting business because McDonald’s food is cheaper, or that The Hold Steady can’t sell records because they’re not a member of a big RIAA label.
The other point that just drove me crazy was the story of Ronda from New Century Brewing Co., makers of Moonshot “Premium Beer With Caffeine”, and her epic struggle to market her beer and feed her poor babies. At no point did we see Ronda in anything but the Victimized Hero role as she sacrificed family time to meet with “No” after “No” in her battle against the evil corporations. There are so many layers to this story for me to hate. I’ll focus on two.
First, the easy one: “Beer With Caffeine” has got to be one of the worst marketing gimmicks I’ve ever seen. There are already other (better!) beers that have caffeine in them. This is nothing new! The only people you’d ever fool with this are the consumers in the commodity market, and they’re not interested anyway.
Secondly, the way Ronda was portrayed as a helpless victim in a big corporate world was mind-bendingly frustrating. If she didn’t spend all of her time trying to sell out, I might have some sympathy for her, but instead of starting at the grassroots level and slowly building her brand through a good product and word of mouth, she tried to play the corporations’ games, and came off as hopelessly naive because of it.
Look, yes, for all small businesses, there is the danger of losing everything you’ve built to a large corporation, but it isn’t that hard to prevent. I’m not an expert in business, but it just seems like a bit of common sense and patience is all you need. The most important things to do are these:
Cultivate — You will never have the tons of customers that the big companies have, so take the fans you do have and make them obsessively loyal. The way to do this is through simple good faith. Put out a consistently wonderful product, interact with them, let them know that you are real people, and they will grow to trust you, thus allowing you to count on them.
Grow Slowly — Ronda kept trying to run with the Goliaths, hoping to turn her brand into a breakout overnight hit. Unless you are expansively lucky, that is never going to happen for you. Be happy with 8% growth per year, and learn to work with it. It’ll take you longer to come up with the several million dollars you’ll need to expand your operation, but that’s several million dollars that’ll be earning interest in your company’s bank accounts until you’re ready to make the leap.
Own Your Business — If you want to grow fast, you’re going to have to sell pieces of your business to investors. Do not do this. Make sure that you and your most trusted business partners own a combined 51% at all times. If you ever get the inkling that one of your partners is going to sell his share and the voting power that comes with it to someone else, buy him out, even if you have to pay more than what his share is worth. It’ll hurt in the short term, but it beats losing your controlling interest in the company.
We’ll all be a lot happier, and enjoy our beers a lot more, when we stop trying to convince ourselves that the Man is keeping us down. Chill out, pretend Budweiser doesn’t exist, relax, and don’t worry.
I don’t entirely agree with your idea about the commodity vs culture dichotomy. You’re only considering the two extremes. While I do agree that Joe Minivan who goes to McDonald’s and drinks Bud Light is not likely to ever cross over to the craft beer world, there are plenty of in-betweenies who could. Think Steve Middleclass who eats at Friday’s, goes to a museum exhibit once a year, and drinks Corona and the occasional Boston Lager. Steve Middleclass doesn’t know enough about the brewing process to understand what the difference is between the $10.99 Punkin and the $3.99 knock-off. After all, he thinks the food from Friday’s tastes about the same as food from the slightly-more-expensive Cheesecake Factory, so why spend the extra couple bucks when he’s not sure he’ll even like a pumpkin ale anyway? Especially “in this economy.”
I know plenty of people, mostly middle class and in their 40s and 50s, who have purchased beer from The Big Three for years, and are now starting to get interested in this microbrewing-thing-a-majig. These potential cross-overs are the ones that the big guys are trying to steal back by producing the micro knock-offs, and talking about “triple hopping.” Their intention is to confuse these people into thinking their beer is the same as the micros. They’re not worried about Joe Minivan, they just have to keep making those Super Bowl ads and he’ll never cross over. My point is, it’s the middle of the commodity-culture spectrum that are effected by this new marketing strategy the big guys are taking on.
But yeah, I’m with you on the Rhonda Kallman stuff. And the fact that they played that clip of Todd Alstrom bashing Moonshot without giving him the chance to respond was pretty awful. Put him in a bad light for no reason, while keeping Rhonda in the victim role. Lame.
You make some interesting points here, that I think have implications that carry over beyond the macro-/micro- breweries. However, I think I have to agree with Steph that the dichotomy you refer to is a bit simplistic. In the end, you’re making the argument as black and white as the film makers behind Beer Wars did. You seem to assume there are only two types of people in the world: those with good taste, and those without. But you forget that there may in fact be people out there who drink micro-brews, read Watchmen, love Morimoto, and only watch French films about gay cowboys eating pudding, but who also have Kinkade hanging in their hall bathroom and enjoy the occasional Big Mac. These are the type of people who, given their druthers, would be drinking a nice Dogfish Head or Sierra Nevada, but has no qualms over enjoying a Miller or Bud at a family BBQ, if that’s all that is available.
Come on guys, don’t you know an opinion piece is only worth reading when it’s whittled down to black and white? :)
I don’t think the people with the “What’s the difference?” mentality who are swayed by knock-offs and triple hop brewing were ever going to become part of the Good Beer market anyway. The craft breweries wouldn’t be able to depend on them for business, and they have no more than a waning interest in craft beer to begin with. Small business is all about connecting with the customer, and you can’t connect to people who aren’t listening in the first place. If they’re really interested in your product, you will never have a danger of having them stolen from you unless you betray them first, which is theft as much as tossing a few dollars into the basket at church is.
As for the border territory between commodity and culture, I’m betting the split between people who eventually go commodity and people who eventually go culture is equal to the overall split between the two worlds.
