A little bird, or rather an email correspondent, who was present advised me that at the recent Craft Brewer Conference there was a closed session at which at least one well placed big-mid-sized Midwest brewer “sure made for good entertainment at the voting members session of the CBC- you know, the one the toss the media out for”. Apparently, unlike what is seen on the public sessions, issues like the asymmetrical effect of tax breaks and grants are creating divisions amongst those who would like you to believe that they sing all from the same hymnal… and, then, would like to sell you the hymnal so you can keep in tune, too. Interesting, then, to read about one implication arising from this sort of thing as illustrated by one particular expanding good beer market, Ashville NC, as reported today by Bill Night at The New School:
If the $9 Mil for New Belgium that Magee mentioned sounds like a lot to you, maybe you’ll be interested to find that New Belgium actually snarfed up $13 million in total from “the public trough”, as explained in this post on the blog Ashvegas. As far as I can tell, Sierra Nevada wasn’t quite as gluttonous, and only needed a little under $5 million to set up beer camp in North Carolina:
– State of North Carolina: $1M grant to New Belgium
– Buncombe County: $8.5M tax incentives to New Belgium
– City of Asheville: $3.5M tax incentives and infrastructure to New Belgium
– State of North Carolina: $1M grant to Sierra Nevada
– Henderson County: $3.75M tax incentives and infrastructure to Sierra Nevada
You know who should be really pissed about all that money? The small brewers who built Asheville up into Beer City USA.
Redistribution of wealth is tricky stuff and it does not help that those receiving are national craft millionaires even though sometimes it seems they would like us to think that they are hunting for sofa change to try to make payroll. But it does not stop there today as Harry Schuhmacher in the Beer Business Daily touches on more of the questions left unanswered after the recent conference. He discusses questions of tax policy as I discussed here the other day as well as badly made and overpriced craft – and even how succession planning leading to big money buyouts are all discussed. All important big issues that can leave a bad taste… sometimes by actually leaving a bad taste.
But, most interesting to me is the “S” word – smugness. Harry puts it succinctly: “I’ve met a few new craft brewers over the last year, and I get the sense lately that many think they invented beer.” A great direct line. I can’t, however, speak to the truth of it as, being trained in the law, I assume this is a phenomena that is woven throughout all business sectors so I don’t know whether this is new to beer or that the guard has been left down a bit recently. Yet the other sources mentioned above might be indicating that might well be the case. Where does all of this lead? Good beer did well in the recession, expanding market share as the economy took a hit. But that does not mean the industry is immune to all risk.
For me, big business is big business and will act as such. Lobbying and entitlement will benefit the largest most. But the time needs to come when US craft will stop trying to pretend all brewers are small start ups even if only to argue for financing opportunities which can benefit businesses of different scales. Beyond that, the risk of fatigue needs to be addressed – and not fatigue of flagship beers as Harry suggests though that is happening too. Craft beer is starting to act like pre-teen soccer league where everything and everyone is special. Every brewer gets the medal. Every one gets the treat at the end of the game. In the case of craft beer, the treat is unending increased prices and increased sales forever and ever, amen. Nothing works that way.
Change will come and will likely be unexpected. Change may also be brought upon oneself. How would a brewer best situate itself to withstand a shift away from these present times of plenty? Admitting opening how things actually are might be a start.
[Original comments…]
Pivní Filosof – April 10, 2013 3:46 AM
http://www.pivni-filosof.com/
As I’ve said elsewhere. That companies like Sierra Nevada, New Belgium, Boston Beer and several others can be considered in the same segment of the industry as brewpubs and truly small breweries with little, if any distribution is sort of curious at the very least.
Alan – April 10, 2013 7:57 AM
But, without that, the modestly priced and tasty Sierra Nevada’s pale ale at the US grocery store is going to be perceived as the same as the modestly priced and tasty Blue Moon sitting next to it on the shelf at the US grocery store!
Velky Al – April 10, 2013 10:05 AM
http://www.fuggled.net
‘without that, the modestly priced and tasty Sierra Nevada’s pale ale at the US grocery store is going to be perceived as the same as the modestly priced and tasty Blue Moon sitting next to it on the shelf at the US grocery store!’
And therein lies the seed that germinated into the whole ‘craft vs crafty’ BS, perhaps the bigger craft breweries realise that as BMC start brewing styles normally associated with their product lines then the game is up.
Consumers can only take price hikes for so long before they literally start voting with their wallets and settling for the likes of Blue Moon or contract brewed beers like Trader Joe’s PLZNR.
Perhaps I am being a miserable git (no change there then), but the boom in craft beer is very much mirroring the housing market of the early Noughties and when the inevitable crash comes, as it must, then it will be mainly the small brewers, such as those brewing on less than 10 barrel kits, that will go to the wall, as well as few of the medium sized regional brewers.
Alan – April 10, 2013 3:36 PM
All crafty has done for me is make me happier to buy beers made by macro brewers as the BA has confirmed the taste is comparable by including them in the same concept!
Alan – April 11, 2013 10:40 PM
Excellent reporting. 50% of the tax breaks being sought by the BA will go to 30 of the 2,500 or so US “small” craft breweries. You know, the big ones.
Ethan – April 13, 2013 12:49 PM
http://communitybeerworks.com
I respect, but disagree with, the opinions of large breweries like Lagunitas and Bells. To me, neither of the arguments they make are compelling.
The “patriotic” argument is especially stupid to me in that the federal government subsidizes all kinds of stuff needlessly and what the BA is asking for is a drop in the Federal budget bucket comparatively. That $500,000,000 could so easily be recouped if oil companies actually paid their taxes- or wouldn’t be needed if our defense budget wasn’t fucking ridiculous. In general, the excise tax is unpatriotic already, in that is selectively applied to alcohol and cigarettes but not toothpaste or jewelry. It’s a bullshit tax and should be eliminated for everyone- but I’ll settle for a reduction.
As for what Sam Adams or Yeungling would do with the money, and whether or not it would bury Bells (or Community Beer Works for that matter), hey: capitalism