I do agree with the idea that for customers to be loyal to a brand, the brand must first be loyal to the consumer. It’s just that after 9 years, 4 elections, and countless partisan diatribes, I’ve gotten a little tired of the black-and-white arguments. You’re better than that, man. Try writing with a little more nuance; a little more intelligence. You’re above that partisan hackery (if I may be allowed to borrow from Mr. Stewart.) You come close, and do try to present a somewhat balanced argument in the beginning, but then slip down back into the us vs. them mentality that passes for intelligent discourse in the world today.
I’m not taking a side in a black-and-white dialectic. I’m pointing out that there is a dialectic (which people who are not me created), and that we really don’t need to worry about it.
Ah. My bad. In re-reading, I see that now. That’s what I get for commenting on articles I read before I’ve had my coffee.
[I don’t think the people with the “What’s the difference?” mentality who are swayed by knock-offs and triple hop brewing were ever going to become part of the Good Beer market anyway... Small business is all about connecting with the customer, and you can’t connect to people who aren’t listening in the first place.]
This I disagree with. When I described “Steve Middleclass” in my last comment, I was describing a handful of real people that I actually know. These people have been leaning towards the craft beer side of things. Mostly because they know me and Tim, so they have the information readily available to them. But for someone who doesn’t personally know a brewer and gets all their information about beer from TV ads and beer labels, knock-offs and “triple hopping” could be all that it takes to keep them from becoming a part of the craft beer market.
It’s all about what information reaches the consumer. The big guys have a wider reach than the little guys, so they have an easier time getting their message out to the consumer. Small brewers just don’t have the means to advertise like The Big Three. Trust me, there are plenty of Steve Middleclasses who are on the fence and just need a little more information about what they’re drinking to be swayed over to craft beer side.
Wow. Steph makes it feels like Palpatine and Yoda are fighting for my nerdy, beer drinking soul…
Word of mouth is a powerful marketing force. Anyone who is predisposed to favoring craft beer but hasn’t yet discovered it most likely will do so eventually, probably through friends like you said. I don’t imagine it will be long before every single potential customer has heard of craft beer and made a decision on which side of the fence they prefer. The border may fluctuate a little bit between now and then, but when that point is hit, it’ll stabilize, for better or worse.
[But for someone who doesn’t personally know a brewer and gets all their information about beer from TV ads and beer labels...]
But see that’s exactly my point: The people who get their life’s information from TV ads probably weren’t going to stick around in the craft market anyway. I hate to stereotype (no I don’t), but the sorts of people who are more likely to enjoy good beer simply aren’t as vulnerable to Big Marketing.
Well, I suppose that’s the difference in our arguments. You’re talking about a stereotype and I’m talking about actual people that I know. I agree that a large part of this on-the-fence group fits that stereotype, but I think there’s a large enough amount of people who don’t.
Most people in their 40s-50s watch TV. They see lots of beer ads. They see Anheuser-Busch’s brewmaster talking about the care and attention to all the beer they produce, using the highest quality ingredients, and blah blah blah. If they don’t have someone sitting next to them saying, “Pshh, yeah, maybe the highest quality rice and corn. *Real* beer doesn’t use adjuncts,” then they’re likely to believe what they see, simply because there are no small brewer ads to counter it.
One time, we went to Tim’s parents’ house, and his dad had bought a few microbrews, along with a winter ale knock-off from one of the big guys. He had no idea it was from a macro. He didn’t like it. It likely would have turned him off to any winter ale if we hadn’t been there to tell him it wasn’t a microbrew.
That’s what I mean when I say that word of mouth is spreading, though. People who might like the Good Stuff are becoming more and more likely with each passing day to have someone in the room with them when they hear about Triple Hop Brewing on TV. The information is spreading. We will have to weather a little attrition until things hit a steady state, but it seems to me like the days of having to worry about losing customers to the macros are numbered.
Maybe I’m being too optimistic? I have been in kind of a good mood the last few days.
I do agree with what your saying, though it is possibly slightly optimistic. But I’m hopeful that you’re right.
In any case, AB-InBev sure is a bunch of twats for suing DFH for the use of the words “Punkin” and “Chicory.” Like seriously, completely unnecessary. They would squash out all other brewers if they could. Ass wipes.
Totally. It reminds me of every military occupation in history. The invading army keeps trying to hold the natives down, but nothing seems to be able to stop the insurgency. Has AB|InBev learned nothing from New Caprica?
Actually, the Allied occupations of Germany and Japan after WWII were quite successful. Though there were limited insurgencies, in the long run, the occupying armies emerged victorious. The same could be said for the US occupation of the Phillipines after the Spanish-American War, although that particular insurgency did last for quite a while and is in many ways analogous to the current situation in Iraq. One could also make similar arguments about the post-Civil War South, and most of the history of the British Isles after 1066. Never mind the successful expansion of the United States across the continent and into the Hawai’ian Islands during the 19th and early 20th centuries, in which the U.S. military, or some other American agents, successfully occupied and eventually gained total control over some 3.79 million square miles of land that was once controlled by “natives.”
Buh… Does that count towards Godwin’s Law?
Hmm… interesting question, since i never actually mentioned Hitler or the Nazis, but did reference the war. I’m not up on all the subtleties of Godwin, but this definitely seems like a gray area. In my mind, Godwin applies to intent as much as content, and since my content did not specifially mention the Nazis or Hitler, nor did it intend to equate you or your thesis with them or their theories, I wouldn’t think it applies. But, I can see a good argument in favor of it, too. If it is too close to Godwin for your taste, I will happily redact the “Germany” portion of my above post. The rest holds just as true, even without those sausage eating anti-semitic homophobes.
[...] Make Beer, Not War Most of the beer varieties sold in America are barely differentiable light lagers all brewed by the same conglomerate. We can spend all day arguing on the grounds of spirit and soul over how obviously horrible this is for the beer world… [...]